Oakman Group profits fall despite jump in sales
The aim is to increase site EBITDA in the current year by £2.5m and reduce central overhead costs by £1.3m
Oakman Inns and Restaurants has reported that its EBITDA dropped from £12.0m to £9.8m for the last financial year (June 2023) as its profits were impacted by inflation.
However, its group sales 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%.
The group has now decided to focus 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.
Oakman, an employer of over 1,700 people across its 42-site portfolio, opened two new sites in the summer and it confirmed The Journeyman in Gerrards Cross and The George in Ludlow are trading ahead of expectations with weekly sales (net of VAT) in excess of £60k and £40k 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, Oakman CEO Peter Borg-Neal has 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 to provide 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.
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.”
John Leslie, chairman, added: “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.”