Admiral Taverns, the 1,300-strong tenanted pub company owned by Lloyds Bank, will reduce its debt by a further 50 to 60 per cent in the next 18 months, according to executive chairman Jonathan Paveley. The reduction follows a 40% reduction in debt since the company went into administration at the end of 2009. Paveley told last week’s Tenanted Pub Company Summit: “By selling some of our bottom-end sites that aren’t viable, we’ve massively reduced our debt over the last 18 months. “So our debt has now come down by over 40% - we’ve not only invested in our business but repaid our bank borrowings rapidly. “And by the time we’ve completed the disposal programme, hopefully within 18 months, we’ll have cut the debt by, hopefully, another 50-60% on top. “So by that time, we’ll have a business that has operating cashflow to debt service costs that are half of our major competitors. “This is a business that is not under financial pressure - unlike the position it was in two years ago. “It’s a business that is in a very very good state of financial health, trading ahead of plan in terms of operating profits, and the business can now have the resources to increase significant investment going back into our business and to our licensees.” Paveley reported that Admiral had enjoyed particular success with the 189-site Picadilly Licensed Properties estate it acquired last December. He said: “They were losing money hand over fist. A quarter of the estate were closed, a significant proportion of it was under temporary management. It was a real train crash (but) this business has responded beyond all wildest hopes, let alone expectations.” Within three months, this business was up from minus 10% to plus 8% like-for-like. “A total 36 sites were unviable and had been closed for some time and were sold for good prices. “And within another year to 15 months, we will have successfully repaid all the debt on that acquisition, and we will have ended up with a core of really good sites in growth at no cost.” Paveley also launched a passionate defence of the community local - and criticised the “big egos” that have caused damage to the sector in the past 15 years. He reported that his company believes it has hundreds of viable community pubs - given investment and the right rent levels. But many of its pubs had also proven unsaveable because of the way they had been run by previous owners. Paveley, who has previously overseen strategy at Greene King and was commercial director at Punch Taverns, told colleagues at the Summit: “Leadership has to be honest and non-egotistical. One of the real problems of the last 15 years I think is that we’ve had pretty big egos playing out across this industry. We’re still picking up the pieces as an industry. “You’ve got to trust your people on the front line. I’m very suspicious of centralisation in our industry and the whole ethos in Admiral is to decentralise and give our BDMs total ownership, total accountability and delegation. To me, that BDM-licensee relationship today is the rubber against the road. “The upper middle class, metropolitan management teams aren’t often the best people to run these pubs at an operational level. “Management teams make investment decisions on pubs that they themselves would like to go to rather than pubs that actually the locals want. We all need to remain focused and be brought back down to earth.” Paveley reported that average rent was below £15,000 per annum at Admiral - and companies had too often “pissed off” licensees by over-renting. “There is a market out there for wet-led community pubs,” he added. “But they have to be better, they have to be better invested in and they have to have licensees who are more motivated.” Paveley used case studies of run-down pubs he visited when he first joined Admiral nearly two years ago to illustrate his point: “When I see pubs like this, on their knees, with accommodation you wouldn’t put a pig in, it says to me that pubs that have been written off by previous owners, and there seems to be a lot of those pubs in the industry. “But it’s not due to market forces, they’re due to self-harm, by the way companies have been running them. And that’s something we at Admiral are very passionate about starting to put right.”