TIDMPUB
RNS Number : 6346B
Punch Taverns PLC
05 April 2013
PUNCH TAVERNS PLC
("Punch" or "the Group")
Interim Results for the 28 weeks to 2 March 2013
Underlying financial performance(*) - in line with management
expectations
-- EBITDA of GBP117 million
-- Profit before tax of GBP26 million
-- Basic earnings per share of 3.0p
-- GBP254 million of cash reserves
-- On track to meet full year profit expectations
Operational highlights(*)
-- Improvement in core estate like-for-like net income** down
3.5% in the second quarter, compared to a decrease of 5.2% for the
first quarter
-- Core estate at 94% let, up from 91% at March 2012
-- Investment in 270 core pubs completed in the half year at an
average spend of c.GBP100k per pub
-- Punch Buying Club membership increased to 3,300 Partners (March 2012: 2,200)
-- 164 pubs sold, together with other assets for GBP55 million,
above book value and at a multiple of 18 times EBITDA
Capital structure review
-- Since announcing the restructuring proposal on 7 February
2013 we have continued to engage with the many stakeholders who
will need to approve the restructuring proposal.
-- While discussions remain ongoing and a range of views have
been expressed, the Board believes that a consensual restructuring
can be launched in the first half of 2013.
Stephen Billingham, Executive Chairman of Punch Taverns plc,
commented:
"Our profit performance for the first half of the year has been
in line with management expectations, with improving trends in the
underlying business. We expect to make further progress in the
second half of the financial year and are on track to meet our full
year profit expectations.
We are progressing with our discussions with stakeholders on our
capital restructuring and while discussions remain ongoing, we
continue to believe a consensual restructuring can be launched in
the first half of 2013."
05 April 2013
_______________________
(*) before non-underlying items
(**) net income represents revenue less cost of drink sales (gross profit)
Enquiries:
Results: Punch Taverns plc Tel: 01283 501
948
Stephen Billingham, Executive Chairman
Steve Dando, Finance Director
Restructuring:
Goldman Sachs International; Sarah Mook, Tel: 020 7774
Andrew Wilkinson 1000
The Blackstone Group International Partners Tel: 020 7451
LLP; Martin Gudgeon, David Riddell 4000
Media: Brunswick Tel: 020 7404
5959
Jonathan Glass, Sophie Brand
The interim results presentation will be available on the Punch
website www.punchtavernsplc.com from 9.00 BST. An audio cast of the
presentation will also be available.
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting as financial adviser to Punch and for no
one else in connection with the capital structure review and will
not be responsible to anyone other than Punch for providing the
protections afforded to clients of Goldman Sachs International nor
for providing advice in connection with the capital structure
review, the content of this announcement or any matter referred to
herein.
The Blackstone Group International Partners LLP, which is
authorised and regulated by the Financial Conduct Authority in the
United Kingdom, is acting as financial adviser to Punch and for no
one else in connection with the capital structure review and will
not be responsible to anyone other than Punch for providing the
protections afforded to clients of The Blackstone Group
International Partners LLP nor for providing advice in connection
with the capital structure review, the content of this announcement
or any matter referred to herein.
Forward-looking statements
This report contains certain statements about the future outlook
for Punch. Although we believe our expectations are based on
reasonable assumptions, any statements about future outlook may be
influenced by factors that could cause actual outcomes and results
to be materially different.
EXECUTIVE CHAIRMAN'S REVIEW
Market positioning
Punch is a leading operator of leased and tenanted pubs in the
United Kingdom. As at 2 March 2013, the Punch estate comprised
4,357 pubs located across the UK, 96% of which were held on a
freehold or long leasehold basis. In addition, Punch owns 50% of
Matthew Clark (Holdings) Limited, the holding company of the
Matthew Clark business, a leading drinks wholesaler and
distributor.
Punch's long-term aim is to become the UK's highest quality,
most trusted and best value leased pub company. As part of this
aim, the estate was reorganised in 2011 into two separate
divisions, a core division which consisted, as at 2 March 2013, of
2,912 pubs and a non-core division of 1,445 pubs. The core estate
represents a higher quality, geographically well-located portfolio
which is suitably positioned to adapt to changing market conditions
and support sustainable long-term growth for Punch and our
Partners.
The plan for the core division is to build on the platform
created by the Pathway to Partnership programme to drive
sustainable growth. The core division will aim to attract the right
Partners through new lease offers, expansion of the Punch Buying
Club, further development of the skills of its specialist field
support teams, and investment to drive sales, including food.
The plan for the non-core division is to maximise short-term
returns with a clear focus on costs and cash flow. It is expected
that these pubs will be disposed over a five year period and that
disposals will be phased to ensure a balance between speed of
disposal and value achieved. The majority of these pubs are on
substantive agreements and will therefore continue to have access
to the same operational support infrastructure as our core pubs to
drive operational performance until the decision is made to dispose
of them.
Business review
Overall profit performance is in line with management
expectations and we remain on track to meet our full year profit
expectations of generating underlying EBITDA of between GBP210
million and GBP220 million in the current financial year.
In the 28 weeks ended 2 March 2013, Punch generated EBITDA of
GBP117 million (excluding non-underlying items):
Core Non-core Central Punch
---------------------- -------- --------- --------- --------
March-13 pub numbers 2,912 1,445 - 4,357
---------------------- -------- --------- --------- --------
Revenue GBP193m GBP51m - GBP243m
---------------------- -------- --------- --------- --------
Net income GBP112m GBP28m - GBP140m
---------------------- -------- --------- --------- --------
EBITDA GBP105m GBP26m GBP(14)m GBP117m
---------------------- -------- --------- --------- --------
Core estate - delivering our key strategic initiatives
The core division, comprising 2,912 pubs, accounts for around
80% of Punch outlet EBITDA. With a net income per pub of
approximately GBP73,000, these pubs are of a much higher quality
than the non-core division.
Trading has been in line with our expectations despite being
adversely impacted by weather. Like-for-like net income showed
improvement in the second quarter, being down 3.5% compared to a
decline of 5.2% for the first quarter.
The core estate net income is expected to decline in the current
financial year by between 3% and 4% as we rebalance rents in the
short-term. Trading comparatives are much more challenging in the
first half of this year but are expected to improve in the second
half of the year when the business will also benefit from the
recent improvements in letting, investment and food development as
well as the increased field team support.
Management currently expects the core estate to return to growth
of between 0% and 1% in the next financial year. The core estate is
expected to deliver like-for-like growth in net income of between
1% and 2% in the 2015 financial year before returning to a
long-term growth rate of c.2% in the 2016 financial year.
Positioning the core estate for growth is being driven by:
Recruitment: The percentage of core pubs on substantive
agreements remains strong at 94% and is in line with our target of
having between 93% and 95% of the core estate on substantive
agreements. The launch of the new Partner recruitment website has
been extremely well received having attracted c.1,200 enquiries in
the last 3 months, helping support a further 10% growth in
applicant numbers.
