Oakman back to strong growth but ‘converting sales to level of profit planned much more difficult’, two new sites to open this summer: Oakman Group said it has returned to strong growth in recent days following a weather-affected February and March, but that “converting our sales to the level of profit we have planned for has been much more difficult”. The first 38 weeks of FY 2022/23 has seen sales of £50.6m, which versus 2021/22 saw +9% total sales and -1.9% like-for-like sales. VAT adjusted sales versus 2021/22 saw +17.0% total sales and +6.9% like-for-like sales. Sales versus pre-covid 2019 were +48.6% total sales and +15.3% like-for-like sales. Oakman Group chief executive Peter Borg-Neal added: “The continuing strength of our sales performance underlines the compelling attraction of our premium pub business. Following an excellent Christmas trading period, we performed better than expected in January. February and March have been a little softer versus last year, but we believe that’s weather related, and indeed, in recent days we have been back to strong growth. Converting our sales to the level of profit we have planned for has been much more difficult. The pace and intensity of the inflationary pressures that have impacted our sector combined with the increase of VAT to 20% make a pretty toxic mix. The VAT on hospitality in the UK needs to be brought down in the way it has been across the rest of Europe. In Ireland it is 9%, in France 10%, in Sweden 10%, in Belgium 6%, I could go on. We were told prior to Brexit that EU regulations were the problem, so why hasn’t this ridiculously onerous pre-profit tax been dealt with? Without reform of VAT, the ability of the hospitality sector to invest in growth and contribute to economic recovery will be severely limited. As a sector, we need to stop campaigning for short term government interventions and instead focus on the unfairness of the VAT regime. It is a nonsense that a packaged ready meal from a supermarket is not subject to VAT but a Scotch egg in a pub is.” It comes as the group reported turnover and Ebitda exceeding pre-pandemic levels for the year ending 3 July 2022, as its losses narrowed. Turnover rose by 61% from £32,363,476 in 2021 to £54,418,788. This compares to £34,827,472 in the pre-pandemic 15 months to 30 June 2019. Total sales were up 55.4% and like-for-like sales up 19.9%. A pre-tax loss of £3,849,629 in 2021 was narrowed slightly to a loss of £3,268,491 (2019: loss of £8,056,003). Adjusted Ebitda increased by 49.2% to £5,370,742 from £3,599,927 in 2021 (2019: £3,058,329). No dividends were paid (2021: nil). The company received £227,117 in government grants (2021: £6,553,426). In November 2022, a new loan of £1.275m from SPC (2021) was drawn at a cost of 9.75% per annum, repayable in October 2024. The following month, the Senior Term Loan Facility of £4.7m from Santander dated July 2017 was repaid in full. In February 2023, Santander extended the maturity dates for the Growth Capital Loan Facility and Coronavirus Business Interruption Loan to April 2024. The company said despite cost inflation and other headwinds, “the business consistently outperformed our competitor set and performed strongly given the pressures outside of our control”. In order to retain its best staff, it created an environment to of “paying as much as we could afford, rather than as little as we could get away with” and developed a Kitchen Academy, which “has provided us with the employee resources to continue our growth”. During the year, the business opened The Rose Inn in Wokingham and The Grand Junction in Buckingham, together with The Hesketh Arms in Rufford, Lancashire, taking its site count from 35 to 38. Since the year-end, the company has added two further leaseholds to the operational estate, The Beech House in Watford and The Navigation Inn in Lapworth, and acquired the rights to two further sites, taking its undeveloped pipeline to five sites. Work has now begun on The Journeyman in Ludlow, Shropshire, and The George in Gerrards Cross, Buckinghamshire, with both due to open in July 2023. Average net sales per site when open after lockdown amounted to £40,000 per week. In his statement accompanying the accounts, director Dermot King said: “The directors believe that because the company’s business outlets are mostly situated in suburban affluent areas, its customers’ propensity to spend on eating-out is not impacted as severely as the general UK consumer. Also, the commodity element of the company’s energy contracts were fixed until May 2024 just prior to the war in Ukraine, while increases in food costs have been mitigated through menu changes and moving supply routes, all of which provides some protection to the economic threats imposed by the cost of living crisis. The directors are encouraged by the fact that wholesale energy prices are now lower than their pre-war levels and that the Bank of England economic forecasts are for the UK economy to return to growth in the last quarter of 2023. Nevertheless the directors expect the trading environment to remain challenging throughout 2023 and in to the first half of 2024.” Oakman Group features in the Propel Turnover & Profits Blue Book. Its turnover of £54,418,788 in the 125th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. 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