Heavitree Brewery, the Exeter-based tenanted pub operator, has reported a 4.39% rise in group operating profit to £1.4m in the year to 31 October, alongside a slight drop in turnover of £33k to £7.2m.

The company, which said that the possible introduction of a market rent only option potential change would, at the very least, cast a shadow of uncertainty across the industry, sold two pubs during the year - The Artichoke Inn in Christow and The Vestry in Newton Abbot were sold in the year under review. This resulted in a net profit of £322k.

It also leased The Pen Inn to Mitchells and Butlers, which have closed the pub for a six-month redevelopment under its Toby Carvery brand.

The group said that planning permission had been granted for the conversion of the Red Lion in Ashburton and the Country House Inn in Exeter. It said that work was still ongoing at these two sites.

Upgrade work has started at The Heavitree in Exmouth and The George and Dragon in Dartmouth and the company said that it would report further at the half-year about the “exciting developments at these two houses”.

The group’s The Dartmoor Halfway in Bickington is currently closed but it is close to approving a scheme to develop and improve the site.

The company’s Directors recommended a final dividend of 3.675p per Ordinary and ‘A’ Limited Voting Ordinary Share (2013 - 3.5p) making a total for the year of 7.35p, which is up 5% on last year.

The company said: “Due to the size of our estate we will not be legislatively bound to offer MRO agreements; and we will continue to operate with a tie albeit with a large choice of permanently listed products and an even larger list of seasonal ales and ciders for our tenants to choose from. So in practical terms we are not directly affected. However, this potential change will, at the very least, cast a shadow of uncertainty across the industry; and we will have to adapt to the commercial realities that accompany it.”