17th May 2005 07:00
Enterprise Inns PLC17 May 2005 Unaudited Interim Results of Enterprise Inns plc for the six months ended 31 March 2005 Enterprise Inns plc (Enterprise), the leading operator of leased and tenantedpubs in the UK, today announces its interim results for the six months ended 31March 2005. Interim results highlights • Operating profit £253.3 million (2004: £149.7 million) Up 69% • Profit before tax and exceptionals £143.6 million (2004: Up 53% £93.7million) • Adjusted earnings per share 29.6 pence (2004: 19.5 pence) Up 52% • Interim dividend of 5.6 pence (2004: 3.6 pence) Up 56% • Average operating profit per pub Up 9% • The integration of the Unique business, acquired in March 2004, has now been completed in all respects. Commenting today, Ted Tuppen, Chief Executive said: "These are excellent results which reflect the effective integration of theUnique business and our continuing investment in improving quality andincreasing profitability across our pub estate. Against a background where some are talking of a downturn in consumerdiscretionary spending, our top quality pub estate continues to trade well inwhat is, and always has been, a challenging and competitive environment." Enquiries: Enterprise Inns plcTed Tuppen, Chief Executive 0121 256 3050David George, Finance Director Gavin Anderson & CompanyDeborah Walter / Charlotte Stone 020 7554 1400 The investor presentation will be available on the company website atwww.enterpriseinns.com on Tuesday 17 May 2005. A live recording of thepresentation can be accessed at 9.30 am BST by dialling +44 20 7162 0183. Arecorded version will be available from 12.00 noon BST on +44 20 7031 4064,passcode 660813 (for European callers) or +1 954 334 0342, passcode 660813(for US callers). CHAIRMAN'S INTERIM STATEMENT I am delighted to report on our interim results for the six months to 31 March2005, which reflect continuing improvements in the quality and profitability ofthe pub estate and which have benefited from a full contribution from the UniquePub Company Limited (Unique), the acquisition of which we completed on 31 March2004. Unique has now been successfully integrated in all respects and we expectsynergies of some £27 million to be largely realised during the current year. Total operating profit in the period increased by 69% to £253.3 million andprofit before tax and exceptional items rose by 53% to £143.6 million. Adjustedearnings per share increased by 52% to 29.6 pence. The directors intend to pay an interim dividend of 5.6 pence per share on 4 July2005 to shareholders on the register of members on 10 June 2005. This paymentrepresents an increase of 56% over the prior year and is in line with our statedpolicy for this financial year of setting dividend levels broadly in line withearnings growth. Future dividend policy and the potential for additional cashreturns is being reviewed taking account of the needs of the business andconsultations with our shareholders. We will publish the outcome of this reviewwith our preliminary results for the full year, which we expect to announce inNovember. The Company has continued to enhance the quality of the pub estate, throughinvestment, acquisitions and disposals. During the period we completed 540capital investment schemes across the estate at a cost of £24.8 million,investing alongside licensees to improve the quality and potential of their pubbusinesses. Furthermore, 11 good quality pubs were purchased at a cost of £6.5million and 94 pubs and parcels of surplus land were sold for a total of £27.1million. At the end of the period the estate comprised 8,644 pubs. We continue to review acquisition opportunities that may become available in themarket, evaluating these against our stringent quality, return on capital andearnings enhancement criteria. Average operating profit per pub in the first half of the year amounted to£29,200, based on an average of 8,687 pubs in the period. This represents anannual increase of 9%, compared to the pro-forma average operating profit perpub of £26,800 for the first half of the prior financial year. This strong likefor like performance is driven by core growth, synergies and estate investmentand churn. Free cash inflow after interest, tax, dividend and capital expenditure on thepub estate amounted to £58 million in the period, an annual increase of 66%. Atthe end of the period net borrowings were £3,213 million, with interest costs100% fixed at an average rate of 6.9% for an average life of 14 years. On the 25 February, Unique issued £170 million of Class A4 Asset Backed Notesdue 2027. These notes are at a fixed interest rate of 5.7% and the proceeds wereused to repay a short-term bridge facility put in place upon the acquisition ofUnique. At the same time, favourable market conditions enabled the refinancingof £393 million of floating rate notes, which resulted in an interest ratesaving of £1.2 million per annum. The associated unamortised debt issue costs of£4.6 million have been written off as an exceptional interest charge. CHAIRMAN'S INTERIM STATEMENT (CONTINUED) In common with all other listed companies, we are preparing for the introductionof IFRS. This will affect our reported results from next financial year with thefirst results announcement on this basis due in May 2006. We are working withour auditors