Q: The first half of the year was characterised by tough trading conditions and rising costs. What are you doing to mitigate rising prices?

A: We do have some protection in the form of our existing contracts. For example, we renegotiated our lager supply from the start of our financial year, and we’ve got a three-year contract which is showing some very substantial savings. On the energy side, we’ve also got a gas contract that’s fixed until October 2010. So we’re protected in some respects.

Q: How much cost can you pass on to the consumer, given the current climate?

A: It’s more difficult than it has been for a number of years, and for a few reasons, one of which would be the significant duty increases we’ve just seen, and the future increases that have also been announced at the same time. We’ve also got a weaker consumer outlook, and the relative pricing to off-trade, I think, does make it more difficult than it might have been in previous years to pass those cost increases on to the consumer.

Q: A number of your peers have announced they’re going to convert to REIT status. Are you likely to follow them down that route?

A: Our business structure is different from those of our competitors you’ve referred to, so the decisions for us are not quite so straightforward. And certainly in the short-term, the volatility in the credit markets makes it very difficult anyway. Having said that, it is something that we’re looking at very closely. We’re exploring all of the options with our advisers. We’ll do a cost-benefit analysis, and see whether the potential to actually convert to a REIT will be advantageous to us.

Q: So when are you likely to come to a decision?

A: It’s a very complex area, and at the moment we don’t have a fixed timetable that we are working towards.
What I would say, in the meantime, is that the decision will be difficult anyway, given the current volatility in the debt markets. And also I would say that the upside for us is not as great in the short-term, because we’re benefiting anyway from a very low tax charge.

So it’s something we’ll keep under review and we hope to be able to say something in the coming months.

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