Adnams, the Suffolk brewer, distiller and retailer, has today published its Report & Accounts for the 12 months to 31 December 2014, showing sales of £66.0m and a £3.8m operating profit.
The Company reported a growth in beer volumes approaching 10% and a return to profit for its Adnams Shops business. Commenting on the performance in 2014, Jonathan Adnams OBE, Chairman, said, “2014 was a strong year for Adnams. We recorded our highest ever brewing year, saw continued growth in sales of our spirits and achieved profitability within our shops. We were delighted to receive a number of awards for our beers and spirits, notably the International Wine & Spirit Vodka Trophy for Adnams Longshore Vodka and Gold awards for Ghost Ship, Dry Hopped Lager and Mosaic. This success has continued this year with Adnams Dry Hopped Lager winning a Gold medal at the SIBA (Society of Independent Brewers) Beer Competition last week. The economic outlook is by no means certain, however we are making a confident statement in announcing the start of a major and innovative project to expand and improve our brewery and distillery. We have regularly made the point that Adnams is about the long term, that is our commitment and it will remain the case.”
The Adnams Report & Accounts highlights include:
· Sales of £66.0m (2013: £60.5m) +9.1%
· Operating profit £3.8m (2013: £3.3m) +14.7%
· Final Dividend £1.36 (2013: £1.28) +6.25%
· Debt down £2.7m at £8.0m
· Adnams beer volumes up 9.7%
· Adnams spirits volumes up 37%
Ends
Notes to Editors
Adnams, the brewer, distiller and retailer, is an independent family values-based business committed to a sustainable future. It has been brewing from its base at Southwold on the Suffolk coast for over 140 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 Adnams Stores. For further information about Adnams visit adnams.co.uk.
For further information contact:
Emma Hibbert PR & Marketing Director Adnams
Emma.hibbert@adnams.co.uk | 01502 727256 | 07766 206203
Chairman’s Report in full:
Adnams Plc Annual Accounts 2014
Chairman’s Statement
I am very pleased to be reporting a strong year for Adnams in 2014. We have seen our operating profit grow by 15% to £3.8 million on the back of a 9% increase in turnover to £66.0 million. Sales of our own beer reached their highest ever levels at over 95,000 barrels (over 27 million pints) and at the same time our debt levels fell by £2.7 million to
£8.0 million. We are recommending a 6.25% increase in our final dividend.
We have been growing and strengthening the Adnams brand over a long period of time and our name and reputation, backed-up by high quality products, have served us well in very competitive markets in the last year. A lot of things came right for us in 2014, much of which were down to our own strategies and some were down to a stronger external environment. The economic upturn that we saw in the second half of 2013 continued during 2014 and the beer market showed its first increase in volumes for many years. The weather too was relatively benign for much of the year.
It was very good news in April that the Chancellor made a second cut in the rate of beer duty. We have still seen an exceptionally large hike in duty rates since 2008, but the smaller reversals that we have seen in this trend in the last two years have definitely helped to provide some confidence for the future. The 2015 budget is due to take place at roughly the same time as these accounts will be signed and we hope that we may hear another positive message with regard to beer duty.
It was very encouraging to see an increase in total UK beer consumption in 2014, sales of which were up by 1.3%, with cask ale seeing a 1.1% increase. Whilst cask beer is still the larger part of our production, our non-cask production is increasing fast, rising by 15% in the last year. An important part of this was from a strong growth in our kegged beer products, with Mosaic Pale Ale and Dry Hopped Lager both performing well. We also saw continuing growth in our bottled and canned business, though at a rate slower than the substantial growth that we saw in 2012 and 2013. For the market as a whole a landmark was reached in 2014 with beer consumption in the off-trade surpassing on-trade consumption. For other drinks and in many other countries this has long been the case, but in the UK beer has been strongly associated with pubs and it is a notable event that more beer is now being consumed at home.
Adnams is well placed to participate in the growing market for craft beers, both in cask and keg. We have an established reputation, a first class range of products and an ability to innovate and respond to consumer demands. Alongside this, we need equipment that gives us the flexibility to deliver what the market requires. This is the backdrop to a major investment programme that we will be undertaking between now and 2018. We will be spending some £7 million on the brewery to ensure that we have the capacity to produce not just our core cask ales, but also the kegged, canned and bottled products that are in increasing demand.
Our spirits business has grown very rapidly in the four years since we opened our distillery and our production facilities have already reached full capacity. The quality of our products was recognised in 2013 when we won the International Wine & Spirit Competition’s Gin Guild Trophy and again in 2014 when we won the equivalent vodka award with Adnams Longshore Vodka. These markets, and the market for whisky, offer great potential for small artisan producers such as us. To meet growing demand we are enlarging the distillery site and installing two further pot stills and extra storage tanks. This will cost around half a million pounds and it will form the first phase of the larger project being undertaken in our brewery as already mentioned. The enlarged distillery will be in use by January 2016.
We sold six pubs during 2014, and two others have been sold since the year end. Shareholders will be aware that we have been selling less sustainable pubs in recent years. This is a strategy being pursued by a number of pub owners, but it also accords with our move towards being increasingly branded as Adnams and structuring the ways in which we serve customers and present our brand. In parallel with this strategy we have temporarily managed a few smaller pubs whilst seeking new tenants. This is generally preferable to short term closure or using an external management company.
Our strategy in recent years has been to manage our own hotels, the Swan and Crown, whilst having tenants, and in some instances, lessees, run our pub estate. We are now managing our property assets on a more integrated basis, including temporary management of some properties. Most notably we are investing substantially in the White Horse at Blakeney, which we bought in 2011 and initially leased. This property is being substantially refurbished and will be managed by Adnams on reopening with the aim of re-establishing it as a leading North Norfolk pub and hotel.
