ETI.L Share News (ETI)

As it poured out first half results that measured up to targets, pubs group Enterprise Inns impressed the market with plans to increase direct management of pubs and grow its commercial property business.Interim results showed it continued to grow like-for-like net income in the period, up 0.6% but down from the 1.1% growth seen in the same period last year.Earnings before interest, tax, depreciation and amortisation (EBITDA) before exceptional items was down 2% to £144m, but this was expected due to its pub disposal programme, while profit before tax and exceptional items increased 3.6% to £57m as interest savings from reduced debt offset the reduction in EBITDA.Adjusted earnings per share rose 4.7% to 9.0p."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," said chief executive Simon Townsend. "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."But it was the unveiling of his new strategy that drew more interest, with plans to recycle capital from disposals to swell the number of managed pubs under three different models to 100 this year, then accelerate this to 400-500 by 2018 and 750-850 by 2020.Meanwhile, in response to legislative changes, the commercial property business, currently a low-overhead business that takes rents from a portfolio of 162 properties operating as free-of-tie pubs and 23 that are retail units, aims to increase this number to 300 in 2016, before accelerating this to 600-700 by 2018 ad 900-1,000 by 2020.Enterprise said it planned to free certain of its food-led pubs estate from the beer tie and negotiate rent-only terms. This business might be converted to REIT status.Townsend said the plan would provide "a clear path to maximise returns from each of our assets", ensuring the group generates "the greatest value from each of our assets" and fits in with the requirements of the new legislation introduced within the 2014 Small Business, Enterprise and Employment bill."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."On the more immediate outlook, trading in the first few weeks of the second half of the year is in line with expectations but comparisons with the third quarter of last year will be particularly challenging as it included enhanced trading from the FIFA World Cup and a later Easter trading period.The market's reaction was uncertain, with Enterprise shares up 0.8% at 133.4p, having risen more than 3% earlier.