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Tue 17th Nov 2015 - Enterprise Inns reports operational progress and strategy on track
Enterprise Inns reports operational progress and strategy on track: Enterprise Inns has reported like-for-like net income growth of 1% in the final quarter of its year, resulting in an increase of 0.8% for the year ended 30 September 2015. Ebitda before exceptional items was £296m (2014: £302m), in line with expectations after disposals. Profit before tax and exceptional items increased to £122m (2014: £121m). There was a statutory loss after tax of £65 million (2014: £30 million profit) after net exceptional charges of £162 million (2014: £65 million) which primarily relates to the impact of the total estate revaluation, which is down 2.7% (2014: down 1.9%). The company reported: “The execution of our strategic plan for the business is on track. Delivery of this plan will ensure we can best serve our publicans and communities whilst providing a clear path to maximising shareholder value through the optimisation of returns from every asset within our estate. Operational enhancements aimed at improving publican profitability have helped deliver a further 18% reduction in the number of business failures. The total number of managed house pubs trading under our Bermondsey and Craft Union operations increased from 16, at the time of our strategy announcement on 12 May 2015, to 35 at 30 September 2015. We have increased our portfolio of commercial properties from 185 sites, at 12 May 2015, to 213 sites and have increased the average annualised rental income from £53,000 to £56,000. Capital investment of £69 million (2014: £66 million) of which 44% was focused on growth driving initiatives yielding expected returns on investment in excess of our 15% hurdle rate. Net proceeds from disposal of primarily under-performing assets of £75 million (2014: £73 million) used to fund investment programme. Chief executive Simon Townsend said: We are pleased to report further operational progress and a second, successive full year of like-for-like growth in net income across our leased, tenanted and free-of-tie estate. This has been achieved by maintaining a relentless focus on the many operational activities and initiatives with which we are supporting our publicans to improve their profitability. Trading in the first six weeks of the new financial year has been in line with our expectations and continues to maintain our growth momentum. While the market in which our pubs operate remains highly competitive, and as we prepare for the implementation of new legislation in 2016, we are encouraged by the continuing momentum of our business, reflecting the exceptional efforts of our publicans and the strength of our relationships with them. The implementation of our strategic plan is on track, providing us with greater flexibility with which to optimise returns from each of our assets and deliver greater value to our shareholders. Our managed house estate is being successfully expanded and our commercial property portfolio continues to grow in both scale and quality in line with our plans. We have attracted some outstanding talent to help us execute our new strategy. They bring a wealth of experience to complement the quality, loyalty and determination of the existing Enterprise team which, combined with the skills and expertise of our publicans, gives us confidence in the Group’s prospects. Earnings growth momentum has been delivered through an improvement in like-for-like net income achieved from our leased, tenanted and free-of-tie estate. We have grown our like-for-like net income in every quarter of the year with the full year growing by 0.8%. We are pleased with this outcome particularly as the previous year, which included the FIFA World Cup, represented a strong comparative period. As with last year, all geographies across our estate reported year-on-year stability of income, but it was the South where the growth was once again most significant. Trading in the 661 pubs based in the Greater London region remained particularly strong with like-for-like net income up by 3.1%. We have a strong core of our estate trading very well with the top 90% (4,532 pubs), in terms of income earned, showing like-for-like net income growth of 2.6% on the previous year.” Of the company’s new managed expert strategy, partnering with experienced multi-site operators in joint venture, he said: “We are aiming to establish, at least, a further three Expert partnerships during 2016, with the objective of having around 8 to 12 sites in total operating in the Expert model by 30 September 2016. The experience we have gained in working with Rupert (Clevely) in the design and execution of the model gives us confidence that this approach provides us with the optimum means with which to operate sites with exceptional profit potential.”


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