Ei Group plc has today announced its results for the six months ended 31 March 2019. Political uncertainty has hindered growth but operational efficiency and consumer loyalty to locals helps deliver like-for-like net income growth. The completion of the disposal of 348 commercial properties in March was highlighted by CEO Simon Townsend, as a significant milestone for the Group.
Financial highlights
- Growth in underlying EBITDA# to £140 million (H1 2018: £139 million)
- Underlying profit before tax# increased to £59 million (H1 2018: £57 million)
- Completion of the disposal of 348 commercial property assets for net proceeds of £332.7 million, in line with the tangible net book value of the assets and representing a 13 times multiple of earnings
- Statutory profit after tax of £9 million (H1 2018: £37 million), after non-underlying charges of £40 million (H1 2018: £10 million), largely relating to the allocation of £31 million (H1 2018: £4 million) of goodwill to property disposals
- Basic earnings per share of 1.9p (H1 2018: 7.9p) which, adjusting for non-underlying items, delivers underlying earnings per share# of 10.8p (H1 2018: 9.8p)
- Net asset value of £3.32 per share (H1 2018: £3.26 per share)
- Announcement of additional £30 million share buyback to deliver a total programme of £85 million in the current financial year
Operational progress
- Publican Partnerships
o Like-for-like net income# up 1.9% (H1 2018: up 0.6%) with growth across all geographic regions
o Average annualised net income per pub# up 2.7% to £83,100 (H1 2018: £80,900)
- Managed Pubs
o Like-for-like sales# growth of 6.0% (H1 2018: up 6.6%) across our largely wet-led managed house businesses
o Managed Operations – growth on track with 357 (H1 2018: 276) pubs trading within our wholly-owned managed division
o Managed Investments – continued progress with 62 (H1 2018: 43) pubs trading with 11 specialist partners
- Commercial Properties
o Total portfolio of 83 (H1 2018: 351) properties of which 22 are expected to be sold, subject to superior landlord consent, for £11.4 million over the coming months
o The retained portfolio of 61 properties generates net annualised rental income of £4 million with average annualised net income per property# of £65,600 (H1 2018: 351 properties generated net annualised rental income of £25 million with average annualised net income per property of £68,600)
Capital allocation
- Revised capital allocation framework to maintain debt reduction whilst facilitating increased returns to shareholders
- Strong net cash flows from operating activities of £132 million (H1 2018: £125 million)
- Ordinary course disposal proceeds of £22 million (H1 2018: £34 million) partially funded capital investment of £45 million (H1 2018: £42 million)
- Undrawn bank facilities of £150 million at 31 March 2019
- Net debt reduced to £1.7 billion (H1 2018: £2.1 billion)
CEO’s statement
Simon Townsend, CEO of Ei GroupCommenting on the results, Simon Townsend, Chief Executive Officer, said: “We are pleased with the trading performance of our Group for the first half of the year. We continue to deliver sustained like-for-like net income growth within our core Publican Partnerships business and are generating strong returns as we expand our Managed Operations and Managed Investments businesses.
“Despite an environment of unprecedented political uncertainty and inflationary pressure from increases in the national minimum and living wage, consumers continue to support their local pub. This consumer resilience, combined with excellent operational execution and effective capital investment, provides us with the confidence that we can maintain our growth momentum for the year as a whole, despite some challenging comparative trading periods ahead of us in June and July.
“The completion of the disposal of 348 commercial properties in March represented a significant milestone for the Group. We have demonstrated our ability to grow value through the transfer of assets to their optimum use and then to unlock that value through monetisation providing evidence of our strategy in action. We are using the significant cash proceeds received from the transaction to accelerate our debt reduction plans and to deliver value to our shareholders.
“We are pleased to announce today a further £30 million share buyback programme, in addition to the £55 million programmes previously announced in this financial year.”