Enterprise digs deep to help its licensees

July 22, 2008: Enterprise Inns' business remains robust, despite difficult trading conditions, the company said in an interim management statement today.

It bemoaned the smoking ban for a downturn in drinkers, as well as supermarket beer discounts, the government's "ill conceived" increase in alcohol duty and general low consumer confidence, which is keeping many pub-goers at home.

Beer sale declines as well as payments to licensees finding trading difficult, through its business recovery scheme, would have an effect on earnings, it predicted.

In the first half of the year rent concessions and special discounts for licensees amounted to more than £3.5 million, and would be higher in the second half.

During the 42-week period the report covers, up to July 19, Enterprise acquired 51 pubs for £44 million and invested almost £60 million, alongside its licensees, in improvements to the estate. During the same period, it disposed of 45 pubs and plots of surplus land for a total consideration of £25 million, realising a small net profit over book value.

Enterprise is reiterated its intention to convert to tax-efficient REIT status and is seeking approval for the move from its various stakeholders.

"These are testing times for the pub industry, but I am constantly reassured by the quality of our pub estate and our licensees and the security of our balance sheet," said Enterprise chief executive Ted Tuppen.

"Our cashflows remain strong, providing adequate funds for investment and the reduction of borrowings as required.

"The majority of our licensees are coping well with the current consumer downturn. Where appropriate, we have the resources to help licensees who are experiencing short-term trading difficulties, thereby demonstrating an essential strength of the leased and tenanted pub model.

"We remain confident that (Enterprise) will continue to deliver real long term growth in value for shareholders."