Avanti Capital Share Discussion Threads

[adam] 30/5/2005 16:09

Former Laurel Pub Company boss Ian Payne is thought to be planning to snap up the Chicago Rock Cafe and Jumpin Jaks brands put up for sale by Luminar and merge them with nightclub chain Po Na Na. Mr Payne is working with private equity firm TDR Capital - The Sunday Express

[adam] 26/5/2005 10:27

Luminar results confirm trading tough in the sector.

Following announcement of a strategic review, a number of approaches have been received which may lead to the disposal of the entertainment division.

It would appear non-core bars at Luminar account for £70m verses Barvest about £20m. Worth mentioning again the Barvest sites were cherry picked out of admin', so should hold up better in a tough market. We shall find out by end of July I feel as that is the time frame indicated by Luminar..

More positively. WNN AGM today are in the same sector as mBlox and are very upbeat.

[lbo] 26/5/2005 09:02

Very true Curry! LOL

[currypasty] 26/5/2005 08:52

"I fear we're boring everyone to death here!"


lol


ps, not many here anyway !

[lbo] 26/5/2005 08:50

LOL.

"I fear we're boring everyone to death here! But on any reading of today's results from Luminar, they confirm what I have been saying; that AVA bought into Po Na Na at the peak of the cycle just as the sector was turning down and that spending and margins have been, and remain, under pressure, since"

SQC Research note
"That transaction fell squarely within the Avanti criteria; the business is profitable at the operating level and has sound growth potential. The added ingredient is that the Company invested at a time when the sector was at a low point and has backed a management team with deep knowledge and experience in the business and the sector."


Sure thing!

And why exactly are you so interested in Avanti then??????

[jeffian] 25/5/2005 11:19

LBO,

I fear we're boring everyone to death here! But on any reading of today's results from Luminar, they confirm what I have been saying; that AVA bought into Po Na Na at the peak of the cycle just as the sector was turning down and that spending and margins have been, and remain, under pressure, since.

"25 May 2005

Luminar plc
Preliminary results for the year 27 February 2005

Background

Luminar performed strongly up to 2003.......However, by 2003 the growth in capacity, combined with adverse changes in consumer demand and a significant increase in regulatory activity combined to significantly damage the sector's performance." (Edit: N.B. AVA bought Po Na Na in August 2003). "These trends negatively affected the Company's results.

In response to the difficult trading background, the Company is currently
undergoing a period of significant strategic and organisational change.

As previously reported, a modest recovery in trading around the middle of the
year was not sustained over the key Christmas period and sales for the year
reflected like for like sales down 4%.

Although market conditions remain poor, during the 10 weeks since the start of
the new financial year like for like sales for core nightclub venues and the
Entertainment Division have been flat.

Current trading and dividends

At this early stage in the year it is trading broadly in line with
its plans. However, its market sector remains highly competitive and the
business is managing considerable risks during its reorganisation.

Financial Review of year ended 27 February 2005

Turnover for the year decreased by 6.2% to £375.1m (2004: £399.7m)...Operating profit before exceptional items and goodwill has declined by 10.9% to
£67.0 (2004: £75.2m)...Operating profit margin before exceptional items and
goodwill amortisation has declined by 0.9 percentage points to 17.9%...Earnings before interest, tax, depreciation, amortisation and exceptional items (EBITDA) has declined by 10.6% to £98.9m (2004: £110.6m...EBITDA margin has declined by 1.3 percentage points to 26.4% (2004: 27.7%)."

I wish for the best for AVA shareholders. Time will tell whether AVA can exit this investment at a profit and that, after all, is what this is all about for them but be under no illusion, this is a tough old market to be selling into.

Regards, Ian

[lbo] 25/5/2005 09:15

LOL...well they have people wanting to buy their venues too!

AND GUESS WHAT!! Surprise! Surprise! THE TRADING IS HOLDING UP JEFFIAN! ;) Which reinforces what I have been saying all along about the consumer in the sector.

LONDON (SHARECAST) - Nightclub operator Luminarhas received a number of approaches for its Entertainment Division that could result in a sale.

"Following announcement of a strategic review, a number of approaches have been received which may result in the sale of the entertainment division. We expect to make a further announcement reporting progress by the end of July," said Luminar.

