BARK.L Regulatory News (BARK)

 The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

22 July 2020

The Barkby Group PLC

("Barkby" or the "Company")

Update and CBILS loan

The Barkby Group PLC (AIM:BARK), the diversified business group, provides the following summary of trading in its divisions. The Company also announces receipt of a £1m loan from HSBC under the UK Government's Coronavirus Business Interruption Loan Scheme ("CBILS") which was arranged with support from finnCap's Debt Advisory team. The CBILS loan provides the Company with added liquidity to support, in particular, the Hospitality and Consumer division after a period of severe disruption due to COVID-19.

Operational Highlights:

o  Vivoplex received approvals for first clinical feasibility study of its wireless battery-free uterine sensor system. Study expected to conclude in Q1 2021 and device expected to receive CE marking in 2021

Financial

Commercial Property Development

Hastings

Construction work at our development at Hastings, which is anchored by Aldi Stores, Greggs and Costa Coffee, completed in June 2020. Aldi has taken occupation of its unit and is currently fitting out with a view to opening towards the end of the summer. To date we have been unable to issue 'practical completion' due to the local authority and utility companies being unable to complete their programs due to COVID-19 restrictions. However, we expect to trigger 'practical completion' by the middle of August which will result in a net cash payment to Barkby of £1.9m. This is lower than the £2.2m that was originally expected due to additional costs incurred because of the delay to completion related to COVID-19.

Saffron Walden

We took the opportunity of the COVID-19 disruption to further enhance the planning consent at Saffron Walden, where we already have planning consent for 35 residential units. We expect to receive this planning by September 2020. We were hoping to sell this development prior to 30 June 2020, but COVID-19 has delayed this sale process. We now expect a sale to complete prior to 31 December 2020. Because of previous planning permissions granted, we currently have an unrealised gain of approximately £2m on this development, and we look forward to updating shareholders once a successful sale has completed.

Wellingborough

On 9 July 2020 we obtained planning permission for a 20,000 sq. ft. mixed use retail and trade scheme. We expect to begin construction later this year and look forward to updating shareholders on progress.

Other schemes

We submitted a planning application for a 30,000 sq. ft trade scheme at Huntingdon in May 2020 and expect a decision by the end of September 2020. We remain busy identifying new commercial development opportunities and are conducting active negotiations on two further deals which we hope to announce prior to 31 December 2020.

Hospitality and Consumer

After a positive start to 2020, our growth plans were significantly disrupted by the enforced closure of our pubs due to the COVID-19 lockdown.

We worked quickly to minimise cash outflows during this period but some ongoing monthly costs were incurred, such as utility costs, reduced rents and insurance. We took advantage of the UK Government's Job Retention Scheme, furloughing the vast majority of our workforce in the pub business and we also benefited from business rate exemptions.

During the period we took the opportunity to make a number of structural and operational changes to the business and accelerated our plans to streamline the business, reducing our number of suppliers and renegotiating key supplier contracts. We have implemented a new room reservation system across the pub estate and have redesigned the various pub websites, which are now live. The refurbishment of The Rose and Crown at Ashbury is now complete.

Following the relaxation of the UK Government's lockdown our pubs reopened on 4 July 2020. Various Government incentives and the continued support of the majority of our landlords lead us to be optimistic about the future trading outlook, subject to no further restrictions being imposed. We have been taking bookings for accommodation and the initial demand has been better than anticipated.

We are currently taking this opportunity to actively add to our pub portfolio and are carefully reviewing both leasehold and freehold opportunities that would fit the overall portfolio of the Group.

Workshop Coffee

Workshop temporarily closed its retail operations at the start of the UK Government lockdown but continued with limited wholesale and online operations. We were able to take advantage of the Job Retention Scheme for staff at our retail stores and the business also benefitted from the business rates exemptions. The online business has grown by over 300% on the same three-month period last year and we are seeing this trend continue even as restrictions are lifted. Whilst B2B wholesale volumes were significantly down year on year for the last quarter, we started seeing an increase in May 2020 and this has continued into June 2020. The performance of the online business has helped to partially offset the temporary decline in wholesale volumes. We now look forward to seeing performance further improve as both our own retail sites, and those of our B2B partners, reopen.

Automotive

Centurian Automotive had a quiet start to the lockdown period but towards the end of April 2020 trade began to substantially improve. April and May were loss making months, however June has seen the business trade ahead of expectations and made a profit for the month of June, with a record month in term of total vehicles sold and revenue. We sold 76 vehicles for the three months to 30 June 2020, with total revenues of £1.8m. The strategy we adopted since acquiring Centurian is now beginning to pay off and we expect further improvements over the next 12 months. Inventory is currently at 75 cars, with a target of 50 cars.

Life Sciences

Cambridge Sleep Sciences

On 21 April 2020, we announced completion of an agreement with Cambridge Sound Technologies UK Ltd for the exclusive design of, and acquisition of the intellectual property rights related to a device to improve and facilitate natural sleep.

