Herbel Group: Property market impacting group
The Herbel group is a Belfast-registered family-owned company, combining significant property investment assets along with extensive retail fast food operations as part of the Kentucky Fried Chicken (KFC) franchise. The group is the largest KFC franchise in Europe, with outlets in the Republic of Ireland, the Isle of Man, Scotland and South West England, as well as in Northern Ireland.
The group holds property investment assets, located in the UK and the Republic of Ireland, in eleven subsidiary companies. Four subsidiary companies combine fast food outlets with the holding of property assets. In 2012, the financial results were sharply affected by a further write-down in the value of investment property and the taking of exceptional charges against the profit and loss account.
Operating profit is reported here before a deduction of exceptional charges of £7m in 2010, £8.6m in 2011 and £3.7m in 2012. When these exceptional charges are included, pre-tax results in the three years reported here were, in 2010, a loss of £11.6m, £5.6m in 2011, and £2.9m in 2012.
The cumulative impact of pre-tax losses and the write-down of the value of assets as carried into the balance sheet, hit the balance sheet value of shareholders' funds, which have fallen from £74m at the end of 2009 to £39m at the end of 2012. The group has a large portfolio of physical assets whose balance sheet value, affected by the significant changes in the value of commercial property, fell from £202m in December 2009 to under £164m at the end of 2012. This is a fall, or revaluation, of nearly £38m in the last three years.
The average number of employees rose to an average of 1,227 people in 2012 – a further increase of 11%. Capital spending in 2012 fell to just under £2m. In the previous three years, 2009-2011, it was £9.4m, £5.1m and £3m respectively.
The level of bank lending underpinning the businesses, although slightly lower at the end of 2012, remained high at nearly £106m.