With its cash takeover by Stonegate approved by investors and expected to complete in early 2020, Ei Group’s (EIG) full-year results are somewhat academic. Nonetheless, these numbers should give shareholders further confidence that they are being paid a decent price for the business.
Given the considerable changes in the pub group since 2018 – including the disposal of 354 commercial properties and 27 per cent growth in the managed estate – a reappraisal of the balance sheet was also arguably overdue. In the event, net assets fell by £258m to £1.30bn, a touch above Stonegate’s offer.
This was due to a drop in profits, and despite robust operating cash flows of £247m and net disposal proceeds of £384m. Indeed, the statutory loss in the table below reflects a raft of below-the-line adjustments. These included a £152m early debt repayment, a £42m loss on the sale of property, a £20m negative revaluation of the remaining estate, and a whopping £232m goodwill impairment to reflect lower long-term growth rate assumptions and “market indicators identified following the proposed acquisition of the group”.
As expected, that deal is now subject to a phase one review by the Competition and Markets Authority, which is probing whether Ei’s merger with the Slug & Lettuce owner will lessen competition in the recreation and leisure market. A decision from the watchdog is due by 13 December.
| EI GROUP (EIG) | ||||
| ORD PRICE: | 282p | MARKET VALUE: | £1.23bn | |
| TOUCH: | 281.8-282p | 12-MONTH HIGH: | 289p | LOW: 166p |
| DIVIDEND YIELD: | NIL | PE RATIO: | N/A | |
| NET ASSET VALUE: | 296p | NET DEBT: | 132% | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 625 | -71 | -13.0 | nil |
| 2016 | 632 | 75 | 14.2 | nil |
| 2017 | 648 | 58 | 11.2 | nil |
| 2018 | 695 | 87 | 15.2 | nil |
| 2019 | 724 | -199 | -46.2 | nil |
| % change | +4 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a |
