Enterprise Inns, one of Britain’s largest ‘pubcos’ and owner of a commercial property empire of some 6,500 properties, has announced six-monthly pre-tax profits of £74m, down from last year’s £86m. The drop in profits is attributed to its ongoing programme of reducing commercial property holdings, together with an unusually harsh winter putting off all but the most hardened pub-goers.
During this period, it trimmed 212 pubs and other properties from its commercial property portfolio. So far it has reduced debt by £175m – around 9% of its total – and intends to sell a further 500 pubs before the end of the year. It has done well from sale and leaseback in a strong investment market, selling 71 pubs at auction. In total this strategy has seen the offloading of 176 pubs, raising £247m at an average 6.5% rental yield.
According to Enterprise CEO Ted Tuppen, the focus on debt reduction has seen bank borrowings fall to £545m. Tuppen underlined the rising costs in doing business, an estimated 12% in two years, referencing the VAT rise, the Budget’s beer duty increase and higher energy bills. These mean an interim dividend won’t be paid to shareholders, although returning cash to shareholders remained ‘a key objective’.
Net income per pub remained flat at £31,200, a figure Tuppen expects to increase in the second half of the year once it completes the rest of its planned commercial property sales.
There was a regional split in the figures; pubs average net income rose by 2% in the south, remained static in the Midlands and fell 2% in the north. In total it dropped to £71m.
The powers that be say that they had no plans to follow the commercial property path of Punch Taverns, the UK’s other large pubco, which intends to demerge its managed pubs from its leased estates in order to tackle its estimated £3bn debt.
