Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc

 
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Interim Results: 31 March 2015

        www.enterpriseinns.com
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Introduction

Robert Walker
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Overview

Simon Townsend
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Overview

Performance highlights

Financial and trading review

Strategic review

03   Investor presentation 2015
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Performance highlights
 Leased and tenanted tied business model remains robust

 Like-for-like                                               Growth
 net income                Adjusted EPS    Capex             investment       Business failures

 0.6%                      4.7%            £33m              42%              21%
                                           Disposals

                                           £34m
 Maintaining               Stabilisation   Enhancing         Investment       Further
 like-for-like net         of earnings     returns through   increasingly     reduction
 income growth             achieved        reinvestment      focused on       in business
                                           of disposal       growth driving   failures
                                           proceeds          initiatives

Definitions disclosed in appendix 9

04   Investor presentation 2015
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Financial & Trading Review

                Neil Smith
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Financial Highlights
    Earnings in growth and debts reducing

                                                                 Y-on-Y
6 months ended 31 March                        2015      2014   change

Like-for-like net income growth                0.6%      1.1%     -

EBITDA1                                      £144m     £147m     (2.0)%

Profit before tax1                            £57m      £55m      3.6%

Adjusted earnings per share1                   9.0p      8.6p     4.7%
Free cash flow pre-investment and debt
repayment                                     £43m      £42m      2.4%

Group net debt                              £2,387m   £2,477m    (3.6)%

1   Excludes exceptional items.
    Definitions disclosed in appendix 9

06     Investor presentation 2015
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Income statement

                                        6 months to                6 months to             Year to
                                      31 March 2015              31 March 2014          30 Sept 2014
                                     Pre                        Pre
£m                                excep Excep       Total    excep Excep       Total           Total
EBITDA                              144        -     144       147       (2)    145            289
Depreciation                          (8)      -       (8)       (8)      -       (8)           (16)
Operating profit                    136        -     136       139       (2)    137            273
Property related                       -     (21)     (21)        -      (6)      (6)           (70)
Finance costs                       (79)     (26)    (105)     (84)       -      (84)          (167)
Profit before tax                    57      (47)     10        55       (8)     47             36
Taxation                            (12)       6       (6)     (12)       2      (10)            (6)
Profit after tax                     45      (41)       4       43       (6)     37             30

Adjusted EPS (p)                     9.0                        8.6
Weighted average
                                   501.1                     499.8
no. of shares (m)

07   Investor presentation 2015
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Reconciliation of EBITDA
 and like-for-like net income

6 months ended 31 March                                                       Total estate
                                                                              like-for-like net
£m                                    2015 Movement          2014 Change %
                                                                              income growth
Like-for-like net income1             178              1     177        0.6   of 0.6%
FY15 disposals                           1             (1)     2
                                                                              Translates to EBITDA
FY14 disposals                            -            (2)     2              reduction of 2.0%
Unallocated costs                       (3)             -      (3)            due to asset
                                                                              disposals, with
Net income                            176              (2)   178
                                                                              pub numbers down
Property costs                         (15)            (1)    (14)            263 (4.8%)
Administrative expenses                (17)             -     (17)
                                                                              Administrative costs
EBITDA                                144              (3)   147      (2.0)   expected to rise in
                                                                              H2 due to investment
                                                                              in strategic evolution
                                                                              of business
1 Relates   to 5,196 trading estate at 31 March 2015

08   Investor presentation 2015
Interim Results: 31 March 2015 www.enterpriseinns.com - Ei Group plc
Improved like-for-like net income – up 0.6%

6 months ended 31 March 2015 (£m)                                             Sales-led improvement
                                                                              with growing income
                                                                              from beer, aided
                     3.0             (2.3)
                                                  0.3
                                                                              by discounts, driving
                                                                              volume
                                                                  178
      177
                                                                              Encouraged to report
                                                                              rental income growth
                                                                              Discretionary support
                                                                              maintained at £3m in
                                                                              the period
     net income

