Adnams report profit rise: Suffolk brewer and retailer Adnams has reported turnover of £65,698,00 in the year to 31 December 2015, slightly down from £66,032,000 the year before. Profit before tax rose to £4,068,000 compared to £3,890,000 the year before. Chairman Jonathan Adnams said: “I am pleased to report that the company made good progress in 2015 with our operating profits rising by 7.3% to £4,093,000. We noted at the half year that turnover was 3% behind 2014. However this improved in the second half of the year, to leave us just 0.5% short of the prior year. The economic mood for much of 2015 was reasonably buoyant, though it is clear that consumer spending patterns continue to evolve quickly, and it has been very important for us to keep our finger on the pulse of the market and our eye on future trends. The diversity of our business, spanning beer, spirits, shop retail, hotels and pubs also gives us some protection against any downturn in particular markets. One of the most notable features of 2015 was the growing regulation of the beer and pubs sectors together with continued changes to the many taxes that the industry pays. In March we were pleased to see, for the third year running, a cut in beer duty rates. The penny a pint reduction was welcome, particularly when reflecting on the above inflation duty increases that had preceded these cuts, with duty having risen 42% in the previous five years. Shareholders will be aware of the recently proposed changes to safe drinking guidelines in the UK. The view that Adnams has held for many years is that we should work towards encouraging safe and responsible drinking. We see moderate alcohol consumption as an aid to relaxation and a source of enjoyment. Total UK beer sales fell by 1.5% in 2015, a disappointing result after the modest growth the previous year, though in line with the long-term trends dating back to the later 1970s. However, within the beer market we saw the continued growth of beers brewed by smaller producers. UK cask ale sales, a subset of the total market, were 0.8% ahead of last year and sales of bottled and canned ales were 6.3% ahead. The continuing switch to the off trade is also a long-term trend, though another of those trends, the growth of lager relative to ale, seems to be turning around, aside from premium and craft lagers. The main lagers being sold are still those of the major international brewers, however we are hopeful that consumer tastes will increasingly open the door to products such as Adnams Dry Hopped Lager and the purchase of craft brewers by international brewers may serve to hasten that trend. I wrote last year about the project that Adnams wished to undertake to ensure that we have the capacity and flexibility to meet the demands of a changing beer market. Our investment is now well underway and by the time that the work is completed at the end of 2017, we will have spent around £7 million on extensions and improvements. Most notably this project will give us new bottom fermentation, beer conditioning and filtration capacity, much enhanced cooling equipment and an automated kegging line. During 2015 we spent about £0.5 million on extending our distillery. We started distilling at the end of 2010 and have been delighted with how well this business has grown and the reputation that our spirits have built. The result of this success was that we reached full capacity in the distillery last year and have now trebled what we are able to produce. The new equipment, including two new stills, was commissioned in January 2016. Another clear trend of recent years has been the sad reduction in pub numbers. We too have seen the impact on our pub estate of changing consumer tastes and increasing competition from home entertainment, casual dining, fast food outlets, coffee shops and others. We continued to sell some of our smaller pubs and six more were sold in 2015. We have sold one more pub since the year end and have another still for sale, but as things stand we do not envisage selling many more of our properties. 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. 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%. The other side of our pub business is pubs and hotels that we manage ourselves. In the last couple of years we moved the White Horse at Blakeney and the Ship at Levington under our own management. We have been seeking to build a business in running managed properties outside the Swan and Crown in Southwold and signs so far are encouraging. There are clear advantages in running both a managed and a leased and tenanted estate and being able to move pubs between them as market conditions change. In 2015 the Swan was shut for refurbishment for much of the early part of the year, which inevitably affected its performance. Our shops business has continued the success that we have seen in the last few years. We have built the retail skills that we require and honed our proposition towards our shops being an integral part of the Adnams brand, selling goods under the Adnams name and promoting that name to wider groups, especially a female audience. The take home market has been the strongest part of the beer market for some years and having our own shop outlets means that we are well placed to take advantage of this trend. We made a further modest expansion to our shop estate in 2015, opening in Bury St Edmunds and running a pre-Christmas pop-up in the Coes shop in Ipswich. We were delighted to add Guy Heald and Karen Hester to the Adnams Board in April, with Karen becoming our first ever female executive director and our executive committee includes five senior female employees. We seek to recruit, retain and develop the very best talent based upon merit and contribution. We were therefore pleased that by applying these clear principles we have achieved such an effective gender balance. The company is stronger as a result. As from April 2016 a new National Living Wage will apply in the UK. In anticipation of this change we applied the new rate in October 2015 and we had already been moving towards the Living Wage Foundation rates. 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.”
Tritax Big Box buys Brakes distribution centre for £25.2m: Tritax Big Box has bought the distribution centre at Portbury Way, Portbury, Bristol, let to Brake Bros for £25.2 million (net of acquisition costs), reflecting a net initial yield of 5.15% to the company. The purchase has been funded out of equity proceeds, with senior debt finance expected to be introduced in the near term. The property comprises a purpose-built cold store facility with a multi-temperature control system and incorporates modern design features including cross docking with an eaves height of 11 metres. The distribution centre will also benefit from significant capital investment by the tenant to meet its growing distribution requirements in the south west. The facility comprises a gross internal floor area of 250,763 sq ft and benefits from a low site cover of 32%. The property is being acquired with a new unexpired lease term of approximately 30 years, which is subject to five yearly upward only rent reviews indexed to the Retail Price Index and capped at 5% pa compound. The next review is due in February 2021.