The group added that the planned disposal of non-core clubs making up the Enterprise Division is progressing with five of the units having been sold separately for £3m.

The Entertainment arm contains some of Luminar's biggest brands such as Chicago Rock Cafe and Jumpin' Jaks.

"Although market conditions remain poor, during the 10 weeks since the start of the new financial year like for like sales for core nightclub venues and the Entertainment Division have been flat. Margins have remained broadly neutral," said the group.

Results came in line with expectations with a pre-tax loss of £14m compared to £11m last time, while pre-tax profit before amortisation of goodwill and exceptional asset write off was £54m compared to £62m last time.

Luminar has raised the dividend by 10% to 13.79p.

[jeffian] 24/5/2005 20:45

Luminar (LMR) figures out tomorrow which should give some better indication of trade in the sector than ETI/M&B etc. They are among the best operators in the field of nightclubs/late-night bars, so if they're struggling, Barvest will not be immune. In the meantime, this today from Ultimate Leisure (ULG):
"Ultimate Leisure Group PLC
24 May 2005

Circular to Shareholders

The Company announces it has today issued a circular to shareholders to
requisition an extraordinary general meeting of the Company to seek
shareholders' approval to buy back shares.

Background to and reasons for obtaining authority to buy back shares

The Company, in common with many other bar and nightclub operators, has for some time now been experiencing extremely competitive trading conditions."

The Publican article also highlights another issue in this sector - refurbishment costs. Fashionable night-spots have a very short shelf-life and need to be re-furbished/re-branded/reinvented every few years to stop their customers drifting off to the next 'latest place'. A minor tart-up can run to six figures and a refurbishment will knock a hole in £500k-£1m. It is a very capital-hungry business. If AVA aren't able to unload their interest in Barvest, watch out for a request to dip into (your) cashpile to keep the show on the road!

Regards, Ian

[lbo] 22/5/2005 19:48

You say M&B "have no late-night bars". You need to look again at all of M&B

If you think Tim Clarke and M&B have no interest in late night bars then why does he bother to comment on it. Of course some of their buisiness falls into this category. And if you think Po Na Na is not a competitor. I am not so sure
I quote from the FT article that you have been so happily using "Tim Clarke, chief executive, said that, at residential sites, which account for 70 per cent of the business, sales were robust whereas high street performances were "sharply divergent".In central London, like-for- likes expanded by 10 per cent in the most recent period, boosted by tourist trade in the West End. At the other extreme, late-night circuit venues continued to suffer from weak demand and competition"

But hey he just comments on the late night bar area of the business cos he can!!! Perhaps he can comment on how Manchester United is trading as well next time! Sure thats of no relevence either to his business so he may aswell comment on that too;) LOL

As to the "lone voice" comments you made above...you have lost me here and I think you have lost the point of the argument again....SO I will again restate it!

I posted here the other day responding to a query from another poster. This was regarding his question if the recent decline in consumer spending and its effect on the Barvest valuation may have caused the recent weakness in the Avanti share price.I posted a response and have said all along that the recent results from EI and now MB had resulted in the view from many anyalysts that spending in the leisure sector was holding up better then expected and that this would not be a problem for the Barvest sale.

You posted that these results from the sector were of no relevence to how Barvest was or is currently trading!! But thats your opionin and I am sorry buts that a "lone voice" to believe that these sector results have no relevence for how the consumer is continuing to spend more resiliently in the lesiure sector then the retail sector.

Lastly, I never said the figures that I posted were from Barvest! This is the Avanti Capital BB...not the Barvest BB (LOL) and Barvest is just another investment soon to be sold! The point again that you seem to have missed yet again from my posting!!! (a nasty knack you seemed to have developed..so I will have to spell it out again!!) is that even without Barvest, Avanti Capital made an interim profit of just under £0.5m and when you take out the cash out of the current Avanti Mkt. Cap. it shows that no upside value has been attributed to Avanti Capital of a Barvest disposal!

Please must I always spell it out to u! ;)

Now if you want to talk about the Barvest figures and valuation...I can teach you that too! but I think you might need some time to take in all this information and I prefer to let the sale price will do the talking! ;)

As for your attempts also to talk down Richard and Julians Management abilities...I dont think I will bother to respond to such idiotic and obvious begrudging statements. But hey! (I again refer to the repeating pattern developing about you) you seem to think you know more then everyone! so What else should have I expected.