Investment: We plan to invest in around two-thirds of the core
estate over the next five years focussing on improving the customer
environment, targeting GBP40 million per annum across 400 schemes
per year. The increased level of activity in pub investment seen in
the final quarter of 2012 has continued into the first half of this
year and we have completed investments in 270 core pubs at an
average spend of c.GBP100k per pub. This investment is transforming
the customer offering in these pubs and the associated trading
uplift is expected in the second half of the year.
Food development: Investments are partly structured to drive
increased food sales which represent a significant opportunity to
our Partners. Our five year target is to increase the food sales
mix from an estimated 22% in 2011 to 35% of Partner revenue. We
estimate that food sales now make up 25% of Partner revenue, up
2.4% pts from March 2012. The percentage of our pubs without a food
offer has reduced from an estimated 23% in 2011 to just 15% at
March 2013.
Regional Launch Managers: We have recently increased the size of
our specialist field team support including the introduction of our
new Regional Launch Manager team. This team provides dedicated
support to our Partners through the successful launch of every
investment, ensuring that the right vision is in place for each
pub, supported by detailed launch, promotional and operating plans
with a focus on the retail offer to the consumer. The feedback
received from Partners who have benefited from this new resource
has been extremely positive and we are confident that increased
support in this area will result in improved trading performance
for both our Partners and for Punch.
Punch Franchise Tenancy: We are currently rolling out nationally
our new Punch Franchise Tenancy agreement with the expectation of
having 50 franchises in place this financial year, with c.200
franchises in place by the end of 2014. These franchises are
designed to drive both Punch and Partner profits and reduce the
levels of new Partner failures. This fully supported open book
agreement is attracting new entrepreneurs from outside the sector.
It provides them with a newly refurbished pub, best practice
operating standards, marketing and pricing support, food and drink
menu set up and a range of business management tools.
Punch Buying Club: The Punch Buying Club continues to grow in
popularity with 55% of our drinks orders now being taken online, up
from 35% at March 2012. A total of 3,300 Partners across our estate
are now signed up, an increase of 1,100 Partners over the last 12
months. Through the Buying Club we are committed to simplifying the
administrative burden for our existing and prospective Partners and
to drive down the cost of running a pub. We already offer a range
of industry leading exclusive offers to our Partners and will
continue to build on the success of the Buying Club over the next
year as we introduce a wider array of services for the benefit of
our Partners.
Punch support: We have increased the size of specialist field
teams in the areas of investment, marketing and food development
resulting in a ratio of just 18 pubs per field member (down from 20
pubs per field member at August 2012). The mystery visit programme
is being rolled out across the core estate to improve retail
standards with every pub having at least one visit by the end of
2013. The programme offers detailed feedback from an independent
observer, highlighting operating strengths and development
opportunities. Free WiFi has now been rolled out across the estate
with over 2,500 Partners signing up. At the same time as increasing
our specialist field team support, we have made further head office
efficiencies, as we continue to focus on cost reduction as the size
of the non-core division reduces.
Non-core estate - disposal programme on track
The non-core division, comprising 1,445 pubs, accounts for
around 20% of Punch outlet EBITDA. These pubs have a much lower
average net income per pub at approximately GBP36,000, are
predominantly small, with low turnover and are wet led. With
limited scope for investment these pubs are more likely to be
impacted by the long-term decline in drinking out and as a result
are expected in time to generate more value through disposal than
retention. The non-core division is segmented into two groups;
'sell now/sell later' and 'protect and grow'.
Maximising short-term returns:While these non-core pubs remain
in our portfolio, we remain committed to driving operating
performance and maximising the profits from these outlets.
Following the additional segmenting of the non-core division we
will be investing in selective 'protect and grow' pubs and
re-letting them where it is appropriate to do so. We aim to retain
high quality Partners from the non-core estate by offering
partnerships in the core estate where this is possible so that we
continue to benefit from their expertise. We offer the same support
to the non-core division that we do for the core division in order
to protect the profit generated by these pubs whilst they remain in
the estate.
Maximising value on disposal: The disposal programme is slightly
ahead of our target to realise GBP105 million of net proceeds in
the current financial year. During the half year we have sold 164
pubs (including 21 pubs from the core estate), together with other
assets for proceeds of GBP55 million, slightly ahead of book value
and at a multiple of 18 times EBITDA.
Matthew Clark joint venture
Matthew Clark, the 50% joint venture with Accolade, owned by
Champ Private Equity, continues to perform satisfactorily in a very
competitive market providing a post-tax contribution to Punch of
GBP2.4 million for the period, up from GBP2.0 million in the
comparative period. Matthew Clark has significant scale in its
marketplace as the largest independent drinks wholesaler and
distributor to the UK leisure and hospitality industry, with annual
turnover of c.GBP700 million. Turnover increased by 9% in the joint
venture's last financial year and the business has clear plans for
continued growth in market share from which Punch will benefit.
Regulation
On 8 January 2013, the Department for Business, Innovation and
Skills (BIS) announced plans to establish a new statutory code of
practice and an independent adjudicator for the leased and tenanted
pub sector.
Punch supports the existing Industry Framework Code and self
regulation which includes the benefit of two complaint review
bodies available to licensees. PIRRS exists to provide low cost
resolution for rent disputes and our Partners are able to take
complaints relating to any other part of our Code of Practice to
PICAS. We will participate in the formal consultation process which
is expected to be launched in the spring.
Pubs play a vital role in the economy providing local employment
particularly for young people and we continue to engage with
Government on the need for investment in the sector as a key part
of the wider growth agenda for the UK economy. While we welcome the
recent decision by the Chancellor of the Exchequer to scrap the
beer duty escalator, more can be done. We believe the economic case
for reduction in VAT in the hospitality sector is compelling with
the potential to create thousands of new jobs and we continue to
provide our full support to the VAT Club campaign led by Jacques
Borel.
Financial review
Net finance costs:
Net underlying finance costs were down GBP3 million (4%) at
GBP84 million, reflecting a decrease in borrowings. The average
cost of funding was 6.9% (March 2012: 6.9%).
Taxation:
The underlying taxation charge is based on an estimated full
year effective tax rate of 25.2% before post-tax earnings from
joint ventures. This compares with the UK corporation taxation rate
of 23.6% for the financial year ending August 2013.
Earnings per share:
Adjusted basic earnings per share, which excludes the effect of
non-underlying items, was 3.0 pence per share (March 2012: 3.8
pence). The weighted average number of shares in issue during the
period was 665.1 million.
Non-underlying items:
During the period a GBP39 million non-cash charge was incurred
following the reclassification of an interest rate swap as no
longer being deemed to be effective for accounting purposes
following the announcement of the capital structure proposal in
February 2013.
Other non-underlying items include GBP3 million of refinancing
expenses, GBP2 million of asset impairment, GBP1 million of
attributable goodwill written off relating to core asset disposals,
GBP1 million credit on the disposal of non-current assets and GBP2
million credit in the value of shares held.
Capital investment and disposals:
Total capital expenditure amounted to GBP36 million, including
the completion of 270 core investments in the period, investments
in progress and GBP3 million spend in the non-core estate. Asset
disposals realised GBP55 million of net proceeds from the sale of
164 pubs together with other assets.
