Ei Group pushes on with managed operations

Ei Group pushes on with managed operations

Ei Group’s managed operations have continued to progress, as the pub company announces its interim results for the six months ended 31 March 2018.

Its managed division remains a priority for the group. There are now 276 (136 in 2017) pubs trading within Ei’s 100%-owned managed operations business; 223 (100 in 2017) in its drinks-led Craft Union format; and 53 (36 in 2017) in the Bermondsey format.

There are also 43 pubs trading within its managed investments business with 10 specialist partners, up from 22 this time last year.

Ei saw a like-for-like sales growth of 6.6% across its managed businesses.

“We set out our strategic plan in 2015, and we have made strong progress,” says Simon Townsend, chief executive officer of Ei Group. “As we look to 2020 and beyond, our strategy continues to evolve, reflecting our successes to date, changes in the marketplace and our continuing drive to unlock embedded value within our estate. However, the core tenets of our strategy remain unchanged in that we aim to optimise the returns delivered from each of our assets by ensuring they trade in their optimal format and operating model.

“Our managed operations continue to trade well, with good returns achieved upon conversion and we expect the financial contribution from such conversions to increase in the coming years, delivering long-term incremental value to the Group. Our managed investments and commercial properties businesses are successfully building the value-enhancing characteristics of portfolio quality and scale, consistent with our objective to monetise their value over time.”

The company as a whole saw further growth in net asset value to £3.26 per share (£3.01 in 2017). Statutory profit after tax has also increased to £37m, stated after charging non-underlying finance costs of £1m. Ei Group’s underlying EBITDA was £139m (£140m in 2017), which is said to be in line with expectations and reflecting the impact of planned disposals.

Like-for-like sales across its publican partnerships were up 0.6%, which saw an average annualised net income per pub up 4.3% to £80,900.

“We are pleased to have maintained the growth momentum in our leased and tenanted estate during the first half of the year,” adds Townsend. “This is despite challenging trading conditions for the sector as a whole, with inflationary pressures and some fragility in consumer spending compounded by particularly poor weather towards the end of the period. To have achieved overall growth in net income despite these headwinds underlines the benefits of our flexible business model and gives us confidence that we are on track to deliver positive like-for-like net income growth in our leased and tenanted business for the full year.

“The continued positive trading momentum and cash generation of the business enabled us to complete a £20 million share buyback programme during the first half of the year, demonstrating our commitment to deliver returns to shareholders when appropriate and to drive long-term growth in shareholder value.”