As for my "grip" on the facts. Personally, I would prefer to have my grip on the real facts about Avanti Capital any day over your delusions of thinking you have a grip on reality. Personally if I was you I would concentrate getting to grips with your overvinflated ego and delusions of granduer.

But you seem to know everything about everything!!
It must be great to be you!

Finanlly if its all so bad with Barvest and Avanti Capital and its Management.........WHY THE HELL ARE YOU HANGING AROUND!

LOL

Regards
LBO

[jeffian] 21/5/2005 18:38

If you say so, LBO. Mind you, at the risk of letting a few facts spoil a good argument:

1) M&B, whose brands include traditional pubs like Nicholson's and restaurants like Harvester, have no late-night bars/venues, so Tim Clarke is hardly likely to be talking down the "competition".

2) He is not a 'lone voice'. Besides me(!), within the last few days similar comments have been made by Ralph Findlay of Wolverhampton & Dudley and Ted Tuppen of Enterprise Inns, among others.

3) But besides all this, you say the "real crux" is the growth in profits at Barvest, eh? Unfortunately, you seem to have drawn this conclusion from the AFX abridged resumee of the figures. Had you gone to the accounts themselves, you would have seen that these figures exclude Barvest:

"During the period under review, Avanti Capital plc
(excluding the consolidated results of Barvest) made a profit
of #475,000 before exceptional items and warrant cancellation
payment."

Had you gone further into the accounts you would have found:


Profit & Loss.................... Avanti...Barvest....Adjustments...Group Total
..................................#000......#000..........#000..............#000

Profit on ordinary activities
before exceptional items...........475.......(367)............................108


Ooops!

I agree with the chap above who says this is all immaterial as long as Avanti succeed in selling their interest and getting out at a profit. It's just that having watched this lot from Cambury/ECI days, I don't think they have a clue. Having floundered around in the dot.com days and burned some shareholder cash, they then switched strategy and plunged into the world of leased fashionable late-night bars at the top of the cycle and I fear they never really understood what they had got hold of. Let's see what comes out of the sale process, but I'm afraid that potential buyers will have a firmer grip on the facts than you seem to!

Regards, Ian

[lbo] 21/5/2005 15:28

Tim Clarke can't really pass comment on how Po Na Na is trading then we can on his late night bar trading until we see the results Of course some late night venues may suffer from weak demand but the reality is they were suffering before any consumer slowdown and were suffering because they were bad venues and conumers vote with their wallets and prefer the Po NA NA venues over others. Remeber Po Na Na is the competition he is referering to. I think you will find that its just another excuse for a poor performance in their late night bar division and may not be reflective on the whole sector but a reflection on how wrong their late model is. People were choosing Po NA Na venues over theirs before this quote overwhelming deterioration in consumer confidence and hopefully they will continue to do so.

The comments he made to the FT were obviously an attempt to flatter his abilities and the M&B results during a what he refers to as difficult time.He is also playing on the negative sentiment as a means to talk down the investor expectations going forward. We all know that fiscal policy has tightenend and its true that we all agree that their is a slowdown in consumer spending but recent results in the leisure sector have shown that the sector is holding up better then previously envisaged and although we all agree performance in different areas and under different managment will be as you quoted "sharply divergent", the fact still remains, that consumers are continuing to spend in the sector in a more resilient manner then retail spending. As for all the analysts that your talking about in the article or FT saying that spending in the sector is not showing more resilience then the retail sector, please! point them out again, beacuse I can't see them being referred to in the article! The fact is quite the opposite in the City and the lesiure sector notes which have been put out by many of analysts over the last few days reinforces this view.

LONDON (AFX) - Avanti Capital PLC six months to December 31 2004
Sales - 10.36 mln stg vs 8.20 mln
Pretax profit before exceptionals - 475,000 stg vs 215,000

[jeffian] 20/5/2005 19:38

So it's just me, is it, LBO? Well I've just seen the report in today's FT on the M&B results and it also seems to be Tim Clarke (CEO of M&B), various analysts and the FT:

"Growing food sales....helped M&B....counter what it called "overwhelming evidence of a deterioration" in general consumer confidence....Tim Clarke, chief executive, said that.....performances (of different bar sectors) were "sharply divergent".....At the other extreme, late-night circuit venues continued to suffer from weak demand and competition". Po Na Na falls firmly within the latter category.

