Pubcos

Enterprise sees 5.2% growth in free-of-tie pubs

By James Evison contact

- Last updated on GMT

Chief executive of Enterprise Inns, Simon Townsend: "We are continuing to make good progress."
Chief executive of Enterprise Inns, Simon Townsend: "We are continuing to make good progress."

Related tags: Pubs code, Renting

Enterprise Inns has seen growth of 5.2% in its free-of-tie business and 1.8% from its tenanted and leased business in like-for-like net income for the first half of the year, the pubco has announced. 

The pubco also said its new premium tenancy agreement​, which will be launched in the second part of the financial year following the launch of the pubs code this summer and the Market Rent Option, aims to reduce property obligations for licensees - as well as committing to "where appropriate" matching capital investment from licensees.

Free of tie

The pubco's commercial arm, which includes 264 properties - most of which operate as free-of-tie pubs - had generated a rental income of £15.6m with an overall value of £181m as a portfolio, producing a yield of 8.6%.

It confirmed that it would expand this offer to around 300 properties by the end of September this year - with another 150 added next year across the same time period.

MRO

On the impact of the MRO, the pubco said: “The impact of the MRO is expected to take effect over five years, as MRO events are largely expected to arise through the cycle of five yearly rent reviews and agreement renewals.

"Depending on the date that the Pubs Code takes effect, we anticipate that in our 2016 financial year we will have approximately 200 such events that may constitute an MRO event under the new regulatory regime and some 600 such events per year thereafter.

“As the underlying intent of the legislation has become clear, so our response has developed. We are confident that our strategic plan provides us with sufficient flexibility to accommodate this legislation and represents the appropriate response to its likely impact.”

Managed

It also released figures about its managed pubs estate​ with a total of 75 outlets across its Bermondsey Pub Company, Craft Union and Managed Expert/Enterprise Managed Investment models. The Craft Union business will expand by around 20 pubs over the next year alongside single figure growth in its other managed brands.

Enterprise said the six months performance of £142m earnings before interest, taxes, depreciation, and amortization (EBITDA) was in line with its own expectations - and the impact of pubs which it has sold off.

Profit before tax was £57m and after tax was £33m.

Townsend

Chief executive of the pubco, Simon Townsend, said: “We are continuing to make good progress. Our leased and tenanted business is maintaining its growth momentum while the rapid expansion of our managed operations and commercial property portfolio is on track and delivering results in line with our expectations.

“We are confident that the execution of our strategy is demonstrating a clear path to maximising long term shareholder value and our returns driven approach to allocating excess cash will deliver near term benefits to all our stakeholders.”

Euro 2016

Enterprise also presented its thoughts on the impact of this year's summer of sport​, stating it was set to benefit from the Euro 2016 championship this summer​.

It's trading statement said: “The first week of the second half of the year was inevitably adversely affected by the timing of the Easter period, but since then trading has been broadly in line with our expectations.

"We forecast trade to benefit from the UEFA Euro 2016 football championship in June and July although we do anticipate a period of disruption to follow the introduction of the Pubs Code. We remain confident that we will deliver positive like-for-like net income growth in our leased, tenanted and commercial estates for the full year.”

Related topics: Ei Group

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