Ei Group plc (EIG or Group), the largest owner and operator of pubs in the UK, today announces its final results for the year ended 30 September 2017.
Financial highlights
- Net asset value up 5% to £3.13 per share (2016: £2.96 per share) underpinned by like-for-like net income growth, asset appreciation, cash generation and net debt reduction.
- Underlying EBITDA# of £287 million (2016: £292 million), in line with expectations and reflecting the impact of planned disposals
- Underlying profit before tax# of £121 million (2016: £122 million) as interest savings from reduced debt broadly offsets reduction in EBITDA
- Statutory profit after tax of £54 million (2016: £71 million), impacted by non-underlying finance costs of £30 million (2016: £7 million)
- Basic earnings per share of 11.2p (2016: 14.2p) which, adjusting for non-underlying items, delivers underlying earnings per share# growth of 5%, at 20.5p (2016: 19.6p)
- Announcement of a further £20 million share buyback programme commencing with immediate effect
Good operational and strategic progress
On track with the evolution of our operating divisions
Publican Partnerships
- Like-for-like net income# up 2.3% (2016: up 2.1%) with growth across all geographic regions
- Average net income per pub# up 5.0% to £79,600 (2016: £75,800)
- Continuing to manage the implications of the Pubs Code
Commercial Properties
- High quality portfolio of 331 (2016: 273) properties generating net annualised rental income of £23 million on assets valued at £271 million, representing a yield of 8.4%
- Average net income per property# up 9.2% to £66,800 (2016: £61,200)
Managed Operations
- Performance on track with 226 (2016: 99) pubs trading within our 100% owned Managed Operations with 48 (2016: 28) trading within our Bermondsey operation and 178 (2016: 71) within our drinks-led Craft Union operation.
Managed Investments
- Good progress with 30 (2016: 8) pubs trading within our managed investments business with 9 specialist partners
Stable and robust balance sheet and cash flows
- Annual estate valuation increased for second consecutive year, up 0.2% (2016: up 0.1%)
- Strong operating cash flows of £261 million (2016: £269 million) and disposal proceeds of £100 million (2016: £98 million) fund capital investment of £80 million (2016: £74 million) and debt reduction
- Sufficient available bank facilities to repay the £100.5 million corporate bond due in December 2018
- Net debt reduced to £2.1 billion (2016: £2.2 billion), equivalent to loan-to-value of 58%
Commenting on the results, Simon Townsend, Chief Executive Officer said:
“We are making good progress against the strategy we set out in May 2015, which represents the most effective means to unlock embedded value within our estate. We are delighted with the continued growth momentum in our leased and tenanted business, achieved within the regulatory framework of the Pubs Code. At the same time we are developing a quality commercial property portfolio and our managed operations and investments businesses are going from strength to strength. We are delivering on our plans for the transformation of the Group and are now beginning to accelerate the execution of these plans as our financial metrics and balance sheet continue to strengthen.
We are mindful of current economic and political uncertainty and the inflationary cost headwinds faced by our industry, notably the rising minimum wage and above inflation increases in business rates, but our flexible business model and robust financial position leave us well placed to succeed despite these conditions.
The current financial year has started well and we are on track with our plans. We aim to deliver positive like-for-like net income growth in our leased and tenanted and commercial estates for the year ahead, and we are encouraged by the trading performance of our expanding portfolio of managed houses.
As we enter the third year of our strategic implementation we are increasingly confident in the progress made with our operating divisions making good headway, our balance sheet and finances robust and our route to shareholder returns clear. This continued successful implementation of our strategy gives us the opportunity to announce a further £20 million share buyback programme, consistent with our commitment to deliver long-term growth in shareholder value.”