Punch ploughs ahead with restructuring plans as year profit set to meet expectations

For the 52 weeks to 17 August 2013, the Staffordshire-based company saw average income per pub rise by 1.5 per cent, with fourth-quarter trading particularly strong – like-for-like income in the core estate was up 0.4 per cent in the last 12 weeks.

"We have made excellent progress in implementing operational changes that we expect will deliver further improvements in the underlying performance of the business,” said the executive chairman of Punch Taverns, Stephen Billingham.

“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."

During the 12-month period, Punch offloaded 433 pubs for a total of £149m as the business continues to downsize its estate. From the start of the new financial year, 116 pubs have been transferred from the non-core division to the core division. It now has 2,990 pubs in its core division, and 1,106 in its non-core division.

“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 £102k per pub,” read today’s statement. “This investment is transforming the customer offer in these pubs and we are achieving our target returns for these investments.”

Business restructuring​

With regards to the restructuring of the business, Punch last year announced that it was in talks to identify ways to restructure the business,​​ with a view to potentially changing the two securitisations, or pooled debt financial instruments, which fund the business.

It then confirmed it had identified two possible solutions - one for each securitisation - which it was discussing with stakeholders and hoping to implement 'without delay'. The options on the table include using cash to cancel some of the debt held by one of the securitisations and changing the terms of the second, as well as putting off certain payments in order to prepare for a future deleveraging, or debt reduction process.

The two options will lead to a £463m reduction in debt payments over the next five years and a £229m immediate reduction in debt in one of the two securitisations.

In today's financial statement, Punch said it had 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.

The company added: “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.”

Overall profit performance for the year was in line with management expectations, with Punch expecting to report underlying EBITDA of between £210m and £220m.