Speaking at The Morning Advertiser’s online MA500 conference on 14 May, Livelyhood Pub Group’s Tom Talbot told delegates that he found the headlines and intentions of the Government’s financial support “very clear” during the application process, and that it was – for the most part – apparent what was expected of both him and his business.
Talbot explained that south London-based operator Livelyhood had managed to successfully apply for grants for two of its six sites due to their rateable values and had furloughed all but three staff members, including Talbot, which equates to 99% of workers.
“In the early stages, you’re trying to ascertain what your position is, how you use the support and move forward,” he said. “At the time, we didn’t know how long the period of closure was going to be so you’re making a lot of decisions in the early stages.
“The grants were simple. It was about the pace of the local authority – one of ours was really quick and one had a slight delay – but I think the hoops for the furlough scheme were the grey area in the initial stages. It’s a great scheme, an absolute lifesaver, completely critical and we’re very grateful.”
However, Talbot acknowledged that the sheer volume of information had, at times, left him feeling “a bit lost” among a swathe of financial fine print and detail. Yet a matter of days after Boris Johnson called last orders in Britain’s pubs on 20 March, he says Livelyhood was ready to set out its shutdown stall.
“It was by the Monday or the Tuesday that we made the decisions based on our understanding of the guidance at the time, which meant we could move forward with furlough and communicating to our team what that support was,” he said.
“We put that in a hold position, really. We said this is our position for two weeks, guidance will continue to come, we’ll continue to communicate and be in touch just so we wouldn’t be in limbo for that time while we were establishing the detail.”
Supporting the business in ‘the pause phase’
City Pub Group’s Clive Watson told delegates that his company – which operates 45 sites across the south of England – had been able to claim on the business rates rateable value of less than £51,000, received Government grants of £25,000 on eight of its sites and were able to, like Livelyhood, furlough 99% of staff members under the Government’s Coronavirus Job Retention Scheme.
“We haven’t gone down the business interruption loan at this stage – we don’t need to – and obviously the business rates relief until March next year has been very helpful as well,” he added.
On the subject of grants, Watson explained that financial support had been used to cover both company head office costs as well as pub costs.
“We’ve furloughed most of our head office but we’re topping up salaries there – so the grants have helped us in that area. Really, it just goes into the pot that we need to continue to run our business.
“They haven’t been used in a particular area, it’s money coming in that helps to mitigate the money going out.”
Talbot added: “It supports the business in the pause phase, if you want to call it that. We were unable to turn off all costs and with, no income coming in, there was a mix of costs that we were still committed to and liable for.
“We’ve got a small team that’s working still. All of the venue teams are furloughed. Our direction there is about how do we support the team and the business towards reopening now. It’s quite spread.”
Fortunate access to shareholders
Within a week of Prime Minister Boris Johnson calling last orders on Britain’s pubs, City Pub Group revealed it had raised £15m from the successful pacing of 30,000,000 new ordinary shares, something that Watson says helped “strengthen the balance sheet” on top of Government support.
“We were fortunate that we had access to shareholders to support the business. Had we not had that, we would have obviously gone down the business interruption loans process,” he explained.
“I know a number of smaller independent pub companies that are trying to do that and it seems to be much more challenging for those companies who don't have access to outside shareholder finance.
“Even with the Government guarantee of 100% of the loan, a £50,000 maximum limit doesn’t really go that far – I think that’s the one the Government needs to improve. They need to encourage the banks to process these loans much quicker than what’s happening at the moment.”
Like Watson, Talbot told MA his company hadn’t felt the need to pursue a business interruption loan.
“We’ve been working with our bank to a degree,” he said. “It’s not a preferred option. Everything at this stage is debt towards a business that’s unable to trade, which really highlights the importance of how we move forward and how we get to the reopening stage in the best and leanest way possible.”
Need to address landlords and insurance
Discussing the extent and effectiveness of the Government’s financial support for the sector during the Covid-19 pandemic, both Watson and Talbot agreed the authorities had reacted well and that support had been efficient.
“It’s now all about how we move forward,” Talbot added. “There’s going to be a lot of change. By default, pubs aren’t spaces where people practice social distancing, so how we modify? How we remodel and how we adapt over the next stages and around any support – if there is support for the next piece – is really the key bit.”
On top of praise for the Government’s response, however, Watson added that he believed the powers that be should take aim at landlords and insurers next.
“Some landlords have been very good, come to the table, sat down and negotiated,” he said. “Others have been much more aggressive and the Government needs to put out guidelines as to how landlords and tenants can work through this together.
“Insurance companies are trying to run away from their obligations and, again, there needs to be more guidance from the Government directed towards insurance companies to honour the policies that have been taken out from companies like our own where it’s pretty obvious what the policy intends. They’re trying to find loopholes or even half loopholes to get out of it – and that’s totally wrong.”
No stone left unturned
Looking ahead to the next stage of the pandemic to wrap up the online session, Watson explained every company within the sector should leave “no stone unturned” in their efforts to finance their business through what remains of the Covid-19 pandemic.
“The state aid that we’ve received has helped us to survive or, hopefully, will help us to survive, but as we come to a point where state aid will be reduced, companies will be uncapitalised,” he said. “They will have eaten into their reserves and it will be difficult for them to come out of this.
“I guess it’s [a matter of] continuing to work with landlords, not just in the short term, but trying to work on a situation that pushes out the time that the full rent kicks in and trying to renegotiate leases. Having bank support, if that’s applicable, and looking to outside shareholders even if you’re a private company to create liquidity in your business – anything, really, no stone left unturned because it’s not going to go back to normal for quite a while. Looking at your cost base and making sure that you bear down on every cost you can.”
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