Punch Taverns plc Interim Management Statement

PUNCH TAVERNS PLC

Interim Management Statement for the 12 weeks to 26 May 2012

Trading summary

·; On target to meet our full year profit expectations

·; As anticipated, third quarter trading was impacted by weather and the timing of bank holidays

·; Core estate: Like-for-like net income -6.4% (-3.4% 40 weeks to 26 May 2012)

·; Disposal proceeds of £95 million, ahead of book value

·; Average net income per pub across the full estate of 4,655 pubs was broadly flat over the 40 weeks to 26 May, benefiting from the ongoing disposal of non-core assets.

Core estate (2,942 pubs)

As previously stated, third quarter trading in 2011 benefited from exceptionally good weather and the additional Royal Wedding bank holiday. Consequently this represented strong comparatives for trading in the third quarter of 2012 which was itself negatively impacted by having the wettest April on record this year.

Market statistics confirm a sharp decline in beer sales during this period and this is reflected in Punch sales, resulting in a decline in like-for-like net income of 6.4% in the quarter (down 3.4% for the 40 weeks to 26 May 2012).

Punch licensees are working hard in difficult trading conditions and pub failure levels remain in line with last year. Despite the impact of weather on recent comparatives, underlying performance in the business is robust with like-for-like net income in pubs on full substantive agreements down just 1% over the 40 weeks to 26 May 2012.

In contrast to the third quarter, we have already seen an uplift in sales in the first four weeks of the fourth quarter, which included the Queen's Diamond Jubilee weekend and the start of the UEFA European football championship.

In these challenging market conditions our team has focused heavily on strong control of our cost base and we therefore remain confident of meeting management's full year profit expectations.

Maximising value from non-core assets (1,713 pubs)

We also remain on track to dispose of between 400 and 500 non-core pubs for the full year. During the first 40 weeks of this financial year we sold 349 pubs together with other assets for net proceeds of £95 million.  The disposed pubs generated just £5.1 million of EBITDA over the last 12 months equating to a disposal multiple of 19x, which demonstrates the accretive nature of these sales.

Capital structure

Since the announcement of our interim results, we have continued to develop a broad range of options to optimise our capital structure. Whilst evaluating these options, we have continued to provide financial support to both the Punch A and Punch B securitisations. Without this support the DSCRs (Debt Service Cover Ratio) for both the Punch A and Punch B securitisations would have been below their respective financial covenant levels.

Roger Whiteside, Chief Executive Officer of Punch Taverns plc, commented:

"Having worked hard to contain costs, we remain on track to meet management's full year profit expectations. Our anticipation of a difficult third quarter, because of strong comparatives last year, has been compounded by the exceptional wet weather this year. Encouragingly, we have made a good start to our fourth quarter and notwithstanding recent difficult market conditions, the underlying business remains robust.

We have a clear operational plan to return the core estate to growth in the medium-term and we remain on-track to maximise value from our non-core assets."

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