Cheshire brewer and pub operator Frederick Robinson has given more details of its reorganisation plan as it reported an 86.1% rise in pre-tax profits to £3.4m in 2012, a period in which the company increased its pub disposal rate.
Turnover increased 4% to £56.1m and operating profit rose from £116,000 to £1.5m. Robinsons sold 17 pubs for £2.3m, at a profit of £1.7m, compared to six disposals at proceeds of £1.6m and a profit of £1.2m in 2011.
Chairman Peter Robinson said the “appalling” summer weather had a “serious effect” on its north Wales pubs, with many visitors cutting short their holiday due to persistent rain. Despite this, own-beer sales grew slightly in the year.
“The last five years have been very tough for the pub industry and brewers such as ourselves, who fall just above the lower duty threshold and therefore pay the full duty rate and not the 50% rate, from which the small micro brewers benefit,” he said.
“To ensure our business adapts to the changes facing our industry in 2012 we began a number of reviews right across the company. We have already completed a number of these reviews and will complete the rest together with their implementation by the end of 2013. The main focus of these reviews is to make sure we are competitive in all areas of our business.”
The review saw the reorganisation of its tied trade department, integrating the Cumbria and Stockport pub estates under director of retail operations Dave Harrison. Robinsons said it planned to increase the retail support offered to its pubs through these changes.
This morning M&C Report revealed that Robinsons is to segment its estate into six trading styles as part of the modernisation programme, which will see 20 pubs identified as “beer shrines”. The company also intends to replace half its business development managers by the end of the year.
In 2012, Robinsons reduced the number of larger capex schemes, focusing instead on investing smaller individual amounts into a greater number of pubs.
Robinson said “continued difficulties” in the tied trade meant rental income increases on review have been “modest”. Rental allowances remained stable at £0.9m, with rental income also stable at £6.6m.
The company improved gross profit from £8.2m to £10.5m due to lower “direct” costs, principally a fall in the cost of repairs from £5.8m in 2011 to £2.8m in 2012, offset by increases utilities and depreciation by c£200,000. The cost of “house rehabilitation” fell slightly to c£1.6m. Repair and maintenance costs at the production facilities also fell by c£1.2m as development of the new brewhouse neared completion.
Capex increased from £7.1m to £7.3m, including £2.5m on new brewhouse facilities, expenditure of £1.9m in the tied estate (2011: £2.7m), plus £1.1m on the Visitors Centre and £0.9m on the distribution facility at Cumbria. To fund the capex, which was partly off-set by the sale of properties, Robinsons sold current asset investments realising £5.4m with a profit on disposal of £0.3m
Robinsons said the direct cost of running temporary managed houses fell slightly due to its agreement with a third party to manage temporary managed houses that are viable; those that aren’t are put up for sale, which it hopes will result in further significant savings in future years.
Robinsons said sales to the freetrade and the off-trade grew by £1.2m and £400,000 respectively while sales to the tied trade were “unchanged”. Overall volume of products increased by 3%, with contract packaging sales up £300,000 to £5.3m and overall contract numbers up 7%
The main increases in volume have come from areas of trade with lower gross margins, with volume improvement focused on the off-trade, the free trade, contract sales and wines, all of which carry lower margins than the supply of beer to the tied trade.
Employment costs in the year increased by £0.9m to £12m. Employment costs include £400,000 for redundancy payments. Distribution costs rose from £3.7m to £3.9m, largely due to increased marketing expenditure up from £0.8m to £1.1m. Administrative costs grew from £4.5m to £5.1m.
Robinsons’ pension provision increased from £4.6m to £5.5m.