I think you will agree that that is pretty well what I was saying in post 51. If I'm wrong, I appear to be in good company!

Regards, Ian

[lbo] 20/5/2005 08:02

Well if you think its no reflection on the fact that consumers are still spending in the leisure sector to a greater degree then retail sector then thats up to you. I agree things are bad and may get worse before they get better

But this is a view that many have in the City on the sector from the recent results and if anything this is a bit of a postive for Po Na NA

[adam] 20/5/2005 01:26

I agree with jeffian, though the point is what price. barvest equity ~£600k from memory. The Barvest licenses will be quite good ones as they were cherry picked from the last time PoNaNa went into administartion. Of course we don't know anything for sure, but seems likely a sale possible assuming Avanti do not have unrealist price expectations.

[jeffian] 20/5/2005 00:29

No I didn't miss the point at all, LBO. ETI are one step removed from the consumer because it is their tenants who have to cope with short-term spending patterns. The fact that they have continued to show extremely strong growth is not an indication that consumer spending is strong but a function of their business model which benefits from extremely shrewd and sophisticated financial engineering including huge debt leverage, low fixed long-term interest, property 'churning' to constantly upgrade the average size/income of their pubs, and high levels of cash generation. It is also a common misconception to draw conclusions from "the sector" when those companies lumped together often have little in common; thus the tenanted pubco's (ETI/PUB which generate income from rents and wholesale profits) are completely different to the Managed pubco's (JDW etc. who are retailers) who are different from conglomerates like WTB (business hotels, health clubs and pub/restaurants) and late-night bars and 'venues' (Po Na Na, ULG etc.) which are entertainment-driven. M&B results don't reflect that all is well with consumer spending in 'the sector', as they specifically say in their results they reflect a shift in M&B's retail offer towards food and wine while beer sales are down. This ties in exactly with declines in the more traditional 'beery' trade reported by JDW etc. So my take on it is that there IS a squeeze on consumer spending, that those at the sharp end such as Po Na Na will feel the pinch first and that those who are managing best are those who are able to adjust their offer to their consumers' demands (such as M&B say they have done) or are not reliant directly on the consumer for their income (ETI etc.). As I said in #48 above, if you are taking comfort from the results of ETI and M&B in relation to Po Na Na, you are comparing chalk and cheese; this is the longer version!

Regards, Ian

[lbo] 18/5/2005 18:55

Think you missed the point!

Not in terms of business model!!! LOL ....but as reflection on how consumer spending (mentioned by Adam as a possible cause of the recent share price fall) is holding up in some sectors better then others!

Regards LBO!
LOL

[jeffian] 18/5/2005 10:37

Absolutely no comparison. Tenanted community pub estate v. directly managed late night bars/'venues' = chalk v. cheese.

Regards, Ian

[lbo] 18/5/2005 09:29

Surely the recent Enterprise Inns results bode well for the Po NA NA sale too

[adam] 16/5/2005 13:06

Possibly - Intresting snippet on ULG posted on paulypilot



Which makes an interesting comparator. Interim Results


Now turnover about double Barvest and profitable, partly down to scale I would suggest, also trading at slight premium to NAV, and m/cap is £65m. I am speculating that it would seem sensible if ULG are on the block that the buyer would want to mop up the competition into the same bucket....

[currypasty] 16/5/2005 12:33

update on ponana due ?

[adam] 26/4/2005 20:29

To add to the bad news flow Whitbread warned, and in the wider consumer market Carpetright is struggling. I would think that Barvest and others will be struggling a little. The worry is that with a fixed cost base that a drop in LFL even without a squeeze on margins translates into a large decrease in operating profit. Not withstanding this there seems to be a lot of interest in the Luminar and Spirit disposals going on what I read in the papers.

[adam] 21/4/2005 14:19

May be it is proving difficult to shift at a decent price given the consumer slowdown?