Enterprise Inns plc, the leading operator of leased and tenanted pubs in the UK, has announced its interim results for the six months ended 31 March 2015, as well as a strategic review designed to have a managed pub business operating in the region of 750-850 pubs by September 2020, and a commercial property business with around 900-1,000 property assets.
Greater than expected
Douglas Jack of Numis commented:
“H1 PBT rose 5% to £57m (we forecast £57m), with LFL net income up 0.6%, EBITDA down 2% and net debt down 4%. We are holding our forecasts. The direction of the strategic review is as expected, but the scale of the conversion programmes to managed pubs and commercial leases is much greater than expected.”
Whilst Simon Townsend, Chief Executive Officer commented on the results:
“We are pleased to report like-for-like net income growth for the first half of the financial year. At the start of last year we delivered net income growth for the first time in many years and to have built upon that momentum is particularly satisfying. To have achieved this performance against a backdrop of legislative uncertainty reflects the professional approach of our teams and the strength of relationships we have with the vast majority of our hard working publicans.
Maximising returns from each asset
“We are now implementing our new strategy which provides a clear path to maximise returns from each of our assets. We are building upon our core capability of operating leased and tenanted pubs by extending our operational flexibility into the direct management of pubs and increasing the scale of our commercial property business.
“This new strategic direction will ensure that we generate the greatest value from each of our assets, and will also accommodate the requirements of the new legislation. This is a sustainable strategy for our business which embraces different operating models to best serve our publicans and their communities whilst delivering greater value to our shareholders.”
Financial highlights
- Continued like-for-like net income growth, up 0.6% (H1 2014: 1.1% growth)
- EBITDA before exceptional items of £144 million (H1 2014: £147 million), in line with expectations and reflecting the impact of planned disposals
- Profit before tax and exceptional items increased to £57 million (H1 2014: £55 million) as interest savings from reduced debt offsets reduction in EBITDA
- Profit after tax at £4 million (H1 2014: £37 million) largely due to exceptional costs of £26 million in respect of partial refinancing of 2018 corporate bonds and property charges of £21 million (H1 2014: £6 million)
- Adjusted earnings per share up 4.7% at 9.0p (H1 2014: 8.6p)
Operational highlights
- Capital investment of £33 million (H1 2014: £41 million) funded from net disposal proceeds of £34 million (H1 2014: £42 million) with 42% focused on growth driving investment initiatives (H1 2014: 32%)
- Operational focus aimed at supporting publicans has helped to deliver a 21% reduction in the number of business failures
Strategic review
- Enterprise announces the outcome of a strategic review which was commenced in April 2014 and aims to optimise the returns from every asset within the property portfolio. In order to achieve this, they are increasing their operational flexibility which means they will:
- continue to reinvigorate the tied tenancy business;
- expand the managed business;
- build a high quality commercial property portfolio; and
- make disposals where appropriate to optimise returns
- Whilst recognising that this will be a dynamic process, they are planning that by September 2020 the managed pub business should be operating in the region of 750-850 pubs and expect to have a commercial property business with around 900-1,000 property assets.
H&C News will shortly return to present the details of the Enterprise Inns strategy as outlined today.