Enterprise Inns continues to make grinding progress towards stabilising its debt-ladened operations. Overall, the group's full-year results held few real surprises; nonetheless, disappointments that pub values were written down by 5 per cent and that dividends remain on hold were enough to see the group's volatile shares sold off by more than 10 per cent.
Net income per pub, which management regards as a key operational measure, has flattened out during the second half. Part of this is down to the sale of chronically underperforming pubs and investment to improve others. The so-called "substantive" estate, where trading is deemed robust and which now accounts for 89 per cent of the whole estate, saw like-for-like net income down 2 per cent for the year as a whole.
There were also signs of stability in the form of reduced financial support for struggling tenants and fewer tenant failures. Pub sales helped reduce net debt by 10 per cent during the year. The flip side of this is that lost revenue, and the payment of rent on pubs sold and leased back, has weighed on profits, which were down 16 per cent to £175m before tax and exceptional costs.
Broker Peel Hunt forecasts underlying 2011 pre-tax profits of £170m and EPS of 24.9p (from £175m and 25.8p in 2010).
| Enterprise Inns (ETI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 98p | MARKET VALUE: | £497m | |
| TOUCH: | 98-99p | 12-MONTH HIGH: | 142p | LOW: 83p |
| DIVIDEND YIELD: | nil | PE RATIO: | 19 | |
| NET ASSET VALUE:* | 278p | NET DEBT: | £3.3bn | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 970 | 415 | 50.5 | 13.5 |
| 2007 | 921 | 337 | 54.3 | 15.6 |
| 2008 | 880 | 209 | 36.8 | 16.2 |
| 2009 | 818 | 11 | 1.20 | nil |
| 2010 | 758 | -31 | 5.20 | nil |
| % change | -7 | - | +333 | - |
*Includes intangible assets of £405m, or 80p a share | ||||
