Hall & Woodhouse, the Dorset brewer and pub operator, has reported a fall in pre-tax profit for the 52 weeks to 29 January 2011, as it incurred significant start up costs for its new flagship site in Bath and started the development of its new brewery. Pre-tax profit fell 14.8% from £6.562m to £5.594m, while operating profit before onerous rent provisions fell to £7.3m from £8.4m in 2010. Turnover climbed slightly, up 1.3% to £90.467m, while interest costs stood at £1.8m, slightly down on £1.9m in 2010. Chairman Michael Woodhouse said: “2010 was always going to be a transition year financially as we incurred significant start up costs of our new flagship site at Bath and started building the new brewery on the Blandford site.” Woodhouse said that the fall in operating profit was mainly due to the start up costs in Bath and “change in sales mix towards increased, but lower margin, sales within the take-home channel”. The group, which operates c.180 tenants and 58 managed sites, achieved record property sales of £8m (2010: £2.1m) during the year, driven by the disposal of surplus land adjacent to its Plough pub near Horsham. Property disposal profits rose from £700,000 in 2010 to £3.3m. The company said it continued to review its leasehold estate and took an additional onerous rent provision of £1.4m during the year, up from £700,000 in 2010. It also wrote down 14 leasehold pubs to zero value during the year. It said that its long-term aim was to exit the tail end of its leased estate and towards that goal it handed back three leases and assigned two leases. The group said that taking these property transactions together there was nil effect on its profit for the year. The group said it had made “significant progress” towards the building of its new brewery at its headquarters in Blandford, with completion scheduled for the end of this year. It hopes to be brewing beer from the new facility early next year. Woodhouse said that the group had made “significant headway” in reducing its borrowings, which fell by a record £10.2m during the year to £43.3m. He said that strong cash flow helped the company to negotiate new banking facilities earlier this year of £20m each from Lloyds and HSBC, which have left the company with total facilities now in excess of £60m. Woodhouse said that current trading is in line with expectations despite the “challenges presented by the economy and significant cost pressures”. He said: “The economy is showing little sign of recovery, substantial tax rises and government cuts have been announced. However, we have got the full year positive impact of the highly successful Bath site and the exciting prospect of our new brewery, the first in over 100 years. “I am very confident that we have the right strategy and the right team to tackle the challenges ahead and look forward to a very exciting year and beyond.”