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Sat 23rd Mar 2019 - Hakkasan reduces losses by more than $100m as it streamlines portfolio, UK turnover rises 6%
Hakkasan reduces losses by more than $100m as it streamlines portfolio, UK turnover rises 6%, no payments to directors: UK-based restaurant and nightclub company Hakkasan Group has reported pre-tax losses reduced by more than $100m following its decision to streamline its portfolio to focus on core performing assets. The company saw turnover fall 1.5% to $308,887,000 for the year ending 30 June 2018, compared with $313,647,000 the previous year. Adjusted Ebitda rose 129% to $5,124,000, compared with $2,247,000 the year before. Pre-tax losses dropped to $43,966,000, compared with a loss of $145,494,000 the previous year, according to accounts filed at Companies House. UK revenue rose 6% to $57,227,000, compared with $54,188,000 the year before. US sales fell 3% to $236,174,000, compared with $243,946,000 the previous year, while rest of the world revenue was down slightly to $15,426,000, compared with $15,513,000 the year before. At the end of the period, the company had 54 sites with three more venues closing since the year end. There were no payments to directors, compared with a total of $54.4m the previous year when $50.5m went to just one person. In their report accompanying the accounts, the directors stated: “It has been a year of stabilisation and restructuring within the owned brand portfolio and corporate offices. The group had some moderate growth with the opening of Herringbone Waikiki in August 2017, but also streamlined the portfolio with the closure of certain underperforming venues both during the year (HKK in October 2017, and Searsucker Austin in June 2018) and shortly after the end of the year (Hakkasan Dubai in July 2018 – albeit a new site will open in 2019 – Yauatcha Waikiki in August 2018, and Ivory on Sunset in September 2018). Similarly, there was growth in our managed portfolio, as multiple managed venues were opened with development partners in Bali, Indonesia (Omnia Dayclub and Sake No Hana restaurant, both in early February 2018) and in San Jose del Cabo, Mexico (Omnia Dayclub, Herringbone, Casa Calavera restaurant, and Shorebar, all in February 2018). By contrast, there was also an active initiative throughout the year to streamline the portfolio in order to allow a greater focus on core performing assets. In the US, revenue fell 3%. The principle movement here was a reduction in revenue from nightlife and daylife venues, where specifically Hakkasan Nightclub and Omnia Nightclub in Las Vegas saw a reduction in their revenues of 13% and 6% respectively. J2 revenue decreased by $3.9m or 81% from the previous year as a result of the operations being sold in October 2017. In the UK, revenues grew 6%, despite the impact of the HKK restaurant closure from October 2017. Growth was driven by strong performance across the UK restaurants in the portfolio. In the rest of the world, revenue was in line with 2017, while Hakkasan Shanghai continues to perform well, with revenues increasing 4%. This was contrasted by a 11% fall in revenues from Hakkasan Dubai, which was closed on 1 July 2018. The group continued to grow fees from management agreements increasing other operating income from $15.1m to $15.3m, an increase of 2%. Going forward, the group intends to selectively fund development with an eye towards reducing upfront capital investment by focusing on brands that are less costly to open, such as Yauatcha. In addition, the group will work with select landlords and partners on deal structures that will showcase existing brands, build equity in new brands, and spur growth while minimising costs.” In November 2018, Nick McCabe announced he was stepping down as chief executive at Hakkasan to take up the same role with Pacha Group. He left Hakkasan at the beginning of January.

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