Statutory Code: Admiral Taverns claims costs would 'fundamentally compromise' financial position

Admiral said the annual cost to the company, based on the Government’s mid-range estimate of £102m per year, would be c£5m of EBITDA per year, or more than 20% of its annual pre-tax and interest profit.

“This is material, is broadly equivalent to our entire annual investment budget and could fundamentally compromise the company’s financial position,” Admiral said.

Outrageously unjust​

“Given that all the hard evidence regarding Admiral is that we are fair and our licensees are overwhelmingly positive about us, this would represent an outrageously unjust assault on a well-run company operating a legitimate business model.

“Ultimately, it would lead to many pub sales, loss of pubs to the market, fewer opportunities for tenants with a reputable pub operator and substantial loss to the economy.

“Much of this ‘value transfer’ would not be gained by tenants at all, but would be lost to the sector and the economy, thus the ‘benefits’ to tenants are probably much over-stated.”

Cost of £300,000​

Admiral expects the minimum cost of the system in the first year to total £300,000.

Based on straight pub numbers apportionment, the cost would be c£50,000 per year, equivalent to 10 times the cost of self regulation. “Given that we have had no rent disputes or substantial complaints we think this is extremely unjust and disproportionate.”

BIS 'travelling blind'​

Admiral said that the range of assessments of the cost of the proposals, from nil to more than £200m, indicates that the business department is “travelling blind in making these proposals and really has no confidence in its own impact assessment”.

Meanwhile, Admiral suggested potentially raising the code threshold from 500 to 2,000 pubs, which was the limit applied under the 1989 Beer Orders that forced big national brewers to sell their pubs.

It also suggested that “traditional tenancies” be exempt from statutory regulation, and a much lower limit be introduced for leases, potentially down to 100 outlets.

Overall, the company said that the “dramatic” reduction in size of pub company estates has allowed larger companies to make “some headway” in resolving “problems” associated with the past when they owned many more pubs. 

“The market is in effect solving the problem and is making the need for any statutory regulation redundant,” Admiral stated.