Financial results and company news
Enterprise Inns profits fall
Poor weather and Olympic disruption are expected to have caused a 13% to 14% fall in pre-tax profits for Enterprise Inns, when the pub group announces its full-year results on Tuesday. Sales in the year to September 2012 were down on the previous year, but the fall is bottoming out, leading to forecasts that the firm might reintroduce its dividend over the next 12 months.
Estimates point to a £135m profit on a turnover of £710m.
The Mail on Sunday
Enterprise Inns briefing
Enterprise Inns seemed to have joined the legion of zombie firms whose growth had been stalled by loan repayments. However, it is slowly recovering. Some debt has been refinanced and on Tuesday, Enterprise is expected to reveal full-year results that show £200m has been raised through pub disposals. However, pre-tax profits are tipped to have fallen. Fears about borrowings have devastated Enterprise’s share price, which is down 91% from a high of 770.5p in 2007. However, the market is beginning to believe that Enterprise Inns has a future. Its shares have rebounded 119% in the past year to 65.75p, giving a market value of £333m. CEO Ted Tuppen is aiming to raise a further £150m through disposals next year.
The Sunday Times
Three spirits for the perfect cocktail bar
Three is not a crowd when it comes to business, insists Steve Locke. In fact, without his two co-founders, Rhys Oldfield and Leigh Miller, the Be At One bar chain Locke started in 1998 might have failed. “There have been low points I wouldn’t have got through on my own,” said Locke. “When things don’t run smoothly, you split the stress three ways and keep each other going.” Tribulations have made the trio resilient and over 14 years they have built a portfolio of 13 London cocktail bars and sales of £10m. They hope to open another 18 sites within four years, a goal set last year after a deal with Piper, the private equity company, which invested £8m in return for a third of the business. Locke, Oldfield and Miller met in 1994 when all three moved to London and got jobs behind the bar at TGI Friday’s, the restaurant chain, in Leicester Square. After three years, the friends began to talk of starting their own business. “TGI Friday’s had become a lot more like a restaurant and wasn’t the New York-style bar it was when we joined,” said Locke. “We figured there would be a gap in the market for a cocktail bar like the one it used to be.” A year later the three moved into a flat in Tooting, south London, and began hunting for a site. Each took out a £9,000 car loan from the bank and maxed out credit cards to secure a lease in Battersea. “When we told the banks we wanted to start a business, they wouldn’t lend. When we called back to say we wanted to buy cars, they gave us the cash,” said Locke. They opened in May 1998, “with no sign outside and no drink shelves — just a bar we made and a leaking roof”, said Oldfield. But the venue was a hit: it made £50,000 sales in its first year and is their best-performing bar today, with profits of £400,000 a year. Its success encouraged the friends to look for another site. “We thought we could do well anywhere,” said Locke. They bought a larger space in Wandsworth but “didn’t worry too much about the location and size because we thought we had the recipe right”. The bar struggled and the founders lost £182,000 in two years. “It was a real low and we had no money. Getting through it makes you tough and I couldn’t have done it alone,” said Locke, 41. Help came from their supplier Italian Continental Stores, which gave them five months’ credit. “Keeping good relationships is important,” said Miller, 38. “We could not have done anything without their support and faith that we would not let them down.” Be At One in Wandsworth was sold in September 2001. That year the three partners bought a site in Richmond — after researching the area thoroughly. Then they waited three years before opening the next bar, in Covent Garden. In 2008, Piper, the consumer brand specialist which founded the Pitcher & Piano bar chain, came to the trio with an offer. “We weren’t ready for a deal. We felt we had enough to grow at the pace we wanted for a while,” said Locke. The chance came again in October 2011 when the £8m injection from Piper was agreed. “The investment helped us to grow up. We now have a financial director,” said Locke. The 13th bar, Be At One Guildhall, opened last month. The founders live in London, near their headquarters in Clapham, where they have 15 staff. Each is married with three children. They admit their venture was risky, but say hard work and confidence brings success. “You have to start digging and keep working to get the ball rolling,” said Oldfield, 40. Miller added: “Never give up. There is no need to if you surround yourself with the right people.”