Cash flow:
Cash flow from operating activities remains strong at GBP80
million from an EBITDA of GBP113 million. Due to the timing of the
half year date, there is historically a working capital outflow in
the first half of the year, with a working capital inflow expected
in the second half of the year.
Free Cash Flow before debt service amounted to GBP99 million,
which after GBP109 million of debt service costs, resulted in a
GBP10 million decrease in the cash balance to GBP254 million.
Pensions:
Punch maintains a defined contribution scheme which is open to
all employees. The Group has one defined benefit scheme (the
Pubmaster pension scheme) which is closed to new entrants. Under
IAS 19 the net pension liability was GBP3 million at both March
2013 and August 2012.
Capital structure:
Punch is financed through two whole business securitisations,
the Punch A securitisation (GBP1,463 million of gross debt) and the
Punch B securitisation (GBP899 million of gross debt), as well as
certain cash resources held across the Group. As at 2 March 2013
the Group held GBP254 million of cash resources (of which GBP93
million was held outside the securitisation structures, which
includes GBP11 million held within the Group supply company).
Although the securitisations have generated underlying profits
and positive net cash flow before debt service in the half year,
they continue to require financial support through the use of cash
resources held outside of the securitisations to maintain
compliance with their DSCR (Debt Service Cover Ratio) covenants.
Without this support, both the Punch A and Punch B securitisations
would breach their respective DSCR covenant levels.
The Group has provided financial support to the securitisations
in the half year to allow the completion of the capital structure
review, identification of a restructuring solution for each
securitisation and discussions with stakeholders in relation to the
proposed restructuring. Net support from cash resources held
outside of the securitisations amounted to GBP7 million for the
half year, being GBP50 million of gross support less GBP43 million
of cash payments from the securitisations to the wider Group during
the half year. The net cost of continuing financial support in the
second half of the financial year, should this take place, would be
expected to be significantly higher than the level of the cost
incurred in the first half.
The provision of future financial support to the Punch A and
Punch B securitisations will continue to be reviewed on an ongoing
basis. Failure to effect a restructuring solution for either
securitisation in the near-term may result in the Group ceasing to
provide financial support to one or both of the securitisations,
which in turn would result in a covenant default in the relevant
securitisation. In particular, because of the financial linkages
between the Punch B securitisation and the Group and the need for
the Group, as part of the proposed restructuring solutions, to
commit a substantial majority of its cash resources to delevering
the Punch B securitisation, the scope for the Group to continue to
provide ongoing financial support to the Punch A securitisation
beyond the near-term may be constrained.
Going concern
In determining the appropriate basis of preparation of the
Interim Report, the Directors are required to consider whether the
Group can continue as a going concern for the foreseeable future;
that is for at least 12 months from the date of signing of this
Report. After making enquiries, and considering the matters which
are described in note 1 to this announcement, the Directors have
concluded that it is appropriate to prepare the Financial
Statements on a going concern basis. However, the Directors are
making full disclosure, as required by accounting standards, to
indicate the existence of material uncertainties facing parts of
the business. Further details are set out in note 1 to this
announcement.
Board changes
On 1 February 2013, Roger Whiteside resigned as Chief Executive
Officer to take up the position of Chief Executive of Greggs
plc.
To ensure continuity in the leadership of Punch, particularly
during the ongoing discussions regarding the restructuring
proposals, Stephen Billingham was appointed as Executive Chairman
and Neil Griffiths was appointed as Chief Operating Officer.
Stephen Billingham has been Non-executive Chairman since
September 2011. Neil Griffiths was previously Punch's Property and
Turnaround Director and has been with the Group since 2001. He has
25 years' experience in the leisure and hospitality industry having
held senior management roles in Warner Brothers and Bass.
On 25 October 2012, John Allkins joined the Board as an
Independent Non-executive Director. John brings with him a
significant amount of consumer and business development experience
to the team, having been Group Finance Director of MyTravel Group
plc, and Chief Financial Officer of Equant NV. John has
considerable experience in chairing audit committees in a number of
public and private companies.
John replaced Ian Fraser, who retired from the Board in December
2012 having served 8 years as an Independent Non-executive
Director.
CONSOLIDATED CONDENSED INCOME STATEMENT
for the 28 weeks ended 2 March 2013
28 weeks to 2 March 2013 28 weeks to 3 March 2012
Non- underlying Non- underlying
items items
Underlying (note Underlying (note
items 3) Total items 3) Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ----------- ---------------- -------- ----------- ---------------- --------
Revenue 243.3 - 243.3 264.6 - 264.6
Operating costs before
depreciation and amortisation (129.2) (3.4) (132.6) (138.3) - (138.3)
Share of post-tax profit
from joint venture 2.4 - 2.4 2.0 - 2.0
-------------------------------- ----------- ---------------- -------- ----------- ---------------- --------
EBITDA(1) 116.5 (3.4) 113.1 128.3 - 128.3
Depreciation and amortisation (6.3) - (6.3) (7.7) - (7.7)
Impairment (note 4) - (2.1) (2.1) - (1.8) (1.8)
Goodwill charge - (1.4) (1.4) - - -
Profit on sale of property,
plant and equipment
and non-current assets
classified as held
for sale - 1.0 1.0 - 3.9 3.9
-------------------------------- ----------- ---------------- -------- ----------- ---------------- --------
Operating profit /
(loss) 110.2 (5.9) 104.3 120.6 2.1 122.7
Finance income (note
5) 5.2 1.8 7.0 3.1 5.2 8.3
Finance costs (note
5) (89.2) (39.1) (128.3) (90.4) - (90.4)
Movement in fair value
of interest rate swaps - 0.3 0.3 - (10.4) (10.4)
Profit / (loss) before
taxation 26.2 (42.9) (16.7) 33.3 (3.1) 30.2
UK income tax (charge)
/ credit (note 6) (6.0) 9.4 3.4 (8.4) 2.7 (5.7)
-------------------------------- ----------- ---------------- -------- ----------- ---------------- --------
Profit / (loss) for
the financial period
attributable to owners
of the parent company 20.2 (33.5) (13.3) 24.9 (0.4) 24.5
-------------------------------- ----------- ---------------- -------- ----------- ---------------- --------
Earnings / (loss) per
share
(note 7)
Basic (pence) 3.0 (2.0) 3.8 3.7
Diluted (pence) 3.0 (2.0) 3.8 3.7
-------------------------------- ----------- ---------------- -------- ----------- ---------------- --------
(1) EBITDA represents earnings before depreciation and
amortisation, impairment, goodwill charge, profit on sale of
property, plant and equipment and non-current assets classified as
held for sale, finance income, finance costs, movement in fair
value of interest rate swaps and tax of the Group.