                                     Discounts

                                                                 net income
                      Beer income

                                                 Rental income
       H1 FY14

                                                                   H1 FY15

Full detailed analysis included as appendix 2

09   Investor presentation 2015
Reducing level of publican change
 Important contributor to like-for-like net income improvement

Number of business failures                                                       Business failures
                                                                                  reduced by 21%
                                     % of closing estate
     9.4%    13.1%   12.8%    12.1%      12.4%     10.5%   9.1%    4.9%    4.0%
                                                                                  72 closed houses
                                                                                  to re-open
             972
                      875
                                                                                  4% of closing estate
                               762
     730
             433
                                          734
                                                                                  failed in H1
                      485                           579
     340                       388
                                          443
                                                           486                    Average occupation
                                                    322                           6 years
                                                           329    267
             539                                                          210
     390              390      374                                157
                                          291       257                   167
                                                           157    110      43
     2008    2009    2010     2011       2012      2013    2014   H1 14   H1 15

     Agreement failures      Agreement surrenders
     (unplanned)             (planned)

10     Investor presentation 2015
Like-for-like net income growth from total estate

                                   2.7%
                                                                   Sustained growth
                                                                   performance
                                                                   Growth in Q3 will be
                                                                   challenging as 2014
                            1.6%                                   included benefits of
                                                                   FIFA World Cup
                                                                   football tournament

       0.8%      0.8%                                              Targeting full year
                                                   0.7%
                                                                   net income growth
                                           0.5%
                                                           0.4%

      Q4 13      Q1 14     Q2 14   Q3 14   Q4 14   Q1 15   Q2 15

11   Investor presentation 2015
Performance aided by strong South

                                                                           Year to       Strong performance
                                                                           30 Sept       in South of country,
6 months ended 31 March                                                     2014
                                                                                         aided by London
                         Net income                     Year-               Year-        up 2.9%
                                                       on-year             on-year
              No. of     FY15                FY14      change              change
Location       pubs       £m          %       £m          %                  %*
                                                                                         43% of income
                                                                                         derived from
North          1,527        48        27        49          (2.0)                    -   South sector
Midlands       1,669        53        30        53               -                0.9
                                                                                         Stability of income
South          2,000        77        43        75            2.7                 3.3    in Midlands
Total          5,196       178       100      177             0.6                 1.7    North remains most
                                                                                         challenged sector
                                                                                         Highest earning
                                                                                         90% (4,675) pubs
                                                                                         reported growth
*The FY14 income change comparative has been restated to reflect
                                                                                         of 2.7%
like-for-like performance for the 5,196 pubs trading as at 31 March 2015

12   Investor presentation 2015
Exceptional items primarily relate
 to refinancing and property costs

6 months ended 31 March (£m)       2015    2014    Net charge
                                                   to income from
Property related:
                                                   property related
Profit on sale of pubs               3       7     items primarily
Valuation change on sold pubs        (8)     (3)   in respect of
                                                   asset disposals
Valuation change on future sales    (12)     (6)

Goodwill                             (4)     (4)   Exceptional finance
                                                   costs relate to
Total property exceptionals        (21)     (6)
                                                   charges arising from
Finance costs                       (26)      -    partial refinancing of
Other                                 -      (2)   2018 Bonds in
                                                   October 2014
Exceptional items pre taxation     (47)     (8)

Taxation                             6       2

Total exceptional items            (41)     (6)

13   Investor presentation 2015
Strong operational cash generation

                                                   Year to   Working capital
6 months ended 31 March                            30 Sept   outflow relates to
£m                                 2015    2014     2014     cyclical timing -
                                                             expected to improve
Operating profit                   136     137       273
                                                             in second half
Depreciation & amortisation          8        8       16
                                                             Debt reduction
Deferred pension settlement           -       -       10
                                                             leads to lower
Movement in working capital         (10)     (8)        -    interest cash outflow
Operating cash inflow              134     137       299
                                                             Tax outflow increased
Interest                            (77)    (84)    (167)    due to settlement
Tax                                 (14)    (11)      (21)   agreement reached
                                                             with HMRC in April
Free cash flow pre-investment
and debt repayment
                                    43      42       111     2014 in respect of
                                                             historic liability

