Kent-based brewer and pub operator Shepherd Neame has reported a 9.7% jump in pre-tax profits for the year to 25 June 2011, driven by strong performance within its managed estate. Pre-tax profit for the year was £8m (2010: £7.3m) on turnover up 5.2% to £121.3 (2010: £115.4m). Operating profit before exceptionals was up 3.3% to £12.3m, with earnings per share before exceptionals up 17% to 46.2p. A revaluation of the pub estate, meanwhile, showed a £68m surplus over book value. Like-for-like sales in the managed estate were up 7.4%. Within this, there was a substantial acceleration in the growth of food sales - +11.1%, against +3.9% in 2010. One million meals were served in the managed estate and average spend per head was up 6.7% to £9.12. The 0.7% decline in drink sales in 2010 was turned around to rise of 5.6%. Meanwhile, accommodation sales were up 9.7% (2010: +0.1%) after a number of investment programmes in its hotels. Revenue per available room increased 9.3% to £37.73. Investments in the year have included £0.7m in the Crown Hotel in Blackheath; performance since re-opening has been “above expectations”. There was also a “strong performance” from sites where investments took place in 2010. The company reported “improving” trends in its tenanted pubs, with like-for-like ebitdar at -3% (2010: -3.8%). Average ebitdar in the tenanted pubs was up 0.8%; in the managed sites it was up 8.5%. Tenanted trade revenue fell 1.5% (2010: +1.8%); the company disposed of eight pubs in the division, which helped generate £2.5m from asset sales (2010: £5.9m). It bought two pubs - the Cock in Boughton Monchelsea and the Parrot in Canterbury - for £3.4m. Meanwhile, total beer volumes were up 4% (2010: +4.8%), with own beer volumes up 2.6% to 239k brewers’ barrels (2010: +3.8%). Shepherd Neame said the heavy snow and ice in December, and the comparatives with the 2010 World Cup, hit sales, although the warm weather and the royal wedding in April mitigated this. The main driver of volume growth was Asahi Super Dry, up 16.8%. Volumes of Spitfire were up 2.3% and Bishops Finger by 3.9%. Wine volumes increased 1.8%. Overall CAPEX in the year was £9.8m (2010: £8m). Net cash flow before financing was £1.8m (2010: £9.4m) and year-end debt was reduced from £66.6m to £64.9m. The company also announced today that finance and IT director Ken Littlefair is to retire in March 2012. In the 17 weeks to 17 September, like-for-like managed sales were up 6.5%, with beer volumes up 6.9%, and two hotels have been bought for £7.6m, adding 66 letting rooms. There are also “improving trends” in the tenanted estate, although there’s “margin pressure” in the beer business. Miles Templeman, chairman of Shepherd Neame, said: “This is another strong performance from Shepherd Neame, as we have achieved record turnover and record beer volume. “We have improved the offer in our pubs, enjoyed the benefits of recent capital investment in our estate, grown our beer sales and invested to develop our marketing capability. “However, the general economic and industry outlook remains challenging with decline in consumer income and inflation in our cost base. “We will continue to pursue our long-term strategy of investing fully in our brands and pubs so as to retain the strength and identity of the business. I have every confidence that we will continue to deliver value for shareholders with dividend growth and a strong balance sheet for future expansion.” James Dawson of Charles Stanley Securities issued a Buy recommendation for the company, at a target price of 1220p, and said: “A solid set of FY2011 results in line with our expectations and proof that despite challenging markets not all operators are struggling. “Near term trading prospects remain unpredictable, but the level of local knowledge and site specific awareness at SN should ensure further encouraging trading results. With a PT of 1220p underpinned by a recent estate revaluation and a stable, secure dividend payout we retain our BUY recommendation.”