Ei Group’s managed sites prove prosperous

By Nicholas Robinson contact

- Last updated on GMT

Sales growth: Ei Group board members with chief operating officer Simon Townsend (centre)
Sales growth: Ei Group board members with chief operating officer Simon Townsend (centre)
Pub giant Ei Group has delivered a 6% sales growth within its “largely wet-led” managed pub estate in the past six months.

In February, Ei Group’s boss Simon Townsend set out plans to continue to invest in the managed house operation, saying the group would increase the number of managed sites​ to more than 400 this year, before reaching 500 in 2020.

Profits before tax rose to £59m – up £2m compared to the same period last year – its half-year results for the six months to 31 March 2019 show.

Ei’s Publican Partnerships business also saw income increase by 1.9%, compared to a rise of 0.6% for the same period last year.

The sale of its commercial property portfolio​ for £348m to a US hedge fund, announced in January, is ongoing and, when complete, will leave the business with 61 sites when a further 22 are sold for £11.4m in the coming months.

Remaining sites

About £4m in rent will be generated through the remaining 61 sites, with an average annual net income per property of £65,600.

Although a lower figure than the £25m generated from the 351 properties in the first half of 2018, some analysts have highlighted the restructure and sale as more economic for the business.

The large-scale disposal within the commercial arm of the business, and the subsequent financial results, showed Ei’s ability to grow its value, said group chief executive officer Townsend in the company’s trading statement.

“We are using the significant cash proceeds received from the transaction to accelerate our debt reduction plans and to deliver value to our shareholders,” he added.

Over the past five years, Ei has ditched 930 “under-performing” sites and achieved 419 managed house conversions, as well as 341 property conversion.

£30m share buyback scheme

Within the update, Townsend also announced a further £30m share buyback programme on top of the £55m already announced this financial year.

“We are pleased with the trading performance of our group for the first half of the year,” said Townsend.

“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 the wider financial struggles within the industry, such as political uncertainty, inflation and national minimum wage increases, Townsend said the figures showed consumers were continuing to support their local pubs.

“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.”

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