Luminar, the country's biggest nightclub and late-night venue operator, said this morning it was pushing its refurbishment spending up 25% to £30m for 2003 as its profit before tax for 2002 showed the expected drop.
The company, which runs the Chicago Rock Cafe, Jumpin Jaks, Liquid and Oceana chains, said it was also conducting a review of its whole estate, particularly the Dancing Division, with an emphasis on branding and market segmentation for each unit.
Luminar said it had strengthened its field operations management structure and brought in training and development programmes for all operational middle management "to ensure focus on the core business". As part of the shake-up, John Aust, the commercial director, will be retiring at the AGM.
Profit before tax and goodwill amortisation was down 4.3% on the previous year at £66.6m and operating profit before goodwill amortisation fell by 3.6% to £81.3m despite a rise in turnover for the year of 8.9% to £392.4m, after what Luminar described as "a significant downturn in the sector".
Like for like sales fell 3.6% on the year and while gross margins remained stable at 81.0%, operating margins dropped by 2.8 percentage points to 20.7% after an increase in promotional spend. Last year's budget duty increase on PPS drinks also reduced the group's gross margins, by 0.8 percentage points for the year. Working capital fell by £200,000 to £4.6m.
Acquisition spending was slashed by 96% to just £900,000. The number of units in the Dancing division fell from 181 to 174, but the Entertainment division rose from 86 to 92.
In the Dancing division, the group's new Oceana concept opened its first unit in Milton Keynes last April. Five new Liquids were developed in Windsor, Wrexham, Basingstoke, Hanley and Jersey and two unbranded units were converted to Liquids in Shrewsbury and Ashford. Since the year end a second Oceana has opened in Kingston upon Thames and a Liquid nightclub opened in Aberdeen.
In the Entertainment division, 12 new units opened in the year, including six Chicago Rock Cafes in Tamworth, Trowbridge, Braintree, Warrington, Jersey and Stevenage, while one unbranded unit was converted to a Chicago Rock Cafe in Southsea. Six new Jumpin Jaks opened in Blackburn, East Grinstead, Hanley, Halifax, Stevenage and Glasgow. Two unbranded units and a former Hotshots unit were converted to Jumpin Jaks in Huddersfield, Ilford and Dumfries.
Six new units are lined up to in the current year, with three already open, two Chicago Rock Cafes in Aberdeen and Livingston and a Jumpin Jaks in Aberdeen.
Luminar's chief executive, Steve Thomas, said while the core weekend business remained strong compared to the previous year, mid-week volumes had suffered, particularly in the middle of each month. Luminar was in a strong financial position thanks to its "excellent" cash flow generation, low levels of gearing and the high proportion of freeholds held within the estate, he said, and for the future, it would use its financial strength to invest in its portfolio of core market segmented brands.
The group has sold 15 properties for £8.6m to date, Thomas said, with further disposals planned. This year just nine new developments were planned, at a cost of around £15m, after a reduction in the development programme for new units and re-branding venues to £51.3m from the original plan of £60m, to help balance cash flow.
Luminar intends increasing its spend on refurbishing its properties. by around 25% to £30m, targeting 59 venues at an average spend of £500,000. It said the expenditure will be less than the group depreciation charge, which will be more than £35m.
It said of the 26 properties on the closed list at the half year it has sold nine and refurbished seven. The group has closed a further five units in the second half. Since the end of the year it has reopened two more units that were closed for refurbishment and have contracted to sell two further units, leaving 11 units currently either for sale of being redeveloped.
The Emerging Business division contributed £23.1m of turnover, representing 5.9% of total sales, with an operating profit contribution of £1.9m, up from £0.8m in 2001/02. Two "The's" opened in Windsor and Manchester and one Orange House opened in King's Lynn.
During the second half of the financial year Luminar outsourced its entertainment booking facilities for an annualised saving of £300,000. Gearing was 49% at the year end, down from 51%, while interest cover was 5.5x, down slightly from 5.7x.
Chairman Keith Hamill said trading so far in the current year has stabilised in line with levels experienced in the second half of last year. He told investors: "We continue to manage the business with the assumption that our markets are unlikely to improve in the short term." However, the company was showing its confidence in the future with a 15% increase in its final dividend.
Greg Feehely, leisure analyst at Altium Capital, said the strategy of extending Luminar's proven brand and market segmentation into its significant unbranded estate "makes sense but will take time". However, he said, "when the market turns the company should be well positioned."
The company, which runs the Chicago Rock Cafe, Jumpin Jaks, Liquid and Oceana chains, said it was also conducting a review of its whole estate, particularly the Dancing Division, with an emphasis on branding and market segmentation for each unit.
Luminar said it had strengthened its field operations management structure and brought in training and development programmes for all operational middle management "to ensure focus on the core business". As part of the shake-up, John Aust, the commercial director, will be retiring at the AGM.
Profit before tax and goodwill amortisation was down 4.3% on the previous year at £66.6m and operating profit before goodwill amortisation fell by 3.6% to £81.3m despite a rise in turnover for the year of 8.9% to £392.4m, after what Luminar described as "a significant downturn in the sector".
