Adnams plc - Amazon Web Services · Adnams plc Annual Report and ... case of 12 bottles is accompanied with informative tasting notes and gives ... in the Bury St Edmund’s shop

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Adnams plc Annual Report and Accounts 2016

Investing in our brand. Investing in our future.

12 Chairman’s Report

14 Strategic Report

28 Our Board

30 Report of the Directors

Financial statements

32 Profit and loss account

32 Statement of comprehensive income

33 Balance sheet

34 Statement of changes in equity

35 Statement of cash flows

36 Notes to the financial statements

50 Corporate governance

51 Directors’ responsibilities in respect of the accounts

52 Independent auditor’s report

Go to Finance Commentary 26

Adnams saw strong growth in the volumes that it brewed and distilled in 2016. Brewery sales volumes rose by 9% and distillery volumes by 66%. A record level for both parts of the business. Whilst the depreciation of sterling depressed profits, underlying trading was good with most of our shops and pubs trading well.

The £7 million investment that we have been making in our brewery will be completed by the middle of 2017 and we will also see the reopening of the Swan Hotel transformed into a stylish destination hotel and restaurant.

Adnams remains a business focussed on delivering for the long-term and for all of its stakeholders.

Turnover £000

£70,265+7.0%

£70,265

£65,698

£66,032

£60,500

£56,9222012

2013

2014

2015

2016

Net pension liability £000

£9,909+207.3%

£9,909

£3,225

£11,468

£5,755

£7,4722012

2013

2014

2015

2016

Net bank debt £000

£9,208+3.2%

£9,208

£8,918

£8,048

£10,758

£13,7392012

2013

2014

2015

2016

Dividend £

£2.26+4.6%

£2.26

£2.16

£2.05

£1.96

£1.942012

2013

2014

2015

2016

Operating profit £000

£3,937-3.8%

£3,937

£4,093

£3,815

£3,325

£3,3922012

2013

2014

2015

2016

(per £1 share)

(pre-tax)

2014, 2015 and 2016 financial highlights have been prepared using the accounting standard FRS102, previous years were prepared using the accounting standards in force at that time.

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01Adnams plc Annual Report 2016

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Our strategy is to build a brand, to concentrate on producing top-quality drinks, to expand where the market is strongest and to develop our wider capabilities including our retail, pub and hotel businesses. We will continue to invest, live our values and support our wider stakeholder group.

Over the following pages we take a look at how 2016 was a year of continued investment – investment which will ensure the long-term sustainability of our business.

Go to Chairman’s Report 12Go to Strategic Report 14

Jonathan Adnams OBEChairman

Turns out everyone’s

favourite ghost is a ship!

Slimer? Caspar?

Timothy Claypole?

In 2016, Ghost Ship overtook Southwold Bitter to become our number one best selling beer. It is one of the UK’s fastest growing pale ales and is achieving successes in all formats – cask, keg, can and bottle. We’ve even

teamed up with Fairfield Farm to make Ghost Ship flavoured crisps!

We have focussed on Ghost Ship throughout the year, backing it heavily with marketing support. In March it became the official beer of the

Boat Races, in June the official beer of the Women’s Tour & the same in September for The Tour of Britain. At Newmarket Racecourses ‘Adnams July Course’, Ghost Ship was on sale in all bars. Anything standing still for long enough was likely to be branded or flavoured with Ghost Ship!

Ghost Ship is now in the Top 20 biggest selling premium bottled ales

It was the fastest growing Premium Bottled Ale in the Top 20

Sales in the off trade of Ghost Ship have more than doubled in the last year.

pints sold via pint, bottle, keg & can

medal winner at the Champion Beer of Britain Awards 2016

Our best selling beer of the year

1.2m BRONZENo1

Source: Nielsen Premium Bottled Ales Sales data MAT to 13-01-2017

02 Adnams plc Annual Report 2016


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IN 2016, WE BREWED 45 DIFFERENT BEERS.

THIS ‘ONE HOP WONDER’ BECAME THE TOP SELLING BEER IN ONE OF OUR MAJOR CUSTOMER’S CRAFT BEER SELECTION.

MASTER BREWER, FERGUS, AND HIS TEAM COLLABORATED WITH SIX DIFFERENT BREWERIES IN 2016.

45 MOSAIC! COLLABOR ATIONS

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Go to Chairman’s Report 12

HUGELY POPULAR – THEY ARE PERFECT FOR PARTIES AND CELEBRATIONS AT HOME.

28 HOP GATHERERS DONATED BAGS OF WILD HOPS FOR THIS YEAR’S WILD HOP BEER.

WE LOVE BEER AND WE LOVE GIN. WE DIDN’T NEED MUCH PERSUADING TO MAKE A JUNIPER BEER!

MINISWILD! JUNIPER


Retail sales increase

Own label makes a splash

We pride ourselves on working with wine producers around the world.

During 2016 we introduced 17 Adnams own label wines –

all of them chosen to reflect the character of their maker, region,

and grape variety.

With a new store in Felixstowe and a Christmas pop-up in Chelmsford,

our shops enjoyed another successful year. With an increased

focus on Adnams branded products, they really are the must-visit

destination for all Adnams fans.

Go to Strategic Report 14

RETAIL SALESRECORD

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Online sales strengthen

Wine Club

Our Wine Club delivers direct to your door, a quarterly case of wines selected by our wine team at a range of prices to suit all purses and palates. Each

case of 12 bottles is accompanied with informative tasting notes and gives

Club members the opportunity to discover new wines, carefully chosen to complement each quarter’s season.

Our online sales grew by 12% driven by beer (especially mini casks) and

experience vouchers for Hotels, Tours and Make Your Own Gin. Growing our customer database through events and competitions has helped increase sales as has

our social media activity.



DEMANDDEMANDAt the start of 2016 we tripled the capacity of our distillery to fulfil the demand for Adnams spirits, in particular, Copper House Gin. The continuing popularity of gin in the UK and around the world

shows no sign of slowing and, having won the coveted International Wine & Spirits Gin Trophy in 2013, we continue to claim that we make the world’s best gin! In 2016 we launched a new gin, Rising Sun and its partner, Rye Hill Vodka. Both these spirits are made with rye grown by Jonathan Adnams, just a

couple of miles away from the distillery.


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Pot stills At the start of the year, we

installed our two new copper pot stills – one to make gin and the other to make whisky. They are so beautiful that we almost felt compelled to name them! They

are certainly the subject of photos for almost every visitor

on our distillery tours.


PREENING OUR FEATHERS& GETTING OUR DUCKS IN A ROW

Artist impression

Artist impression

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Meet Nick, Head of our Managed Inns The number of properties which fall within our Managed Inns grew during 2016 as we added the Plough, Wangford and more recently the Bell at Walberswick and the Harbour Inn, Southwold.

Nick Attfield joined us to manage these wonderful Inns allowing each to develop its own character and guest experience, whilst wholeheartedly ‘showing off’ the Adnams brand.

Reinstating the Swan as our jewel in the crown Over the years, we have ever so slightly apologised for the fact that the Swan has a brewery and (more recently) a distillery in its backyard, when in fact, this is often the very reason visitors choose to stay with us.

When we reopen the doors later this year, the new-look Swan will become a beautiful premium coastal hotel which will maintain many of its wonderful heritage features whilst injecting some contemporary flair too. As part of the refurbishment plan, the Cygnets building at the rear of the Swan will be converted into our Brewery and Distillery Tours Hub – positively celebrating the link between the Swan and the brewery and distillery!

Dining in style One of the features of the Swan refurbishment is the new entrance into the dining room from Southwold’s Market Place, making it a welcoming destination to residents and non-residents alike.


Artist impression

Artist impression


Chairman’s Report

Overview Adnams saw strong growth in 2016 with our own beer sales passing 100,000 barrels for the first time in our history, a 9% increase over 2015 and sales of our own spirits grew by 66%. Overall turnover was also a record high at £70.3 million and operating profits were £3,937,000. Our operating result was 3.8% behind the previous year with the largest impact coming from the fall in Sterling in the second half of the year. We have substantial Euro and US Dollar costs relating to wine and hop purchases. Our profit before tax at £5,020,000 was 23% ahead of 2015 driven mainly by the profit that we made on the sale of the UK distribution rights for Lagunitas beer. The sale took place at the half year, and second half operating profits were reduced because we no longer had these rights. We have confidence in the underlying performance of the business and the growth that we have been seeing. On this basis, we are recommending a 4.2% increase in our final dividend. This represents an increase of 6p per ‘B’ share. European Union 2016 was a momentous year for the UK with the vote to leave the European Union and there were many predictions of economic downturn. So far at least, these have not been borne out. The economy has been reasonably robust, though the overall beer market has continued its long downward trend and pubs continue to close.Alcohol duty The substantial duty increases that we saw in the years prior to 2013 were followed by modest cuts and then a freeze. This change was helpful in providing confidence for investment. The 3.9% increase in the March 2017 budget was a disappointing relapse, and we hope that it does not signal a return to a period of damaging duty hikes. The Beer Market We have witnessed some substantial changes in our business over a short period as beer consumers have changed where they buy and what they buy. The long-term shift towards beer being bought from supermarkets and other shops, with less being sold in pubs, has continued and the taste for high quality products from small producers has also grown. We have been closely watching these trends and adapting our business accordingly.

Jonathan Adnams OBE Chairman

“ Our focus will continue to be on the longer term and we are investing accordingly, notably in the brewery and the Swan Hotel.”

