ADNAMS SOUTHWOLD
Interim Accounts 2020
RESILIENT ADNAMS SPIRIT
Chairman's Statement
OUR FOCUS ON
RESILIENCE, RECOVERY AND DOING THE RIGHT THING
RESULTS
The impact of the Covid-19 pandemic was just starting to become apparent as we finalised our 2019 full year Report & Accounts and we have since provided two updates on trading in 2020. The hospitality sector was one of the hardest hit as socialising became heavily restricted and pubs were required to close their doors. As a pub owner and pub operator ourselves, and with a drinks business heavily orientated towards the on-trade, our business was focussed on our online sales, to our supermarket partners and other shops. These sales represented only about one fifth of our normal trade.
The Government support schemes, particularly the Coronavirus Job Retention Scheme (furlough), discretionary grants, business rates relief and cut in VAT, have been enormously important to us. The
I would like to thank my Board colleagues and senior management who volunteered to take up to a 50% pay cut from lockdown and through the depth of the crisis.
As we noted in our AGM announcement, this backdrop means that these half year accounts show a loss. EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation, a commonly used proxy for cash generation before capital expenditure) for the period was -
In light of the onset of Covid-19 no final dividend was paid for 2019 and no interim dividend is proposed for 2020. The company benefits from a hugely supportive and loyal shareholder base. The Directors will keep the dividend policy under continuous review and return to paying dividends as soon as is appropriate.
We were delighted in
THE DRINKS BUSINESS
The Adnams drinks business has seen good growth in recent years in its sales to supermarkets and shops (our "Take Home" business). The dominant element of our drinks sales remains sales to pubs and other on-trade outlets and the closure of these outlets from 23rd March until beyond the first half of the year had a serious impact on this business.
As at the end of February our beer volumes were running just under 3% behind the prior year, but March sales were 25% behind and April 34%. Our on-trade business became restricted to small deliveries to pubs running a takeaway operation. We saw very strong growth in our Take Home sales where April volumes were ahead of 2019 by 57%. In the first half of the year, volumes in Take Home were ahead by 25%, whereas overall beer volumes were down by 25%. These numbers compare to industry volumes which show the total beer market down by 15%, cask ale sales down by 62%, and sales of premium bottled ales up by 19%.
Our export business performed strongly in the first two months of the year but not surprisingly faced tough trading conditions, yet it is seeing demand grow in our established markets.
A similar picture is apparent in our spirits business where total volumes sold for the first half of the year were down by 17%, however Take Home volumes rose by 25%.
In terms of products sold, Ghost Ship remains our most popular beer, and Ghost Ship 0.5% continues to show strong growth. Likewise with spirits, Copper House Gin is our bestseller. We continue to see strong customer and trade reviews for our products in the press and online which helps build awareness and drive sales.
Our investment in new brewing equipment, allowing us to produce beer ready for bottling and canning, has proved its worth at a time when the beer market has moved to selling the vast majority of its products in these formats. The implementation of JD Edwards in 2019 enabled us to respond positively to the significant growth in online orders during lockdown.
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ADNAMS PROPERTIES
The Adnams property estate, managed, leased and tenanted, was all closed from 23rd March until beyond the end of the half year, though some of the leased and tenanted pubs have offered a takeaway business. Most staff employed in the Adnams managed properties were placed on furlough following closure in March.
In 2019 the Adnams managed estate gained the
The half year result for our managed properties shows a loss, with full trading only possible up to
We've helped clean 1.3 million pairs of hands by supplying alcohol to the UEA. Over 5000 care packages have been delivered to front line workers and the local community.
ADNAMS SHOPS AND ONLINE
As drinks retailers Adnams was not required to close its shop estate when other properties closed in March, however we took the decision to do this in the interests of staff and customer welfare and because our online offering provided a strong alternative. We started reopening our shops in early June and whilst they are still building towards the turnover levels of last year, early signs are promising.
The Adnams online sales have represented a true highlight in a difficult half year. We have seen sales rise four fold compared to 2019 and whilst the reopening of other retail outlets, including pubs, will present a challenge in maintaining these sales, we have served many new customers and will have the opportunity to firmly establish this business in its improved position.
"AS EVER, IF ADNAMS DOES SOMETHING, IT DOES IT WELL"
MELISSA COLE , TELEGRAPH
FINANCE
Covid-19 struck at a point when Adnams was looking to harness the benefits of its relatively recent capital investments.
