Beer Sales Down 39%
Wednesday 13th April
NEW HMRC FIGURES SHOW BEER SALES IN "ON TRADE" DOWN BY
4.8% ON YEAR EARLIER AS PUNCH TAVERNS REVEALS LOSSES OF £350M AND
DEMERGER PLANS
The old naval tradition of the captain last to leave a
sinking ship is being reversed at Punch Taverns as Dyson the chief
executive is the first off to the lifeboat - leaving the tenants
and bondholders to fend for themselves if the demerger happens says
GMB
An analysis by GMB, the union for tied pub tenants, of official
data shows that total alcohol volumes released for UK consumption
in the year to January 2011 are 1% down on the levels for the year
to January 2010 and down 0.2% on the figure for the year to
December 2010. This analysis comes as Punch Taverns, one of the
biggest pubco operators, announced losses of £350.7m for the first
half of the financial year and its plans to demerge the company and
dispose of unprofitable pubs.
The latest official HM Revenue and Customs (HMRC) figures for
January 2011 show that the volume of wine released for UK
consumption in the year to January 2011 was down by 0.7% on the
volume for the year to December 2010 and down 0.4% on the volume
for the year to January 2010.
In the year to January 2011 the volume of cider released for UK
consumption was up by 0.7% on the volume for the year to December
2010 and up by 0.1% for the year to January 2010.
In the year to January 2011 the volume of spirits released for
UK consumption was down by 2% on the volume for the year to
December 2010 and up 2.2% on the volume for the year to January
2010.
In the year to January 2011 the volume of beer released for UK
consumption was down by 0.1% on the volume for the year to December
2010 and was 2% down on the volume for the year to January
2010.
In the year to January 2011 the volume of beer released for UK
consumption in the "on trade" was down by 0.1% on the volume for
the year to December 2010 and was 4.8% down on the figure for the
year to January 2010. Sales of beer in the "on trade" are down
38.8% on the peak levels in 2002.
In the year to January 2011 the volume of beer released for UK
consumption in the "off trade" was down by 0.1% on the volume for
the year to December 2010 and was 1.3% up on the volume for the
year to January 2010.
These figures are from a GMB analysis of the latest official
figures for alcohol released for UK consumption up to December
2010, the latest figure available which were released today by HMRC
and set out in the table below.
This analysis of alcohol volumes released for sale by GMB, the
union for tied pub tenants, shows an unsteady and uneven recovery
underway in the seasonally adjusted monthly volumes of some type of
alcoholic drinks released for consumption in the UK while volumes
are still well below pre-recession levels for all types of
alcoholic drinks except cider.
The indices for the seasonally adjusted monthly volumes of wine,
beer, cider and spirits released for UK consumption from August
2007 to January 2011 are set out in the Table below with the
figures indexed from the volumes in June 2002.
In value terms alcohol consumption is still well down on the
peak level of £43.4 billion sold in the UK in 2007. Beer had a
market share of 41.6% of all sales in 2009 and volumes are still
declining. Spirits had a market share of 20.2 % of sales in
2009. Volumes of wines and ciders, with a market share of
38.2% of sales in 2009, are growing. In 2009 total alcohol sales in
the UK had fallen in value by 4.6% to £41.4 billion
Alcohol: GMB analysis of seasonally adjusted monthly quantities
released for UK consumption- Source HM Revenue and Customs
Please click here to view
table.
Paul Maloney GMB National Officer for tied tenants said "Beer
sales in the "on trade" continue to fall month by month. They have
fallen off a cliff – down 38.9% from peak levels - as pubs are
priced out of the market and close as a result of rents being too
high.
Ian Dyson chief Executive of Punch plans to be the Chief
Executive of Spirit. The old naval tradition of the captain
being last to leave a sinking ship is being reversed at Punch
Taverns one of the largest pub operators. Dyson the chief Executive
of Punch is the first off to captain the lifeboat - leaving the
tenants and bondholders to fend for themselves if the planned
demerger actually happens.
GMB has called for bondholders, shareholders and tenants as
stakeholders in Punch to work together and for the debts to be
converted to equity. ( See GMB press release on this in notes to
Editors below). We understand that a majority of the bondholders
are now in favour of this outcome. So why is Dyson to so keen the
desert the sinking ship and head for the lifeboat
The recent rise in VAT to 20% means that the differential
in the price of beer in supermarkets and pubs is wider than ever.
More pubs will close.
The private equity inspired property companies like Punch that
own large chunks of the pub estate are charging these sky high
rents to pay interest to offshore bondholders. They are doing
absolutely nothing to end this loss of market share.
