preliminary results - enterprise-inns group website · 2019. 8. 23. · preliminary results 2010...

Preliminary Results 2010

Preliminary Results

30 September 2010

VISIT OUR WEBSITE www.enterpriseinns.com


David George

Chief Financial Officer


Financial performance 12 months to 30 September 2010

EBITDA pre exceptional items £405m (2009 - £450m)

Average net income per pub down 2% in the year, stable in H2

Profit before tax & exceptional items £175m (2009 - £208m)

Adjusted EPS 25.9p (2009 - 30.7p)

£270m proceeds from disposals

Successful refinancing of bank facility

Net debt reduced by £374m


Profit & loss account Adjusted EPS of 25.9p

Year ending 30 Sept 2010 Year ending 30 Sept 2009

£m Pre

excep Excep Total

Pre excep

Excep Total

EBITDA 405 (5) 400 450 (5) 445

Depreciation (13) - (13) (12) - (12)

Operating profit 392 (5) 387 438 (5) 433

Property - (190) (190) 0 (158) (158)

Interest (217) (11) (228) (230) (34) (264)

Profit before Tax 175 (206) (31) 208 (197) 11

Taxation (46) 103 57 (55) 50 (5)

Profit after Tax 129 (103) 26 153 (147) 6

Adjusted EPS (p) 25.9 30.7

Weighted average no. of shares (m) 498.6 497.8


Cash flow statement Strong cash generation of £363m

12 months ending

30 September

£m 2010 2009

Operating profit 387 433

Operating cash inflow 410 440

Interest (219) (232)

Tax (43) (59)

Free cash flow pre investment 148 149

Capital expenditure (55) (54)

Acquisitions - (4)

Disposals 270 103

Cash generation 363 194


Balance sheet Robust balance sheet

30 September

£m 2010 2009

Goodwill & investments 392 409

Pubs & other assets 5,015 5,394

Net debt (3,305) (3,679)

Net other liabilities (158) (158)

Deferred tax (537) (591)

Net assets 1,407 1,375

Minimal net pension liabilities

Annualised leasehold rent payable of £11m


EBITDA EBITDA before exceptionals of £405m

Year ending 30 Sept 2010 Year ending 30 Sept 2009

£m Pre

excep Excep Total

Pre excep

Excep Total

Revenue 753 5 758 811 7 818

Cost of sales (311) (3) (314) (325) (4) (329)

Gross profit 442 2 444 486 3 489

Administrative expenses (37) (4) (41) (36) (8) (44)

Reorganisation & regulatory - (3) (3) - - -

EBITDA 405 (5) 400 450 (5) 445


Gross margin analysis Margins impacted by discretionary concessions

£m

Beer,

cider

& fabs

Contractual discounts

Net beer, cider & fabs

Rental

income Concessions

Wines,

spirits &

minerals

Machines & other Total

2009/10

Turnover 567 (59) 508 217 (15) 34 14 758

Cost of sales (277) - (277) (12)* - (25) - (314)

Gross profit 290 (59) 231 205 (15) 9 14 444

51.1% 45.5% 58.6%

2008/09

Turnover 594 (47) 547 240 (21) 36 16 818

Cost of sales (296) - (296) (6) - (27) - (329)

Gross profit 298 (47) 251 234 (21) 9 16 489

50.2% 45.9% 59.8%

* Includes impact of sale and leaseback programme


Net income per pub Average net income per pub stabilised during H2

2010 2009 %

decline

Gross profit 444 489

Add back property costs 12 6

Adjusted net income 456 495

Average no of pubs 7,138 7,611

Average net income per pub 63.9 65.0 (1.7)

Average net income per pub in H1 31.2 32.2 (3.1)

Average net income per pub in H2 32.7 32.8 (0.3)


Analysis of gross profit 94% of income from pubs let on substantive agreements

No. of pubs at 30 Sep 2010

FY10 £m

Change £m

FY09 £m

Change %

All substantives 6,073 430 (10) 440 (2)

Non substantives 747 26 (14) 40 (35)

Like-for-like income 6,820 456 (24) 480 (5)

