Sat 5th Aug 2023 - Punch reports all three divisions delivering like-for-like sales growth Punch reports all three divisions delivering like-for-like sales growth: Punch Pubs & Co, the Fortress Investment Group-backed business, has reported that all three of its divisions (leased and tenanted, management partnership and Laine Pub Co) delivered like-for-like sales growth for the 40-week period to 21 May 2023 when compared with the prior year. 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 40-week period compared with £211.3m last year, with the conversion of pubs from its leased and tenanted division to its management partnerships estate contributing to the increased revenue. It reported a pre-tax profit of £8.8m (2022: £12.4m). Ebitda for the period was £57.6m, 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. The business said it had invested £23.6m 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, total revenue was £75.8m compared with £68.7m the year before. Net proceeds from the sale of properties in the period was £8.4m (2022: £5.7m), at £1m above book value. It said that 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 and tenanted pub estate from Young’s in 2021, continued investment in the estate, and a small number of pub acquisitions and disposals. Punch said circa 93% of its pub portfolio is either owned on a freehold or long leasehold (greater than 50 years remaining lease term) basis. The company said: “As noted in the previous quarter’s report, having converted 71 pubs from leased and 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.” During the quarter, the business collapsed its joint venture with Big Smoke Group, which resulted in five pubs transferring across to its leased and tenanted division and three pubs being retained in the management partnership division. One additional site was also transferred into its leased and tenanted division from its management partnership division. Punch chief executive Clive Chesser told Propel: “We have recently mutually agreed with the Big Smoke team to change the structure of our partnership from a joint venture to a more traditional turnover share. It now operates four Punch pubs close to its brewery in Esher, including one recent opening, and we will continue to explore further opportunities with it.” These four pubs are the Prince of Wales, Hammersmith; The Royal George, Hersham; The Rising Sun, Epsom; and The Abercorn Arms, Teddington. Punch features in the Propel Turnover & Profits Blue Book. Its turnover of £284,400,000 for the year ending 14 August 2022 is the 30th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription.