Pub repair costs a factor in Heavitree Brewery's annual profits dip
Exeter-based pub chain Heavitree Brewery has said a number of "problematic" pubs within its estate were a contributing factor in its fall in annual profits, but did not impact its shareholder dividend.
The family owned business, run by the Tucker family, announced a 1.14% turnover decrease to £7,268,000 in the preliminary results for its financial year to October 31, 2012.
Its operating profits stood at £1,245,000 – down from £1,408,000 in 2011. The company said the dip was partly due to ironing out a number of undisclosed issues which arose at a handful of its pubs.
Chairman Nicholas Tucker said that trading conditions and company's performance had changed little over the year, adding: "With the adverse weather conditions during the summer season and the floods experienced towards the year end, public houses have had a lot to contend with once again. Despite these factors we have again returned a steady set of results."
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The group said that gross margins and rental income held up "extremely well" across its 76-strong pub portfolio.
But it said an additional £47,000 to its annual repair bills was "directly attributable to dealing with a small number of problematic houses" and ate into profit margins.
Meanwhile, the business has begun residential conversions of two former pubs which have lain empty for a number of years and during 2012 the business made £554,000 in capital investments on its trade estate, including at the Heart of Oak in Exeter's Pinhoe and an extension of the trading area at The Half Moon in Clyst St Mary, both completed in December.
Mr Tucker expressed disappointment that the Government has not heeded industry calls for the removal of the beer duty escalator, saying: "As a result we can only anticipate further above-inflation duty increases."
He added that while anticipating trading conditions to remain "difficult -– perhaps for years to come," the company's focus was upon maintaining strong relationships with its consumer-facing landlords and landladies.
Managing director Graham Crocker added: "I don't think anyone would go into one of our pubs and recognise it as a Heavitree inn. They are all very individual and we think that is our strength – many of are run by second and third generations ."
At its board meeting this week, the company's directors recommend a final dividend payout of 3.5p per ordinary share, making a total for the year of 7p, which is unchanged from last year. The dividend will be paid on April 19, subject to shareholder approval at the annual general meeting on April 12.