The mini-furore that accompanied last week’s filing of the accounts of Gordon Ramsay Holdings (GRH) for the year to August 2008 was, it turns out, entirely misplaced. Newspaper coverage centred on the decline in profits year on year, and we concentrated on why sales were seemingly so much less than GRH had forecast. Now the actual GRH accounts are to hand, however, it is clear that all such commentary – while correct – was beside the point.
It was implicit in all the coverage that GRH is the holding company of all Gordon’s UK restaurant interests. In short, everyone assumes GRH is shorthand for “Gordon UK Inc”.
This is just wrong. What no one seems to have noticed is that Gordon’s newer UK businesses are simply not included. Thus, for example, while the results of the original (and best) of the gastropubs, the Narrow, are ‘consolidated’ (to use the technical term) into the GRH accounts, those of the two more recent pubs and the dismal Foxtrot Oscar are not. Nor are those of Plane Food, Murano or York & Albany.
Thus the GRH accounts give us some sort of view of about half the total London picture. From a profit perspective, one would guess it’s the better half too, as GRH does include all the most famous, longest-established – and presumably most cash-generative – of the Ramsay restaurants. These, on a crude analysis, were modestly profitable (a pre-tax margin of some 2.6 per cent). It’s as well to bear in mind, though, that these accounts ended, in August, before the economy went really sour: Lehman Brothers collapsed the following month.
The GRH accounts, however, tell us nothing about the more interesting question of how the new ventures have fared, and their effect on the London business as a whole. But whereas the profit and loss implications of the newer ventures do not appear in GRH’s accounts, much of the capital involved does. The accounts record that a staggering sum – more than £15 million – had, in August 2008, been advanced by GRH to other Ramsay ventures.
To put it another way GRH is bankrolling these ventures (at least in part), but is not accounting for their results – they are “off-balance sheet”. In such circumstances, to consider the accounts of GRH – as all commentators did last week – as if GRH were some sort of meaningful entity, in the sense of being a whole business, is illogical.
GRH, of course, is a private company and it comprises what Gordon Ramsay and Chris Hutcheson, his father in law, want it to, neither more nor less. Anyone dealing with GRH, however, would need to be aware that its capital position is very dependent on the recoverability of the sums advanced to non-GRH companies. The funds extended to non-GRH Ramsay ventures stood in August 2008 at over five times GRH’s capital base (which is some £2.7 million)!
One thing cautious creditors, for example, could therefore do is look at the accounts of other relevant companies. One of these looks to be very much more important than all the rest. Gordon Ramsay Holdings International Limited (GR International) appears to be the holding company of most of the major Ramsay restaurant interests – both international and domestic – which are not included in GRH. Sight of those accounts might not tell one everything, but – if one were trying to formulate a more complete picture – it would be a good start.
So off to Companies House then, to see the results of GR International, which the law required to have been filed on 29 June. Well… Surely not? The record says they are “overdue”. But didn’t Gordon tell the Sunday Times that, henceforth, accounts would be filed on time? But he, of course, was explicitly talking about GRH, and GR International, legally speaking, is another company altogether.
We’re told we may expect GR International accounts “within a month or so”. Only then will any sort of full picture begin to emerge.
Follow hardensbites Follow hardensparty
Become a Harden's fan
