Thursday, 26 January 2012

A distraction from filling out your tax return ...

As many of you approach the deadline for filing your tax returns and the realisation of exactly how much profit (or loss) you made last year I thought I would share with you some extracts from the company report for Punch and for your convenience have worked out a few figures for you to digest whilst you work out how to pay your tax bill.

If you are one of the 2,000 pubs in the "turnaround" division of Punch (i.e. "non-core "or non-essential to the long term plans of company) this is Punch's stated policy from the company report:

"The plan for the turnaround division is to maximise short-term returns with a clear focus on costs and cash flow. It is expected that these pubs will be disposed of over a five-year period and will be phased to ensure a balance between speed of disposal and value. "

From the accounts published in the report  the EBITDA  (operating profit) the following figures can be calculated.  For those of you in "turnaround" the earnings per pub was  £33,122, from core pubs the amount per pub was £73,873 .The average per  pub (for all of Punch's pubs)  was £51,558.

Now look at your tax return.

Whilst you compare your EBITDA with the company's here is some more interesting reading from the report:

"Punch as a Group achieved 21st place in the Sunday Times Best Big Companies to Work For 2011, the only major pub company to be listed. This is a fantastic achievement and reflects our commitment to develop our team and our Company culture to make us a ‘Great Place to Work’. We were rated highly for open and honest communication from managers, staff feeling they could make a contribution to the success of the Company and teams being fun to work with, as well as being nominated for a special award for wellbeing."

How open and honest were your communications from Punch last year? Do you think it's fun being a Punch tenant/lessee? Are you bathed in the glow of "wellbeing" emanating from Burton on Trent?

And whilst they were all feeling so well and having fun here's some details from the Remuneration Report for Directors:

CEO Roger Whiteside earns a base salary of £430k, plus a chance to earn  250% in bonus (1/3rd in shares) and a contribution to his pension pot of 25% of his salary.

The total Roger got last year, including all benefits and bonus  was £931,000

The total all the 12 directors earned from Punch last year was £3,363,000, an increase from £2,432,000 in 2010.This means a total increase in their remuneration packages of 38%, with average pay of £280,000 a year.

Now look at your tax return again.

Picked yourself up off the floor yet? Now work out if the profit you made from your pub increased by 38% last year or were you able to give your staff a wage increase of 38% last year?

For those of you that have invested in Punch let's also have a quick look at how your investment performed from 2006 to 2011 compared to FTSE indices:

I know it's a bit blurry, but the orange line is Punch, the other to look at is the grey line which shows the Travel and Leisure sector's performance and shows that for a nominal £100 what your 2006 investment was worth in 2011. Bet that investment is looking just dandy now isn’t it?

Now over to Solihull for news from Enterprise. They report, for October 2011, an EBITDA of £366 millions, which means they earned £58,196 per pub.

From £500 millions of sales of beers, wines and spirits they made £200 millions of gross profit, not bad for just sitting there taking orders.

On the £198 millions of rent they collected (average per pub £31,483) they spent out £5 millions on repairs and maintenance (average £795 per pub) or just 2.5%.  Measure this against a total revenue of some £711 millions and it is just 0.7%! Compare that to the ALMR Benchmark Report (October 2011) on the running costs of a pub which puts average spend on premises repairs by pub operators at 5.6%

Look at your profit and loss account and I'll wager you spent out more than £795 on repairing and maintaning their assets (your pub) last year. 

And the directors? Nine of them, in total, earned £3,070,000 or on average £341,111 down 3.6%  on the previous year. Mind you they did increase their earnings from £2,240,000 in 2009 to £3,185,000 in 2010 which was an increase of £945,000 or 42%.

Ted Tuppen the Enterprise CEO still managed to claw in a staggering £910,00 in 2011 and £1.223 million in 2010;
So how did Enterprise investors fair compared to the market places then? Take a look at the graph below:

Not much better than Punch's poor benighted investors.

