Lack of investment hits Honeycombe Leisure

Announcing its annual results for the year to April 30, 2006 pub management group Honeycombe Leisure has painted a bleak - and frank - portrait of its future.

Noting that the group made pre-tax loss of £1.7m on sales of £41.6m, chief executive James Baer said a lack of investment in the estate was a major factor behind its decline.

"We've had some good results and a lot of sites are trading reasonably well. There are around eight to 12 sites that are dragging us down and in two thirds of these a lack of investment is behind it."

Pointing to the "challenging environment" and debt and cost pressures, Baer painted a bleak assessment of the group's prospects.

"It's clear that the business cannot continue in its current form," he said. "The level of gearing and the demands on cash in the present challenging environment provides no upside for any stakeholders, be it employees, shareholders or the bank and as such the board is focused on finding a realistic and equitable solution.

"However we're spending every minute of every day looking at turning things round," he added.

Honeycombe announced in June that it was seeking a buyer for the business and while Baer said talks regarding a sale were still ongoing he confirmed no progress had been made.

Capital expenditure is crucial to the health of the business, Baer said, although he acknowledged the group's current finances made this difficult.

"We are working on this and it is part of the solution," he said, suggesting that once in place there would be a "considerable improvement" in the group's trading performance.