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Wed 22nd Apr 2015 - Punch Taverns reports 54% rise in First Half profit
Punch Taverns reports 54% rise in First Half profit: Punch Taverns has reported Ebitda of £105 million (2014: £108 million) in the 28 weeks to 7 March, in line with expectations. It has reiterated full year underlying Ebitda guidance of between £193 million and £200 million. Profit before tax rose 54% to £30.4m. Its core estate (2,894 pubs producing net income of £74,000 per annum each out of a total of 3,653) accounted for 90% of outlet Ebitda and saw like-for-like net income growth of 0.5%. Its disposal programme is ahead of target with £57 million of proceeds – full year guidance has been revised up to £80 million. Its £600m reduction in net debt, which took place in October last year, has seen leverage reduced to 7.3 times (August 2014: 9.5 times). It now has £1.5 billion of securitised debt, secured against largely freehold pub estate valued during August 2014 at £2.1 billion. Net debt has reduced by £53 million since the 8 October capital restructuring and it is on track to meet £200 million deleveraging target over next three years. It reported actions have already begun to provide a more flexible business model in light of the anticipated introduction of the Market Rent Only option (MRO) in 2016. The company made a capital investment of £22m in the period, which is 23% below last year and slightly below its target “reflecting the uncertainty create by MRO provisions”. Matthew Clark, its 50% joint venture with Accolade, performed strongly in the period delivering a post-tax contribution to Punch of £3.9 million for the half year (March 2014: £2.7 million). Punch received a dividend of £6.0 million in the period from Matthew Clark. Stephen Billingham, executive chairman of Punch, said: “We have delivered profits for the half year in line with our expectations and are on track to meet full year underlying Ebitda guidance of between £193 million and £200 million. Group debt has materially reduced following the completion of the capital restructuring on 8 October 2014 and we have delivered strong cash flow generation during the first half. All of our debt is long-term securitised debt with no short-term bank debt and we have a clear path to further debt reduction. I am delighted that Duncan Garrood will be joining Punch as Chief Executive Officer in June. Duncan is joining an experienced management team and Duncan’s retail and franchise background will be of great value to Punch’s future development.” Numis Securities leisure analyst Douglas Jack, issuing a ‘Buy’ note with a target price of 160p, said: “In our view, re-rating risk from 8.5x EV/Ebitda (Enterprise Inns: 9.8x) is on the upside, particularly if Punch can negate any risks relating to the MRO through: developing a managed estate; trialing franchises; encouraging free-of-tie pricing; and potentially selling free-of-tie pubs into a possible Enterprise Inns’ REIT.”

Tesco reports £7bn of one-off charges: Tesco has reported £7bn of one-off charges to produce a loss of £6.376bn in the 53 weeks ended 28 February. It reported a £1.4bn Group trading profit, in line with expectations before one-off charges. UK like-for-like sales volumes were up for first time in over four years, driven by better availability, service and pricing; like-for-like sales performance improved to (1.0)% in Q4. However, there was a “significant reduction” in UK trading profit, as previously announced. It saw tough trading conditions overseas, especially in Korea and a disappointing performance in Europe. The £7bn in one-off charges, include a £4.7bn fixed asset impairment, reflecting challenging industry conditions and profit decline. A pension deficit funding plan has been agreed with trustee, comprising cash contributions of £270m per annum. Chief executive Dave Lewis said: “It has been a very difficult year for Tesco. The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years. We have faced into this reality, sought to draw a line under the past and begun to rebuild, and already we are beginning to see early encouraging signs from what we’ve done so far. Over the last six months we have put customers back at the centre of everything we do. By focusing on the fundamentals of availability, service and targeted price reductions, we have seen a steady increase in footfall, transactions and, most significantly, volumes. More customers are buying more things at Tesco. We are making deep changes to the way we organise and run our business, with a simpler, more agile office team, more colleagues serving customers and a new approach to the way we work with suppliers. I do not underestimate how difficult some of these changes have been for the team and I thank everyone for their professionalism and contribution at this time of great change. The market is still challenging and we are not expecting any let up in the months ahead. When you add to this the fundamental changes we are making to our business and our offer, it is likely to lead to an increased level of volatility in short-term performance. Our clear priority – and the one that will deliver sustainable value for our shareholders – is to improve consistently for customers. The changes we have made and will continue to make put us in a stronger position to do this.”

Vianet reports trading in line with forecasts: Vianet Group, the provider of real time monitoring systems and data management services for the leisure, vending, and forecourt services sectors, has reported trading for the second half of the year to 31 March has been satisfactory as anticipated and, as a result, the Group’s full year profits will be broadly in line with market expectations and ahead of last year’s outturn of £3.048 million. The group’s UK core beer flow monitoring operations has maintained its contribution despite continuing uncertainty around the government’s proposed Statutory Code for pub companies as well as ongoing pub closures. Against this solid background, the Board expects to be in a position to recommend to shareholders that the final dividend for the year ended 31 March 2015 be maintained at 4.0 pence. James Dickson, chairman, said: “Against a backdrop of ongoing pub closures and increased investment in the USA, the Group has delivered year-on-year growth. Importantly, there has been solid overall progress across the business and prospects are encouraging, particularly for telemetry solutions for the coffee vending market. Given the Group’s prospects and continued investment, the Board is confident that growth will continue through the remainder of the current financial year.”

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