UK: Punch Taverns eyes road to redemption in FY
Punch Taverns sees improving trends, but challenges remain
Punch Taverns has said that it sees improving trends in its remaining business, despite failing to return to profits growth in its latest full-year.
A leaner Punch Taverns said today (20 October) that net profits from continuing operations and prior to charges fell by 13% for the 12 months to 20 August, to GBP55m (US$86.5m). Operating profits fell by 11%, to GBP241m.
However, having spun-off its managed pub business, Spirit, in August, the group said that it sees improving momentum in its remaining tenanted business, which comprises around 5,000 pubs.
Like-for-like income for the firm's core estate, made up of 2,951 pubs, fell by 2% for the year, after falling 5% in the previous 12 months. The core estate accounts for 76% of group profits. "I am pleased to report a year of good progress, which has seen the business deliver underlying results in line with market expectations," said Punch Taverns' CEO, Roger Whiteside.
The 2,053 pubs within the group's 'turnaround' division - effectively an intensive care unit - proved a drag on the business. Profits at the division fell by 13% for the year and Punch was hit by write-down charges of GBP377m on the lower value of pubs within the unit.
The figures underline why Punch will seek to offload up to 500 pubs in 2012, as part of a wider plan announced earlier this year to sell 3,000 pubs - around half of its leased estate - within the next six years. Disposals will help the firm to pay down debt and, in theory, rid it of its worst-performing pubs.
Despite a tough on-trade market and depressed property prices in the UK, Punch said that it made GBP108m from disposals in its last fiscal year, which it claims is ahead of the book value for the properties sold. During the 12 months, the firm cut its gross debt by 5%, or GBP133m.
Whiteside said: "We are focused on creating value for our shareholders through successful long-term partnerships with our licensees in our core estate of 3,000 of the highest quality, best invested leased pubs in the country.” The company does not produce net sales figures for its tenanted division. But, said that sales per pub in its core estate were around GBP130,000, which is between GBP20,000 and GBP30,000 higher than rivals Enterprise Inns, Marston's and Greene King.
For the company's results presentation, click here.
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