Punch: we want to be most trusted pubco in UK

Punch Taverns has set itself the goal of becoming the "most trusted and best value" pubco in the UK.

The pubco said that it had continued to evolve the leased model in the wake of the Business and Enterprise Committee report and the threat of Office of Fair Trading action.

It has launched a new strategic change programme — Pathway to Partnership — which aims to build a more open and transparent relationship with its tenants.

It said it had "already recognised" a number of key challenges to the tenanted model prior to the BEC report of May and had been "quick to respond" to them.

"We have subsequently introduced a number of changes to the way that we operate, including the removal of the lessee machine share from the rent calculation, the removal of upward only rent reviews, the passing on of negative RPI rent reviews, the removal of restrictive covenants on the sale of pubs and the introduction of a price match commitment on our insurance premiums," said chief executive Giles Thorley.

"To further evolve our leased business model and build open and transparent relationships with our licensees, we have embarked on a major change programme Pathway to Partnership, which will see a cultural shift and a focus on ensuring joint profitability for Punch and our licensees."

Punch said it had played a key role in bringing together major industry players in the form of the industry mediation group.

Thorley added: "Whilst we do not believe that it is necessary for the sector to be investigated by the competition authorities again, we continue to cooperate with the Office of Fair Trading and await the outcome of their review."

Trading performance in leased estate​

The focus for the year has been on stabilising performance in the leased division.

It reported there had been "no material change" in like-for-like EBITDA —down 11% on last year. Its disposals programme has reduced EBITDA by around £6m (£29m annualised), resulting in an overall EBITDA of £412m for the year.

"Trading performance has been impacted by a combination of weaker beer volumes and a softening in rents, coupled with the previously announced increase in the levels of licensee support, which has been maintained at an average of £1.6 million per month across the year, being more than double the level of support being provided in the previous year," said Punch chief executive Giles Thorley.

"In this difficult economic environment, the support that Punch provides to its licensees through flexible lease agreements, training, sales driving activity, food development and financial support is more important than ever. The number of closed pubs within the Punch estate at the year end remains a relatively small number at around 4% of the estate."

Punch said Business Relationship Managers were now spending more time in trade and pointed to the fact that the full extent of wholesale brewery increases had not been passed on to tenants, with the September 2008 uplift being absorbed entirely.

During the year, Punch sold one-third (416) of the 1,250 in its "Turnaround division". A further 430 pubs have now been transferred to the division, ear-marked for extra support.

The Turnaround division now makes up 19% of the estate but contributes less than 6% of the operating profit and includes two-thirds of the closed pubs and those operating on tenancy at will basis.