Southwold-based Adnams reports increased annual profits

Jonathan Adnams, chairman of Southwold-based Adnams.

Jonathan Adnams, chairman of Southwold-based Adnams. - Credit: Archant

Suffolk-based brewer, distiller and retailer Adnams today posted a 7.3% increase in annual operating profit, despite a slight dip in overall sales.

Suffolk-based brewer, distiller and retailer Adnams today posted a 7.3% increase in annual operating profit, despite a slight dip in overall sales.

The Southwold company reported turnover of £65.698million for the 12 months to December 31, down 0.5% from £66.032m in 2014 but representing an improvement during the second half of last year with sales having been 3.0% lower at the half-year stage.

However, operating profit before exceptional items grew from £3.815 to £4.093m, with operating expenses trimmed from £62.217m to £61.605.

Pre-tax profit was 4.6% ahead at £4.068m, against £3.890m a year earlier, with a fall in interest payments offset by a rise in pension scheme finance charges. Adnams is proposing a final dividend £1.44 per share, up 5.9%.

In his annual report, company chairman Jonathan Adnams said: 'I am pleased to report the company made good progress in 2015; the economic mood was reasonably buoyant and a cut in [the beer] duty rate for the third year running was a welcome announcement in the budget.

'Ghost Ship has remained in strong growth, as have our newer range of kegged, canned and bottled beers which fit well into the vibrant and growing UK craft beer market.

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'Our investment into the brewery and distillery continues, and this development will ensure we have the flexibility and capacity to meet the demands of the changing beer market.

'Our spirits have become an integral part of our business, and we're delighted to have trebled our capacity with the addition of two new stills.'

Mr Adnams said that the diversity of the company's business, spanning beer, spirits, shop retail, hotels and pubs, gave it some protection against any downturn in particular markets.

Adnams' total UK beer sales fell by 1.5% which, although in line with long-term industry trends, was described by Mr Adnams as 'disappointing', following modest growth the previous year. However, its cask ale sales were 0.8% ahead and sales of bottled and canned ales were 6.3% higher.

Mr Adnams said that, in line with previous announcements, investment on increase brewing capacity was now 'well underway', with a total spend of around £7m planned by the time the work is completed at the end of 2017, and around £500,000 was spent during 2015 on extending the company's distillery.

Adnams continued to sell some smaller pubs, with six more disposals during 2015, one more sold since the year end and another currently on the market. However, Mr Adnams said that no further sales were currently envisaged.

'We have tried hard to sell pubs as going concerns and to keep them trading as pubs and in nearly all cases we have been able to do this,' he said.

'Trading in our continuing tenanted and leased estate, where we have some great pubs and some first-rate operators, was good during the year with like-for-like income up by 3.5%.'

Among the company's directly managed pubs and hotels, the White Horse at Blakeney and the Ship at Levington performed well and business at the Crown in Southwold was much in line with the previous year.

The Swan in Southwold was closed for refurbishment during the early part of 2015, which was reflected in its performance, and Adnams is now reviewing the hotel's proposition, which is likely to include the construction of a visitor centre in the Cygnets building to the rear.

The company's shops business had continued the success seen in recent year, said Mr Adnams, with a new store opened in Bury St Edmunds during the year and a pre-Christmas pop-up shop operated within the Coes store in Ipswich.

Mr Adnams said that, ahead of the new National Living Wage coming into force from April, the company had applied the new rate from October 2015, having already been moving towards the rates recommended by the Living Wage Foundation.

'We believe that paying better wages is the right approach and may be particularly important in sectors such as leisure and hospitality where pay rates have often been less good,' he added.

Looking ahead, Mr Adnams said that sentiment at the start of 2016 had been less buoyant, possible due to uncertainties created by the forthcoming European Union referendum, although global economic conditions also seemed less benign.

'The impact of this on consumer spending and our own sales is always hard to judge; however, there seems a fair likelihood that 2016 will be a tougher year for the economy than was 2015,' he said.

'In terms of the alcohol business in particular we saw somewhat lower January sales and it is hard to escape the conclusion that a growing interest in following 'dry January' may have had a role in this.

'January is far from the most important month. However, the trend is perhaps indicative of the growing prominence of public health messages.'

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