North west-based brewer and pub operator Frederic Robinson says expenditure on its new brew house and a sharp rise in “rehabilitation expenditure” for its tenants explains a 23.7% decline in pre-tax profit in 2010.

The company also revealed that it has doubled the sum it lends to incoming tenants to £1.5m over the past two years due to the “continued reluctance” of banks to lend to small businesses.

Robinson’s has reported pre-tax profits of £2.464m in 2010 (2009: £3.229m) against turnover down 4.4% to £53.405m, according to accounts filed at Companies House.

Operating profit was £1.588m (2009: £1.333m). The highest paid director’s salary increased 131% from £133,000 to £307,000. Gross margin fell from £8.9m to £7.5m.

Despite the fall in turnover, sales to Robinsons’ tied trade increased £0.9m to £37.9m. Turnover in the off-trade fell from £3.6m to £0.7m after the company chose to “restrict’ its activity because of the “poor margin” achievable. Contract packaging sales fell from £6.2m to £5.2m as a number of customers moved supplier.

In the tenanted estate, “rehabilitation” expenditure increased from £2.1m to £3.2m, and there was a non-specified one-off cost of £0.7m.

Rental income increased by a “more modest” figure than usual, up £100,000 to £6.8m. This was partly due to rent cuts for pubs under temporary management and rent allowances for tenants - these two costs increased to £0.8m (2009: £0.7m).

Chairman Paul Robinson said: “The tenancy support team worked very hard to assist our tenants in buying at the best possible prices, including food, equipment and, equally important, gas, electricity and fuel oil.”

Robinson said the number of changes in tenancies dropped but added: “Unfortunately, we were again forced to lend money to many in-going tenants to enable them to take over tenancies. This sum has doubled to £1.5m in the last two years, due to the banks’ continued reluctance to lend to small businesses.”

No sites were bought during the year, but there was “major expenditure” on 11 venues. The sale of 13 properties generated £2.1m at a profit of £1.6m (2009: 13 properties generated £1.4m at a profit of £1.3m).

The cost of running temporary managed houses was “unchanged”.

Robinson said: “After the year end the company has entered into an agreement with a third party to manage its temporary managed houses where the house is expected to have a viable economic future. It is anticipated that this will result in significant cost savings in this area. Where the company believes that the house has no viable future the house is closed and put up for sale.”

Phase one of the new brewery site, which is predicted to lead to energy savings of 60%, was completed in the period. Phase two was to start in June 2011. Elsewhere, production and utility costs in the brewery remained “broadly constant”. Construction of a new depot in Backbarrow was to begin in May 2011.

A new marketing department was also set up during the year. Capex was £3.9m (2009: £12.7m), including £2.3m on the new brew house.

Employment costs increased by £0.7m to £11.9m.

Robinson said: “The results for the year 2010 have been achieved against extremely difficult trading conditions.

“The very severe weather during the winter decimated the trade at many of our leading catering houses, with Christmas bookings being cancelled across the whole of our trading area. Coupled with the continued effects of the recession on our customers’ disposable income, it is pleasing to report that turnover was virtually static compared with the previous year and although beer sales nationally were down again, the figure for our own products were better than the national figures.”

Robinson said there’s “little or no evidence” of the Coalition dealing with the “ever-growing” problem of legislation affecting the trade. He predicted another “difficult” year in 2011.

Dividends of £315,000 were paid in the year (2009: £307,496).