Interactive Investor

Eclectic Bar rises despite tumbling profits

26th March 2014 16:33

Ceri Jones from interactive investor

AIM-listed nightclub owner Eclectic Bar has reported higher revenue for the first half of the year, but profits have fallen dramatically, owing to costs associated with its listing in November and its rapid club expansion.

Revenue rose 9.6% to £11.4 million in the six months ended 29 December 2013 but acquisition and site opening costs reduced pre-tax profits to £100,000, down massively from the £600,000 made the previous year.

The company operates 20 bars in towns and cities across the UK, such as Lola Lo, Po Na Na and Fez Club, which are aimed at young sophisticates.

During the first half of the year the firm made several acquisitions, including Coalition in Brighton and Coyote Wild in Derby and signed a new lease in Deansgate Locks in Manchester, where it opened its ninth Lola Lo bar. Its bank credit facility has been extended to £5 million, from £1.5 million, to cover further expansion.

Tomorrow it opens a new concept in Brighton, a premium brand 320-seat bar and restaurant known as Dirty Blonde, named after a cocktail discovered by its chief executive Reuben Harley in New York. The bar is on the site of the Madame Geisha nightclub, a stone's throw from where the company earlier trialled the Lola Lo concept.

The company said trade in the second half of the year has been strong and its profits should rise again, with plenty of potential for expansion. Already in the current reporting period it has exchanged contracts to acquire Lowlander in the Covent Garden area of London, an established brasserie that could start the roll-out of a food-led brand.

Eclectic hopes to pay a dividend in the next financial year. The shares shrugged off the news and rose 1.5% today to 172.50p.