The Sunday Times
Call for ministers to investigate overcharging pubs
Ministers are being urged to probe claims of price-fixing at thousands of pubs. The head of an all-party group of MPs has called for an inquiry into claims that pub companies are overcharging landlords for rent and drinks. Lib Dem MP Greg Mulholland warns the extra costs are then passed on to hard-up drinkers and contribute to dozens of pubs closing every month. Mr Mulholland, chairman of the Commons Save the Pub Group, wants the companies, known as pubcos, to under¬go the same kind of price-fixing investigation the gas industry faces after accusations that energy giants colluded to rig the wholesale price of gas. Claiming the government was turning a blind eye to the problem, he said: “This needs to be properly investigated. If pubcos have been colluding to artificially increase prices, that would be a clear abuse of the market.” Mr Mulholland said the firms were using financial muscle to negotiate drinks discounts, but failing to pass on savings to tenant landlords or customers. He added: “It is also notable that prices offered to tied licensees are virtually identical between pubcos. “This suggests possible co-operation over beer prices tenants are charged, which would also be an abuse.”
Sunday Mirror
Trilantic sells IDG stake
Trilantic Capital Partners, the private equity firm, has sold its stake in the Turkish restaurant operator Istanbul Doors Group to Dogus Group, a Turkish conglomerate. In 2010 IDG bought a controlling stake in Tom Aiken’s restaurant business.
The Times
Travelodge to bunk up with budget gyms
Budget hotel operator Travelodge is linking with low-cost fitness chain Gym Group to find sites in a £70m investment deal. The two firms have signed a deal to fins ten locations in London and the south east over the next five years. This could see Gym Group setting up on the ground floor and basement of a building with a Travelodge hotel on the floors above. The companies are looking either for conversion or development opportunities and have already tested the idea in London, Plymouth and Guildford.
The Mail on Sunday
Row about a loan forces MWB into administration
The upmarket hospitality company behind Malmaison and Hotel du Vin collapsed into administration on Friday, prompting some of its creditors to seek legal advice. MWB Group, whose shares were suspended two weeks ago, called in administrators from Deloitte after failing to resolve a row about an inter-company loan from a 75%-owned subsidiary, the Business Exchange. he company ran into trouble when the Business Exchange, a serviced office operator, declined to repay a contracted amount of £4.8m to MWB. The Times understands that some of MWB’s creditors, who hold loan notes of £22m, want to investigate the actions of MWB’s biggest shareholder, Pyrrho Investments. Pyrrho owns 24.5% of MWB Group and is also the second-largest shareholder in the Business Exchange. A spokesman for the disgruntled creditors said: “We are very concerned by Pyrrho’s involvement in the days leading up to the anticipated release of MWB’s accounts.” She continued: “We intend to appoint lawyers to investigate Pyrrho’s role and intentions.” The creditors want to find out whether any talks have taken place between Pyrrho and the board of Business Exchange, which could have led to a conflict of interest.
