TIDMAVA
RNS Number : 4798R
Avanti Capital PLC
28 October 2013
Avanti Capital plc
Investee Company, Eclectic Bar Group plc announces intention to
float on AIM of the London Stock Exchange
Avanti Capital Plc (Avanti), the AIM-listed investment company,
is pleased to announce that Eclectic Bar Group plc (Eclectic), one
of the UK's leading premium bars businesses, has today announced
its intention to float on the AIM market of the London Stock
Exchange.
Avanti currently holds a 60% equity stake in Havana together
with a loan due from Havana of approximately GBP7.3m.
Richard Kleiner, director of Avanti, said "Over the last five
years, Avanti have been delighted to be closely involved with the
development of Havana and working with the management team to see
it make the transition to a public company. Avanti believes that
Havana has substantial growth opportunities and this transition to
the public markets should provide the capital to accelerate its
growth whilst deepening and broadening its infrastructure to ensure
that such growth will continue to be built on firm foundations. We
also hope the IPO crystallises a return for our loyal
shareholders."
For further information on Avanti please contact:
Avanti Capital plc
Richard Kleiner Tel: 020 7299 1455
Canaccord Genuity Limited
Bruce Garrow/Joe Weaving Tel: 020 7523 8350
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN
NOR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF
THE RELEVANT LAWS OF SUCH JURISDICTION
This announcement is an advertisement and not a prospectus or an
admission document and does not constitute a recommendation
regarding any securities. Investors should not subscribe for or
purchase any shares referred to in this announcement except on the
basis of information in the admission document to be published by
Eclectic Bar Group plc in due course in connection with the
proposed institutional placing and admission of the entire issued
and to be issued ordinary shares of Eclectic Bar Group plc (the
"Ordinary Shares") to trading on AIM, a market operated by London
Stock Exchange plc (the "Admission Document"). Copies of the
Admission Document will, following publication, be available from
the Company's registered office.
The contents of this announcement, which has been prepared by
and is the sole responsibility of Eclectic Bar Group plc, have been
approved by Panmure Gordon (UK) solely for the purposes of section
21 of the Financial Services and Markets Act 2000 (as amended).
For Immediate Release
27 October 2013
Eclectic Bar Group plc(1)
("Eclectic", the "Company" or the "Group")
Intention to Float on AIM
Eclectic, one of the leading operators of premium bars in the
UK, today announces its intention to launch an initial public
offering ("IPO") by means of an institutional placing of Ordinary
Shares consisting of the issue of new Ordinary Shares by the
Company for approximately GBP10 million, and a sale of existing
Ordinary Shares, held by the Group's principal shareholder, Avanti
Capital plc ("Avanti") (the "Placing"). The Company intends to
apply for the admission of its entire issued and to be issued
Ordinary Shares to trading on AIM, a market operated by the London
Stock Exchange ("Admission").
Highlights
Premium target market
-- Eclectic is a leading operator of premium bars in the UK.
Eclectic's portfolio comprises 19 venues located in major towns and
cities, predominantly targeting a customer base of sophisticated
students midweek and stylish over 21s and young professionals at
weekends. The Company focuses on delivering added value for its
customers, with premium product ranges, high-quality music and
entertainment, and a commitment to high service levels and
standards.
___________ (1) The Company has been newly incorporated for the
purposes of the proposed IPO. Shortly before Admission, it is
proposed the Company will acquire Eclectic Bars Limited, the entity
currently operating the business described in this announcement. As
such, all references to "Eclectic", "Company" and "Group" in this
announcement should be construed accordingly.
Strong brands
-- The Group trades across its estate under a variety of brands,
including Embargo 59, Lola Lo, Sakura, Po Na Na and Fez Club. These
brands have proven themselves to be consistently cash-generative,
continuing to trade well even since the start of the global
financial crisis of 2008.
Strong financial track record
-- The Group has established a stable financial track record
over the past five years with turnover in the year ended 30 June
2013 of GBP21.2 million, representing a 2 year CAGR of 16.9 per
cent., and Group EBITDA of GBP3.0 million, representing a 2 year
CAGR of 16.7 per cent.
Significant growth potential based on successful track
record
-- The management team, led by Reuben Harley who has over 25
years' experience of working in the UK pub and bar industry, is
implementing a strategy to grow the business through the
development of new sites either under the Company's existing brands
or using brands which can be successfully maintained, as well as
business acquisitions as appropriate opportunities present
themselves. The bar market in the UK remains fragmented, and the
Company is presented with a significant number of opportunities for
acquisitions of both new sites and businesses. The management team
has demonstrated its ability to achieve successful openings of new
venues, on average exceeding its target returns.