At least the Enterprise Annual Report spares us the PR waffle and cuddly graphics so prevalent in the Punch document.

Inevitably I am, again, drawn to the definition of zombie: “the body of a dead person given the semblance of life, but mute and will-less, by a supernatural force, usually for some evil purpose”  when I read these reports.

And you wonder why the likes of Vince Cable want to introduce shareholder vetoes on board salaries or wonder why the BIS committee in the Commons queries if tenants and lessees are getting a fair deal from pubcos? Not!

Wednesday, 25 January 2012

Shock, Horror! Bad Service annoys customers!

My industry spies report that bad service is biggest deterrent for restaurant diners.

According to Langton Capital (whose excellent daily intelligence email I receive (go here for more details ). 

"The new 2012 Square Meal Complaints Survey has concluded that bad service is the biggest annoyance for restaurant diners in the capital, amounting to 45% of all complaints in the industry. Ambience and decor make up a further 19.5% of complaints according to the survey of around 8,000 London restaurant consumers, which also found automatic service charges and disappointing or overpriced food to be significant sources of irritation in consumers."

So if you want some tips on Customer Service click here

Monday, 23 January 2012

How to make sure your pub is attractive to your local MP ...

According to a report in today's Telegraph you'd better make sure of the following things:

House of Commons Dining Room
Don't charge more than £2.60 a pint (this against the average national price of £2.90 according to Pint Price . com or the eye-watering price of £3.50 other London drinkers pay) 

Don't charge more than £4.15 for pan-fried red mullet with carrot purée and a soft boiled quail’s egg or serve Artichoke and tomato salad with truffle dressing for more than £2.05 (the cost of those meals in the House of Commons dining rooms).

Make sure you serve your chips in a tower so the chips don't go soggy and heaven help you if you charge more than £2.35 for a glass of Merlot.

All this sage advice, of course, if you want to make sure your pub is full of whingeing, self-serving numpties who really have lost touch with life in the real world ... wonder how much their £5,8 million subsidy to their catering would have bought in the real world ... maybe it's time to ask your MP if "we're all in this together" still?

(Just as a matter of interest according to Horse and Hounds £5.8 million would buy Fermyn Woods Hall the home of the Brigstock Horse Trials) 

Friday, 20 January 2012

So our esteemed PM has spoken out about the need for morality in capitalism, here are some highlights from his speech yesterday: 

"We won’t build a better economy by turning our back on the free market...we’ll do it by making sure that the market is fair as well as free.  While of course there is a role for government, for regulation and intervention...the real solution is more enterprise, competition and innovation."

This has to be a triumph of dogma over logic if ever I heard one, whilst we are still reeling from the lack of regulation of bankers that has wrought so much damage to the world economy. That's why, despite cross-party support and a seven year inquiry into pubcos that under his leadership HMG still refuses to impose statutory control over pubcos.

"In this debate about the kind of economy we want to see, my position is clear. I believe that open markets and free enterprise are the best imaginable force for improving human wealth and happiness. They are the engine of progress, generating the enterprise and innovation that lifts people out of poverty and gives people opportunity.And I would go further: where they work properly, open markets and free enterprise can actually promote morality.Why? Because they create a direct link between contribution and reward; between effort and outcome.The fundamental basis of the market is the idea of something for something – an idea we need to encourage, not condemn."
It's a pity then that he doesn't realise how empty his words seem when pubcos continue to get something for nothing and his much cherised open markets don't exist within the pub trade whilst pubcos continue unfettered. Never has so much been taken by so few from so many with such little effort than is the case with pubcos (apologies to a truly esteemed previous PM for the pastiche).

Orwell himself would have been proud of this quasi-Adamsian doublethink!

Monday, 16 January 2012

Beer, gas, electricity ... should all be local "utilities"

Sunday newspapers can be a great inspiration at times and reading the various reports of how energy companies are able to squeeze extra margin out of we impoverished consumers by use of dynamic pricing (see article on the howtorunapub website) and how much local government will be strapped by the cuts imposed by central government ... here's a thought that should satisfy the free markets ... allow local councils to become energy suppliers in addition to all the other services they supply to us business rate and council tax "customers".

