Arkell’s, the Wiltshire brewer and pub operator, has reported improving trends in what it called a “long and difficult year”, and revealed it has agreed a new loan facility and overdraft worth £12m.
Profit before exceptional items and tax in the year to 31 March 2012 increased 1% to £1.8m on turnover up 3.2% to £18.7m. Rental income grew 6%, largely due to the two pub acquisitions and transfers from managed houses to tenancies. Managed house profits increased in the year.
The company revealed it has put another five pubs on the market, all for conversion to alternative use. Arkell’s made a profit of £457,000, listed as an exceptional item, on the sale of three pubs in the year, which helped its retained profit rise from £915,000 to £1.4m.
Operating profit for the year grew 20% to £2.4m.
Since the year end Arkell’s, which operates c100 pubs, agreed a £9m loan facility with Svenska Handlesbanken and a £3m overdraft facility with Lloyds Bank. Overall borrowings in the year increased £824,000 due to acquisitions.
Chairman James Arkell said: “It has been a long and difficult year for both our tenants and the brewery. We have to cope with higher taxes from Government in the form of increased VAT and duty, which continues to increase at 2% above inflation every year.
“We have become a collector of enormous taxes which are causing such damage to the brewing industry. In 2012 we paid £539,000 of duty, £345,000 of employers national insurance, £352,000 of corporation tax and £1,829,125 of VAT.
“Much has changed in our trade, the norm hardly applies to anything these days. We have hundreds of breweries springing up around the country, which now total over 800. Pubs have been closing because of tax increases, higher overheads and a complete change in the way regular customers use their ‘local’. Even the weather has had an adverse impact on trade with much rain (monsoon like at times!) and little sun. In these times of double dip recessions we have much to thank our staff and tenants for.”
He said that in recent years it has invested in rooms and food to increase profitability. Arkell said trying to curb expenditure in its pubs is “always challenging with our high standards of maintenance”. “We try to continually reappraise our estate, investing wherever our return can be improved.”
Arkell said the brewery has “never looked better” and own-beer sales grew in the year. Growing the freetrade business has “competitive challenges” but the company’s optimism continues thanks to the promotion of Swindon Town FC.
Arkell said the old final salary pension scheme “continues to cause a headache as it is governed by ever more regulation, which does not appear to assist the beneficiaries at all”. The deficit in the pension scheme increased from £2.3m to £3.4m.
The firm expects trading conditions to “remain difficult” this year, with profits “similar” to 2012.
“The company remains acquisitive and will buy when opportunities arise to enhance the estate and improve profits,” it said.
Earnings per share increased from 117p to 150p and directors recommended a final dividend of 8p for the year.