Panmure Gordon (UK) Limited is acting as Nominated Adviser and
Broker to the Group.
Reuben Harley, Chief Executive Officer of Eclectic, said:
"I see a great opportunity to grow this business both
organically and via selective new site acquisitions. The bar market
remains highly fragmented and with our total focus on attracting a
premium customer to the highest quality bar in the locations in
which we operate we are well positioned to take advantage of the
market.
"The potential of our brands allows for growth both from
utilising different brands in areas in which we currently operate
as well as new sites in our target towns and cities. The IPO will
help accelerate this growth strategy."
Key Strengths of the Group
The key strengths of Eclectic are:
-- It targets a premium customer base.
-- Gross margin of c. 80 per cent.
-- Premium product ranges, high-quality music and entertainment,
and commitment to service and standards.
-- Capacities averaging approximately 400.
-- National geographic spread, primarily in university towns
which in management's view combine an active night time economy and
demographics to support premium-positioned bars.
-- Detailed framework of operational and financial systems and
disciplines throughout the business.
-- Management team with a track record of delivering operational and financial improvements and value-enhancing acquisitions.
-- A clear development and training programme for the people within the business.
The Estate
The Group currently operates 19 sites, all held by the Group on
a leasehold basis with the exception of one site which is owned on
a freehold basis. The estate is national, with sites in London,
Bath, Bournemouth, Brighton, Bristol, Cambridge, Derby, Edinburgh,
Lincoln, Manchester, Norwich, Oxford and Reading.
The sites currently trade under a variety of branded themes as
follows:
Cuban
Embargo 59 is the Group's Cuban-themed premium bar located on
the King's Road in Chelsea, London. Its theme is based on the
revolution of 1959, with Cuban elements in the design and product
range seeking to encapsulate the feel of the playground of the
Americans in the 1950s. Embargo 59 includes a VIP 'Gold Room' with
adjacent walk-in cigar humidor and roof-top terrace.
Polynesian
Lola Lo is a Polynesian tiki-themed bar brand, based on Easter
Island and the iconic 1950s 'pin-up' girls. The bars are decorated
with bamboo and woodcarvings and the theme is supported by a wide
range of rum products and high quality cocktails served in
authentic tiki mugs and in fresh fruit. Currently Eclectic operates
Lola Lo branded sites in Brighton, Bournemouth, Cambridge,
Edinburgh, Lincoln, Norwich, Oxford and Reading.
Japanese
Sakura is the Japanese word for cherry blossom, and the brand
has a subtle Japanese theme. The positioning for the brand is to
offer a 'West End' style experience to customers in major towns and
cities outside the Capital. Sakura sites are currently located in
Manchester and Reading.
Moroccan
The Company's Po Na Na and Fez Club bars are Moroccan themed,
based on the 1920s French art deco period. These sites are designed
to have the atmosphere of a souk with rough plastered walls and
lanterns. The current portfolio includes Po Na Na sites in London
(Wimbledon), Bath and Bristol, and Fez Club sites in London
(Putney) and Cambridge.
Recent Acquisitions
The Group's most recent acquisitions, Madame Geisha, Coalition
and Coyote Wild, currently continue to trade under their existing
brand names.
The Madame Geisha site in Brighton was acquired in March 2013
and is also Japanese themed. It is planned for refurbishment in
2014.
In October 2013, Eclectic acquired the Coalition bar in
Brighton. Coalition is located in the Kings Road Arches on the
seafront and has a large outdoor terrace. The bar regularly hosts
live music events and headline DJ acts. Coalition will continue to
trade under its existing name for at least the next 12 months, over
which time the opportunities for further development will be
reviewed.
Also in October 2013, Eclectic acquired the freehold of the
Coyote Wild bar in Derby. The Company intends to convert this site
to the Lola Lo brand in early 2014.
Market Position
The Company competes in the premium bars market. It is the view
of the Directors that the bars market can be segmented into three
constituent parts being mass market, super premium and premium.
Within each town or city there is a premium customer segment
looking for aspirational venues to visit. In management's view this
customer segment includes sophisticated students midweek and
stylish over 21s and young professionals at weekends. This is the
target market for Eclectic.
Eclectic's value added product and service offer incorporating
premium branded drinks, high quality cocktails, table service, VIP
areas and table booking, combined with relatively low capacity
venues leads to an ability to target and maintain a premium
customer clientele.
Strategy for Growth
The Board's current business strategy comprises:
-- identifying development opportunities across its existing
sites, whereby capital can be employed to enhance existing
profitability.
-- growth through the acquisition and, if necessary, development of new sites.