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Retail The Retail business continued to perform well in 2016, though its results were affected by the mid-year depreciation of Sterling, as imported wine forms a major part of its sales. We opened a new shop in Felixstowe during the year and towards the end of the year we converted what had been a café in the Bury St Edmund’s shop into a “make your own gin” experience centre, modelled on the existing facility in Southwold. Once again we opened a pre-Christmas pop-up shop, in 2015 this was in Ipswich and in 2016 it was in Chelmsford. The Adnams shops provide a very strong gift offer and trade well in pop-ups ahead of Christmas. The Adnams shops have come into their own in recent years. They have been a powerful boost to our brand, they have spread our name more widely, they have reached different demographics and they have given us an appeal that resonates equally with both genders. Marketing and sponsorship In 2016 Adnams boosted its investment in marketing, in particular we undertook some major new sponsorships. One of these was the Oxford and Cambridge boat races, another was the Tour of Britain cycling. These investments helped us to drive our sales and reach the record beer volumes that we achieved. Outlook I observed earlier that the economic climate in 2016 was better than many expected. There are, at the start of 2017, similar concerned voices and a worry that inflation induced by currency depreciation will outrun wage growth, leading to a squeeze in living standards and reduced consumer spending. It remains to be seen what happens when the UK leaves the EU, however our focus will continue to be on the longer term and we are investing accordingly, notably in the brewery and the Swan Hotel. I would like to thank our shareholders for their support.

Investment Whilst we are, and remain committed to being, a major cask ale producer, it was the sale of beer in kegs, bottles and cans that drove our increased production in the last year. These changes emphasise the importance of the new investments in our brewery. This project will be complete by the middle of 2017. We will have spent about £7 million on extensions and improvements that will give us beer conditioning and filtration capacity, enhanced cooling and an automated kegging line. Spirits Our spirits business had a particularly good 2016 with very strong growth across all channels including supermarkets, pubs and our own shops. Our key product, Adnams Copper House Gin, continues to grow its reputation as one of the best drinks of its type. The tripling of capacity that we put in place at the start of 2016 came just in time to allow us to fulfil the demand that we have seen. The fact that we can produce high quality alcohol, that we then distil, means that we can deliver a true ‘grain to glass’ drink, which sets us apart in a market that largely comprises distillers who buy alcohol from bulk producers. Our Estate We have gradually reduced our leased and tenanted pub estate in recent years as we have sold smaller and less viable properties as customer habits have changed and many of our more rural outlets have struggled. Our sale programme has slowed as the average quality of our estate has improved, though we sold one further pub during the year. The performance of the balance of our estate was good with like-for-like income up by 2.6%. During 2016 trading in our managed houses was ahead of the prior year, with a particularly good result from the White Horse at Blakeney. The Swan The Swan Hotel closed at the start of 2017 for a major refurbishment. We see this as a ‘once in a generation’ opportunity to transform our historic hotel and create a gateway to the Adnams brand in the heart of Southwold. The refurbished Swan will celebrate the character and heritage of the building and at the same time will showcase the modernity of our brand and our products. It will be shut for over six months. The Cygnets building behind the hotel, will be transformed into a Hub for our Brewery and Distillery Tours and will welcome approximately 16,000 visitors each year. The closure will have a material impact on our 2017 results as we will miss income from this property during the refurbishment work.

BARRELS OF BEER WERE BREWED – A RECORD NUMBER

16,000+VISITORS

100,000+

Supply chain In June, we held our inaugural Supplier Conference and Awards, giving us the chance to share ideas and celebrate our partnerships.

Our Brewery and Distillery tours continue to attract visitors from around the world, we were delighted to once again be awarded a Trip Advisor Certificate of Excellence.

Jonathan Adnams OBE Chairman


Beer

The evolution of Adnams towards being a producer of high quality branded drinks continued in 2016. We substantially grew the volumes that we sold of both beer and spirits, and increased our focus on our managed shops and pubs that represent our brand to consumers.

A great mix of old favourites, new favourites and seasonal brews. It’s hard to tell which creates more of a buzz from Adnams fans - the news that we’re launching a new beer that they haven’t tried before, or news that we’re bringing back an old favourite that they haven’t tasted for years. The good news is, that we’ll continue to do both!

Adnams strong beer portfolio Amongst our beer portfolio, Adnams Ghost Ship once again stood out as showing particular customer appeal and it is now our best-selling beer. It sold well in cask, bottled, canned and mini-keg formats. We also saw good growth from newer beers including Mosaic Pale Ale and Dry Hopped Lager which are available in kegs. The traditional cask products of Adnams Bitter and Broadside found the market tougher, though bottled Broadside showed good growth. Our seasonal beers in 2016 included Old Ale, a beer for the Olympics, Samba City and a new single hop beer, Cashmere IPA. We have been very pleased to see Old Ale recently crowned Champion Beer of East Anglia by the Campaign for Real Ale. Imported beers Alongside our own beer, we have exclusive distribution rights in the UK to sell a number of imported beers. We have a longstanding relationship with Bitburger, a premium German Pilsner, and more recently we have distributed the Greek beer, Mythos. Bitburger sales performed well in supermarkets, though they slipped back in pubs. This may in part reflect trends towards newer ‘craft’ beers and we had until June the distribution rights for one of the strongest performers in this category, Lagunitas. Lagunitas is a California-based brewery with a very strong following. Adnams took on the UK distribution rights in 2013 and achieved considerable sales growth. Towards the end of 2015, Heineken formed a joint venture with Lagunitas and wished to acquire the distribution rights in the UK. We sold these rights in the middle of 2016 and they form the major part of the profit on disposal of assets shown in these accounts.

Our performance In a beer market where volumes declined by 1% in 2016, we saw an 8.8% increase in our own beer sales. The pattern of our growth reflected some broader market trends. The market for cask ale was down by just over 4%, a rather disappointing result, and we too experienced a decline. One area where the market grew, by a modest 0.2%, was sales through shops. For Adnams this was a very strong area and our sales grew by about a third. Market data shows an increase of 5% in sales of premium ales in pubs in 2016. With the decline in cask ale, this was driven by keg sales and marks a change in the market as a good choice of high quality kegged ale is becoming available. The diversity of style and flavour that has been a hallmark of the cask ale market has started to spread into kegged ale and we saw a notable increase in our sales of kegged beers. This has been a major area of focus for us in recent times and that focus paid dividends in 2016.

Strategic Report

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Brewing partnerships There’s always a great deal of excitement when we welcome brewers from other breweries – whether from far-flung places or those not so far away. Collaborating with other brewers allows us to share knowledge and think about brewing from a different perspective and it usually happens whilst sharing a beer.

The Adnams Sales app launched in November, making it easier than ever for our trade customers to order from us at a time that suits them best.

In July we celebrated 25 years of working with Germany’s No 1 draught beer brand. Supermarket sales were strong in 2016.

Marketplace Regular readers of our reports will know that we have long been concerned by the unintended consequences of the structure of the subsidies provided to the UK’s smallest brewers. We have been pleased to welcome the recent formation of an industry group, supported by many from different segments of the market, requesting that the government look again at how these subsidies are structured. Strong growth in the ‘craft’ beer market can be seen in many countries which do not have the structure or scale of subsidies seen in the UK. Another structural aspect of the beer market that has ebbed and flowed over recent years has been pub ownership by brewers. Adnams still owns around fifty pubs, but we sell only just over 5% of our production to these pubs and our primary focus is on selling into the free trade. The recent revival of ownership by larger brewers may be less consequential than in the past, as pubs have evolved towards selling food as much as alcohol. This may mean that the danger of restricted market access is less this time around.

Direct business In 2016 our direct delivery business, which distributes to East Anglia, London and the South East, performed strongly. We have a very desirable range of beer and a high-quality sales and distribution team ensuring delivery. Sales of our own kegged beers were particularly buoyant in this channel in 2016. The direct business provides a full service offering to free trade pubs through which these pubs can buy their complete range of drinks, which we buy on a wholesale basis if they are not our own product. Price competition to supply non-Adnams beers has been very strong and we saw a reduction in margins and volumes in 2016. This emphasises the importance of growing our own products. During the year we built a sales application for use on mobile phones and tablets. This provides enhanced information to our sales team and can also be used by customers to place orders. This should further improve our service to customers.


Strategic Report continued

The Tour of Britain As sponsors of the Best British Rider for both the Women’s Tour and Tour of Britain we were delighted to see Adnams branding along the route as both races toured the UK.

Women’s Tour We were hugely excited when it was announced that the Women’s Tour bike race was to start in Southwold. We could hardly contain ourselves when we heard that they would cycle through the brewery yard, under the Swan archway and into Southwold’s High Street.

Furnivall Gardens in Hammersmith became the home to the Adnams Fan Park throughout the day of the Boat Races. Our brightly coloured Adnams flags, bar and beach huts certainly made an impact and brought a little bit of Suffolk to the banks of the River Thames.

National sales business Our national sales business, which sells to major pub-owning companies, wholesalers and other brewers saw good growth with most customers. We have however noted in the past that in the case of the pub owners who directly manage their pubs, as opposed to their pubs being run by tenants or lessees, supply can be volatile as central decisions cause rapid increases or decreases in volume. In 2016 we saw lower volumes with two large customers which reduced overall volumes in this channel below what we saw in 2015. Take home sales Our sales to supermarkets and other retailers, which are made through our take home channel, were very strong in the year. Ghost Ship has been a particular success in this channel in bottles, cans and mini-kegs. Ghost Ship represents an interesting example of the way in which a strongly-performing cask ale has succeeded in other packaging forms. In recent years Adnams beers have had a lower level of distribution in the take home market than they have had in pubs, but this is beginning to change as we see rapid growth in sales to shops. We believe that our own shops have helped to familiarise customers with our products and we have also increased our marketing spend in areas reaching beyond East Anglia and the South East, which has helped push distribution across the UK.

