Jennings Brothers, the Cumbrian brewer and pub owner, announced this morning a rise in underlying profits for the year to March 1 of 76%, despite turnover dropping 46% after its exit from managed houses.

John Rudgard, Jennings' chairman, said the results affirmed the board's decision to sell or convert to tenancies its managed pubs, and concentrate on its leased and tenanted estate and the free trade.

Underlying pre-tax profit was £2.5m, up from £1.4m in 2002, with the operating margin almost doubling to 20.6%, while underlying EPS rose to 17.3p from 9.6p. Reported pre-tax profit was £2.6m, against a loss in 2002 of £6.1m after costs of £6.2m in connection with the company's exit from managed house retailing.

The InnVentures leased and tenanted pub operation increased turnover by 29.9% to £9.8m and operating profit by 63.6% to £4.6m, while the operating margin rose almost 10 percentage points to 47.2%.

Like-for-like beer volumes in the company's own pubs rose by only 1%, but the free trade business increased turnover by 9.4% to £5.6m and operating profit by 25% to £900,000 as business grew 11%, while the operating margin rose 2.1 percentage points to 16.5%.

Sales of Jennings' lead brand, Cumberland Ale, grew in the free trade by 23%, while sales of the group's bottled beers, mostly to supermarkets, rose by 48%.

The company's tied estate rose by a net 14 houses to 124 during the year after 16 transfers from managed houses and 17 acquisitions, less the sale of 19 generally smaller houses. However, Jennings said, it was unable to meet its target of 25 acquisitions because it had not found enough pubs to buy which met the board's required rate of return. Since the start of the new financial year Jennings has agreed terms on three new pubs, which will take its estate to 127.

Year-end net debt was £17.5m, down from £24.2m in 2002, representing gearing of 67%, down from 97%.