Enterprise Inns Share Discussion Threads

[etome] 16/11/2010 07:16

Financial Highlights

� EBITDA* before exceptional items GBP405 million (2009: GBP450 million)
� Average net income per pub stable in second half, GBP63.9k for full year
(2009: GBP65.0k)
� Like-for-like net income in substantive estate (94% of total net income) 2%
down (2009: 3% down)
� GBP270 million proceeds from disposals, realising an exceptional profit of
GBP52 million
� Net debt reduced by GBP374 million
Statutory results

� Profit before tax and exceptional items GBP175 million (2009: GBP208 million)
� Profit after tax GBP26 million (2009: GBP6 million)
� Adjusted earnings per share# 25.9p (2009: 30.7p)
Operational Highlights

� 89% of estate let on substantive agreements, up from 83% at 30 September 2009
� Cessation of Temporary Management Agreement (TMA) programme
� Continuing improvements in quality of estate and customer offering
� New agreements provide additional flexibility to attract and retain the best
licensees
* Earnings before interest, tax, depreciation and amortisation
# Excludes exceptional items

[timbo003] 03/11/2010 12:55

Toxic taverns (Punch) get a mention on todays ftalphaville, I'm very glad that I do not hold them. Enterprise, Green King and Marstons are much better bets IMO



NH Before I shoot off

NH very interesting note out of Seymoure Pierce today

NH on the Toxic Pub company

NH and things seem to be getting bleaker

NH and bleaker every day

Punch Taverns PLC (PUB:LSE): Last: 68.50, down 0.55 (-0.80%), High: 71.85, Low: 68.20, Volume: 706.75k

BE Rollo at MOST reckons it might be drilled down to 5p.

BE Can it get worse than that?

NH well Seymour have a fresh angle

NH apparently

NH some of the toxic debt

NH was wrapped by Ambac

NH which is facing bankruptcy

NH the question is

NH what does that mean for the Toxic Pub Co

NH here's Seymour's early thoughts

NH Reports on Ambac in yesterday's financial press claimed that the US bond insurer had stated on Monday that it might have to file for bankruptcy. Better known for insuring US municipalities's debt so that the latter could achieve higher credit ratings, Ambac insured a substantial proportion of the higher rated debt within Punch Taverns' securitizations, making it a form of 'trustee' over the top of the bond structures. The article in the FT yesterday (p.21) said that Ambac "...had branched out into structured finance in search of higher profits than were available in their traditional business of insuring municipal debts". In the case of Punch Taverns, as one of the structured finance vehicles insured by Ambac, it is a rare instance of the 'sub-prime' disease spreading from this side of the Atlantic to the other.
NH The implication of the (potential) bankruptcy of Ambac is unclear but could be material for stakeholders in Punch Taverns. It may be that the responsibility of Ambac as insurer passes to another body which is more active in protecting its interests. It may be that the insurance simply disappears and that the immediate result is the downgrading of the underlying Punch debt by rating agencies. This will precipitate the discussion between debt representatives and other (esp. Equity) representatives. What is the likely result of this? Either (1) Debt holders demand additional equity injection to prevent longer term default probability or (2) Debt holders agree on some form of 'haircut', or, as per 2009, sell out at a significant discount

BE Wow. Just wow.

NH The Doomed Pub Company

NH what was the new CEO thinking of

NH taking on this job

NH what did buffett say about good managements and bad businesses

BE One of the ROTR said yesterday that administration looked the best course of action for Toxic Taverns. I'm increasingly minded to agree.

NH indeed

[jeffian] 21/10/2010 10:15

Ah, spob, as you're back on one of your rare visits, you forgot to answer this one -

"jeffian - 20 Jul'10 - 18:01 - 369 of 407 edit


Well what do you think is the "right" level of debt and why?

If you were buying a house (or pub!), how much of the purchase price would you be prepared to borrow?"

[timbo003] 14/10/2010 07:58

>>>>davejones81

The link you provided for the BBC article reads as it is good news for Enterprise and the other pub cos to me:



14 October 2010 Last updated at 07:36

Pub sector 'ties' cleared by Office of Fair Trading

The investigation has been a long-running affair The Office of Fair Trading (OFT) has confirmed it has found no evidence that so-called "beer ties" between pub firms and landlords are harming competition.

It had already ruled in October last year that landlords being forced to buy beer from pub owners was not anti-competitive.

But it reopened the investigation in February after the Campaign for Real Ale (Camra) lodged an appeal.

Big pub companies have always denied any wrongdoing.

