Enterprise Inns: snow cost £2m

Enterprise Inns has paid tribute to the "resilience" of its licensees in limiting the effect of the severe weather on its operating profit to £2m in the first quarter.

At its AGM, the pubco will tell shareholders that average net income per pub is down by around 1% over the 16 weeks to 15 January with like-for-like net income per pub in the substantive estate down by around 2% — in line with end of year results.

"The dangerous conditions caused by the extreme cold and snow kept many customers at home at a time when pubs across the industry would expect trade to be at its peak," it said.

"It is therefore a tribute to the resilience of our licensees and the determination of their customers that we estimate the impact of these extreme conditions on our first quarter operating profit to be no more than £2m.

"We can take further encouragement from performance during the three weeks following the quarter end where, against easier comparables due to last year's poor weather, some of this December shortfall has already been recovered."

It remains "confident" that average net income per pub for the whole estate and like-for-like net income in the substantive estate will improve during the year.

Sale and leaseback​

In the 16 week period Enterprise sold or exchanged contracts on 105 non-core pubs for £32m — a profit of £4m on book value. Over the full year it expects to dispose of up to 500 pubs, generating total net proceeds in excess of £125m.

The pubco also completed sale and leaseback deals on 58 pubs for £73m —a profit of £15m on book value, based upon 35-year leases back to the company at an average rental cost of 6.8%.

It expects to complete a further 50-60 sale and leasebacks over the year. Enterprise said its "strong cash generation" from its business and disposals had been used to reduce borrowings on its bank facility.

Code of practice​

Enterprise said its new code of practice had been "well received by the vast majority of our licensees".

It said: "Not only does this new Code formalise the wide range of agreement types available to licensees, in particular offering greater freedom from the tie where appropriate, but the Code also enhances the level of disclosure and requirements for training which must now be completed prior to a licensee taking a pub with Enterprise."

It has delivered 1,400 training days to 700 licensees in the first quarter on both pre-agreement training and business development courses.

One down-side to the code seems to have been the delay caused in getting people into pubs. "Whilst stricter pre-entry requirements have led to some delays in signing new substantive agreements, we remain focused on achieving our objective of more than 90% of the estate operating on substantive agreements during this financial year," it said.

Challenges​

Despite the economic uncertainty and VAT rise, Enterprise said there is "clear evidence that a significant majority of our estate is successfully facing up to these challenges and trading well".

It added: "We are further encouraged that the Coalition Government recognises the economic and social contribution that responsibly run, thriving pubs at the heart of communities can make to the Big Society and we look forward to measures designed to promote this objective."