Failures up 50% at Enterprise
Business failures among Enterprise licensees are running 50% ahead of last year at a rate of 25 a month compared to a figure below 20 a month a year ago, the company has reported in an interim statement.
Chief executive Ted Tuppen said: "A poor licensee in the past had an escape route in the assignment market and that market has now gone.
"These guys don't have anywhere to go. We do accept surrenders but, typically, these are people who paid too much for their leases. It's obviously a tragedy in each case."
Enterprise reported that increased support for licensees, which is now costing £1.7m a month, is reducing the rate of business failures.
Enterprise said that 6,100 of its pubs, 81% of the estate, are delivering net income down 3% on last year.
Excluding pubs closed pending disposal, the number of closed pubs has reduced to just over 100 and Enterprise has seen a significant reduction in the number of pubs operated under temporary tenancy (TAW) agreements.
The company currently has more than 200 pubs operating under its Temporary Management Agreement (TMA) scheme and short term management and administration costs incurred under the scheme have "stabilised" at around £700,000 per month.
The initial cost of the scheme was around £800,000 per month for around half the number of pubs. Enterprise insisted underlying trading performance "appears to be stabilising", with the rate of decline in beer sales reducing.
The company reported: "We continue to incur substantial costs helping licensees deal with the impact of weak consumer confidence and the pressures of increased costs. Some 800 licensees currently receive rent concessions and special discounts under our Business Recovery scheme."
Enterprise has sold 277 pubs for a total of £84 million, generating a profit over book value after taking account of costs of closure and disposal.
Net income from these pubs was £7m in the full year to September 2008. A total of £100m is the expected realisation from pub sales this year.
The company added: "We intend to refinance our existing bank facilities before the end of the next financial year and remain confident that adequate debt facilities will be available to the group at the time of our refinancing."
On the Business and Enterprise Committee report on pub companies. Enterprise stated: "The pub and brewing companies, collectively through the British Beer and Pub Association and individually, are engaged at many levels with Government to ensure that the importance of the British pub in our communities remains high on the agenda and that the relationship between pub owners and licensees is balanced, fair and transparent and continues to evolve in a way which ensures vibrant competition, wide choice and fair prices for consumers."
