The Investment Column: Enterprise Inns still worth holding

Home in on soaraway Topps Tiles - Patientline's healthy outlook is attractive

For a company peddling the "sin" of alcohol consumption, Enterprise Inns manages to put together an extraordinarily pious statement.

For a company peddling the "sin" of alcohol consumption, Enterprise Inns manages to put together an extraordinarily pious statement.

Fine full-year results yesterday from the country's biggest pubs landlord were accompanied by talk of focus on "quality": "The average pub goer is more discerning and that quality is what counts." Its tenants, the company insists, make a "fair" living - it published figures showing more than two-thirds earn more than £30,000 a year.

The company wants "the development of a more civilised drinking culture". It lashed out at pubs encouraging and members of the public indulging in "binge drinking". It even sounded positive on the Government's proposed partial smoking ban.

To be fair, Enterprise does seem to be one of the good guys in the industry. Its 8,727-strong estate (at the end of September) is unbranded. It relies on the ingenuity of its licensees to know their local market and to create a pub that is appealing for its location. For many who are fed up with the ever-onward march of the chain on the high street and in the pubs sector, this must be the right strategy.

Earlier this year, Enterprise bought the Unique Pub Company for £609m, adding some 4,000 pubs to its estate. The underlying operating profit growth seen for the year to the end of September was 8 per cent, while the dividend was raised 40 per cent.

There is no getting away from the shadow of the smoking ban: the Government has proposed that establishments where food is served must not permit smoking.

Ted Tuppen, the chief executive at Enterprise, argues that in the long run, smoke-free pubs may actually attract more people. Also, he hopes that the consultation period will achieve some change in the proposal. He'd like to see pubs segregated into smoking and non-smoking areas. As it stands, the Government wants pubs to choose to be one or the other.

A good company but the issue of whether tenants are being "squeezed" and the smoking ban make Enterprise, at 683p, a hold.

Home in on soaraway Topps Tiles

Britain's television obsession with home makeover programmes can be blamed for a number of things: making Laurence Llewelyn-Bowen a celebrity is one. Making shareholders in Topps Tiles very happy is perhaps another.

Yesterday Topps said what most investors were expecting it would - that this was a blockbuster year. The company reported record numbers: full-year turnover up 32.5 per cent to £157.6m; pre-tax profits up 78 per cent to £33.8m; an increase in the final dividend of 146 per cent to 8p.

Topps wants to grow at its current rate for another six years, by which time it aims to have 350 stores in the UK (from 220 at the moment). The company currently has no plans to expand abroad apart from the 11 stores it operates in Holland as part of a joint venture - and, given how much growth it sees in the UK, there seems little point in changing that policy.

Most competition tends to come from relatively small, local shops which struggle to keep up with the pricing power Topps has, through its ability to buy in huge bulk. Those savings are passed on to customers - so even trade users are beginning to convert to Topps.

The shares, available for little more than 50p in 2002, closed at 228p yesterday. Heady stuff, and so any investors wishing to take money off the table at this stage can hardly be blamed - the shares, trading on approximately 17 times earnings, are not cheap any more and the growth rate will slow eventually.

But for investors not owning the stock, there are few British retailers showing such confidence and so long as management keeps hitting targets there is plenty of upside left in these shares. Buy.

Patientline's healthy outlook is attractive

Patientline is getting to some important milestones that should provide comfort for investors.

The loss-making (though fast-growing) business provides bedside terminals for patients in hospitals. These supply entertainment - TV, radio and internet access - plus communication: phone and e-mail. In the future, the terminals will also provide access to electronic patient files. Patients buy time on the terminals.

This is a new market and Patientline has nearly two-thirds of it. Delivering half-year results, it said that, from the next financial year, it would significantly slow the rate of terminal installation - which costs about £1,600 a time - bringing forward profitability.

The group has been putting in the machines at a rate of 20,000 a year. It now has some 65,000 in place. On "mature" machines (installed for nine to 12 months), it is making £2.10 a day, a 55 per cent operating margin, before depreciation.

The company also has new, larger bank facilities that ought to put an end to rumours that it is going to be issuing equity. For the half-year, revenue was up 45 per cent to £23.3m, while underlying earnings were 142 per cent higher at £7.9m.

The company also has great potential overseas, especially in the US. Patientline shares, at 125.5p, remain attractive.

News
people
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
filmDirector said film would 'never have been financed' with ethnic minority actors in key roles
News
people
Sport
footballArsenal 2 Borussia Dortmund 0: And they can still top the group
PROMOTED VIDEO
Arts and Entertainment
An unseen image of Kurt Cobain at home featured in the film 'Kurt Cobain: Montage of Heck'
film
News
Andy Murray with his girlfriend of nine years, Kim Sears who he has got engaged to
peopleWimbledon champion announces engagement to girlfriend Kim Sears
Arts and Entertainment
Jake Quickenden and Edwina Currie are joining the I'm A Celebrity...Get Me Out Of Here! camp
tv
Arts and Entertainment
George Mpanga has been shortlisted for the Critics’ Choice prize
music
News
Albert Camus (left) and Jean-Paul Sartre fell out in 1952 and did not speak again before Camus’s death
people
Arts and Entertainment
Roisin, James and Sanjay in the boardroom
tvReview: This week's failing project manager had to go
News
ebooksNow available in paperback
News
Ed Miliband visiting the Holocaust museum in Jerusalem. The Labour leader has spoken more openly of his heritage recently
newsAttacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But are the barbs more sinister?
Arts and Entertainment
'Felfie' (2014) by Alison Jackson
photographyNew exhibition shows how female creatives are changing the way women are portrayed in advertising
News
i100
Life and Style
Fright night: the board game dates back to at least 1890
life
Environment
The vaquita is being killed by fishermen trying to catch the totoaba fish, which is prized in China
environmentJust 97 of the 'world's cutest' sea mammals remain
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

h2 Recruit Ltd: Head of Regional Sales - Financial Software - £130,000 OTE

Negotiable: h2 Recruit Ltd: A rapidly expanding, global Software/ SaaS Vendor ...

SThree: Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Langley James : IT Support; Helpdesk, VMware; Manchester, £18k

£16000 - £18000 per annum: Langley James : IT Support; Helpdesk, VMware; Manch...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

Arsenal vs Borussia Dortmund

The Ox celebrates century with trademark display of speed and intuition
Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

When two worlds collide

Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?