52 weeks to 18 August 2012
Non-underlying
items
Underlying (note
items 3) Total
GBPm GBPm GBPm
-------------------------------- ----------- --------------- --------
Revenue 491.7 - 491.7
Operating costs before
depreciation, amortisation
and impairment (257.1) (4.0) (261.1)
Share of post-tax profit
from joint venture 3.4 - 3.4
-------------------------------- ----------- --------------- --------
EBITDA(1) 238.0 (4.0) 234.0
Depreciation and amortisation (13.5) - (13.5)
Impairment (note 4) - (3.4) (3.4)
Goodwill charge - (1.1) (1.1)
Profit on sale of property,
plant and equipment and
non-current assets classified
as held for sale - 1.3 1.3
-------------------------------- ----------- --------------- --------
Operating profit / (loss) 224.5 (7.2) 217.3
Finance income (note 5) 6.4 7.0 13.4
Finance costs (note 5) (166.9) - (166.9)
Movement in fair value
of interest rate swaps - (11.4) (11.4)
Profit / (loss) before
taxation 64.0 (11.6) 52.4
UK income tax (charge)
/ credit (note 6) (16.0) 14.7 (1.3)
-------------------------------- ----------- --------------- --------
Profit for the financial
period attributable to
owners of the parent company 48.0 3.1 51.1
Earnings per share
(note 7)
Basic (pence) 7.2 7.7
Diluted (pence) 7.2 7.7
-------------------------------- ----------- --------------- --------
(1) EBITDA represents earnings before depreciation and
amortisation, impairment, goodwill charge, profit on sale of
property, plant and equipment and non-current assets classified as
held for sale, finance income, finance costs, movement in fair
value of interest rate swaps and tax of the Group.
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the 28 weeks ended 2 March 2013
28 weeks 28 weeks 52 weeks
to to to
2 March 3 March 18 August
2013 2012 2012
GBPm GBPm GBPm
------------------------------------------------ --------- --------- -----------
(Loss) / profit for the period attributable
to owners of the parent company (13.3) 24.5 51.1
------------------------------------------------ --------- --------- -----------
Items that are or may be recycled subsequently
to the income statement
Losses on cash flow hedges (3.5) (32.0) (57.4)
Transfers to the income statement on
cash flow hedges 39.1 1.7 1.7
Tax relating to components of other
comprehensive income that can be reclassified
into profit or loss (8.1) 7.8 7.9
Items that cannot be recycled subsequently
to the income statement
Actuarial (losses) / gains on defined
benefit pension schemes (1.7) (0.2) 2.4
Tax relating to components of other
comprehensive income that cannot be
reclassified into profit or loss 0.4 0.1 (0.7)
Other comprehensive profits / (losses)
for the period 26.2 (22.6) (46.1)
------------------------------------------------ --------- --------- -----------
Total comprehensive income for the period
attributable to owners of the parent
company 12.9 1.9 5.0
------------------------------------------------ --------- --------- -----------
CONSOLIDATED CONDENSED BALANCE SHEET
at 2 March 2013
2 March 3 March 18 August
2013 2012 2012
GBPm GBPm GBPm
--------------------------------------- ---------- ---------- ----------
Assets
Non-current assets
Property, plant and equipment (note
8) 2,432.7 2,495.1 2,463.9
Operating leases 5.9 6.3 6.0
Other intangible assets 0.6 0.8 0.9
Goodwill 178.6 181.1 180.0
Investments in joint venture 46.9 43.1 44.5
Other investments 9.9 10.3 8.8
Deferred tax assets - - 2.0
2,674.6 2,736.7 2,706.1
Current assets
Trade and other receivables 31.8 31.5 34.1
Current income tax assets 0.8 3.1 0.8
Non-current assets classified as held
for sale 114.1 121.5 106.9
Cash and cash equivalents 254.3 215.8 263.9
Restricted cash 315.0 - 315.0
--------------------------------------- ---------- ---------- ----------
716.0 371.9 720.7
Total assets 3,390.6 3,108.6 3,426.8
--------------------------------------- ---------- ---------- ----------
Liabilities
Current liabilities
Trade and other payables (99.0) (111.8) (121.1)
Short term borrowings (64.8) (61.0) (61.5)
Cash-backed borrowings (315.0) - (315.0)
Derivative financial instruments (41.0) (36.3) (38.4)
Provisions (4.4) (2.2) (2.4)
--------------------------------------- ---------- ---------- ----------
(524.2) (211.3) (538.4)
Non-current liabilities
Borrowings (2,339.2) (2,404.3) (2,373.4)
Derivative financial instruments (292.4) (269.9) (293.1)
Deferred tax liabilities (2.3) (0.9) -
Retirement benefit obligations (3.2) (6.3) (2.7)
Provisions (8.1) (11.6) (11.0)
(2,645.2) (2,693.0) (2,680.2)
Total liabilities (3,169.4) (2,904.3) (3,218.6)
--------------------------------------- ---------- ---------- ----------
Net assets 221.2 204.3 208.2
--------------------------------------- ---------- ---------- ----------
Equity
Called up share capital 0.3 0.3 0.3
Share premium 455.0 455.0 455.0
Hedge reserve (197.7) (201.5) (226.1)
Share based payment reserve 7.1 9.6 9.7
Retained earnings (43.5) (59.1) (30.7)
--------------------------------------- ---------- ---------- ----------
Total equity attributable to owners
of the parent company 221.2 204.3 208.2
--------------------------------------- ---------- ---------- ----------
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
for the 28 weeks ended 2 March 2013
Share
based
Share Share Hedge payment Retained Total
capital premium reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- --------- --------- --------- ---------- --------
At 18 August 2012 0.3 455.0 (226.1) 9.7 (30.7) 208.2
----------------------------- --------- --------- --------- --------- ---------- --------
Loss for the period - - - - (13.3) (13.3)
Other comprehensive profits
/ (losses) for the period - - 28.4 - (2.2) 26.2
----------------------------- --------- --------- --------- --------- ---------- --------
Total comprehensive gains
/ (losses) for the period
attributable to owners
of the parent company - - 28.4 - (15.5) 12.9
Share based payments - - - (2.6) 2.7 0.1
Total equity at 2 March
2013 0.3 455.0 (197.7) 7.1 (43.5) 221.2
----------------------------- --------- --------- --------- --------- ---------- --------
At 20 August 2011 0.3 455.0 (179.7) 12.1 (85.6) 202.1
------------------------------------- ---- ------ -------- ------ ------- -------
Profit for the period - - - - 24.5 24.5
Other comprehensive losses
for the period - - (21.8) - (0.8) (22.6)
------------------------------------- ---- ------ -------- ------ ------- -------
Total comprehensive (loss)
/ gain for the period attributable
to owners of the parent
company - - (21.8) - 23.7 1.9
Share based payments - - - (2.5) 2.8 0.3
------------------------------------- ---- ------ -------- ------ ------- -------
Total equity at 3 March
2012 0.3 455.0 (201.5) 9.6 (59.1) 204.3
------------------------------------- ---- ------ -------- ------ ------- -------
At 20 August 2011 0.3 455.0 (179.7) 12.1 (85.6) 202.1
------------------------------------- ---- ------ -------- ------ ------- -------
Profit for the period - - - - 51.1 51.1
Other comprehensive (losses)
/ gains for the period - - (46.4) - 0.3 (46.1)
------------------------------------- ---- ------ -------- ------ ------- -------
Total comprehensive (loss)
/ gain for the period attributable
to owners of the parent
company - - (46.4) - 51.4 5.0
Share based payments - - - (2.4) 3.5 1.1
Total equity at 18 August
2012 0.3 455.0 (226.1) 9.7 (30.7) 208.2
------------------------------------- ---- ------ -------- ------ ------- -------
CONSOLIDATED CONDENSED CASH FLOW STATEMENT
28 weeks 28 weeks 52 weeks
to to to
2 March 3 March 18 August
