Marston's premium pubs and beers reported profit growth across the board despite cost pressures and economic uncertainty in the sector.
The operator of Pitcher & Piano and Revere reported underlying revenue of £905.8m, up seven per cent for the year ended 1 October.
Profit before tax increased by seven per cent to £98m.
The average profit per pub was up eight per cent in 2016 and has doubled since 2012.
Results were in line with October's trading update, with like-for-like sales up 2.3 per cent in Marston's destination and premium arm and like-for-like sales up 2.7 per cent in taverns.
The company's beer brands are performing well, with volumes increasing by 13 per cent in 2016.
The company completed 22 new pubs and bars this year and six lodges, which takes the estate to more than 950 rooms.
Why it's interesting
Marston's strategy is to focus on operating and expanding its high-quality pub estate by investing in new, location-specific pubs and bars and in accommodation.
The company focuses on "putting the right pubs in the right place", chief executive Ralph Findlay said, rather than taking a one-size-fits-all approach.
The new-build programme, which has opened more than 150 new pub-restaurants since 2009, is driving growth.
The business invested about £70m into new builds in 2016.
Marston's has zeroed in on the growth market of locally-made premium beers. The pub operator's core brewing business grew in terms of revenue and earnings, and was helped by the integration of the Thwaites beer business, acquired in April 2015 for £25.1m.
What Marston's said
Findlay said the businesses' growth is encouraging, particularly the performance of the brewery.
He said trading in the first few weeks of the new financial year has been solid, and he predicted no change from last year's trends, with most of the company's major product cost lines contracted for 2017 and 2018.
We have a high quality pub and beer business which is displaying positive momentum and is consistently outperforming the market. We believe that, despite some continuing market headwinds, our expansion plans for new pub-restaurants, lodges and Revere bars will further enhance our ability to deliver attractive returns.
What others said
Paul Hickman, analyst at Edison Investment Research said:
Over the past six years Marston’s has morphed most of its old-style tenancies into managed or franchise-style operations, so that it now has 80 per cent of pub profits from managed or franchised operations. As well as making commercial sense, this greatly reduces the impact of the new Market Rent Only (MRO) regulation which enables tenants to opt out of tied drinks supply.
The flip side of that is that it does expose the company more directly to cost pressures such as the National Living Wage, food inflation, and Business Rates increases, although arguably stronger businesses are better able to manage such pressures.