Preliminary results for the 52 weeks to 22 August 2016
Performance in line with management expectations and reflects the completion of our strategic disposal programme:
- Higher quality pub estate:
- Average profit per pub1 across the entire estate up 4%; benefiting from the disposal of non-core pubs
- Core estate like-for-like net income2 growth of 1.0%
- Underlying EBITDA of £178 million (August 2015: £196 million); reflecting the impact of £324 million of strategic disposals completed over the last 24 months
- Underlying profit before tax of £53 million (August 2015: £61 million)
- Profit before tax of £60 million (August 2015: loss of £105 million)
Good operational progress:
- Retail division operating ahead of expectations:
- 242 pubs identified to operate under the Retail contract, of which 109 pubs are trading at November 2016 (November 2015: 32 pubs trading)
- Retail contract roll-out plans accelerated to c.150 pubs per year (up from previous guidance of 100–120 pubs per year)
- Under the Retail contract, anticipated pub EBITDA is between £100,000 and £110,000, representing an expected profit uplift of between £15,000 and £25,000 as compared to historical EBITDA under the tenanted and leased model
- Mercury pub division, our smaller drink led pub estate, is on target to deliver like-for-like growth from the end of 2017
- Positive progress in realising additional value from the non-trading parts of our extensive freehold property and land estate, having identified the potential for upwards of £100 million of additional value (not currently recognised in the external property valuation), of which £11 million was realised in the year.
Strengthened balance sheet:
- Nominal net debt3 reduced by £223 million in the year (16% reduction)
- Nominal net debt to underlying EBITDA reduced to 6.6 times (August 2015: 7.2 times)
- Property estate externally valued by GVA at £2,030 million; £848 million in excess of nominal net debt (August 2015: valuation and Matthew Clark investment4 £790 million in excess of nominal net debt)
- Nominal net debt to property valuation reduced to 58% (August 2015: 67%)
- Strategic disposal programme is now complete, having delivered ahead of expectations with net proceeds of £234 million in the year; £75 million above book value
Duncan Garrood, Chief Executive Officer of Punch Taverns plc, commented:
“The business has ended the year with a solid set of results, in line with our expectations, and which reflects the completion of our strategic disposal programme.
We have made good progress towards delivering on the strategy we set out in November 2015. In particular the roll-out of our Retail division is progressing well and we are accelerating the roll-out to c.150 pubs per year.
The new Pubs Code Regulations has resulted in us having to re-market all lets in line with the new regulatory requirements. While this is impacting letting activity in the short-term, our expectations for the longer-term growth prospects for the business remain unchanged.
Punch has a clear plan for the future, a strategy that is progressing well, and a unique operating model that is expected to drive improved performance over the coming years.”
8 November 2016
1 average profit per pub represents underlying EBITDA on the Core and Mercury operating segments (note 2) divided by the average number of pubs held in the year
2 like-for-like net income represents underlying revenue less cost of sales (gross profit), see Performance Summary, for those pubs held for the entirety of both the prior and current year
3 nominal net debt represents the par value of loans less cash balances (note 7)
4 Matthew Clark investment included at net proceeds value of £99 million
Results: Punch Taverns plc Tel:01283 501 948
Duncan Garrood, Chief Executive Officer
Steve Dando, Chief Financial Officer
Media: Brunswick Tel:020 7404 5959
Jonathan Glass, Joe Shipley
A presentation for equity and debt analysts on the full year results will be held today at 9.00am (UK time) at The Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED.
A live web cast and slide presentation of this event will be available on our website, www.punchtavernsplc.com and subsequently available on demand. We recommend you log on at 8.50am.
Inside information and forward-looking statements
This announcement contains inside information.
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.