Uncertainty surrounding Punch Taverns' (PUB) sale to Heineken - coupled with the impact of regulation-led change to its business model - hurt letting activity in the first half, pushing the group into a pre-tax loss. Although shareholders approved the deal in February, the owner of the UK's second-largest pub estate has faced concerns from landlords that the deal could affect which beer and cider options they could serve - although the company has rebuffed this.
Together with the introduction of the Pubs Code, this market uncertainty has pushed back by 12 months the target to get 93-95 per cent of the core estate on substantive letting agreements. The Pubs Code broke the so-called 'beer tie', whereby certain pubs had to order drinks directly from their parent company.
Adjusted earnings before interest, tax, depreciation and amortisation slipped to £88m from £94m in the same period last year, reflecting £53m of pub disposals. But out of its total estate of 3,227, the group doubled the size of its retail division to 171 pubs. These are operated under its Falcon Retail Contract, through which the retailer is paid a portion of the retail sales, from which it pays staff. A similar, new 'front of house' agreement was launched, which relieves smaller pubs that are more drinks-focused of a number of management duties, allowing for faster rollout.
| PUNCH TAVERNS (PUB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 175p | MARKET VALUE: | £389m | |
| TOUCH: | 175-178p | 12-MONTH HIGH: | 200p | LOW: 84p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 273p | NET DEBT: | 78% | |
| Half-year to 4 March | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016* | 213 | 55 | 26.3 | nil |
| 2017 | 217 | -175 | -82.4 | nil |
| % change | +2 | -419 | -413 | - |
Ex-div: na Payment: na | ||||