Marketing and Sponsorship Our marketing has remained primarily focussed on events and sponsorships, however we spread this more widely in 2016 with the start of a six year sponsorship of the University Boat Races. The first races sponsored by Adnams took place at the end of March 2016. The Adnams logo was displayed on the side of the boats and we undertook substantial additional sponsorship at the fan park along the river. A further major extension of our 2016 sponsorships involved our support for the Tour of Britain and Women’s Tour. We have for some years been sponsors of cycling events including the Women’s Tour of Britain and the Men’s Tour when it has been local to us. This year we extended this to cover the Men’s Tour more generally. The Women’s Tour provided a particular boost to Adnams in 2016 as it started in Southwold and riders passed through the brewery yard as they set off. Our sponsorship arrangement with the Newmarket Racecourse continued in 2016 as did those with the Diss Rugby Club, The Playhouse and Theatre Royal in Norwich, the Soho Theatre, the Suffolk Show, the Royal Norfolk Show, Norfolk Food & Drink, the Aldeburgh Food & Drink Festival and Jimmy’s Farm. Adnams export business The Adnams export business has received a much greater focus in recent years as we have sought to grow our overseas distribution. This is a business that requires long and consistent investment to establish our brand and reputation in non-UK markets. We believe that our investment in time and people is starting to gain us some traction and whilst our year-on-year volume growth in 2016 was modest, we have reached levels above anything previously achieved and we are hopeful of further improvements in 2017.

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Spirits

Investment The Copper House Distillery, has been trading for just over six years and in that time has grown to become an important part of the Adnams business and has won several major awards and accolades for its products. A year ago we tripled our distillery capacity in a tribute to the success of this venture and our spirits turnover has now reached £3 million. Award winning products Our most successful product has been Adnams Copper House Gin, winner of the 2013 International Wine and Spirits Competition’s Gin Guild Trophy for the world’s best gin. This drink has won many plaudits in a fast growing and highly competitive market for English gin. Performance Our overall spirits volumes grew by 66% in 2016 with the strongest growth being from the take home channel, comprising sales to supermarkets and other shops. These volumes more than doubled to reach approaching 40% of our sales by volume. Sales through our own shops also achieved impressive 25% growth. Sales of our own spirits is a point of focus for our shops, nonetheless, given that our shop estate has not changed substantially and we have been selling spirits through these shops since production began, the strong 2016 growth is a sign of the appeal of these drinks.

1460 DA

YSThe wait is over – Adnams single malt whisky is back The first release of our Single Malt Whisky was so popular that we sold out of stocks – and as impatient as we might be to bottle some more, unfortunately you simply cannot hurry whisky along. We released our four year old Single Malt back on to the shelves just in time for Christmas.

Our Triple Malt Whisky is made from, you guessed it, three malts – wheat, barley, and oats. After maturing in American oak barrels for five years, it develops beautiful flavours of coconut, vanilla and apricot.

+66%Not only have our spirits won multiple awards for their quality and taste, in 2016 Copper House Gin won the World Drinks Awards, Best Design Effectiveness category – so now we can say we make the world’s best looking gin! The redesign of our spirits range has undoubtedly played its part in the 66% volume growth we saw in 2016.



Our tenanted and leased estate Over recent years our property estate has reduced in size. The Adnams pub estate has traditionally included quite a lot of small rural and community pubs which have found conditions tough as consumer habits change. Our estate is now more stable and whilst we sold one further pub in the year, one just after the year end and have two still for sale, we do not envisage any notable further reduction in the estate. Our tenanted estate had a successful year with absolute profits slightly higher than 2015 and like-for-like profits up by 2.6%. We sold the Cherry Tree at Harleston at the start of the year and we also made two further small land disposals. Our pubs are benefitting from the Adnams spirits range and despite the smaller estate they sold 6% more than they sold in 2015. Our managed estate We started the year with the Swan and Crown in Southwold, the White Horse in Blakeney and the Ship at Levington in our managed estate. During the year we added the Plough at Wangford and since the year end we have added the Bell at Walberswick and the Harbour Inn, Southwold. The White Horse had a particularly strong year, rapidly re-growing its reputation as a destination pub and hotel on the North Norfolk coast. Changes of personnel at the Ship held it back in 2016, however we are hopeful that this beautifully positioned pub, overlooking the Orwell, will return to the success that it has enjoyed in the past. The Plough at Wangford is a characterful and spacious pub with rooms, though its visibility and position on the main road have made it a challenge in recent years. A new caravan site is being constructed on land to the rear of the pub and should help it to fulfil its potential.

Pubs and Hotel Properties

Our properties We have recently grown the number of properties that we manage ourselves, though the large majority of our pubs are run by independent tenants and lessees. Direct management allows us full control over branding and presentation so that we can ensure that our properties represent Adnams in the way that we would choose. Direct management also comes with greater costs and risks as we directly employ the staff concerned and have to ensure effective management at sometimes remote locations. To this end we have, at the start of 2017, recruited Nick Attfield, who had been enjoying great success running two of our pubs: the Bell at Walberswick and the Harbour Inn at Southwold. Earlier in his career Nick ran twenty-six bars and restaurants for Harrods and we believe that he has the right skills to help us to make a success of our own managed pubs.

The Southwold hotels The Southwold hotels both traded ahead of 2015, though underlying trends were not strong and this has helped to make the case for the changes that are planned. In the case of the Crown we are not planning any radical reorganisations, however we aim to apply the learnings from our newly enlarged managed estate to assist its performance. In the case of the Swan, changes will indeed be radical. Refurbishment of the Swan Hotel started on 2 January 2017 and we expect it to be complete by late summer. The cost, including the impact of lost sales during the period of closure, will be in the region of £6 million. The premium hotels market has seen many changes in recent years. The Swan was struggling to compete with high quality restaurants in the region and with the accommodation that is available in other hotels and in leased property. Our aim is to give the Swan a point of distinctive difference. In part this will be achieved by raising standards both in the restaurant and in the rooms. The restaurant will be made much more accessible with an entrance onto the Market Square to attract non-residents. Another key aspect will be a closer linking between Adnams as a wider company, and the Swan as an hotel. Alongside the refurbishment work we are changing the Cygnets building which is behind the Swan into a modern visitors’ centre demonstrating Adnams as a brewer and distiller.

The White Horse in Blakeney is a warm and cosy pub, perfectly positioned on the North Norfolk coast. The manager Tom Pickard and his team continue to welcome guests of all types, including small, furry, four-legged ones too – it’s an inclusive place!

Adnams Honey Guests at the Swan enjoyed our very first batch of honey delivered in August by Adnams’ beekeeper, Steve Barratt. The hives are kept at our distribution centre at Reydon, now that is local sourcing!

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Shops

Performance Our shops enjoyed another successful year with sales growing by about 10% (2.8% on a like-for-like basis). They are an integral part of the way that Adnams deploys its brand and have brought us to the attention of an ever wider audience. Today some 57% of the sales from our shops are of Adnams branded products, an increase of about ten percentage points in the last two years. The fall in the Sterling exchange rate after the EU referendum in June 2016, had a substantial impact on our shops business as around half of our sales are of wine, with wines imported from the EU being the largest group. We have mitigated this by some price rises and some changes to the range, however it was still a major and quite sudden change which depressed profits below where they would otherwise have been. We estimate the foreign exchange impact on our overall business, before mitigation, as £250,000. Store openings We opened one new shop in 2016, this was a small outlet in Felixstowe, which has traded well since it started. Our Bury St Edmunds shop had its first full year of trading in 2016. We initially opened in Bury with a café at the rear of the shop, however this did not attract the success that we have seen from our Southwold café and we decided later in 2016 to offer a ‘gin experience’ in the shop instead. This allows customers to distil their own gin, which has been a very successful offering in Southwold. We opened a Christmas pop-up in Chelmsford in 2016, replacing the offer that we had in Ipswich in 2015 and in Norwich in previous years. This allows us to test the water in different locations and increase customer brand

Energy production

Adnams Bio Energy Adnams Bio Energy Ltd, in which Adnams plc had a 50% interest, went into administration during 2016. Adnams plc had written-off the cost of this investment during 2015. We are pleased to say however that the biodigester will continue to operate and is receiving further investment from its new owner, Southwold Energy Ltd. This company is unrelated to Adnams plc. The digester is being refurbished by its new owners, and when this is complete, waste from our brewery will again be sent to the digester and the digester remains an important part of the environmental investment in the Southwold area.

awareness. All our shops trade well ahead of Christmas. We remain interested in new openings, though we see this as a gradual evolution.E-commerce We are very clear that digital business will be an increasing part of our future and will provide channels to allow us to fulfil sales from beyond the area covered by our shops. Just as our wider marketing campaigns have helped to grow our beer distribution through shops beyond our heartland, ecommerce helps us to do this by delivering directly to customers. We have seen consistent growth in our ecommerce sales, in 2016 they were up by 12%. Nonetheless, we have greater ambitions and are focussing our attention on how we can achieve a step-change in this area. Aside from being our online shop our website provides a route for us to sell our hotel rooms, without reliance on third party bookings and the associated commission. It also allows us to attract and facilitate the booking of brewery and distillery tours, and we see future growth in this area with our new visitors’ centre currently under construction.

