Punch writes off 663m of its pub estate
Debt-laden pubs firm Punch Taverns yesterday said its annual losses had jumped to £406m after it wrote down the value of its estate by £663m.
Punch, which own over 7,600 pubs, said its pre-tax profit for the year to 22 August fell 39 per cent to £160m compared with £262m the year before.
Following the writedown, Punch said the value of its pub assets and investments had been revised down to £5.4bn, equivalent to a net asset value of 260p per share.
Punch, the second-biggest leased and managed pubs operator in Britain, said it had taken an impairment charge on the value of struggling pubs.
It said the pubs were unlikely to grow in the long term and that their profitability had been significantly affected by market conditions.
Punch said it reduced net debt by over £1bn to £3.47bn over the financial year, easing concerns over its long-term future.
It has embarked on a programme of selling underperforming pubs and buying back bonds in order to reduce its borrowings. The group has disposed of 800 pubs so far.
It has also raised £375m through a share issue and suspended its dividend payments.
“Punch’s debt reduction has been impressive,” said Astaire Securities analyst Mark Brumby.
Chief executive Giles Thorley said the group raised £414m through disposals last year and anticipates raising another £200m in the current year. The group said sales had fallen by eight per cent to £1.44bn.
FAST FACTS PUNCH TAVERNS
&9679; Punch Taverns is the UK’s second largest leased and managed pubs operator
&9679; It has struggled to cope with its £4bn of debts
&9679; Punch has sold around 800 pubs and raised £375m to reduce its debt burden