2013 2012 2012
GBPm GBPm GBPm
----------------------------------------------- ----------- ----------- ------------
Cash flows from operating activities
Operating profit 104.3 122.7 217.3
Depreciation and amortisation 6.3 7.7 13.5
Impairment 2.1 1.8 3.4
Goodwill charge 1.4 - 1.1
Profit on sale of non-current assets (1.0) (3.9) (1.3)
Share based payment expense recognised
in profit 0.1 0.3 1.1
(Increase) / decrease in trade and
other receivables (0.8) 12.5 3.2
Decrease in trade and other payables (28.5) (34.5) (15.4)
Difference between pension contributions
paid
and amounts recognised in the income
statement (1.0) (1.7) (2.7)
Decrease in provisions and other liabilities (0.5) (0.7) (1.0)
Share of post-tax profit from joint
venture (2.4) (2.0) (3.4)
Cash generated from operations 80.0 102.2 215.8
Income tax received - 1.3 4.4
----------------------------------------------- ----------- ----------- ------------
Net cash from operating activities 80.0 103.5 220.2
----------------------------------------------- ----------- ----------- ------------
Cash flows from investing activities
Purchase of property, plant and equipment (35.6) (13.9) (41.2)
Proceeds from sale of property, plant
and equipment 26.8 13.9 33.0
Proceeds from sale of operating leases 0.6 0.1 0.3
Proceeds from sale of other non-current
assets held for sale 27.6 47.6 96.8
Purchase of other intangible assets (0.1) (0.1) (0.6)
Interest received 4.4 1.1 5.0
Net cash generated from investing activities 23.7 48.7 93.3
----------------------------------------------- ----------- ----------- ------------
Cash flows from financing activities
Repayment of borrowings (28.2) (39.8) (67.8)
Repayment of derivative financial instruments - (5.1) (5.1)
Interest paid (84.5) (87.0) (171.3)
Repayments of obligations under finance
leases (0.5) (0.7) (1.3)
Interest element of finance lease rental
payments (0.1) (0.1) (0.3)
Costs of terminating financing arrangements - (0.2) (0.3)
----------------------------------------------- ----------- ----------- ------------
Net cash used in financing activities (113.3) (132.9) (246.1)
----------------------------------------------- ----------- ----------- ------------
Net (decrease) / increase in cash and
cash equivalents (9.6) 19.3 67.4
Cash and cash equivalents at beginning
of period 263.9 196.5 196.5
----------------------------------------------- ----------- ----------- ------------
Cash and cash equivalents at end of
period 254.3 215.8 263.9
----------------------------------------------- ----------- ----------- ------------
for the 28 weeks ended 2 March 2013
NOTES TO THE FINANCIAL STATEMENTS
for the 28 weeks ended 2 March 2013
1. ACCOUNTING POLICIES
Basis of preparation
This condensed set of interim financial statements has been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
adopted by the EU. The Group's Annual Report and Financial
Statements are prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU. As required by
the Disclosure and Transparency rules of the Financial Conduct
Authority, this condensed set of financial statements has been
prepared applying the accounting policies and presentation that
were applied in the preparation of the Group's Annual Report and
Financial Statements 2012, and which are expected to apply at 17
August 2013.
This condensed set of interim financial statements have been
prepared on a going concern basis. The Directors have prepared
detailed operating and cash flow forecasts, which cover a period of
more than 12 months from the date of approval of these financial
statements. These show that the Group has adequate funds for the
foreseeable future to meet its liabilities as they fall due.
The Group is financed through two whole business
securitisations, the Punch A Securitisation (GBP1,463 million of
gross debt) and the Punch B Securitisation (GBP899 million of gross
debt), as well as certain cash resources held across the Group. At
2 March 2013, the Group's liquidity position was strong with GBP254
million of cash resources (of which GBP93 million was held outside
of the securitisation structures, which includes GBP11 million held
within the Group supply company), compared to loan amortisation due
within one year of GBP61 million. The Group is currently in full
compliance with the financial covenants contained in its
securitisation arrangements.
Whilst the securitisations generated underlying profits and
positive net cash flow (before debt
repayments) in the half year, they required financial support
through the use of cash resources held outside of the
securitisations to maintain compliance with their DSCR (Debt
Service Cover Ratio) covenants. Without this support, both
securitisations would have breached their respective DSCR covenant
levels in the period. Net support from cash resources held outside
of the securitisations amounted to GBP7 million for the half year,
being GBP50 million of gross support less GBP43 million of cash
payments from the securitisations to the wider Group during the
half year.
The ability of the Group's securitisations to continue to comply
with their DSCR covenants in the near term is dependent on either
the continuation of group support or reaching agreement with the
relevant stakeholders to amend the terms of the financial
covenants.
The Group has proposed a consensual restructuring solution for
both securitisations. Detailed operating and cash flow forecasts
prepared by the Directors indicate that the proposed restructuring
solution would allow the securitisations to comply with their
financial covenants without the need for ongoing financial
support.
The Group has engaged in discussions with stakeholders to seek
support to implement the proposed restructuring solution.
Discussions remain ongoing.
If a covenant breach were to occur in a securitisation then this
could lead to circumstances in which the lenders to that
securitisation may be able to request early repayment of all
outstanding borrowings. Were this to occur the relevant
securitisation may have insufficient cash resources to repay all of
its borrowings, and cease to be a going concern, which in turn
would result in a significant reduction in the Group's operations.
These circumstances represent a material uncertainty that casts
significant doubt on the ability of a significant part of the Group
to continue as a going concern and, in such circumstances, part of
the Group may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The Directors of Punch Taverns plc are of the opinion that it is
in the best interests of stakeholders to agree to a consensual
restructuring for both of the securitisations and that a consensual
restructuring is capable of being successfully implemented.
NOTES TO THE FINANCIAL STATEMENTS continued
for the 28 weeks ended 2 March 2013
The comparative figures for the 52 weeks to 18 August 2012
presented in these interim financial statements are not the Group's
statutory accounts for that financial period. Those accounts have
been reported on by the Company's auditor and delivered to the
Registrar of Companies. The report of the auditor was not modified,
and did not contain statements under section 498(2) or (3)
Companies Act 2006 or equivalent preceding legislation. However in
the Group's Annual Report and Financial Statements 2012, the
auditor included an emphasis of matter paragraph in its audit
report relating to the uncertain outcome of the directors'
intention to restructure the securitisation facilities.
