Activities

Punch Taverns has become the UK's largest pub group following its acquisition of the Spirit Group in early 2006, four years after it demerged the business.

Punch's estate focuses on unbranded leased and tenanted community pubs, while the Spirit portfolio of managed pubs and restaurants is made up of food-led venues and community pubs trading under a wide range of brand names. They include Chef and Brewer, John Barras, Tom Cobleigh and and Firkin Beer Company.

Timeline

• December 1997: Punch is set up by chairman Hugh Osmond from a portfolio of 1,399 pubs acquired from the Bass Lease Company.
• September 1999: Punch buys the Inn Business Group of 688 pubs for £69m in September. Later in the month it buys Allied Domecq’s Vanguard estate of 3,500 pubs for £2.75b. It sells on 650 to Bass for £886m and retains 1,785 leased pubs and around 1,100 managed pubs.
• 2000: Punch reorganises itself into two divisions – Punch Pub Company for the leased and tenanted venues (which remains its trading name until 2004) and Punch Retail for its managed estate.
• 2001: Punch buys the North Yorkshire-based Commer Group for £19m, adding 75 pubs stretching from Leicester to Tyne & Wear.
• 2002: The 1,040-strong managed estate – now known as the Spirit Group – is demerged in March. In May, the 4,252-strong Punch Taverns floats on the London Stock Exchange at 230p, which values the company at £570m.
• August 2003: The group now has 4,515 pubs following the acquisition of 283 venues for a total cost of £121m. This includes package deals with Honeycombe Leisure, Spirit Group, Greene King and Conquest Inns.
• November 2003: Punch announces it is to buy the 3,115-strong Pubmaster group for £1.2b. The deal bolsters its relatively weak position in the south east of England and takes its estate to more than 7,400 following the sale of 256 pubs to companies in a joint venture with London Inns. The acquisition is funded by an award-winning restructuring of its long-term securitised debt to £1.8b. 
• June 2004: Punch launches a new corporate identity and the use of the Punch Taverns name (used initially for its public listing) across the whole business.
• September 2004: Punch buys the 1,064-strong InnSpired Pubs business (formed in 2000 from the merger of Ushers of Trowbridge and Alehouse Company) for £335m. It agrees to sell on 88 pubs (including 51 InnSpired sites) to Admiral Taverns for £22.6m. The buy expands its estate to 8,300 pubs.
• January 2005:  Following a strategic review of the InnSpired estate, Punch sells 545 non-core pubs to Pubfolio for £162.5m, taking its estate to 7,800.
• July 2005: Punch snaps up Avebury Taverns estate of 409 tenanted pubs for £219m. Avebury was set up in 1997 from 147 Wolverhampton and Dudley pubs and underwent a management buy-out in 1999.
• August 2005: The group sells 45 pubs to Admiral Taverns for £14.8m in a cash deal expected to complete in September.
• December 2005: Punch buys the 1,832-strong Spirit Group (which it demerged in 2002) for £2.7b in a deal that completes in January 2006. The acquisition of Spirit's managed venues boosts its estate from more than 8,200 to in excess of 9,500 pubs. It announces plans to convert 750 Spirit pubs to leaseholds and tenancies, sell another 82,  and to review the rest of the estate over the year.
• December 2005: Punch sells 203 pubs to Admiral Taverns for £40m and 205 pubs to the Petchey Group for £98m.
• January 2006: The group buys eight traditional community locals in South Wales around Merthyr Tydfil for an undisclosed sum.
• May 2006: Punch announces plans to sell 380 managed Spirit pubs (including Glasgow's renowned Rogano restaurant) on top of the 29 it has disposed of already. It intends to convert 740 Spirit outlets into leaseholds, leaving it with 680 high-quality managed pubs with an average outlet Ebitda of £231,000 per year.
• June 2006: Punch sells 290 managed Spirit pubs to private equity group GI Partners (a former owner of the Yates Group) for £571m. The pubs - which mostly operate under the Country Carvery, Q's and Bar Room Bar brands - are to be merged with 21 pub-restaurants that GI acquired from Noble House Leisure the previous month under the Orchid Pubs banners.
• June 2006: The Old Cock Inn at Harpenden becomes the first managed Spirit pub to take on a Punch lease.
• August 2006: Punch sells 31 themed outlets from the managed Spirit portfolio – including 29 Old Orleans restaurants and two Quincey’s venues – to late-night operator Regent Inns.
• September 2006: Punch buys the Mill House Inns’ estate of 82 food-led leased and tenanted pubs in the Midlands and south of England from the Bank of Scotland for £164m.
• October 2006: Punch buys 69 freehold pubs trading under the Scorpio Inns name from ING Real Estate Income Trust for £17m-plus. The pubs - mostly in Wales, Hertfordshire and the South-west - operated under a sale-and-leaseback arrangement with Punch.
• October 2006: Punch enters an agreement with the former owner of the Ludlow’s Michelin-star Overton Grange to develop a group of up to six food-led pubs over the next three years. The first is the Salway Arms on the A49 between Hereford and Shrewsbury.
• January 2007: Punch signs the 300th lease on the 750 pubs destined to be transferred from the Spirit managed estate by the end of the year. It has spent more than £2.5m upgrading the first 300 converted pubs.
• April 2007: Punch agrees to sell 870 tenanted pubs to Admiral Taverns for around £300m.
• April 2007: Punch and Constellation Brands (the world’s largest wine company) form a joint venture to take control of drinks wholesaler and distributor Matthew Clark. The holding company is 50/50 owned by Punch and Constellation Europe (a division formed in 2004 to merge Constellation Wine Europe and Matthew Clark).
• April 2007: Punch enters the FTSE 100, the index of Britain’s 100 biggest financial players.
• August 2007: The group completes the conversion of 650 Spirit managed pubs to leased pubs three months ahead of schedule.