We were delighted to become the official beer partner of the Oxford v Cambridge Boat Races. The races are a firm favourite in the calendar and in many ways signify the first big day out in London after the winter.

+12%INCREASE IN ONLINE SALES

Social media Adnams has an active social media presence and works hard at recruiting and retaining its fans. Work that is done alongside our sponsorships and events programme, such as the ‘fan park’ that we sponsored at the 2016 University Boat Races, and competitions on pack in major supermarkets, is an important way in which we are able to do this.Wines The trend in recent years has been for ecommerce sales to gradually displace traditional telephone mail order. Nonetheless we have seen growth in aspects of the mail order business, in particular we have focussed on our Wine Club which offers quarterly cases of wine, red, white or mixed, at three different price points. This is an excellent way for customers to appreciate the Adnams range and try wines that they might not otherwise have come across. Those that have dealt with this business will very probably have encountered our fine wine expert, Rob Chase. Rob retired towards the end of 2016 after 27 years with Adnams, though he is still, in his inimitable way, helping us with wine events and tastings.


Environmental Reporting Our environmental performance improved further in 2016 and we continue to see the economic benefits from this. Those benefits come in the form of a reduced cost base, for example energy savings from installing LED lighting at our warehouse, business resilience, for example reducing our reliance on the mains water supply, and improved revenues as we stand out to customers as a trustworthy, responsible business. For example, we are now a Plan A silver supplier to Marks & Spencer, which greatly enhances our status with them and in turn with their customers. This is just one of several awards and accolades that we received in 2016.

Biomethane truck Using alternative vehicle fuels is reducing cost, carbon and pollution. This lets us operate our business efficiently and with a clean conscience.

Distribution centre After ten years of energy efficient operations and protecting biodiversity, our distribution centre remains an icon of our innovation and creativity.

We continue to use our established management framework to look holistically at our environmental performance. The four pillars of carbon, water, waste and biodiversity guide our thinking and we look across our product lifecycles (from grain to glass) to ensure best practice and responsible decision making. We maximise our efficiency through our concept of environmental gearing.

Commited to lowering our carbon emissions Our total carbon emissions decreased to below 3,000 tonnes this year. Our moving away from fossil fuels over the past few years has contributed significantly to that, though reporting guidelines only now allow us to reflect it in our data. From October, our brewery’s electricity supply came wholly from renewable sources and the rest of the company had already moved to 99% renewable. The annualised saving from this policy is over 1,000 tonnes, a reduction equivalent to process improvements which we made in previous years.Energy usage The company overall used slightly more energy as our output and property estate grew. On a per-revenue basis, our carbon emissions have fallen to 36.3kg per £000. This is a 5.4% reduction on last year and a reduction of over 23% since 2013. Our increased output was an important part of this improvement. Our production, logistics and retail divisions all used less carbon per barrel of beer or £000 of revenue though our managed inns saw an increase in emissions as we took The Plough, Wangford into our estate and had a full year trading at The White Horse, Blakeney and The Ship, Levington. The Swan and The Crown in Southwold retained their gold award under the Green Tourism Business Scheme, a credential of growing significance to customers.

Investment Some of our notable projects in 2016 included a series of changes to our fleet operations. Our Southwold shop is now using an electric van for local deliveries, our Stamford and Woodbridge shops have adopted engine technology that reduces their fuel consumption by 24%, and we are midway through trialling biomethane as a fuel source for one of our heavy goods vehicles. This reduces nitrous oxide emissions by over 60% and has a very short payback period. With increasing fuel prices and oil a finite resource, our work here considerably reduces uncertainty in our operations.Water Our water ratio has fallen to 2.8 pints of water for every pint of beer produced, the first time we have reduced it below three. This remains ahead of the industry as a whole. Our distillery continues to make efficiencies and reduces its consumption every year. We can compare our whisky production with other UK distillers, and are confident our ratio is better than the industry average. We also consider water depletion and quality across the lifecycle of our products to ensure a holistically responsible approach. Our work in this area last year helped us to win the Edie award for Water Management, a very prestigious accolade in this field that has been widely reported in the press.Waste and Biodiversity We continue to send zero waste to landfill and to support initiatives to preserve the biodiversity in our local area. Our bees, which we introduced in 2015, produced their first honey in 2016, which we used at The Swan and The Crown. We continue to focus on our packaging and the impact it has, which in 2016 included joining forces with an aluminium can recycling campaign called ‘Every Can Counts’, helping to increase recycling rates from our customers so that we can maintain our 90% recycled content, aiding future resilience.


Holistic ImperativeInternal processes and initiatives

+ Suppliers, Customers & Competitors

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We held three successful beach cleans, including our highest ever turnout with over 100 volunteers. We continue to support Suffolk Wildlife Trust’s Hen Reedbeds with our 5p carrier bag charge. We have also initiated a highly praised project called ‘Food for Thought’ under which local schools have grown food that is then used in our hotels. Risk & Expenditure As we have reported in previous years, we continuously update our risk register with environmental and climate risks. These include changing weather patterns, water availability, energy costs, flooding and so on. This is separate to our daily environmental management and covers the emergency risk measures to apply in such a situation.We do not separate our environmental expenditure from other costs as it is integral to the long-term sustainability of our business.

Water ratio We reduced our water use again in 2016 and have a ratio below three for the first time ever. This is some 25% ahead of the industry average and helps us ensure our business is resilient against water shortages.

2.8

Lift here to see how our respect for our environment and community are a fundamental part of our business

Carbon per £000 revenue1

kgCO2e

20130

10

20

30

40

50

2014 2015 2016

47.20843.021

38.32736.273

Total emissions1

Tonnes CO2e

2,549

2,518

2,841

2,8562013

2014

2015

2016

+1.2%

ProductionkgCO2e per barrel produced

9.4

10.9

14.2

15.32013

2014

2015

2016

-14.3%DistributionkgCO2e per barrel delivered

6.4

6.8

6.8

7.62013

2014

2015

2016

-5.5%

RetailkgCO2e per £000 revenue

1.9

2.3

3.1

4.22013

2014

2015

2016

-15.8%Managed InnskgCO2e per £000 revenue

81.6

73.2

86.6

102.12013

2014

2015

2016

+11.5%

Scope 1 emissions1

Fuels used for combustion and transport (Tonnes)

2,500

2,312

2,169

2,1902013

2014

2015

2016

+8.1%Scope 2 emissions1

Purchased electricity (Tonnes)

49

206

672

6662013

2014

2015

2016

-76.2%

1 Using location-based emission factors, normalised emissions were 51.315kg of CO2e per £k revenue, total emissions were 3,611 tonnes of CO2e, fuels used for combustion and owned transport amounted to 2,500 tonnes and purchased electricity amounted to 1,111 tonnes.

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Our water saving energy efficient

Distribution Centre saves over 1m litres

of water per year

38% Lighter weight bottles thanks to a partnership with

another Edie award winner, O-I

Biomethane for our trucks

On-site bee breeding

to develop resilience

of bee population

1x electric van2x vans with

modified engine technology to

reduce fuel by 24%

By Jove!By Jingo!

Jon

ath

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’s

farm

We know that sustainability is good for business. That’s why we aim to reduce our carbon footprint and water use every year. It’s why we turn our waste into assets and it all started by recognising the beauty of rural East Anglia, a place we’re proud to call home. Ensuring quality in everything we do helps us reduce our costs, make our business more resilient for the future and reassures our stakeholders that we deserve their trust.

63% reduction

in NOx pollution

Over 30% cost

saving

Embracing innovation & new technology.

Sharing results of our trial with other

businesses. 24% fuel saving

Developing Local partnerships:

Diesel Dynamics and VETS East

Our product lifecycle

Minimising health

impact & pollution


Solar panels generate power

for the anaerobic digester and distribution

centre

Biomethane to the grid

Hotel food waste

Digestate fertilizer

(by-product)Brewery

waste output

Anaerobic digester

FEED ME!

I emit up to 40% less

methane than a cow

fed on grass

Local barley farms known by name

Spent grains to East Anglian cattle

using 100% renewable energy thanks to another Edie award winner and locally based

company, Smartest Energy.

START HERE

Our energy efficient Brewery

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Our community

OUR

COMMU

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Adnams and Southwold are intrinsically linked, and where we promote Adnams we promote Southwold. We strongly believe in helping Southwold to create a vibrant and thriving town all year round, and ensure the impact our business has on the town is a positive one. From community sponsorships and charitable giving to beach cleans we always strive to make a positive difference.

Adnams 10K It started as a ‘good idea’ to help us raise funds for a Prince’s Trust Million Makers Challenge in 2009, but the Adnams Southwold 10k seems to have become a permanent fixture on the Adnams’ events calendar. A few of us here are runners and thought it would be a great idea to organise an event in our home town. The date was originally chosen to fit with our Million Makers Challenge, but the cold, wet and windy conditions seemed to suit those who wanted to feel heroic as they crossed the finishing line. So, the annual date is set for mid-to-end November and it’s a firm favourite in people’s calendar.

Food for Thought Food for Thought is a social enterprise that sees local schoolchildren plan, plant, grow and sell fresh produce directly to restaurants. We wanted the scheme to offer a unique opportunity for local children to grow their skills in everything from maths and English to business and marketing. Our team at The Crown Hotel used the produce to create oven-roasted tomatoes and a delicious apple chutney to serve with their game terrine. One teacher commented that ‘I genuinely wish every child, every school, every business and community had the opportunity to be involved.’ The project has been such a success in our first two pilot schools that we have opened the idea out to other educational institutions.

