Adnams, the Suffolk brewer, distiller and retailer, has today published its Report & Accounts for the 12 months to 31 December 2012, showing sales of £56.9m and a £3.4m operating profit.
The Company, which won two prestigious awards during 2012 (the Queen’s Award for Enterprise: Sustainable Development and Investors in People Gold), reported a 3.8% growth in beer volumes and a 3.3% increase in like-for-like turnover in its Cellar & Kitchen business. In his report, Chairman Jonathan Adnams remarked that the business’s performance in 2012 proved robust despite the challenging market conditions and that whilst conditions continue to be tough, the company is committed to building for the long-term.
The Adnams Report & Accounts highlights include:
· Sales of £56.9m (2011: £54.6m) + 4.3%
· Pre-exceptional operating profit £3.4m (2011: £3.3m) +3.5%
· Final Dividend £1.28 (2011: £1.25) + 2.4%
· Adnams beer volumes up 3.8%
· Take Home beer volumes + 14%
· Adnams beer prices held for the fifth year in a row for Tied and Free-trade
customers
· Strong growth over the last two years for the Adnams award-winning distillery
Commenting on the performance in 2012, Jonathan Adnams, Chairman, said:
“Adnams enjoyed a good year in 2012, despite the challenges of tough markets and lack of economic growth. Our turnover increased 4.3% to £56.9 million, our operating profits increased 3.5% to £3,392,000 from £3,277,000 (before exceptional items), our debt fell £1.7 million to £13.7 million and the quantity of Adnams beer sold rose by 3.8%.
“Adnams prides itself on doing the right thing, regardless of the market conditions. With this in mind, we were delighted to have received two very prestigious third-party endorsements during 2012. At the start of the year, we were awarded the Queen’s Award for Enterprise: Sustainable Development, the second time that we have won this award. At the end of the year, we also received Investors in People Gold, which is testament to the processes, procedures and support that we provide for our people and for their development.
“The markets that Adnams operates in have been challenging and this hasn’t been helped by external factors such as government policy or indeed the poor British weather. We have continued to support our customers throughout these difficult times by holding Adnams beer prices. 2013 will be the fifth consecutive year that we have held the price of Adnams beer (with the exception of duty) to our Tied Estate and free-trade customers. We welcomed the Chancellor’s decision to reduce beer duty by 2% and scrap the ‘beer duty escalator’, a policy that has been extremely harmful to beer and pubs.
“2012 was a difficult year for the economy, but we came through it well and achieved both beer volume and good profit growth. We did many of the right things to improve in 2012 and we believe that our long-term view will continue to hold us in good stead over the years to come.”
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 and hotels and a chain of 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:
Adnams enjoyed a good year in 2012, despite the challenges of tough markets and lack of economic growth. Our turnover increased 4.3% to £56.9 million, our operating profits increased 3.5% to £3,392,000 from £3,277,000 (before exceptional items), our debt fell £1.7 million to £13.7 million and the quantity of Adnams beer sold rose by 3.8%.
There seems now to be almost an acceptance that the UK economy is stagnant and a flat line economic performance is becoming the norm. In many cases the income of consumers, allowing for inflation, has been falling. Adnams operates in some very tough markets. Beer consumption is declining, several high profile bankruptcies have demonstrated the challenges faced by retail businesses, and hotels, notably those outside London, have had a very difficult year.
Government policy has done little to help. In particular the continuing ‘beer duty escalator’ under which each successive year has seen an increase in excise duties at a rate ahead of inflation, has been extremely harmful to both beer and pubs. A 42% increase in beer duty since 2008 has been accompanied by a 17% fall in beer consumption and closure of 5,800 pubs.
We have also seen a lack of government interest in reducing the duty inequality between small brewers and their slightly larger competitors. As a measure of this, if Adnams had paid duty at microbrewer rates its profits would have been £5.4 million (160%) higher in 2012.Industry data suggests that the cask beer market fell by 2.5% in 2012 whilst the overall market for beer declined by 4.7%. It is encouraging to see a little more evidence that cask beer is a growing proportion of beer consumption, even though the overall total is falling. Our brewing and brands business made a profit of £1,792,000 in 2012. This was 4% down on the previous year, though without the loss that we suffered as a result of the insolvency of the large wholesaler, Waverley The Beer Seller, the result would have been ahead of 2011. As with last year the strongest growth within our business was in the take home trade, though interestingly the much anticipated point at which home consumption exceeds consumption in pubs has been deferred another year as sales through pubs and sales through shops fell by almost identical amounts.
Our distillery has now been open for a little over two years and we have seen strong growth in both of those years. We are also seeing an increasing interest amongst those keen to follow in our footsteps and we suspect that plenty more micro-distilleries will open in the next few years. In part this reflects the strength of the markets for gins and whiskies, and it also reflects the quality and new flavours that specialist craft producers can offer. Our gins and vodkas continue to win awards and grow in recognition and our liqueur range has been establishing a popular following. There is growing interest too in the Adnams whiskies that we will launch at the end of 2013.