Financial snapshot

Full year    
Turnover: £1.546.1b (2005: £770.1m) 
Pre-tax profit: £249.6m  (2005: £206.8m) 

Half year
Turnover: £921.1m (2006: £618.9m)
Pre-tax profit: £138.1m (2006: £108.3m)

Financial year end: 19 August 2006
Half-year end: 3 March, 2007

Operating data

Operating figures for the full year to 19 August 2006
Revenue, leased:  £803.3m (2006: £770.1m)
Revenue, managed: £742.8m
Operating profit, leased: £417m (2006: 397.2m)
Operating profit, managed: £135m

Operating figures for the half year to 3 March 2007
Revenue, leased:  £440m (2006: £430.4m)
Revenue, managed: £481.1m (2006: £188.5m)
Operating profit, leased: £239.1m (2006: £223.7m)
Operating profit, managed: £71.1m (2006: £29.9m)

Number of employees: 590 (Punch) and 38,000 (from the acquisition of the Spirit managed business)
Number of pubs: 8,435
Number of leased pubs: 7,250
Number of managed pubs: 1,185, of which 700 are core

The branded estate
Punch has divided the Spirit managed estate into four divisions - Value Food, Quality Food, City, Locals.
 
The brand names include Mr Qs and Qs bars, Bar Room Bar, the John Barras community pubs, Firkin Beer Co pubs, T&J Bernard, Squares, Henry’s Bar and Café, and Baha Beach Club.

The more food-led brands are Two for One, Chef and Brewer, Wacky Warehouse (child-oriented dining), All Day Family Feast, Oak Inns (adult dining), Millers, Country Carvery, Orchard, and Tom Cobleigh

Strategy

"“Our strategy to focus the managed estate on a smaller core portfolio of food driven pubs or top quality locals will complete later this year and position the estate to take advantage of the evolution of the pub market in the light of the smoking ban.   The core estate already earns 39% of sales from food, and is able to capitalise on a growing market for informal dining.”

Source: half-year results statement, 1 May 2007

Chief executive

Giles Thorley

Key directors

Finance director: Robert McDonald
Commercial director: Jonathan Paveley
Managing director, Spirit Group: Andrew Knight
Managing director, Punch Leased: Deborah Kemp
Customer services director: Francis Patton
Company secretary: Neil Preston
Group director of human resources: Karen Caddick
Property and strategy director: Neil Griffiths

Contact

Jubilee House
Second Avenue
Burton upon Trent
Staffordshire
DE14 2WF

Tel: 01283 501 600
Fax: 01283 501 601

E-mail: enquiries@punchtaverns.com
Website: http://www.punchtaverns.com

Commentary

Punch has grown at a phenomenal rate in the past eight years to become the UK’s largest pub operator. It almost doubled in size between 2002 and 2004, largely thanks to the acquisitions of Pubmaster and InnSpired which also brought the group annual cost savings of £10m and £3m respectively.

Chief executive Giles Thorley sees plenty of scope to continue expanding the group to a maximum of 12,000 outlets in the UK. The group took its total tally past the 8,000 barrier in July 2005 when it snapped up Avebury Taverns.

In late 2005 it bought back the Spirit estate of managed pubs and restaurants which it had demerged in 2002. The move allowed Punch to overtake Enterprise Inns as the UK's largest pub group.