Punch Taverns results in line with expectations
Punch also revealed that it considers a consensual restructuring of its business can be launched in the final three months of this year.
It said that failure to effect a restructuring solution for either of the company’s securitisations in the near-term may result in a covenant default in the relevant securitisation.
Full year EBITDA stood at £216 million (2012: £238m), while profit before tax was £49m (2012: £64m). Revenue declined by 7 from £491.7m to £457.6m.
The core division accounted for 82% of Punch outlet EBITDA with average net income per pub being more than double that of the non-core division at c.£74,000 per pub.
Punch said that trading through the year has benefited from the operational improvements delivered in the business, ending the year with a return to like-for-like net income growth of 0.4% in the fourth quarter, having had three consecutive quarters of improving like-for-like trends.
Like-for-like net income for the full year declined by 2.4% which represented a 1.3% point improvement on the previous year.
The percentage of core pubs let on substantive agreements ended the year at 96%, above the company’s target of between 93% and 95%. With the new recruitment website now firmly embedded, it said it was generating high levels of new applicants up 28% on last year.
The company said it planned to invest in around two-thirds of its core estate over the next five years focussing on improving the customer environment, targeting £40m per annum across 400 schemes per year. It said it had exceeded its target this year, investing in 476 pubs at an average spend of £102,000.
It said: “This investment is transforming the customer offering in these pubs and we are achieving our target returns for these investments.”
Net income in non-core pubs on substantive agreements declined by 2% in the year on a like-for-like basis, with the majority of the decline coming from non-substantive pubs in the process of disposal.
The group said that following the improvement in performance of a number of pubs in the non-core division, 116 pubs were returned to its core division from the start of the new financial year.
These pubs have an average net income per pub of c.£59,000 and delivered £6m of outlet EBITDA in the year.
During the year it sold 433 pubs (including 60 pubs from the core division), together with other assets for proceeds of £149m, £11m ahead of book value.
The disposed pubs generated just £8m of EBITDA in the year to disposal, equating to a disposal multiple of 18x, demonstrating the accretive nature of these disposals.
The company said it had continued an “extensive process of engagement” with a broad range of stakeholders across the capital structure (including the ABI Special Committee of noteholders and its advisers) to discuss feedback, and continue to build a broad base of support for the restructuring.
It said: “Whilst the process of engagement has taken longer than previously anticipated, the Board considers that a consensual restructuring can be launched in the fourth quarter of the 2013 calendar year and will provide an update on the implementation of the restructuring in due course.”
Stephen Billingham,executive chairman of Punch Taverns, said: “We have delivered profits for the year in line with our expectations and returned the core estate to growth in the most recent quarter.
“We have made excellent progress in implementing operational changes during the course of the year and this is reflected in our recent financial performance.
Pubs in which we have invested have shown significant improvement in performance and the core division accounts for over 80% of Group EBITDA.
“Expectations of future net income growth for the core estate remain unchanged from those previously announced, with a return to like-for-like net income growth of up to 1% expected in the 2014 financial year.”
