Punch Taverns has this morning reported a 0.4% increase in like-for-like net income across its core estate for the 12 weeks to 17 August 2013 and said that whilst the process of engagement with its stakeholders has taken longer than previously anticipated, it considers that a consensual restructuring of the business can be launched in the second half of 2013.
It said that the overall profit performance for the year was in line with management expectations and previous guidance and it expects to report underlying EBITDA of between £210m and £220m.
Expectations of future net income growth for the core estate remain unchanged from those previously announced, with management expecting the core estate to return to like-for-like net income growth of up to 1% in the new financial year and between 1% and 2% net income growth in the 2015 financial year, before returning to a long-term net income growth rate of c.2% in the 2016 financial year.
It said it had continued an extensive process of engagement with a broad range of stakeholders across the capital structure to consider further amendments to the previously announced restructuring proposals.
It said: “Whilst the process of engagement has taken longer than previously anticipated, the Board considers that a consensual restructuring can be launched in the second half of 2013 and will provide an update on the implementation of the restructuring in due course.”
The group highlighted improving like-for-like trends in net income; core estate net income was up 0.4% in the fourth quarter (-2.4% 52 weeks to 17 August 2013)
It said that 96% of its core estate let on substantive agreements, up from 94% at August 2012 and that it had completed 476 core investments in the year at an average spend of £102k per pub.
The group sold 433 pubs £149m, ahead of book value, at a multiple of 18 times EBITDA, while 116 pubs were transferred from its non-core division to the core division from the start of the new financial year.
Punch Buying Club membership increased to c.90% of the core estate (August 2012: 72%).
It said that significant improvements had been made in the areas of letting, investment, sales and marketing and Partner support, and this is reflected in our recent financial performance.
Punch said that the launch of its new Partner recruitment website during the year had helped deliver the increased rate of letting with the result that we remained within or above the 93% to 95% target range throughout the year.
The new Punch Foundation Tenancy agreement (formerly referred to as “Franchise Tenancy”) was launched in the year. Whilst still in the early stages of roll-out, with 48 pubs operating on the new agreement, it said it had seen a significant increase in sales in these pubs.
The group said: “This new agreement has now been rolled out nationally and a significant proportion of the lettings within the new financial year are expected to be operated on this new agreement.”
Stephen Billingham, executive chairman, said: “We have made excellent progress in implementing operational changes that we expect will deliver further improvements in the underlying performance of the business. Our profit performance for the year has been in line with management expectations. We are encouraged by our first quarter of net income growth since demerger, and we reiterate our previous expectations of net income growth in the core estate for the years ahead.”
