Corporate-speak is usually bland, and sometimes jarring. Simon Townsend offered up an example of the latter in his summary of Ei Group (EIG)’s half-year results, citing pub-goers’ support for their local alongside “excellent operational execution and effective capital investment” as reasons for decent group-wide trading momentum.
Still, the point stands, and so long as drinkers can prop up like-for-like net income growth, the chief executive can look forward to the steady unwinding of Ei’s leverage.
On that front, there has been progress. Net debt now sits at the group’s medium-term target ratio of six times earnings before interest, tax, depreciation and amortisation, if the first-half figure is annualised. That’s been aided by the disposal of 348 commercial property assets for £332.7m, which Ei reports as “in line with [their] tangible net book value”.
That sale also priced the assets at an earnings multiple of 13 – or a 30 per cent premium to Ei’s current market rating. A decision to extend a share buyback programme by £30m to £85m for the financial year therefore carries a certain logic, especially with the shares 33 per cent adrift of book value.
Peel Hunt expects adjusted earnings of 20.5p a share for the current September year-end, rising to 21.8p in FY2020.
| EI GROUP (EIG) | ||||
| ORD PRICE: | 223p | MARKET VALUE: | £998m | |
| TOUCH: | 222.4-223p | 12-MONTH HIGH: | 226p | LOW: 126p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 24 | |
| NET ASSET VALUE: | 335p* | NET DEBT: | 113% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 330 | 45 | 7.9 | nil |
| 2019 | 353 | 13 | 1.9 | nil |
| % change | +7 | -71 | -76 | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| *Includes intangible assets of £281m, or 62.7p a share | ||||
