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Morning Briefing for pub, restaurant and food wervice operators

Thu 10th Feb 2022 - Oakman Group reports healthy growth, new financing deal and strongest ever pipeline
Oakman Group reports healthy growth, new financing deal and strongest ever pipeline: Oakman Group, the Dermot King-led pub-restaurant operator, has reported healthy growth, a new refinancing deal and its strongest ever pipeline. Oakman has completed a £29m refinance of its freehold estate with Cynergy Bank providing new funding of £18m. Steven Kenee, chief investment officer of Oakman Group, said: “The transaction significantly reduces our cost of capital, simplifies our corporate structure, and further strengthens the foundations from which our ambitious plans for the group will grow.” Steve Crosswell, relationship director, Cynergy Bank, added: “This is a landmark deal for Cynergy Bank and one we were keen to transact with the Oakman Group, which we believe to be an outstanding operator.” Oakman has also made further progress with strengthening its balance sheet via the launch of a FCA regulated share issue that has seen more than 300 new shareholders join the company since it was launched on 17 December 2021. Oakman said the group has recently completed significant refurbishments of two sites and is due to open two new sites within the next two months, in Buckingham and Tring. It has also secured, what the directors believe, is its strongest ever pipeline of new sites, the development of which will increase the size of the group by some 25%. Despite the impact of Omicron on the key festive period, total sales (net of VAT) or for the 31 weeks ending Sunday 6 February were £37.9m – a 74.3% growth over last year when the business was forced to close. Compared with the same period two years earlier, this represents a total growth of 28.3% and like-for-like growth of 12.0%. Taking into account and adjusting for VAT reductions, the Oakman Group’s like-for-like sales were 8% up (11% if you ignore the three weeks leading up to Christmas). The company said encouragingly wet sales have increased which, given the lower staff costs, will have a disproportionally positive impact on profits. Weekday accommodation sales are “unsurprisingly” below budget in line with abnormal working patterns, but the company has mitigated this issue by putting increased focus on the leisure market for our rooms.” Oakman has also announced a new board structure with immediate effect consisting of six members split into three executive directors, (Peter Borg-Neal, executive chairman; Dermot King, chief executive; and Steven Kenee, chief investment officer) and three non-executive directors (John Leslie, non-executive vice-chairman; David Sherratt, non-executive director; and Jane Bentall, non-executive director). Bentall joined the board last week. She began her career with KPMG before joining The Rank Group. She then joined Bourne Leisure, in 2000, where she rose to be the group finance director as well as managing director of its Haven Holidays division. She left Bourne Leisure last year after the completion of a circa £3bn sale of the business to Blackstone.” Borg-Neal said: “All three of our non-executive directors are investors in the business, and it’s our intention is to add a fully independent non-executive director to the board in due course and to form an advisory board made up of the investor directors who were on the original Oakman Inns & Restaurants board and other major shareholders. We might also invite specific individuals who can bring specialist knowledge to this board. It is very important that the group board ‘directs’ rather than ‘manages’ the business. The day-to-day running of the company will be undertaken by an operating board. The membership will be the 12-person senior management team.” Oakman, which employs more than 1,400 people across its 36 existing sites, has retained its three star status in this year’s “Best Companies” to work for list. It is also proactively mitigating employment issues associated with the hospitality industry via the recent opening of the company’s “Oakman Chef Academy” based at The Woburn, and run by chef director, Ross Pike. The academy gives newcomers to the industry the opportunity to retrain in a new career with a guaranteed job at the end of the course. The company also has 20 apprentices on programmes including degree apprenticeships at base camp and with some of its senior operators. Oakman has also developed its green credentials as it breaks new ground with the creation of a kitchen garden at The Akeman Inn in Buckinghamshire. Borg-Neal said: “This prototype development aims to achieve a multiplicity of objectives. Key is an exploration of how the company can shorten the supply chain and utilise local. Furthermore, it will act as an education centre and for engaging with the local community. If the kitchen garden is a success, Oakman Group will look to replicate the idea at the other sites across the estate where sufficient land is available.”

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