14    Investor presentation 2015
Movement in net debt

£m                                                                                                           Free cash flow
                                                                                                             of £43m
                                                                                                             Enhancing returns by
                                                                                1
                                                                                                             reinvesting disposal
                    43
                                                           (28)
                                                                                                             proceeds of £34m
                                                                                                             133 pubs disposed of
     2,404
                                  34           (33)                                             2,387        in the period with
                                                                                                             average net
                                                                                                             proceeds of £256k
                                                                                                             £28m of cash
                                                                                                             outflow in respect
                                              investment

                                                                                                March 2015
     Sept 2014

                                  Disposals

                                                           Refinancing costs
                 pre-investment

                                                                               Non-cash items
     Net debt

                 Free cashflow

                                                                                                 Net debt
                                                Capital

                                                                                                             of 2018 Bonds partial
                                                                                                             refinancing in
                                                                                                             October 2014

15     Investor presentation 2015
Enhancing our estate quality
 Reinvesting disposal proceeds to enhance returns

H1 FY15                                                                  Securing long term
                                                                         future of quality pubs
                              Investment               £33m              by recycling funds from
                                                                         disposal of unviable
                                                                         operations
                   £(34)m    Disposals
                             Divestment
                                                                         Increased proportion
                                                                         of capital investment
                                                                         focused on growth
Full year expectation                                                    from 32% to 42%
                                                                         Return on investment
                              Investment                          £70m   (ROI) hurdle rate of
                                                                         15%, with actual returns
                                                                         of 19%
                            Disposals
                              Divestment
     £(75)m                                                              Full year disposal
                                                                         expectations increased
                      Growth (%)      Letting & maintenance (%)
                                                                         from £60m to £75m

16   Investor presentation 2015
Loan-to-value stable at 60%
 (63% excluding lotting premium)

£bn                                                                            £35m securitised
                                                                         4.0   bonds repaid in
                                                                               period through
                                                                         3.8
                                                                               amortisation

                                                                   2.4
                                                                               New £138m bank
                                                                               facility commenced
                                          1.8                                  on 7 October 2014,
                                          1.6         1.1
                                                            1.8
                                                                               available until 2018
                                    1.1

                                                                               Bank debt net of
                                                                               cash at 31 March
     0.1 0.4        0.1
                                                                               2015 was £69m
       Bank      Convertible      Corporate          Securitised   Total
       debt        bonds           bonds               bonds

                      Net debt      Assets      Lotting premium

See appendix 5 for full analysis of Group net debt

17   Investor presentation 2015
Regulatory update
 Small Business, Enterprise and Employment Act 2015

     Statutory Code of Practice overseen by independent Adjudicator
     ● Largely reflecting current self-regulatory regime - behaviours, remedies, sanctions
     ● Statutory Code applies to 6 companies (>500 tied pubs) comprising ~13,000 pubs

     Market Rent Only (MRO) clause inserted in November 2014
     ● Specified trigger events allow tied tenants to opt for MRO
     ● Trigger events include renewal, rent review, “significant” price increases,
       material change of circumstances

     Royal Assent given on 26 March 2015
     ● Implementation expected by June 2016

     Near term implications for Enterprise
     ● Administration and compliance costs estimated at £2m pa from implementation
     ● c.200 pubs with potential MRO trigger events in FY16
     ● c.600 pubs with potential MRO trigger events in FY17

18   Investor presentation 2015
2015 Technical guidance

     Targeting full year like-for-like net income growth
     More challenging trading comparatives in
     quarter 3 due to 2014 FIFA World Cup
     Total administrative charges of c. £36m
     Full year interest costs (excluding exceptional
     charges) of £158 - 160m
     Full year effective tax rate c. 20.5%
     Disposals of c. £75m
     Capital investment of c. £70m

19   Investor presentation 2015
Strategic Review

Simon Townsend
Market context
 Future prospects for the sector are more encouraging

     Macro-economic                 UK eating out share vs GDP growth (%)                 Eating out vs drinking out
     indicators are improving

