Ei Group plc (EIG or Group), the largest owner and operator of pubs in the UK, today announces its interim results for the six months ended 31 March 2017.
Financial highlights
- Business performing well with all operations maintaining like-for-like growth momentum and strategic evolution on track
- Underlying EBITDA# of £140 million (H1 2016: £142 million), in line with expectations and reflecting the impact of planned disposals
- Underlying profit before tax# of £57 million (H1 2016: £57 million) as interest savings from reduced debt offset reduction in EBITDA
- Statutory profit after tax reduced to £10 million (H1 2016: £33 million), primarily due to non-underlying finance costs of £30 million (H1 2016: £7 million) associated with, previously announced, partial refinancing of the 2018 corporate bonds which delivered smoother and extended debt maturity profile
- Basic earnings per share of 2.1p (H1 2016: 6.6p) which, adjusting for non-underlying items, delivers underlying earnings per share# growth of 4%, at 9.6p (H1 2016: 9.2p)
Operational and strategic progress
- Publican Partnerships – our reinvigorated tied leased and tenanted business
- Continued momentum with like-for-like net income# up 1.6% (H1 2016: up 1.8%) and growth delivered across all geographic regions
- Initial phases of implementation of the new Pubs Code progressing in line with expectations
Commercial Properties – our high quality commercial property portfolio
- Like-for-like net income# up 1.1% (H1 2016: 6.3%) reflecting changes in estate composition, with future like-for-like net income growth expected to normalise in line with inflation
- Expanding portfolio with 304 commercial properties at 16 May 2017 at an improved average annualised rental income per property of £66,000 (H1 2016: £59,000)
- Disposal of a package of 18 commercial properties on 16 March 2017 generating £20 million of net proceeds, representing a 15% premium to the prior year-end book value and a gross yield of 6.57%
Managed Operations – our directly managed house business
- 161 pubs trading within our 100% owned Managed Operations business at 16 May 2017 with 39 trading in the Bermondsey Pub Company and 122 in the Craft Union Pub Company
Managed Investments – our innovative partnerships with expert managed house operators
- 24 pubs trading within our Managed Investments business unit at 16 May 2017, operating through trading agreements with seven managed partners
Capital allocation
- Net cash inflows from operating activities of £117 million (H1 2016: £129 million)
- Net proceeds from disposals of £65 million (H1 2016: £27 million)
- Total capital investment of £35 million (H1 2016: £30 million) with 57% focused on growth-driving investment schemes (H1 2016: 50%). Average pre-tax returns on all such investment of 21% (H1 2016: 19%)
- Repaid £38 million (H1 2016: £37 million) of securitised notes, in line with amortisation schedule
- Completed share buyback programme of £25 million in respect of the issued share capital of EIG, with 24.1 million shares purchased for cancellation
Commenting on the results, Simon Townsend, Chief Executive Officer said:
“We are pleased to have maintained the growth momentum in our leased and tenanted estate while making significant progress in building our commercial property portfolio and managed businesses. Our transformation of the Group remains on track.
Trading in the first six weeks of the second half of the year has been strong, assisted by the timing of the Easter holiday period. We expect our trading performance to reflect more challenging comparatives in June and July as we benefited from the UEFA Euro football championship last year. We are mindful of the potential for continuing economic uncertainty over the coming months, and remain vigilant regarding possible headwinds from the Pubs Code depending upon its interpretation and application.
Whilst taking into account these factors, we are confident that we will continue to deliver positive like-for-like net income growth in our leased, tenanted and commercial estates for the full year, we are encouraged by the trading performance of our expanding portfolio of managed houses, and we remain committed to the successful implementation of our strategic plan to deliver long-term growth in shareholder value.”