The painfully large annual loss reported by pub operator Punch (PUB) is hardly surprising, reflecting a raft of exceptional items such as capital restructuring costs and asset writedowns. Yet cash profit actually fell just 5 per cent to £205m. And, crucially, a capital restructuring programme was voted through in October - since the period under review ended - which cut the net debt burden by almost £0.6bn to £1.5bn.
The deal involved a debt-for-equity swap which, admittedly, meant significant equity dilution for existing shareholders: Punch's bondholders now hold around 85 per cent of the group. But it does leave Punch on a firmer footing, and broker Numis Securities expects the debt burden to fall by a further £80m in the coming year.
Meanwhile, like-for-like net income at the group's more profitable core estate rose 1.3 per cent. Trading should also be supported by a major investment programme: £43m was invested in the period. The disposal programme at the less profitable non-core estate is on track, too. Management raised £111m in the period by selling 285 pubs, and disposal proceeds are expected to be at least £60m in the current financial year.
Numis expects adjusted pre-tax profit of £60.5m for 2015, giving EPS of 23.8p (from £38.7m and 91.7p in 2014).
PUNCH TAVERNS (PUB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 146p | MARKET VALUE: | £324m | |
| TOUCH: | 146-148p | 12-MONTH HIGH: | 340p | LOW: 122p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 123p | NET DEBT: | £2.1bn** | |
| Year to 23 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)† | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 653 | -130 | -500 | nil |
| 2011 | 607 | -335 | -2,696 | nil |
| 2012 | 492 | 52.4 | 154 | nil |
| 2013 | 458 | 16.6 | 62 | nil |
| 2014 | 448 | -240 | -526 | nil |
| % change | -2 | - | - | - |
*Includes intangible assets of £173m, or 78p a share †Adjusted for one-for-20 share consolidation **Prior to October's 2014's debt-for-equity swap | ||||
