Enterprise: rate of pub failures slowing
The rate of business failures in the Enterprise Inns estate is "slowing" with the amount of financial help required from the pubco also reducing.
Enterprise said there had been "no material change" in trading to 30 September, since it last reported on 16 July. A total of 90 of its pubs are currently closed.
In July, it said business failures were running 50% ahead of last year at a rate of 25 a month compared to a figure below 20 a month a year ago. It was also spending £1.7m a month on rent concessions and extra discounts to help tenants.
"The core estate continues to demonstrate resilience in challenging trading conditions although overall profitability remains affected by the ongoing costs of discretionary financial support given to struggling licensees, business failures and temporary management agreements," said chief executive Ted Tuppen.
"It is however encouraging that, thanks to our successful programme of disposing of less viable pubs, together with some stabilisation in beer volumes, reports of improving food sales and an abatement of cost pressures on licensees, we are beginning to see the rate of business failures slowing and the requirements for financial support under our Business Recovery Initiative reducing."
Valuation
Its pub estate, 98% of which is freehold, will be independently valued on 30 September and the pubco expects a "small reduction in overall sales". It has 181 short leaseholds with an annual rent of £2.6m. "We are encouraged that many valuers are saying that pub values may now be stabilising and that demand for good quality assets is increasing."
It has sold 365 bottom-end pubs, which did not have a "viable" future at the company, during the year for £103m — in line with book value. Last year, net income from those pubs was £9m. "We expect to continue this disposal programme throughout the coming year," said Tuppen.
Enterprise said it is currently £64m ahead of its amoritisation schedule with the next scheduled maturities being £60m in February 2014 and £600m in March 2018.
Its £1bn bank syndicated facility is due for renewal in March 2011. "We have maintained an ongoing dialogue with our advisers and the members of our banking syndicate and remain confident that adequate debt facilities will be available at the time of our refinancing, which we expect to take place before the end of the next financial year," said Tuppen.
Pubco inquiry
Enterprise said it still considered the findings of the Business and Enterprise Committee "ill-informed" and "based upon hearsay rather than evidence".
It said it had made "good progress" on its 13-point plan for improving relations with its tenants and had co-operated "fully" with the Office of Fair Trading investigation, following the Campaign for Real Ale's super-complaint.
• Get all the latest pub trade news every day direct to your inbox. Sign-up for our news alerts. Click here.
