Financial highlights
Ø Continued like-for-like net income growth, up 0.6% (H1 2014: 1.1% growth)
Ø EBITDA before exceptional items of £144 million (H1 2014: £147 million), in line with expectations and reflecting the impact of planned disposals
Ø Profit before tax and exceptional items increased to £57 million (H1 2014: £55 million) as interest savings from reduced debt offsets reduction in EBITDA
Ø Profit after tax at £4 million (H1 2014: £37 million) largely due to exceptional costs of £26 million in respect of partial refinancing of 2018 corporate bonds and property charges of £21 million (H1 2014: £6 million)
Ø Adjusted earnings per share up 4.7% at 9.0p (H1 2014: 8.6p)
Operational highlights
Ø Capital investment of £33 million (H1 2014: £41 million) funded from net disposal proceeds of £34 million (H1 2014: £42 million) with 42% focused on growth driving investment initiatives (H1 2014: 32%)
Ø Operational focus aimed at supporting our publicans has helped to deliver a 21% reduction in the number of business failures
Strategic review
Ø Today we are announcing the outcome of a strategic review which we commenced in April 2014 that aims to optimise the returns from every asset within our property portfolio. In order to achieve this we are increasing our operational flexibility which means we will:
o continue to reinvigorate our tied tenancy business;
o expand our managed business;
o build a high quality commercial property portfolio; and
o make disposals where appropriate to optimise returns
Ø Whilst recognising that this will be a dynamic process we are planning that by September 2020 our managed pub business should be operating in the region of 750-850 pubs and we expect to have a commercial property business with around 900-1,000 property assets.
Commenting on the results, Simon Townsend, Chief Executive Officer said:
"We are pleased to report like-for-like net income growth for the first half of the financial year. At the start of last year we delivered net income growth for the first time in many years and to have built upon that momentum is particularly satisfying. To have achieved this performance against a backdrop of legislative uncertainty reflects the professional approach of our teams and the strength of relationships we have with the vast majority of our hard working publicans.
We are now implementing our new strategy which provides a clear path to maximise returns from each of our assets. We are building upon our core capability of operating leased and tenanted pubs by extending our operational flexibility into the direct management of pubs and increasing the scale of our commercial property business.
This new strategic direction will ensure that we generate the greatest value from each of our assets, and will also accommodate the requirements of the new legislation. This is a sustainable strategy for our business which embraces different operating models to best serve our publicans and their communities whilst delivering greater value to our shareholders."
