Brakspear warns on VAT rise as profits fall
A scheduled 2.5% rise in VAT will hit drinkers hard at a time when trading is already tough, the new chief executive of Oxfordshire-based pub firm WH Brakspear has warned.
Tom Davies, who stepped up from his role as commercial director to replace Don Bridgman earlier this month, made the comments as the firm revealed a 33% fall in pre-tax profits to £3.4m for the year to 31 December 2009. Annual turnover was up 5% to £13.2m.
Brakspear is owned by JT Davies, which acquired the business in 2006 in a deal that valued it at £106m. Last year, JT Davies sold its Mayor Sworder wine business to concentrate on running its Brakspear pubs.
Davies told Caterer that although trading for the year was not "fantastic", the main reason for the fall in profit was tough comparatives because of disposals the company had made in the previous year, as well as increased costs in the 2009 accounts as a result of the consolidation of the two firms.
"I don't think the figures are that relevant in terms of the trading but we have already seen a big improvement since then and we are cautiously optimistic," he said. "We are still bedding down the integration of JT Davies and Brakspear. Things are going to go up and down for a time while we bed ourselves in. Trading was tough, as it was for everyone, but I am pleased to say that this year is looking a bit better."
Sales of Brakspear's own ales, which are brewed under licence by Marston's, were "marginally ahead" throughout 2009, thanks in part to Brakspear's decision to absorb alcohol duty increases for two consecutive years. And Davies added that good weather in May, June and July of this year had also helped lift sales. But he warned that even though Brakspear would look at each duty increase as it came along, it certainly wouldn't be able to absorb the VAT rise: "The VAT rise is once again driving the price of your pint up at a time when other cuts are happening and there are going to be job losses and tax increases. It is going to be another thing that is going to hit us," he said.
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By Neil Gerrard
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