Abokado, the Kings Park Capital-backed healthy eating group “swallowed its pill early” by disposing of non-core sites earlier this year, chief executive Mark Lilley has told MCA.
Lilley said the decision to exit five sites ahead of the more recent flurry of problems facing the sector had enabled Abokada to secure total premium proceeds of £260,000 and be in a stronger position coming into 2018.
He anticipates a further softening of the London property market, and ample opportunities for Abokado in 2018, as some businesses dispose of sites and others fall into administration.
He was speaking ahead of the publication of financial result for the full year to 31 March 2017, where the 29-strong group recorded turnover up 10% to £14m, gross profit up 7% to £5m, and an increase in adjusted EBITDA to £600,000.
Lilley told MCA: “We feel like we swallowed our pill early. All the headwinds consuming the sector now, we were experiencing 12 months before.
“In a way our trading has been acyclical. At the back end of last year when the market appeared to be trading well, we were feeling those pressures. Now we’re back in growth and positive like for likes and the market seems to be in freefall.”
He added: “Emotionally it’s a difficult decision to make to dispose of sites but the majority we should have got rid of two, three, four years ago. They were never going to generate a meaningful return
“The changes we’ve experienced in our business model have made it very clear that sites that were marginal are now not, and it’s made the decision to dispose of them much easier.
“Having done it, it feel great - it’s like a extracting a poison. We now have stable, profitable, cash generative core estate that we can focus our attention on growing.
“It’s been a cathartic experience, and I won’t delay making those decision again in the future.”
Lilley said Abokado was now in a stronger position to grow in 2018.
He said: “We are looking at 2018 as a year of growth having come off the back of a year of tidying up.
“There are clear signs the property market in London is softening, and 2018 is about doing what we do, growing the business, and signing up some great sites.”
On the current problems facing the sector, he said: “Everyone knows there are businesses that are not going to survive the next three to six months.
“There will be a bit of a shake out there, people trimming their estates. There will be lots of opportunities.
“We have been keeping our powder dry for second half of 2017, thinking we’re happy to sit on our hands waiting for better opportunities. I think there could be a period of two or three years when it is a buyers’ market.”