Pre-tax profits fall almost 50% at Thwaites

Daniel Thwaites, the Lancashire brewer and pub operator, has revealed a halving of pre-tax profits.

It comes on the back of a 14.7% drop in revenues for the year to 31 March 2010, amid falling beer volumes and "extremely difficult trading conditions".

Pre-tax profits (before exceptional items) were down 49.6% from £11.3m to £5.7m.

The Blackburn-based brewer said sales fell to £135.2m as the impact of the recession, the Government's tax regime and the coldest winter in the for 30 years impacted bother its beer and pubs business.

The company said its hotels business had also faced a challenging period, with falling corporate demand reducing both occupancy levels and room rates.

Operating profits before exceptional items at the group fell 21.3% to £13.3m, although much of this fall was a result of profit declines in the group's hotel arm. Part of this was the result of the sale of its Stafford Hotel in London

Like-for-like beer volumes in Thwaites 377-strong pub business were down 10%, a result the company said of supermarket discounting, the recession and the harsh winter.

The group said as a result of the transfer of most of its managed pubs to tenancy, and a lower cost base, profits at the division were broadly flat.

The company said improvements to its team of area managers had started to yield results, with the number of closed pubs down 60% during the year.

Estate​

After scaling back capital expenditure to focus on minor refurbishment projects, the company said return on capital had exceeded its 20% target. In the current year it had identified a further 50 such projects and expected to deliver a similar level of returns.

During the period Thwaites carried out an estate review, resulting in a reduction in value of £34.2m — approximately 10% of the total fixed asset value. £18.2m was a reduction against original cost and £16m was a reduction against previous upward revaluations.

In the 12 months it sold 15 properties from the bottom of its estate.

The sale of the Stafford Hotel in Mayfair for £77.5m — 28.7 times operating profits — in September 2009 crystalised an exceptional profit of £14.3m.

It said the sale made sense as there was little synergy between this property and the rest of its pubs and hotel business, given its focus on regional hotels and inns.

As a result of the sale of the Stafford it now operated six full service hotels, comprising 667 rooms and seven inns with a total 156 bedrooms.

Brewing​

On the brewing side, the company did not reveal overall volume performances but said it had exited further contract brewing agreements, which had served to improve profitability.

It said it was "delighted" by the success of its cask ales, in particular Wainwright, which saw year-on-year volumes clime 29%.

Volumes grew 1% in the free trade — against a market down 7%.

During the year the group reduced debt significantly — down £87.2m from £136m to £48.8m. It also renegotiated bank facilities to 2012.

Ann Yerburgh, chairman, said: "The last few years have been very difficult ones. However, we have taken decisive action in each of them to address our costs, restructure the business, manage our cash flow carefully, reduce our net debt and put ourselves in a position to grow into markets where we are best placed to increase our profits and also future dividends.

"Many of the challenges faced last year are likely to persist into the current one and beyond, and in some cases may increase as our politicians address the country's structural budget deficit.

"However, I remain confident entering the current year, despite uncertainties on many fronts, that we are in a strong position to react to whatever the year throws at us and am certain that the decisions and actions of the past two years will provide a base for future success."