Oakman Group chief executive Peter Borg-Neal has given an update on the company’s response to sector challenges, improvements in trading, and a future liquidity event for shareholders.
The Journeyman, an Oakman Group pub in Gerrards Cross
Addressing shareholders in a letter, Borg-Neal commented that “group sales for the last financial year (June 2023) were 8% ahead of the prior year at just under £70m. In addition, like-for-like sales for the core Oakman Inns business were up 4.1%.”
However, consistent with the wider sector, Oakman’s profits for the financial year ended in June 2023 were impacted by inflation, with site EBITDA down from £12m to £9.8m.
He commented on performance improvement initiatives to remove complexity and drive business efficiency. Key actions include enhancing pricing policies, delivering cost reductions, refocusing training, improving employee engagement, and optimising labour scheduling. The aim is to increase site EBITDA in the current year by £2.5m and reduce central overhead costs by £1.3m.
The benefits are beginning to be delivered in the business. Borg-Neal said: “Q1 FY 2023-24 was the most profitable quarter since December 2021. Furthermore, we are already tracking 10% ahead of the prior year for Christmas bookings.
“We have also consolidated our corporate structure, which had become unnecessarily complicated since its inception over 16 years ago, and this has reduced administration and management overheads.”
Oakman, an employer of more than 1,700 people across its 42-site portfolio, has recently been recognised by the Princess Royal Award for Training Excellence, evidencing the progress being made by the company’s award-winning training and development academy.
Borg-Neal reported that two new sites had opened successfully in the summer. The Journeyman in Gerrards Cross and The George in Ludlow are trading ahead of expectations, with weekly sales (net of VAT) in excess of £60,000 and £40,000 respectively.
The company’s pipeline includes two additional sites with planning permission — Bush Hall in Old Hatfield and the Beech House in Epsom. In addition, lease terms have recently been agreed for Batchwood Hall in St Albans.
To assist with the development of these new sites and refinance £5m of third-party debt, Borg-Neal announced the launch of a new £10m loan note secured against the company’s substantial property portfolio.
The company has already discussed this approach with key investors in Oakman, and strong progress has been made in relation to raising approximately £5.5m, which exceeds the threshold required to repay the bank.
Oakman intends providing further details on this refinancing, and how it will unlock a liquidity event for shareholders for those investors who so wish, at the forthcoming AGM.
Chairman, John Leslie, said: “Peter stepped back into the role of CEO eight months ago and has thrown himself at the challenges with vigour, determination, and resourcefulness. There is no doubt that Oakman is very well regarded in the industry as a top-quality operation and has high-quality assets.
“We are confident that we will deliver our long-promised liquidity event at some point in 2024, with further details to be announced to shareholders shortly.”