The criteria Eclectic sets for new sites seeks to maintain the
Group's focus on a premium customer base. It is anticipated that
the majority of new sites will be in major cities and towns where
there is also a student population. The Company targets a 30 per
cent. EBITDA return on new acquisitions and 25 per cent. on
re-developments of existing sites in the first 12 months post
acquisition or re-development. The Company is targeting the
addition to its portfolio of two to three new sites per annum.
Brands
New sites will be selected either for the opportunity to use one
of the Company's existing brands, or where an existing brand or
business can be successfully maintained and developed. Internally
the management team continues to work on the evolution of existing
brands and the development of potential new brands, which it
believes is a key aspect of retaining customers and providing a
premium offer to them.
Historical Trading
The following financial information has been derived from the
Company's financial statements for its 2011 and 2012 financial
years and from the Company's non-statutory, unaudited management
accounts for its 2013 financial year.
Year ended 26 June 2011 24 June 2012 30 June 2013
GBPm GBPm GBPm
Revenue 15.5 19.8 21.2
Revenue excluding
PBR(1) 15.5 19.8 20.6
Gross profit 12.4 15.7 16.9
Gross profit margin 80.1% 79.1% 79.6%
Site EBITDA(2) 4.2 5.1 5.8
Site EBITDA margin 27.2% 25.6% 25.1%
Site EBITDA excluding
PBR(1) 4.2 5.1 5.2
Group EBITDA(3) 2.2 2.9 3.0
Notes:
1. In July 2012, Eclectic was awarded a contract to operate the
33 sites of PBR Leisure Limited ("PBR") on behalf of its lending
banks. This contract terminated on 20 October 2013 following the
sale of The Living Room business to Stonegate Pub Company and the
sale of a number of other individual sites to various
purchasers.
2. Site EBITDA represents EBITDA at site level before deduction
of central infrastructure and head office costs.
3. Group EBITDA represents EBITDA for the Group after deduction
of central infrastructure and head office costs.
Current Trading
Since 30 June 2013, Eclectic has acquired one leasehold site and
one freehold site, funded from existing cash resources and debt
facilities. The contract to manage the assets of PBR terminated on
20 October 2013. Current trading is in line with the Directors'
expectations for the first three months of the new financial year.
The Directors continue to implement the Group's strategy and are
confident about the future prospects of the Group.
The Placing and Use of Proceeds
The Group plans to use the net funds from the Placing of new
shares to repay a shareholder loan owed to Avanti of approximately
GBP7.3 million with surplus net funds raised to be used to fund
organic growth prospects and new site acquisition
opportunities.
Avanti is looking to realise a proportion of the value of its
investment in the Company. Avanti will retain flexibility around
the size of its stake to be sold in the Placing.
Dividend Policy
The Directors intend, in the absence of unforeseen
circumstances, to adopt a progressive policy of paying dividends
while maintaining a prudent level of dividend cover for the group.
This dividend policy will reflect the long-term earnings and cash
flow potential of the Group and retain sufficient flexibility to
finance anticipated development capital investment in line with the
Company's growth strategy. The Directors propose to pay an interim
dividend and a final dividend in respect of each financial year,
with the first dividend payment expected to be paid following the
Company's 2014 financial year.
Executive Directors' biographies
Reuben Harley - Chief Executive Officer
Reuben has worked in the UK pub and bar industry for over 25
years. His career started at Grand Metropolitan plc before becoming
an area manager at Greenalls Inns in the late 1990s. Between 1998
and 2004 he worked at SFI Group PLC, where he moved through the
roles of Operations Manager, Regional Manager, Brand Manager of the
Litten Tree brand nationally for the Bar Med brand and then
Divisional Director responsible for the disposal division of 62
sites. Prior to joining Eclectic as CEO in June 2006 he was
Business Development Director for The Nightclub Company.
John Smith - Chief Financial Officer
Since qualifying as a chartered accountant (ACA) with Touche
Ross & Co in 1985 John has held a variety of senior finance
roles. From Head of Finance at International Currency Exchange plc
he then became Group Finance Director at Vision Express until it
was sold to Grand Vision in 1997. After two years as Joint UK
Managing Director of Vision Express post the acquisition he then
became Finance Director of First Leisure Corporation plc in 1999,
before becoming CEO in 2003, and then CEO of The Nightclub Company
which was created by the purchase of 22 nightclubs from the
receiver of First Leisure. John became Finance Director of Eclectic
Bars Limited in June 2006.
