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Tue 24th Sep 2019 - Hakkasan slashes six-month losses to $4.4m as it continues to stabilise and restructure business
Hakkasan slashes six-month losses to $4.4m as it continues to stabilise and restructure business: UK-based restaurant and nightclub company Hakkasan Group has slashed losses as it continues to stabilise and restructure the business. The company reported turnover of $152,400,000 for the six months ending December 2018 after changing its accounting period, compared with $325,505,000 for the year ending 30 June 2018. Adjusted Ebitda increased to $10,519,000 in the six-month period, compared with $5,716,000 for the period before. Operating losses in the six months fell to $978,000 compared with $39,503,000 in the prior period, while pre-tax losses were down to $4,409,000 compared with $42,687,000 in the period before. UK revenue in the six-month period was $29,982,000, compared with $57,277,000 in the 12-month prior period. US sales were reported as $113,943,000 in the six months compared with $246,688,000 in the previous reported 12 months, while rest of the world revenue was $8,519,000 compared with $21,540,000 in the previous period. At the end of the six-month period, the company had 52 sites with three venues closing during that time – Hakkasan Dubai, and Yauatcha Waikiki and Ivory On Sunset in the US. A pop-up Hakkasan restaurant was opened with a development partner in Dubai. There were no payments made to directors. Since the year end, Nick McCabe has departed as chief executive to take up the same role with Pacha Group with a “settlement agreement being entered into”. In February, Hakkasan sold the management contracts for three restaurants in Las Vegas to an unrelated third party for which it received a one-time termination payment. In May, the company sold the management contracts for four restaurants, two bar lounges and one day club in Las Vegas to the venues’ owner. As part of the agreement, Hakkasan is to receive ongoing licence fees for three of the restaurants and one of the bar lounges equal to 1% of gross sales. In their report accompanying the accounts, the directors stated: “The six months to 31 December 2018 has been a period of stabilisation and restructuring within the owned-brand portfolio and corporate offices. Overall turnover for the six months ended 31 December 2018 compared slightly unfavourably to turnover for the 12 months ended 30 June 2018. In the US, revenues decreased primarily due to a reduction in food and beverage sales at owned venues. The principal movement there was a reduction in revenue from restaurants closed during the six months, including Yauatcha Waikiki and Ivory On Sunset. Nightlife and daylife venues also saw a reduction in overall sales, specifically Hakkasan Nightclub in Las Vegas, whose beverage, admissions, and other revenue decreased. In the UK, revenue growth was driven primarily by an increase in management fee revenue related to venues opened during both the six months ended 31 December 2018 and 12 months ended 30 June 2018. The UK also saw strong performance by owned restaurants in the portfolio related to food and beverage sales. Throughout the rest of the world, Hakkasan Shanghai saw a decline in revenue and Hakkasan Dubai decreased in revenue due to its closure. However, this loss was slightly offset by a new restaurant management agreement in Dubai. The group intends to selectively fund development with an eye towards reducing up-front capital investment by focusing on brands that are less costly to operate. 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.”


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