19th Nov 2013 09:31
LONDON (Alliance News) - Pub operator Enterprise Inns PLC Tuesday said net earnings were starting to improve as its asset sales and restructuring programme started to pay off, as it also announced that founder and long-serving Chief Executive Ted Tuppen will retire February 6 and be succeeded by Chief Operating Officer Simon Townsend.
The company has been restructuring for the past few years as, like the industry at large, it was hit by the economic downturn, a ban on smoking in pubs and a growing trend for drinking at home. It has been selling off pubs in an effort to retain the best performers and to reduce its debt burden.
It reported a net loss of GBP4 million for the year to end-September, compared with a profit of GBP44 million a year earlier as revenues declined to GBP639 million, from GBP692 million due to the disposals. However, it said it like-for-like net income was up 0.6% in the final quarter of the fiscal year.
"We are pleased to report an improving trend in our trading performance which, together with our actions to improve the quality of the estate and reduce our net debt, puts us on a clear path to return to growth in the near term," said the departing Tuppen.
"Like-for-like net income growth has continued into the first seven weeks of the current financial year. Looking ahead, we believe that the quality of our pub estate, the innovation and resilience of our publicans, the dedication of our team and the proactive actions we are taking provide the foundations for delivering sustainable net income growth," he added.
It successfully reduced debt, with bank borrowings at GBP41 million at the end of the year compared with GBP310 million a year earlier. It used cash it generated, disposal proceeds and a the proceeds of a GBP97 million convertible bond it issued in September. It had also cut available bank facilities to GBP180 million, from GBP389 million.
Looking ahead, it said current and foreseeable market conditions remain volatile and challenging.
"Economic confidence is returning but consumer spending remains restrained, with cost inflation exceeding income growth. To have delivered like-for-like net income growth in such conditions in our final quarter is pleasing and to have continued this into the first seven weeks of the current financial year is encouraging," it said.
Tuppen has been at the helm of Enterprise Inns for over 20 years, having founded it in 1991 and then listed it in 1995, growing the business and then shrinking it so that it is currently left with some 5,500 leased and tenanted pubs and bars valued at about GBP4 billion.
Townsend joined Enterprise in 1999 and has been COO for seven years. In total, he's worked in the sector for 25 years.
"Simon is highly regarded in the pubs sector. He was the unanimous choice to succeed Ted as Chief Executive," Chairman Robert Walker said in a statement.
Enterprise Inns shares were up 7.1% at 147.80 pence Tuesday morning, the second-biggest gainer on the FTSE 250.
By Steve McGrath; [email protected]; @stevemcgrath1
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