The operator of 1,242 pubs, split into three divisions – Leased & Tenanted (L&T), Management Partnership (MP) and Laine Pub Company – said total revenue for the 16-week period to 3 December 2023 was £96.0m, compared to £92.0m in the prior year period of 16 weeks to 4 December 2022.
All three of its divisions delivered like-for-like sales growth for the 16-week period when compared to the prior year as well.
The group delivered £25.6m of underlying EBITDA (earnings before interest, taxation, depreciation and amortisation) for first quarter (Q1) versus £23.9m in the previous year’s Q1 period.
Underlying EBITDA for the 52 weeks to 3 December 2023 was £83.0m, which compares positively to the £76.0m of adjusted underlying EBITDA from the group in the year to August 2019, being the most recent financial year prior to the Covid pandemic.
Profit before taxation was £6.8m for the period versus £3.2m in the equivalent 16 weeks a year prior.
Reduced capex
The business spent £7.7m of capex investment into its pubs during the quarter, which was down from the same period last year (£11.5m).
Unaudited drink revenue was £74.4m for the 16-week period (L&T £28.3m, MP £32.3m and Laine £13.8m) versus £70.9m in the period a year ago (L&T £27.2m, MP £30.3m and Laine £13.4m).
Food revenue was £9.8m (MP £8.7m and Laine £1.1m (L&T N/A)) compared to £9.6m (MP £8.4m and Laine £1.2m (L&T N/A)) a year before.
In its trading update, Punch said: “Having converted 71 pubs from L&T across to the MP division since August 2021, the rate of pub conversions has slowed down as we take time to select and build the next pipeline of pubs for transformational investment and conversion, taking learnings from the successful conversions we have completed to date.
“We have now identified the next tranche of pubs to convert to the MP model, having identified a population of up to70 pubs that would be suitable for conversion.
“Future conversions would be expected to achieve a return on investment of between 20% and 30%, and would be phased progressively over a three-year period.
“During the most recent quarter, we have transferred a small number of pubs to the L&T division, representing pubs with lower sales revenue opportunity that are better suited to an L&T model.”
Seven sites exited
Punch raised £4.1m from property disposals (seven sites) in the period, property assets increased by £1.0m to £894.0m (13 August 2023: £893.0m). The group has a predominantly free hold estate with 93% of its portfolio owned on a freehold or long leasehold (greater than 50 years remaining lease term) basis.
The group said the increase in property values “largely reflects the purchase of the L&T pub estate from Youngs Pub Company in 2021, continued investment in the estate and a small number of pub acquisitions and disposals”.
On current trading and looking to the future, Punch said: “The 10 weeks trading post the period end to 11 February 2024 has continued with strong like-for-like sales growth across all three divisions.
“Q2 trading to date has been encouraging with profitability materially ahead of the prior year.
“The group expects to benefit from inflation positively impacting L&T net income together with the improving margins and the benefit of maturing sales and profitability in the pubs converted to the MP estate since August 2021.”
