16th Jan 2008 07:01
Punch Taverns PLC16 January 2008 PUNCH TAVERNS PLC ("Punch" or "the Group") Interim Management Statement for the 20 weeks to 5 January 2008 Punch Taverns plc announces its Interim Management Statement for the 20 weeksfrom the start of the financial year on 19 August 2007. Our priority during 2007 was to focus on enhancing the quality of the overallestate. As a result we reduced the size of the estate by 9% with strategicdisposals of just under 1,000 pubs. This strategy has continued into the periodunder review, with a further 16 pubs acquired, 14 sold, and 16 converted frommanaged to leased creating an estate of 8,450 pubs comprising 869 managed pubsand 7,581 leased pubs as at 5 January 2008. In addition we have spent £53million on capital projects in the estate in the period. TRADINGAfter a satisfactory start to the year, trading over the last eight weeks hasbeen more subdued in what has been widely acknowledged as a challenging periodfor the sector, with declining consumer confidence coinciding with the impact ofthe smoking ban in England and Wales. Despite the market conditions, our leased estate delivered a satisfactoryperformance in the first 20 weeks of our financial year to 5 January 2008,demonstrating the resilience of the model, with like for like outlet profitmarginally lower than last year, down 0.8%. Average outlet profit per pub is up10% over the same period last year, reflecting the improved estate quality. In the core managed estate like for like sales have declined by 2.2%, with foodsales having grown by 1.0%. Food sales now account for 39% of total sales inthe managed estate. The change in sales mix, coupled with inflationary costpressures, will impact managed operating margin. It is still too early to evaluate any long term trends following theintroduction of the smoking ban in England and Wales. As anticipated, the banhas impacted trading during the start of the winter period, however we stillhold the view that the smoking ban will have a positive effect on the industryin the medium to long-term. This is being born out in Scotland where the bancame into force in March 2006 and like for like profit in our Scottish leasedestate over the 20 week period has grown by 1.6%. We continue to review all areas of our business to maximise efficiency acrossthe Group and, where possible, to mitigate the challenges we face. Further tothe reorganisation of field and central support teams in 2007 we expect toachieve additional cost savings of c.£10 million in the current financial year. FINANCIAL STRUCTURE Since the year end £51 million of debt has been repaid. The Group currently hasno short term bank borrowings and no longer term financing requirements. All ofthe Group's debt is at effectively fixed rates of interest and amortises overterms extending to 28 years. With interest cover in excess of 2 times EBITDA,significant headroom in our debt covenants and the use of long-term amortisingdebt, the Group has a robust financing structure. We continue to believe that our current business structure provides the bestopportunity for long-term returns for shareholders, although we activelyconsider all opportunities that may add further value and we continue to keepall options under review. OUTLOOK The developments made in our estate over the past two years leave us with one ofthe most robust and high quality pub estates in the UK. This puts us in astrong position to build on the longer term opportunities available to us. Whilst we remain cautious over the short-term outlook for the sector, theenduring popularity and appeal of the local community pub will continue and weremain confident about the long-term prospects for our business. We expect to announce interim results for the first 28 weeks of our financialyear on 24 April 2008. 16 January 2008 There will be an analyst conference call at 0830 this morning. Please contactSuzanne Larkby at College Hill on 020 7457 2066 or [email protected] for dial-in details. ENQUIRIES: Punch Taverns plc Tel: 020 7255 4002 Giles Thorley, Chief Executive Phil Dutton, Finance Director College Hill Tel: 020 7457 2020Justine WarrenMatthew Smallwood This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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