Punch Taverns has posted Interim Results for the 28 weeks to 4 March 2017.
The company stated that shareholders had approved the sale of the Group to Vine Acquisitions Limited on 10 February 2017 for 180 pence per share. Completion of the sale is expected (subject to competition conditions) before the end of August 2017.
For the period, like-for-like net-income declined by 1.2% in the leased and tenanted estate, including the Mercury division (H1 2016: 0.7% growth), but was flat after adjusting for the impact of the previously flagged temporary slow-down in letting activity.
Underlying adjusted EBITDA stood at £88m (H1 2016: £94m), reflecting the impact of £53m of disposals completed over the last 12 months.
The firm increased pub investment with £41m of total capital expenditure (H1 2016: £25m), supporting the roll-out of the Retail division.
Punch has doubled the size of the Retail pub division since the August 2016 year end, with 171 pubs open and trading as at April 2017 (August 2016: 85 pubs).
The group has launched a new innovative operating agreement, designed to be a simpler version of the Falcon Retail contract, targeted towards smaller drinks led pubs. It opened the first pub under this new agreement in April 2017.
Recent market uncertainty resulting from the sale of the Group has impacted letting activity, together with the previously reported impact of the new Pubs Code Regulations. Consequently, Punch now expects it to take up to 12 months to return to its long-term target of having a core estate of 93%-95% let on substantive agreements.
The firm has continued to progress with the Mercury pub division (management of lower profitability sites under a reduced cost operating model), on-track to deliver like-for-like net income growth in this division from the end of 2017.
Punch is growing the commercial free-of-tie lease division with 57 pubs in operation with an average rent of £71k.
Duncan Garrood, Chief Executive Officer, commented, “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 which is now expected to complete before the end of August 2017.”