In its latest trading update, the operator of about 1,250 pubs across England, Wales and Scotland, said total revenue was £233.9m for the three quarters of its 2023 financial year (FY23) compared to £211.3m in the same period of FY22, with the conversion of pubs from its Leased & Tenanted division to its Management Partnerships estate contributing to the increased revenue.
EBITDA (earnings before interest, taxation, depreciation and amortisation) for the period was £57.6m, which was down £0.8m from £58.4m the year before. However, the group said the prior year period results included the benefit of the temporary reduced rate for VAT on food and non-alcoholic drinks, and lower energy costs, with a combined impact of about £3m during the period.
Punch said all three of its divisions (Leased & Tenanted, Management Partnership and Laine) delivered like-for-like sales growth for the 40-week period when compared to the prior year.
£2m more spent on expansion and maintenance
It added £23.6m had been spent on expansionary and maintenance capital during the first three quarters versus £21.6m in the period in the prior year.
During the 12-week period to 21 May 2023 (Q3) total revenue was £75.8m compared to £68.7m in Q3 FY22.
Punch said: “As noted in the previous quarter’s report, having converted 71 pubs from Leased & Tenanted across to the Management Partnership division since August 2021, the rate of pub conversions has slowed down as we take time to select and build the next pipeline of pubs for transformational investment and conversion, taking learnings from the successful conversions we have completed to date.
“The benefit of the EBITDA uplift from these recent conversions is still to be fully realised, and despite the significant increase in energy costs, we still expect to achieve a stabilised return on investment in excess of 20% on these investments.”
Big Smoke venture ended
It continued: “During the quarter, we collapsed the joint venture with Big Smoke Group, which resulted in five pubs transferring across to our Leased & Tenanted division and three pubs being retained in the Management Partnership division. One additional site was also transferred into our Leased & Tenanted division from our Management Partnership division.”
Net proceeds from the sale of properties in the period was £8.4 (same period in FY22: £5.7m), at £1.0m above book value.
Property assets increased by £4.9m in the period to £900.4m (14 August 2022: £895.5m). Punch said the increase in property values largely reflected the purchase of the leased & tenanted pub estate from Young’s Pubs Company in 2021, continued investment in the estate, and a small number of pub acquisitions and disposals.
Some 93% of the pub portfolio is either owned on a freehold or long leasehold (greater than 50 years remaining lease term) basis.