Century Inns - a solid but 'rather unexciting' pubco?

Since its flotation in 1995, Century Inns has profited from careful acquisition. Lorna Harrison reports.

Century Inns openly admits that City experts may view it as a "rather unexciting ... but solid" pub company.

Since its listing with the Stock Exchange in December 1995, the Cleveland-based company has made a few careful strategic moves.

It has grown its estate by some 100 pubs, bought a couple of small pub companies and invested heavily in improving pubs.

Chief executive Alistair Arkley says he has no dramatic aims and puts the City's viewpoint down to its comparisons with pub company rivals Enterprise Inns.

Before flotation, at roughly the same time, both companies held a similar size and structure. Century now has an estate of 420 pubs, while Enterprise has aimed for national status by boosting its estate to around 1,150.

"We don't want to play the quantity game, we're looking at quality," said Arkley. "There are no prizes for being the biggest company and we have our aims firmly on being the best."

Century was established in 1991 through a management buy-in. Its decision to float has showed a healthy return for the company which boasted a 23 per cent jump in pre-tax profits to £7.1m for its year ending September 1996. Turnover was up 13 per cent at £24m.

Unlike Enterprise, which is firmly set in the leased market, Century is maintaining its traditional tenancy agreements and is also heavily committed to expanding its managed house division which has already jumped from seven to 40 in the past year.

Although Arkley is keen to acquire good pubs packages, he is adamant that they must fall within the company's criteria.

"There are a lot of Flash Harrys out there looking to make a fast buck. Many people are doing deals but many are not the right deals at the right time," he said.

Over the past year the company has bought all 65 pubs belonging to The Pub Estate Partnership (Vintage Inns) as well as Royal Freehouses with its 11 pubs.

All purchases fall into the company's trading area covering the North East and, for the time being, there are no plans to buy tenancies outside this area for two good reasons. "Property prices are still low and people are still drinking a lot of beer," said Arkley.

However, branded managed house concepts could start cropping up nationally, claims Arkley.

Dr Browns is a new town centre operation offering "value-for-money" food and drink as well as live entertainment. A cross between a Firkin and a Tap & Spile, with a hint of a Yates's Wine Lodge, the venues have a distinct character - one which Arkley believes could be successful nationally.

Dr Browns forms part of the managed estate. Managed houses fall into three categories:

• Ale and Wine Houses - town centre outlets all of which could be branded into the Dr Browns theme.
• Country Taverns - offer good food, a locals' bar and many have letting bedrooms. Again, branded menus could eventually become a feature throughout these outlets.
• Communities with food - big outlets with a good food offering.

Century is keen to build on its managed division because "it makes economic sense". But unlike many pubcos it is not going big on family dining and catering for children.

"We're not anti-family but we have no plans to follow in the footsteps of Brewers Fayre," said Arkley. "We believe that a declining population will ultimately result in a reduced market for families."

Most of the 380 tenancies fall into the "community pub" sector. Century is spending money on refurbishing outlets to provide good drinking/food pubs which boast a community atmosphere. Last year it ploughed £7m into the estate.

Arkley admits there are around half a dozen "tough estate boozers" which the company is looking to dispose of but in the main it is happy with its existing estate, including the recent package additions.

Arkley claims that the majority of his tenants, which are on traditional three-yearly agreements, are happy - especially the ones who have recently come on board from the newly acquired companies.

He said: "We found that many of the Pub Estate Partnership tenants had differing agreements. They were fed up as they had seen no investment. We are committed to honouring their previous agreements but so far 40 out of the 65 have signed up with our tenancy - and that's in just three months.

"I think the majority of our tenants would consider us reasonable landlords. We are firm but fair - we help people who have genuine difficulties but are tough on those who try to cheat us."

The future is pretty clear for the company. Size is definitely not important and instead we will see managed houses grow and branding develop. Tenancies will be improved to beat off the competition and we could also see more pubs with letting rooms.

The company has some clear aims and by all accounts it is reaping the benefits of its flotation.