Adnams reports highest ever beer production: Suffolk brewer and retailer Adnams has reported its highest ever beer production – 95,000 barrels – in the year to 31 December 2014 – and is now expanding its brewery and distillery. Operating profit grow by 15% to £3.8 million on the back of a 9% increase in turnover to £66.0 million. Debt levels fell by £2.7 million to £8 million. Chairman Jonathan Adnams said: “We have been growing and strengthening the Adnams brand over a long period of time and our name and reputation, backed-up by high quality products, have served us well in very competitive markets in the last year. A lot of things came right for us in 2014, much of which were down to our own strategies and some were down to a stronger external environment. The economic upturn that we saw in the second half of 2013 continued during 2014 and the beer market showed its first increase in volumes for many years. The weather too was relatively benign for much of the year. It was very encouraging to see an increase in total UK beer consumption in 2014, sales of which were up by 1.3%, with cask ale seeing a 1.1% increase. Whilst cask beer is still the larger part of our production, our non-cask production is increasing fast, rising by 15% in the last year. An important part of this was from a strong growth in our kegged beer products, with Mosaic Pale Ale and Dry Hopped Lager both performing well. We also saw continuing growth in our bottled and canned business, though at a rate slower than the substantial growth that we saw in 2012 and 2013. For the market as a whole a landmark was reached in 2014 with beer consumption in the off-trade surpassing on-trade consumption. For other drinks and in many other countries this has long been the case, but in the UK beer has been strongly associated with pubs and it is a notable event that more beer is now being consumed at home. Adnams is well placed to participate in the growing market for craft beers, both in cask and keg. We have an established reputation, a first class range of products and an ability to innovate and respond to consumer demands. Alongside this, we need equipment that gives us the flexibility to deliver what the market requires. This is the backdrop to a major investment programme that we will be undertaking between now and 2018. We will be spending some £7 million on the brewery to ensure that we have the capacity to produce not just our core cask ales, but also the kegged, canned and bottled products that are in increasing demand.”

Jonathan Adnams said: “Our spirits business has grown very rapidly in the four years since we opened our distillery and our production facilities have already reached full capacity. The quality of our products was recognised in 2013 when we won the International Wine & Spirit Competition’s Gin Guild Trophy and again in 2014 when we won the equivalent vodka award with Adnams Longshore Vodka. These markets, and the market for whisky, offer great potential for small artisan producers such as us. To meet growing demand we are enlarging the distillery site and installing two further pot stills and extra storage tanks. This will cost around half a million pounds and it will form the first phase of the larger project being undertaken in our brewery as already mentioned. The enlarged distillery will be in use by January 2016.”

Jonathan Adnams said: “We sold six pubs during 2014, and two others have been sold since the year end. Shareholders will be aware that we have been selling less sustainable pubs in recent years. This is a strategy being pursued by a number of pub owners, but it also accords with our move towards being increasingly branded as Adnams and structuring the ways in which we serve customers and present our brand. In parallel with this strategy we have temporarily managed a few smaller pubs whilst seeking new tenants. This is generally preferable to short term closure or using an external management company. Our strategy in recent years has been to manage our own hotels, the Swan and Crown, whilst having tenants, and in some instances, lessees, run our pub estate. We are now managing our property assets on a more integrated basis, including temporary management of some properties. Most notably we are investing substantially in the White Horse at Blakeney, which we bought in 2011 and initially leased. This property is being substantially refurbished and will be managed by Adnams on reopening with the aim of re-establishing it as a leading North Norfolk pub and hotel.”

Jonathan Adnams said: “Our shops business has been one of the successes of 2014. We observed last year that trading was improving and this trend continued into 2014 with good cost control, improved use of data and a stronger group of shops. We are also increasingly focussing on the shops as outlets for the Adnams brand and almost half our sales are now of products bearing our name. We closed two outlets: Bloomsbury and Waterside, and opened a new shop in Aldeburgh. The latter has traded very well since it started and may prove to be a good model for smaller units that might open elsewhere. We are in the process of reviewing a number of locations within the broader East Anglian area where we might open shops in 2015.We are also looking at other pre-Christmas pop-up opportunities having had another successful year with a pop-up in the Chapelfield centre in Norwich.”

Jonathan Adnams said: “We have already announced two new appointments to the Adnams board which will take place at the 2015 AGM. The first announcement was of Karen Hester, who has been our Operations Director since 2007 and who joined Adnams in 1988 as a part-time cleaner. Karen is a true exemplar of the fact that with talent and determination a route to the top is available to anyone. In 2008 Karen won the title of East of England Business Woman of the Year and in 2013 won the CBI First Women Business of the Year title in recognition of Adnams’ success in supporting women employees to reach their full potential. The second appointment is of Guy Heald who has been a long term supporter of Adnams. His family, initially the Robinson family, has been involved with Adnams since its very early days and Guy is a major shareholder. Guy has been an Adnams Charity trustee since 2004, he has had a successful international career in finance and has wide ranging interests in Suffolk. These appointments will increase the Adnams board from six to eight. Aside from me, we will have three executive directors and four non-executives, three of whom are independent. Those shareholders who have attended recent Adnams AGMs will know how crowded these have become. We have reached the point at which St Edmund’s Hall can no longer support our needs and there is no alternative venue in Southwold of a suitable size. This has led us to relocate the 2015 AGM to Snape Maltings, which offers excellent facilities and a suitably sized hall at the Britten Studio. Whilst we will provide the opportunity to talk to directors after the meeting, over teas and coffees, we will not be able to provide lunch. The notice of meeting is on page 21 and I look forward to seeing shareholders there.”

Jonathan Adnams said: “2014 was a strong year for Adnams, our market positioning worked for us, we traded well, the external environment was quite benign, the beer market grew, there was reasonable weather and there was economic growth. In 2015 we may see more of the same, but there are undoubtedly greater uncertainties over the Eurozone and over the result of the UK general election in May. We have nonetheless made a statement of intent and confidence by starting a major and innovative project to expand and improve our brewery and distillery. We have regularly made the point that Adnams is about the long term, that is our commitment and it will remain the case.”

Eclectic Bar Group reports sales up 11.3% in first half: Bar and nightclub operator Eclectic Bar Group has reported sales on continuing operations were up 11% at £12.3 million (2013: £11.0 million) in its first half to 28 December 2014. Site Ebitda on continuing operations was in line with last year at £2.6 million (2013: £2.6 million). Company Ebitda on continuing operations before adjusting items was at £1.1 million (2013: £1.3 million). Coalition and Manchester Lola Lo both completed their first anniversary during this period with combined cash on cash return for the first 12 months in excess of 50%. Embargo Republica on the Kings Road re-opened in August and is trading ahead of expectations. However, it warned that reduced trading levels ‘experienced towards the end of the first half and over recent weeks are likely to continue during the remainder of the financial year’. Reuben Harley, chief executive, said: “Eclectic has some of the best locations and premium brands in the UK. Whilst this has been a challenging period for the company, I am confident that the actions we have taken have made Eclectic a stronger company which will continue to build value for our shareholders over the medium term. Our team have continued to work hard in a difficult trading environment and I’d like to take the opportunity to thank them for their continued hard work and dedication.”