Brewer Daniel Thwaites has reported a decline in pre-tax profit after record regulatory costs in the year to 31 March 2006.
The brewer saw pre-tax profits drop to £11.6m from £12.4m the year before. The lower pre-tax profit came despite an increase in turnover to £164.5m in 2006 from £159.6m the year before.
Lower profits followed a £2.5m increase in costs for the year as a result of rising utility bills, the new licensing legislation and staff restructuring.
However, flagship brands have seen increases of up to 20 per cent and the tenanted estate has achieved 7.5 per cent like for like sales growth. Brewery operations showed a healthy 8% increase in volumes, buoyed by a £2.1m investment in brewery plant, which helped the company to offset the erosion of margins due to increased competitiveness.
Daniel Thwaites biggest success story was delivered by its flagship brands, with Kaltenberg HELL continuing to gain a foothold in the market with 16 per cent growth, and the Freddie Flintoff endorsed Lancaster Bomber, recording an increase of close to 20 per cent.
The brewer also continued to deliver on its pledge to invest in the estate, with £2.3m invested in refurbishment programmes for managed houses, £7.1m spent on acquiring 11 new pubs and a further £4.2m going to tenanted pub development.
Thwaites managing director Brian Hickman said: "It has been a challenging year for the business, but we believe that these results are a further indication that the long-term plan we outlined after the mid-year results is sound, and one that we are well on-course to deliver.
"The difficulties we have faced in terms of increasing operating costs have been challenging but not unexpected which is why we took action at the beginning of the year to address some of these issues."