The following amendments are effective for the Group for the
financial year beginning 19 August 2012:
-- Amendment to IAS 12 'Income Taxes'
-- Amendment to IAS 1 'Presentation of Financial Statements'
The above amendments to the published standards have had no
material impact on the results or the financial position of the
Group for the 28 weeks to 2 March 2013.
2. SEGMENTAL ANALYSIS
Core Non-core Unallocated Total
GBPm GBPm GBPm GBPm
------------------------------------------ -------- --------- ------------ --------
28 weeks to 2 March 2013:
Drink revenue 136.2 36.8 - 173.0
Rental income 52.0 12.1 - 64.1
Other revenue 4.3 1.9 - 6.2
------------------------------------------ -------- --------- ------------ --------
Underlying revenue 192.5 50.8 243.3
Underlying operating costs(1) (87.4) (25.0) (16.8) (129.2)
Share of post-tax profit from
joint venture - - 2.4 2.4
------------------------------------------ -------- --------- ------------ --------
EBITDA before non-underlying items 105.1 25.8 (14.4) 116.5
------------------------------------------ -------- --------- ------------ --------
Underlying depreciation and amortisation (6.3)
Operating non-underlying items (5.9)
Net finance costs (121.3)
Movement in fair value of interest
rate swaps 0.3
UK income tax credit 3.4
------------------------------------------ -------- --------- ------------ --------
Loss for the financial period
attributable to owners of the
parent company (13.3)
------------------------------------------ -------- --------- ------------ --------
28 weeks to 3 March 2012:
Drink revenue 141.3 45.7 - 187.0
Rental income 53.8 16.6 - 70.4
Other revenue 4.7 2.5 - 7.2
------------------------------------------ -------- --------- ------------ --------
Underlying revenue 199.8 64.8 - 264.6
Underlying operating costs(1) (87.1) (32.6) (18.6) (138.3)
Share of post-tax profit from
joint venture - - 2.0 2.0
------------------------------------------ -------- --------- ------------ --------
EBITDA before non-underlying items 112.7 32.2 (16.6) 128.3
------------------------------------------ -------- --------- ------------ --------
Underlying depreciation and amortisation (7.7)
Operating non-underlying items 2.1
Net finance costs (82.1)
Movement in fair value of interest
rate swaps (10.4)
UK income tax charge (5.7)
------------------------------------------ -------- --------- ------------ --------
Profit for the financial period
attributable to owners of the
parent company 24.5
------------------------------------------ -------- --------- ------------ --------
52 weeks to 18 August 2012:
Drink revenue 269.1 82.3 - 351.4
Rental income 99.0 28.3 - 127.3
Other revenue 8.6 4.4 - 13.0
------------------------------------------ -------- --------- ------------ --------
Underlying revenue 376.7 115.0 - 491.7
Underlying operating costs(1) (167.3) (57.9) (31.9) (257.1)
Share of post-tax profit from
joint venture - - 3.4 3.4
------------------------------------------ -------- --------- ------------ --------
EBITDA before non-underlying items 209.4 57.1 (28.5) 238.0
------------------------------------------ -------- --------- ------------ --------
Underlying depreciation and amortisation (13.5)
Operating non-underlying items (7.2)
Net finance costs (153.5)
Movement in fair value of interest
rate swaps (11.4)
UK income tax charge (1.3)
------------------------------------------ -------- --------- ------------ --------
Profit for the financial period
attributable to owners of the
parent company 51.1
------------------------------------------ -------- --------- ------------ --------
(1) Unallocated underlying operating costs represent corporate
overheads that are not allocated down to the divisional
performance.
Core Non-core Unallocated Total
GBPm GBPm GBPm GBPm
------------------------- -------- --------- ------------ ----------
2 March 2013
Assets and liabilities
Segment assets 2,285.7 431.5 14.1 2,731.3
Unallocated assets - - 659.3 659.3
------------------------- -------- --------- ------------ ----------
Total assets 2,285.7 431.5 673.4 3,390.6
------------------------- -------- --------- ------------ ----------
Segment liabilities - - - -
Unallocated liabilities - - (3,169.4) (3,169.4)
------------------------- -------- --------- ------------ ----------
Total liabilities - - (3,169.4) (3,169.4)
------------------------- -------- --------- ------------ ----------
Net assets 2,285.7 431.5 (2,496.0) 221.2
------------------------- -------- --------- ------------ ----------
3 March 2012
Assets and liabilities
Segment assets 2,259.0 529.7 15.3 2,804.0
Unallocated assets - - 304.6 304.6
------------------------- -------- ------ ---------- ----------
Total assets 2,259.0 529.7 319.9 3,108.6
------------------------- -------- ------ ---------- ----------
Segment liabilities - - - -
Unallocated liabilities - - (2,904.3) (2,904.3)
------------------------- -------- ------ ---------- ----------
Total liabilities - - (2,904.3) (2,904.3)
------------------------- -------- ------ ---------- ----------
Net assets 2,259.0 529.7 (2,584.4) 204.3
------------------------- -------- ------ ---------- ----------
18 August 2012
Assets and liabilities
Segment assets 2,272.8 468.9 15.1 2,756.8
Unallocated assets - - 670.0 670.0
------------------------- -------- ------ ---------- ----------
Total assets 2,272.8 468.9 685.1 3,426.8
------------------------- -------- ------ ---------- ----------
Segment liabilities - - - -
Unallocated liabilities - - (3,218.6) (3,218.6)
------------------------- -------- ------ ---------- ----------
Total liabilities - - (3,218.6) (3,218.6)
------------------------- -------- ------ ---------- ----------
Net assets 2,272.8 468.9 (2,533.5) 208.2
------------------------- -------- ------ ---------- ----------
There are no sales between the segments. Segment assets include
property, plant and equipment, operating leases, non-current assets
held for sale and goodwill and exclude other intangible assets,
receivables, cash, taxation, investments in joint venture and other
investments, whilst all liabilities are unallocated.
3. NON-UNDERLYING ITEMS
In order to provide a trend measure of underlying performance,
profit is presented excluding items which management consider will
distort comparability, either due to their significant
non-recurring nature or as a result of specific accounting
treatments. Included in the income statement are the following
non-underlying items:
28 weeks 28 weeks 52 weeks
to to to
2 March 3 March 18 August
2013 2012 2012
GBPm GBPm GBPm
------------------------------------------------ --------- --------- -----------
Operating non-underlying items
Restructuring and other related one-off
costs (3.4) - (4.0)
Impairment losses (note 4) (2.1) (1.8) (3.4)
Goodwill charge(1) (1.4) - (1.1)
Profit on sale of non-current assets 1.0 3.9 1.3
------------------------------------------------ --------- --------- -----------
(5.9) 2.1 (7.2)
------------------------------------------------ --------- --------- -----------
Finance income
Loan note redemptions(2) - 1.7 1.7
Movement in fair value of provision for
share scheme settlement(3) 0.7 0.6 1.1
Movement in fair value of Spirit shares
held(4) 1.1 2.9 1.4
Profit on sale of shares held in trust - - 1.7
Other non-underlying finance income - - 1.1
------------------------------------------------ --------- --------- -----------
1.8 5.2 7.0
------------------------------------------------ --------- --------- -----------
Finance costs
Recycling of hedge reserve(5) (39.1) - -
Movement in fair value of interest rate
swaps(6) 0.3 (10.4) (11.4)
Total non-underlying items before tax (42.9) (3.1) (11.6)
------------------------------------------------ --------- --------- -----------
Tax
Tax impact of non-underlying items 9.8 2.7 9.6
Adjustments to tax in respect of prior periods (0.4) - 5.1
9.4 2.7 14.7
------------------------------------------------ --------- --------- -----------
Total non-underlying items after tax (33.5) (0.4) 3.1
------------------------------------------------ --------- --------- -----------
(1) Represents the goodwill relating to those core pubs disposed
of in the period.
