Punch Taverns has released its Year End Trading Statement for the 52 weeks to 22 August 2015 showing full year profits in line with management expectations, with overall profit performance for the year in line with management expectations and previous guidance. Punch expects to report underlying EBITDA of between £193 million and £200 million.
Douglas Jack of Numis promptly issued an upgrade note:
“2015E trading and disposals are ahead of our expectations, with core estate LFL net income up 0.3% and average profits up 4%. We are upgrading our 2015E PBT forecast by 5% to £60m, from £57m. We would Buy the shares, which we believe are undervalued, with further possible positive catalysts ahead. We are increasing our target price to 180p, from 160p.”
Highlights
- Positive like-for-like trends in net income; core estate net income up 0.3%;
- Disposal proceeds ahead of guidance at £89 million, above book value and at a multiple of 26 times EBITDA;
- Further reduction in nominal net debt; down £513 million in the year and down by £102 million since the October 2014 refinancing to £1,406 million;
- Property estate externally valued at £2,097 million; £691 million in excess of nominal net debt;
- Exchanged contracts with NewRiver Retail for the disposal of 158 non-core pubs for £53.5 million (average of c.£340,000 per pub); disposal expected to complete on 11 September 2015;
- Higher quality pub estate; average profit per pub up c.4% benefiting from the disposal of non-core pubs; the core estate is now expected to generate c.95% of pub EBITDA in the 2016 financial year.
Duncan Garrood, Chief Executive Officer of Punch Taverns plc, commented:
“The business has ended the year with a solid set of results, in line with our expectations. The business has clear plans for further debt reduction and will benefit from being able to focus more resources on the higher quality core pub estate.
“Since joining Punch on 15 June I am excited by the opportunities I see in the business. I look forward to updating the market on our plans when we present our full set of results on 12 November.”