With even the Chancellor of the Exchequer waking up to the social merits of the traditional British boozer, Punch Taverns (LON:PUB) gave another boost to the pubs trade with a well-received set of interim results.
The debt-burdened group, criticised prior to the credit crunch for being more of a property group than a pubs operator, is making a decent fist of catering to the drinking and dining habits of Britons, despite the best efforts of the British weather to discourage popping down to the local.
In its core estate, like-for-like (LFL) income in its core estate is still declining year-on-year, only not so quickly. In the second quarter of the group’s fiscal year LFL net income was down 3.5%, representing a notable improvement on the first quarter decline of 5.2%.
Management currently expects the core estate to return to growth of between 0% and 1% in the next financial year. The core estate is expected to deliver like-for-like growth in net income of between 1% and 2% in the 2015 financial year before returning to a long-term growth rate of around 2% in the 2016 financial year.
Underlying financial performance in the 28 weeks to March 2 was in line with management expectations, and the company said it is on track to meet full year expectations of underlying earnings (EBITDA) of between £210mln and £220mln. EBITDA, excluding non-underlying items, in the first half of the financial year, was £117mln, down from £128.3mln the year before.
Half-year revenue eased to £243.3mln from £264.6mln the year before, in part reflecting the group’s attempts to reduce its debt burden by selling off pubs.
Underlying profit before tax, which excludes exceptional items, tumbled to £26.2mln from £33.3mln at the halfway point last year; with exceptional items included the interim profit turned to a loss of £16.7mln, versus a reported profit the preceding year of £30.2mln.
Net debt at March 2 stood at £2,483.1mln, a modest improvement on net debt of £2,555.7mln a year earlier. As bar tabs go, that one is of Oliver Reed proportions, but plans are afoot to address this.
“We are progressing with our discussions with stakeholders on our capital restructuring and while discussions remain ongoing, we continue to believe a consensual restructuring can be launched in the first half of 2013,” said Stephen Billingham, executive chairman of Punch Taverns.
Shares were up 10.6% at 11.75p in mid-morning trading.