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Morning Briefing for pub, restaurant and food wervice operators

Thu 19th Aug 2021 - Adnams – we are seeing strong demand
Adnams – we are seeing strong demand: Suffolk brewer and retailer Adnams has reported turnover of £20,518,000 in the six months ended 30 June and a pre-tax loss of £3,340,000. In a trading update, the company reported strong current demand. It stated: “In the period since the easing of on-trade restrictions on 17 May Adnams has continued to see strong demand for its products. Its accommodation businesses led by the Swan Hotel in Southwold are experiencing high levels of occupancy and its pub estate is fully open with a waiting list of prospective tenants. Some properties did temporarily face enforced closures, restrictions to service and/or restricted opening times as infection rates around the country increased and necessitated staff to self-isolate. Fortunately, to date, such closures have been relatively few and therefore their impact on the overall business limited. The business remains cautiously optimistic that the worst of the pandemic is behind it and that the on-trade will be able to progress relatively normally into the autumn and beyond. Adnams continues with its digital transformation, and it has seen good adoption of its on-trade self service App Rockpool. Sales online remain above pre pandemic levels and sales through its own shops and to supermarkets remain strong. It should be noted that the business continues to benefit from reduced VAT rates, business rate relief and an increased number of visitors to rural and coastal East Anglia due to current restrictions and uncertainty around international travel.” Chairman Jonathan Adnams added: “Our bank debt on 30 June 2021 was £13.4m, compared to 30 June 2020, when it stood at £14m. We have continued to focus on working capital management. We have repayment plans in place with HMRC and indeed have paid down some of the outstanding monies to them in the first half of the year. We refinanced with Barclays for a further three years, at the end of 2020 with a total facility of £20m, comprising of a £5m term loan, a £7m revolving credit facility and an £8m overdraft. Our borrowings have increased from the £9.6m at year end as we unwind monies owed to HMRC and restocked the business for reopening in April/May. Since reopening, the business has been cash-generative and can sustain this level of debt as we seek to catch up on preventative property maintenance that we have been unable to complete through the various lockdowns. We have been well supported throughout the pandemic by Barclays and we will not face a covenant test until December 2021. 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 £11.2m which compares to £6.2m at 30 June 2020 and £11.2m at 31 December 2020.”

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