The regulatory authorities have done nothing to save tied
tenants from this market abuse by these property companies that own
pubs. The Government has done nothing either. Pub tenants are
bitter at this inaction.
Government talk about binge drinking completely misses the point
that supermarkets are the source of much of the drink as beer sales
in pubs are 38.8 % down on the peak year of 2002."
End
Contact: Paul Maloney on 07801 343 839 or
Hayley Brennan on 07850 919933 or GMB Press Office 07974 251 823 or
07921 289 880
Notes to editors
This is the text of GMB press release of 17th
November 2010
GMB CALL ON PUNCH TAVERNS BOARD TO EXPLORE WITH BONDHOLDERS
THE CONVERSION OF £3.6 BILLION OF DEBTS TO EQUITY FOR MORE VIABLE
PUB BUSINESS
The debts average £534,901 per pub and interest
payment and the costs of insuring the loans amounts to £271 per day
per pub and is payable whether the pub is trading at a profit or
not
GMB, the union for tied tenants, is calling on Ian Dyson
Chief Executive and the Punch Taverns board to explore with
its bondholders the conversion of its £3.6 billion debts to equity
to ensure a more viable pub business. This call comes as a result
of a detailed study undertaken for GMB by outside experts of the
published accounts of the group and the securitised vehicles within
it.
The key numbers arising from the study are set out in the
two tables below. They lead GMB to conclude that the common view
that shareholders in Punch Taverns own a pub business is wrong. The
analysis shows that 92 per cent of its assets are securitized: they
belong not to shareholders, but to three investment vehicles: Punch
A, Punch B and Spirit. GMB conclude that shareholders don’t own a
pub business; they own a holding company which invests in and
manages pub securitizations. These bonds in these vehicles are due
for repayment in 2033 and 2035.
GMB calculates that the debts per pub averages £534,901. The
interest payment alone amounts to £36,373 per year per pub.There
are also huge costs of derivative financial instruments to insure
the debts amounting to an average of £62,000 per pub in 2010. Thus
financing cost are on average £98,554 per pub per annum or £271 per
day per pub.
The figures show Punch A and Punch B are soaking up PLC cash
and both are cash trapped. The company as a whole made a loss of
£159.1 in year to end August 2010. The figures show that the
company has little scope for capital expenditure to upgrade the
estate nor is there scope to pay a dividend. The figures show that
Punch has disposed of 2.486 pubs since the peak year in 2006 when
it had a total of 9,256 pubs.
Earlier this monthMorgan Stanley analyst Jamie Rollo said
that Punch shares could be worth as little as 5p in the worst case
but could reach 110p if they recovered. GMB are unable to comment
on this.
Punch Taverns – analysis of the published accounts.
Please click here to view.
Paul Maloney GMB National Officer for GMB tied tenants said
“This analysis of the Punch published accounts leads GMB to
conclude that Chief Executive Ian Dyson needs to follow the example
of MGM and begin discussions with the bondholders to convert debts
to equity.
I can not honestly say that I understand all the intricacies
of the accounts but I do understand the mountains of debt and
amount of red ink in a company set up by debt junkies. The debts
average £534,901 per pub and interest payment and the costs
of insuring the loans amounts to £271 per day per pub and is
payable whether the pub is trading at a profit or not.
These are trying times in the pub trade. It is essential
that the interests of all the stakeholders are aligned to enable
the major players to come up with an agreed strategy to stop the
decline.
This can not happen if most of the surplus income generated
from trading is needed to pay the bondholders. It is time to unwind
the financial engineering that has gone badly wrong.
GMB consider that it would be much better if Punch
shareholders owned a pub business rather than owning a holding
company which invests in and manages pub securitizations.
For a thriving pub sector we need pub companies charging
open market rents to tenants who can compete on price in buildings
refurbished to a high standard and where customer service and care
is the top priority. That way there will be a decent income for all
the stakeholders.
Many of the Punch bondholders are based in offshore tax
havens and the securitised structure is costing the UK Exchequer a
lot of lost taxes in these times of austerity. GMB sponsored
Members of Parliament will be asked to take an active interest to
establish the scale of the tax losses. It is union policy that
there should be no tax relief on debt interest payable in leveraged
vehicles. ”
End
Contact Paul Maloney GMB 07801 343 839 or Hayley Brennan
07850 919933
Notes: to Editors
1 Debt Service Cover Ratio is the ratio of cash available to
pay debt compared to the repayments that are due.
2 Finance A is due for repayment in 2033, Finance B in 2035
and Spirit in 2033.
3 The debt fully repays over terms extending to 25 years and
is effectively at a fixed rate of interest of 6.8%