LONDON (Alliance News) - Pub operator Punch Taverns PLC Wednesday said its swung to a huge loss in its last financial year because of the booking of almost GBP309 million in exceptional costs largely associated with its recent debt restructuring.
On an underlying basis, the company's pretax profit increased to GBP68.6 million for the year ended August 23, up from GBP48.6 million a year earlier.
However, on a reported basis, having booked GBP308.8 million in exceptional charges during the year, compared with only GBP32 million the year before, it swung to a pretax loss of GBP240.2 million, from a GBP16.6 million profit the prior year.
Those charges, it said, related to impairment losses, its recent capital restructuring, and more than GBP214 million from the recycling of hedge reserve relating to the Punch A interest rate swaps following its restructuring. It said it also increased investment in pub repair spend and increased costs associated with partner training.
Revenue declined by 2% to GBP448.1 million, from GBP457.6 million last year, as both drink revenue and rental income fell.
Last month, the pub operator finally completed its debt restructuring, including the resetting of its financial covenants. The company had ran up a debt pile of several billion pounds through an expansion spree, but was then hit hard when the financial crisis and ensuing economic downturn weighed on its trading. It also was hit by structural changes to the industry, such as a ban on smoking in pubs and a general fall in the number of drinkers going to pubs and bars.
"We believe that the capital restructuring completed last month creates a robust and sustainable debt structure, providing stability to the business that will lead to further deleveraging through strong cash generation," said Executive Chairman Stephen Billingham in a statement, "We can now focus on improving our business through investment in our pubs," he added.
During the last financial year, Punch Taverns returned its core pub estate to like-for-like growth, with net income up 1.3%. Meanwhile, the group continued with its pubs disposal programme in its non-core estate, having disposed of a total of 285 pubs right across its estate. Its core pubs estate consists of 2,925 pubs, with 884 pubs in its non-core estate.
"We have also made a positive start to the new financial year with the core estate in like-for-like net income growth of 0.8% and have realised GBP43 million of proceeds from the sale of non-core and gold-brick sites," said Billingham.
Punch Taverns shares were down 0.9% at 147.40 pence Wednesday morning.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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