Enterprise Inns reviews investment due to pubs code ‘uncertainty'

Pub giant Enterprise Inns has warned that it is reviewing its capital investment plans because of continued uncertainty over the pubs code.

The beer tie faces the scrap following a government defeat in the House of Commons in November last year, when MPs voted in favour of a ‘market rent only' option being added to the code. It would allow pub licensees an independent rent review, as well as the power to buy their beer on the open market.

While the Campaign For Real Ale and the Federation of Small Businesses regarded the vote as a victory, the British Beer & Pub Association (BBPA) warned it was "hugely damaging" and could lead to 1,400 pub closures.

Now Enterprise, which has previously condemned the outcome of the vote, has told the City in a trading update ahead of its AGM that it was diverting an increased proportion of its capital investment away from longer-term agreements and towards shorter-term arrangements.

The company said: "As a direct response to the planned legislation we are reviewing our capital investment plans for the current year. Our previous guidance of capital investment of £70 million for the full year remains unchanged.

"However, given that the planned regulatory changes may increase the uncertainty of returns from investments made into longer-term agreements, we are diverting an increased proportion of capital investment into similarly attractive opportunities from shorter-term agreements."

Enterprise said that its trading performance in the first 18 weeks of its financial year to 31 January 2015 had been in line with its expectations, resulting in like-for-like net income growth for its leased and tenanted estate of 0.3%.

Beer tie to be scrapped following government defeat in Commons >>