Enterprise Inns (ETI), the leased and tenanted pub group, has this morning reported that average net income per pub remained stable for the six months to the end of March, despite poor weather over the Christmas trading period.
Average net income per pub in the six months ended 31 March was £31,200, the same as the corresponding period a year earlier.
Announcing its results for the half year to 31 March, the company said pubs let on substantive agreements, which account for 87% of its estate of c.6,800 pubs, representing 94% of net income of revenue, had seen like-for-like net income drop 2%, matching the previous six month period.
Ebitda before exceptional items was down from £204m to £179m and it delivered profit before tax and exceptional items of £74m down from £86m the years before. Profit before tax stood at £61m, down from £91m the year before.
The group said that average net income per pub across the whole estate remained stable for the first half of the year, with growth of over 1% during February and March offsetting a similar decline in the first quarter, predominantly caused by adverse weather conditions over the important Christmas trading period.
It said that there continued to be significant regional variations with average net income per pub down by 2% in the north, stable in the midlands and growing by 2% in the south.
ETI invested £8m in the first half of the year (up from £7m in H1 2010), on supporting its licensees and said this increase “ was as a result of difficult trading over the Christmas period”.
Bank debt stood at £545 million at the end of H1 well below the group’s new forward start facility of £625 million, which came into force on 16 May 2011. ETI said it expected to see further substantial reductions in bank debt by the end of its current financial year.
Ted Tuppen, chief executive said: “We have achieved a solid set of results, in line with our expectations. Headline numbers are impacted by a 9% reduction in the average number of pubs in our portfolio and higher leasehold costs, reflecting our successful sale and leaseback programme. I am pleased that average net income per pub has remained stable despite very challenging conditions across the pub sector during the first half of our financial year.
“The second half of the year has started well, with fine weather over Easter and the Bank Holiday weekend providing our publicans with a welcome boost to trade. Whilst we expect trading conditions to remain challenging, we are confident in our strategy and expect that the quality of our pub estate and the resilience of our publicans will ensure that we deliver results for the full year in line with our expectations.”
It said it was encouraged by a reduction in the level of bad debts to just 0.2% of turnover, whilst overdue balances are some 30% down on this time last year at just £6.4m.
During the period the company sold 212 pubs, together with other property assets for a net consideration of £47m. It said its expect to sell in the region of 500 pubs in the full year, by the end of which its accelerated disposal programme will be substantially complete and it will return to a lower rate of estate churn.
It said that its sale and leaseback programme has “now largely served its purpose”, raising £247m from the sale of 176 high value properties at an average rental yield of 6.5%.
During the period ETI invested £30m to deliver a wide range of improvement schemes across more than 800 pubs.
The company said it expect capital expenditure to total £60m this financial year on a wide range of improvement schemes, some totally repositioning a pub to reflect market changes, others quite simple low cost schemes to revitalise a pub in its local market place.