START

PLAYING OUR PART

Adnams plc Annual Report 2016

PLAYING OUR PART

Community sponsorship Adnams is proud to be part of the Southwold community sponsoring local events and initiatives such as the Southwold Shuttle bus, Southwold Christmas lights, Soutwold Arts Festival, Pigs Gone Wild Trail 2016 Sir Bradley Piggins and Raffle prizes for hundreds of community and Charity events.

We established the Adnams Community Trust in 1990 to mark our centenary as a company. We are proud of the fact that over £1.2m has been awarded to local good causes in that time.In 2016 we changed our name from the ‘Adnams Charity’ to the ‘Adnams Community Trust’ which reflects our ongoing commitment to supporting the local area. All of this is made possible by the generosity of our supporters, including Adnams shareholders, who contribute generously to the charity every year.

Adnams Community Trust had another great year in 2015-2016 with £72,867 awarded to 68 local organisations. Local schools benefitted from grants towards conservation education, improving a library and a trip to an outdoor activity centre for children with severe learning difficulties. With the support of the Trust local charities supported those in need including women and children at risk of domestic abuse, the bereaved, and adults who have experienced mental ill-health. The Trust also supported causes that promote the arts, provide sports and recreation facilities, and upkeep numerous community buildings.

COMMUNITY TRUST

FINISH

£1,200,000+

£5 +Pennies We teamed up with Pennies, the digital charity box in 2012 in our flagship Southwold Store, it proved so successful in 2013 we rolled it out across all our stores and in 2016 to the Adnams online store. In 2016 we hit the amazing milestone of receiving 500,000 individual donations. It’s a simple and great way for our customers to be able to support charities at the press of a button, and the pennies really do add up! In 2016 a total of 181,553 individual donations were made and £46,868.59 raised. The charities you’ve helped support over the past year are Alzheimer’s Research UK, Royal Association for Deaf People, Pancreatic Cancer UK, The Big C and East Anglia’s Children’s Hospices – Thank you!


2017 WILL BE A RECORD YEAR FOR CAPITAL INVESTMENT


Finance CommentaryAccounts presentation After the notable changes that were made in 2015 as a result of adopting the new UK accounting standard, FRS102, there are no comparably significant changes in 2016. However, we would like to draw shareholder attention to the segmental reporting note on page 39. In recent years Adnams has allocated costs across its business to seek to arrive at the profitability of each business after a fair attribution of overheads. Those costs not clearly attributable to a business (such as the costs of maintaining our status as a quoted PLC), were retained as central costs. The aim of allocating costs is in many ways desirable, however it has disadvantages. Firstly, in a business such as Adnams, where activities are very integrated, it is hard to determine which business should carry which costs, which creates considerable subjectivity in the numbers. Secondly, it is important that individual managers are clear about what they are managing and not confused by a bottom line that carries costs over which they have little control. Thirdly, the stripping out of overheads allows a greater business focus on these costs. For these reasons our management reports no longer show results after allocated costs. Should an allocation be necessary it can in any case be done as a management accounting exercise. In our statutory accounts we are required to adopt a presentation that reflects the one used by our management. Accordingly, we have changed our reporting to show results before cost allocation and then we show our overheads. The overhead cost has been split into two parts, the Central Operations cost, the principal part of which relates to the costs of running our warehouse and distribution operations, and Central Management costs which cover services such as Human Resources, Information Technology and Finance, the costs of our board, and our marketing expenditure. Borrowings Though our capital expenditure reached £5.2 million in the year, our year-end borrowings were only slightly ahead of 2015 at £9.2 million compared to £8.9 million. We were assisted by asset disposal proceeds of £1.8 million, but were pleased to note strong cash generation. Our largest capital project in 2016 was the continuing investment in our brewery. The year-end debt level was 1.4 times EBITDA (earnings before interest, tax, depreciation and amortisation) excluding profits on asset sales, which compares to 1.3 times in 2015. Interest expense (excluding the notional interest charge relating to the pension deficit) was covered 17 times by operating profit, compared to 15 times in 2015. These measures suggest a prudent level of borrowing.

In 2015 Adnams agreed new facilities of £15 million, £5 million as a five year fixed rate loan, together with a £10 million overdraft limit. We anticipate 2017 being a record year for capital investment at Adnams with the completion of the brewery project and the Swan renovation, which together with forgone income will cost in the region of £6 million. With this in mind we have, since the year-end, negotiated a further £5 million loan facility with Barclays, making our total facility £20 million. At the 2015 year-end our previous three year facility was about to mature and so we had no debt with a maturity over one year. This had a presentational effect on our balance sheet as all debt was shown in current liabilities which meant that net current assets were negative, though creditors falling due after more than one year were correspondingly lower. In 2016, our £5 million term loan has altered this position turning our net current assets positive. Tax The effective tax rate (the tax charge in the accounts as a proportion of the pre-tax accounting profit), was 17% compared to 21% in 2015. The reduction in this rate relates principally to adjustment to the prior year provision, mainly as a result of taking into account lower projected rates of corporation tax. We take a prudent approach to our tax affairs and whilst we do not shun tax reliefs, we avoid anything that might be considered to constitute tax avoidance. Pensions Once again we are publishing accounts showing a very material change in our pensions liability. Our deficit has leapt from £3.2 million to £9.9 million. This does not result from our assuming any new liabilities, these were frozen when we closed our defined benefit pension scheme to further accrual in 2005. It results from changes to the assumptions that are made when assessing the size of the liabilities. Foremost amongst those assumptions is the discount rate that is applied when reducing future liabilities to a current value. A lower discount rate means a lower reduction and a higher current value of liabilities. The discount rate that we are required to use in company accounts is the return on high quality corporate bonds (borrowings). This showed a very marked reduction in 2016 over 2015, with the discount rate falling from 4.0% to 2.6%.In contrast, the assumptions used by the Scheme Actuary in performing his triennial valuations tend to be much more stable. The latest triennial valuation took place as at 1 April 2016. The result was a deficit of £1.8 million which was £2.6 million lower than three years earlier. The Company and the Scheme Trustees agreed that the existing employer contributions should nonetheless remain unchanged at £480,000 per annum.

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We are recommending an increase in the final 2016 dividend of 6p per £1 ‘B’ share, which is 1.5p per 25p ‘A’ share.

in our ability to meet the requirements of our customers and consumers. We operate in challenging and competitive markets and are building a brand that attracts some admiration.

INCREASED DIVIDEND

WE REMAIN CONFIDENT

Financial highlights

2012 2013 2014 2015 2016 Variance1

Operating profit (£000) 3,392 3,325 3,815 4,093 3,937 (3.8%)ROCE (percentage)2 9.5% 9.3% 13.0% 10.5% 10.7% 2.2%

Gearing (book value) 62.8% 42.7% 37.9% 29.7% 33.5% 13.0%Net debt (£000) 13,739 10,758 8,048 8,918 9,208 3.2%Interest cover3 8.2 11.2 12.3 15.3 17.4 13.7%Ord dividend (per £1 share)4 1.94 1.96 2.05 2.16 2.26 4.6%

1 % variance between 2015 and 2016.2 The return on capital is based on the operating profit line and capital employed, including debt.3 Excluding exceptional items and interest on pension deficit.4 Including proposed final dividend for 2016.

2014, 2015 and 2016 financial highlights have been prepared using the accounting standard FRS102, previous years were prepared using the accounting standards in force at that time.

Treasury policies Whilst interest rates remained low in 2016, this would have been the year to buy forward our foreign currency requirements at the rates prevailing ahead of the EU referendum. Sadly this was less clear ahead of the vote, and if it had been, rates would have been different. We have continued to take the view that we will accept the swings with the roundabouts and as a long-term business we will gain in some years and lose in others, but we will be no worse off in the long term and will not need to invest resource in managing our treasury position. We are helped in this view by the fact that though changes in foreign exchange rates have an impact on our results, they are not important enough to imperil our operations. We have chosen not to insure debts owed to us as we find the strictures imposed by the insurers to be too constraining. We manage credit risk with appropriate limits applied to each customer, based on payment history and credit references. Limits are reviewed regularly and debt appropriately chased. Further details of financial risk are shown in note 28 to the accounts.Impairment Charges None were made in either 2016 or 2015.Dividend Policy We are recommending an increase in the final 2016 dividend of 6p per £1 ‘B’ share, which is 1.5p per 25p ‘A’ share. This raises the dividend from £1.44 per ‘B’ share (36p per ‘A’ share) to £1.50 per ‘B’ share (37.5p per ‘A’ share). Given the increase in the interim dividend of 4p per ‘B’ share (1p per ‘A’ share) this will mean that the full year dividend will be £2.26 per ‘B’ share (56.5p per ‘A’ share), a 4.6% increase on 2015. Whilst we retain discretion to vary our payments in accordance with the circumstances of the time, our normal policy is to pay an interim dividend equal to 35% of the previous full year dividend. On this basis we envisage a 2p per ‘B’ share (0.5p per ‘A’ share) increase in our 2017 interim dividend which will make the ‘B’ share payment 78p and the ‘A’ share payment 19.5p, a 2.6% increase on 2016.Business Risks and Uncertainties We seek to use this report, and that from our Chairman, to discuss the business in such a way that we properly explain the principal risks and uncertainties that we face and we have also sought to classify the main categories of risks and uncertainties, beyond the environmental and financial risks discussed above, as follows.

