The difference in trading performance between pubs in Punch Taverns' core estate and those in its non-core estate clearly demonstrates why the pubs group is so keen to get shot of the latter.
In the 16 weeks to December 10th, pubs in the core estate saw like-for-like (LFL) net income dip 1.5% from the same period of 2010, while net income in the non-core estate was down 10.4% on a LFL basis.
The good news for the debt-laden company, however, is that the rate of decline in LFL net income is clearly slowing; in the last financial year (52 weeks to August), the core estate saw a 2.1% fall in LFL net income, while the non-core pubs saw a 13% LFL slide in net income last year.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
As a result of the group getting shot of a wodge of under-performing pubs, the average net income per pub across the full estate rose 1.3% during the latest period from a year earlier.
Latest Videos FromMoneyWeek
Disposal proceeds from the 116 pubs sold during the quarter reached £31m, slightly ahead of book value, as the firm tackles its £3bn debt.
Despite the performance of pubs in the core estate still lagging behind last year's levels, pubs in the south of the UK continued to fare well, showing a growth in like-for-like net income, which helped offset declines in the north of the UK.
The percentage of pubs on substantive agreements - a deal whereby Punch provides additional support to its leased partners - remains at 95%, and the firm is seeing healthy levels of interest from new applicants. The number of closed pubs in the core estate remains very low at just 11 and less than 2% of its estate is on tenancy-at-will agreements - a flexible contract for renting commercial property.
Chief Executive Officer Roger Whiteside said: "Trading in the first sixteen weeks of the financial year has been broadly in line with management expectations.
"While the UK consumer environment is likely to remain challenging for at least the near-term, we have a clear operational plan to return the core estate to growth in the medium-term and extract maximum value from our non-core assets."
The firm has lost 84.25% on its share price over the past twelve months.
The share price rose 2.27% to 11.25p by 14:00.
NR/JH
