Lincolnshire brewer and pub retailer Batemans has reported an 8% increase in barrelage in its most recent year to just over 30,000 barrels.
However, gross margin dropped 7.7% to £3.1m in the year to 31 January 2009 and profit before tax fell to £358,140 compared to £466,671 the year before.
The company booked a £398,516 profit on the sale of the Lion at Basford, Nottingham to sitting multiple tenant Pub People.
Managing director Stuart Bateman said: "We've been fortunate in having improved growth in all sectors. We've been static on volumes in our pubs but seen increases in guest beer volumes.
"We've also had good progress in national sales and in the off-trade. We've had a look at the Punch disposals but decided there are as many good opportunities to develop our own pubs and help tenants extend their offer."
Batemans spent around £500,000 on refurbishment schemes within its estate during the year, he added.
The company reported, in accounts filed at Companies House, that costs, particularly in terms of raw materials and utilities, increased at an unprecedented rate pulling down the gross margin. It added: "Having invested in various areas to generate growth, investment levels were maintained despite a worsening economic climate creating pressure on operating and pre-tax profits."
The company also criticised beer duty: "The Government's determination to try and control unruly behaviour attributed to alcohol consumption with the blanket application of duty increases above the rate on inflation runs the risk of reducing market consumption while having no effect on the problem."
Batemans also reported that Rob Jones, the executive overseeing the tenanted estate who joined the company just over two years ago from Scottish & Newcaastle Pub Enterprises, and John Woodward, its new finance director joined the board in April this year.