     On-trade beer volume
     stable for the first time in
     many years

     Property values stable with     Source: ONS, Datastream, Numis Securities Research   Source: ONS, Datastream, Numis Securities Research

     signs of rental growth
                                    Pub beer/cider volumes (%)                            UK Pub Investment Yield Tracker

     Increasing traction for the
     economic importance of
     the sector

                                    Source: ONS, Datastream, Numis Securities Research    Source: CBRE

21   Investor presentation 2015
Market dynamics
 Key drivers of success

     Clear understanding and
     application of consumer
     insights

     Format and location of
     relevant retail propositions

     Flexible models
     ● To meet evolving
       consumer demands
     ● To respond to
       competitor activity

     Operational control where
     appropriate
     ● To influence performance
       and protect asset value

     Investment to maintain
     and refresh the offer

22   Investor presentation 2015
Operating models – before
 Limited optionality, and publican-dependent

                                                Premium

                                                          Commercial
                                                           free-of-tie
                                                              (185)

                                   Tied leases
Wet Led                                                                   Food Led
                                  and tenancies
                                      (5,011)

                                                                         Total trading estate
                                                                          @ 31 March 2015
                                        Value
                                                                                 5,196

23   Investor presentation 2015
Our approach has evolved
 Use consumer insight to establish optimal asset use

            #1                            #2               #3                   #4
         ANALYSE                        MATCH            EVALUATE             EXECUTE

 Analyse and                      Match to           Establish          Utilise operational
 segment the                      preferred retail   methodology to     flexibility to
 estate by                        propositions       evaluate optimum   execute optimum
 consumer                                            model for each     outcome
 preferences                                         available asset    • Tied leases &
                                                     (including           tenancies
                                                     disposal)          • Managed house
                                                                        • Commercial
                                                                          property
                                                                          (free-of-tie)
                                                                        • Disposal

24   Investor presentation 2015
Supply and demand segmentation
 Catchment area analysis for each Enterprise pub

     #1
 ANALYSE

                                                           PUB
                                      Demand                  Supply
      Local            Frequency of         Potential     Supply of      Occasions         Current
 customer-base         occasions by        demand for     occasions     delivered by   Enterprise estate
  by segment             customer           occasions    covered by       formats         by format
                          segment                          format

                                                 Comparison
                                                                                         Competing
                                      Key outputs:                                        pubs and
                                                                                         restaurants
                                        Assessment of Enterprise pub                      by format
                                        performance on a normalised basis
                                        Identification of optimal pub format
                                        given external environment

25   Investor presentation 2015
Consumer insights informing retail offers

      #2
     MATCH

                            Premium                   Location
                                      Destination     ● Destination, urban, rural / community
                                       Premium
                                         Food         Demographics
                                                      ● Clientele, catchment area, drive time

                                                      Competition
Wet led             Destination
                                                      ● Direct and indirect
                    Mainstream             Food led

                                                      Amenity
                                                      ● Physical attributes, facilities, car park,
                                                        kitchen
              Destination
                Value
                Mixed
                                                      Format
                            Value
                                                      ● Food, drink, offer, pricing

26    Investor presentation 2015
Operating models
     Evaluation metrics

              Evaluation                       Measurement
      #3
 EVALUATE            Portfolio of assets
                                               Tied tenancies
                                               • Like-for-like net income   •   ROI/ROCE
                 Like-for-like income growth
                                               • EBITDA                     •   Business failure rate
                                     EBITDA
                                               • Capital invested           •   % growth capex
                             Execution risk                                 •   Tenant satisfaction
                     Capital requirement
                                               Managed                                                  Earnings
                           Free cash flow      • Like-for-like sales        • ROI/ROCE                  growth and
                                               • EBITDA                     • Footfall                  shareholder
                                Valuation
                                               • Capital invested           • Customer satisfaction     returns
                                      ROI
                                               Commercial property
                                   ROCE
                                               • Rental income              • Segment net
                                               • Implied yield                asset value

                    Optimal valuation          Group
                        & returns                                           • Net Debt / EBITDA
                                               • Central costs as %
                                                 of EBITDA                  • ROCE
                                               • Free cash flow

