Avebury grows with Honeycombe pubs

Avebury Taverns is to convert more managed houses to tenancy and lease after buying a package from Honeycombe Leisure.

The addition of the 14 managed houses in the North West and Yorkshire will boost the size of Avebury's national estate to nearly 800.

The deal comes as Avebury announced that like-for-like volumes in its core estate were up by three per cent in the nine months to June 30.

This excluded newly acquired pubs, such as 67 managed houses that are mostly being converted to tenancy after the purchase of the Stanford Pub Company earlier this year.

Managing director David Myers said: "The Honeycombe pubs are all high quality with significant potential to enhance current earnings, and which will make a useful contribution to our expansion plans.

"We also continue to look at a number of larger acquisition opportunities to allow for considerable acceleration in our growth."

The conversion of Stanford and Honeycombe's managed houses to tenancy reflects a growing trend led by Voyager Pub Company, Laurel Pub Partnerships and Enterprise Inns.

The £6.6m deal will allow Honeycombe to reduce the amount of debt which was taken on when it bought pub operator Devonshire Group in March. The Avebury package includes 10 outlets from the 35-strong Devonshire estate, which cost Honeycombe £32m.

After integrating Devonshire's remaining 25 pubs and bars plus another 10 individual sites, Honeycombe is now looking for more acquisitions.

Chairman Sandy Anderson said: "We had placed our individual site acquisitions on hold while we integrated the Devonshire estate, but we now feel that we are in a position to consider any exceptional opportunities that may arise."

Honeycombe, which is based in Preston, Lancashire, has 70 venue bars and traditional pubs in the North West after selling its Biba bar in Concert Square in Liverpool city centre for £600,000 to a developer.

It has also been investing in its estate, which led to a 42 per cent drop in pre-tax profits to £1.15m for the year to April 29, although turnover soared by 47 per cent to £21m.

Over the year, it spent £9.68m on refurbishing new and existing outlets, which led to 100 trading weeks being lost while the pubs and bars were closed.

But Mr Anderson said it would be back on track for growth once the investments started to pay off.

"The trading environment remains competitive, but I believe the acquisition of Devonshire and subsequent management actions have considerably strengthened the company," he said.

"We now have an improved portfolio of pubs, greater depth of management, better IT and EPoS systems and a lower cost base."

Like-for-like sales over the year were up by two per cent, and this has remained at the same level in May and June.

Mr Anderson said eight of its pubs have been hit by the foot-and-mouth crisis.