Tuppen: Enterprise lessees coping well

There has been no material deterioration in the key indicators of Enterprise lessees' financial health despite the harsh economic climate, according to chief executive Ted Tuppen.

The boss of Britain's second biggest pubco admitted times were tough and beer volumes had dropped due to the smoking ban, rising fuel, food and mortgage costs and taxes putting the squeeze on consumer spending.

Enterprise Inns spent £3.5m in supporting struggling tenants in the first half of the year - and even more in the second half as the credit crunch began to bite.

It said the consumer slowdown had taken its toll on EBITDA for the 42 weeks to 19 July.

"The majority of our licensees are coping well with the current consumer downturn," said Tuppen.

"Where appropriate, we have the resources to help licensees who are experiencing short term trading difficulties, thereby demonstrating an essential strength of the leased and tenanted pub model."

He added: "Thanks to the quality of our pub estate, where food sales represent an increasing proportion of pub turnover, the resilience and innovation of the majority of licensees and our continuing support where appropriate, we are pleased that there has been no material deterioration in the key indicators of our licensees' financial health and sustainability."

Reit​

Enterprise said that talks over conversion to tax efficient Real Estate Investment Trust (Reit) status with HM Revenue and Customs had progressed well and they were now in a position to seek the approval of shareholders.

The conversion would involve the setting up of a new operating company, which would take an intermediate lease over the freehold pub estate from Unique Pub Properties.

To convert to the lower taxes of Reit status, 75% of revenue must come from rent with most of the profit being distributed to investors.

Supermarkets​

Enterprise also called for action against deep discounting in the off-trade and the Chancellor's duty escalator on alcohol announced in the Budget.

"The Government's ill-conceived increase in alcohol duty will adversely impact all responsible licensees and pub goers and do little to address the much publicised problems of anti social behaviour and binge drinking.

"In this regard, we would once again call into question the strategy of the major supermarkets, some of whom continue to use alcohol as a traffic builder, often selling multi packs at below cost into a market place where consumption is almost entirely unregulated.

"In the absence of responsible retailing, we would expect the Government to introduce sensible legislation to address this issue."

Estate​

During the 42 week period, Enterprise acquired 51 pubs at a cost of £44m and invested almost £60m alongside its licensees.

It disposed of 45 pubs and plots of surplus land for £25m.

Its property valuers believe there will be a modest uplift in the value of its estate by 30 September.