Interim Accounts 30th
Chairman's Statement
Results
The last few years have seen substantial change and considerable investment in the Adnams business as we have positioned ourselves in crowded and rapidly changing markets. The last, and vital, plank of this investment has been renewal of our core systems, the previous system having been in place for towards thirty years. Against this backdrop turnover was slightly lower than in 2018 and the half year operating loss rose from
Our new system went live at the end of March and has unarguably been a major distraction during the past half year. However, the process of change is easing, and we are starting to be able to remove the additional costs required to facilitate and embed our new processes. For its size, Adnams is a complex business selling a large variety of products in many different ways through many different channels. This makes our system needs relatively onerous and the process of change particularly challenging.
The board has agreed an unchanged interim dividend of 78p per "B" share and 19.5p per "A" share.
The Drinks Business
Adnams beer volumes were ahead of the market for the first six months of 2019, showing an increase of 2% against a market fall of 1%. The relative importance to Adnams of cask ale, a sector down by 5%, made this is notably good performance. We have been particularly pleased by the success of our low alcohol product, Ghost Ship 0.5%, which we launched a little over a year ago. Ghost Ship 0.5% meets the fast-growing demand for low alcohol drinks. We are reducing the beer's alcohol by using reverse osmosis, a filtration method that does not damage the beer's flavour in the way that traditional alcohol evaporation techniques can do. Making a low alcohol version of our most successful product, Ghost Ship 4.5%, means that we can gain immediate recognition, however it also requires us to prove that the quality of the 0.5% product justifies the name of the 4.5% beer. We believe that we have done this, and strong sales growth led to our doubling the capacity of our low alcohol equipment at the start of this year.
Aside from the success of Ghost Ship 0.5% we have also seen a near doubling of export volumes as a consistent focus on key markets bears fruit. Another promising development has been the launch of Adnams Wild Wave cider in March this year and customer feedback has been very good.
Gin volumes were down in the first half of 2019. We noted in our 2018 accounts that the
Recent trends in the drinks market have been towards premiumisation, healthy lifestyles, authenticity and experience. Adnams' strategy plays strongly to these trends. We have some of the best manufacturing equipment in the business, a uniquely premium method for producing low alcohol ales, we are one of a handful of true grain to glass distillers and we possess leading sustainability credentials. We have a raft of awards and reviews to evidence these claims including recently winning the Energy Efficiency award at the highly regarded Footprint Awards 2019 and in February we collected the edie Sustainability Leaders Award for Water Management.
The growth of the Adnams managed estate continued during 2019 with an important outlet in Aldeburgh, the
Our award winning brewery and distillery tours business, based out of the
Our leased and tenanted estate has reduced in size in recent years and now comprises thirty-eight properties. There were no sales during the last six months, however the comparative period included profits from the King's Head, Laxfield, the Lord Nelson,
Our shops performed well in the first half of 2019, with results ahead of 2018 with an unchanged estate. Our shops have an important role in helping to display our brand to a wider audience, in acting as a launch platform for our new products, and in providing a valuable sales channel through which we can directly sell product that we make or brand ourselves.
In April we launched a new website, linked to our new central system, and whilst the change caused some disruption, and our online sales were behind 2018 in the first half of this year, we are pleased with the design and responsiveness of the new website and are now converting many more visits to sales.
Brand Marketing
We continue to invest in brand development and evolve the communication channels that we use. We have been very successful in launching products ahead of market trends and producing high quality drinks. The challenge has been to stay ahead when followed by other producers in very crowded markets. We are increasing our use of data to understand our opportunities and blending this with our feel for the market and our compelling stories. We have also been investing more in public relations to ensure that our voice can be heard.
