Enterprise Inns Share Discussion Threads

[jeffian] 11/8/2016 09:49

OK trading update today but -
"we are confident in our strategy and the actions we are taking to grow value for shareholders" -
well, I'm not feeling it yet!

[jeffian] 09/8/2016 16:28

Yes, I hold a shedload in my SIPP to provide a 'base income' with equities for growth. I traded through the 2018, 2025 and now 2031 bonds, buying years ago when they were at a pretty steep discount, taking profits on each and moving into the longer-dated bonds as the earlier ones got up to or above par. As you say, the 2031 is still good value compared to any other corporate bond I know of.

[return_of_the_apeman] 09/8/2016 15:30

At least their 2031 6.375 bonds look like good value, if you're into bonds that is :-)

[jeffian] 07/8/2016 18:52

Aye, at this rate they might get back to where they were when they started blowing our money on the buyback!

[hugepants] 07/8/2016 16:53

Shares edging north here. Must be the buyback! Preparing for a sustained assault on the key 100p level now.

[hugepants] 28/7/2016 21:23

I've been buying this dog recently. Overall I think the share buyback is a good idea although I understand the dividend argument. I reckon at some point these will be 150p-170p. May take a while mind you.

[cerrito] 21/7/2016 22:17

The new pubs code comes into force today

[jeffian] 19/7/2016 16:49

Stepone68
You miss my point entirely. I quite understand the principle that reducing the shares in issue raised both NAV and eps but if this is not reflected in the share price it is a completely ineffectual way of "returning surplus cash" to shareholders. Even before the current buybacks, the company have been bleating for years that their NAV is nearly £3 and what good has that done the share price for the past few years? Precisely nothing. Remember, they have form, having spent nearly £1bn buying shares up to nearly £8. Where's that cash now? Up the Swanee. I repeat my question - they're spending £25m of our "surplus" cash this year. Does any shareholder feel they have received that value? As for Brexit, see my comments above. You,re joking. The shares have been languishing for years and, other than the very short term volatility that affected the whole market for a day or two, they're back in they're normal range.

[stepone68] 19/7/2016 13:09

Jeffian, buying back shares reduces the number of shares in issue, meaning you personally own a bigger piece of the company. The buybacks don't 'artifically' increase per share figures, they *actually* increase per share figures.

You can argue about whether it's the right thing to do, but in general if the shares are below NAV, it would seem to be a reasonable action. I think the fall in share price you are highlighting is more to do with Brexit than anything else.

[jeffian] 07/7/2016 19:06

Well this is going well isn't it?! Since the announcement of the share buyback scheme on 22 March -



£25m (enough for a 5p dividend) "returned to shareholders" eh? Any shareholders here received any "value"? Feel the benefit of the rise in underlying NAV? No, nor do I. It will be no good moaning about Brexit or whatever (and the share price was going nowhere before that outcome), this is a lesson for the Board that they do not control the share price, the market does. They should focus on the things which are under their direct control - revenues, profits, cashflow and dividends - and let the share price take care of itself.

[jeffian] 20/5/2016 23:09

I'm hopping mad. I've had several meetings with Simon Townsend and he knows my views on this matter. If they had £25m free cashflow, that would have paid for a 5p dividend which would have supported the share price and genuinely "returned value to shareholders". As it is, they're going to blow it on repurchasing their shares which, of course, artificially enhances eps and NAV per share (a metric for their bonuses?) but does not in any way give value to shareholders who have had 8 years without a dividend and negative Total Shareholder Return.

They say they are restructuring the company. What they need to give shareholders is a vision of how they will be rewarded down the line. They keep saying that NAV is 280p/share but we can only sell our shares today for under £1. What's the vision? How are they going to get that value to us? At the last AGM I pointed out that if it took 5 years to get back to NAV or close to it, they might as well liquidate now and give us our money back. As you can imagine, that went down like a lead balloon.

I have no doubt that the company has good management and they are doing their best in difficult circumstances, but I'm not sure they are focussed on shareholder value. I think they are looking at firefighting, keeping their bondholders happy and keeping their own jobs.

[cerrito] 20/5/2016 21:19

Listened to the webcast of the interims. The Chairman, CEO and CFO upbeat and gave a good explanation and seemed happy with the way things are evolving; yes I agree so far so good but still a long way to go to reposition the portfolio. Patience will be the order of the day and I do not see the catalyst for the shares to go back to the 150p level.
The CFO recognized that admin expenses are going up with the new hires they are making to reshape the business-and there will be a new Head of Commercial Property joining in August..also they are recruiting negotiators to go through detailed lease renegotiations as and when the new legislation is enacted.
Jeffian, I note your comments on the buyback…this did not come up in the webcast as I guess had been covered by the Capital Markets Day presentation…I went back to the cash flow for the FY ending Sept 07 to see that they spent £667m in buy backs in that year and picked at random a RNS of Dec 11 2006 when they purchased in one day 450k shares at an average price of £1314.36…;your call as to whether management was then optimistic, naïve or arrogant. I suppose that Management would say that now it is justified as the shares trade at a discount to NAV but would prefer that they use their cash to give them flexibility.