Like for like sales fell 3.6% on the year and while gross margins remained stable at 81.0%, operating margins dropped by 2.8 percentage points to 20.7% after an increase in promotional spend. Last year's budget duty increase on PPS drinks also reduced the group's gross margins, by 0.8 percentage points for the year. Working capital fell by £200,000 to £4.6m.
Acquisition spending was slashed by 96% to just £900,000. The number of units in the Dancing division fell from 181 to 174, but the Entertainment division rose from 86 to 92.
In the Dancing division, the group's new Oceana concept opened its first unit in Milton Keynes last April. Five new Liquids were developed in Windsor, Wrexham, Basingstoke, Hanley and Jersey and two unbranded units were converted to Liquids in Shrewsbury and Ashford. Since the year end a second Oceana has opened in Kingston upon Thames and a Liquid nightclub opened in Aberdeen.
In the Entertainment division, 12 new units opened in the year, including six Chicago Rock Cafes in Tamworth, Trowbridge, Braintree, Warrington, Jersey and Stevenage, while one unbranded unit was converted to a Chicago Rock Cafe in Southsea. Six new Jumpin Jaks opened in Blackburn, East Grinstead, Hanley, Halifax, Stevenage and Glasgow. Two unbranded units and a former Hotshots unit were converted to Jumpin Jaks in Huddersfield, Ilford and Dumfries.
Six new units are lined up to in the current year, with three already open, two Chicago Rock Cafes in Aberdeen and Livingston and a Jumpin Jaks in Aberdeen.
Luminar's chief executive, Steve Thomas, said while the core weekend business remained strong compared to the previous year, mid-week volumes had suffered, particularly in the middle of each month. Luminar was in a strong financial position thanks to its "excellent" cash flow generation, low levels of gearing and the high proportion of freeholds held within the estate, he said, and for the future, it would use its financial strength to invest in its portfolio of core market segmented brands.
The group has sold 15 properties for £8.6m to date, Thomas said, with further disposals planned. This year just nine new developments were planned, at a cost of around £15m, after a reduction in the development programme for new units and re-branding venues to £51.3m from the original plan of £60m, to help balance cash flow.
Luminar intends increasing its spend on refurbishing its properties. by around 25% to £30m, targeting 59 venues at an average spend of £500,000. It said the expenditure will be less than the group depreciation charge, which will be more than £35m.
It said of the 26 properties on the closed list at the half year it has sold nine and refurbished seven. The group has closed a further five units in the second half. Since the end of the year it has reopened two more units that were closed for refurbishment and have contracted to sell two further units, leaving 11 units currently either for sale of being redeveloped.
The Emerging Business division contributed £23.1m of turnover, representing 5.9% of total sales, with an operating profit contribution of £1.9m, up from £0.8m in 2001/02. Two "The's" opened in Windsor and Manchester and one Orange House opened in King's Lynn.
During the second half of the financial year Luminar outsourced its entertainment booking facilities for an annualised saving of £300,000. Gearing was 49% at the year end, down from 51%, while interest cover was 5.5x, down slightly from 5.7x.
Chairman Keith Hamill said trading so far in the current year has stabilised in line with levels experienced in the second half of last year. He told investors: "We continue to manage the business with the assumption that our markets are unlikely to improve in the short term." However, the company was showing its confidence in the future with a 15% increase in its final dividend.
Greg Feehely, leisure analyst at Altium Capital, said the strategy of extending Luminar's proven brand and market segmentation into its significant unbranded estate "makes sense but will take time". However, he said, "when the market turns the company should be well positioned."
Luminar preliminary results 2002/03
|
| 2003 £m | % increase |
Total turnover | 392.4 | 8.88% |
| Profit before tax | 66.6 | -4.31% |
| Ebidta | 114.0 | +2.5% |
| Fully diluted EPS (p) | 60 | -2.44% |
| Final dividend (p) | 8.06 | 15.14% |
| Total dividend (p) | 11.4 | 15.15% |
Dancing Division |
|
|
|
| Year to 2/3/2003 £m | % increase |
| Turnover | 240.2 | 2.47% |
| Net operating profit | 70.0 | -6.29% |
| Like for like sales |
| -3.6% |
| Operating margin | 29.1% | -2.8 %age points |
| Number of units at year end | 174 | -3.87% |
|
|
|
|
Entertainment Division |
|
|
| Turnover | 121.1 | 14.35% |
| Net operating profit | 29.3 | 9.33% |
| Like for like sales |
| -3.8% |
| Operating margin | 24.2% | -1.1 %age points |
| Number of units at year end | 92 | 6.98% |
Capital expenditure after disposal proceeds was down 32%to £73.4m (2001/2002 £108.5m). Disposal proceeds generated£8.6m (2001/2002 : nil). Acquisition expenditure was reduced 96% to£0.9m (2001/2002 : £21.4m).
| Capital expenditure | £m |
| New developments | 46.3 |
| Re-branded units | 5.0 |
| Acquisitions | 0.9 |
| Refurbishments | 24.3 |
| Central | 5.7 |
| Total | 82.2 |
