TIDMADB
RNS Number : 9782X
Adnams PLC
03 September 2020
ADNAMS SOUTHWOLD
Adnams plc
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
Treasury should be commended for their urgent and timely response.
However, there remain substantial hurdles ahead before UK pubs can
return to anything like their previous trading on a sustainable
basis.
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
-GBP1.6m compared to GBP1.0m in 2019. Our 2020 operating loss was
GBP3.5m against a loss of GBP0.8m in 2019, a year that was itself
subject to disruption following a change to our core computer
systems at the end of March 2019. 2020 first half turnover was
GBP21.0m, which compares to GBP34.7m in 2019.
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 April 2020 to be awarded the Queen's Award
for Enterprise in Sustainable Development. This is the third time
that Adnams has won this award, a true testament to our continuing
leadership in the field of sustainability.
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
UK pubs were already experiencing potentially serious cost
pressures before Covid-19 arrived, rates bills and increases in the
National Living Wage substantially ahead of inflation being
particularly notable. Enforced closure followed by restricted
reopening requirements and customer caution in visiting hospitality
venues will inevitably have far reaching effects on the pub
landscape. At this point it is very difficult to know the extent of
these changes; and the way in which government support evolves will
undoubtedly also affect the position.
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 Cross Keys at
Aldeburgh by transfer from our leased and tenanted estate whilst
the Ship at Levington moved in the reverse direction. There were no
changes to either estate in the first half of 2020. The Cardinal's
Hat in Harleston was sold at the end of 2019, though the proceeds
were received in 2020.
The half year result for our managed properties shows a loss,
with full trading only possible up to March 23rd with costs of
maintaining a closed estate continuing after that. The decision was
taken that it was not appropriate or right to charge rents to our
leased and tenanted estate whilst these properties were closed, so
earnings here were reduced too.
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 30th June 2020 was GBP14m compared to 30th June
2019 debt of GBP21.0m. The improvement is driven by strong cost and
working capital management as well as utilising opportunities in
deferring various taxes and duties.
Focused control of cash and spending has ensured that Adnams
banking facilities, which are all provided through Barclays Bank,
have remained at GBP22m, GBP10m of which is in the form of term
loans whose maturity has been extended to over a year as at 30th
June 2020.
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 GBP6.2m which
compares to GBP8.0m at 30th June 2019 and GBP6.2m at 31st December
2019. However, the triennial valuation, on which company
contributions are based, showed a small surplus as at 31st March
2019 and the contributions have been adjusted accordingly with our
trading levels.
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
Unaudited Unaudited
6 months 6 months 12 months
to 30 to 30 to 31
June June December
2020 2019 2019
For the six months ended 30 June 2020 Notes GBP000 GBP000 GBP000
----------------------------------------------------- ----- --------- --------- ------------
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)
----------------------------------------------------- ----- --------- --------- ------------
Profit/(Loss) on ordinary activities before taxation (3,873) (1,152) 39
Tax on profit on ordinary activities 2 667 213 (10)
----------------------------------------------------- ----- --------- --------- ------------
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 GBP1 each (679.4)p (199.0)p 6.1p
----------------------------------------------------- ----- --------- --------- ------------
BALANCE SHEET
Unaudited Unaudited
30 June 30 June 31 December
2020 2019 2019
As at 30 June 2020 GBP000 GBP000 GBP000
----------------------------------------------- --------- ---------- -----------
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 27,171
----------------------------------------------- --------- ---------- -----------
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 GBP471,842. The earnings per share calculation is the
same for basic and diluted earnings.
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.
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END
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September 03, 2020 07:08 ET (11:08 GMT)
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