Record revenues for brewer but profits dip after investment drive

Manchester brewer JW Lees has today posted its results for the 12 months to March 31, 2018, with turnover at £70.8m (up £3m/+4.5%) and pre-tax profits at £3.9m (down £1.2m/-23.2%).

The Middleton-based business said 2018 was a record year for investment for JW Lees, with capital expenditure of £18.1m including the acquisition of the 52-bedroom Stanneyland’s Hotel in Wilmslow and 20-bedroom Bluebird Inn in Samlesbury.

There were also major investments at The Alderley Edge Hotel, Belmore Hotel Sale, Groes Inn Conwy, Links Hotel Llandudno and Trearddur Bay Hotel.

It said the 23% drop in profits was caused by the closure periods necessitated by the ambitious refurbishment programme which means that JW Lees has made net investments in its business of £58.7m since 2012.

JW Lees paid £200,000 to team members through its profit-share scheme to recognise their achievement, hard work and commitment during the year.

William Lees-Jones, sixth generation managing director of JW Lees said: “2018 has been a transformational year for JW Lees and I want to take this opportunity to thank the JW Lees team for a year of really hard graft.

“At the end of 2017 we were sitting on over £20m in cash which had been earmarked for new pub acquisitions but, with a shortage of quality sites available, we decided to accelerate our investment programme in our existing estate – we invested in a total of 89 schemes in the year which means that 2/3rds of the JW Lees pub estate benefitted from improvement schemes of some form.

“We entered the MCA Tenant Track Survey for the first time in 2017 and were delighted to be ranked the second-best pub company overall in the survey.

“On April 1st, 2018, we reorganised the pub business, separating our 291-bed Managed Hotels & Inns business, headed up by Tony Spencer, from our Pubs business headed up by Chris Moulson, with the Pubs business encompassing both Managed Pubs and Pub Partners.

“We relaunched the JW Lees brand in November 2017 as the modern traditional brewery, with new packaging for our beers and new signage on our pubs, as well as the successful launch of Manchester Craft Lager and the subsequent opening of our new small-batch brewery ‘The Boilerhouse’ in July 2018.”

He added: “JW Lees is campaigning with other brewers in the Beer Duty Coalition Campaign to lobby the Government to review Progressive Beer Duty since it is making brewers like JW Lees uncompetitive in the market place – we are sandwiched between large international brewers with huge economies of scale and up-and-coming craft brewers who benefit from a tax subsidy and who only pay 50% of the duty on the beer that they brew.

“Increases in beer duty over the 16 years since Prime Minister Gordon Brown introduced Progressive Beer Duty have made JW Lees increasingly uncompetitive as a brewer.

“It’s a complicated argument but Progressive Beer Duty was first introduced in 2002 and since then there has been an explosion of new brewers, but actual UK beer volumes have fallen by 24% in the same time period – it’s clearly not working and we are calling for a review in the Chancellor’s Budget.”

He said highlights of the current year so far include today’s launch of their latest beer, Cosmic Brew, in collaboration with Prof Brian Cox, the signing a new contract with Marco Pierre White to brew and market the Governor Ale, and to launch the Governor Lager, as well as winning a Gold Medal and ‘Best Show Garden’ at the RHS Flower Show at Tatton Park with the ‘From hop to glass’ garden that was created for JW Lees by designer Leon Davis and which now resides at The Golden Pheasant in Cheshire.

“We are also delighted to report that we have recently exchanged contracts to build a new pub at the Woodford Aerodrome site in Stockport as part of Redrow’s Woodford Garden Village 500-acre development of over 1,000 new homes.

“There is strong positive momentum at JW Lees, focused around putting the brewery at the heart of the JW Lees business.

“We have some great pubs, run by great people and have big ambitions.”

He added: “2018-19 has started well for us with total sales for five months to August +12.8% and EBITDA up 33.7%.

“JW Lees remains an active buyer of high quality managed pubs, tenanted pubs, inns and hotels.”