Very few of us alive today will remember when every town used to have its own water company, gas company, brewery ... it worked well in the hayday of Victorian capitalism so why not now in the time of the unfettered market?

If the energy companies can make £billion pound profits why couldn't local authorities do the same? I, for one, would rather buy my energy from a truly local supplier (such as my city council) as I prefer to buy my beer from local brewers (of which my city boasts several). Think of how much profit (or surplus as governmental agencies prefer to call it) that could be ploughed back in to local economies (jobs, infrastructure, revenue) and how much more our local authorities would be able to then put back in to local services (housing, the eldery, education, health, police, the arts).

Isn't this the point of the Big Society where Big Government gives communities the power to manage their own affairs... in the era of big government and old style socialism this was called nationalisation ... perhaps we could call this communitisation? We could have a whole new set of share issues in local utlitiy companies with councils holding the majority share held in trust for their electorate - I know it may not seem a huge amount but imagine the £125 profit per customer the Dirty Half Dozen made from their customers in 2010 was put back into your local community - in mine it would come to some £42.5 million. My city council slashed £26million from essential services last year alone!

Like I said if local beer is better for the environment, local economies and the great beer drinking public why not local utlities?

Thursday, 5 January 2012

That Was The Year That Was …

January saw England win the Ashes in Australia for the first time in 23 years. The Arab Spring starts in Tunisia. The Metropolitan Police re-opens its investigations into phone-hacking.

Pubs face up to the hefty increase in VAT to 20% as industry reports indicate that it could cost up to 8,000 jobs … over a thousand of you download my free VAT increase calculator … hope it helped!

February and Barclays Bank admits to only paying £113m in UK taxes on a £11.6bn profit … “you say to-mar-to, I say tom-a-to, you say evasion, I say avoidance”. Colin Firth bags an Oscar for the King’s Speech, whilst Gadaffi desperately clings to power.

SIBA (the independent brewers’ organisation) reports that indie-brewers are flourishing with over 40% reporting an increase of 8.8% in volumes despite a UK downturn in barrels brewed overall of 3.9%

March definitely came in like a lion with the earthquake off Japan’s coast, the ensuing tsunami and nuclear disaster at Fukushima. By the time we saw the Aides of March (15th) it was only 500 days until the 2012 London Olympic Games and UK forces were actively engaged in attacking Gadaffi’s military at a reported cost of £1.75bn – good to see that HMG has that much to spare now other spending cuts have started to take effect! The euro-debt crisis deepens with a £21bn bailout for Ireland … and look another £7bn of "savings" get spent out!

RIP Elizabeth Taylor.

Pubs and brewers reel at the continued beer duty escalator as good old George imposes an eye-watering 7.5% increase in beer duty … way to go to stimulate the pub trade George!

April and we’re all asking “What the frack was that?” … or the residents of Blackpool were as minor earthquakes shake the area. Greece is set to get a 110bn-euros bailout, Wills and Kate get spliced and Charlie Sheen goes into melt-down live on stage.

Just when you think you’ve got enough red-tape to deal with whilst running a pub the Police Reform and Social Responsibility Bill gets its second reading in the Lords.

May, after 10 years of waiting and 40 minutes of gunfire it’s Bang Bang You’re Dead for Mr Bin Laden. It’s not the end of the world as predicted by Harold Camping – everyone knows that it ends in 2012 – come on! Love it or hate it (and the Danes hate it, it would appear) as the Danish government bans the importation of Marmite and shock-horror Queen doesn’t sup Guinness on visit to Dublin brewery!

Whilst she’s there the Irish government announces a reduction in VAT to 9% to help its ailing hospitality industry … how about it George?

June’s publication of an IPPR report shows that 2/3rd of Britons think the pay gap between high and low earners is too wide – you think? “Happy Feet” – more like “Tired Feet” as an emperor penguin gets lost and turns up 2,000 miles away from Antarctica in New Zealand.

