Punch bullish about future after strong results

The rapid growth of the Punch Taverns group was vividly illustrated by its year end results which revealed a 49 per cent increase in yearly turnover to £638m.

With the integration of the 3,115-strong Pubmaster group now complete, Punch is turning its full attention to its strategic review of the 1,064 InnSpired pubs it picked up for £335m earlier this year.

80 individual pubs were also added over this period bringing Punch's total number of leased and tenanted pubs to 8,300.

Aside from the acquisition-driven growth, a clearer marker of core performance was revealed in the figures for the existing Punch estate. This returned a 2.9 per cent increase in turnover and 3.9 per cent increase in like-for-like profits over the previous year.

Punch's chief executive Giles Thorley was bullish about the future saying Punch Taverns could and would continue to grow. "We still have the facility for buying post-InnSpired and will be looking to continue the growth of the estate," he said. "There are other potential big acquisitions which we would certainly look at, including the Spirit pub sell-off, if and when suitable venues come up for sale."

With Punch already behind nearly 14 per cent of pubs in the country the question of a ceiling on growth - and therefore the company's acquisition-driven momentum - becomes increasingly pertinent.

In terms of satisfying competition requirements Thorley claims the estate could still almost double to 15,000 pubs. However, he conceded that 10,000 would be a more realistic figure.

"It will become increasingly difficult to identify and buy groups which won't push us beyond the limits in a given postcode," Thorley admitted. "This means it is likely that we would have to sell an increasing proportion of any group we purchase."

In the immediate future Punch is to focus on a further £50m investment in its existing estates and continue the conversion of the predominantly short-term leases of the Pubmaster pubs to the 10+ years typical of its original Punch estate. Punch Taverns will also continue to rationalise its purchase with ongoing churn at the less profitable end of its estates.