ADNAMS SOUTHWOLD

Interim Report 2026

Chair's Report

"We operate a well-invested brewery, with nationally recognised brands and capacity to support future growth."

Simon Townsend

Chair

The business has continued to make progress against a number of strategic and operational priorities during the first half of 2026, despite challenging conditions across both the hospitality and drinks sectors.

Group revenue for the six months ended 30 June 2026 was £27.4 million compared with £30.1 million in the corresponding period last year. As anticipated, the largest reduction in revenues resulted from the disposal of some tenanted pubs which completed during 2025. Excluding this expected impact, performance across most parts of the business was resilient despite continued pressure on consumer spending and subdued trading conditions in the early part of the year.

Trading within our managed pubs and hotels was below expectations during the first half of the year, leading to the implementation of a series of operational, commercial and labour management initiatives. Complemented by an extended period of very favourable weather and the football World Cup, we have been encouraged by the early results, with our managed estate delivering like-for-like revenue growth of 3.3% and profit growth of 10% in July. Whilst it is still early, these improvements give us confidence that the actions being taken will support stronger performance through the second half of the year.

Within Retail, we have started to see encouraging evidence that targeted investment can improve returns and outperform the market. Following the relocation of our Bury St Edmunds store in December 2025, performance has improved significantly, with bottom-line profitability at the half year increasing five-fold compared with the previous location. This provides a clear example of how selective investment can enhance both customer experience and shareholder returns.

Within our Drinks business, direct free trade revenues were broadly flat compared with the prior year, reflecting the strength of our customer relationships and the resilience of the Adnams brand in a difficult market. Trading with supermarkets also remained broadly in line with the previous year and continued to outperform the wider beer market, as a result of focused investment behind our core brands and our strong customer partnerships. Encouragingly, the Ghost Ship family of brands has continued to outperform the total ale category by 2.1% and reinforcing its position as one of the UK's leading premium ale brands.

Performance within our national wholesale channel was below expectations and remains an area of focused recovery. We have appointed an experienced wholesale specialist to improve performance and identify new opportunities for growth within this important channel.

Operating expenses reduced by over £2 million compared with the first half of 2025, reflecting improvements in efficiency, overhead control and operational discipline across the business. Despite the reduction in revenue, these actions helped mitigate some of the impact on overall profitability. We will continue to simplify and strengthen the business in order to improve the conversion of revenue into profit.

Our debt reduction programme has led to a 50% fall in interest to £0.4million, compared with £0.8 million in the corresponding period last year. A stronger balance sheet will provide the business with the flexibility to invest in future growth opportunities. Management continues to focus on cash generation, working capital discipline and maintaining financial flexibility.

Operating loss before exceptional costs and gains on disposal of assets was £0.8 million compared with an operating profit of £0.5 million in the prior year. Exceptional costs reduced significantly from £1.2 million to £0.2 million, and we generated gains on disposal of assets of £1.2 million during the period. Reported operating loss was £1.0 million compared with £0.7 million in the first half of 2025. Loss before tax was £1.4 million, broadly in line with the previous year, whilst loss after taxation improved to £1.1 million from £1.4 million in the first half of 2025.

At our Annual General Meeting, we highlighted our view that Adnams is a hospitality business with a brewery at its heart. This remains the central organising principle of our strategy. We own a distinctive collection of pubs, hotels and hospitality assets which provide attractive opportunities to improve returns through operational excellence and focused investment, and alongside these we operate a well-invested brewery with nationally recognised brands and capacity to support future growth. As a result, an increasing proportion of management attention, investment capital and development activity is being directed towards our hospitality estate.

The recent Swan Courtyard development has produced encouraging early results and reinforced our confidence in carefully selected investment projects. We are expanding our accommodation offering in Southwold through the addition of a two-bedroom apartment on Pinkney's Lane and a two-bedroom property on Church Street. We continue to evaluate a number of additional opportunities across the estate.

Adnams today is a more focused business than it was two years ago. Our balance sheet is stronger, financing costs have reduced materially and our strategic direction is clear. Whilst there remains much work to do, the Board believes the actions being taken are the right ones to create a more resilient, profitable and sustainable business over the long term.

As in previous years, the Board is not recommending the payment of an interim dividend.

Chair
Adnams plc

Profit and loss account

For the six months ended 30 June 2026

Balance sheet

As at 30 June 2026

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 using the accounting policies consistent with those disclosed in the 2025 annual report. These are the policies expected to be applied in the preparation of the audited financial statements for the year ended 31 December 2026.

The financial information for the year ended 31 December 2025 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 December 2025 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for the year ended 31 December 2025 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Despite the major uncertainties at this time across the economy as a whole, and the challenges of this industry, in the reported first half of the year Adnams has continued to operate within its banking covenants on its debt facility. The business manages cash carefully and has concluded, based on its cash management ability and current projections, that it is appropriate for Adnams to adopt the going concern basis for these accounts.

2 Taxation

The taxation charge is based on the estimated tax rate for the year.

3 Loss per share

Loss per share is calculated by dividing the earnings available to ordinary shareholders by the issued ordinary share capital of £471,842. The earnings per share calculation is the same for basic and diluted earnings.