Firstly the state of the economy, notably the level of consumer confidence and changes in alcohol consumption patterns are key to us. We try to ensure that we are sensitive to changes so that we can rapidly adapt.Secondly the regulation of our industry affects the ways in which we compete. The alcohol industry is, unsurprisingly, highly regulated. We seek to ensure that we adopt a consistently responsible attitude towards alcohol consumption, that we are well informed on regulatory developments and engage with the development of these regulations. Thirdly we face operational risks in ensuring the continuing functioning of our brewery, computer systems and other key processes. We deal with these by attracting and retaining staff with the right abilities and by establishing wider risk management processes.Fourthly our brand and reputation are key to all our business activities and we seek to be constantly vigilant in ensuring that we stand by our values and live up to the name that we have built.We feel that this classification remains as valid in 2016 as it was in 2015. The future UK consumers have so far reacted robustly in the face of the uncertainties presented by the UK’s prospective exit from the EU. The depreciation of Sterling has led to higher import prices and may slow economic activity. However, we remain confident in our ability to meet the requirements of our customers and consumers. We operate in challenging and competitive markets, and that is not likely to change, but we are building a brand that attracts some admiration. We will continue to invest in our future and I would like to thank our many supporters in this enterprise, particularly our hard working employees. On behalf of the board.Andy Wood OBE Chief Executive14 March 2017

Our Board

Jonathan Adnams OBEChairman

Jonathan joined Adnams on 25 November 1975, starting out in brewery engineering and working in every aspect of the company since. He joined the Board in 1988 running pubs and property and assumed the role of Managing Director in 1997. In August 2006 Jonathan took over the role of Chairman, in which he remains today.Jonathan has been instrumental in driving Adnams forward in terms of innovation and sustainability. The introduction of the modern and energy-efficient brewing equipment and the world-class distillery that is Adnams today, are all thanks to Jonathan. Jonathan was awarded an OBE in 2008 for his commitment to Corporate Social Responsibility.In November 2015 Jonathan celebrated completing 40 years at Adnams.Outside of work Jonathan is a keen sailor, and spent many years as part of the RNLI Lifeboat crew in Southwold.Favourite drink: Either a pint of Adnams Bitter, or an Adnams Single Malt Whisky

Karen HesterChief Operating Officer

Stephen PughFinance Director

Andy Wood OBEChief Executive

Andy joined Adnams in the mid 1990s with responsibility for developing its customer service and supply chain operations. He joined the Board in 2000 as Sales and Marketing Director becoming Managing Director in 2006 and Chief Executive in 2010. Andy is Non-Executive Chairman of SGWM a wealth management company operating throughout East Anglia and is a Non-Executive Director of Extremis Technology who manufacture humanitarian shelters. He is also Professor of Corporate Leadership and Associate Dean of Enterprise (Faculty of Social Science) at the University of East Anglia.He has co-authored a book on Lean and Green Business Systems. The book was awarded the Shingo prize for Operational Excellence in 2013.Favourite drink: A pint of Ghost Ship

Karen joined Adnams in 1988 as a part-time cleaner with a background in Army logistics and transport, her expertise in operational management was soon spotted. Having progressed in logistics, procurement and transport, Karen became Operations Director in 2007. 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.Karen is also a Magistrate and joined the Adnams Board in 2015. In October 2015, Karen was awarded an honorary doctorate by University Campus Suffolk (UCS).Favourite drink: A nice cold glass of Adnams Riesling

Stephen joined Adnams in 2003 as Finance Director. Alongside this role Stephen is responsible for Adnams IT Systems, and served as the Company Secretary until May 2016.An alumnus of Cambridge University, Stephen has previously worked for Price Waterhouse, NM Rothschild, Burberrys and The Economist Group.Stephen is a fellow of the Institute of Chartered Accountants in England and Wales, an associate of the Chartered Institute of Taxation and a fellow of the Association of Corporate Treasurers.Stephen is also a member of the Policy and Technical Committee of the Association of Corporate Treasurers, a member of Corporation at Suffolk New College and is a trustee of the National Eczema Society.Favourite drink: A pint of Ease Up IPA


Guy Heald Non-Executive Director

Bridget McIntyreNon-Executive Director & Chair of the Audit Committee

Steven SharpNon-Executive Director & Chair of the Remuneration Committee

Nicky joined the Adnams Board in April 2014.Nicky is a highly experienced businesswoman who has held a number of positions in leading UK retailers, including Chief Executive at Hobbs. She currently chairs the Board of local business, Notcutts Ltd. Before that, Nicky had a successful career within Marks & Spencer, where she led a number of strategic financial initiatives across a broad range of disciplines including Retail Operations, Property, where she led two ground-breaking transactions, refinancing over £700m of property assets and Human Resources. Her last role at M&S was Finance Director of the Food Division.Favourite drink: Copper House Gin & Tonic with ice & lime.

Guy joined the Adnams Board in April 2015.Guy has been a long term supporter of Adnams. His family has been involved with Adnams since its very early days and 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.Favourite drink: A pint of Dry Hopped Lager

Bridget joined the Adnams board in May 2013.Bridget started her business career training to be an accountant. After qualification in 1987, she worked in a variety of industries from Collins the publishers to Volvo cars. She moved to work at Aviva and held a number of senior positions across the business. Most recently she was UK chief executive of RSA Insurance.She is currently a director at NHBC, Ageas UK, Jarrold & Sons, and Saga. She is a governor of the Health Foundation and founder of her own social enterprise business, Dream on, a Suffolk-based company focussed on improving the lives of women.Favourite drink: Either Dry Hopped Lager or a Copper House G&T, but always with a packet of Ghost Ship crisps!

Steven joined the Adnams Board in June 2007.Steven started his retail marketing career with the Bejam Group in 1978. He progressed to the Argyll Group and became Marketing Director of Asda in 1987.He joined the Board of Debenhams on the same day as Stuart Rose in 1989, and became Group Marketing Director of the Burton Group.Steven continued his relationship with Stuart as Marketing Director of Booker, Arcadia and Marks & Spencer. He now runs his own company Imagineer London.Favourite drink: A nice pint of Blackshore Stout

Nicky DulieuNon-Executive Director


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Report of the DirectorsFor the year ended 31 December 2016

The Chairman’s Report and the Strategic Report on pages 12 to 27 include information about the company’s business and financial performance during the year and indications of likely future developments and should be read in conjunction with this report.

Dividends to ordinary shareholders2016 £000

Final 144% (paid 3 May 2016) 679

Interim 76% (paid 3 October 2016) 359

Proposed final dividend of £708,000 (150%) to be paid 2 May 2017.

Financial risksThe financial risk management objectives, policies and exposures of the company are set out in the Strategic Report and in note 28 to the accounts.

PropertiesIn the opinion of the directors the market value of the properties considerably exceeds the amount included in the balance sheet. The directors are unable to quantify this excess in the absence of a professional valuation, the costs of which are not considered justifiable in view of the company’s intention to retain ownership of its principal existing properties for use in its activities for the foreseeable future.

DirectorsThe directors who held office during the year and their interests in the share capital of the company, at the beginning and end of the financial year, and whilst a director, are shown below.

The statement of Directors’ responsibilities is shown on page 51.

N J Dulieu, S C Pugh and S M Sharp retire by rotation and being eligible offer themselves for re-election.

Directors’ interests

‘A’ Ordinary 25p ‘B’ Ordinary £1

2016 2015 2016 2015

Ordinary shares

J P A Adnams 186,182 186,096 3,263 3,263

N J Dulieu* 161 161 – –

M G H Heald* 164,860 160,213 45,737 46,037

K Hester 1,819 1,693 – –

B F McIntyre* 105 105 – –

S C Pugh 2,238 2,112 – –

S M Sharp* 304 304 – –

A C Wood 4,626 4,500 – –

10,670** 10,670** 3,800** 3,800**

* Denotes non-executive director.** Shares held as Trustee.

The company has a Share Incentive Plan (SIP) in which the executive directors are eligible to participate. Directors’ interests in shares attributed under the terms of this scheme are included above.

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Employee mattersInvolvementAdnams is committed to involving employees in the performance and development of the company by encouraging them to discuss with management matters of interest and subjects affecting day to day operations. Most employees, including executive directors, benefit from the company’s success through a profit sharing scheme, and through a share incentive plan which distributes shares to employees during their period of service with the company.

Health, welfare and development of employeesFor many years Adnams has operated schemes for the welfare and benefit of employees. As well as pension and life assurance, we provide cover for illness and we make available to employees qualified specialists to cover medical welfare, pension advice and any counselling needs. Health and safety policies are given a high profile in all areas with wide representation throughout the company on the Health and Safety Committee.

It is our policy to train and develop the knowledge and skills of employees at every level and to provide long-term secure and fulfilling employment. We are proud achievers of the Investors in People Gold award.

Disabled persons It is the company’s policy to give full consideration to suitable applications for employment by disabled persons. Opportunities also exist for employees who become disabled to continue their employment or to be trained for other positions.

IndependenceAdnams continues to value and work to preserve its status as an independent company.

Charitable donationsAdnams is committed to giving not less than 1% of its annual profits to charitable causes.

Donations to the Adnams Charity during the year amounted to £40,000 (2015: £41,000).

Supplier paymentIt is the company’s policy to make every effort to agree terms of payment with suppliers in advance, to ensure that suppliers are made aware of the terms and to abide by them.

At 31 December 2016, the company had an average of 29 days (2015: 25 days) purchases outstanding in trade creditors.

Directors’ qualifying third party indemnity provisionsThe company has granted an indemnity to its directors against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third party indemnity provision remains in force as at the date of approving the directors’ report.