Non-Executive Directors' biographies
James 'Jim' Fallon - Chairman
Since 1994 Jim has worked almost exclusively within the leisure
sector as a lender, adviser, owner, operator and most recently
business consultant. Jim worked for Imperial Chemical Industries in
electrical engineering for eight years prior to joining Midland
Bank in 1991. He was at HSBC until 2002 when he left to set up the
consumer sector corporate finance advisory business McQueen
Limited. He was specifically responsible for the leisure sector
within McQueen as well as much of the day to day running of the
business. Jim works as a consultant to a variety of UK leisure
businesses through his company, Graybridge Solutions Limited. In
addition he is Chairman of Newman Bars Ltd which owns and operates
Lowlander Grand Café, a continental bar brasserie business in
Covent Garden.
Clive Watson (to be appointed on Admission)
Clive qualified as a chartered accountant with Price Waterhouse
in London in 1986 then joined the investment bank Manufacturers
Hanover Limited where he spent three years. He joined Regent Inns
plc as Finance Director and Company Secretary in 1990. Clive left
Regent Inns plc in 1998 and co-founded Tup Inns Limited where he
was responsible for financial and commercial matters as well as
acquisitions. Clive was appointed in 2000 as Finance and Commercial
Director of The Capital Pub Company PLC which was admitted to
trading on AIM in 2007. In 2008 he was appointed Chief Executive
and oversaw the sale to Greene King plc in 2011 for GBP93 million.
He then set up The City Pub Company in 2012 under the Enterprise
Investment Scheme which operates a portfolio of pubs in cities and
large market towns in the south of England.
For further information, please contact:
Eclectic Bar Group plc Tel: 020 7376 6300
Reuben Harley, CEO
John Smith, CFO
Panmure Gordon Tel: 020 7886 2500
Corporate Finance
Andrew Godber / Atholl Tweedie
Corporate Broking
Adam Pollock / Charles Leigh-Pemberton
College Hill Tel: 020 7457 2020
Matthew Smallwood
Justine Warren
The distribution of this announcement and other information in
connection with Admission and the Placing may be restricted by law
in certain jurisdictions and persons into whose possession this
announcement or any document or other information referred to
herein should fall should inform themselves about, and observe, any
such restrictions. Any failure to comply with these restrictions
may constitute a violation of the securities laws of any such
jurisdiction.
This announcement does not constitute or form part of, and
should not be construed as, an offer for sale or subscription or
solicitation of or invitation to make any offer to buy or subscribe
for any securities, and neither this announcement nor any part of
it shall form the basis of or be relied on in connection with or
act as an inducement to enter into any contract or commitment
whatsoever. No reliance may or should be placed by any person for
any purposes whatsoever on the information contained in this
announcement or on its completeness, accuracy or fairness. The
information in this announcement is subject to change.
This announcement may include statements that are, or may be
deemed to be, "forward looking statements". These forward-looking
statements may be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, including references to assumptions, or by
discussions of strategy, plans, objectives, goals, future events or
intentions. Forward-looking statements may and often do differ
materially from actual results. Any forward-looking statements
reflect the Company's current view with respect to future events
and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Company's business,
results of operations, financial position, liquidity, prospects,
growth and strategies. Forward-looking statements speak only as of
the date they are made.
Panmure Gordon (UK) has approved this announcement solely for
the purposes of section 21 of the Financial Services and Markets
Act 2000 (as amended) but neither accepts any liability for the
accuracy of any information or opinions contained in this
announcement nor for the omission of any material information from
this announcement for which the Company is responsible.
Neither Panmure Gordon (UK) Limited, nor any of its directors,
officers, employees, advisers or agents, accepts any responsibility
or liability whatsoever for, or makes any representation or
warranty, express or implied, as to the truth, accuracy or
completeness of the information in this announcement (or whether
any information has been omitted from this announcement) or of any
other information relating to the Company, its subsidiaries or
associated companies, whether written, oral or in a visual or
electronic form, and howsoever transmitted or made available or for
any loss howsoever arising from any use of this announcement or its
contents, or otherwise arising in connection herewith.
Both the Company and Panmure Gordon (UK) Limited expressly
disclaim any obligation or undertaking to update, review or revise
any forward-looking statement contained in this announcement (other
than as required by the AIM Rules or by the rules of any other
applicable securities regulatory authority) whether as a result of
new information, future developments or otherwise.
Panmure Gordon (UK) Limited, which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority, is acting
exclusively for the Company and no-one else in connection with this
announcement, the proposed Placing and Admission. Panmure Gordon
(UK) Limited will not regard any other person as its client in
relation to the matters described in this announcement and will not
be responsible to anyone other than the Company for providing the
protections afforded to its clients, nor for providing advice in
relation to the Placing and Admission, the contents of this
announcement or any transaction, arrangement or other matter
referred to herein.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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