Our pubs business enjoyed a very good 2011 and continued to do well in 2012. We are fully aware of the economic pressures on pubs and closure rates are still running at around eighteen per week. Amongst other things, pubs have had to contend with the smoking ban imposed in 2007, with exceptional increases in beer duty, with widening leisure opportunities, with growing price competition from supermarkets (who have often used alcohol as a loss leader), and with an increasingly vocal health lobby.
We sold two pubs in the year and are currently looking at further sales. Wherever possible we seek to sell pubs as going concerns, and we have managed to do this for all pubs that we have sold in recent years. We understand a local pub’s importance to its community; indeed the first project for ‘The Pub is the Hub’ group was within the Adnams estate. In some circumstances, however, the fact has to be faced that a pub may no longer be sustainable. It is a dis-service to incoming licensees to encourage them to invest in a pub which offers no realistic chance of a profitable livelihood.
2012 proved to be a tough year for the Swan and Crown hotels in Southwold. Undoubtedly the wet weather that we saw from April onwards contributed to this, but we have noted in recent years that we suspect that spending on hotel visits has represented a relatively easy saving in harder economic times.
Our shops business had an improving year. We have worked hard to grow sales in the new stores that we opened in later 2011 and also at the Norwich store which opened in May 2012. Before allocating central costs, our shops business contributed a profit in 2012, but we believe that it can and should do better. Whilst the business overall is not in profit, it is nonetheless the case that, allowing for shared costs, our total profits are higher with the business than they would be without it.
In recent years we have enjoyed excellent continuity on the Adnams board, which has not changed since Steve Sharp joined us in 2007. 2013 will however see a change as William Kendall is leaving us after eleven years of service. William has a huge breadth of experience both of different industries and different roles. I would like to thank him very much for all that he has done for Adnams. We are delighted that Bridget McIntyre will be joining us on 1st May 2013 and a resolution to appoint her is included in the AGM Notice. Bridget was the UK Chief Executive of RSA Insurance until 2008 and before that she held senior roles at Aviva PLC. Since leaving RSA she has set up a Suffolk-based social enterprise company which focuses on improving the lives of women in the local community. We are sure that she will be a great addition to the Adnams board.
Adnams prides itself on doing the right thing. Making such claims is easy and it is important from time to time to benchmark ourselves against others. With this in mind we were delighted to have received two very prestigious third party endorsements during 2012. At the start of the year we heard that we had been awarded the Queen’s Award for Enterprise: Sustainable Development. This is the second time that we have won this award. Only a small proportion of applicants are successful and we feel that it speaks volumes for our long-term view. At the end of the year we received the gold award of the Investors in People, again a very prestigious and rarely awarded accolade. Investors in People benchmark performance against world class standards and this award is testament to our processes, procedures and support that we provide to our people and to their development.
Outlook
It is difficult to be too positive about an economy where things feel hard and give little sign of being about to improve. Our markets are tough ones and 2013 has begun as 2012 ended with difficult trading conditions, exacerbated in January with a covering of snow. Nonetheless we did many of the right things to improve our performance in 2012 and we believe that our long-term view will continue to hold us in good stead over the years to come. I am grateful for your continued support.
|
2012 |
2011 |
||||||
| Profit and Loss
For the year ending 31 December 2012 |
£000 |
£000 |
|||||
| Turnover |
56,922 |
54,570 |
|||||
| Operating expenses (including exceptional items) |
(53,530)1) |
(52,961) |
|||||
| Operating profit before exceptional items |
3,392 |
3,277 |
|||||
| Exceptional operating items |
– |
(1,668) |
|||||
|
|
|||||||
| Operating profit |
3,392 |
1,609 |
|||||
| Profit on disposal of properties |
267 |
– |
|||||
| Interest receivable |
1 |
1 |
|||||
| Interest payable |
(415) |
(356) |
|||||
| Other finance (charge)/income on pension scheme |
(61) |
45 |
|||||
| Profit on ordinary activities before taxation |
3,184 |
1,299 |
|||||
| Tax on profit on ordinary activities |
(729) |
(796) |
|||||
| Profit for the financial year |
2,455 |
503 |
|||||
| Earnings per share basic and diluted |
|
|
|||||
| ‘A’ Shares of 25p each |
130.1p |
26.7p |
|||||
| ‘B’ Shares of £1 each |
520.3p |
106.6p |
|||||
| Balance sheet | ||||
| As at 31 December 2012 | ||||
|
2012 |
2011 |
|||
|
£000 |
£000 |
|||
|
|
|
|||
| Fixed assets |
|
|
||
|
|
|
|||
| Tangible assets |
38,129 |
38,341 |
||
|
|
|
|||
| Investments |
247 |
298 |
||
|
38,376 |
38,639 |
|||
|
|
|
|||
| Current assets |
|
|
||
|
|
|
|||
| Stocks |
4,803 |
5,147 |
||
|
|
|
|||
| Debtors |
7,072 |
7,132 |
||