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Adnams plc Results for the 12 Months to 31 December 2011

Adnams, the brewer, distiller and retailer, has today published its Report & Accounts for the 12 months to 31 December 2011, showing sales of £54.6m and a £3.3m operating profit (before exceptional items).

The Company, which collected several awards for its beer and spirits throughout the year, reported a 7% growth in beer volumes and a 13% increase in like-for-like turnover in its Cellar & Kitchen business. In his report, Chairman Jonathan Adnams, pictutred,  noted that economic uncertainty is greater now than at any recent time, but said that the business would not be distracted from its long-term goals and would continue to invest for the future.

The Adnams Report & Accounts highlights include:

· Sales of £54.6 (2010: £50.9m)

· Pre-exceptional operating profit £3.3m (2010: £3.2m)

· Final Dividend £1.25, (2010: £1.22)

· Adnams beer volumes up 7%

· Adnams beer prices again held for Adnams pubs and free-trade customers

· Adnams continues to build a long-term sustainable business for the future

 

Commenting on the performance in 2011, Jonathan Adnams, Chairman, said:

 

“The Adnams business enjoyed a good year in 2011, in continuing difficult economic circumstances. We brewed 7% more Adnams beer in 2011 than in 2010, and on the retail side our profit per pub was up by 15% and our like-for-like shop turnover was 13% higher. I am pleased to say that we increased our pre-exceptional operating profit by 2.8% from £3,188,000 to £3,277,000 and on the back of this we are proposing an increase in our dividend for 2011.

 

“For many years Adnams has championed the importance of taking a long-term view. We firmly believe that it is by taking a values-based approach to business, building trust and loyalty with our customers, employees and shareholders that we carve a path to sustainable business success. By investing for the long-term, we have been able to make reductions in our carbon emissions and it is this approach that has contributed to our being able to hold Adnams beer prices for the 4th consecutive year.

 

“We continue to innovate with new products and have been delighted with the success of Ghost Ship, and with Sole Star, our full-flavoured 2.7% abv beer which we launched just before Christmas. During 2011 we brewed over 30 different Adnams beers bringing back many well-known favourites such as Old Ale, which was crowned Champion Beer of East Anglia. It is enormously pleasing that recipes which we have been brewing for 100 years are still winning awards today.

 

“As ever, I am immensely proud of the work we have done throughout the year with our communities. The Adnams Charity, now in its 21st year has awarded over £800,000 to good causes within a 25-mile radius of Southwold during this time. We continue to support a wide variety of local and national events from Suffolk Dog Day to the Tour of Britain cycling event. Our own Adnams 10k run in Southwold now attracts over 700 people and has become a firm fixture in our calendar and we were delighted to welcome back Olympic legend Steve Cram once again in 2011.

 

“Despite sounding a note of caution about economic uncertainty, our response to the current conditions is to keep an eye on costs, but we will not be distracted from our long-term goals and will continue to invest for the future.”

 

Ends

 

Notes to Editors

Adnams, the brewer, distiller and retailer, is an independent values-based business committed to a sustainable future. It has been brewing from its base at Southwold on the Suffolk coast for over 100 years and produces a range of cask and bottled beers which are available in pubs and supermarkets nationwide.  The company has an estate of pubs, hotels and a chain of successful Cellar & Kitchen  stores. For further information about Adnams visit adnams.co.uk.

 

For further information contact:

Emma Hibbert Head of Corporate Affairs Adnams

Emma.hibbert@adnams.co.uk | 01502 727256 | 07766 206203

 

Chairman’s Report in full:

 

The Adnams business enjoyed a good year in 2011, in the difficult economic circumstances. We brewed 7% more Adnams beer in 2011 than in 2010, and on the retail side our profit per pub was up by 15% and our like-for-like shop turnover was 13% higher. I am pleased to say that we increased our pre-exceptional operating profit by 2.8% from £3,188,000 to £3,277,000 and on the back of this we are proposing an increase in our dividend for 2011. The final dividend will be £1.25 per ‘B’ share, a 2.5% increase.

 

There is no doubt that the UK economy is facing harsh times. Adnams has always sought to invest for the long term, but we also need to make sure that our business is appropriately structured for the business conditions that we face. With this in mind we have toughened the criteria that we use to assess when our assets should be written down in value. We have moved to looking at each pub and each store as a separate entity and not as part of a group. This change in approach has in part driven the exceptional charge in this year’s accounts. £0.9 million of the £1.7 million charge arises from impairment provisions and £0.8 million from closure costs.

 

Whilst we are pleased with the performance of our beer business in 2011, we are equally aware that the market has become increasingly difficult each year. Industry statistics suggest that cask ale declined by 1.9% in 2011 and bottle and canned ales declined by 2.8%. Despite the long-term decline in beer consumption, particularly beer drunk in pubs, the government seems to be intent upon continuing with its predecessor’s policy of making major annual hikes in beer duty. We believe that this more than anything else is discouraging pub visits and adding to the rate at which pubs have been closing. This policy has serious adverse employment consequences and pushes alcohol consumption away from the supervised environment of pubs. There is a growing feeling that the government should institute a wider review of beer duty and we would strongly support such a call. Current policies have led to a spiralling cost of beer in pubs and to a growing inequality in the cask beer market where some smaller brewers are being subsidised to the tune of £200,000 per annum each.

