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Thu 13th Aug 2020 - Adnams sees pre-tax losses rise to £3.9m as turnover plummets
Adnams sees pre-tax losses rise to £3.9m as turnover drops: Suffolk brewer and retailer Adnams has reported a pre-tax loss of £3.9m for the six months ending 30 June 2020, compared with a loss of £1.2m the previous year as a result of its pubs being closed and beer sales plummeting. Turnover dropped to £21.0m, compared with £34.7m the year before. Ebitda stood at minus £1.6m, compared with £1m the previous year. No interim dividend will be paid and the policy will be kept under continuous review, with a view to returning to paying dividends “as soon as is appropriate”. Bank debt as of 30 June 2020 was £14m compared with £21.0m the previous year. Focused control of cash and spending has ensured Adnams banking facilities, which are all provided through Barclays, have remained at £22m, £10m of which is in the form of term loans whose maturity has been extended to more than a year. The company said its drinks business is heavily orientated towards the on-trade, and while it has focused its efforts during lock-down on online sales, and to its supermarket partners and other shops, these sales represented only about one fifth of its normal trade. Chairman Jonathan Adnams said the various government support schemes had been “very important to us” and also thanked board colleagues and senior management for volunteering to take up to a 50% pay cut during lock-down and “through the depth of the crisis”. He added: “The Adnams property estate, managed, leased and tenanted, was all closed from 23 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. 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 23 March 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. The Adnams drinks business has seen good growth in recent years in its sales to supermarkets and shops (take home). The dominant element of our drinks sales remains sales to pubs and other on-trade outlets and the closure of these outlets from 23 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 that show the total beer market down by 15%, cask ale sales down by 62%, and sales of premium bottled ales up by 19%. 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%. 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 fourfold compared with 2019 and while 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. 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.”

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