Second Quarter Trading Update for the 12 weeks to 2 March 2013
ON TRACK TO MEET OUR FULL YEAR PROFIT EXPECTATIONS
Trading across the quarter has been in line with our expectations despite January trading being adversely impacted by weather. Like-for-like net income showed improvement in the second quarter, being down 3.5% in the core estate compared to a decrease of 5.2% for the first quarter.
We expect that the second half of the year will benefit from the recent improvements we have made in the areas of letting, investment, food development and increased field team support and we remain on track to meet our full year profit expectations.
Progress on delivering our key strategic initiatives
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.
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 invested in 270 core pubs at an average spend of c.£100k per pub. This investment is transforming the customer offer in these pubs and the associated trading uplift is expected in the second half of the year. We also benefited from a shift towards food which is now estimated to make up 25% of Partner revenue across the core estate, up 2.4% pts from March 2012.
We have increased the size of our specialist field team support including the introduction of new franchise management and pub launch management teams. These teams provide dedicated support to help new Partners launch their businesses in the best possible way. 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.
Disposal programme on track
The disposal programme is slightly ahead of our target to realise £105m 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 £55 million, slightly ahead of book value and at a multiple of 18 times EBITDA.
Capital structure review
Since announcing the restructuring proposal on 7 February 2013 we have made positive progress in engaging with the many stakeholders who will need to approve the restructuring proposal.
On the basis of the ongoing dialogue with stakeholders, the Board continues to believe that a consensual restructuring will 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 have strong plans in place to return the core estate to growth in the medium-term. 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 encouraged by the progress we are making in our discussions with stakeholders on our capital restructuring proposal and believe a consensual restructuring can be launched in the first half of 2013.”
– 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
Sophie Brand
Conference call
There will be a conference call for analysts and stakeholders at 9.00am today on:
44 (0) 1452 541 003, Conference ID 22062206.
The title of the call is Punch Taverns Trading Statement.
A replay of the call will be available by calling:
44 (0) 1452 550 000. Access code 22062206#.
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.