Underlying profit at Punch Taverns, the leased and tenanted pub operator, fell by 17.8% to £422m, down from £514m last year, the group revealed this morning.
Unveiling its interim results for the 52 weeks to 21 August it said profit before tax was £131m, a figure that had widely been expected by analysts.
The company made a loss after exceptional items of £160m, following a net exceptional charge of £253m. The company also took a £218m writedown of its estate – following on from last year’s writedown of £663m.
It said it had also identified a further 1,347 non-core pubs in its estate of 6,700 that were considered not sustainable.
Ian Dyson, the newly appointed chief executive of the embattled pub group, said he had started a “comprehensive review” of Punch’s strategy which would focus on operating performance and capital structure, “with a view to exploring options to create value for our shareholders.”
He added: “"I am delighted to have joined Punch and to have the opportunity to build on the progress made over the last year.
“While we have been encouraged by more recent trends in both the leased and managed businesses, the economic environment is very difficult and there remains room for improvement across all aspects of our business.”
There was no change in the group’s like-for-like ebitda per pub in its leased and tenanted estate with the figure remaining at –11%. Punch said the performance was split between its core and non-core estate – with like-for-like ebitda down by 9% and 28% respectively.
Disposals of non-core assets had also hampered its ebitda performance by c£4m, added Punch.
During the year it has disposed of 893 pubs, raising £254m on an average multiple of 16x ebitda. It also invested in 800 pubs to the tune of £45m.
In its managed arm, like-for-like sales fell by 2% for the year. However, Punch said it had seen an improvement in performance in the second half of the year – with like-for-like sales in its last 12 weeks up by 2.6%.
Besides the impairment charge on its estate, Punch said that it had been hit by a £68m charge for the mark-to-market of certain interest rate swaps, a £44m gain on the repurchase of debt, £33m onerous lease provision, £2m of reorganisation costs, £6m loss on asset disposals and a £9m charge on disposed goodwill.
The tax effect of these items together with finalising a number of prior year tax matters with HMRC gave rise to an exceptional tax credit of £37m.
During the year, Punch reduced its debt pile by 17% to £684m. Net debt at 21 August was £3.1bn. However, it added that following the repayment of it convertible bond, all of its debt is in the form of long term mortgage type finance which has a weighted average life of 17 years secured on more than 6,500 of pubs.
The debt fully repays over terms extending to 25 years and is effectively at a fixed rate of interest of 6.8%.
In a statement, Punch concluded: “Trading in the first seven weeks of the new financial year has been in line with the improved trading performance seen in the fourth quarter of last year.
“However, we still expect the trading outlook in the near term to continue to be uncertain. Tax rises and reduction in public spending will inevitably put further pressure on unemployment levels, reduce disposable incomes and constrain consumer confidence. Against this backdrop, we believe it is sensible to adopt a cautious approach and we have prepared our financial plans accordingly.”