Our bank debt at
Focused control of cash and spending has ensured that Adnams banking facilities, which are all provided through Barclays Bank, have remained at
The pension scheme valuation has been updated for movements in the six months since the year end valuation. No revaluation is undertaken at the half year. The half year deficit is
THE FUTURE
Our diversified strategy has enabled the business to pivot and adapt to the changing environment quickly. Through controlling costs, maximising opportunities, and delivering operational excellence at pace has ensured that we have continued to grow the parts of the business that could operate. Our focus on resilience, recovery and doing the right thing has continued to grow our social capital with our incredible team, customers and others - as we approach the Adnams' 150th anniversary in 2022 we can look forward to building back better.
Jonathan Adnams OBE
Chairman
PROFIT AND LOSS ACCOUNT
For the six months ended |
Notes |
Unaudited |
Unaudited |
12 months to |
Turnover |
|
20,951 |
34,704 |
74,749 |
Operating expenses |
|
(24,462) |
(35,487) |
(74,030) |
Operating loss |
|
(3,511) |
(783) |
719 |
Profit/(loss) on disposal of assets |
|
- |
- |
62 |
Profit/(loss) on ordinary activities before interest and taxation |
|
(3,511) |
(783) |
781 |
Interest |
|
(303) |
(257) |
(525) |
Other finance charge on pension scheme |
|
(59) |
(112) |
(217) |
Loss on ordinary activities before taxation |
|
(3,873) |
(1,152) |
(877) |
Tax on profit on ordinary activities |
2 |
667 |
213 |
92 |
Profit/(loss) for the financial year |
|
(3,206) |
(939) |
29 |
(Loss)/earnings per share basic and diluted |
3 |
|
|
|
'A' Shares of 25p each |
|
(169.8)p |
(49.8)p |
1.5p |
'B' Shares of |
|
(679.4)p |
(199.0)p |
6.1p |
BALANCE SHEET
As at |
Unaudited |
Unaudited |
|
Fixed assets |
|
|
|
Tangible assets |
42,014 |
45,129 |
43,791 |
|
|
|
|
Current assets |
|
|
|
Stocks |
8,688 |
10,039 |
9,185 |
Debtors |
6,063 |
10,475 |
9,706 |
Cash at bank and in hand |
2 |
23 |
24 |
|
14,753 |
20,537 |
18,915 |
|
|
|
|
Creditors: amounts falling due within one year |
(14,793) |
(25,993) |
(17,411) |
Net current assets |
(40) |
(5,456) |
1,504 |
Total assets less current liabilities |
41,974 |
39,673 |
45,290 |
Creditors: amounts falling due after more than one year |
(10,198) |
(5,196) |
(10,196) |
Provision for liabilities |
(996) |
(742) |
(1,114) |
|
(11,194) |
(5,938) |
(11,310) |
Net assets excluding pension liability |
30,870 |
33,735 |
33,985 |
Pension liability |
(6,157) |
(7,795) |
(6,198) |
Net assets including pension liability |
24,623 |
25,940 |
27,787 |
Capital and reserves |
|
|
|
Called up share capital |
472 |
472 |
472 |
Share premium |
144 |
144 |
144 |
Profit and loss account |
24,007 |
25,324 |
27,787 |
Equity shareholders' funds |
24,623 |
25,940 |
27,787 |
Notes
1 Basis of preparation
The interim accounts, which have not been audited, have been prepared under the recognition and measurement principles of FRS 102. The 2019 full year accounts were audited. The accounting policies are unchanged from 2019.
Given the major uncertainties at this time, few businesses can have absolute confidence in their long-term position. We continue to manage cash carefully in the business and have concluded, based on our cashflow management over the past few months and our current projections, that Adnams continues to be soundly based thus the adoption of the going concern basis in these accounts is justified.
2 Taxation
The taxation charge is based on the estimated tax rate for the year. Profit on sale of assets includes property profits which are assumed to be reinvested and the tax rolled-over.
3 Earnings per share
Earnings per share is calculated by dividing the earnings available to ordinary shareholders by the issued ordinary share capital of
4 Impairment review
At the reporting date, our pubs, after 3 months of closure, were planning to reopen following changes to government guidelines. We considered the carrying value of our estate and due to the subsequent trading being ahead of internal forecasts, no impairment was deemed necessary.
This information is provided by RNS, the news service of the