27    Investor presentation 2015
Business transition
 Evolving the business through effective management of transition “events”

     #4
 EXECUTE
                                   EVENT                      OUTCOME

                                    Other

                                                                  Tied

                                  Assignment
 CURRENT                                        EVALUATION                   FUTURE
 ESTATE                                             &
                                                NEGOTIATION    Managed       ESTATE
                                  Agreement
                                    expiry                    Commercial
                                                               property/
                                                               free-of-tie

                                  Rent review
                                                                Disposal

28   Investor presentation 2015
Event management
 Routine business activity - more options, better outcomes

                                                                                               Pre statutory code   Post statutory code

                                         635
                                                                    578
     Other events
     Lease assignments
     Lease expiries
                                         129                        140                                                          89
     Lease rent review
                                         160                        115                      120

                                                                                                             66
                                                                    461                      460                    35          494
                                         437
                                                                                                            264     176

                                      FY 2013                   FY 2014                     FY 2015         FY 2016           FY 2017

                                  (FY13-FY14: Actual events. FY15-FY17: Estimated events)

29   Investor presentation 2015
Operating models
 More options providing flexibility

                                                    Premium

                                                    Managed       Commercial Property
                           Tied leases                             (free-of-tie)
                                                     Expert
                           and tenancies

                                                     Managed
Wet Led                                             Mainstream                          Food Led
                                                   (Bermondsey)
                     Managed
                     Community
                    (Craft Union)

                                           Value

30   Investor presentation 2015
Tied leases and tenancies
 Reinvigorated model

                                  Statutory Code protection
                                  Enterprise investment
                                  Flexible terms – discounts driving sales
                                  Extensive product range
                                  Enhanced SCORFA benefits
                                  Local support
                                  Consumer insights informing offers
                                  Knowledge transfer from managed
                                  operations

                                  Future capex directed at shorter term
                                  tenancies
                                  Currently 60% leases, 40% tenancies
                                  0.6% LFL net income YTD (whole estate)

31   Investor presentation 2015
Managed expert
 Partnering with exceptional retailers

                                         Premium offer
                                         High quality food
                                         Complex operation
                                         Prominent sites
                                         First venture with Rupert Clevely
                                         (ex Geronimo)

                                         £20k + sales per week
                                         c.£400k capex
                                         Tailored deals
                                         Conversion capability15-25 per year
                                         Significant opportunity to leverage expertise

32   Investor presentation 2015
Managed mainstream
 The Bermondsey Pub Company – two preferred retail offers

                                               Meeting Place
                                               ●   ABC1 demographic
                                               ●   Premium drinks (real ale, craft beers and spirits)
                                               ●   70% wet; 30% food
                                               ●   High quality, fresh but simple food, sharing
                                               ●   Full of character
                                               ●   A place to meet business colleagues and friends
                                               ●   Urban / suburban locations
                                               Friends and Family
                                               ●   C2DE demographic
                                               ●   Mid-range offer
                                               ●   55% wet; 45% food
                                               ●   Quality, value, traditional pub food
                                               ●   Suburban / neighbourhood locations

                                               £12k – 18k sales per week
                                               c.£200k capex
                                               10 sites to date
                                               Conversion capability 35-50 per year

33   Investor presentation 2015
Managed community
 The Craft Union Pub Company

                                  Community hub, wet-led offer
                                  80-90% wet; 10-20% simple food
                                  Value drinks range
                                  Sports TV/entertainment
                                  Support for local teams/clubs

                                  £7-£12k sales per week
                                  £75k capex
                                  6 sites to date
                                  Conversion capability100-125 per year

34   Investor presentation 2015
Managed house operations
 Well suited to the Enterprise estate

Annual roll-out potential                      30% of the Enterprise estate already has a full
                                               time manager - employed by agreement
                                               holder
Model                             Range p.a.
                                               Trials developed over last 12 months –
Expert                              15-25      accumulated learning
                                               Recruitment of skills and capabilities
Bermondsey                          35-50      Development of financial controls and
                                               back office infrastructure
Craft Union                        100-125
                                               Outsourcing capability where appropriate
Total Managed                      150-200     Careful management of overhead and
                                               potential complexity