Our shops business has been one of the successes of 2014. We observed last year that trading was improving and this trend continued into 2014 with good cost control, improved use of data and a stronger group of shops. We are also increasingly focussing on the shops as outlets for the Adnams brand and almost half our sales are now of products bearing our name. We closed two outlets: Bloomsbury and Waterside, and opened a new shop in Aldeburgh. The latter has traded very well since it started and may prove to be a good model for smaller units that might open elsewhere. We are in the process of reviewing a number of locations within the broader East Anglian area where we might open shops in 2015.
We are also looking at other pre-Christmas pop-up opportunities having had another successful year with a pop-up in the Chapelfield centre in Norwich.
We have already announced two new appointments to the Adnams board which will take place at the 2015 AGM. The first announcement was of Karen Hester, who has been our Operations Director since 2007 and who joined Adnams in 1988 as a part-time cleaner. Karen is a true exemplar of the fact that with talent and determination a route to the top is available to anyone. In 2008 Karen won the title of East of England Business Woman of the Year and in 2013 won the CBI First Women Business of the Year title in recognition of Adnams’ success in supporting women employees to reach their full potential. The second appointment is of Guy Heald who has been a long term supporter of Adnams. His family, initially the Robinson family, has been involved with Adnams since its very early days and Guy is a major shareholder. Guy has been an Adnams Charity trustee since 2004, he has had a successful international career in finance and has wide ranging interests in Suffolk. These appointments will increase the Adnams board from six to eight. Aside from me, we will have three executive directors and four non-executives, three of whom are independent.
Those shareholders who have attended recent Adnams AGMs will know how crowded these have become. We have reached the point at which St Edmund’s Hall can no longer support our needs and there is no alternative venue in Southwold of a suitable size. This has led us to relocate the 2015 AGM to Snape Maltings, which offers excellent facilities and a suitably sized hall at the Britten Studio. Whilst we will provide the opportunity to talk to directors after the meeting, over teas and coffees, we will not be able to provide lunch. The notice of meeting is on page 21 and I look forward to seeing shareholders there.
Outlook
2014 was a strong year for Adnams, our market positioning worked for us, we traded well, the external environment was quite benign, the beer market grew, there was reasonable weather and there was economic growth. In 2015 we may see more of the same, but there are undoubtedly greater uncertainties over the Eurozone and over the result of the UK general election in May.
We have nonetheless made a statement of intent and confidence by starting a major and innovative project to expand and improve our brewery and distillery. We have regularly made the point that Adnams is about the long term, that is our commitment and it will remain the case. My thanks go to our shareholders for their support.
Jonathan Adnams OBE
Chairman
| Profit & loss account
For the year ended 31 December 2014 |
||
| 2014
GBP 000 |
2013
GBP 000 |
|
| Turnover | 66,032 | 60,500 |
| Operating expenses | (62,217) | (57,175) |
| Operating profit | 3,815 | 3,325 |
| Profit on disposal of properties | 626 | 1,100 |
| Interest receivable | 1 | 1 |
| Interest payable | (312) | (299) |
| Other finance income on pension scheme | 2 | 1 |
| Profit on ordinary activities before taxation | 4,132 | 4,128 |
| Tax on profit on ordinary activities | (913) | (882) |
| Profit for the financial year | 3,219 | 3,246 |
| Earnings per share basic and diluted | ||
| ‘A’ Shares of 25p each | 170.6p | 172.0p |
| ‘B’ Shares of GBP1 each | 682.2p | 687.9p |
| Balance sheet
As at 31 December 2014 |
||
| 2014
GBP 000 |
2013
GBP 000 |
|
| Fixed assets | ||
| Tangible assets | 35,481 | 36,886 |
| Investments | 5 | 188 |
| 35,486 | 37,074 | |
| Current assets | ||
| Stocks | 5,921 | 5,415 |
| Debtors | 7,862 | 7,227 |
| Cash at bank and in hand | 1,202 | 15 |
| 14,985 | 12,657 | |
| Creditors: amounts falling due within one year | (9,885) | (10,046) |
| Net current assets | 5,100 | 2,611 |
| Total assets less current liabilities | 40,586 | 39,685 |
| Creditors: amounts falling due after more than one year | (8,483) | (9,483) |
| Provision for liabilities | (415) | (475) |
| (8,898) | (9,958) | |
| Net assets excluding pension liability | 31,688 | 29,727 |
| Pension liability | (9,174) | (4,546) |
| Net assets including pension liability | 22,514 | 25,181 |
| Capital and reserves | ||
| Called up share capital | 472 | 472 |
| Share premium | 144 | 144 |
| Profit and loss account | 21,898 | 24,565 |
| Equity shareholders’ funds | 22,514 | 25,181 |
All amounts relate to continuing activities
The Directors have recommended a final dividend for the financial year ending 31 December 2014 of 136% per share on the ‘A’ and ‘B’ Ordinary Shares. This amounts to GBP1.36 per ‘B’ share and 34p per ‘A’ share, a 6.25% increase on the previous year. The dividend will be paid on 1 May 2015 to the shareholders on the register on 7 April 2015. In line with UK accounting standards, the 2014 final dividend has not been accounted for within the above financial statements.
Adnams PLC confirms that none of its directors combines either one executive directorship with four non-executive directorships or eight non-executive directorships.
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 2014. The statement preceding the profit and loss account is unaudited.