Earnings slip at Ei Group ahead of takeover by Stonegate

Ei Group, the pub giant which has agreed to be bought by rival Stonegate for £1.28 billion, has posted lower earnings after the sale of 354 properties.

The company, which operates around 4,000 pubs across the UK, saw earnings before tax and interest of £276 million for the year to September 30, down from £287 million the previous year.

Meanwhile, revenues moved higher on the back of growth for its managed pubs and publican partnership divisions.

Underlying revenues for the year jumped 4.2% to £724 million, which the company said was “in line with expectations”.

Simon Townsend, chief executive of the pub company, said: “We are pleased to have maintained the strong trading performance for the year, particularly given the challenging trading comparatives from the summer last year.”

Pub operators have been faced with weaker consumer confidence alongside cost increases, particularly through higher wages and property costs, over the past year.

The squeeze has seen an increase in acquisition activity in the sector, with rival Greene King also recently snapped up for £2.7 billion by Hong Kong’s CKA Group.

Slug and Lettuce owner Stonegate agreed a £1.28 billion deal to buy Ei in July, which would make it the UK’s largest pub owner.

Last month, the competition watchdog launched an investigation into the deal and invited the industry to submit evidence over whether the deal could lead to a reduction in competition in the pubs sector.

Mr Townsend said: “The approach by Stonegate to acquire the business is recognition of the strength of our strategy and the value of our high quality pub estate.

“Stonegate has indicated its intention to continue our strategy of improving the quality of the estate following completion of the acquisition, by ensuring the right consumer proposition is available in each of its pubs supported by the best people, utilising the optimum operating model.”