35   Investor presentation 2015
Commercial property
 Attractive, high quality asset class

                                        Recent appraisal by Colliers International
                                        154 sites virtually all freehold
                                        £53,000 average rent
                                        Strong presence in London and SE
                                        High proportion of prime or secondary
                                        locations
                                        Diversity of occupation, including corporates
                                        98% long-term substantive agreements
                                        Alternative use potential

                                        300 sites by September 2016
                                        150 - 200 sites added per year thereafter
                                        Free-of-tie pubs (MRO) where value is
                                        optimised
                                        Fully repairing and insuring standard leases
                                        Seek out development opportunities
                                        Potential to list as a Real Estate Investment
                                        Trust (REIT)

36   Investor presentation 2015
Operating models- indicative profile 2020
 More options providing flexibility

                                                  Premium

                          Tied leases             Managed       Commercial Property
                         and tenancies             Expert          (Free-of-tie)
                            (c.2,400)              (c.100)           (c.1,000)

                                                   Managed
Wet Led                                           Mainstream                          Food Led
                                                 (Bermondsey)
                    Managed                         (c.200)
                    Community
                   (Craft Union)
                      (c.500)

                                                                Total estate           Disposals
                                         Value                    c. 4,200              c.1,000

37   Investor presentation 2015
Capital recycling 2016 - 2020
 Disposals proceeds fuelling majority of investment

Disposals                                      Capital investment

  £300m
 c.                                               £350m
                                                 c.

 (£60m )                     p.a                 (£70m )             p.a

                                                £70m
                                                                    Managed
                                                                    Tenanted

                                                   Maintaining our current target
                                                   hurdle rate of > 15% ROI

38    Investor presentation 2015
Our team
 Enhancing our capabilities

     Recruiting quality and experience
     where required
     Outsource where appropriate
     Active areas of recruitment
     ●   Retail concept
     ●   Managed operations
     ●   Real estate
     ●   Business development
     ●   Code compliance
     ●   Change programme

     Clear segregation of responsibilities
     to protect business performance

39   Investor presentation 2015
Strategy outcomes
 Value creation for all stakeholders

     Evolution of our operating
     model enables us to adapt to
     changing consumer behaviour
     and competitor landscape
     Operational flexibility which
     unlocks embedded value in each
     asset
     Introduction of MRO increases
     speed and depth of strategic
     change
     Organisation clearly focused
     on continuing performance
     improvement whilst building
     operational flexibility
     Large tied leased and tenanted
     business for many years

40   Investor presentation 2015
Levers of value creation
 Put every asset to its optimal use

         Reinvigorated                      Expanded
                                                                        Commercial                    Asset
           tenancy                          managed
                                                                         property                  optimisation
           business                         operation

• Flexible agreements              • Premium retail offers      • Robust commercial         • Put every asset to
• Focused on short term                through partnerships         management                its optimal use
     tenancies                     •   Mainstream mixed offer   •   Free-of-tie pubs with   • Returns focused
•    Freedom for operator          •   Tailored local               turnover-related rent     assessment
•    Backed by capital                 community value offer    •   Non-licensed premises   • Disposals where
     investment                    •   Disciplined growth       •   Property development      returns optimised
•    Local support                                                  partnerships
•    Like-for-like net income                                   •   Potential future
     growth                                                         conversion to REIT

           Using consumer insight to inform & great people to deliver

41    Investor presentation 2015
Questions & Answers
Appendices

1. Operational metrics
2. Like-for-like net income analysis
3. Supporting publican profitability
4. Balance sheet
5. Net debt analysis
6. ETI bank facility
7. ETI corporate bonds
8. Unique securitisation
9. Definitions
10. Forward-looking statements

