Enterprise Inns plc has reported for the 44 weeks to 3 August 2013, indicating a difficult first half of the year during which like-for-like net income declined by 4.2%, but an improving trend in performance in the second half with like-for-like net income for the total estate down by 2.7% in the 18 weeks to 3 August 2013. Encouragingly, the first five weeks of the final quarter have seen like-for-like net income growth.

Adverse weather + Waverley impact first half

In the first half of the year, income was adversely impacted by some exceptionally poor winter weather alongside the cessation of trading of Waverley, their wines and spirits distributor.

In the third quarter, they faced tough comparatives against the prior year due to the timing of Easter and the positive impact from the Euro 2012 football championship and the Queen’s Diamond Jubilee celebrations.

After taking account of these events, underlying like-for-like net income in the first half is estimated to be down by around 2% and has improved in the second half to date to be down by approximately 1%.

Sustaining improved performance

Enterprise considers that successful execution of their many operational activities is key to sustaining improved performance. The rate of business failures continues to fall and good progress is being made with the roll out of new services to publicans, including the deployment of free Wifi, the provision of improved food pricing and support, and the availability of discounted Sky entertainment packages.

Investment in the estate is being maintained, including the completion of 656 exterior redecorations, many of which have been completed during June and July.

Cash flow and balance sheet

The asset disposal programme remains on target and, as at 3 August 2013, disposals of 356 pubs have been or are being made with proceeds of £127 million. Total disposal proceeds for the full year will be in the region of £150 million.

Asset disposals combined with cash generated from operations fund the investment in the core estate and continue to reduce bank debt. Drawn bank borrowings net of cash are now at £217 million, already below the level of the new bank facility of £220 million which commences on expiration of the existing facilities on 15 December 2013, and the debt reduction strategy remains on track withtotal net debt expected to be reduced to £2.5 billion by the year end.