Honeycombe Leisure has announced like-for-like sales down 2.8% and warned that full year profits will fall below market expectations as tough trading conditions persist.
In a trading update, the 142-strong managed pub operator said that poor winter and summer weather and a number of sites closed for refurbishment contributed for the decline in sales.
It also said some of its Venue Bar sites have faced localised pricing pressures. Margins, however, are generally holding up despite rising costs brought about by increased utility costs, doormen charges, and other fees.
The outcome of a financial review identified certain charges and potential losses in asset sales that will ultimately hit earnings, it added.
Following a review of its finances after the appointment of a new finance director, Tracey Alston, the company has decided to book further exceptional write-offs of £300,000 for the periods 2003-04 and prior years.
A change to its depreciation policy will require a further charge in the year of about £200,000, and also realised losses of up to £340,000 from the sale of freehold sites.
Honeycombe also announced that it had signed a 12-month agreement to run 27 sites for Scottish & Newcastle Pub Enterprises, part of the package that S&NPE is running for Robert Tchenguiz’s R20. R20 acquired the pubs as part of a 364-strong package from Spirit Group.
The agreement with S&NPE allows Honeycombe to extend the agreement to a 10-year lease.
In addition management contracts have also been signed with Admiral, Avebury and Wolverhampton & Dudley Breweries, bringing the number of pubs under Honeycombe management to 41.
Nectar Inns, a Venture Capital Trust (VCT) company, now has 26 sites trading. Honeycombe manages these sites on behalf of Nectar shareholders.
Following its success a second VCT qualifying vehicle, Amber Taverns, has raised a £14.5m fund for acquisitions. This comprises £4.5m equity and £10m bank debt. Honeycombe has a similar management contract in place.
A further new vehicle is currently seeking to raise £9m funding to roll out the successful Ma Hubbards concept.
It also reduced the final dividend for the current year to 0.95 pence per share from 2.3p a year earlier as it re-invests more money in its pub estate.