43   Investor presentation 2015
Appendix 1
 Operational metrics

     256 rent reviews completed at an average annual increase of 0.7%
     (H1 2014 - 202 reduction of 0.1%)
     70% of substantive agreements linked to RPI (H1 2014 - 69%)
     90% of publicans receiving contractual BCF discount (H1 2014 - 88%)
     Overdue balances reduced by 6% to £3.1m (H1 2014 - £3.3m)
     Rate of business failures reduced by 21% (H1 2014 – down 16%)
     Total discretionary support unchanged at £3m (H1 2014 - £3m)
     Average length of occupation 6 years

44   Investor presentation 2015
Appendix 2
 Like-for-like net income analysis

                  Beer,                    Net beer,                            Wines,
                  cider      Contractual    cider       Rental Discretionary   spirits &   Machines
£m                & fabs      discounts     & fabs     income Concessions      minerals     & other   Total
H1 2015
Turnover            241           (39)       202         81         (3)           14          5       299
Cost of sales      (111)           -         (111)        -          -           (10)         -       (121)
Net income          130           (39)        91         81         (3)           4           5       178

H1 2014
Turnover            239           (37)       202         81         (3)           14          5       299
Cost of sales      (112)           -         (112)        -          -           (10)         -       (122)
Net income          127           (37)        90         81         (3)           4           5       177

45   Investor presentation 2015
Appendix 3
 Supporting publican profitability

                                            PUBLICAN

                                                                       Digital
                                                       Discretionary   (on-line
        Road shows      Training       Range           support         ordering)       Sports TV       Free WiFi

        • Over 1,900    • Over 1,000   • 490 brewers   • £3m in H1     • Roll out in   • Over 900      • Over 2,200
          pubs in         delegates                      FY15            FY14 H2         benefitting     installed
          attendance                   • Over 1,400                                      from SKY/BT
                        • e-Learning     cask ales                     • Over 1,100      deal          • Worth £500
        • Over £7k of     over 500                                       users to                        pa
          value per       delegates                                      date          • Saving up
          pub                                                                            to £3k pa
                        • 100 days
                          programme

46   Investor presentation 2015
Appendix 4
 Balance sheet

                                                        As at   Assets –
As at 31 March                                        30 Sept   predominantly
£m                                 2015      2014       2014    pub estate which
Goodwill & investments              334       341        338
                                                                is subject to annual
                                                                valuation
Pubs & other assets               3,843     3,973      3,874
                                                                Liabilities –
Net debt                          (2,387)   (2,477)   (2,404)
                                                                primarily net debt
Net other liabilities              (149)     (142)      (168)
                                                                Net asset value
Deferred tax                       (236)     (255)      (237)
                                                                of £2.80
Net assets                        1,405     1,440      1,403

47   Investor presentation 2015
Appendix 5
 Net debt analysis

                                         As at                  As at
                                       31 March              30 Sept
£m                                   2015          2014        2014
ETI bank debt                         (95)          (107)      (81)
ETI cash                               26             28        35
ETI net bank debt                     (69)           (79)      (46)
Captive insurance cash                  7              3         5
Convertible bonds                     (97)           (97)      (97)
Corporate bonds                    (1,125)        (1,125)   (1,125)
Total ETI debt                     (1,284)        (1,298)   (1,263)

Unique securitised bonds           (1,186)        (1,260)   (1,221)
Unique cash                           83             82         83
Total Unique debt                  (1,103)        (1,178)   (1,138)

Underlying Group net debt          (2,387)        (2,476)   (2,401)
Fair value and other adjustments        -             (1)       (3)
Group net debt                     (2,387)        (2,477)   (2,404)

48   Investor presentation 2015
Appendix 6
 ETI bank facility

     New facility commenced on 7 October 2014 at £138m as follows:

     Amount        Cost over LIBOR         Term      Status

     £138m               3.00%            4 years    Fully revolving, no amortisation

                                                                       As at 31 Mar     As at 30 Sept
                                                    Covenant               2015             2014

Interest cover greater than                          1.50x                1.97x            1.89x

First charge asset cover greater than                1.33x                5.12x            8.29x

Total property asset cover greater than              1.50x                12.15x           19.48x

