Enterprise Inns: net income per pub stable

Enterprise Inns has reported a "stable" performance from its tenanted pubs for the six months to 31 March despite the poor December weather.

Average net income per pub for the pubco was flat on last year for the same period at £31,200, representing continuing stabilisation following dips of 3% last year and 8% in 2009.

Its pubs recorded a 1% growth in average net income per pub for Febraury and March, which offset a similar decline in the first quarter caused by adverse weather. There were also significant regional variations with average net income per pub down 2% in the north, stable in the midlands and up by 2% in the south.

The pubco giant reported a 12% drop in Earnings Before Interest, Tax, Depreciation and Amoritisation on last year for the six months to 31 March to £179m — partly due to a 9% reduction in the number of pubs it owns and higher leasehold costs as a result of its sale and leaseback programme.

Profit before tax and exceptional items stood at £74m, down from £86m the year before with profit before tax at £61m — down from £91m.

Code of practice​

A total of 87% of its pubs are now let on substantive agreements, representing 94% of its income.

Chief executive Ted Tuppen said that additional pre-entry training and business planning requirements imposed by its new Code of Practice have lengthened the time it takes for a licensee to sign up to a substantive agreement, accounting for a 2% dip since September 2010.

Like-for-like income from those pubs remains around 2% down on last year. "However, we continue to enjoy a strong pipeline of applicants, attracted by the improved flexibility offered by our suite of lease and tenancy agreements," he said.

"Most importantly, we are confident that the stricter pre-entry requirements, particularly in respect of assignments by existing publicans, are having a positive impact on the quality and qualification of our publicans."

Tenant profit​

Enterprise spent £8m in support of its tenants in the first half — up from £7m last year.

It estimates that its tenants earn, on average, £45,000 a year including a £10,000 live-in benefit. The estimate is based on its calculation of Fair Maintainable Trade (FMT) across the estate.

"The tied model is built on mutual success," said Tuppen.

"Sustainable income growth for Enterprise will not be achieved by taking an increasing proportion of overall pub profitability and it is essential that we work with publicans to grow sales and profitability in every pub, through the flexibility of agreements, innovative investment, training and business support and cost and efficiency savings.

"We strive to provide the best possible support to all our publicans and we are pleased that our recent survey of publicans' attitudes showed that more than 82% were satisfied both with their relationship with Enterprise and with the performance of their regional manager."

Debt​

The pubco is to invest £60m in improving its estate across the wfull year. To date it has raised £47m from the sale of 212 pubs and a further £247m from the sale and leaeback of 176 pubs, which is now largely complete.

Bank debt stood at £545m at the end of the first half — well below the group's new forward start facility of £625m, which came into force on 16 May 2011. Enterprise said it expected to see further substantial reductions in bank debt by the end of its current financial year.