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.

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
voicesIs a huge gamble on oil keeping the First Minister up at night?
Life and Style
tech

Apple has been hit by complaints about the 1.1GB download

Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
A 'Sir Alex Feguson' tattoo
football

PROMOTED VIDEO
Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Arts and Entertainment
Actor and director Zach Braff
tv

News
i100
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
News
i100
Arts and Entertainment
The former Doctor Who actor is to play a vicar is search of a wife
film

Matt Smith is set to join cast of the Jane Austen classic - with a twist

News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pointless host Alexander Armstrong will voice Danger Mouse on CBBC
tv

Much-loved cartoon character returns - without Sir David Jason

Arts and Entertainment
tv

Arts and Entertainment
Meera Syal was a member of the team that created Goodness Gracious Me
tv

Actress to appear in second series of the hugely popular crime drama

Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
Life and Style
i100

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

Property Underwriter

£70-90,000: Saxton Leigh: Our client a London Market Insurer are seeking a Pro...

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week