Moroccan magic - bright future for Po Na Na

The future looks bright for Po Na Na as it exploits the late-night bar sector.

As an Islamic country where alcohol is rarely drunk, Morocco wouldn't seem to have much to offer the British pub and bar industry. After all, the national drink is mint tea, although one of its favourite dishes, the kebab, has always played an important part in a traditional night out pubbing.

Despite the Moroccan lanterns, luxurious fabrics, carved artefacts and "bedouin-style layout" in Po Na Na Group's bars and clubs, few customers appreciate the subtle North African theming. Even the ubiquitous cartoon face of a man in a fez, who looks like a cheeky version of Peter Lorre in Casablanca, isn't enough.

However, the venues are not really about bedouins or couscous but simply offering a good night out, which has made Po Na Na one of the most successful operators to exploit the late-night bar sector.

Last month, City analysts looked beyond the headline figure of £2.5m pre-tax profits over the year to March 24 and enthusiastically predicted future growth.

Po Na Na's chief executive, Christian Arden (pictured)​, highlighted a 27 per cent increase in operating profit to £3.05m and a 36 per cent rise to £4.5m for earnings before interest, tax, depreciation and amortisation (EBITDA). With the acquisition of seven nightclubs from Luminar for £2.47m a year ago, turnover jumped by 57 per cent to £30.2m.

The pre-tax profits were partly affected by the poor performance of Po Na Na Hammersmith, the former Hammersmith Palais in West London. The group was originally involved in the landmark club as a joint venture, but last year it took full control before reopening it in February after a major refurbishment.

The 2,230-capacity venue now has six main bars, a lounge branded as Bam bu da and a bar providing a soundproofed view of the dancefloor. While it made gross sales of over £100,000 in the week ending February 18, this fell to £45,000 within two months.

The venue produced a trading loss of £317,000 in the first half of last year and a further deficit of £227,000 in the final 37 weeks of the financial year.

Since then, Po Na Na has turned the business around and is on course to achieve an operating profit this year. This has been achieved through several promotions and events, including the highly successful SchoolDisco on Saturday nights when customers dress up in school uniforms and dance to 1980s tunes.

The other blow to pre-tax profits came from the one-off cost of stepping up from the small Ofex shares market to float on the stock exchange's alternative investment market (AIM) in August last year.

Despite a number of medium-sized nightclubs, the bulk of the group's 58-strong estate is made up of Souk bars and Fez clubs.

The roots of the business date back to a restaurant opened by Christian Arden in Kings Road, Fulham, London. He teamed up with an ex-colleague, Rob Sawyer, who developed the basement into a bar in 1992, naming it Souk after the Arabic word for bazaar.

After two years, the bar was sold to pub operator Grosvenor Inns but, in 1996, Christian and Rob bought the business back and Po Na Na Group was born. Grosvenor Inns' former chief executive Gary Pettet is now group chairman.

Within 15 months, the estate grew from two to 10 and now stretches from Aberdeen and Hull to Bristol and Newport. Last year, it was named Retail Brand of the Year at The Publican Awards.

With plans to open eight bars and a club a year, Po Na Na is predicted to double pre-tax profits for 2001-02 to between £4.5m and £5m.

According to analysts at broker WestLB, the company "offers excellent medium-term value at current levels based on its high-return profile and significant growth prospects". Their report added: "Margins and returns should grow in the current year, largely as a result of tight cost control, tail-end disposals and larger openings."

So far, Po Na Na has sold bars in Croydon and Cardiff and has put a third in Swansea on the market. It is also selling two of the clubs bought from Luminar and has sublet its Manchester style bar Ampersand under a management agreement.

With the late-night bar sector continuing to grow, Christian, Rob and the rest of the directors remain confident that the company will live up to its Arabic name which means "magical".