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Preliminary Results

Underlying financial performance* - in line with guidance
· EBITDA of £216 million (2012: £238 million)
· Profit before tax of £49 million (2012: £64 million)
· Basic earnings per share of 5.7p (2012: 7.2p)
· Strong cash position; £329 million of cash reserves
· Net debt decreased by 6% or £122 million

Operational KPIs*
· Improving like-for-like trends in net income**, with core estate net income
· up 0.4% in the fourth quarter
· down 2.4% for the 52 weeks to 17 August 2013 (ahead of guidance of -3% to -4%)
· Average net income per pub +1.5% across the year
· 96% of the core estate let on substantive agreements, up from 94% at August 2012
· 433 pubs disposed for £149 million, £11 million ahead of book value and at a multiple of 18 times EBITDA

Operational headlines
· Continued progress delivering the business plan:

Core estate:
· Recruitment: 96% of the estate let on substantive agreements, ahead of our target range of 93% to 95%; letting activity and applicant numbers up 17% and 28% respectively
· Investment: Ahead of plan with 476 pubs invested in at an average spend of £102,000
· Food development: Food mix up another 3 percentage points to 27%
· Increased field support:New Business Development Division to provide increased support to all newly launched businesses over their first six months
· Punch Buying Club: Membership in its fourth year, increased to c.90%, up from 72% at August 2012
· Punch Foundation Tenancy: Under this new arrangement we provide Partners with a newly refurbished pub and a full range of support. With 48 pubs operating under this agreement, drink sales have grown c.50% and we plan to extend to c.200 pubs in 2014

Non-core estate:
· Disposal programme on track, realising total net proceeds of £149 million in the year. Following the improvement in the performance of a number of pubs in the non-core division, 116 pubs have been transferred to the core division from the start of the new financial year.

Capital structure update
· Punch has continued an extensive process of engagement with a broad range of stakeholders across the capital structure (including the ABI Special Committee of noteholders and its advisers) to discuss feedback, and continue to build a broad base of support for the restructuring.
· Whilst the process of engagement has taken longer than previously anticipated, the Board believes that a consensual restructuring can be launched in the fourth quarter of the 2013 calendar year and will provide an update on the implementation of the restructuring in due course.

Restructuring Update

Under the terms of confidentiality agreements with certain stakeholders, Punch is publishing details of restructuring terms proposed by a group of stakeholders in the Punch A and Punch B securitisations (the "Proposals").

The key terms of the Proposals have been provided to the Company in the form of term sheets for Punch A and Punch B, which are reproduced in the appendix to this announcement.

The Proposals are supported in principle by a group of creditors to the Punch A and Punch B securitisations who together own or control c.34% of the notes across Punch A and Punch B and over 50% of junior notes in both securitisations and the equity share capital of Punch (the "Stakeholder Group"). In addition, whilst the ABI Special Noteholder Committee is not currently signed up to the Proposals, substantial progress has been made in addressing their issues.

Implementation of a consensual restructuring would require the consent of other parties outside of the Stakeholder Group, including shareholders, all classes of noteholders in Punch A and Punch B and other securitisation creditors. Accordingly, there can be no certainty that the Proposals will proceed.

A restructuring of the securitisations is required in order to avoid a default in both the Punch A and Punch B securitisations, which would be likely to have a material negative impact for all stakeholders.

The Proposals differ in a number of ways from the terms of the restructuring launched by Punch on 15 January 2014. In particular, junior notes in Punch A and Punch B would be exchanged for a combination of not only cash and new junior notes, but also ordinary shares in the Company in a debt-for-equity swap. In addition, a group of junior creditors would subscribe for ordinary shares in the Company at a significant discount to the current market price to raise additional funds to be applied to repay junior notes in the Punch A securitisation.

The Proposals would result in a reduction in total net debt (including the mark-to-market on interest rate swaps) of £0.6 billion. In consideration for the debt reduction, the debt-for-equity swap and placing contemplated by the Proposals would result in significant equity dilution for existing shareholders, such that the Company's currently issued share capital would represent 15% of its total enlarged issued share capital following the restructuring.

Were the Proposals to be implemented, the reduction in net debt (including the mark-to-market on interest rate swaps) of £0.6 billion would result in the pro-forma net debt to EBITDA leverage of the Punch group falling to c.7.7x[1] at August 2014. Gross securitisation debt[2] of £1,582 million would have an effective interest rate of c.7.9% including PIK interest (c.7.1% cash pay interest).

Any decision by the Board to recommend a proposal involving dilution of existing shareholders would need to be carefully considered in terms of the value which it represents for existing shareholders.

Implementation of the Proposals, or any consensual restructuring involving a significant equity component, results in additional execution complexity. Accordingly, the Board is of the view that it will not be possible to launch the Proposals, or any consensual restructuring involving a significant equity component, prior to the deadline of 30 June 2014 included in the covenant waivers obtained by Punch A and Punch B on 13 May 2014. It is, therefore, likely that Punch A and Punch B will require an extension to the covenant waivers to provide sufficient time to implement a consensual restructuring and Punch will provide further details of any such extension in due course.

[1] Based on pro-forma gross securitisation debt at August 2014 (excluding swap mark-to-market) of £1,582 million, less £31 million of cash liquidity balances and mid-point group underlying EBITDA guidance of £201 million
[2] Excluding swap mark-to-market
27 May 2014

Class 2 Disposal

Punch is pleased to announce that it has reached agreement to sell 5 pubs to Manica Properties Limited for a total consideration of £9.7 million. The pubs to be sold are freehold outlets located in central London. The agreement is expected to complete on 30 June 2014.

The consideration will be satisfied in cash. Net disposal proceeds will be used to reduce debt and reinvest in the estate.

For the financial year ended 17 August 2013, the pubs being disposed of generated earnings before interest and tax of £0.5 million. As at 1 March 2014, the pubs had a book value of £4.4 million.

The video at the end is interesting - Campaign Win: Reform of the Beer Tie

Restructuring Update

Update on the launch of the restructuring of the Punch A and Punch B securitisations

On 18 July 2014, Punch announced that covenant waivers had been approved in respect of the Punch A and Punch B securitisations. These waivers are subject to various conditions, including that a restructuring implementing the proposals announced by the Company on 26 June 2014 is launched by 11 August 2014. This condition is subject to a cure period of up to 10 business days.

Punch announces that the launch of the restructuring has been delayed, as some additional time is required to conclude discussions between certain stakeholders, and for the documentation to be finalised. The Board believes that a restructuring on terms which are broadly similar to those announced on 26 June 2014 can be launched within the 10 business day cure period.

However, there can be no certainty that a restructuring will be launched within this period. The Board continues to believe that a consensual restructuring is required to avoid a near-term default in the Punch A and Punch B securitisations, which would have material adverse consequences for all stakeholders and, in particular, for shareholders.

Punch Taverns Restructuring Announcement

Possible Offer for Punch Taverns plc ("Punch")