McMullens well placed to add pubs to its estate

McMullens, the Hertford-based brewer and pub operator, hopes to bolster the size of its estate with a number of acquisitions in the coming months, with its chances of success boosted by a strong balance sheet.

Peter Furness-Smith, the group's managing director, said the company's balance sheet was "very strong" and provided a target pub met with its strict buying criteria - large, managed sites with turnover in excess of £20,000 a week - then he was confident a deal could be done.

"The pubs we're after have to be seriously good and be around in 20 years' time," he said, adding that prices for the sort of good quality assets the group wanted had not come down by much, whereas "further down the 'food chain' prices have halved".

McMullens bought two pubs last year, including the Heron on the Lake in Fleet, Hampshire.

The brewer had offers out on a number of sites, Furness-Smith added, although he declined to reveal the identity of the pubs or the vendor.

Meanwhile Furness-Smith said current trading across the group was around 0.5 per cent down on last year, with operating profits off by around 10 per cent.

Turnover had been up 3.5 per cent until December last year when the bad weather hit trade.

The group's 80 managed pubs were trading well at the half year point in March, up 0.2 per cent, with food sales up three per cent and liquor sales down one per cent.

"Community liquor-led pubs are finding tough, however," Furness-Smith said, and McMullens was offering a mix of support measures to those of its 55 tenants who needed assistance.

"We look at each house individually and have a wide selection of remedies. Where the tenant is trying their best and still struggling we look at things like rent reductions or holidays and beer discounts. We will mix and match to help where we can.

Furness-Smith said the group's own brewed beer volumes were down around two per cent.

"The trends we saw in 2009 [when operating profits fell 14 per cent to £6m on turnover up nearly three per cent to £56.5m] have continued into the current year, so the outlook remains challenging," he added.

The freeze on beer duty was good news, although Furness-Smith said next January's VAT hike would "further widen the differential in pricing between supermarkets and pubs with the obvious knock on effect - less overall tax revenue for the Treasury and further undermining pubs as community assets and the home of supervised socialising with friends".