Half-year figures from Punch Taverns (PUB) confirmed that the pub operator still faces plenty of challenges. Strip-out profit attributable to bondholders and underlying pre-tax profit fell to £20m from £26m a year earlier, while restructuring costs, property sell-offs and impairment charges made for a hefty reported loss. Crucially, the group continues to tackle its huge debt burden.
Punch disposed of another 140 pubs from its non-core estate, for £51m, but it still has a further 1,000 to offload. While progress is evident, however, it's unlikely to mean much to the group's bondholders, currently wrangling to find a solution to the crippling debt pile. That debt - which was built up more than a decade ago - is now structured in 16 tranches across two securitisations (Punch A and Punch B) and held by multiple creditors.
Indeed, Punch said it breached a debt covenant relating to Punch A during the quarter ended 1 March and management is convening a meeting on 29 April to seek covenant waivers from the noteholders of the two securitisations. End-June will signal time for a final decision on a possible restructuring but, assuming an agreement is reached, executive chairman Stephen Billingham says re-investment in the core properties will continue.
Broker Numis Securities expects full-year EPS of 5.3p (from 5.7p in 2013).
PUNCH TAVERNS (PUB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 13p | MARKET VALUE: | £87m | |
| TOUCH: | 12-13p | 12-MONTH HIGH: | 17p | LOW: 9p |
| DIVIDEND YIELD: | na | PE RATIO: | na | |
| NET ASSET VALUE: | 49p* | NET DEBT: | £2bn | |
| Half-year to 1 March | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 243 | -16.7 | -2 | nil |
| 2014 | 234 | -175 | -18 | nil |
| % change | -4 | - | - | - |
Ex-div: - Payment: - *Includes intangible assets of £175m, or 26p a share | ||||