'Community importance'

The watchdog said that consumers had a wide choice between pubs and that this competition prevented the beer tie from being used to inflate pub beer prices beyond competitive levels.

Pubs had not been prevented from offering a wide choice of beers to consumers, it added, saying that pub-owning firms tended to source beer from a wide range of suppliers, including smaller brewers.

"We appreciate how important local pubs are to many consumers and local communities," said Ann Pope, senior director of goods at the OFT.

"Camra's super-complaint has provided a timely opportunity to examine the pub sector, as the beer tie model has attracted considerable attention recently.

"After carrying out detailed analysis, we have found that the sector is competitive overall and that there is no need for the OFT to take further action at the moment.

'The OFT recognises that many pub lessees are concerned about issues regarding the contractual relationship with their pub-company and we note that the pub industry is taking steps to address some of these concerns. Our focus, however, has been to assess whether the market is working well for consumers."

Since Camra first went to the OFT in July of last year, the British Beer and Pub Association has brought in a new code of practice that sets out information that must be given to prospective pub tenants by breweries.

[dreamsurfer141] 11/10/2010 12:47

I've averaged down here today. Although I have concerns with the stock if they re-introduce their dividend then this could see a return to 160 - 180p plus and its at that point I break even so worth the risk for me atm.

[davejones1981] 06/10/2010 10:55

A pub chain which failed to carry out gas safety checks at more than 400 of its premises put hundreds of lives at risk, the Health and Safety Executive (HSE) has said.

Enterprise Inns plc was fined £315,000 by Liverpool Crown Court after one of its landlords died of carbon monoxide poisoning.

Paul Lee, 41, was found dead at the Aintree Hotel in Bootle in 2007.

The pub chain said it now worked closely with the HSE.

Fining the West Midlands-based company, which was also ordered to pay £19,000 costs, the judge said Mr Lee's death was wholly unnecessary.

-Deadly heater-

Tenant landlord Mr Lee, who was found unconscious by a cleaner just after noon on 12 November 2007, had turned on a gas fire 10 hours earlier before falling asleep.

He had worked at the pub for less than a month.

Enterprise Inns was prosecuted after the HSE investigation found the fire may not have been serviced since 1979 and the chimney was completely blocked.

One man has been killed and hundreds of other lives have been put at risk

Iain Evans,
HSE Investigator

The company, which owns approximately 7,700 pubs across the UK and has an annual turnover of £818m, admitted breaching the Health and Safety at Work Act.

Liverpool Crown Court heard Enterprise Inns should have ensured gas safety inspections were carried out at 868 of its pubs at least every 12 months, but only 394 had valid certificates.

The gas heater which caused Mr Lee's death should have been checked before he took over the tenancy.

HSE investigator Iain Evans said: "It is shocking that a major pub chain failed to ensure regular gas safety checks were carried out at more than 400 of its properties.

"As a result, one man has been killed and hundreds of other lives have been put at risk.

Poison levels

"Tests we carried out on the gas fire at the Aintree Hotel showed that the workplace limit for exposure to carbon monoxide would have been exceeded within five minutes of it being turned on, and would have reached a level known to be fatal within an hour.

"The chimney from the fire was completely blocked so there was nowhere for the carbon monoxide to escape. Instead, it gradually built up in the room and starved Mr Lee's organs of oxygen until he was left unconscious.

"Mr Lee's life could have been saved if Enterprise Inns had continued to obey the written warning it received about gas safety six years earlier, instead of falling back into old habits."

His sister Sharon Lee said: "Paul's death will very possibly save the lives of others in the future, but it should not have taken the loss of his life to highlight the wider failings of Enterprise Inns.

Enterprise Inns apologised to Mr Lee's family and friends, adding: "Since 2007, working closely with the HSE, Enterprise has done everything possible to ensure nothing like this can ever happen again."

[davejones1981] 06/10/2010 10:54

Enterprise Inns fined £315,000 over landlord's death

[jeffian] 05/10/2010 15:32

Tipped in Tempus column of The Times as "An interesting punt" (no link - who wants to pay Rupert Murdoch?!). Reference made to the Matrix report and the possibility of divis restarting. There's something in the wind; when you see the same ideas coming from different sources, you wonder if it's being floated out to see how the market reacts.........

[jeffian] 04/10/2010 13:12

You're about 3 days off the pace, crosswire! (see post 396 above)

[crosswire] 04/10/2010 11:09

Analyst: Enterprise close to turning a corner?

