The company started the year with a division of leased and tenanted pubs and a division of managed pubs. The managed house operation was demerged on 2 March 2002 and renamed Spirit Group, and is shown in the statutory accounts as discontinued operations up to that date. The results of the continuing business were impacted by exceptional and non-recurring items, including the splitting of a joint debt facility, which are described below and in the notes to the accounts. To assist in presenting a consistent picture of Punch Taverns plc, financial figures are presented for the underlying continuing business excluding exceptional and non-recurring costs. A reconciliation with the continuing business profit as included in the statutory accounts is shown in the Operational and Financial Review.
 
Highlights 

  
•   Like-for-like growth
    - sales 3%
    - pub contribution 5%
    
•  Operating profit margin 51.7% (2001: 50.4%)
    
•  Improved quality of earnings
    - rental profit up 9%
    - machine income up 42% 
    
•  £26 million invested in 479 outlets generating pre-tax returns of over 30%
    
•  187 pubs acquired during the year taking estate to 4,302 pubs at year end
    
•  Exceptional and non-recurring statutory P&L costs (not included above) of £213 million, primarily arising from the demerger and IPO, of which £147 million was non-cash

Commenting, Giles Thorley, Chairman, said:

“These good results fully deliver on expectations at the time of our recent flotation. We have achieved organic growth of over 5%, increased the quality of our earnings and improved the quality of our estate. We have also accelerated our acquisition programme. These factors drive the business, delivering operating profits of over £200 million and fuelling EPS growth of 21%.
“The quality of Punch’s estate comes from over 4,300 individual businesses let to entrepreneurial retailers, with over 65% of the estate let on long-term leases of up to 30 years.

“The effectiveness of Punch’s organic growth strategy is shown by the increase in like-for-like revenues and the higher increase in like-for-like pub contribution. Our focus is on attracting and supporting the best retailers – our tenants and lessees – with innovative recruitment, training, lease improvement and capital investment programmes. We believe we are leaders in these fields in our sector. Our objective is to have a win-win partnership, whereby returns are increased for our retailers, the company and our shareholders.

“As an example, during the year some £26 million was invested in 479 individual pub improvement schemes, generating pre-tax returns of over 30% on our investment. This complemented over £6 million invested by our retailers.

“Our organic growth strategy has been augmented by an accelerated acquisition programme. During the year, we invested some £67 million, acquiring 187 pubs, and sold 46 pubs. Our estate numbered 4,302 pubs as at year end.
  
Restructuring and Flotation
 
“Last year was one of transformation for Punch, culminating in our successful flotation and listing on the London Stock Exchange on the 27th of May this year.

“The flotation delivered net proceeds of £152 million to the company, of which £96 million was used primarily to reduce borrowings. The balance of £56 million was retained within the business and together with existing cash balances and unused facilities leaves Punch well placed to continue its acquisition and investment programme.

“Prior to the flotation, there was a major restructuring to demerge the managed pub business and create Punch Taverns as a focused leased and tenanted pub company. This process necessitated the appropriate allocation of group debt between Punch Taverns and the managed business. This resulted in a non-cash transfer of £144 million of group debt to Punch Taverns which is shown as an exceptional item in Punch’s profit and loss account.

“In addition, there were other exceptional and non-recurring costs, principally relating to the changed capital structure and IPO, of £69 million. Total exceptional and non-recurring costs charged to the profit and loss account were therefore £213 million. In view of this, we have presented the underlying results of Punch Taverns to enable meaningful understanding of the financial performance of the company and comparisons with the previous year.
 
Board Changes
 
“Today we are also announcing the departure of Stephen Lambert, Chief Executive of Punch Taverns. This is a natural progression of the development of management responsibilities following the successful completion of the restructuring and IPO, and reflects the company’s desire to separate clearly the roles of Chairman and Chief Executive. It is therefore planned that, at Punch’s January AGM, Phil Cox, currently Deputy Chairman, will be appointed Non-executive Chairman, and I will be appointed Chief Executive. We all thank Stephen very warmly and wish him every success in his future career.
 
Current Trading and Outlook
 
“The year has started with continued steady progress in trading, which is in line with expectations. 
 
“Investments and acquisitions are progressing well. Over 100 pub redevelopment projects are either completed or underway, and a further 50 pubs have been purchased, including 37 pubs from Greene King. We are in the final stages of completing a new distribution contract with Carlsberg-Tetley which will improve service levels and efficiencies.
 
“We look forward to further progress this year.”
 
Contacts:
 
Punch Taverns
Tel: 020 7868 8903
Giles Thorley
Robert McDonald

Ends