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Morning Briefing for pub, restaurant and food wervice operators

Thu 5th Feb 2015 - Enterprise reports 0.3% LfL net income growth, diverting capital into shorter term agreements
Enterprise reports 0.3% LfL net income growth, diverting capital into shorter term agreements: Enterprise Inns has reported that trading performance during the first 18 weeks of the financial year to 31 January has been in line with expectations, resulting in like-for-like net income growth for its leased and tenanted estate of 0.3%. The company stated: “We are encouraged that positive like-for-like net income has been delivered despite the more challenging comparatives of last year. Trading over the Christmas period was positive although we have seen a little softening in the volume of beer ordered during January. Our operating model is tailored to create the right environment for publicans to build successful and sustainable businesses and we remain focused on providing operational initiatives to aid publican profitability. In the first 18 weeks of the new financial year we are pleased to have seen a further reduction in the level of business failures as we have delivered operational support and commercial benefits to our publicans. On 18 November 2014 an amendment to the Small Business, Enterprise and Employment Bill was passed in the House of Commons inserting a “market rent only” option which, if finally enacted, would potentially have a significant impact upon aspects of our business as well as the wider pub marketplace. We are working with the industry and Government to ensure that the planned legislation does not lead to unintended consequences, whilst delivering a workable solution for our publicans, Enterprise and the industry as a whole. As a direct response to the planned legislation we are reviewing our capital investment plans for the current year. Our previous guidance of capital investment of £70 million for the full year remains unchanged. However, given that the planned regulatory changes may increase the uncertainty of returns from investments made into longer-term agreements, we are diverting an increased proportion of capital investment into similarly attractive opportunities from shorter-term agreements. At this time, our guidance for disposal proceeds of £60 million for the full year also remains unchanged although the scale of future asset disposals will be subject to further review.” Chief executive Simon Townsend added: “We are pleased to have maintained the positive momentum delivered last year into the first 18 weeks of the current financial year and remain focused on continuing this progress. We continue to believe the tie offers the best operating model for the vast majority of our pubs with our interests closely aligned to those of our publicans. Whilst the planned legislation may require us to evolve our business model over the longer term, until the detail of the legislation is clear and enacted, we remain focused on providing exceptional local support to our publicans to aid their profitability which, in turn, will enhance our performance.”

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