The pub-filling summer sport bonanza can't come soon enough for pubs operator Punch Taverns, which saw half-year profits dragged down by poorly performing pubs it is keen to get shot of.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) sank to £128.3m in the 28 weeks to March 3rd from £138.6m in the corresponding period of the previous year.
Profit before tax, adjusted for exceptional items, tumbled to £33m from £41m the year before, while basis earnings per share slipped to 3.8p from 4.7p at the half-way point of last year.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Revenue dropped to £264.6m from £324.8m, or from £277.3m once the demerged Spirit plc leased business is stripped out.
On the plus side, average net income - defined as revenue minus the cost of drink sales - per pub continued to grow, rising 0.8% year-on-year.
However, on a like-for-like basis, even Punch's core estate - the pubs it is keen to hang on to - saw net income fall 2.1% from the first half of the previous financial year. On average, a pub in Punch's core estate takes £77,000 in net income a year.
Revenue from the core estate of 2,946 boozers totalled £200m, yielding net income of £119m and EBITDA of £113m. The turnaround estate, consisting of 1,844 pubs in need of revamping, or which have been abandoned by their landlords, pitched in with revenue of £65m, net income of £37m and EBITDA of £32m. Average net income for a turnaround pub is only around £38,000 a year.
"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," Punch said.
The group said it remains on track to dispose of between 400 and 500 non-core pubs in the current financial year. After 28 weeks of the year, the company had offloaded 214 boozers which, together with sales of other assets, raised £62m, £4m above the assets' book value.
The disposed of pubs generated just £3.1m of EBITDA over the last 12 months, equating to a disposal multiple of 20 times EBITDA.
The nominal value of net debt at the end of the half year period was £2,203m, a decrease of £61m from the previous year end. The period end cash balance of £216m included £102m of cash held outside the securitisation structures.
"Third quarter trading in 2011 was boosted by exceptional weather and the additional Royal wedding bank holiday. Consequently the third quarter of 2012 is up against strong comparative numbers making trends difficult to interpret," the company statement said.
"Nevertheless, 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 latter half of the year," the statement added.
Share in Punch fell 0.75p to 9.75p in the morning trading session after the interim results were announced.
JH
-
FTSE 100 hits record highs – why is it rising and will we see more gains?Advice UK equities have been described as unloved for a long time but as the FTSE 100 hits new highs, we explain if now is the time to buy British.
-
How to invest in copperIt may be time to invest in copper as the red metal appears poised for a big jump. Dominic Frisby looks at what should investors should buy
