McMullen posts growth but warns on impact of tax and bureaucracy

Award-winning brewer, pub and bar operator McMullen has announced its results for the year to 1 October 2011.

Highlights:

• turnover up by 3.5% to £60.8m compared with the 53 week period in 2010
• profit before tax and exceptional items up by 24% from £5.9m to £7.4m
• good performance from managed pubs and, in particular, recent acquisitions
• phasing of pub repair programme resulting in lower spend than in 2010
• total sales in managed houses were up 5.8% with like-for-like sales up 2.5%
• draught volumes level with previous year; encouragingly, volumes of McMullen’s own brewed ales up 1.6%
• acquisitions made in 2010 – The Nag’s Head in Bishop’s Stortford , and the Heron on the Lake in Fleet – re-opened after refurbishment and both trading well ahead of expectations.
• the two sites in central London continued to perform very well

Peter Furness-Smith, Managing Director, comments:

“After a good start to the current financial year with like-for-like sales in managed houses up 3.7% at the end of March they are now up only 1.2% after a very challenging last 10 weeks, largely due to the disappointing weather.”

The burden of tax and bureaucracy

Mr Furness-Smith went on to warn on prospects:

“The outlook is less certain as Government policy continues to load tax and bureaucracy costs onto the pub sector which is forcing us to reconsider our investment plans. Even before the latest inflation busting increase in duty and a new tax on gaming machines, around a third of our sales goes straight to the Exchequer in the form of tax (VAT, beer duty, corporation tax, business rates, employer’s national insurance, etc), which increased by more than £2m over the previous year.

“This means that we hand over to the Exchequer over three times as much in tax as we make in profit. Even more incredibly, we pay the Government over 20 times more than what we pay out in dividends to the investors who risk their capital investing in our pubs and the local economy.

“This is clearly not conducive to stimulating investment and growth let alone creating employment opportunities.”

Team training and development

McMullen’s growth has seen an additional 27 full time employees added this year, to a total of 997, and an impressive and ongoing commitment to their employees:

“… we invest over £500k pa in training and the development of our teams.  This investment in people is essential as we strive to give all our customers a consistently good experience as well as filling most management vacancies internally.”

However, Mr Furness-Smith warns that this progress made in creating new jobs will not be maintained without Government adopting a supportive attitude towards pubs with action on reducing general bureaucracy and taxation.  A substantial reduction in VAT for pubs would encourage more socialising in pubs and help to reverse the trend of cheap supermarket alcohol being consumed in unsupervised environments. This in turn would lead to the creation of more jobs and would quickly generate more revenue for the treasury.

Summary of results