Brains' pre-tax profit drops £2.9m

Welsh brewer and retailer SA Brain & Co has reported a sizeable drop of £2.9m in profit before tax to £5.9m in the year to 27 September 2008.

The company saw turnover drop from £117m in 2007 to £113m in its latest year after the sale of its free trade business and some smaller managed pubs moving to the tenanted division.

Chairman Chris Brain said: "Following what we considered to be a particularly challenging 2007, this year has proved to be more difficult.

"The slowing economy, an accelerated decline in beer sales, severe cost base pressure and another poor summer were all factors. As late as the end of June, the business was performing to plan but we then experienced a significant deterioration in trading conditions within the final quarter of the year.

"However, the investment that we have continued to make in our brands, pubs and people has ensured that we have continued to outperform or at least perform in line with the market in most areas of the business.

"In volume terms, the national on-trade for all beers was down by over 9% during the financial year and in Wales the decline was considerably higher with the last quarter believed to be down by around 15%.

"The company's volumes were down by 8.7% but our ale volumes only declined by 1.9%, which compares with an ale market down by nearly 10%. This is clearly a

significant outperformance of the market.

"These reducing volumes in both ale and lager men that we have to continue to be more innovative in areas such as our food and accommodation offers, as well as aiming

to be the pub of first choice."

Chief executive Scott Waddington reported that managed sales were down 3.2% for the year, undermined by a 8% drop in the last quarter.

However, food sales grew by 6% and accommodation income grew by 30%. Like-for-like volumes were down 10% in the tenanted division, although rental income growth stood at 7%.

Overall, the contribution from this division rose by £100,000. He reported that ten pub acquisitions had been made during the year. The company reported that sales within its managed division continue to be negative in the current year so the business was being managed "very tightly".

It added that the continued decline in free trade volume and contribution "is of concern and shows no sign of improvement".