2009 and 2010 disposals 5 (15) 20

Unallocated costs (5) - (5)

Net income 456 (39) 495

Property costs (inc LH rent) (12) (6) (6)

Gross profit 444 (45) 489


Analysis of like-for-like income Resilient performance in the South

Location


% of pubs

Income FY10 £m

% of income FY10

Income/ pub FY10

£k

Income FY09 £m

Income/ pub FY09

£k

Change %

North 2,276 33 147 32 65 159 70 (8)

Central 1,884 28 118 26 63 125 66 (6)

South 2,660 39 191 42 72 196 74 (3)

Total 6,820 456 67 480 70 (5)


Years in occupation No. of pubs at 30 Sep 2010

Income FY10 £m

Income/ pub FY10 £k

Income FY09 £m

Income/ pub FY09 £k

Change %

<1 year (new lets) 983 48 49 59 60 (19)

<1 year (assignments) 206 15 73 14 68 7

1-5 years 2,371 172 73 168 71 2

Over 5 years 2,513 195 78 199 79 (2)

Total substantives 6,073 430 71 440 72 (2)

Non substantives 747 26 35 40 54 (35)

Total 6,820 456 67 480 70 (5)

Analysis of like-for-like income Strong performance from established licensees


Pub estate valuation Total pub estate valued at £5.0bn

As at 30 September 2010

Number of pubs

Total value

Average value per

pub

£m £k

Pubs 6,552 4,948 755

Operating leases 149 13 87

Pubs held for sale 119 30 252

Total 6,820 4,991 732


Annual estate revaluation 2% reduction in value of pub estate

£m 2010 2009

Estate value – pre revaluation 5,051 5,710

Revaluation:

Recognised through the income statement (141) (122)

Recognised in reserves 38 (278)

Total revaluation reduction (103) (400)

Estate value – post revaluation 4,948 5,310

Revaluation reduction (2)% (7)%


Pub estate valuation Estate valuation profile reflects improving pub quality

Pub value


Average pub value

FY10 £k

Total value FY10 £m

Est avg licensee

turnover/ pub £k

Pub value as a

multiple of turnover

£1m+ 1,241 1,248 1,549 505 2.5

£750k to £1m 1,697 857 1,455 370 2.3

£500k to £750k 2,433 622 1,514 289 2.1

£250k to £500k 973 408 397 224 1.8

£0k to £250k 208 159 33 180 0.9

Total 6,552 755 4,948 338 2.2

• Analysis excludes 149 pub classified as operating leases & 119 pubs due to be sold and classified as assets held for sale


Debt structure Attractive debt structure

Tax efficient

Flexible

Manageable

Secure

Low cost


Debt structure Group net debt reduced by £374m

As at 30 September

£m 2010 2009 Movement

Unique securitised bonds (1,501) (1,576) 75

Bank debt (686) (902) 216

Corporate bonds (1,185) (1,185) -

Cash 108 101 7

Underlying Group net debt (3,264) (3,562) 298

Issue costs and fair value adjustments (41) (117) 76

Group net debt (3,305) (3,679) 374

Memo: Interest cost (217) (230)

Tax shield 59 62


Unique securitisation Secured bonds, ring-fenced in subsidiary

Leveraged structure at below market interest rates

Smooth amortisation profile until maturity in 2032

£75m prepayment of floating rate notes (£116m outstanding)

Fixed rate notes:

£1,385m at 6.3%

Amortisation commences September 2013

No concerns on financial covenants


Unique securitisation: DSCR Corporate structure underpins DSCR ratio

Potential restriction of dividend to ETI in 2014 (if DSCR <1.5x) is not a concern

Debt service requirement of £158m in 2014, reducing thereafter

Minimum cash flow required to meet DSCR covenant of 1.1x is £174m

This can be achieved through:

Growth in current level of income

Increase in the procurement fee payable by ETI (at ETI discretion)

Decrease in the management fee payable by Unique (at ETI discretion)

Restriction of dividend payment from Unique to ETI

Purchase of pubs by Unique (from available cash)