to determine the likely impact on reported results, but at thepresent time we anticipate only minor adjustments to earnings. There will be noimpact on cash flows in the business or on our debt covenants. These are strong interim results and performance since the period end reinforcesour expectation of being able to report another year of solid progress. We arecontinuing our drive for increased profitability through improvements in allaspects of our business and will further enhance shareholder value through theoptimal use of the strong cash flows which are generated. H V ReidChairman Summarised Consolidated Profit and Loss Account Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 March 2005 31 March 2004 30 September 2004 Notes £m £m £m Turnover 453.9 240.3 712.7 -------------------------------------------------------------------------- Group operating profit before exceptional items 253.3 130.7 383.7 --------------------------------------------------------------------------Exceptional administrative expenses - - (14.8) --------------------------------------------------------------------------Group operating profit afterexceptional items 253.3 130.7 368.9Share of operating profitfrom associated undertakings - 19.0 19.0 Total operating profit 253.3 149.7 387.9Exceptional item: net profiton disposal of tangible fixedassets 0.5 0.2 1.3Share of associate's netprofit on disposal of tangible fixed assets - 0.1 0.1 -------------------------------------------------------------------------- 253.8 150.0 389.3 Net interest payable (109.7) (42.3) (157.8) Share of associate's net interest payable - (13.7) (13.7) Exceptional interest payable and similar charges (4.6) (4.6) (4.6) --------------------------------------------------------------------------Profit on ordinary activitiesbefore taxation 139.5 89.4 213.2 Taxation 3 (42.7) (25.9) (64.1) Share of associate's tax - (1.6) (1.6) -------------------------------------------------------------------------- Profit attributable tomembers of the parentcompany 96.8 61.9 147.5 Ordinary dividend on equity shares 4 (19.2) (12.5) (41.2) --------------------------------------------------------------------------Retained profit for the period 77.6 49.4 106.3----------------------------------------------------------------------------------------------------------------- Earnings per share - basic 5 28.2p 18.2p 43.0p - adjusted* 5 29.6p 19.5p 47.5p - diluted 5 27.8p 18.0p 42.3p * Adjusted Earnings Per Share excludes exceptional items and goodwill amortisation Consolidated Statement of Total recognisedGains and Losses Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 March 2005 31 March 2004 30 September 2004 £m £m £m Profit for the period excluding shareof associated undertakings 96.8 58.1 143.7 Share of profit in associatedundertakings - 3.8 3.8 -------------------------------------------------------------------------Profit for the period attributableto members of the parent company 96.8 61.9 147.5 Unrealised surplus on revaluationof licensed estate - - 133.3 Share of unrealised surplus on revaluation of licensed estatein associate - - 4.7 Actuarial loss recognised in thedefined benefit scheme of subsidiary - - (0.7) Movement in deferred tax asset related to pension scheme deficit - - 0.1 ------------------------------------------------------------------------- Total recognised gains andlosses relating to the period 96.8 61.9 284.9 ========================================================================= Reconciliation of movements in shareholders' funds Unaudited Unaudited Audited six months ended six months ended year ended 31 March 31 March 30 September 2004 2005 2004 £m £m £m Total recognised gains and losses 96.8 61.9 284.9 Dividends (19.2) (12.5) (41.2) -------------------------------------------------------------------------- 77.6 49.4 243.7 New share capital subscribed - 0.5 0.5 Premium on issue of shares - 50.5 50.7 Consideration paid for purchaseof own shares (22.3) - (24.3) Proceeds received for disposal ofown shares 2.4 - - Share-based expense recognised inoperating profit 1.2 0.7 1.6 ------------------------------------------------------------------------- Net addition to shareholders' funds 58.9 101.1 272.2 -------------------------------------------------------------------------Opening shareholders' funds 1,353.6 1,081.4 1,081.4Closing shareholders' funds 1,412.5 1,182.5 1,353.6 ========================================================================= Consolidated Balance Sheet Unaudited Unaudited Audited six months ended six months ended year ended 31 March 2005 31 March 2004 30 September 2004 Notes £m £m £mFixed assetsIntangible fixed assets 77.5 89.9 79.6Tangible fixed assets 4,931.0 4,816.7 4,931.8Investments in associatedundertakings 0.2 0.2 0.2 ---------------------------------------------------------------------------------- 5,008.7 4,906.8 5,011.6 ----------------------------------------------------------------------------------Current assetsAssets held for resale 5.0 7.6 4.6Debtors 85.0 75.8 85.7Cash at bank and in hand 100.5 161.0 146.7 ---------------------------------------------------------------------------------- 190.5 244.4 237.0Creditors: amounts fallingdue within one year (31.9) (55.6) (26.9)- Bank overdrafts and loans - Other (272.5) (232.9) (282.5) ---------------------------------------------------------------------------------- (304.4) (288.5) (309.4) ----------------------------------------------------------------------------------Net current liabilities (113.9) (44.1) (72.4) ---------------------------------------------------------------------------------- Total assets less currentliabilities 4,894.8 4,862.7 4,939.2 Creditors: amounts fallingdue after more than oneyear- Bank loans anddebentures (3,398.3) (3,630.4) (3,509.2) Provisions forliabilities and charges (82.5) (49.8) (73.7) --------------------------------------------------------------------------------- Net assets excludingpension liability 1,414.0 1,182.5 1,356.3 Pension liability 6 (1.5) - (2.7) ---------------------------------------------------------------------------------- 1,412.5 1,182.5 1,353.6 ================================================================================== Capital and reserves Called up share capital 17.5 17.5 17.5Share premium account 485.5 485.3 485.5Revaluation reserve 541.1 402.9 541.8Capital redemption reserve 7.6 7.6 7.6 Merger reserve 77.0 77.0 77.0Other reserve - treasury shares (43.7) (3.8) (28.1) Profit and loss account 327.5 196.0 252.3 ---------------------------------------------------------------------------------- Equity shareholders'funds 1,412.5 1,182.5 1,353.6 ================================================================================== Consolidated Statement of Group Cash Flows Unaudited Unaudited Audited six months ended six months ended year ended 31 March 2005 31 March 2004 30 September 2004 £m £m £m Net cash inflow from operatingactivities 254.7 139.0 403.2 Return on investments andservicing of finance- Interest received 6.2 9.1 13.1- Interest paid (129.0) (61.6) (171.4)- Issue costs of long-term loans (1.1) (8.2) 9.9) --------------------------------------------------------------------------------- (123.9) (60.7) (168.2) Taxation (20.0) (16.4) (36.3) Capital expenditure and financialinvestment:- Payments to acquire public houses (6.5) (7.7) (12.9)Receipts from sales of tangible fixed assets 27.1 20.1 110.5- Payments made on improvementsto public houses (24.8) (15.7) (50.9)- Payments to acquire otherfixed assets (0.4) (0.2) (1.8)- Payments to acquire investments - own shares (22.3) - (24.3)- Receipts from sale ofinvestments - own shares 2.4 - - --------------------------------------------------------------------------------- (24.5) (3.5) 20.6 Acquisitions and disposals:- Purchase of subsidiaries* - (247.4) (247.4) - Net cash acquired withsubsidiaries - 191.3 191.3- Expenses of acquisitionpaid - (1.3) (2.6) --------------------------------------------------------------------------------- - (57.4) (58.7) Equity dividends paid (28.9) (19.3) (31.8) --------------------------------------------------------------------------------- Cash inflow/(outflow) beforefinancing 57.4 (18.3) 128.8 FinancingIssue of ordinary share capital - 50.9 51.5 Share issue costs - - (0.3)Debt due within 1 year:- new short-term loans - 30.0 30.0- repayment of short-term loans (30.0) (130.0) (160.0)Debt due beyond 1 year:- new long-term loans 680.9 1,003.5 1,028.2- repayment of long-term loans (754.5) (417.5) (573.9) Repayment of Deep Discounted Bonds* - (361.5) (361.5) ---------------------------------------------------------------------------------- (Decrease)/increase in cash (46.2) 157.1 142.8 ================================================================================== * principal elements of cash consideration of purchase of subsidiary totalling £608.9m. Reconciliation of net cashflow to movement in net debt Unaudited Unaudited Audited six months ended six months ended year ended 31 March 2005 31 March 2004 30 September 2004 £m £m £m (Decrease)/increase in cash in the period (46.2) 157.1 142.8Decrease/(increase) indebt and lease financing 103.6 (124.5) 37.1Issue costs of long-term loans 1.1 8.2 9.9 -------------------------------------------------------------------------------Change in net debtresulting from cash flows 58.5 40.8 189.8 Debt acquired with subsidiaries - (2,158.4) (2,171.0) Amortisation and write off of issue costs and discounts on long-termloans (2.3) (4.3) (4.0) Amortisation of interest rate swap 8.6 1.7 7.7 Provision against interest rate swap (0.5) - (2.5) Write-off of unamortised issue costs (4.6) - (4.6) -------------------------------------------------------------------------------- Movement in net debt in the period 59.7 (2,120.2) (1,984.6) Net debt at 1 October (3,389.4) (1,404.8) (1,404.8) ================================================================================ Net debt at 31 March/30 September (3,329.7) (3,525.0) (3,389.4) ================================================================================ Reconciliation of operating profit to operating cash flows Unaudited Unaudited Audited six months ended six months ended year ended 31 March 2005 31 March 2004 30 September 2004 £m £m £m Operating profit 253.3 130.7 368.9Depreciation and amortisation 4.1 2.1 6.1Share-based expense recognised in operating profit 1.2 0.7 1.6 Decrease/(increase) in debtors 1.7 3.4 (7.3)(Decrease)/increase in creditors (4.0) 1.6 31.5 Decrease in provisions (1.2) - -(Increase)/decrease in assets held for resale (0.4) 0.5 2.4 -------------------------------------------------------------------------Net cash inflow from operating activities 254.7 139.0 403.2 ========================================================================= Notes 1. Publication of non-statutory accounts The financial information contained in this interim statement, which isunaudited, does not constitute statutory accounts as defined in section 240 ofthe Companies Act 1985. The financial information for the full preceding year isbased on the statutory accounts for the financial year ended 30 September 2004.These accounts, upon which the auditors issued an unqualified opinion, have beendelivered to the Registrar of Companies. 