Barkby agreed revised terms which comprised of an initial cash consideration of £120,000 to cover design costs incurred with two further payments of £60,000 upon completion of certain milestones. The acquiring vehicle has been granted a license for the algorithm of the product on a perpetual basis in exchange for a royalty payment per unit sold.

We will be launching the first product, SleepHub™, in August 2020. SleepHub™ is a unique sleep device with four sleeping modes scientifically designed to act as a natural sleep aid. By using rhythms and pulses to emulate brain waves produced during sleep, SleepHub™ restores natural sleep cycles and improves wellbeing.

SleepHub™ has received significant interest from global retailers and distributers and we are now taking initial orders. We look forward to updating shareholders on progress when we announce our full year results.

Vivoplex

Our Life Sciences investment, Vivoplex, continues to make excellent progress. On 20 April 2020 Vivoplex received UK regulatory approvals required to initiate the first clinical feasibility study of its wireless battery-free uterine sensor system. The study is expected to generate key clinical data to support European approval (CE marking) for the first product, which is part of a range of reproductive health biosensors it is developing. The approval for the study is an important milestone for VivoPlex in the path towards commercialisation of its intra-uterine sensing system. We expect the study to conclude in Q1 of 2021 and the device to receive a CE marking in 2021.

Other Investments

Under the agreement with Transcend, which completed on 7 January 2020, the Group had the ability to advance up to £3.5m under a convertible loan note ("CLN"). Since 7 January 2020, the Group has advanced £250,000 to Transcend under the CLN, in addition to £250,000 advanced in October 2019 prior to the CLN completing. Transcend completed a substantial funding round in June 2020 but the Board of Barkby decided not to participate in the funding round due to the current economic climate, a keen focus on conserving cash and because we did not feel the opportunity presented value for our shareholders. As part of this decision and under the terms of the CLN, Transcend will be repaying the £500,000 (plus accrued interest) advanced to them by the Group in full over the next nine months, with a repayment premium of £150,000 due at the end of 2021. The first repayment instalment of £125,000 was received in June 2020.

Balance sheet strength

Barkby remains in a strong overall financial position. With Hastings completion and the sale of Saffron Walden, the Group will move into a period of positive net cash generation. We have secured a £1m CBILS loan from HSBC to support the business and as at 30th June 2020 the Group had a £1.5m overdraft facility with HSBC, which will be repaid in full on the completion of Hastings, of which £1.1m was drawn. In addition, the Group has utilised £1.75m of a £3.5m facility headroom facility with Tarncourt Investments LLP.

We will continue to manage cash carefully as we emerge from the lockdown. Since joining in April, Douglas Benzie, our CFO, has been overseeing the implementation of Oracle NetSuite, our new Group wide accounting system. This will help the whole business in terms of reporting, controls and automation as we grow and allow us to take advantage of synergies across our finance functions.

Results for Financial Year Ended 30 June 2020

As previously set out the Group has well diversified operations and the Group's property interests have provided a measure of protection from the difficulties in the consumer facing divisions. At the time of the interim results the Board prudently expected the EBITDA for the year ending 30 June 2020 to be around £3.5m. This forecast was made on the basis of the Group's management accounts to that date and a forecast for the remainder of the financial year which included the sale of Saffron Walden.

Given the prolonged enforced UK Government COVID-19 lockdown, the delays in the property division and uncertainty surrounding the impact of COVID-19 in terms of potential provisions against the Group's consumer facing divisions, the Board believe that it is prudent to withdraw this forecast.

Completion of Capital Reduction

Further to the disclosures made in the Company's AIM Admission Document, the reduction of the share capital of the Company was approved by the Court on 25 June 2020 (the "Capital Reduction"). The purpose of the Capital Reduction is to create distributable reserves for the payment of future dividends and other corporate purposes. There is no change in the number of the Company's Ordinary Shares in issue and the Capital Reduction does not involve either the diminution of any liability in respect of unpaid capital or the payment to any shareholders of any paid-up capital of the Company.

Charles Dickson, Chairman of Barkby, said:

"The last 15 weeks have been extremely challenging for our Consumer and Hospitality business in particular. Our top priority has been protecting our staff and customers and I have been incredibly impressed with how our management team has dealt with a multitude of challenges. I would like to thank the whole team for helping navigate the Group through this period and I am confident that we are in a position to accelerate our growth once more once as we begin to emerge from this extraordinary period.

"We would like to thank all of our shareholders for their continued support. It is an exciting time for Barkby, and we look forward to delivering on the Group's potential. Barkby is a diversified business and is well positioned to recover from the COVID-19 pandemic. Activity in our highly cash generative Commercial Property Division continues a pace and the Group continues to deliver on its strategy to invest in exciting businesses with the ability to disrupt. I am particularly excited about the potential of Cambridge Sleep Sciences and SleepHub™ to materially supplement Group earnings for FY2021.

"We are pleased to have secured a £1m CBILS loan from which will provide additional liquidity to help our Consumer and Hospitality division recover. We are delighted that customers are returning to our pubs and we look forward to the new financial year with optimism.

Enquiries: