Enterprise Inns expects its managed houses to contribute to group income growth from 2018.

The UK’s largest pub operator currently had 105 managed houses at the end of its 2015/16 financial year, compared to 35 the year before, but EBITDA remained flat at £6m.

Chief financial officer Neil Smith said the managed business remained in a transition period - with growth to c250 expected by the end of this financial year.

He told an analyst conference following the publication of the full-year results:“All of our assets moving to managed houses would close for a period to refurbish and often to reposition. One of the reasons we are building our managed operations is because our segmentation model is telling us that certain offers in certain areas aren’t working and need to be changed. It will obviously then take time to build up the consumers’ knowledge and awareness. Equally they are not branded so there is no immediate pull. The curve back to profitability takes longer.

“Our expectation is that the £6m will grow over the next year, although we will then have 150 or so new managed houses. The expectation is that the profile of managed will start to contribute to group income growth from 2018 or 2019 onwards.”

Meanwhile, chief executive Simon Townsend said the company was continuing to take learnings from its managed houses into its tenanted and leased estate.

He said this was particularly true for sports viewing, adding: “The success of sports in our Craft Union business has allowed us to demonstrate the benefits of a prescribed retail offer. We can go to our tenants and say – look what we can do. We are using the benefit on a cluster basis to show partners what can be achieved.”

Townsend also said the National Living Wage would inevitably impact sales in its managed business – with the potential to account for 1.5% of sales – but that it would seek to mitigate the impact.

He said: “Over the next five years it will be 1% to 1.5% of sales incremental cost. That’s if we did nothing about it but clearly our managed house starts from a small base so we can seek to target the right sort of productivity metrics to mitigate the NLW cost.”