2. Accounting policies and basis of preparation of interim financial information The unaudited interim financial information has been prepared on the basis ofthe accounting policies set out in the Company's statutory accounts for the yearended 30 September 2004. Fixed annual charges are apportioned to the interimperiod on the basis of time elapsed. Other expenses are accrued in accordancewith the same principles as used in the annual accounts. The tax charge for theperiod has been calculated at the effective rate expected to apply for the fullyear. 3. Taxation The total taxation charge of £42.7m for the six months equates to an effectivetax rate of 30.6% which is in line with the expected effective rate for the fullyear. 4. Dividends An interim dividend of 5.6 pence per Ordinary Share is proposed (2004: interim3.6 pence; final 8.4 pence), which will be payable on 4 July 2005 toshareholders on the register of members on 10 June 2005. 5. Earnings per Ordinary Share Basic earnings per ordinary share is based on earnings of £96.8m (2004 sixmonths £61.9m, full year £147.5m) and on 343,397,210 (2004 six months339,702,129, full year 342,806,374) ordinary shares in issue excluding sharesheld by trusts relating to employee share options. Adjusted earnings per share is based on earnings adjusted for the effects ofexceptional items, net of tax, of £101.7m (2004 six months £66.1m, full year£163.0m) and on 343,397,210 (2004 six months 339,702,129 full year 342,806,374)ordinary shares in issue excluding shares held by trusts relating to employeeshare options. Diluted earnings per share is based on earnings of £96.8m (2004 six months£61.9m, full year £147.5m) and on 347,932,936 (2004 six months 343,885,273, fullyear 348,935,535) ordinary shares in issue adjusting for shares held by trustsrelating to employee share options. 6. Pension liability The most recent full actuarial valuation of the defined benefit pension sectionof the pension scheme was at 5 April 2002. This was updated to 30 September2004. The valuation used the projected unit method and was carried out byWilliam J Mercer, independent professionally qualified actuaries. The liability as at 31 March 2005 has been reduced by the amount of top-uppension payments made to the scheme during the period. The valuation has nototherwise been updated on the grounds of materiality. A full actuarial valuationis being carried out as at 5 April 2005 and the results of this valuation willbe reflected in the accounts for the year to 30 September 2005. International Financial Reporting StandardsThe group will adopt International Financial Reporting Standards (IFRS) as thebasis on which it will report its financial statements for the year ending 30September 2006. The first financial statements to be published under IFRS willbe our interim results for that year. The group continues to prepare for thisand has carried out a detailed review of the impact of each standard on thefinancial statements. In our annual accounts for the year ended 30 September 2004 we outlined threemain areas where we expected differences to arise. These were fixed assets,hedge accounting and deferred tax. Having carried out more detailed analysis, westill expect these to be the key areas of difference. There will also be arelatively small impact from recognising the fair value of share-basedincentives over their vesting period and from ceasing to amortise goodwill. Therevised accounting does not impact on the cash flows of the business. We expect to publish our transition balance sheet with the financial statementsfor the year ended 30 September 2005. This will include a full reconciliation ofthe balance sheet under UK standards as published at 30 September 2004 to theopening balance sheet under IFRS. The re-stated balance sheet and results forthe periods to 31 March 2005 and 30 September 2005 will be published ascomparatives to the interim results at 31 March 2006. Independent Review Report to Enterprise Inns plc Introduction We have been instructed by the company to review the financial information forthe six months ended 31 March 2005, which comprises the Summarised ConsolidatedProfit and Loss Account, Consolidated Statement of Total Recognised Gains andLosses, Reconciliation of movement in shareholders' funds, Consolidated BalanceSheet, Consolidated Statement of Group Cash Flows and related notes 1 to 6. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by the law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof Group management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied, unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2005. Ernst & Young LLPBirmingham 17 May 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
EI Group