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Morning Briefing for pub, restaurant and food wervice operators

Tue 20th Nov 2012 - Breaking News - Enterprise Inns to invest £180m
Enterprise Inns to invest £180m in estate over next three years: Enterprise Inns, which owns around 12 per cent of the total UK pub stock, is to invest £180m in its estate over the next three years. Chief executive Ted Tuppen said around £10m would be spent on larger schemes worth £250,000 or more in the coming year, focused on pubs in good locations and with high quality licensees. The company, which plans to reduce estate size by 700 pubs to 5,200 over the next three years, has also identified 700 pubs where the external condition is “poor”, all of which will be addressed in the next 12 months. Tuppen said that the company would have achieved flat like-for-like income in the second half of its latest financial if it hadn’t have been for the Olympics where volumes were similar to mid-January – Tuppen estimated that the company lost 12,000 barrels of beer volume during the two weeks of the Olympics. “Sales were close to mid-January levels during the two weeks,” he told City analysts. Tuppen estimated that average licensee income is around £45,000 per annum, including the £10,000-a-year so-called live-in benefit. He reported that the company had transferred £54m of income to licenses since 2008 through average lower rents, down 12 per cent since 2008, and increased beer discounts – the benefit transfer has been worth an average of £9,000 per pub per year. “Despite this our business remains robust,” said Tuppen, who reported Enterprise income per pub stands at £65,000 per annum while the government takes an annual £145,000 in VAT, duty and other taxes for each pub in the estate. Tuppen reported that beer and cider sales were up by 6.7 per cent in value terms and down three per cent in volume terms, which is “slightly better than the on-trade market”.

WaverleyTBS costs Enterprise up to £2m: Enterprise Inns has reported that collapse of its wine and spirits distributor WaverleyTBS is likely to cost the company between £1m and £2m after licensees exercised the contractual right to source supplies from elsewhere, depriving the company of income.

Assignment market drops by half: Chief executive Ted Tuppen has reported that the company saw 140 assignments of leases in the past year, which reflects the fact that “the number of assignments has halved over the last couple of years”. He added: “The premiums being paid are not significant.” Tuppen argued that the collapse of the assignment market was a good thing since it meant that Enterprise was not coming across licensees who had spent a couple of hundred thousand pounds on an assignment premium just to start trading a pub. Some “high values” were still being paid to buy Enterprise leases in the south with demand generally high. “We had 26 highly qualified applicants with fully-funded business plans applying to take over a pub in Islington,” said Tuppen. Of the 800 pubs owned by Enterprise within the Greater London area, less than ten of them are available to let.

A thousand pubs worth more than £1m: The latest valuation of the Enterprise estate has shown it owns 1,049 pubs worth more than £1m, with a further 1,430 pubs worth between £750,000 and £1m. The average pub value within the Enterprise estate ids £720,000. The most recent revaluation has produced a two per cent drop in estate value with it worth a total of £4.341bn. The Net Asset Value is £3-a-share.

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