[thomasthetank1] 17/5/2016 13:11

Read Panmure Gordon & Co's note on ENTERPRISE INNS PLC (ETI), out this morning, by visiting hxxps://www.research-tree.com/company/GB00B1L8B624

"The Interim results show solid performance with tangible progress made towards the strategic plan with all targets in sight. LFL is up, business failures down and planned disposals are progressing well. The second half has started ‘broadly in line’ and holds some uncertainty with Euro 2016 in June/July perhaps offset by the uncertainty around the implementation of the new Pubs code. With the stock trading on 9.3x EV/EBITDA and PE of 4.7x – this is a highly geared (8.0x Net debt/EBITDA) play on wet-led pubs – a sector that is..."

[jeffian] 05/5/2016 12:22

Well I note that the share buyback programme to "return" £25m "value" to shareholders is in full swing, with almost daily repurchases since 1 April resulting in -


Frankly, I'm spitting feathers. £25m of 'free cash' and this is the best they can think to do with it. Things better perk up before the next AGM or there'll be an interesting discussion about Total Shareholder Returns etc.

[jeffian] 06/4/2016 13:43

I don't know why they weren't buying in the 70's but the suggestion of the last Trading Update on 22 March is that they found £25m down the back of the sofa -
"Based upon current trading and the good progress the Group is making against our strategic objectives, the Board expects the business to generate £25 million of excess cash flow in the current financial year." - which apparently they didn't know about at the AGM in February! Pity, because if they had, we could have had the discussion.

Mind you, it fits a pattern. Besides the huge share repurchase programme up to 2008 and the recent purchases in 90's rather than 70's a few weeks before, they also paid a significant premium to buy in a large chunk of the 2018 bonds when they could have bought the longer-dated bonds at a discount.

[cerrito] 06/4/2016 12:14

You are right Jeffian to remind us of the value destruction of the 2008 era buy backs. Given that the company is in a transitional phase I would like them to keep their financial powder dry and use any spare cash for dividends.
Does anyone know why they were not buying in the 70@s?

[timbo003] 01/4/2016 13:00

See article in today's Morning advertiser by reporter Philip Morris



Very date appropriate!

[timbo003] 24/3/2016 07:10

I think this is one of the rare occasions that share buybacks are a more efficient way of returning money back to shareholders than dividends.

Looks like they will continue buybacks unless share price exceeds 150p/share, see slide 104 from the Capital markets day presentation last week:






Note to self: latest NAV/share (from the 2015 AR):


Our balance sheet remains strong with a total net asset value of £1.35 billion (2014: £1.40 billion). Gross property assets are the most significant assets in the balance sheet and are recorded at £3.7 billion (2014: £3.9 billion) of which 92% (2014: 47%) is valued on an annual basis by external, independent valuers. Group net debt includes the most significant liabilities in the balance sheet and has reduced to £2.3 billion (2014: £2.4 billion) during the year.

The share price at 30 September 2015 of £1.08 (2014: £1.24), which equates to an equity value of £541 million, compares to a net asset value per share of £2.70 (2014: £2.80). The differential between net asset value and market value reflects current market sentiment but does not, we believe, reflect the underlying value of the Group.

[jeffian] 22/3/2016 11:38

Share buybacks?!!!!!! I don't believe it! (© V. Meldrew)

[jeffian] 17/3/2016 15:49

I'm not in uk at moment and haven't been able to take on board budget detail, but as the average ETI pub is worth around £700k (from memory, that may be wrong) benefit is marginal and over £1m distinctly worse. I don't have access to RV figures but surprised so low. Anyway, any benefit goes to tenant not ETI so no direct benefit other than slightly happier and more solvent tenants, but they're not going to pay any more rent because of that!
Haven't seen any comment about the plan to limit tax relief on interest costs. Does ETI get caught by that?

[timbo003] 16/3/2016 21:12

>>>Jeffian, thoughts as follows:


Stamp duty changes:

Substantially lower transaction costs on buying and selling lower end pubs (especially those priced in the £250K - 500K region) for example current stamp duty payable on a pub costing just over £250K was previously £7.5K, following introduction of the stamp duty changes it will be £2.5K. Likely result is that it will increase both the desirability and liquidity of lower end pubs and have an uplifting effect on the pub market (and Enterprise NAV)


Business rate changes:

Ratable value for 75% of pubs is <£15K (source Morning Advertiser), these pubs will no longer pay business rates which would save around £7K per annum for a pub with a ratable value of just under £15K.

This should substantially reduce running costs and hence increase desirability of running a pub as a business allowing more investment by landlords into their pubs and reducing delinquency rates, this should increase pub values (and Enterprise NAV)

[jeffian] 16/3/2016 17:43

I get the duty freeze but why are the other two "very good" news for ETI and PUB?

[timbo003] 16/3/2016 14:04

A very good budget for Punch and Enterprise:

Beer, Cider and Spirits duty frozen, but probably more importantly.....

* change in threshold in ratable value from £6K to £15K before business rates are payable

* stamp duty rates on the purchase of commercial property bought into line with residential property

[cerrito] 04/3/2016 14:30

Good to see that their expulsion from the FTSE 250 has not yet hit the sp