Punch saw EBITDA in its financial year to 20 August fall 9% to £178m reflecting a £324m disposal programme over the last two years.

Underlying profit before tax was £53m, down from £61m in 2015, while the group reported profit before tax of £60m, compared to a £105m loss last year.

Average profit per pub was up 4% across the estate with core estate like-for-like net income growth of 1%. Including the 240 pubs which were transferred to the Mercury division in the year, the like-for-like net income growth was 0.2%.

The group once again upped its target for the rollout of its Retail contract, with 242 pubs now, of which 109 are already operating. It reiterated its belief that the division can grow by up to 150 pubs a year.

Punch said its Mercury division, formed earlier this year predominantly from its former non-core estate, was on target to deliver like-for-like growth from end of 2017.

The group said it was pleased with the progress of its retail concepts, with 47 pubs currently operating under four formats - ‘Mighty Local’ community drinks led pubs, ‘Champs’ sports bar, ‘Signature’ managed house and ‘Village Pub & Kitchen’ community drink and food led pubs.

There are currently 46 commercial free-of-tie leases in operation across the Punch estate with an average rent of £73,000, including three pubs recently let to Stonegate. The company described it as a “small but growing” operation.

The company said the pubs code regulations, which came into effect in July, have negatively impacted letting activity in the first half of the new financial year, as all lets had to be re-marketed in line with the legislation.

Since the new regulations came into effect, 40 publicans have requested MRO comparison figures, of which 21 are currently under review with the publicans, with the remainder having been either concluded under a tied rent review or renewal, or lapsed.

Punch reiterated that approximately two thirds of its Core estate pubs do not have a rent review MRO trigger event before the end of their agreement. Tied leases with five years remaining on their lease at the next rent review represent c.26% (c.660 pubs) of the Core estate, while tied leases with ten or more years remaining on their lease represent a further c.7% (c.170 pubs) of the Core estate.

The group said: “While it remains early days with the new legislation and the take-up of the MRO option will become clearer with time through the cycle of five yearly rent reviews and renewals, our expectations, and early indications are, that the majority of publicans will continue to operate under, and enjoy the benefits of the tied-drinks model. “

The group’s property estate, which now numbers 3,276, was externally valued at £2.03bn (including £8m of unlicensed properties), which represents a net like-for-like uplift in the valuation (after accounting for pub disposals) of £37m.

The company said that consistent with its strategy to focus on its Core estate, it disposed of 111 non-core pubs from the Mercury division, together with unlicensed property assets for proceeds of £40m, £14mabove book value. In addition, package disposals raised £53m from the sale of 158 pubs, £0.3m above book value.

It also disposed of a relatively small number of Core pubs in the year, realising £42m in proceeds from the sale of 43 pubs, £14m above book value and at a multiple of c.20 times LTM EBITDA.

The group said it had identified the potential for £100m of additional value in non-trading parts of estate identified, with £11m realised this year.

Nominal net debt reduced by £223m (16%) in the year with nominal net debt to underlying EBITDA reduced to 6.6 times (August 2015: 7.2 times).

Chief executive Duncan Garrood said: “The business has ended the year with a solid set of results, in line with our expectations, and which reflects the completion of our strategic disposal programme.

“We have made good progress towards delivering on the strategy we set out in November 2015. In particular the roll-out of our Retail division is progressing well and we are accelerating the roll-out to c.150 pubs per year.

“The new Pubs Code Regulations has resulted in us having to re-market all lets in line with the new regulatory requirements. While this is impacting letting activity in the short-term, our expectations for the longer-term growth prospects for the business remain unchanged.

“Punch has a clear plan for the future, a strategy that is progressing well, and a unique operating model that is expected to drive improved performance over the coming years.”