Punch Taverns, the debt-laden group that owns almost 10% of British pubs, has reported Preliminary Results for the 52 weeks to 18 August 2012.
At the same time, it has been forced to concede that it has ‘initiated discussions with certain major shareholders and certain other stakeholders’ in order to restructure the group’s £2.4bn debt.
Whilst the debt position takes the headlines, and financial performance is ‘in line with expectations’, it is clear that the Group is working as hard as practicable to improve performance across the estate. Inevitably, driving sales – particularly food – and increasing revenues is a very tough task in the present economy and with so large – and mixed – a portfolio of pubs.
Underlying financial performance – in line with expectations
• EBITDA of £238 million (2011: £258 million)
• Profit before tax of £64 million (2011: £76 million)
• Basic earnings per share of 7.2p (2011: 8.6p)
• Strong cash position: £264 million of cash reserves, of which £90 million held outside of the securitisations
• Net debt decreased by £137 million
Operational KPIs
• Average net income per pub broadly flat across the year
• Substantive agreements at 94%
• Core substantive like-for-like net income -1% (Partners on secure agreements for greater than 1 year)
• Total core estate like-for-like net income -3.7%
• 475 pubs disposed together with other assets for £130 million, £1 million ahead of book value and at a multiple of 18 times EBITDA
Operational headlines
• Continued progress on delivering the key strategic initiatives:
Core estate:
1. Invest to improve customer environment and increase food sales: record £38 million invested in 400 core pubs; food mix up 3 percentage points to 24%
2. Attract high quality Partners: 25% increase in applicant numbers, growing number of multiple operators
3. Drive sales: additional 1,100 Partners in the Punch Buying Club, a 65% increase; 45% of drinks orders now online, up from 21% last year
4. Improve Punch support: successful launch of the Punch Franchise Tenancy agreement, free WiFi to be rolled out across the estate in 2013
Non-core estate:
5. Disposal of non-core sites: disposal programme on track to deliver a core estate of 3,000 pubs within the next 5 years
Roger Whiteside, Chief Executive Officer of Punch Taverns plc, commented
“We have delivered profits for the year in line with our expectations and are on track with our disposal programme in extracting maximum value from our non-core assets.
“We are making good progress towards our long term objective to become the UK’s highest quality, most trusted and best value leased pub company, with record levels of investment in our core pubs and an additional 1,100 Partners joining the Punch Buying Club.
“We have completed the review of our capital structure and have initiated discussions with certain major shareholders and certain other stakeholders. We will engage with our remaining stakeholders, including bondholders, at the appropriate time. While the options are complex and will take time to conclude we are confident that a consensual restructuring can be successfully implemented in a manner that delivers value for stakeholders.”