Debt-ladened pub operator Enterprise Inns announced its half-year results five years to the day of the shares hitting an all-time high. Since then the company has trudged its way towards stabilising its balance sheet and trading, but at some cost to shareholders who have seen over 90 per cent wiped off the value of their shares.
While there is no reason to bring out the champagne yet, the company is making grinding progress toward becoming a credible investment proposition once again. During the first half, around £89m was raised through disposals although that includes £49m from the sale of high-quality pubs which is a regrettable long-term loss to the estate despite the financial fillip. Enterprise has also written down the value of pubs being put up for sale by £16m to reflect the financial hit when it offloads them. Disposals and cashflow helped cut net debt by £220m in the past year and analysts expect an extension of the group’s bank facility, which expires at the end of 2013, to be announced soon.
Operationally, the 94 per cent of pubs that are judged to be on functional lease agreements produced a 1.5 per cent rise in like-for-like income, although total like-for-like income for the 6143 pubs trading was down 1.6 per cent. Still, this marked an improvement on the first quarter.
Broker Peel Hunt forecasts full year underlying EPS of 20p (2011: 23.4p).
| Enterprise Inns (ETI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 69p | MARKET VALUE: | £ 349m | |
| TOUCH: | 69-70p | 12-MONTH HIGH: | 91p | LOW:26p |
| DIVIDEND YIELD: | nil | PE RATIO: | 58 | |
| NET ASSET VALUE: | 288p | NET DEBT: | £2.9bn | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 346 | 61.0 | 14.2 | nil |
| 2012 | 342 | 64.0 | 10.6 | nil |
| % change | -1 | +5 | -25 | |
