Enterprise Inns: trade stabilising
Enterprise Inns has reported an "improving trend in trading performance" in its third quarter with continued stabilisation across its tenanted and leased estate.
Average income per pub across the estate for the 42 weeks to 16 July is down 2% on last year but third quarter performance was in line with last year after trade was boosted by the good summer weather and the World Cup.
Growth in the number of pubs let on substantive agreements has slowed due to stricter pre-entry training requirements for new licensees but 86% of its pubs, representing 93% of net income, are currently let on substantive agreements — a figure it expects to grow by the year end.
Like-for-like income per pub at pubs let on substantive agreements for the year-to-date is down by almost 2% on last year.
The pubco now has 55 pubs operating under Temporary Management Agreements but is aiming to reduce that level to zero by the end of the financial year.
The percentage of pubs closed or let on short term agreements has remained broadly constant. "We continue to enjoy a strong demand from new licensees wishing to take on good quality pubs," it said.
Enterprise has so far disposed of 402 "poorer quality and potentially unviable pubs" for £124m for the year to date.
A further 102 pubs have exchanged contracts or are in the hands of solicitors for completion, raising a further £29m. Sales have been "significantly ahead of book value" it said.
The company has now exchanged contracts or completed the sale and leaseback on 69 London pubs generating £110m achieving a "substantial profit over book value" and an average yield of 6.4%.
"As we continually seek to improve the overall quality of the pub estate, whilst at the same time reducing bank borrowings, we would expect to continue with both the disposal of unviable pubs and the sale and leaseback programme at a similar level during the next financial year," it said.
BISC Report
Enterprise said it had now made a number of enhancements to its Code of Practice, which has now been accredited by the BII, since the Business Innovation and Skills Committee report.
"We are now in the process of launching our new suite of agreements, offering licensees greater flexibility in the terms of the agreement that they might choose, including increased levels of discounts on beer and the option to be free-of-tie for wines, spirits and minerals, bottled beers and ciders, locally produced cask ales and gaming machines.
"Whilst these options will be reflected in the level of fixed rental charges levied by Enterprise Inns, this flexibility will give licensees greater choice in developing a business model which most closely aligns with their particular business plan and has been well received across the industry."
