Oakman CEO demands VAT reform as sales rise
The group reported sales to the week ended 25 March 2023 were £50.6m, which comprised a 9% rise versus FY 2021-22 with like-for-like (lfl) sales down by 1.9% but, when adjusted for VAT, total sales were up 17% and lfl up 6.7%.
Compared to pre-Covid (FY 2018-19), total sales were 48.6% higher and lfl sales up 15.3%.
The business will have 40 sites when its two new venues the Journeyman, in Gerrards Cross, and the George, in Ludlow, open in July this year.
Borg-Neal said: “The continuing strength of our sales performance underlines the compelling attraction of our premium pub business.”
Strong growth
He continued: “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.”
Hampered at Christmas
The group also announced full-year figures for its FY2022 that showed sales were up versus the prior FY by 61% to £54.4m, total sales v pre-pandemic (FY2018-19) rose by 55.4% and like-for-like (lfl) sales increased by 19.9%, company sales outperformed the competitor set by 13% during the year (per Coffer Peach) and adjusted EBITDA (earnings before interest taxation, depreciation and amortisation) rose by 49.2% to £5.4m.
Oakman Group director Dermot King said: “As the country emerged from restrictions due to the coronavirus pandemic, the business began the year strongly, supported by the Government extension of a temporary VAT reduction and business rates forgiveness. During the year the number of sites operated by the group increased from 35 to 38.
“The three new sites are: the Rose Inn, Wokingham; the Grand Junction, Buckingham; and the Hesketh Arms, Ruffold. The number of ‘pipeline’ sites increased to five.
“The key Christmas trading period was severely hampered by the prevalence of the Omicron version of the Coronavirus and what effectively became a pre-Christmas lockdown. As Government support measures ended from early 2022, the industry suffered generally from a shortage of workers, and although we were perhaps less affected than others, we limited opening hours and trading capacity.”
