Punch Taverns plc 2007 Annual Report and Financial Statements

Results for the year
The financial year comprised the 52 weeks to 18 August 2007.
The Group has returned a strong set of results, building on the
acquisitions made during 2006.
Summary consolidated income statement before exceptional items:
£m 2007 2006 Growth
Revenue 1,704.9 1,546.1 10%
Operating costs (1,042.9) (939.8)
Share of post-tax profit
from joint venture 1.6 –
EBITDA 663.6 606.3 9%
Depreciation and amortisation (56.5) (46.1)
Operating profit 607.1 560.2 8%
Net finance costs (328.4) (312.0)
Profit on asset sales 3.0 1.4
Profit before taxation 281.7 249.6 13%
Tax (57.7) (54.8)
Net earnings 224.0 194.8 15%
Basic EPS 84.4p 74.9p 13%
Pub numbers Leased Managed Total
August 2006 7,846 1,410 9,256
– Acquisitions 85 93 1 178
– Lease conversions 563 (563) –
– Disposals (933) (53) (986)
August 2007 7,561 887 8,448
– Net change (4%) (37%) (9%)
Average estate size 7,873 1,191 9,064
1
Managed acquisitions includes 11 lease reversions.
The Group operates in two business segments; a leased estate
and a managed estate. Both business segments have performed
strongly in the year and are well positioned to meet the changing
market conditions.
The makeup of the pub estate has altered significantly in
the year following the completion of the lease conversion
programme, the acquisition of Mill House Inns and the strategic
disposal of a number of leased and managed pubs.
Operational highlights were as follows:
Leased estate
• Average profit per pub up by 11% to £61k per pub, driven
by organic growth and estate churn
• Like for like profit growth of 2.7%
• Transfer of 563 pubs from managed to leased in the year
• Disposal of 933 non-core smaller pubs
• Continued investment with £117m spent on enhancing
over 1,000 pubs
Managed estate
• Average outlet EBITDA per pub up by 15% in the closing
estate to £216k per pub, driven by organic growth and
estate churn
• Like for like revenue growth of 3.5%; increased costs
particularly from utilities impacted operating margin with
a like for like profit growth of 1.4%
• Acquisition of 82 pubs from Mill House
• Conversion and disposal of 616 pubs leaving an estate
of 87 managed pubs
Core Managed Total
Leased managed transition managed
estate estate estate 3 estate
£m Growth 1 £m Growth 2 £m £m
Average pub numbers 7,873 (1%) 830 – 361 1,191
Year end pub numbers 7,561 836 51 887
Revenue
£m £m £m £m
Drink 577.3 5% 394.4 2% 125.0 519.4
Rent 235.7 11% – – – –
Food – – 261.2 6% 24.3 285.5
Machine income 32.1 8% 18.9 (5%) 10.7 29.6
Other sales – – 18.4 10% 6.9 25.3
Total revenue 845.1 7% 692.9 4% 166.9 859.8
Gross margin
Drink 287.0 9% 299.1 3% 97.4 396.5
Rent 235.0 11% – – – –
Food – – 169.0 5% 12.8 181.8
Machine income 32.1 8% 18.9 (5%) 10.7 29.6
Other sales – – 18.4 10% 5.1 23.5
Total gross margin 554.1 10% 505.4 4% 126.0 631.4
Rent payable (6.8) (31%) (35.9) (3%) (8.6) (44.5)
Managed pub costs (278.6) (5%) (79.9) (358.5)
Other costs (68.1) (6%) – – – (45.6)
EBITDA 479.2 10% 190.9 1% 37.5 182.8
1
Growth measured against last year excluding GRS Inns, sold June 2006.
2
Refers to like for like growth in the core managed estate, covering 755 pubs owned for at least 12 months.
3
Transition estate represents pubs sold/converted in the period together with 51 pubs at the year end that do not fit into any of the four core operating divisions of the Spirit estate.
Punch Taverns plc Annual Report and Financial Statements 2007 17