Crawling out from under its massive pile of debt was never going to be easy for pub group, Punch Taverns (PUB). If February's restructuring plans - to tackle debt securitisation - isn't successful, then management has warned that Punch could even breach its financial covenants.
Cash payments to service that debt reached £7m in the half-year, but the full-year figure is expected to significantly exceed last year's £21m payment. Meeting that demand could prove challenging as income from the core estate of 2,912 pubs, which generates 80 per cent of cash profits, is expected to decline by 3 to 4 per cent for the full-year. Second quarter like-for-like net income fell 3.5 per cent, although this was an improvement on the 5 per cent fall in the first quarter. Overall, cash profit fell 12 per cent to £113m and the group reported a headline pre-tax loss because of an additional £39m of finance costs from the restructuring scheme.
On a brighter note, Punch is sprucing-up its core estate and is improving the food offering. It also sold 164 pubs for £55m - slightly ahead of book value - and is on target to raise £105m by year-end. Numis Securities expects full-year pre-tax profit of £48.2m, giving EPS of 5.4p (from 7.2p in 2012).
| PUNCH TAVERNS (PUB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 11.8p | MARKET VALUE: | £78.5m | |
| TOUCH: | 11.3-11.8p | 12-MONTH HIGH: | 15.8p | LOW: 5.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | 6 | |
| NET ASSET VALUE: | 33p* | NET DEBT: | £2.48bn | |
| Half-year to 2 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 265 | 30.0 | 3.70 | nil |
| 2013 | 243 | 16.7 | 2.00 | nil |
| % change | -8 | - | - | - |
*Includes intangible assets of £179m, or 27p a share | ||||
