Beaufort Securities has reiterated its Hold recommendation for Punch Taverns following the pub company’s interim results for the 28 weeks to 1 March.
Punch this week reported a 1.4% rise in like-for-like net income in its core estate in the half-year, with average profit per pub up 4% across the entire estate, and said that “extensive engagement with a wide group of stakeholders” over its debt restructure is continuing. The company said its underlying financial performance is “in line with management expectations”, with EBITDA of £108m (2013: £117m); pre-tax profit of £50m, which includes £30m of profits attributable to bond purchases, (2013: £26m; no profits attributable to bond purchases).
The note from Beaufort Securities states: “Punch Taverns continued to deliver on its strategy of selling off pubs in the non-core estate. Besides, the significant charges relating to capital restructuring put further dent on its profitability.
“A restructuring deal with the stakeholders, though delayed, should materialise in the upcoming meeting of noteholders with the recent appointment of a corporate restructuring specialist.
“Despite a strong portfolio of around 4,000 pubs and an on-track performance on the operational front, progress in relation to the covenants and terms of a prospective restructuring deal remains in focus. We retain a Hold rating.”