(2) Represents profit on the purchase of securitised debt
together with the write off of related deferred issue costs.
(3) Represents movement in fair value of shares held to settle
future share schemes and release of provision for share
schemes.
(4) Represents movement in fair value of shares held as an
investment.
(5) Represents the recycling of the hedge reserve relating to
the Punch B C1 loan note following the reclassification of the
associated interest rate swap as ineffective during the financial
period, due to the announcement of the capital restructuring
proposals on 7 February 2013.
(6) Represents the movement in the fair value of interest rate
swaps which do not qualify for hedge accounting.
4. IMPAIRMENT LOSSES
Property, plant and equipment and operating leases
When any indicators of impairment are identified, property,
plant and equipment and operating leases are reviewed for
impairment based on each cash generating unit (CGU). The cash
generating units are individual pubs. The carrying values of these
individual pubs are compared to the recoverable amount of the CGUs,
which is the higher of value-in-use (VIU) and fair value less costs
to sell (FVLCS).
In the 28 week period to 2 March 2013, the FVLCS of the
non-current assets classified as held for sale were reviewed and an
impairment of GBP2.1m was identified. During the 52 week period to
18 August 2012, the FVLCS of the non-current assets classified as
held for sale were reviewed, and an impairment of GBP3.4m was
identified, of which GBP1.8m had been recognised during the 28 week
period to 3 March 2012.
The impairments recognised in the current and prior periods are
as follows:
28 weeks 28 weeks 52 weeks
to to 3 March to 18 August
2 March 2012 2012
2013
GBPm GBPm GBPm
--------------------- --------- ------------ --------------
Property, plant and
equipment 2.1 1.8 3.4
--------------------- --------- ------------ --------------
Goodwill
Goodwill represents the synergistic benefits of operating a
large pub estate and is allocated to groups of CGUs. The estate is
organised in separate core and non-core property structures. No
goodwill is allocated to the non-core estate due to the low value
of the properties in the estate and the low level of synergistic
benefits.
During the year ended 18 August 2012, a review for impairment
was carried out on the remaining goodwill allocated to pubs in the
core estate. This review compared the carrying amount of the
goodwill to the net realisable value, being the higher of the FVLCS
and VIU, of the core pubs. Cash flows used in the VIU calculation
were based on earnings before interest and taxation, and used the
forecasted cash flows included within the Group business plan for
the first five years, and then the cash flows were extrapolated for
a further 45 years, applying a multiple of ten as the terminal
value. The pre-tax risk adjusted discount rate applied to cash flow
projections was 8.0%. The growth rate applied to cash flows over
the 45 year period was 2%. Based on this review, no impairment of
goodwill on the core estate was identified.
During the current period, a review completed using the same
criteria as the previous period on the remaining goodwill allocated
to pubs in the core estate also concluded that no impairment was
required.
Whilst considered unlikely neither a 2% decrease in the growth
rate assumption, nor a 1% increase in the discount rate assumption
would have led to an impairment in either the current or prior
period.
5. FINANCE INCOME AND COSTS
28 weeks 28 weeks 52 weeks
to to to
2 March 3 March 18 August
2013 2012 2012
GBPm GBPm GBPm
------------------------------------------- --------- --------- -----------
Finance income
Bank interest receivable 3.7 1.7 3.5
Pension finance income 1.5 1.4 2.9
Non-underlying finance income (note 3) 1.8 5.2 7.0
------------------------------------------- --------- --------- -----------
Total finance income 7.0 8.3 13.4
------------------------------------------- --------- --------- -----------
Finance costs
Interest payable on loan notes 86.4 87.4 161.2
Interest payable on finance leases 0.1 0.1 0.1
Pension finance costs 1.4 1.5 3.1
Amortisation of deferred issue costs 1.0 1.0 1.8
Effect of unwinding discounted provisions 0.3 0.4 0.7
Non-underlying finance costs (note 3) 39.1 - -
Total finance costs 128.3 90.4 166.9
------------------------------------------- --------- --------- -----------
6. TAXATION
The effective taxation charge before non-underlying items and
share of post-tax profit from the joint venture is 25.2%. The
effective rate of taxation for the comparative period was
26.8%.
The total tax credit of GBP3.4m (March 2012: charge of GBP5.7m;
August 2012: charge of GBP1.3m) includes a non-underlying tax
credit of GBP9.4m (March 2012: credit of GBP2.7m; August 2012:
credit of GBP14.7m).
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year, excluding
those held in the employee share trust, which are treated as
cancelled.
Diluted earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year
(adjusted for the effects of dilutive options).
Reconciliations of the earnings used in the calculations are set
out below:
28 weeks to 2 28 weeks to 3 52 weeks to 18
March 2013 March 2012 August 2012
Per share Per share Per share
Earnings amount Earnings amount Earnings amount
GBPm pence GBPm pence GBPm pence
------------------------------ ----------- ---------- ----------- ---------- ----------- ----------
Basic (loss) / earnings
per share (13.3) (2.0) 24.5 3.7 51.1 7.7
Diluted (loss) /
earnings per share (13.3) (2.0) 24.5 3.7 51.1 7.7
Supplementary earnings
per share figures:
Basic earnings per
share before non-underlying
items 20.2 3.0 24.9 3.8 48.0 7.2
Diluted earnings
per share before
non-underlying items 20.2 3.0 24.9 3.8 48.0 7.2
------------------------------ ----------- ---------- ----------- ---------- ----------- ----------
The impact of dilutive ordinary shares is to increase weighted
average shares by nil (March 2012: nil; August 2012: nil) for
employee share options.