 

The biggest driver of our beer business success in 2011 was the market for drinking at home. Having had a tough 2010, this business made a major move forward in 2011. Over 20% of our beer is now sold in bottles, cans and mini-casks.

 

One other notable success in the year was the distillery that we opened towards the end of 2010. It had a very promising first year of operation. As a new business, the volumes sold have inevitably been small, but they exceeded our expectations and we are looking for strong and continued growth over the next few years, with some exciting new product launches.

 

Our pub estate benefited from good consistent trading. Despite our having a slightly lower average number of pubs, beer barrelage grew in 2011, with our own beers being particularly strong. Over the last few years we have sold a few pubs which we feel do not fit our strategy and added a small number that do. I am delighted to report that we made a first rate acquisition in September when we bought the White Horse at Blakeney, a coastal pub with rooms and an excellent reputation for food.

 

We saw some very strong year-on-year sales growth within our shops, a good performance in a very difficult retail market. On the other hand we had a year of change in terms of openings and closures which led to extra cost. This business is an important part of our future strategy and whilst we have had a Cellar & Kitchen store in Southwold for many years, the expansion into other locations has been relatively recent. Inevitably, we have found that some locations have traded better than others and we conducted a thorough review during the year which led to some relocations and closures, and we also opened three new stores, two of which were in London.

 

Our hotels business started the year well, but trading conditions toughened notably from May onwards. We suspect that reduced hotel visits have been a way in which some have been able to tighten their belts. It may also be the case that the typical clientele of the Adnams hotels has been disproportionate losers from the UK’s monetary policy. Whilst very low interest rates help borrowers, they have the opposite impact on savers and will inevitably have meant that some have needed to cut-back their spending.

 

Trust is a very valuable commodity. Sadly British business has lost much of the trust that it needs. Firms that exploit their customers, their suppliers, their staff, their community or their environment lose the vital ingredient that gives them long-term value. Nobody is consistently beyond reproach, but it is important that firms try to behave towards others as they would expect others to behave towards them. Adnams has long held to a values-led approach. We have invested in relationships, sought to treat others fairly and built strong community support by working with schools and colleges, engaging in projects with our neighbours, supporting charities and much besides. We believe that trust is all the more important in difficult economic times.

 

Another aspect to our approach is staff remuneration. We make no claims to be high payers, but we do seek to provide a good range of benefits and we have stood clear of the gross pay inequality that has been seen in some other places. The ratio of our highest salary to our average salary is a relatively modest 8.8 times. We have avoided the complex senior staff incentive schemes which were so popular until recently. We believe that a better result comes from paying our staff a fair salary, an occasional bonus and from encouraging an ethos of doing the right thing.

 

Outlook

I have sounded a note of caution in my statements over the last few years, but I am feeling that economic uncertainty is greater now than at any recent time. Business confidence indicators are low and there is constant talk of a further recession. Despite this, there is the prospect that the Jubilee, Olympics and other events may improve sentiment, as we saw last April with the Royal Wedding. Our response to current conditions is to maintain caution and to keep an eye on costs, but not to be distracted from our long-term goals and to keep investing for the future. I thank you for your continued support.

 

           

2011

2010

Profit and Loss

For the year ending 31 December  2011

         

£000

£000

Turnover  

54,570

50,912

Operating expenses (including exceptional items)  

(52,961)1)

(47,724)

Operating profit before exceptional items

3,277

3,188

Exceptional operating items

(1,668)

         

 

 
Operating profit

1,609

3,188

Profit on disposal of properties

98

Interest receivable    

1

1

Interest payable    

(356)

(458)

Other finance income/(charge) on pension scheme

45

(11)

Profit on ordinary activities before taxation

1,299

2,818

Tax on profit on ordinary activities

(796)

(664)

Profit for the financial year

503

2,154

Earnings per share basic and diluted
‘A’ Shares of 25p each

26.7p

114.1p

‘B’ Shares of £1 each

106.6p

456.5p

 

Balance sheet  
As at 31 December 2011  

2011

2010

£000

£000

Fixed assets
Tangible assets

38,341

37,334

Investments

298

136

38,639

37,470

Current assets
Stocks

5,147

4,230

Debtors

7,132

5,957

Cash at bank and in hand

14

19

12,293

10,206

Creditors: amounts falling due within one year

(23,776)

(19,545)

Net current liabilities

(11,483)

(9,339)

Total assets less current liabilities

27,156

28,131

Creditors: amounts falling due after more than one year

(304)

(288)

Provision for liabilities

(611)

(898)

(915)

(1,186)

Net assets excluding pension liability

26,241

26,945

Pension liability

(4,011)

(1,868)

Net assets including pension liability

22,230

25,077

Capital and reserves
Called up share capital

472

472

Share premium

144

144

Profit and loss account

21,614

24,461

Equity shareholders’ funds

22,230

25,077

 

 

All amounts relate to continuing activities.

The Directors have recommended a final dividend for the financial year ending 31 December 2011 of 125% per share on the ‘A’ and ‘B’ Ordinary Shares. This amounts to £1.25 per ‘B’ share and 31.25p per ‘A’ share, a 2.5% increase on the previous year. The dividend will be paid on 2 May 2012 to the shareholders on the register at 10 April 2012. In line with UK accounting standards, the 2011 final dividend has not been accounted for within the above financial statements.

The information contained in the above profit and loss account and balance sheet has been extracted from the audited accounts of Adnams PLC for the year ended 31 December 2011. The statement preceding the profit and loss account is unaudited.