Punch Taverns PLC Regulatory News (PUB)

PUNCH TAVERNS PLC

Interim Management Statement for the 12 weeks to 3 March 2012

ON TARGET TO MEET OUR FULL YEAR PROFIT EXPECTATIONS

Trading summary

·; Growth in average net income per pub across the full estate of 0.8%

·; Regionally mixed, stronger performance in the South of England

·; Core estate: Like-for-like net income -2.9% (-2.1% 28 weeks to 3 March 2012)

·; Disposal proceeds of £62 million, slightly ahead of book value

·; Non-core estate: Like-for-like net income -10.2% (-9.7% 28 weeks to 3 March 2012)

Average net income per pub across the full estate of 4,790 pubs increased by 0.8% over the half year, benefiting from the ongoing disposal of non-core assets.

Core estate

Like-for-like net income in our core estate of 2,946 pubs declined by 2.9% in the quarter (down 2.1% for the half year), impacted by softer trading after Christmas, with weaker beer volumes in the months of January and February.

The vast majority of the estate continues to perform strongly, with pubs on full substantive agreements showing growth in net income over the half year period. Within this, trading in the South of England remains robust and continues to outperform the rest of the UK.

The decline in net income continues to be driven by pubs which have been returned to us after failing and are currently under temporary management. The level of pub failures remains in line with last year and the majority of these pubs will receive investment to reposition their offering in their local marketplace and are currently in the process of being re-let on full substantive agreements.

Maximising value from non-core assets

We remain on track to dispose of between 400 and 500 non-core pubs for the full year. During the first 28 weeks of the financial year we sold 214 pubs, together with other assets for proceeds of £62 million, slightly ahead of book value.  The disposed pubs generated just £3.1 million of EBITDA over the last 12 months, equating to a disposal multiple of 20x, demonstrating the accretive nature of these disposals.

While these non-core pubs remain in our portfolio, we remain committed to driving operating performance and maximising the profits from these outlets. Net income in non-core pubs on substantive agreements is stable with all the decline coming from non-substantive pubs in the process of disposal.

Capital structure

As announced at the time of our Q1 Interim Management Statement, we are considering a broad range of options with a view to optimising our capital structure and to facilitate our plan to downsize the estate effectively. This review is ongoing and, accordingly, we will engage in a dialogue with all stakeholders at the appropriate time.

Whilst evaluating these options, we continued to provide financial support to the securitisations (Punch A and Punch B) during the quarter. Without this support the DSCR's (Debt Service Cover Ratio) would have remained below their respective financial covenant levels.

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

"Punch has a clear operational plan to return the core estate to growth in the medium-term and extract maximum value from our non-core assets.

Profitability in the first 28 weeks of the financial year has been broadly in line with management expectations. While we remain cautious on the near-term consumer environment, we have strong plans in place and expect to benefit from the Queen's Diamond Jubilee, the UEFA European football championship and the Olympic Games in the second half of the year. In the current difficult climate we have worked hard to contain costs and as a result we remain on track to meet our full year profit expectations."

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