Oakman CEO Peter Borg-Neal has formulated and begun to implement an action plan to improve the group’s financial position following a decline in profits.

The founder of the premium pub group, who recently returned to lead the company after a period as executive chairman, is looking to reduce central costs and implement a sales building plan as key parts of the strategy.

He recently bought in a new CFO, Tarquin Williams, who has listed company experience, with City Pub Group, and is expected to make further board changes.

Former CEO Dermot King, who took an interim finance director role, is supporting Tarquin’s induction, though no decision has been made on his long-term role.

The plan ultimately involves Oakman building out its pipeline, improving profitability and realising an exit, once market conditions improve and the best value can be achieved.

A trade sale will be considered, but no instructions for marketing have been made and there are no timetables set for realising this or any other option, Borg-Neal said.

He was speaking after MCA columnist Dominic Walsh suggested Oakman’s expensive estate and squeezed margins could make a sale difficult. 

Oakman recently reported full year trading figures to 3 July 2022, with sales up by 61% to £54.4m.

In comparison to 2019, total sales are up 55% and lfl sales up 19.9%. Adjusted EBITDA was up 49.2% to £5.4m.

However, converting sales to profit been “much more difficult”, Borg-Neal said, with inflationary pressures and VAT at 20% making for a “pretty toxic mix”.

The company recently raises £5.3m from shareholders to provide a “cash buffer”.

The group is also on-site in Ludlow and Gerrards Cross where it is investing £4.8m in two new Oakman Inns.

“Plan A remains to return to the business plan we had going into 2022 before everything changed, albeit there is at least a year’s delay,” he told MCA.

“The plan was to build out our pipeline and then look at exit options with a trade sale or an IPO, although we would not rule out PE.

“We believe that we need an improvement in the external environment – in addition to any internal performance improvement – to bring a successful conclusion.

“The 28 strong Oakman Inn estate – measured by average sales and average EBITDA – is one of the finest in the industry,” he continued. “Our assets are coveted by many of the larger pubcos.

“If someone is prepared to pay tomorrow’s price today, we will listen. But we will not sell for cheap.

Borg-Neal said an IPO “does not appear to be an option”, because although Oakman’s enterprise value is large enough to make it viable, the business will need to show evidence of an upturn in fortunes before it can expect to achieve an “acceptable level of value for our shareholders”.

“In any event, the markets are not in great place right now,” he said.

An institutional refinance of Oakman’s current debt was “not realistic” given current market conditions, though he said the company is looking at some options around private debt.

In terms of private equity, he said the main players in the market were looking to buy cheap, which “probably rules out this option unless someone is prepared to be very creative”.

With Retail Equity Raise having been “very successful” for Oakman in the past, it is an option the company might return to when economic conditions improve.

“Ultimately the focus remains on ‘Plan A’. Fight our way through the current difficult period, wait for external improvements and then press on towards liquidity options,” he said.

He emphasised that he was not working to any timetable or deadline.