Industry cost pressures hit Brakspear's bottom line last year as the pub operator and brewer saw turnover increase but earnings fall.
JT Davies & Sons, the parent company for Brakspear, increased its turnover during the year ending 31 December 2017 by 11% to £28.3m, which generated earnings before interest, tax, depreciation and amortisation (EBITDA) of £7.7m, down 7% on the prior year.
Sales growth came from the 13-strong managed house division and amounted to £3m, giving an annual turnover of £11.8m. The turnover increase came from like-for-like sales growth of £0.5m (+5%), the full-year growth effect from sites opened in 2016 of £2.1m and sites opened in 2017 of £0.5m.
The £0.2m decline in turnover in the tenanted and leased (T&L) estate was due to sites transferring to the managed house division and others being sold. Like-for-like sales were flat.
The decline in EBITDA resulted from the higher costs affecting most operators across the pub industry, namely business rates and increasing employment costs. In addition, significant expenditure was incurred in the last four months of 2017 relating to the acquisition of one new managed site and the transfer of two others to the managed estate from the tenanted estate, including a lease premium paid to an exiting lessee.
Chief executive Tom Davies (pictured) said: "2017 was a satisfactory year for Brakspear. Our core tenanted and leased business continues to trade well. Our managed estate is developing in line with expectations, despite cost pressures impacting the 2017 result. We have recently invested in our managed operations teams and I am confident that this will lead to further improved service, sales and profitability."
During 2017, Brakspear acquired the Lion at Wendlebury, near Bicester, adding it to the managed estate, and the Leicester Arms in Penshurst, Kent, a coaching inn with 12 bedrooms, which joined the T&L estate. Since the year end, Brakspear has added 13 boutique bedrooms to the Lion and refurbished its main bar.
Elsewhere in the managed estate, the Little Angel in Henley was transferred from the leased estate, as was the Dog & Duck in Wokingham, which re-opened in the fourth quarter after a significant development.
Three T&L sites were sold during the year as part of Brakspear's pub disposal programme, two of which were sold to local pub operators.
Brakspear invested a total of £6.9m in its pub estate during 2017, a similar amount to the previous year, which included the managed house acquisition, refurbishments and maintenance.