Pub operator Punch Taverns Plc (PUB.L) announced Wednesday preliminary results for the 52 weeks to August 22, reporting a wider loss for the fiscal that reflected hefty pub impairment charges amid challenging market conditions and significant reduction in consumer confidence, which impacted the level of disposable income available for leisure activities. The company said recent trading continues to be in line with expectations, and anticipates that demand levels are unlikely to improve in the near-term due to the lack of visibility on trading outlook. The company's shares are currently trading down by more than 10% on the London Stock Exchange.
The U.K.-based company's loss before tax widened to GBP 405.7 million from GBP 80.2 million in the previous year. The company recorded a profit before tax and exceptional items of GBP 160.4 million, down from GBP 262.3 million a year ago.
Punch Taverns noted that a number of exceptional items were incurred during the period, resulting in a charge of GBP 290 million. The principal items were GBP 663 million of pub impairment charges, GBP 55 million charge for the mark-to-market of certain interest rate swaps, GBP 246 million gain on the repurchase of securities, GBP 29 million of heavy lease provision, GBP 8 million of reorganization costs and GBP 32 million loss on disposal, mainly related to deemed disposal of goodwill.
Loss for the year attributable to equity holders was GBP 176.4 million or 56.1 pence per share, compared to a loss of GBP 64.7 million or 24.2 pence per share in the prior year. Before exceptional items, profit attributable to equity holders was GBP 113.4 million or 36.1 pence per share, lower than last year's GBP 186 million or 69.4 pence per share.
The company noted that the UK income tax charge/credit has been restated to better reflect the nature of tax items, which had an impact on earnings per share and subsequently the comparatives have been restated.
Revenues for the fiscal declined to GBP 1.44 billion from GBP 1.56 billion in the year earlier.
Punch Taverns operates in two business segments, leased estate and managed estate. Between August 23, 2008 and August 22, 2009, the company said it transferred 21 pubs with a fair value of GBP 24.4 million from the managed to the leased estate.
Revenues from leased estate decreased to GBP 769.5 million from GBP 857.9 million in the prior year. Managed estate reported revenues of GBP 671.5 million, lower than GBP 702.7 million last year.
Operating loss was GBP 272.5 million, compared to an operating profit of GBP 249.5 million in the preceding year.
During the year, the company incurred substantially higher depreciation, amortization and impairment charges amounting to GBP 749.5 million from GBP 357.2 million a year ago. During the 52 weeks, the company recognized impairment losses of GBP 483.4 million in the leased estate and GBP 179.7 million in the managed estate.
Capital expenditure declined to GBP 93 million from GBP 136 million in fiscal 2008.
Punch Taverns's 6,841 leased pubs employ about 50,000 people and 835 managed pubs employ nearly 17,000 people. Over the last few years, the pub industry has faced substantial new regulation, tax and duty increases as well as the effects of the recession, the company noted.
Giles Thorley, chief executive commented, "We are now shaping the business to deliver a return to long-term sustainable growth and value. The trading environment remains challenging and lacks visibility, hence we remain cautious despite the measures undertaken. We are nevertheless confident that the significant progress we are making positions us well for the longer-term opportunities in the sector."
The company said its directors are not proposing the payment of a final dividend.
Separately, Punch Taverns said it has repurchased, in a number of recent market transactions, a total of 5.1% of the original nominal value of the 5% convertible bonds due 2010, which were issued by Punch Taverns (Redwood JerseyCo) Ltd. Following the cancellation these bonds, the company said there will be a nominal value of GBP 44.042 million of the bonds outstanding, which represents 16% of the original nominal value.
PUB.L is currently trading at 103.7 pence, down 12.2 pence or 10.53%, on a volume of 5.49 million shares. In the past 52 weeks, the stock has been trading between 28.75 pence and 192.75 pence on the LSE.
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