Punch ups lessee support

Punch says it has increased its support for struggling lessees to £2m per month, up from £1.6m in the year to August.

The pubco also revealed it had sold 352 pubs in the 16 weeks to 12 December and reduced its gross debt by 10% across the year.

In a trading statement for the period, Punch said rent concessions and discounts have been increased in the "difficult economic environment".

"In the circumstances we have taken proactive steps to increase our support to c.£2m per month, up from an average of £1.6 million per month across last year."

The statement added: "We are beginning to see the benefit of this assistance with the number of pub returns from licensees being materially down on the previous year and the level of closed and tenancy at will properties available for let also down on last year."

Punch said like-for-like profits in the period continue to show a similar rate of decline to that reported in the last financial year, when it fell 11%.

Profits remain "under pressure" because of lower rental income and "increased partner support", along with overall beer volume decline.

The pubco also revealed it was updating its lessee charter "to ensure that it exceeds the standards laid out in the new industry code of practice", and was "reviewing the role" of its business relationship managers.

Punch said: "We believe that the industry has made and continues to make constructive progress in responding to the key themes identified by the BESC Report [the summer's damning report by MPs into pubcos] and we are confident that we can move forward together to bring about positive change."

Application numbers for leased pubs "remain strong".

Net debt stands at £3,347m after a reduction in gross debt of £438m - 10% - in the year to date caused by its continued sale of pubs.

"Our strategy of rapidly reducing the size of our debt, with over £1.5bn having been repaid since 2006, leaving only long-term amortising securitised debt finance in place, leaves us with a more robust, sustainable financing structure for the future," Punch added.

Over the period 352 pubs were sold - 224 from our turnaround division, 114 from the core leased estate and 14 managed sites, realising net proceeds of £127m.

It has led to the disposal of £40m annualised EBITDA in the last financial year and a further £11m in the year to date. Punch has raised its estimate for full-year disposals to around £300m.

Like-for-like sales in the managed estate slid 1.6% on last year, although the City Pub division was up 6.7%.

Punch cited the impact of high rents following the return of "onerous leases" to the group and inflationary cost pressures for hitting operating margins.

It also pointed to "relatively soft trading" in both the premium food and price-led food pubs. "A weak consumer environment impacted both the premium end of the market and put pressure on the family eating out segment."

However, trading has improved over the last four weeks following "extremely positive" feedback on new its menus.