Punch writes down pubs' value

By Matt Scuffham

LONDON (Reuters) - Debt-laden pubs firm Punch Taverns wrote down the value of its estate by 663 million pounds and reported a 39 percent drop in full-year pretax profit, sending its shares lower Wednesday.

Punch, the second-biggest leased and managed pubs operator in the country, said it had taken an impairment charge on the value of pubs it considered unlikely to generate long-term sustainable growth and where profitability had been significantly impacted by the current market conditions.

Following the write-down, Punch said the value of its pub assets and investments had been revised to 5.4 billion pounds, equivalent to a net asset value of 260 pence per share.

The nation's pubs have faced torrid trading conditions over the last two years as a smoking ban, recession, above-inflation tax rises and cheap booze offers in supermarkets kept drinkers at home, leading to over 50 closures a week.

Punch, which has over 7,600 pubs across Britain, said pretax profit for the year to August 22 fell to 160 million pounds compared with 262 million the year before.

Market forecasts for underlying pretax profit ranged between 144 and 170 million pounds, with the consensus at 161.5 million, according to a Thomson Reuters I/B/E/S poll of 17 analysts.

Punch said it reduced net debt by over 1 billion pounds to 3.47 billion over its last financial year, easing concerns over its long-term future.

It has embarked on a program of selling underperforming pubs and buying back bonds in order to reduce its borrowings. It also raised 375 million pounds through a share issue and suspended dividend payments.