The Times
Health
Doctors seek huge rise in price of drink
Leading British medical bodies are calling for a minimum alcohol price of 50p a unit, which could double the cost of a bottle of vodka or cider. In a letter to The Sunday Times, leaders of the medical establishment, including the British Medical Association (BMA) and the Royal College of General Practitioners, argue that the price for a unit of alcohol must be set at 50p. They believe this could prevent 98,000 hospital admissions and 3,060 alcohol-related deaths over a period of 10 years. The government has already promised to introduce a minimum price for a unit of alcohol to cut binge-drinking on cheap drinks. The letter comes in advance of a Home Office consultation on the level at which it will be set, the most likely options being 40p, 45p and 50p. The Home Office uses the minimum 40p rate on its website to illustrate what the cost of popular drinks would be. Letter in full: Much debate about the problems of alcohol focuses on individual drinkers, in terms of both health and social impacts. Less attention is given to victims who are invisible to the public eye. As the recent report from the children’s commissioner for England highlighted, young people and families all too often suffer the consequences of problem drinking, with some 2.5m children in the UK living with a hazardous drinker. The Alcohol Health Alliance UK and other organisations with an interest in safeguarding children and families support the commissioner’s call for the government to take action. We support its commitment to introduce a minimum unit price for alcohol and call for this to be set at 50p in the first instance. This policy will tackle head-on the problems caused by cheap drink, not only to drinkers but to those around them — the innocent victims of alcohol harm. Minimum unit pricing will target the heaviest drinkers: those who cause the most damage to themselves and others. A child who lives with a problem drinker is vulnerable to neglect, violence and abuse, and a significant number of child protection cases are linked to alcohol. It is essential that the government stands firm in tackling problem drinking in order to turn the tide of alcohol harm. While minimum unit pricing is not a silver bullet, there is good evidence to suggest it will make a real difference. Harmful alcohol consumption affects more than just the drinker. We must support measures to help protect the next generation. Signed by: Professor Sir Ian Gilmore, Alcohol Health Alliance and British Society of Gastroenterology; Dr Vivienne Nathanson, British Medical Association; Dr Clare Gerada, Royal College of General Practitioners; Dr Hilary Emery, National Children’s Bureau; Professor Lindsey Davies, Faculty of Public Health; Eric Appleby, Alcohol Concern; Katherine Brown, Institute of Alcohol Studies; Dr Kieran Moriarty, British Society of Gastroenterology; Professor Graham Foster, British Association of the Study of the Liver; Professor Jonathan Shepherd, Oral and Maxillofacial Surgery, Royal College of Surgeons of England; Mike Farrar, Chief Executive, NHS Confederation; Professor Colin Drummond, Medical Council on Alcohol; Dr Fiona Wisniacki, College of Emergency Medicine; Alan Higgins, Director for Public Health on Alcohol, Greater Manchester; Julie Webster, Director for Public Health, Cheshire and Merseyside; Lord Victor Adebowale, Turning Point; Dr Peter Rice, Royal Society of Psychiatrists in Scotland; Paul Lincoln, National Heart Forum; Eric Carlin, Scottish Health Action on Alcohol Problems, Dr Jennifer R Lisle, Royal Society of Public Health, Dr Marsha Morgan, University College London, Professor John Strang, Institute of Psychiatry, King’s College London, Andrew Langford, British Liver Trust, Hadas Altwarg, Drink Wise North West, Dr Evelyn Gillan, Alcohol Focus Scotland, Dr Arif Rajpura, Public Health on alcohol, North West, Martin Astbury, President, Royal Pharmaceutical Society
The Sunday Times
Sports stars’ junk food fortunes under attack
Health campaigners are calling on the Government to ban sports stars from promoting junk food, claiming athletes are earning millions by fuelling childhood obesity. Gary Lineker and David Beckham are among the sporting figures that secure fortunes promoting Walkers crisps and Pepsi and Burger King respectively, while Olympic medallists are cashing in on lucrative deals in the aftermath of London 2012. Gymnast and Strictly Come Dancing’s Louis Smith and boxer Anthony Ogogo are the faces of a Subway campaign to “encourage fans to train hard and eat fresh” by eating American-style “submarine” soft baguettes. Pole vaulter Holly Bleasdale and US swimmer Michael Phelps, the most successful Olympian of all time, also promote “low fat” subs from the chain, which has more than 1,500 outlets across the UK. But there is no evidence that any of the stars practise what they preach. Companies keep details of their celebrity deals secret, but an economic report into the Lineker effect on Walkers crisps revealed his support had boosted sales by 2,760,000 packs over two years - up 23%. Researchers concluded there was “exceptionally high ad awareness… among adults and children.” Stars and their deals: David Beckham: Pepsi, Burger King - Beckham has long been one of the many sports stars who endorse Pepsi. He added Burger King to his product list this year when he endorsed their new “healthy” range, including fresh fruit smoothies. Venus and Serena Williams: McDonald’s - The tennis champions signed up to become the faces of McDonald’s in 2005 in a controversial campaign that targeted children. After a huge media backlash following the 2004 documentary Super Size Me, the company enjoyed 15 consecutive quarters of growth. “We’re both huge fans of McDonald’s, and we both love kids,” said Venus. Michael Phelps: Subway - Phelps puts away 12,000 calories a day when he’s in training and a foot-long meatball marinara, his favourite according to Subway’s website, gives him almost 1,000 calories with 36g of total fat, 14g of which is saturated. Phelps earns around $6m (£3.8m) a year from endorsements. Jonah Lomu: Pizza Hut - Along with Caprice, Martin Clunes and others, the New Zealand rugby player helped the chain to an average revenue per restaurant boost of more than 21 per cent. The company spent £17.8m on the campaign and saw a return of £54.9m.