49   Investor presentation 2015
Appendix 7
 ETI corporate bonds

                                                  Covenants       Market price 31 March
                                                Asset   Income
      Value          Rate          Redemption   cover     cover    2015          2014
     £350m         6.500%             2018      1.67x    2.0x       107          n/a
     £125m         6.875%             2021      1.50x    1.5x       103          102
     £250m         6.000%             2023      1.67x    2.0x       100          n/a
     £125m         6.875%             2025      1.50x    1.5x       102          106
     £275m         6.375%             2031      1.67x    1.5x       99            97
     £1,125m

50    Investor presentation 2015
Appendix 8
 Unique securitisation

      Amortisation in the period - £24m of A3 notes and
      £11m of A4 notes
      £77m ahead of amortisation schedule

                                                       Market price 31 March
                                             Final
      Value           Rate         Note   redemption     2015        2014
     £362m          6.542%         A3        2021        103          105
     £409m          5.659%         A4        2027        103          99
     £225m          7.395%          M        2024        103          97
     £190m          6.464%          N        2032         90          85
     £1,186m

51    Investor presentation 2015
Appendix 9
 Definitions

     Like-for-like net income – represents the like-   Return on investment (ROI) – is measured as the
     for-like pubs level gross profits stated before   incremental income delivered as a result of the
     property costs and unallocated central costs      investment divided by the value of the capital
     EBITDA before exceptional items – represents      investment
     the earnings before interest, taxation,           Business failures, agreement surrenders –
     depreciation and amortisation and                 are those lease or tenancy agreements that
     excludes exceptional items                        do not reach their full term but are terminated
                                                       by mutual agreement of ourselves and the
     Adjusted earnings per share – which the
                                                       departing publican
     directors believe reflects the underlying
     performance of the Group, is based on profits     Business failures, agreement failures – are all
     after tax excluding exceptional items             other lease and tenancy agreements that do
                                                       not reach their full term, that are not achieved
     Growth driving capital investment –
                                                       through mutual agreement of ourselves and
     is discretionary capital cash spend on the
                                                       the departing publican
     Group’s assets which is intended to generate
     incremental income at returns ahead of our
     target return on investment
     Maintenance & letting capital investment –
     is all capital cash spend that is not growth
     driving capital investment, typically focused
     on maintaining the quality of our assets and
     supporting the letting programme

52   Investor presentation 2015
Appendix 10
 Forward-looking statements

 This document contains statements that are, or may be deemed to be, “forward-looking statements” which are prospective in nature. These
 forward-looking statements may be identified by the use of forward-looking terminology, or the negative thereof such as “plans”, “expects” or
 “does not expect”, “is expected”, “continues”, “assumes”, “is subject to”, “budget”, “scheduled”, “estimates”, “aims”, “forecasts”, “risks”,
 “intends”, “positioned”, “predicts”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words or comparable terminology
 and phrases or statements that certain actions, events or results “may”, “could”, “should”, “shall”, “would”, “might” or “will” be taken, occur or
 be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-
 looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals,
 intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy.
 By their nature, forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the control of
 Enterprise Inns. Forward-looking statements are not guarantees of future performance and may and often do differ materially from actual
 results. Important factors that could cause these uncertainties include, but are not limited to, those discussed in the 2014 Annual Report and
 Accounts of Enterprise Inns and “Principal risks and uncertainties” in the 2015 Interim Results of Enterprise Inns.
 Neither Enterprise Inns nor any of its subsidiaries or directors, officers or advisers, provides any representation, assurance or guarantee that the
 occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to
 place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its
 legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority),
 Enterprise Inns is not under any obligation and Enterprise Inns and its subsidiaries expressly disclaim any intention, obligation or undertaking to
 update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This document shall not,
 under any circumstances, create any implication that there has been no change in the business or affairs of Enterprise Inns since the date of this
 document or that the information contained herein is correct as at any time subsequent to its date.
 No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to
 mean that earnings per Enterprise Inns share for the current or future financial years would necessarily match or exceed the historical published
 earnings per Enterprise Inns share.
 This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for
 any securities. The making of this presentation does not constitute a recommendation regarding any securities.

53   Investor presentation 2015
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