Enterprise Inns issues beer tie response

Enterprise Inns responds to the ending of the beer tie by selling up to 1,000 pubs.

Enterprise Inns responds to the ending of the beer tie by selling up to 1,000 pubs. - Credit: PA

Britain’s biggest pub landlord is to sell up to 1,000 outlets and ramp up its number of managed sites in the wake of a vote by MPs to axe the beer tie.

Enterprise Inns, which has just under 5,200 outlets, plans to expand its number of managed pubs from just 16 to up to 850 outlets. These pubs are owned by the group, rather than an individual landlord.

The Solihull-based firm will boost the number of commercial properties, run by landlords without a beer tie, to around 1,000 pubs from 185 outlets currently. The rest of the group’s estate are leased or tenanted.

The ending of the beer tie allows tenanted pub landlords to break the link with their pub group, leaving them free them to search for more competitive beer contracts.

The group said that for every tenanted landlord that ends the beer tie the group would see increased rent, but “it is possible that our total income would be adversely affected by this amendment.”

It added that in 2016 it expects to see the beer tie ended at 200 pubs, rising to up to 600 a year after that.

The group currently runs 16 pubs managed by two other firms, the Bermondsey Pub Company and the Craft Union Pub Company, and plans to expand these outlets.

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It has also struck a deal with the founder of Geronimo Inns, Robert Cleverly, to manage outlets, with the first set to open in the second half of this year.

Enterprise Inns said these partnerships will allow it to understand the complexity and handle the increased costs of managed public houses.

The group said its new pubs will cost between £75,000 and £400,000 per unit to build, adding it will use the sale of existing tenanted pubs it does not think are viable within the group to fund development. It added in the six months to the end of March it sold 133 pubs for £34 million.

Numis broker Douglas Jack said: “The direction of the strategic review is as expected, but the scale of the conversion programmes to managed pubs and commercial leases is much greater than expected.”

Enterprise Inns chief executive Simon Townsend added: “This new strategic direction will ensure that we generate the greatest value from each of our assets, and will also accommodate the requirements of the new legislation.”

The company also reported pre-tax profits of £10 million in the six months to March, down from £36 million in the same period a year earlier, largely due to combined refinancing and property charges totalling £47 million.

It added its like-for-like sales edged up 0.6%, compared to 1.1% growth 12 months ago, with stronger sales at its London pubs compared to those in the North.

The group said trading in the first few weeks of the second half of the year has been in line with its expectations.

It added that comparatives against its third quarter will be tough, as they include strong trading from the World Cup and a later Easter. The group said it continued to target growth in like-for-like net income for the full year.