London Mayor wants to ban lunchtime takeaways
Boris Johnson wants to ban pupils from leaving school at lunchtime to eat takeaways and is also trying to curb the number of fast-food outlets near schools. The mayor of London wants stringent planning guidelines that will prevent new takeaways opening unless they agree to restrict the number of calories and levels of fat in the food they sell. Johnson will issue his guidelines to London councils this week. They will include advice on how to restrict takeaways and ice-cream vans without facing legal challenges from the owners. Johnson’s drive to make London a testing ground for tough measures to tackle obesity mirrors the action taken by Michael Bloomberg, the mayor of New York, who has banned extra large cups of sugary drinks. Johnson has studied Bloomberg’s ideas and has previously said that “where New York leads, London is not far behind”. He said: “As a city, as a nation, we are getting fatter. Just over a third of 10 and 11- year-olds are overweight or obese, with numbers rising all the time, contributing to a problem that costs the NHS as much as £4bn annually. “Takeaway businesses contribute to local economies. This guide shows how councils can manage the proliferation of takeaways across the capital, but also how, by working with businesses as well as schools, we can all be served up much healthier tucker.”
The Sunday Times
Britain is the fattest nation in Europe
Britain is the fattest nation in Western Europe, with more than a quarter of the population ranked as obese. Obesity rates are rising rapidly across Europe but the UK rate of 26.1% is more than twice that in France, at 12.9%, according to a strudy by the Organisation for Economic Co-operation and Development (OECD). Only Hungary outranks Britain with an obesity rate of 28.5%. More than half of Europeans are overweight or obese, according to the report on health across the 27-nation OECD. Obesity is more prevalent in women than men in most countries - but fat men outnumber fat women in Norway, Iceland and Malta. The problem is worse among the poorer and less well educated. Diabetes, hypertension, heart disease, asthma, arthritis and some forms of cancer are increased by obesity. Many countries have stepped up efforts to tackle obesity. There have been taxes on foods high in fat and sugar, and several countries including Denmark, France, Finland and Hungary have passed legislation aimed at changing eating habits. While obesity is rising, smoking and alcohol consumption are falling. Even so, the EU has the highest alcohol consumption in the world at 10.7 litres of pure alcohol per adult. Life expectancy in the EU was 79 years in 2010.
The Independent
Politics, law and taxation
Caffe Nero avoids UK tax
Caffe Nero, the coffee house chain, is the latest company to be caught sidestepping tax - after being found to have paid no corporation tax in Britain for the past two years. Despite profits of more than £36m over that period, it has used entirely legal accounting manoeuvres to avoid payments. Caffè Nero owns more than 450 branches across the country and is controlled through a complex structure of subsidiaries in the UK, the Isle of Man and Luxembourg, a tax haven. According to experts, it borrows money from its offshore sister companies and uses interest payments on this debt to offset its tax liabilities in Britain. Anger is mounting over the use of complex, albeit legitimate, accounting ploys to reduce tax bills. The Commons public accounts committee last week lambasted Starbucks over its tax affairs. Using legal loopholes, Starbucks has paid just £8.6m in tax in Britain since opening its first outlets here 14 years ago. Caffè Nero was founded by Gerry Ford, an American businessman, in 1997. According to its accounts, its main British subsidiary, Rome Pik Holdco, owed £220m to a sister company in Luxembourg in May last year. The payments sent overseas can be legally used to reduce its corporation tax bill in Britain. In a recent interview about his career, Ford said: “Making big money wasn’t the driving force; it was the thought that anything was possible, including changing the world for the better.” Caffè Nero declined to comment.
