Further written evidence submitted by
Gary Mallen
I attended the first oral hearing of the BISC on
30 June to give evidence, and I attended the second oral hearing
on 7 July as a spectator. I write in response to the Chairman's
suggestion to send in supplementary information.
There are a number of points on which I felt further
clarification was required in order to avoid misleading the committee.
Q143 Page 6—Mr Tuppen
claims that I "made a reference—completely incorrectly—to
the survey of 700 pubs that we carried out. He compared the estimate
that appeared in our interim accounts with a survey carried out
independently covering 701 pubs, 137 of which were Enterprise
Inns pubs." It is an irrelevance that only 137 of those pubs
were Enterprise Inns pubs, the survey was commissioned by Enterprise
Inns by an approved independent firm of accountants. It is also
incorrect to suggest that I stated that they were Enterprise Inns
pubs. Mr Rob May attended a meeting at ALMR offices in July 2010
to discuss the validity of the ALMR survey of benchmarking costs,
the results of both surveys were remarkably similar and they both
clearly showed that operating costs were in excess of 40%. Enterprise
Inns were in possession of information from two independent surveys
which showed the true operating costs, and yet they still chose
to use 35% in the example in their interim accounts.
Q167 Page 11—Mr
Tuppen stated that 30 of their employees are RICS qualified, equalling
around 7-8% of their workforce. This point needs some clarification.
RICS membership is open to Chartered Surveyors from all industries.
The majority of the RICS members working for Enterprise Inns will
be building surveyors covering property maintenance and will not
be licensed trade valuers experienced in rent reviews. I know
of only three such RICS members within Enterprise Inns that are
qualified licensed trade valuers, and they cover some 7000 pubs.
Q171 Page 11—Mr
Tuppen stated that I was not RICS qualified nor a member of RICS.
I am NOT a RICS member, as was stated in the evidence on
30 June, and I have never claimed to be a member. I am adequately
qualified in carrying out rent reviews as I have been active in
the market place for almost 20 years. I was however a member of
the RICS panel that revised the RICS guidance notes on pub valuations
as an invitee of RICS. RICS Guidance clearly states the "The
valuer needs to be actively involved in the market for this class
of property as a practical knowledge of the trading aspects of
a trade related property is fundamental to the analysis of the
property's existing operation and trading potential" I satisfy
that criteria. Merely being a RICS member does not qualify a person
to value trade related properties, and there is no formal qualification
from RICS or any other body for valuing public houses.
Q173 Page 11—I am
representing considerably more than the seven clients Mr Tuppen
referred to, I merely used those seven as they all had specific
instances of the routine ignoring of RICS guidance. If, as Mr
Tuppen has suggested, all rent reviews are signed off by Divisional
Directors and one of the three Licensed Trade Valuers, then I
fear the situation is worse than I had considered. Of the seven
pubs submitted in my evidence, six of them had a costs percentage
allowance less than 35%, and one of which was 27.7%. Given the
information available to Enterprise Inns, I do not believe the
RM's, Divisional Directors or the Licensed Trade Valuers can be
giving any consideration to the RICS guidance.
Q174 Page 11—I have
not met, nor have heard of a single BDM or RM that works for Enterprise
Inns that is a RICS member.
Q178 Page 12—Not
one of the seven RM's for the seven premises contained within
my evidence, when specifically asked, was aware of the RICS guidance
nor the ALMR benchmarking survey.
Q194 Page 15—I wish
to point out that RICS guidance makes no such statement as "Comparisons
between tied tenants and free of tie tenants are about as relevant
as between tied tenants and fish and chip shops".
Q208 Page 18—Mrs
Simmonds wrongly stated that it was the third year of the ALMR
benchmarking survey, and it is extremely common knowledge that
it is the fifth phase of results. She also stated that it is mainly
about managed pub information which is also incorrect. However,
the survey commissioned by Enterprise Inns (a BBPA Member ) clearly
shows costs in excess of the ALMR benchmarking survey, and those
were obtained by single operating tenants.
I hope that the above proves helpful, and should
the committee feel that I can assist further, then I am happy
to do so.
31 July 2011
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