Ei Group annual results show steady growth but disposals possible

Ei Group plc, the largest owner and operator of pubs in the UK, has today announced its results for the year ended 30 September 2018, showing underlying profit before tax of £122m (2017: £121m)

Underlying EBITDA was exactly the same in 2017 at £287m, in line with expectations and assisted by a great summer for pubs given the success of the England football team at the FIFA World Cup and some prolonged periods of good weather

Statutory profit after tax of £72m (2017: £54m), after non-underlying finance costs of £6m (2017: £30m) and non-underlying property charges of £25m (2017: £24m).

For Publican Partnerships, like-for-like net income was up 1.2% (2017: up 2.3%) with growth across all geographic regions. The average net income per pub was up 2.3% to £81,400 (2017: £79,600).

For Commercial Properties, there was a total portfolio of 412 (2017: 331), generating net annualised rental income of £29m (2017: £23m). The average net income per property was up 8.2% to £72,300 (2017: £66,800).

The firm is exploring monetisation of the commercial property portfolio, which may include the disposal of all or part of the portfolio.

For Managed Pubs, there was like-for-like sales growth of 7.1% (2017: up 2.4%) across the largely wet-led managed house businesses.

Managed Operations growth is on track with 308 (2017: 226) pubs trading within the 100% owned Managed Operations division, with 54 (2017: 48) trading within the Bermondsey operation, and 254 (2017: 178) within the drinks-led Craft Union operation.

Managed Investments saw continued progress with 47 (2017: 30) pubs trading within this division, with 11 specialist partners.

CEO Simon Townsend (pictured right with CFO Neil Smlth) said, “2018 has been a notable year for the Group, as the strategic plan we launched in 2015 has evolved and matured to the extent that our implementation of the strategy is now 'business as usual'.

'We are very pleased to have maintained positive momentum in our leased and tenanted business whilst at the same time transitioning selected assets into the alternative formats and operating models of our other business units.

'The good investment returns we are achieving upon conversion to Managed Operations have been maintained, and the like-for-like sales performance of the enlarged managed business has been very encouraging throughout the year.

'Our commercial property estate has grown substantially in quality and scale and, consistent with our objective to consider monetising the value of all or part of this business, we have received indications that this attractive, diverse, well-located, income-yielding portfolio of assets is of considerable interest to potential acquirers.'

Townsend continued, 'We welcome the Chancellor of the Exchequer’s decisions in the Autumn Budget to freeze beer duty and to reduce the burden of business rates for small businesses which are important gestures of support for the role that UK pubs and publicans play at the heart of their local communities.

'Notwithstanding the wider uncertainty that prevails across the UK currently, our strategy and our flexible business models provide us with the confidence that we can continue to deliver like-for-like net income growth for the current year in our Publican Partnerships and Commercial Properties businesses, and like-for-like sales growth in our expanding managed businesses.

Townsend concluded, 'We continue to take appropriate steps to ensure that the Group’s capital structure enables and supports our objective to deliver attractive and sustainable returns for shareholders, as demonstrated by today’s announcement to initiate a further share buyback programme of up to £20 million.

'Our strategic plan is on track and we remain focussed on driving long-term growth in shareholder value.”