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Ei Group reports full-year managed like-for-likes up 7.1%: Ei Group has reported its managed estate saw like-for-like sales increase 7.1% for the year ended 30 September 2018. Like-for-like net income in its leased and tenanted estate increased 1.2%, with average net income per pub increasing 2.3% to £81,400. Underlying Ebitda remained at last year’s level of £287m assisted by a “great summer for pubs given the success of the England football team at the FIFA World Cup and some prolonged periods of good weather”. Underlying profit before tax increased £1m to £122m. The company also announced a further share buyback programme of up to £20m that would start immediately. During the period, the group grew its managed joint ventures to 47 pubs with 11 partners. It expects to add a further 20 to 25 pubs to the managed investments business during the current year. Managed pubs contributed £28m to the underlying Ebitda of the group reported in the year. As at 30 September 2018, the company operated 308 managed pubs and expects to add in the region of 90 to 100 further pubs in the current financial year. Its largest managed operation – Craft Union grew from 178 to 254 pubs during the year ending 30 September 2018 while the Bermondsey operation increased from 48 to 54 pubs. The company said the current level of managed house conversions reflected the profile of opportunities that had arisen. As such, it expects to maintain a similar level of asset transition, converting in the region of 110 to 125 pubs per annum to managed formats, which will deliver about 600 managed pubs by 30 September 2020. It expects conversions to continue beyond that date. Its commercial property division grew from 331 to 412 sites, generating net annualised rental income of £29m. Average net income per property was up 8.2% to £72,300 from £66,800 the previous year. The company said it was exploring a potential sale of all or part of the portfolio and recently appointed Rothschild & Co to assist with the process. From the date of the Pubs Code introduction to the 30 September 2018, there were 1,194 rent review or agreement renewal events that could potentially have triggered a Market Rent Only (MRO) requests. It issued 310 MRO offers in response to requests by publicans of which 168 have been concluded by way of mutually agreed tied deals and 27 have been concluded with new mutually agreed free-of-tie terms. In addition, three pubs have been sold and 16 leases have been repurchased from the occupational tenant, with the balance of 91 not yet concluded. Of these, 54 have been referred to the Pubs Code Adjudicator for determination. For the 1,194 pubs there are 894 that are still operated by the same publican on either a tied or new free-of-tie terms and in the year to 30 September 2018 these pubs achieved like-for-like net income growth of 0.2% compared with the prior year. To mitigate its exposure to the effects of MRO it has reduced the number of longer-term leases and increased the proportion of tied business operating under shorter-term tenancy agreements of up to five years in length. Since the concept of MRO agreements was first announced in November 2014 it has reduced the number of long-term agreements from 3,035 to 1,804 as at 30 September 2018. Chief executive Simon Townsend said: “2018 has been a notable year for the group, as the strategic plan we launched in 2015 has evolved and matured to the extent that our implementation of the strategy is now ‘business as usual’. We are very pleased to have maintained positive momentum in our leased and tenanted business while at the same time transitioning selected assets into the alternative formats and operating models of our other business units. The good investment returns we are achieving upon conversion to managed operations have been maintained, and the like-for-like sales performance of the enlarged managed business has been very encouraging throughout the year. Our commercial property estate has grown substantially in quality and scale and, consistent with our objective to consider monetising the value of all or part of this business, we have received indications that this attractive, diverse, well-located, income-yielding portfolio of assets is of considerable interest to potential acquirers. We welcome the chancellor’s decisions in the Autumn Budget to freeze beer duty and to reduce the burden of business rates for small businesses, which are important gestures of support for the role that UK pubs and publicans play at the heart of their local communities. Notwithstanding the wider uncertainty that prevails across the UK currently, our strategy and our flexible business models provide us with the confidence that we can continue to deliver like-for-like net income growth for the current year in our Publican Partnerships and commercial properties businesses, and like-for-like sales growth in our expanding managed businesses. We continue to take appropriate steps to ensure that the group’s capital structure enables and supports our objective to deliver attractive and sustainable returns for shareholders, as demonstrated by the announcement to initiate a further share buyback programme of up to £20m. Our strategic plan is on track and we remain focussed on driving long-term growth in shareholder value.”