News Article Comments : Inbev: UK beer volumes down 10.3%

RE: Inbev: UK beer volumes down 10.3%

17 th January 2008

Enterprise

Inns plc

Interim

Management Statement

Enterprise Inns plc (ETI) publishes its

interim management statement for the 15 weeks to 12 th January 2008,

to coincide with its Annual General Meeting to be held at 11.00am today.

ETI’s business model remains robust,

despite the difficult trading conditions which it predicted at the time of its

preliminary announcement in November 2007, with EBITDA running broadly in line with

the same period last year and earnings per share ahead.

This post replies to J Mark Dodds > RE: Inbev: UK beer volumes down 10.3%

RE: Inbev: UK beer volumes down 10.3%

During the same period, ETI has disposed of

10 pubs and 2 plots of surplus land for a total

consideration of £7 million, a profit over

book value of £2 million. There is considerable

interest in the batch of 96 pubs that we

put on the market in November for sale for alternative

use and current indications are that these

former pubs will also deliver a profit over book

value.

ETI is continuing discussions with HMRC

regarding a potential conversion to REIT status and is exploring whether an

internal restructuring of the Group’s activities, currently being considered by

the Board and designed to enhance shareholder returns and optimise the benefits

of our proposed refinancing, would result in the Group becoming eligible for

admission to the REIT regime.   HMRC is

considering various aspects of this proposed restructuring and we will update

shareholders when there are significant developments to report.  

The balance sheet and cash flows of the

business remain healthy, with debt ratios in line with those reported at the

end of September 2007. As previously indicated, we have capacity to refinance

the Unique securitisation and we are reviewing all options with our advisers.

In the meantime, we continue to buy back shares for cancellation and since 30

September 2007 have purchased 5.5 million shares at a cost of £29 million

excluding associated costs.

This post replies to J Mark Dodds > RE: Inbev: UK beer volumes down 10.3%

RE: Inbev: UK beer volumes down 10.3%

Mark, no splitting of hairs purely a pointing out of your assertion that you are forced to look upon your beer sales as loss leaders gives an inaccurate picture. Lower profit generator yes but by no means a loss.

Mark I would be interested in knowing where you obtain your benchmark from of 65% and how this relates to individual pubs. Gross profit % attainment cannot be looked at or considered in isolation as it is dependent on turnover to produce the wealth to pay the bills. If you are only attaining 30% gp then you need to sell twice as much to achieve the same profit as attaining 60% gp. As you know it is always a balancing act between turnover, costs and gross proft.

In your example of requiring 65% surely this is dependent on your achievable turnover. If you turn over £400k @65% gp this produces £260k profit. If you can only make 60% gp then you require to increase your turnover to £433k to make the same profit.

The problems arrise when one of these affected and restricted to alteration by the licensee. In the case of the tie he looses control over his GP's and in a falling economy( or under legislation) he looses control over his turnover and in an inflation heading economy he looses control over his costs.

Most businesses can survive and adapt to loosing control over one of these components of the equation as with tied tenants still being ok with restricted GP% control. When control over two or more of these components happens then things get really tough and sometimes impossible.

Freehold licensees have not hit this economic downturn with one of their hands tied (excuse pun) behind their back by their landlords (two if you count upward marching rents) and as a result are not experiencing the sharp end reality being experienced by tied tenants as acutely.

Ken Nason

This post replies to J Mark Dodds > RE: Inbev: UK beer volumes down 10.3%

RE: Inbev: UK beer volumes down 10.3%

As you say Mark , you are from a catering background and not that of the pub world for if it was vis versa you would know that there has never been a world "before tie" , Ken , do you want to enlighten Mark about life in the "80s" when there were managed houses and tied tenancies only , except for the few (3% of total estate) leaseholds and the freehouse estate which accounted for 25% of the pub stock , the same % as in 2008. No splitting of hairs Mark , just fact and people like Ken and yours truly were there.... in "feudal brewery land".

This post replies to J Mark Dodds > RE: Inbev: UK beer volumes down 10.3%

RE: Inbev: UK beer volumes down 10.3%

THIS article is of great concern.

This post replies to J Mark Dodds > RE: Inbev: UK beer volumes down 10.3%