Charles Wells reports year of steady progress: Charles Wells has reported a year of steady progress and a significant reduction in its debt. With a stated aim of bringing the total level of debt down in 2013, borrowings at the end of the year were £44.7m, a reduction of £18.8m on the previous year. This was driven by the sale of its distribution depot in Bedford and the company divesting Kestrel Super Strength beer, a non-core brand, from its UK portfolio at the start of the financial year. Trading performance showed a fall in sales income of £7.9m to £181.6m and operating profit before exceptional costs was £0.4m lower than last year at £6.2m. This decrease was anticipated because of the loss of third-party brewing contracts and the sale of Kestrel but was, in part, offset by the exceptional income from the sale. Profit after tax was up 8% and adjusted EBITDA for the Group fell 20% to £13.9m. Wells & Young’s sales fell £8m to £161.9m, reflecting the sale of Kestrel which had contributed sales of £8.7m the previous year. The decision to sell was in line with the business’s strategic plan to reduce exposure to the super-strength lager market and develop a clearly defined portfolio which saw a number of new product launches including Wells DNA and McEwan’s Red. An outstanding balance to Young & Co’s Brewery plc of £5m remains for the purchase of the Wells & Young’s Brewing co Ltd shares and will be paid in February 2014. Although focus has been maintained on core overseas distribution, international sales have also expanded into a number of emerging markets and the Cockburn & Campbell wines and spirits business recorded gross profit growth of 12%. Sales for Charles Wells Pub Company were down 3.5% in a year that had seen a 4.6% reduction in the average trading estate to 203 houses. Whilst 18 smaller and unviable sites were sold, the Company continues to invest in pubs and spent £3m on property refurbishments with EBITDA per pub rising 3.4%. In France, the John Bull managed estate opened its ninth pub, with house net profit rising 13.5% and EBITDA close to breaking through the €1m mark. Paul Wells, chairman of Charles Wells, said: “We can report a year of steady progress with financial results being better than forecast at last year’s Annual General Meeting. Net profit before tax for the year grew slightly and overall trading has been better than expected, with good summer weather, new initiatives and new markets all key features in growing sales. Whilst exceptional items such as restructuring following the loss of brewing contracts and the sale of Kestrel have impacted on the headline figures, we have worked hard to mitigate these losses and have some further exciting new initiatives planned for 2014. Careful control of costs, including a 17% reduction in administration overheads by Charles Wells Pub Company, has helped protect our financial position and reduction of debt ensures we’re well positioned to grow the business. Our tax obligation remains high, with the percentage of tax paid in relation to turnover rising to 44%. However, the cancellation of the duty escalator and cut in duty of 1p per pint helps to ensure that we will continue to invest in high quality pubs in the UK. Our brand portfolio includes an unrivalled mixture of traditional and imaginative beers and we look forward to strengthening our reputation by bringing interesting new beers to market in 2014.”