Finance
The disruption from our new systems had some inevitable impacts on our bank debt which at 30th June was
Adnams banking facilities stand at
In line with the policy adopted in 2018, and that adopted by many others, we have used the previous year end valuation for our pension scheme rather than seeking a mid-year value. These valuations are highly volatile, and we suspect that a separate mid-year valuation adds little to shareholder knowledge. A revised value will be produced at the 2019 year end and we expect the triennial pension scheme valuation result to be available for our full year report. The deficit at 31st
The Future
Last year we observed that the future appeared particularly uncertain given the unknown shape of the impending exit from the
Looking ahead, we have properties and products that are truly premium and award winning, a talented, loyal and determined workforce and a strong reputation for innovation and sustainability. The investments that we have made across our business leave us in good shape for the long term.
Profit and loss account
For the six months ended
|
Notes |
Unaudited |
Unaudited |
12 months to |
Turnover |
|
34,704 |
35,535 |
78,918 |
Operating expenses |
|
(35,487) |
(36,092) |
(77,312) |
Operating (loss)/profit before highlighted items |
|
(783) |
(557) |
1,606 |
Highlighted items - operating expenses |
2 |
0 |
0 |
(1,766) |
Operating loss |
|
(783) |
(557) |
(160) |
Profit/(loss) on disposal of assets |
|
0 |
44 |
(21) |
Loss on ordinary activities before interest and taxation |
|
(783) |
(513) |
(181) |
Interest |
|
(257) |
(228) |
(504) |
Other finance charge on pension scheme |
|
(112) |
(99) |
(192) |
Loss on ordinary activities before taxation |
|
(1,152) |
(840) |
(877) |
Tax on loss on ordinary activities |
3 |
213 |
148 |
92 |
Loss for the financial year |
|
(939) |
(692) |
(785) |
Loss per share |
5 |
|
|
|
'A' Shares of 25p each, Inc. asset disposals (pence) |
|
(49.8)p |
(36.7)p |
(41.6)p |
'B' Shares of |
|
(199.0)p |
(146.7)p |
(166.4)p |
'A' Shares of 25p each, Exc. asset disposals (pence) |
|
(49.8)p |
(38.6)p |
(42.5)p |
'B' Shares of |
|
(199.0)p |
(154.6)p |
(169.9)p |
Balance sheet
As at
|
Unaudited |
Unaudited |
31 December |
Fixed assets |
|
|
|
Tangible assets |
45,129 |
46,257 |
45,181 |
|
|
|
|
Current assets |
|
|
|
Stocks |
10,039 |
8,574 |
9,496 |
Debtors |
10,475 |
9,378 |
10,654 |
Cash at bank and in hand |
23 |
23 |
22 |
|
20,537 |
17,975 |
20,172 |
|
|
|
|
Creditors: amounts falling due within one year |
(25,993) |
(18,229) |
(18,883) |
Net current (liabilities)/assets |
(5,456) |
(254) |
1,289 |
Total assets less current liabilities |
39,673 |
46,003 |
46,470 |
Creditors: amounts falling due after more than one year |
(5,196) |
(10,223) |
(10,199) |
Provision for liabilities |
(742) |
(462) |
(720) |
|
(5,938) |
(10,685) |
(10,919) |
Net assets excluding pension liability |
33,735 |
35,318 |
35,551 |
Pension liability |
(7,795) |
(8,082) |
(7,964) |
Net assets including pension liability |
25,940 |
27,236 |
27,587 |
Capital and reserves |
|
|
|
Called up share capital |
472 |
472 |
472 |
Share premium |
144 |
144 |
144 |
Profit and loss account |
25,324 |
26,620 |
26,971 |
Equity shareholders' funds |
25,940 |
27,236 |
27,587 |
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 2018 full year accounts were audited. The accounting policies are unchanged from 2018.
2 Highlighted Items
Non-recurring costs of
3 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.
4 Dividend
The interim dividend on ordinary shares will be unchanged from 2018 at
5 Earnings per share
Earnings per share is calculated by dividing the earnings available to ordinary shareholders by the issued ordinary share capital of
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