Robinson’s, the Cheshire-based brewer and pub operator, is to introduce a more flexible tenancy agreement this year, which it hopes to rollout across most of its estate, joint managing director William Robinson has told M&C Report.
It comes as the group reports a 50.5% rise in operating profit to £2.3m in 2013 on turnover up 4.5% to £58.6m. Pre-tax profits dipped by 7.9% to £3.1m as it disposed of 19 pubs for £2.3m at an overall profit of £0.8m; in 2012, a profit of £1.7m was made from the sale of 17 pubs for £2.3m.
Robinson told M&C Report that the company is developing a new core tenancy agreement with variations based on different trading styles. There will be a greater focus on helping licensees with compliance issues and more options around product range.
“It’s about ensuring that we have the right agreement offer in place for the right pub,” Robinson said. “Those agreements are flexible to the different trading styles that exist in our estate. We’ve got a diverse range of pubs in our estate; it’s about making sure our agreement is capable of reflecting that.
“We’ve tried to keep it very simple and straight forward.”
The firm has been in discussion with around a dozen licensees about the new agreement and the feedback has been “very positive”, he said. The plan is to introduce the first one over the summer.
“We have in mind that by the end of this year we will have about 20% of our estate across onto the new agreement.”
The agreement will not be compulsory, he said, but he hopes to have a high take up. He said the company has no plans to follow other tenanted operators and introduce a franchise-style approach.
“It’s very much a straight forward tenancy agreement. We believe that a good, straight froward tenancy agreement is a great model for people to work with.”
The move is separate from Robinsons’ debut in the managed sector, which is expected this autumn.
In its full-year accounts for 2013, the company said volumes sales in its off-trade, nation and wholesale accounts and export divisions doubled due to the success of Trooper beer, made in collaboration with rock band Iron Maiden. Overall volumes of its own products increased by 21%.
Rental income remained static at £6.6m. The company said rent allowances showed the first sign of reduction in the year, falling from £900,000 to £800,000. “When rents are reviewed rental income increases have been modest,” Robinsons stated.
Capex in the year totalled £3.1m (2012: £7.3m). It included the final £1m on the new brewhouse facilities (2012: £2.5m) and £1.1m on the tied estate (2012: £1.9m).
During 2013 it invested “significant sums” in more than 30 pubs. Robinsons said: “The company policy is to increase the number of pubs refurbished each year and while we will continue to undertake some significant large investments in our tied houses, this means that in future there will be a lesser number of large projects than in recent years,”
The company said it has sought to increase the range of products and also support to its licensees. In the past year it completed the individual alignment in its surveying, accounts and telesales teams to each pub, ensuring a consistent point of contact.
In the current year gross profits have improved to £11.8m, which it said arose from improving margins on increased sales, lower repair costs and a modest reduction in other direct costs; repair costs were £800,000 lower at £5.8m, while repair and maintenance costs in its production facilities declined by c£0.5m to £0.7m.
“The overall cost of running temporary managed houses has gain fallen in the year as a direct result of the company’s policy to intervene earlier where the house has no viable future so that the house is closed immediately and put up for sale and not put under temporary management.
“It is anticipated that this policy, the introduction of our new tenancy agreement in 2014 as well as the improving economy will result in further reductions in these costs in future years.”
Robinsons increased its cash balances from £5.7m to £7m during the year due to its disposals, lower capex and improved operating profit.
Robinsons said: “We have waited a long time for a good summer, and 2013 did not disappoint. Sales of our own beers were up compared with 2012, which was, to a large extent, due to the success of Trooper in the last seven months of the year. It was the fastest ever-selling premium bottled beer new launch in Morrisons and is also available in Sainsburys and Tesco. During the year we exported Trooper to no fewer than 33 different countries.”
Employment costs increased by £100,000 to £12.2m in the year; the figure included £600,000 of redundancy payments (2012: £400,000). Distribution costs fell slightly from £3.9m to £3.8m and administration costs rose from £5.1m to £5.8m, with the principle increases being in bad debts, temporary staff and pension costs.
Chairman Peter Robinson said: “Trade has been difficult during the last few years, with beer consumption nationally continuing to decline. We continued to take action to reduce our costs by restructuring parts of the business, the results of which are already showing through.
“Our part of the country in the north west has been hit harder than most, but the green shoots are beginning to appear and I am confident that we are now in a good position to take advantage of the upturn.”
