Richoux posts FY loss, raises prospect of calling on shareholders for further funds

Shares in restaurant operator Richoux slumped more than a quarter as it raised the prospect of calling on shareholders for further funds

This was due to the cost of converting or refurbishing restaurants and of closing restaurants that were underperforming, the reduction of income due to temporary closures and the current trading climate.

"The board has had informal discussions with a number of the company's key stakeholders, who have indicated that it would be their intention to support such a fund raising," the company said in its full-year results statement.

"We propose to seek the necessary authorities to allot shares in connection with such a fundraising at our 2017 Annual General Meeting."

The company's full-year adjusted EBITDA fell to £0.2m, down from £1.64m. Turnover increased to £13.32m, up from £13.3m. Pre-tax loss was £6.7m, from a profit of £365,000.

A strategic review saw certain restaurants either closed or rebranded and led to an impairment charge of £5.04m and an onerous lease provision of £420,000.

"Like many restaurant groups in the casual dining sector, trading in the first quarter of this year has been difficult," said Richoux.

"In addition, during this period trading in some of our restaurants was interrupted whilst we converted or refurbished them."

It said the impact of temporary closures would continue during Q2.

"Whilst our new Richoux and Friendly Phil's restaurants have only been trading for a brief period, the early signs from them are encouraging."

At 14:20 BST, shares in Richoux were down 27.27% to 20p each.