The Sunday Times
Retailers must let shoppers see purchase data
Businesses could be forced to share the data that they hold on consumers under plans to be announced by the Government. A voluntary scheme in which some mobile phone companies, supermarkets and high-street shops will offer individuals access to the records of their shopping habits begins on Monday. Some of this information is already available under the Data Protection Act, but getting hold of it can be time-consuming and difficult. The hope is that businesses and other groups will create online applications that enable consumers to manage and interpret the data that is held on them. This could help shoppers to get the best deals and to manage their personal finances better. Companies that have signed up for the scheme include British Gas, Google, Lloyds Bank and Visa. If businesses prove reluctant to join the programme, dubbed “Midata”, the Government could legislate to force them to co-operate. It is to insert a clause into the Enterprise and Regulatory Reform Bill, currently making its way through Parliament, that could make data-sharing obligatory. Richard Lloyd the executive director of Which?, the consumer group. said: “Giving consumers more power with their personal data will help them [to] make better use of their money, and that’s not only good for customer-friendly businesses, but also good for growth in the economy.”
The Times
Economics and employment
Whitehall eyes RBS branch network
A network of 316 branches being sold by Royal Bank of Scotland could be nationalised and turned into a new business lender under a Whitehall plan. If no buyer can be found for the business, it could be set up as a standalone bank, owned 100% by the taxpayer, and would focus on lending to small firms, say sources familiar with the plan. The business would be branded Williams & Glyn’s, the name of a bank based in northwest England that was acquired by RBS 27 years ago. RBS is being forced to sell the branches by the European Commission as a punishment for accepting a taxpayer bailout during the financial crisis four years ago. Santander UK pulled out of a deal last month after two years of talks, forcing RBS to launch an auction. The branch network has 1.8m retail customers and a portfolio of 240,000 small business accounts and 1,200 mid-sized corporate banking relationships — equivalent to a 5% share of business banking in Britain. Virgin Money and Nationwide are examining a bid, along with JC Flowers, the American private equity firm. Under the alternative plan, the government would offer shares in RBS in exchange for the remaining 17% in the new bank, creating a state-owned lender. It is unclear if the plan would breach state-aid rules.
The Sunday Times
Food and drink
Cheesemakers could inherit China
From the humble West Country cheddar to the finest Stilton, China’s growing taste for cheese and yoghurt presents a vast, untapped export market for Britain’s dairy industry, the Environment Secretary has told The Times. Speaking in Shanghai, Owen Paterson, the Secretary of State for the Department for Environment, Food and Rural Affairs, (Defra) said he believed that there are “masses of opportunities” to sell to China, which this year overtook America to become the biggest grocery market in the world. While cheese is still unfamiliar, rising affluence and increasing exposure to European cuisine mean that tastes are beginning to change. An epidemic of food scares, particularly afflicting China’s dairy sector, has frightened middle-class consumers into paying over the odds for imports — a litre of New Zealand milk costs about £4 in city supermarkets. “There is quite clearly a quantum shift in taste; at the same time there is a massive increase in prosperity which is going to continue,” Mr Paterson said. At a time when British dairy farmers are fighting a bitter price battle against supermarkets at home, Mr Paterson believes there is scope for producers to move into premium dairy products such as speciality cheeses and gourmet yoghurt for export to China, as well as UHT and flavoured milk, a market dominated by Australia and New Zealand. China imported about £36 billion of food last year but Britain ranks 22nd on the list of exporter nations and currently imports £1.2 billion more dairy produce than it exports each year.
The Sunday Times
