Punch Taverns PLC Regulatory News (PUB)

PUNCH TAVERNS PLC

Interim Management Statement for the 16 weeks to 8 December 2012

Profit performance in line with management expectations

Average profit per pub is stable and overall profit performance is in line with management expectations. We have achieved this despite the challenging market conditions which continued during the first quarter.

Whilst the average quality of the estate is expected to improve as we sell non-core assets, the core estate net income is expected to decline in the current financial year in line with that experienced last year as we rebalance rents in the short-term, with a return to growth expected in the next financial year. Trading comparatives are much more challenging in the first half of this year and given this, net income in the core estate is down 5% on a like-for-like basis, in line with management expectations. Trading comparatives are expected to improve in the second half of the year when the business will also benefit from the recent improvements in letting and investment activity.

Progress on delivering our key strategic initiatives

We ended the second half of last year with record levels of letting and investment activity and this increased level of activity has continued into the new financial year.

The percentage of core pubs on substantive agreements is strong at 94% and we are seeing healthy levels of interest from new applicants, supported by the recent launch of our new recruitment website. The level of pub failures remains in line with last year, leaving 176 core pubs (6%) available for letting of which 70 have new partners in place awaiting legal completion.

We are committed to improving on the level of support we provide to our Partners.  We continue to build on the popularity of the Punch Buying Club with 53% of our drinks orders now placed online, up from 25% in December 2011. We recently completed our 2012 roadshows, the largest in the sector and our most successful to date, surpassing previous record attendance with 53% of our Partners attending, bringing together a wide range of suppliers of drinks, food, services and expertise, all to help our Partners build their businesses.

We are rolling out nationally our new Punch Franchise Tenancy agreement for our community local pubs aimed at new entrants to the sector. We have increased the size of specialist field teams in the areas of investment, marketing and food development. The roll-out of free WiFi across our pub estate has been well received with over 1,500 Partners having already signed up for this offer. At the same time as increasing our specialist field team support, we have made further head office efficiencies, as we continue to focus on cost reduction as the size of the non-core estate reduces.

Disposal programme on track

The non-core estate disposal programme remains on track. Since commencing this programme in 2011 we have realised proceeds of £193 million from 758 pub disposals, slightly ahead of book value. We expect to sell c.400 non-core pubs in the current financial year, having disposed of 86 pubs in the current quarter (including 11 pubs from the core estate) for proceeds of £26 million.

Capital structure review

As reported at the time of our full year results announcement in October, the Board has completed a detailed review of the Group's capital structure, and we are now progressing discussions towards a financial restructuring of the business.

Our current discussions with certain major shareholders and other significant stakeholders remain ongoing and, following the completion of a noteholder identification exercise, will be extended to include noteholders in both the Punch A and Punch B securitisations.

On the basis of the dialogue with stakeholders to date, the Board continues to believe that a restructuring can be successfully implemented.

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

"Our performance in the first sixteen weeks of the financial year has been in line with management expectations. While the UK consumer environment is likely to remain challenging for at least the near-term, we continue to make good progress with our clear operational plan to return the core estate to growth in the medium-term and extract maximum value from our non-core assets."

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