Although profits were down by 56% to £3.5m, the company cited a number of reasons including the cost of energy, significantly reduced Government support and increased levels of investment in the business.
JW Lees chose to invest heavily in its 134-strong estate during the year, spending £8.9m on refurbishing its properties, including 23 schemes of more than £50,000 and major investments in excess of £500,000 at the Rain Bar Manchester, the Elizabethan Heaton Moor, the Anglesey Arms Menai Bridge, the Lancashire Fold Alkrington, the Boat House Chester, the Spring Inn Rochdale, the Stanneylands Hotel Wilmslow and the Trearddur Bay Hotel in Anglesey.
The brewer said in its results, it is back on track for future growth following the period of lockdowns and a self-imposed freeze on capital expenditure, with the JW Lees estate now back on a five-year rolling refurbishment programme.
The company’s 47-strong managed house division is now operating 346 bedrooms, with bedroom sales now representing 20% of the company’s managed house turnover.
No new pubs were acquired during the year, although the Pointing Dog in Cheadle was bought from Marston’s in June 2023. Two pubs were sold: the Railway & Linnet in Oldham and the Holland Arms in Anglesey, generating £332k book profit.
Pub acquisitions funding available
JW Lees had year-end cash balances of £10m and a revolving bank credit facility of £15m from NatWest, which means that the company has £25m at its immediate disposal to invest, with the funds marked for new pub acquisitions.
The business paid tribute to publicly to Paul Wood, former JW Lees brewhouse manager, who died 12 months ago on 18 December 2022, shortly after completing 50 years’ service at JW Lees, stating Wood was “more than a work colleague, he was the spirit of JW Lees – proud but modest – someone who lived for his job and his work”.
JW Lees welcomed Simon Townsend, former CEO of Ei Group, to its board as a non-executive director in April 2023.
The company said it “faced some challenging headwinds during the year, in particular significant rises in energy, food and property costs, with its long-term energy supply contracts coming to an end in September 2022”.
The company was loss-making for the second half of the year, largely owing to a rise of electricity costs of 148% and a rise in gas prices of 275%. However, it was able to move onto flexible energy contracts from March 2023 and has hedged its energy costs going forwards until 2026.
Performance in the 87-strong ‘pub partner’ estate and free trade was resilient, reinforcing the JW Lees strategy of building a balanced business with the stability of the JW Lees three-legged stool model – managed houses, pub partners and free trade – all of which make balanced contributions to the wider JW Lees business, and vertically integrating wherever the company can add value.
JW Lees managing director William Lees-Jones said: “It feels like we’ve been on a rollercoaster since 20 March 2020 when Prime Minister Boris Johnson ordered all UK pubs to close – sadly some pubs have never recovered but we are now seeing steady growth in all three parts of the JW Lees business.
“The Government says it recognises how important the hospitality sector is but needs to start to think differently about how it invests in the sector.
“There are so many simple things Government could do, including the long-promised root-and-branch review of business rates and fairer rates of both alcohol duty and VAT, which are among the highest in the world.
“The current year’s challenges include continued high energy costs and inflation; we are also starting to see the impact of the Alcohol Duty Review which came into effect in August.
“While we remain keen to acquire more pubs, inns and hotels, there have been limited opportunities for us to acquire the right sites at the right price and so we are about to embark on a major investment programme in our brewery, as we approach our 200-year anniversary in 2028 as well as adding a number of new bedroom blocks to our existing pub estate.”