Statement as to disclosure of information to the auditorThe directors confirm that:

– so far as each director is aware, there is no relevant audit information of which the company’s auditor is unaware; and

– the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

AuditorGrant Thornton UK LLP offer themselves for reappointment as auditor in accordance with section 489 of the Companies Act 2006.

By Order of the Board

E S CantwellSecretary

14 March 2017

Notice of meetingNotice is hereby given that the One Hundred and Twenty-Seventh Annual General Meeting will be held at The Britten Studio, Snape Maltings on 27 April 2017 at 11 o’clock for the following purposes:

Ordinary Resolutions1 To consider the Accounts and Directors’ report

2 To declare a final dividend

3 To re-appoint N J Dulieu, who retires by rotation

4 To re-appoint S C Pugh, who retires by rotation

5 To re-appoint S M Sharp, who retires by rotation

6 To re-appoint Grant Thornton UK LLP as Auditor

7 To authorise the directors to fix the remuneration of the Auditor

A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to exercise all or any of his/her rights to attend, speak and vote.



14 March 2017

Registered OfficeSole Bay Brewery, Southwold, Suffolk, IP18 6JW

Company registered number 31114


Profit and loss accountFor the year ended 31 December 2016

Statement of comprehensive incomeFor the year ended 31 December 2016

Notes2016 £000

2015 £000

Turnover 5 70,265 65,698

Operating expenses 6 (66,328) (61,605)

Operating profit 3,937 4,093

Profit on disposal of assets 7 1,430 625

Profit on ordinary activities before interest and taxation 5,367 4,718

Interest receivable – 1

Interest payable 10 (227) (269)

Other finance charge on pension scheme 27 (120) (382)

Profit on ordinary activities before taxation 5,020 4,068

Tax on profit on ordinary activities 11 (867) (839)

Profit for the financial year 4,153 3,229

Notes2016 £000

2015 £000


Actuarial (loss)/gain on pension scheme 27 (7,044) 8,145

Movement on deferred tax relating to actuarial loss/(gain) 20 1,338 (1,548)

Total comprehensive (loss)/income for the financial year (1,553) 9,826

Notes 2016 2015

Earnings per share basic and diluted 13

‘A’ Shares of 25p each 220.0p 171.1p

‘B’ Shares of £1 each 880.2p 684.3p

The notes form an integral part of the financial statements.

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Balance sheetAs at 31 December 2016

Notes2016 £000

2015 £000

Fixed assets

Tangible assets 14 40,755 38,545

Investments 15 50 –

40,805 38,545

Current assets

Stocks 16 7,230 6,377

Debtors 17 8,987 7,587

Cash at bank and in hand 18 17

16,235 13,981

Creditors: amounts falling due within one year 18 (14,429) (18,024)

Net current assets/(liabilities) 1,806 (4,043)

Total assets less current liabilities 42,611 34,502

Creditors: amounts falling due after more than one year 19 (5,229) (223)

Provision for liabilities 20 – (990)

(5,229) (1,213)

Net assets excluding pension liability 37,382 33,289

Pension liability 27 (9,909) (3,225)

Net assets including pension liability 27,473 30,064

Capital and reserves

Called up share capital 21 472 472

Share premium 22 144 144

Profit and loss account 22 26,857 29,448

Equity shareholders’ funds 27,473 30,064


The financial statements were approved by the board of directors on 14 March 2017, authorised for issue and signed on its behalf by:

S C PughDirector

Company registration number 31114


Notes

Called-up share capital

£000

Share premium account

£000

Profit and loss account

£000Total £000

At 1 January 2015 472 144 20,604 21,220

Profit for the year – – 3,229 3,229

Other comprehensive income

Actuarial gain on pension scheme 27 – – 8,145 8,145

Movement on deferred tax relating to pension scheme – – (1,548) (1,548)

Total comprehensive income – – 9,826 9,826

Dividends paid 12 – – (982) (982)

At 31 December 2015 472 144 29,448 30,064

Profit for the year – – 4,153 4,153

Other comprehensive income

Actuarial loss on pension scheme 27 – – (7,044) (7,044)

Movement on deferred tax relating to pension scheme 20 – – 1,338 1,338

Total comprehensive income – – (1,553) (1,553)

Dividends paid 12 – – (1,038) (1,038)

At 31 December 2016 472 144 26,857 27,473


Statement of changes in equityFor the year ended 31 December 2016

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Notes2016 £000

2015 £000

Cash flows from operating activities


Adjustments for:

Depreciation of tangible assets and write off of investments 2,862 2,634

Profit on sale of fixed asset disposals (1,454) (586)

Interest, and other finance charges on pension scheme 347 650

Tax on profit on ordinary activities 867 839

Difference between pension charge and cash contributions 27 (480) (480)

Increase in stocks (853) (456)

(Increase)/decrease in debtors (1,074) 242

Increase in creditors 787 188

Cash from operations 5,155 6,260

Taxation paid (726) (780)

Net cash generated from operating activities 4,429 5,480

Cash flows from investing activities

Payments to acquire tangible fixed assets 14 (5,187) (6,791)

Receipts from sales of tangible fixed assets 1,781 1,717

Payments to acquire investments/deposits (44) (10)

Net cash used in investing activities (3,450) (5,084)

Cash flows from financing activities

Repayment of bank loans (8,250) (1,000)

Receipt from new bank loan 5,000 –

Interest paid (231) (284)

Dividends paid 12 (1,038) (982)

Net cash used in financing activities (4,519) (2,266)

Net decrease in cash and cash equivalents (3,540) (1,870)

Cash and cash equivalents at 1 January (668) 1,202

Cash and cash equivalents at 31 December (4,208) (668)

Cash and cash equivalents consist of:

Cash at bank and in hand 18 17

Bank overdraft (included in bank overdraft and loans within creditors: amounts falling due within one year) (4,226) (685)

Cash and cash equivalents (4,208) (668)

Bank loan (5,000) (8,250)

Net debt (9,208) (8,918)

Reconciliation of net cash flow to movement in net debt

Decrease in cash (3,540) (1,870)

Cash flow from decrease in loans 3,250 1,000

Movement in net debt (290) (870)

Net debt at 1 January (8,918) (8,048)

Net debt at 31 December (9,208) (8,918)


Statement of cash flowsFor the year ended 31 December 2016


1 Company informationAdnams plc is a Public Limited Company incorporated in England. The registered office is Sole Bay Brewery, Southwold, Suffolk, IP18 6JW.

The principal activities of the company are brewing and distilling; wholesaling and retailing beer, wines, spirits and minerals; pub and hotel ownership and management.

2 Basis of preparationThese financial statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 – ‘The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland’ (FRS102), and with the Companies Act 2006. The financial statements have been prepared on the historical cost basis. There are no fair value adjustments other than in recognition of the net defined benefit pension deficit.

Going concernThe company has considerable property assets and is soundly based. A five year £5 million facility, subject to financial covenants, commenced on 2 February 2016. In addition, short-term facilities were renewed at £10 million. Subsequent to the year-end, as of 2 February 2017 a further £5 million facility has been provided for a three year term, making total facilities £20 million. The directors have reasonable confidence that further facilities will be available to the business when the current facilities mature. The directors also have reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the accounts.

3 Significant judgements and estimatesOne notable area of judgement is the assessment of possible impairment of the fixed assets, especially properties, employed by Adnams. We use a threshold rate of return for these assets when assessing whether an impairment charge could be required. In recent years we have used a pre-tax rate of 7.5%. Whilst interest rates vary year-by-year there is a case for constantly adjusting this rate, but we feel that there is merit in using a consistent rate and we have chosen this course and feel that 7.5% remains a sensible threshold.

The cost of our closed defined benefit pension plan is determined using actuarial valuations. These valuations involve making assumptions, notably about discount rates and mortality rates. Due to the complexity of the valuation, the underlying assumptions and the long-term nature of the plan, such estimates are subject to significant uncertainty.

Our overall view is that whilst judgements and estimates do need to be made in assessing provisions and asset values, had we made other assumptions within the range of likely outcomes, this would not have produced a materially different result.

4 Principal accounting policiesTangible assetsTangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is provided on all tangible fixed assets other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its estimated useful life, as follows:

Freehold buildings 2% to 4% p.a.

Leasehold property

– long lease 2% p.a.

– short lease period of lease

Plant and equipment 4% to 10% p.a.

Fixtures and fittings 15% p.a.

Motor vehicles 15% p.a.

Computer equipment 25% p.a.

Fixed assets in the course of construction are not depreciated until they are brought into use.

Impairment reviewsAsset values are reviewed for impairment should it appear that their value might not be recoverable. In assessing the potential impairment of assets or income generating units (those assets affected by the same economic factors) the book value of properties is compared to the higher of the realisable value and the value in use. The value in use is determined by discounting the cash flows from the assets at a pre-tax rate of 7.5%. Any shortfall is recognised as an impairment loss. In recent years our policy has been to view each of our properties as being sufficiently distinctive to represent a separate income generating unit.

Notes to the financial statementsFor the year ended 31 December 2016

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4 Principal accounting policies (continued)InvestmentsThe investment in the joint venture, Adnams Bio Energy Ltd, was written off in 2015. The £50,000 investment made in 2016 is in the Pint Shop Ltd, a customer of Adnams plc which runs outlets in Cambridge and Oxford. This investment is held at cost.

StocksStocks have been valued on a consistent basis at the lower of cost or net realisable value on a first-in, first-out basis. Cost of beer and spirits stocks includes relevant production costs and associated overheads. Net realisable value is based on estimated selling price less any further costs expected.

