Derek Pain: There's little to lift the spirits at Pubs'n'Bars

No Pain, No Gain

There is little chance of any festive cheer embracing shares of Pubs'n'Bars, the beleaguered drinks chain. They have been an unmitigated disaster since I recruited them to the
No Pain, No Gain portfolio last year.

Last week, chief executive Mel Belligero confirmed that the group "continued to experience difficult trading conditions" and, worryingly, complained about a lack of suppliers' credit that was impacting on working capital. Banks, he added, continued to offer support on "a day-to-day basis" and were still in talks about longer-term funding.A few years ago, when the pub business still had much going for it, the shares nudged 50p. I alighted on them at 23.5p in the mistaken assumption that they had fallen so far that any problems were already discounted. Just to pile on the agony they are now a mere 3.5p, capitalising the company at around £1.4m.

The pub industry, which has weathered many storms over the years, is suffering unprecedented hardship. Recessionary belt-tightening would be bad enough but other influences, such as supermarket price-cutting, are also taking their toll. Vertically integrated groups - brewers with wholesale interests and pub estates - are surviving quite well. Managed pub groups, such as Mitchells & Butlers and JD Wetherspoon, are also countering the worst of the recession. But it's a different story at some other stand-alone pub chains, particularly those with a large tenanted influence. They are experiencing nightmarish trading.

Enterprise Inns and Punch Taverns, which have the two largest tenanted estates, are in the last-chance saloon, their shares pale shadows of what they were. So it is perhaps not surprising that the much smaller Pubs'n'Bars is also in deep despair.

Although around two-thirds of Pubs'n'Bars near 100-strong estate is under management, with the rest tenanted, it does not appear to be drawing the strength others are experiencing from more direct control. It borrowed to expand and with trading weak and pub values under pressure, it is in the same awful predicament as Enterprise and Punch.All three are heavily in debt, often the result of buying pubs at the top of the market at fancy valuations. But in Pubs'n'Bars' case the sums involved are much smaller - a debt pile, at the last count, of around £34.3m. The decline in property values forced it into piecing some of its banking agreements, and relatively long-term loans have consequently been reclassified as repayable within one year. Property write-downs were a major factor in a near-£9m yearly loss. In the following six months, the loss was £691,000.

Perhaps I should have followed the example of former chairman Seamus Murphy, who sold most of his shares in July, collecting, I believe, around 3p a throw. But I am hanging on - hoping this hard-pressed chain of boozers will overcome its difficulties. As I have moaned in the past, I have left it too late to sell. Obviously a cash injection is needed. An asset-disposal programme appears to have made little headway. And with the shares so down in the dumps a stock-market cash-raising exercise would be a difficult undertaking, although it could succeed. Clearly banking backing remains crucial. Encouragingly, the banks seem to be supportive.

I suppose some debt could be swapped for equity. Sometimes shareholders are annihilated in such exercises. I am hoping any such deal at Pubs'n'Bars would allow shareholders to salvage some dignity, although bankers would claim pole position.

On a brighter note, another constituent, Clarity Commerce Solutions, has managed an impressive interim performance with pre-tax profits emerging at £400,000 from sales up 10 per cent at £8.8m. Just to underline the strength of Clarity's recovery, the software group suffered a half-time loss of £25,000 last year and its full-year profit amounted to £465,000.

Like most companies, the group, specialising in such areas as leisure and retail, has trimmed costs and looks well-placed to produce a year's profit of around £1m. But as we all know, times are tough. And the chairman, Sir Colin Chandler, points out that customers "continue to tread carefully before committing to capital projects". He is, he says, "cautiously optimistic" about group's prospects.

The portfolio descended on the shares earlier this year at 29.5p. The price now hovers around 40p.

yourmoney@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Sport
Wes Brown is sent-off
football
News
i100
Sport
Italy celebrate scoring their second try
six nations
Sport
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
music
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

    Harry Kane interview

    The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
    The Last Word: For the good of the game: why on earth don’t we leave Fifa?

    Michael Calvin's Last Word

    For the good of the game: why on earth don’t we leave Fifa?
    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review