Corporate bonds Secure and effective debt instruments

£1,185m at 6.5% weighted average interest rate

Non-amortising

Ring-fenced portfolio of freehold pubs

Annual injection or withdrawal of pubs to maintain income and

valuation requirements (addition of £24m in 2010, £29m in 2009)

First major refinancing of £600m in 2018


Bank facility New forward start facility (FSF) agreed

FSF of £625m - commences May 2011

Tranche A (£419m) expires December 2013

Tranche B (£206m) expires December 2012

Six monthly amortisation of £25m commences December 2011

Initial margin of 3.5% pa

No change to financial covenants

Existing facility (£800m at 30 September 2010) continues until May 2011

£200m of £1bn facility cancelled at 30 September 2010

Out of the money swaps cancelled


Simon Townsend

Chief Operating Officer


Market background Trading remains challenging

Evolution of pubs, publicans and operating models

Stability returning

Proactive business management and investment

Focus on retail sales, skills and standards


Operating performance Improvement in most underlying trends

Average net income per pub down 2% (2009 - down 8%)

Total licensee support reduced to £15m (2009 - £21m)

2010 H1 £7m H2 £8m (2009 H1 £9m H2 £12m)

Rate of business failures reduced

Abandonments, surrender and B&T 875 (2009 - 972)

772 rent reviews completed at an average annual reduction of 1.4%

(2009 - 766 increase of 0.1%)

55% of substantive agreements linked to RPI (2009 - 48%)

TMA programme complete at September 2010 (2009 - 183)


Operating performance Further evidence of stability and a platform for growth

89% of estate let on substantive agreements (2009 - 83%)

Income down 2% to £430m, representing 94% of total income

New lettings onto substantive agreements 1,028 (2009 - 860)

Average length of licensee occupation is over 5 years

2,561 formal applications (2009 - 1,529)

Closed pubs to be reopened 79 (2009 - 90)

Overdue balances reduced by 12% to £6.1m (2009 - £6.9m)

Annual bad debts costs reduced by 38% to £2.1m (2009 - £3.4m)


Evolving estate profile and quality Clear indications of investment, diversification and sustainability

1,850 rent review assessments completed during 2009 and 2010

Estimated average licensee total turnover of £333k

87% of pubs assessed offer food

Where offered, food represents 25% of total licensee turnover

Overall non beer turnover represents 45% of total licensee turnover

Dining is now the primary consumer occasion in 30% of the estate

Almost 5,000 letting rooms across the estate

75% of pubs offer cask ale which now represents over 15% of all beer sales

More award-winning pubs and publicans (www.enterpriseinns.com)

http://www.enterpriseinns.com/


Recent developments Continual business improvement

Industry-leading licensee support packages

statutory compliance, accountancy and stocktaking, maintenance, utilities management

Roll-out of national and regional retailer forums

Website and on-line services

Enterprise Skills Academy

Investors in People Champion 2010

National Innkeeping Training Award (WILMA)


Evolving business model Flexible, competitive and attractive

New lease and tenancy agreements

No rent reviews throughout life of agreement

Off-invoice discounts up to £155 per barrel and incentive discounts

Tie release options (packaged beers, wines, spirits, minerals, SIBA cask

ales, gaming machines)

Available in all new agreements and to all existing agreement holders


Code of Practice A template for successful business relationships

Pre-entry requirements

Detailed disclosure of information

Professional advice

Rent reviews, renewals and changing circumstances

Dispute resolution

BIIBAS accredited in June 2010


Ted Tuppen

Chief Executive


ETI business model: It is working and evolving

Trading in a recession: Good pubs are surviving

Pub valuations: Values are stabilising

Levels of debt: Efficient, flexible and manageable

Challenges The questions we are answering


Preliminary results Summary

Improving trends in a tough market

Top quality freehold estate, fairly valued

Strong operational cash generation plus profitable disposals

Business model evolving to meet market needs

Robust and manageable financing structure in place

Doing the right things to protect long term shareholder value


QUESTIONS

www.enterpriseinns.com

http://www.enterpriseinns.com/

preliminary results - enterprise-inns group website · 2019. 8. 23. · preliminary results 2010...

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