Punch Taverns plc 2011 Annual Report

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04 Punch Taverns plc Annual Report and Financial Statements 2011 Chief Executive Officer’s statement continued Our business Punch is a leading pub company with a core estate of 3,000 of the highest quality pubs leased to our Partners on a tied pub contract operated as their own small business with our support. Our vision To become the highest quality, most trusted and best value pub company in the UK. Roger Whiteside Chief Executive Officer Our objective To create long-term sustainable shareholder value by developing the best quality estate of leased and tenanted pubs in the market, built on long-lasting successful partnerships with our lessees, working together to meet constantly changing consumer needs.
Punch Taverns plc Annual Report and Financial Statements 2011 05 Chief Executive Officer’s statement continued Company strategy Actions to date n Continued focus on strategic change programme launched two years ago to restore leased pub business to growth n Demerger of managed pub business, which provided the best opportunity for creation of shareholder value in both parts of the Group business n Delivery and completion of the Pathway to Partnership programme, which has stabilised and improved performance n Acceleration of the strategy to dispose of non-core pubs n Reorganisation and focus on restoring long-term sustainable growth in our core estate Business review Market review and strategy update Significant progress has been made through the successful delivery of our Pathway to Partnership programme, which has continued to deliver operational benefits throughout the financial year. Improving like-for-like trend performance, together with benefits from the ongoing disposal programme, delivered the first increase in average net income per pub for three years. The UK on-trade market remains challenging with the long-term decline in drinking out in pubs expected to continue, driven by changing consumer behaviour, relative price positioning and the impact of punitive tax and excessive regulation. These factors combined continue to affect the viability of small wet-led pubs and the number of pubs in the UK is expected to continue to decline. Considering these factors in our strategic review we determined that a more radical approach to our pub estate was required, to create a smaller, higher quality, geographically well-located portfolio which is positioned to adapt to these changing market conditions and support sustainable long-term growth for Punch and our Partners. In order to maximise the value of the business as it downsizes to a core estate of around 3,000 pubs, the pub estate has been organised into two divisions: core and turnaround, with separate teams focused on the specific plans for each division. • The plan for the core division is to drive sustainable growth building on the platform created by the Pathway to Partnership programme. The core division will aim to attract the right Partners through new lease offers, expansion of the Punch Buying Club, further development of the skills of its Partner Development Managers and investment to drive sales, including food. • The plan for the turnaround division is to maximise short-term returns with a clear focus on costs and cash flow. It is expected that these pubs will be disposed of over a five-year period and will be phased to ensure a balance between speed of disposal and value. The majority of these pubs are on substantive agreements and will therefore continue to have access to the same support infrastructure as our core pubs to drive operational performance until the decision is made to dispose of them. Financial statements Governance For more information visit: www.punchtaverns.com
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