By Paul Charity

30/09/2010 12:13

A City analyst has claimed that Enterprise Inns is close to turning a corner - and could resume dividend payments in 2011.


Enterprise Inns: could resume dividend payments

John Beaumont, leisure analyst at Matrix, has issued a "buy" note on the company setting a price targe of 150p-per-share.

He said: "In our view Enterprise is close to demonstrating that it is through the worst of the recent downturn.

"Now that both its underlying trading and balance sheet are improving and it's got to grips with the tail end of its estate, we believe it is in sufficiently good shape to resume dividends and see its Net Asset Value (NAV) improve.

"Although Enterprise will not be updating the market with its usual pre-close update at the end of September, we believe the market can have some degree of confidence that Enterprise will demonstrate that it has turned a corner when it reports its prelims on 16 November.

"Perhaps most importantly, we expect the company to report that underlying profitability has stabilised through the whole of H2 (not just benefiting from the good weather in Quarter Three) and that it is confident of this continuing during Financial Year 2011, even without the benefits of the World Cup.

"We also hope that the company makes some reference to resuming dividend payments in 2011 – starting at its interims next May.

"Furthermore, we expect the company to be more ambitious in its debt reduction aims (through ongoing pub disposals and sale & leasebacks) in order to convince the market that, when its current bank debt facility is up for renewal at the end of 2013, renewing it will be seen as no more troublesome than renewing an overdraft facility.

"We believe it is possible for Enterprise reduce its bank debt to only £125m by the end of 2013.

"After about 2.5 years coping with the debt crisis, industry restructuring and recession, ETI is now at the end of this fire-fighting process. We now believe there are enough catalysts in the pipeline for this stock to start performing."

[jeffian] 01/10/2010 23:05

I don't think MARS and GNK will thank you for describing them as "bombed-out pub companies"!

[deadly] 01/10/2010 22:37

thanks for that. If ETI can reduce debt then why not other bombed-out pub companies e.g. PUB, MARS, GNK?

[timbo003] 01/10/2010 04:40

Maybe this might explain some of the recent strength in the share price:

[deadly] 27/9/2010 10:24

Going for it today up 5%. Catch up or something afoot?

[etome] 02/9/2010 16:15

Back to 100 soon. Other peers are performing well, so ETI won't stay low for long.

[the_doctor] 02/9/2010 12:42

I've traded a number of bio stocks - most more profitably than PRM, so I'm not sure I'd have it down as my most favourite. Most interesting, yes.

[jeffian] 02/9/2010 12:35

Whatever you say, doc. I've followed the same practice ('Masterly Inactivity') in your favourite bio-stock for over 10 years which has cost me dear so far but, happily, I am still 'in the money' on ETI (albeit that the opportunity cost of not selling the lot at 760 doesn't bear thinking about). Thanks for your concern.

[the_doctor] 02/9/2010 10:18

I thought a sheep follows the crowd jeffian?
It would appear to me that the crowd moved out of ETI
black sheep?

[jeffian] 01/9/2010 22:52

If only. I am a sheep.

[randolph and mortimer] 01/9/2010 21:05

But you are supposed to be a stock market operator, a big hitter in the UK market!

[jeffian] 01/9/2010 17:42

OK, then, 'my lot'!

8-)

I've always been cr@p at selling, tending to hang on through thick and thin. In this case, whilst recognising that they were more than fully-valued at nearly £8, I deferred a considered sale of part to take advantage of the drop in CGT to 18% (a salutary lesson not to let the tax 'tail' wag the investment 'dog'!)


At that point, and with Ted Tuppen reassuring us the dividend was secure, I could not foresee that there was much downside from £4 for a share with eps around 40p and a divi of 16.2p - and I felt that way all the way down to 39p(?). I still find it hard to understand, frankly. I did follow the example of the Directors by selling part into the rise in August 2009, but still got an awful lot which I will hold until Ted find a way of extracting at least the NAV.

You still in LUP? That followed a rather similar pattern. A warning to all not to follow my lead!

Regards, Ian

[randolph and mortimer] 01/9/2010 15:09

Jeffian,

Why do you talk about 'our lot' when you know that shares are for buying and selling?!

[jeffian] 01/9/2010 11:23

Thinking about having a 'story to tell' going forward, maybe they ought to reconsider the idea of converting to a REIT (for which they already have clearance in principle from HMR&C). Manage the assets, pay down debt over time and distribute all surplus cash to shareholders as dividend - not the most exciting investment, maybe, but rather better than the limbo of low share price and no divi which has been our lot for the past couple of years and it's hard to think of a more exciting alternative.