Enterprise Inns takes £195m writedown
Enterprise Inns has taken the first writedown in the value of its pub estate "in light of perceived changes in property values in recent months".
The company's pub estate has been reduced in value by 3.5% or £195m to £5.5bn.
The company stated: "The valuation was carried out by our qualified in-house team and was based on evidence available in the market, supported by informal discussions with our independent valuers."
The reduction in the value of Enterprise's estate came as the company revealed it had spent £3m in its first half on Temporary Management Agreements whereby management companies take over failed pubs and move them quickly through a refurbishment and relaunch programme so they can be re-let. Enterprise has 134 pubs operating under the scheme, more than a third of them are available to be re-let.
Overall, Enterprise's pubs are showing a decline of 10% in earnings before interest, tax, depreciation and amoritisation (Ebitda) per pub and a 8% slide in net income per pub.
"In the face of very challenging trading conditions across the pub sector, these are solid results which reflect the quality of the Enterprise Inns pub estate, the skills and determination of the Enterprise Inns team and the resilience of the leased and tenanted pub model," said chief executive Ted Tuppen.
"The majority of our licensees continue to trade successfully during these difficult times and benefit from the advice and support that we deliver.
"Despite the financial cost to our business, we believe it is right to continue to provide substantial direct financial assistance, amounting to £1.4m per month, to help deserving licensees during this severe recession.
"We have a robust balance sheet, a secure and flexible debt structure and we continue to generate strong operating cash flows, bolstered by our successful programme to dispose of under-performing and non-core assets.
"We expect trading conditions to be challenging through the second half of the year but, whilst cautious, we remain confident in our strategy and in our ability to deliver results for the full year in line with our expectations."
Overall, ebitda was down to £225m from £256m last year for the period. Profit before tax and exceptional items was down to £103m from £132m.
Its underlying debt has been reduced by £58m in the last 12 months through cash generation and asset disposals.
Britain's second biggest pubco also suspended its interim dividend payment.