RIP Jeremy Allen the noted licensing solicitor. 

And if you hadn’t heard of BISC (the commons Business, Industry and Skills Committee) by now it announces the start of its follow-up inquiry into the pub trade.

July and The Guardian reports that the News of the World hacked Milly Dowler’s phone on the 4th, by the 10th that venerable (168 years in print) newspaper closes as Rupert Murdoch abandons his bid to control BSkyB. To paraphrase dear old Oscar: “To lose one tank may be regarded as misfortune; to lose £6.3bn of assets looks like carelessness” as the MOD admits it doesn’t know where all its highly expensive toys are.

The summer rapidly turns into the Summer of House Committees and Rupert Murdoch has a flantastic time in front of the Culture Committee, as we said goodbye to Amy Winehouse and hello to the world’s newest country – South Sudan.

BISC (remember them?) roundly criticises the British Institute of Innkeeping for not publishing online the level of beer discounts available against pubco rents.

August and it’s a return to the charts for “We Predict a Riot” as civil unrest spreads from London to cities as far apart as Birmingham and Manchester. Blackberry crumbles and Twitter calls to brooms the great clean-up brigade.

In the pub world Punch formally split in two (leased and managed businesses) and promptly  saw the share price for the leased company fall to an all-time low of 9.14p, some market analysts determine that Punch is now officially a zombie corporation.

Definition of a Zombie: “the body of a dead person given the semblance of life, but mute and will-less, by a supernatural force, usually for some evil purpose.” – does this apply to pubcos too?

September we remembered the Twin Towers ten years down the line and Manhattan was Occupied (as were cities across the globe in protest at the failure of capitalism). A big hit on the TV was “My Big Fat Gipsy Eviction” as Dale Farm was cleared at a cost of some £18m – I mean, I know bailiffs were well paid but this is ridiculous!

Meanwhile back at BISC and it’s report published this month calls for the government to introduce a Statutory Code Of Practice to curb the excesses of some pubcos.

October and Dr Fox just “doesn’t know him from Adam” (Wherritty that is) and promptly resigns. On the 5th we saw the departure from this veil of tears of Steve Jobs, a passing that many mourned, unlike the passing of Muammar Gaddafi on the 20th.

Hooray for the underdog as Karen Murphy wins an historic victory over BSkyB in the European Courts of Justice.

November saw the release of “Clueless” a movie starring James Murdoch set in the House of Commons and featuring the cast of the Commons Culture Select Committee in an everyday tale of media folk and parliamentarians. Murdoch declines to take on the role of the Godfather though!

Another landmark as long-term Youth Unemployment surpasses 1 million – well done the Coalition for a stunning 18 months in office!

RIP Gary Speed manager of the Welsh national football team.

Gee, thanks again to Mr Cameron for refusing to introduce a statutory code of practice for the pub industry as his response to the BISC report.

And so to December as Edinburgh welcomed its pandas and Cameron vetoed the Europe-wide treaty to save the euro (hands up anyone that thinks this will come to haunt him and us?) Some good news amongst the doom and gloom, though, as the Large Hadron Collidor at C.E.R.N. announced its first glimpse of the Higgs boson or sometime called god particle.

This reminds me of an old piece of graffito, which I will slightly adapt as “God is Dead” – Frederich Neitzche … “Christopher Hitchens is dead” – God. RIP Christopher - noted atheist and polemic. 

Let’s hope that 2012 is a better year, especially for the pub trade and that this time next year I don’t have to lead my review with "RIP – The Great British Pub".

If you do one thing this coming year make sure it’s that you support your local pub and your local brewer … remember if you don’t use it you lose it!

I’ll be supporting my local and many more I hope with this blog, the HOW TO RUN A PUB website  ... and with that I wish a ...

Happy New Year To You All

(P.S. my new year’s resolution is to stop using exclamation marks so much – cheers!)