BARK.L Regulatory News (BARK)

28 November 2022

Barkby Group PLC

("Barkby", the "Group" or the "Company")

Trading and Strategy Update

Barkby Group PLC (AIM:BARK), the diversified business group, is pleased to provide the following update on trading and an update on the Group's future strategy.

Trading Update

Barkby Real Estate

· The focus of the Group remains on building and scaling a high-quality, substantial portfolio of modern, ESG compliant Roadside real estate investments.

· Since July construction has progressed well at our commercial schemes at Wellingborough and Maldon.

· Wellingborough is scheduled to complete construction next month and it is our intention to hold the development on our balance sheet as an investment as we grow a high-quality commercial property portfolio.

o  The total contracted rent is £234,000 per annum with contracted tenants being Greggs Plc, Formula One Autocentres Ltd, City Plumbing Supplies Holdings Ltd and C. Brewers & Sons Ltd. The WAULT is 12.9 years and all leases are RPI or CPI linked.

· Maldon is scheduled to complete construction by April 2023, we will also hold this development on our balance sheet.

o  The total expected rent is £268,000 per annum with contracted tenants being Costa Coffee Ltd, Formula One Autocentres Ltd, Toolstation Ltd with the remaining unit under offer. The WAULT is 12.1 years and all leases are RPI or CPI linked.

· A revised planning application has been submitted for a 27,000 sq.ft. scheme at Swindon, we expect decision in Q1 2023. The scheme will be anchored by a national Drive Thru operator with a trade and industrial occupiers taking the remainder of the site.

· Given downward valuation pressure in the commercial property market over the last 6 months we are seeing high quality assets, at attractive valuations, becoming available with a lot less competition to acquire. 

· We are seeing a significant opportunity to scale our pipeline, and are in negotiations on a number of new Roadside developments and investments. We are targeting increasing our ongoing pipeline to £200m.

Barkby Pub Co

· Revenue 3% down year on year compared with Q1 2021, broadly in line with the overall sector as household spending decreases.

· Christmas bookings look strong and we remain optimistic for a strong festive trading period.

· Addition of the Eliot Arms pub at South Cerney to take the pub estate to nine units and 75 bedrooms.

· Majority of our energy contracts were fixed in December 2020 until December 2023, so the business is well protected from the wider energy cost pressures facing the industry.

· Inflationary pressures on labour, food and drink margins are in line with the wider hospitality sector.

· Whilst we continue to grow the pub portfolio the Board continues to review future strategy of the PubCo.

Barkby Investments

· As previously announced, we completed the sale of the Verso Biosense stake for £2.6m in August 2022.

· Following our announcement to sell our non-core businesses in July 2022, we provide the following update:

o  Workshop Coffee - a sales process was launched in September 2022. This has coincided with a strong recovery in the business as it returns to pre-pandemic levels. The sales process is progressing, with discussions ongoing with a number of interested parties under NDA.

o  Centurian Automotive - the business will be transferred out the Group on the 1 January 2023, with the existing management team acquiring the ongoing business for nil overall consideration.

o  Cambridge Sleep Sciences - over the summer CSS has developed several significant licensing opportunities with global technology companies for the IP behind SleepHub. The previously launched sales process has been paused whilst these opportunities progress. The Board believes that completion of these licensing opportunities will have a material impact on the potential valuation of the CSS business.

Future Strategy

In our July 2022 update the Board announced it had determined to focus on roadside property development and investment and to dispose of all the Group's other businesses and investments. As we move towards implementing this strategic change, we expect that all non-core businesses, including Barkby Pub Co. Ltd will not form part of the Group moving forward.

In recent months, we have met a number of prospective institutional investors and have received positive feedback around scaling our Roadside property investment and development business and continue to explore doing so.  The Group continues to look at several routes to maximise the opportunity this pureplay real estate strategy presents and is considering funding options, including both equity and debt to take advantage of the pipeline of opportunities highlighted above. We are also reviewing the most tax efficient way of holding a high-quality, substantial portfolio of modern, ESG compliant Roadside real estate investments, including becoming a REIT. We are also looking to further strengthen the Board as we make this pursue our focused roadside strategy. 

Debt Re-financing

As we look to expand our real estate business and hold existing developments, we have in principle agreed a re-financing of the existing Tarncourt facility from £5m to £10m with expiry being extended from 30th June 2023 to 30th June 2024. A separate announcement will be made once all the terms have agreed, and the documentation has been finalised. The re-financing will go to strengthen the Group's balance sheet and working capital.

Results

We expect to release our full year results in December 2022.

Commenting, Charles Dickson, Executive Chairman, said: 

"FollowFollowing on from our July announcement we have made good progress in streamlining the Group. We have completed the sale of our stake in Verso Biosense and made further progress exiting the remaining non-core businesses.

We remain focussed on scaling the real estate business, with a particular focus on high quality modern sustainable roadside developments in the form of drive-thru's, trade counter, last mile logistics, convenience food, EV charging hubs and light industrial commercial buildings. Our view is that this strategy, once scaled, has the ability to deliver double digit annualised total accounting returns."

Enquiries:

Notes to editors

Barkby Group PLC is a diversified group of high growth, high quality businesses run by an entrepreneurial and experienced management team. The existing wholly owned businesses units within Barkby include; Barkby Real Estate, Barkby Pub Co. and Barkby Investments (Comprising of Workshop Coffee, Centurian Automotive and Cambridge Sleep Sciences).

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (596/2014/EU) as it forms part of UK domestic law by virtue of the European Union (withdrawal) act 2018 ("MAR").