Enterprise Inns plc (ETI) has issued its Interim Management Statement for the 18 weeks to 1 February 2014 and describes performance as ‘encouraging and in line with our expectations’. However, LFL net income only rose by 1% against easy comparative figures of -4.4% last year when bad weather was particularly damaging. Combined with ongoing declines in wet-led pub volumes and an uncertain regulatory backdrop, this leads Numis to describe Enterprise as ‘fighting hard to stand still’.
The statement reads:
Trading
Our trading performance in the first 18 weeks of the financial year has been encouraging and is in line with our expectations. Like-for-like net income across the whole estate for the year to date is up 1.0% on the prior year, continuing the growth momentum achieved in the final quarter of the prior financial year.
We are focused on continuing to implement actions that will sustain this trading performance and, despite market conditions remaining volatile and challenging, we are confident that by enhancing our pub estate and continuing to support our publicans we are providing the appropriate foundations for delivering sustainable net income growth.
Estate enhancement
The quality of our estate is being improved through the disposal of unsustainable pubs and reinvesting the disposal proceeds in the retained business. As previously stated, our disposal programme is focused on pubs with limited trading potential and we expect such disposals to generate £70 million of proceeds in the current financial year. In the first 18 weeks of the financial year we have made good progress completing or exchanging on 84 pubs for proceeds of £31 million, generating a healthy premium to book value.
We continue to improve our estate and drive returns through capital investment with an expected investment of up to £65 million for the full year. In the first 18 weeks of the financial year we have invested £25 million in support of our letting programme and growth driving enhancements.
Financing
Our new £150 million Forward Start Facility commenced on 16 December 2013 and is available through to June 2016. We have utilised these facilities to repay the £60 million corporate debenture which matured on 3 February 2014. In line with our expectations, bank borrowings net of cash are now at £104 million, down from £301 million a year ago.
During the first quarter and in accordance with the amortisation schedule, we have repaid £11 million of the Unique A3 securitised bonds and £6 million of the A4 securitised bonds, which, together with
£6 million of bonds purchased and cancelled, leaves £1,277 million securitised bonds outstanding as at 6 February 2014.
Board changes
As previously announced Ted Tuppen will retire as Chief Executive immediately following today’s Annual General Meeting. He will be succeeded by Simon Townsend, currently Chief Operating Officer. The Board would like to thank Ted for his outstanding contribution and leadership since founding the Company over 20 years ago.