Q4 growth leaves Punch in positive frame of mind

PUBCO Punch Taverns is seeing signs of an improving trading environment after experiencing a strong fourth quarter.

In a trading statement for the 52 weeks to August 17, the Burton-upon-Trent firm revealed like-for-like net income in the core estate is up 0.4%, the third consecutive quarter of improving like-for-like trends.

This has helped return average net income per pub to growth for the full year across the estate.
 
Punch also said significant improvements have been made in the areas of letting, investment, sales and marketing and Partner support.

Average net income per pub was up 1.5% over the 52 weeks
 
Some 96% of the core estate is now let on substantive agreements, up from 94% at August 2012.

And 433 pubs were sold for £149m, ahead of book value.

Punch said it is making progress on delivering its key strategic initiatives.

“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,” it said.
 
“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. 

“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 was launched during the year. Punch says it has 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,” it said.
 
Punch has also launched a 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,” it said. 

“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.”
 
Some 90% of the firm’s core pubs are now members of the Punch Buying 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,” the firm said.

Stephen Billingham, executive chairman of Punch Taverns, said: “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.”

Punch also said it 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 debt 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,” it said.

In June a special committee set up by the Association of British Insurers (ABI) criticised the debt restructuring plans for being too vague.