Punch Taverns, which recently demerged a number of better-performing pubs, produced a good set of inaugural preliminary results in its slimmed down form. However, significant obstacles to creating value for shareholders remain and signs of likely consumer retrenchment as we move into 2012 are worrying.
The most encouraging news from the results regarded the group’s property assets, which is where many bullish analysts believe potential value for shareholders lies. The £108m of sale proceeds in the financial year was £3m above book value. What’s more the group had its estate revalued at £2.83bn compared with a book value of £2.67bn. The estate also continues to make grinding progress on the trading front with like-for-like net income in the core estate falling 2.1 per cent compared with a 5.1 per cent decline in the prior year.
However, group still faces significant headwinds as it needs to renegotiate covenants with lenders; is having to use its £113m of unrestricted cash to support loans; and consumer retrenchment and cost inflation have the potential to hit pub performance and pub values.
Numis Securities forecasts current year underlying EPS of 6.7p (2011: 8.6p).
| Punch Taverns (PUB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 10p | MARKET VALUE: | £66m | |
| TOUCH: | 9.8-10p | 12-MONTH HIGH: | 17.81p | LOW: 8.76p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE:* | 30.6p | NET DEBT: | £2.6bn | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 653 | -130 | -25 | nil |
| 2011 | 607 | -335 | -135 | nil |
| % change | -7 | - | - | - |
*Includes intangible items of £183m, or 27.8p per share | ||||
