Barkby Group has said that, although its hospitality operations are being hit by measures to contain the coronavirus, the impact on the business will be “minimal”.
Following the government ordering the closure of many retail and leisure businesses to prevent the spread of Covid-19, Barkby has closed its five pubs and its Workshop coffee premises.
Despite closing, Workshop Coffee is “trading at record levels”, and due to the government interventions announced to mitigate the economic blow of businesses closing physical premises (such as business rates relief and retail grants), Barkby believes this will not have a “material cash impact” on full-year earnings.
However, it said earnings from the company’s pubs will be “significantly lower” in its full-year results. Before the closure of these pubs, trading was “marginally behind expectations” due to the delay of the acquisition of another pub.
Barkby Group executive chairman Charles Dickson said: “Our commercial property development business is by far the largest contributor to the group’s profitability, so while we are undoubtedly seeing our hospitality businesses impacted by the current Covid-19 pandemic, the board expects the impact of this on the group’s full-year earnings to be largely mitigated by the resilience of our commercial property development business.
“Our business is well positioned financially and despite the current uncertainty, we look forward to the future with confidence.”
The comments were made in Barkby Group’s trading update for the seven months ended 31 December 2019.
It reported that turnover increased to £7.64m, up from £1.82m the previous year. This was down to the acquisition of Centurian Automotive in February 2019 and the addition of three new pubs.
The group would have “made a small profit” in its trading update if it wasn’t for the legal and due diligence fees associated with a separate takeover of Disckon Controlled Entities for £30.6m. This cost amounted to £211,000 in addition to £250,000 of “other restructuring costs”.
The group reported a pre-tax loss of £448,530, compared with a £17,880 loss in the previous year.
The landlord said it had faced “a number of headwinds” over the period, which included uncertainty around the General Election and Brexit, as well as a quieter October and November period.
However, December was a “strong month for the pubs” and meant business from these assets was only “marginally behind management expectations”.
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