Pubco reveals big losses ahead of £400m sale

Staffordshire pubco Punch Taverns has revealed a half year pre-tax loss of £174m ahead of the £402m sale of the business later this year.

The losses compare with a profit of £55m this time last year.

Shareholders approved the sale of the group to Vine Acquisitions in February on the basis of an offer of 180 pence per share, a price which values the business at £402.7m.

Heineken and Patron Capital, using Vine Acquisitions as an SPV, have agreed the deal, which will see them acquire the entire and to be issued share capital of the Burton-upon-Trent company.

Immediately on completion of the deal, Heineken will acquire from Patron a portfolio of around 1,900 Punch pubs with Patron retaining an additional 1,329 which it will run itself.

Completion of the sale is expected (subject to competition conditions) before the end of August 2017.

In its last set of interim results before the takeover, Punch said the interims included £198m of non-underlying charges, principally due to the write-down in goodwill and assets following shareholder approval of the sale.

It also said a £53m disposals programme had impacted half-year revenues, with EBITDA for the 28 weeks ended March 4, 2017 at £88.4m (H1 2016: £94m).

There was a like-for-like net-income decline of 1.2% in its leased and tenanted estate, including the Mercury division, which contrasted with growth of 0.7% this time last year.

Despite this, it said progress had been made in reducing interest costs with the £65m early repayment of junior notes in November 2016.

The business also benefited from strong liquidity, with £131m of cash on the balance sheet, no short-term bank debt and low scheduled amortisation at c.£36m per year until 2021.

There was also increased pub investment, with £41m capital expenditure being committed (H1 2016: £25m). This it said, supported the roll-out of its Retail division.

Duncan Garrood, CEO, Punch Taverns, said: “During the period, we have doubled the size of our Retail estate and continue to innovate our operating agreements.  This has been achieved whilst managing through a period of significant change, ahead of the sale of the group.”