The Investment column: Bargain discovery for Enterprise
Thursday 24 April 1997
Enterprise is acquiring 277 pubs, mainly in Wales, the West Midlands and the West Country, and a business that made an operating profit of pounds 5.1m on a turnover of pounds 21.7m in the year to September, when net assets were valued at pounds 16.4m. The properties alone have just been valued at pounds 47.8m.
Enterprise will integrate the estate into its portfolio of 872 pubs, close 30 to 40 of the least viable, and convert most of the 45 managed pubs back into long-lease tenancies.
The chief executive, Ted Tuppen, claims this is more effective than ownership for pubs turning over less than pounds 10,000 a week.
Meanwhile, Enterprise has renegotiated Discovery's supply agreement with Whitbread, which will result in more Whitbread beers being sold in Enterprise pubs and bring a wider range of national and regional beers into the Discovery estate.
Merger costs of pounds 2m in the current year will buy annual savings in excess of pounds 1m from next year, so the deal should be earnings enhancing in 1997/98.
The acquisition came as Enterprise announced a 74 per cent rise in pre- tax profits to pounds 6.2m in the six months to 29 March. Most of the growth came from the acquisition of the John Labatt estate of 413 pubs for pounds 62m last June, but like-for-like income grew 8 per cent, appreciably ahead of the industry average.
Several more deals are under consideration, but the acquisition of surplus Pubmaster pubs in South-east England, where Enterprise is weakest, would make greatest sense.
At 242.5p, up 0.5p, the shares stand on a forward price-earnings ratio of 11, falling to 9, assuming profits rise to pounds 15m this year and pounds 21m next. An interesting punt in a currently fashionable sector.
- 1 Porn block in India: hundreds of sexual websites banned, internet outraged
- 2 Malaysia issues arrest warrant for Gordon Brown’s sister-in-law after she publishes stories on leader Najib Razak's financial affairs
- 3 Gamers confess the worst things they've done in The Sims
- 4 Sex with robots will be ‘the norm’ in 50 years
- 5 Barack Obama turns 54: The US President's best put downs to celebrate his birthday
Jackie Chan climbs to second place in Forbes' Highest Paid Actors list after magazine includes actors working outside US movie industry
Malaysia issues arrest warrant for Gordon Brown’s sister-in-law after she publishes stories on leader Najib Razak's financial affairs
Gwen Stefani and Gavin Rossdale divorce: One of music industry’s most enduring couples announce split after 12 years of marriage
Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
Dutch King Willem-Alexander declares the end of the welfare state
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Labour leadership race: Jeremy Corbyn could be the next Prime Minister, says Ken Clarke
iJobs Money & Business
£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...
£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...
£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...
£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...