28 weeks 28 weeks 52 weeks
to to 3 March to 18 August
2 March 2012 2012
2013
No. (m) No. (m) No. (m)
----------------------------------------- --------- ------------ --------------
Basic weighted average number of shares 665.1 661.8 662.9
Diluted weighted average number of
shares 665.1 661.8 662.9
----------------------------------------- --------- ------------ --------------
8. PROPERTY, PLANT AND EQUIPMENT
GBPm
----------------------------------- --------
Net book amount at 18 August 2012 2,463.9
Additions 36.6
Disposals (24.0)
Depreciation (5.7)
Impairment (2.1)
Other movements (36.0)
----------------------------------- --------
Net book amount at 2 March 2013 2,432.7
----------------------------------- --------
Net book amount at 21 August 2011 2,541.7
Additions 13.9
Disposals (10.5)
Depreciation (6.0)
Impairment (1.8)
Other movements (42.2)
----------------------------------- --------
Net book amount at 3 March 2012 2,495.1
----------------------------------- --------
Net book amount at 21 August 2011 2,541.7
Additions 44.4
Disposals (32.2)
Depreciation (11.1)
Impairment (3.4)
Other movements (75.5)
----------------------------------- --------
Net book amount at 18 August 2012 2,463.9
----------------------------------- --------
9. NET DEBT
(a) Analysis of net debt
2 March 3 March 18 August
2013 2012 2012
GBPm GBPm GBPm
--------------------------------------- ---------- ---------- ----------
Secured loan notes (2,362.1) (2,418.3) (2,390.3)
Cash-backed borrowings (315.0) - (315.0)
Cash and cash equivalents 254.3 215.8 263.9
Restricted cash 315.0 - 315.0
--------------------------------------- ---------- ---------- ----------
Nominal value of net debt (2,107.8) (2,202.5) (2,126.4)
Capitalised debt issue costs 6.1 7.7 6.9
Fair value adjustments on acquisition
of secured loan notes (45.2) (50.8) (48.1)
Fair value of interest rate swaps (333.4) (306.2) (331.5)
Finance lease obligations (2.8) (3.9) (3.4)
--------------------------------------- ---------- ---------- ----------
Net debt (2,483.1) (2,555.7) (2,502.5)
--------------------------------------- ---------- ---------- ----------
Balance sheet:
Borrowings (2,404.0) (2,465.3) (2,434.9)
Cash-backed borrowings (315.0) - (315.0)
Derivative financial instruments (333.4) (306.2) (331.5)
Cash and cash equivalents 254.3 215.8 263.9
Restricted cash 315.0 - 315.0
Net debt (2,483.1) (2,555.7) (2,502.5)
--------------------------------------- ---------- ---------- ----------
(b) Analysis of changes in net debt
At At
18 August Non-cash 2 March
2012 Cash movements 2013
flow
GBPm GBPm GBPm GBPm
---------------------------------- ----------- ------- ------------ ----------
Current assets
Cash at bank and in hand 263.9 (9.6) - 254.3
Restricted cash 315.0 - - 315.0
578.9 (9.6) - 569.3
Debt
Borrowings (2,434.9) 28.7 2.2 (2,404.0)
Cash-backed borrowings (315.0) - - (315.0)
Derivative financial instruments (331.5) - (1.9) (333.4)
(3,081.4) 28.7 0.3 (3,052.4)
Net debt per balance sheet (2,502.5) 19.1 0.3 (2,483.1)
---------------------------------- ----------- ------- ------------ ----------
Net debt incorporates the Group's borrowings, cash-backed
borrowings, derivative financial instruments and obligations under
finance leases, less cash and cash equivalents and restricted
cash.
Non-cash movements relate to amortisation of deferred issue
costs and premium on loan notes and fair value movement in
derivative financial instruments.
10. RELATED PARTY TRANSACTIONS
Balances arising from transactions with joint ventures
The Group holds 50% of the entire share capital of Matthew Clark
(Holdings) Limited. At 2 March 2013, the Group's investment in this
joint venture is GBP46.9m (March 2012: GBP43.1m; August 2012:
GBP44.5m). The Group had transactions of GBP4.7m with Matthew Clark
during the current period (28 weeks to 3 March 2012: GBP5.9m; 52
weeks to 18 August 2012: GBP11.1m), GBP0.4m of which was owing to
Matthew Clark at the period end (March 2012: GBP0.4m; August 2012:
GBP1.4m).
11. CAPITAL COMMITMENTS
Capital commitments contracted, but not provided for by the
Group, amounted to GBP12.5m (March 2012: GBP8.9m; August 2012:
GBP13.3m).
12. SEASONALITY OF INTERIM OPERATIONS
The Group's financial results and cash flows are impacted by the
financial year being split into two unequal periods, with the first
half being 28 weeks and the second half being 24 weeks.
In addition, the Group's financial results and cash flows have,
historically, been subject to seasonal trends between the first and
the second half of the financial year.
PRINCIPAL RISKS AND UNCERTAINTIES
Risk is an inherent part of doing business. The Punch Taverns
plc Board has overall responsibility for the
management of the principal risks and internal control of the
Company. The Board has identified the
following factors as the principal potential risks to the
successful operation of the business. These risks remain those most
likely to affect the Group in the second half of the year.
Market and economic risks:
-- Economic climate
-- Property valuations
-- Increasing costs
Financial:
-- Liquidity risk
-- Financial covenant and refinancing risk
-- Interest rate risk
-- Pensions
-- Internal financial control
Operational and people:
-- Change management
-- Information systems, technology and security
-- Product quality
-- Supply chain management
-- People risks
Regulatory:
-- Health and safety
-- Changes in legislation
For greater detail of these risks, which are unchanged from the
Group's Annual Report and Financial
Statements 2012, please refer to page 8 to 9 of the Group's
Annual Report and Financial
Statements 2012, a copy of which is available on the Group's
website www.punchtavernsplc.com
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the European Union;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first 28 weeks of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining 24 weeks of the
year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first 28
weeks of the current financial year and that have materially
affected the financial position or performance of the group during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
On behalf of the Board
Stephen Billingham Steve Dando
Executive Chairman Finance Director
04 April 2013 04 April 2013
Independent review report to Punch Taverns plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
28 weeks ended 2 March 2013 which comprises the Consolidated
Condensed Income Statement, Consolidated Condensed Statement of
Comprehensive Income, Consolidated Condensed Balance Sheet,
Consolidated Condensed Statement of Changes in Equity, Consolidated
Condensed Cash Flow Statement and the related explanatory notes. We
have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the Disclosure and Transparency Rules (DTR) of the
UK's Financial Conduct Authority (UK FCA). Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 'Interim Financial Reporting' as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the UK. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 28 weeks ended 2 March
2013 is not prepared, in all material respects, in accordance with
IAS 34 as adopted by the EU and the DTR of the UK FCA.
Emphasis of matter - uncertain outcome of restructuring of
securitisation facilities
In forming our conclusion on the condensed set of financial
statements, which is not modified, we have considered the adequacy
of the disclosures made in note 1 to the condensed set of financial
statements concerning the uncertain outcome of the intended
restructuring of the terms of the two securitisation facilities
that are each a significant proportion of the Group's operations.
The ultimate outcome of the matter cannot presently be determined
and failure to achieve a successful renegotiation could result in a
part of the Group ceasing to be a going concern which in turn would
result in a significant reduction in the Group's operations.
Greg Watts
for and on behalf of KPMG Audit Plc
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham,
B4 6GH
United Kingdom
04 April 2013
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR NKQDDOBKDDQK
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