Enterprise Inns, one of the UK’s two dominant leased pub groups, has this morning moved to reassure investors over the stability of asset values within its pub estate and future financing concerns.
Releasing a pre-close trading statement, Enterprise said its overall estate valuation of £5.9bn in September 2008 was broadly unchanged from the previous year.
Enterprise, led by chief executive Ted Tuppen, said this value took into account the £68m invested in the previous 12 months, and reflected flat or increased values across two thirds of the estate, offset by an average decline of 14% across the remaining 2,500 pubs.
About 1,100 pubs – 12% of the estate – were written down by an average of 29%.
Enterprise said that while values remained robust for “good quality assets”, prices for poor quality and potentially unviable pubs remained weak.
It said that in the first half it had completed the sale of 150 pubs for £44m – slightly ahead of book value.
After last week’s high-profile sale of a clutch of London pubs by rival Punch at an 18% discount to book value, there had been suggestions that Punch would come under pressure to writedown its pub assets.
On financing, Enterprise said that it was confident that adequate banking facilities would be available when a £1bn facility required renewing in May 2011. In the meantime it had and would continue to reduce requirement significantly below £1bn.
It was currently paying 6.5% on £1.2bn of corporate bonds, with £60m due to be repaid in 2014 and £600m in 2018. £1.6bn of securitised bonds – also at a rate of 6.5% - amortised over the next 23 years, with Enterprise £80m ahead of the repayment schedule.
Enterprise said there had been no material change in the performance of the business since its interim management statement in January.
Of current trading, it said that January had been relatively strong, February had been hit by two weeks of bad weather including snow and that March had been steady but below last year, which included the impact of the Easter holiday.
Enterprise said: “Without doubt, the pub industry is facing trading conditions of unprecedented challenge.”
It said that although it was facing this period with a “top quality pub estate” it recognised that some licensees “despite their best efforts” were struggling and to that end it continued to provide discounts on rent and beer equivalent to £1.4m per month – or just under £17m per year.
Enterprise said it would announce interim results for the half year to 31 March 2009 on 12 May.
