Punch Taverns PLC Full Year Trading Update (0573N)

TIDMPUB

RNS Number : 0573N

Punch Taverns PLC

03 September 2013

PUNCH TAVERNS PLC

Year End Trading Statement for the 52 weeks to 17 August 2013

FULL YEAR PROFITS IN LINE WITH MANAGEMENT EXPECTATIONS;

FOURTH QUARTER CORE NET INCOME IN GROWTH

n Average net income per pub +1.5% (52 weeks)

n Improving like-for-like trends in net income; core estate net income up 0.4% in the fourth quarter (-2.4% 52 weeks to 17 August 2013)

n 96% of the core estate let on substantive agreements, up from 94% at August 2012

n 476 core investments completed in the year at an average spend of GBP102k per pub

n Punch Buying Club membership increased to c.90% of the core estate (August 2012: 72%)

n 433 pubs sold for GBP149 million, ahead of book value, at a multiple of 18 times EBITDA

n 116 pubs transferred from the non-core division to the core division from the start of the new financial year

Fourth quarter trading for the 12 weeks to 17 August 2013 was strong, with like-for-like net income in the core estate up 0.4%. This is the third consecutive quarter of improving like-for-like trends and has helped return average net income per pub to growth for the full year across our entire estate.

Significant improvements have been made in the areas of letting, investment, sales and marketing and Partner support, and this is reflected in our recent financial performance.

Progress on delivering our key strategic initiatives

We ended the year with 96% of our core estate pubs let on substantive agreements, ahead of our target of having between 93% and 95% let. The launch of the new Partner recruitment website during the year has helped deliver the increased rate of letting with the result that we remained within or above the 93% to 95% target range throughout the year.

In line with our plan to invest in around two thirds of the core estate of c.2,900 pubs over the next five years, we completed investments in 476 core pubs in the year at an average spend of GBP102k per pub. This investment is transforming the customer offer in these pubs and we are achieving our target returns for these investments.

The new Punch Foundation Tenancy agreement (formerly referred to as "Franchise Tenancy") was launched in the year. Whilst still in the early stages of roll-out, with 48 pubs operating on the new agreement, we have seen a significant increase in sales in these pubs. This new agreement has now been rolled out nationally and a significant proportion of the lettings within the new financial year are expected to be operated on this new agreement.

From the start of the new financial year we have launched a dedicated New Business Development team. This specialist team has been put in place to support all new Partners with their initial investment, the launch of their pub and throughout their first six months of trading. We are confident that the addition of this support to new Partners with a focus on the retail offer to consumers will help drive sales, improve Partner profitability and reduce the level of Partner failures.

Having launched the Punch Buying Club just over three years ago, approximately 90% of our core pubs are now members of the club. Through the Buying Club we have been able to offer a range of industry leading exclusive offers to our Partners which included completion of the roll-out of free Wifi across our estate during the year. We will continue to build on the success of the Buying Club over the next year as we introduce a wider range of products and services for the benefit of our Partners.

Maximising value from non-core assets

During the year we sold 433 pubs (including 60 pubs from the core division), together with other assets for proceeds of GBP149 million, ahead of book value and at a multiple of 18 times EBITDA. Following the improvement in the performance of a number of pubs in the non-core division, 116 pubs have been transferred to the core division with effect from the start of the new financial year. Following this transfer, there were 2,990 pubs in the core division, and 1,106 pubs in the non-core division as at 18 August 2013.

Capital structure review

Punch has continued an extensive process of engagement with a broad range of stakeholders across the capital structure to consider further amendments to the previously announced restructuring proposals. Whilst the process of engagement has taken longer than previously anticipated, the Board considers that a consensual restructuring can be launched in the second half of 2013 and will provide an update on the implementation of the restructuring in due course.

Outlook

Overall profit performance for the financial year which ended on 17 August 2013 was in line with management expectations and previous guidance and we will report underlying EBITDA of between GBP210 million and GBP220 million.

Expectations of future net income growth for the core estate remain unchanged from those previously announced, with management expecting the core estate to return to like-for-like net income growth of up to 1% in the new financial year and between 1% and 2% net income growth in the 2015 financial year, before returning to a long-term net income growth rate of c.2% in the 2016 financial year.

Stephen Billingham, Executive Chairman of Punch Taverns plc, commented:

"We have made excellent progress in implementing operational changes that we expect will deliver further improvements in the underlying performance of the business. Our profit performance for the year has been in line with management expectations. We are encouraged by our first quarter of net income growth since demerger, and we reiterate our previous expectations of net income growth in the core estate for the years ahead."

- Ends -

ENQUIRIES;

 
 Punch Taverns plc                             Tel: 01283 501 948 
 Stephen Billingham, Executive Chairman 
 Steve Dando, Finance Director 
 Brunswick Group LLP                           Tel: 0207 404 5959 
 Jonathan Glass 
  Mike Smith 
 
  Forward-looking statements 
  This announcement may contain 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.

This information is provided by RNS

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END

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