Cost of preparing for sale pushes Peach into loss
The cost of appointing advisers to prepare pub business Peach for a potential sale pushed it into a pre-tax loss, its latest financial results show.
It emerged last year that Peach, founded by Hamish Stoddart, Lee Cash and Jo Eames in 2002, was preparing for a sale, with The Restaurant Group reported to be interested in bidding.
Annual accounts for the year to 6 January 2019 showed that Peach enjoyed like-for-like sales growth of 0.5% in 2018, which it claimed put it ahead of the competition, despite experiencing a "tough year".
The 19-strong group increased turnover by 9% to £27.9m in the year to 6 January 2019, up from £25.6m the year before.
Sales increased as a result of organic growth from its existing pubs, as well as from the addition of the Bear & Ragged Staff in Cumnor in Oxfordshire and Boulters near Maidenhead in Berkshire.
But the exceptional £472,000 cost of appointing professional advisers "with a view to engaging with potential investors" as well as £201,000 in relation to the surrender of a lease meant that the company slipped to a pre-tax loss of £120,946, having made a £548,924 profit the year before.
Nonetheless, the company said it was still profitable before exceptional items, pointing to underlying earnings before interest, taxation, depreciation and amortisation (EBITDA) of £1.9m, down £139,000 on the year before. Net assets before deduction of minority shareholdings are currently £1,692,461 (2018 - £1,912,530).
Peach said it had endured a tough year but remained "resilient" despite the mounting pressure of business rates (which are expected to rise another £110,000 in 2019), National Minimum Wage increases and inflationary cost pressures. The company added that until the government could show what a post-Brexit UK looked like, there would be less discretionary spend from its guests.
In January 2019, the firm disposed of one pub, the Old Mill, Berkhamsted in Hertfordshire, because it did not foresee being able to build it to over £27,000 in sales per week.
Managing director Hamish Stoddart said: "Another tough year has inevitably had an impact but we've faced the challenges head-on and in fact come through stronger than ever. We were poised to capitalise on a great summer, and we nailed it. Our pubs have delivered solid organic growth and whilst we might aspire to more than 0.5% like-for-like growth, we are beating the market. We're still battling the cost headwinds and whilst it's not enough like-for-like in our opinion, it's pretty good in the marketplace.
"We intend to be mainly clear of debt and it is likely that we will achieve that in the next few months.
"We continue our long-term goal of being operationally profitable every year. If we have a loss-maker, we deal with it. We got rid of one in 2018.
"It's never been harder, and I love it. The team are moving us forward and we are challenging all those Peach sacred cows of the last 18 years. We are working hard on how to be even better. This is a great industry to be in… profit might be hard right now, but living our values is easy."