DebtorsShort term debtors are measured at transaction price, less any impairment.

CreditorsShort term creditors are measured at transaction price.

Bank loansBank loans are measured at amortised cost.

LeasesTotal rentals payable under operating leases are charged to the profit and loss account on a straight line basis over the lease term. Lease incentives are recognised as a reduction to the expense over the lease term on a straight line basis.

Financial instrumentsFinancial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity when paid.

TaxationCurrent tax is charged on the basis of the amount of tax payable in respect of the taxable profit for the current or past reporting periods using the tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax.

Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits, and are recognised within debtors.

The deferred tax assets and liabilities all relate to the same legal entity and being due to or from the same tax authority are offset on the balance sheet.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Deferred tax is provided on capital gains which have been rolled over into the acquisition of new fixed assets.

Provision is made for tax on gains on disposal of fixed assets only to the extent that at the balance sheet date, there is a binding agreement to dispose of the assets concerned.

TurnoverTurnover is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on despatch or delivery of the goods; or on provision of services. In the Brewing and Brands business turnover is recognised on confirmation of delivery of beer or other physical goods. In the Retail businesses stores and web and mail order turnover is recognised on despatch of goods, or physical shop transaction. In the Property business managed properties recognise income following provision of accommodation services or provision of food or drinks. Rental income received from the tied estate properties is recognised in the period to which it relates. Turnover is measured at the fair value of the consideration receivable.


4 Principal accounting policies (continued)Employee benefitsPension costs – defined benefit schemeFor the Adnams defined benefit scheme assets are measured at fair value. Scheme liabilities are measured on an actuarial basis using the projected unit credit method and are discounted at appropriate high quality corporate bond rates. The net surplus or deficit is presented separately from other net assets on the balance sheet. A net surplus is recognised only to the extent that it is recoverable by the company through reduced contributions or through refunds from the plan. As the scheme is closed to all accrual there are no current service costs. Costs from settlements and curtailments are charged against operating surplus. Past service costs are recognised in the current reporting period. Interest is calculated on the net defined benefit liability. Remeasurements are reported in other comprehensive income. Additional information is included in note 27.

Pension costs – defined contribution schemesIn respect of the defined contribution pension schemes, the amounts charged to the profit and loss account are the contributions payable in the year.

Foreign currency translationTransactions expressed in foreign currencies are translated into Sterling and recorded at rates of exchange ruling at the date of transaction.

Monetary assets and liabilities are translated at rates ruling at the balance sheet date. All differences are taken to the profit and loss account.

DividendsDividends payable on ordinary shares are shown as a movement in reserves when paid. Dividends payable on preference shares are shown as an interest cost in accordance with the payment date attaching to those shares.

5 TurnoverRepresents sales invoiced (excluding VAT and net of discounts), rents, commissions and royalties. Turnover outside the United Kingdom during the year was £695,000 (2015: £761,000).

6 Operating expenses

2016 £000

2015 £000

Raw materials, consumables and duty 43,904 40,452

Change in stock of finished goods and work in progress (566) (244)

Staff costs (note 9) 10,769 10,223

SIP scheme for employees (note 29) 243 301

Depreciation (note 14) 2,862 2,629

(Profit)/loss on disposal of plant and vehicles (24) 39

Auditor’s remuneration – Audit of the company’s annual accounts 33 32

– Audit-related assurance services 2 4

– Tax compliance services 6 6

Operating lease rentals 599 484

Foreign exchange gain (20) (130)

Other operating costs 8,520 7,809

66,328 61,605

7 Profit on disposal of assetsProfit on disposal of assets includes in 2016 the profit made on selling the UK distribution rights for Lagunitas beers, less associated costs, and in both 2016 and 2015 it includes profit from the sale of properties.

Notes to the financial statements

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8 Segmental analysis

Brewing & Brands

2016 £000

Pubs & Hotels

2016 £000

Retail 2016 £000

Central Operations

2016 £000

Central Management

2016 £000

Total 2016 £000

Total sales 44,911 13,398 11,945 – 11 70,265

Operating profit/(loss) 7,492 4,382 1,640 (4,832) (4,745) 3,937

Profit on disposal of assets 1,252 178 – – – 1,430

Interest payable – – – – (227) (227)

Other finance charge on pension scheme – – – – (120) (120)

Profit/(loss) on ordinary activities before taxation 8,744 4,560 1,640 (4,832) (5,092) 5,020

Depreciation 493 583 231 1,364 191 2,862

Brewing & Brands

2015 £000

Pubs & Hotels

2015 £000

Retail 2015 £000

Central Operations

2015 £000

Central Management

2015 £000

Total 2015 £000

Total sales 41,670 13,003 11,009 – 16 65,698

Operating profit/(loss) 7,232 4,168 1,550 (4,477) (4,380) 4,093

Profit on disposal of assets – 625 – – – 625

Interest receivable – – – – 1 1

Interest payable – – – – (269) (269)

Other finance charge on pension scheme – – – – (382) (382)

Profit/(loss) on ordinary activities before taxation 7,232 4,793 1,550 (4,477) (5,030) 4,068

Depreciation 436 558 217 1,254 164 2,629

The company’s business segments are Adnams Brewing & Brands, which comprises brewing and distribution of beer, spirits and other products, Adnams Pubs & Hotel Properties, which comprises tenanted pubs and managed inns and Adnams Retail, which comprises our shops together with the mail order and web businesses. Each of these operating segments is monitored and managed separately in accordance with the products and services provided and strategic decisions are made on the basis of segment operating results.

Transfer prices between operating segments are on an arms length basis.

The measurement policies the company uses for segment reporting under IFRS8 are the same as those used in its financial statements.

In 2016 the company has restated its segmental analysis to accord with a change in its internal management reporting. In previous years Adnams has sought to allocate costs to different parts of its business to assess relative performance, but as a highly integrated business, this process was inevitably subjective. Adnams has now moved to showing business results without any shared costs. These accounts show the shared costs in two categories: Central Operations costs which relate to business operations, notably warehousing and delivery, and Central Management costs which include services such as finance, human resources and information technology and marketing.


9 Directors and employees

Staff costs during the year were as follows:2016 £000

2015 £000

Wages and salaries 9,563 9,081

Social security costs 810 770

Other pension costs 396 372

10,769 10,223

The average monthly number of persons employed by the company, including executive directors, was as follows:

2016 Number

2015 Number

Trading 25 23

Customer services 98 95

Production 26 27

Shops 103 104

Managed properties 153 137

Corporate services 58 52

463 438

Total number of part-time workers included above: 167 145

Directors’ remuneration:2016 £000

2015 £000

Fees 121 108

Basic salaries 717 675

Benefits 10 7

Car and pension allowances 112 108

Performance related pay 26 57

986 955

Salaries and fees

£000Benefits

£000

Car and pension

allowances £000

Performance related

pay £000

2016 £000

2015 £000

J P A Adnams 197 1 33 8 239 248

N J Dulieu 30 – – – 30 29

M G H Heald 30 – – – 30 21

K Hester 132 2 13 3 150 113

B F McIntyre 31 – – – 31 29

S C Pugh 148 4 28 5 185 189

S M Sharp 30 – – – 30 29

A C Wood 240 3 38 10 291 297

838 10 112 26 986 955

As a result of regulations governing pension contributions, the company’s contributions for J P A Adnams stopped in 2012 and those for A C Wood and S C Pugh in 2014 and an equivalent amount has been paid as a pension allowance which has been included within car and pension allowances above. There is a consequential reduction in the pension contributions shown later in this note.

The above table shows remuneration only during the period in which a director is a member of the board. M G H Heald and K Hester were appointed on 23 April 2015.


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9 Directors and employees (continued)J P A Adnams and A C Wood are members of the company’s defined benefit pension scheme which closed to future accrual on 30 June 2005. The following disclosures are made in respect of that scheme:

Accumulated total accrued pension:2016 £000

2015 £000

J P A Adnams 91 91

A C Wood 27 26

Accumulated total accrued pension normally represents scheme service to retirement, but for 31 December 2015 and 2016 this figure reflects the scheme closure in June 2005.

The transfer value of the highest paid director’s accrued benefits in the defined benefit pension scheme amounted to £564,208 (2015: £490,643).

Contributions were paid to the Adnams defined contribution pension scheme in respect of K Hester, £13,000 (2015: £10,000) and M G H Heald, £298 (2015: £215).

The company has an approved Share Incentive Plan in which the Executive Directors participated. Allocated shares, which are included in Directors’ Interests in the Report of the Directors, were as follows:

2016 ‘A’ shares

2015 ‘A’ shares

J P A Adnams 126 120

K Hester 126 120

S C Pugh 126 120

A C Wood 126 120

There were no share option arrangements in place.

10 Interest payable and similar charges

2016 £000

2015 £000

Bank loans and overdraft 225 267

Preference share dividends paid: 3.85% cumulative £10 shares 1 1

Preference share dividends paid: 4.9% non-cumulative £5 shares 1 1

227 269


11 Tax on profit on ordinary activities

The charge based on the profit for the year comprises:2016 £000

2015 £000

UK corporation tax @ 20.00% (2015: 20.25%) 915 626

Tax over provided in prior years (48) (14)

Total current tax 867 612

Deferred taxation (note 20)

Origination and reversal of timing differences 139 173

Pension cost relief in excess of pension cost charge including effect of rate changes 67 134

Adjustment in respect of prior years (206) (80)

Total deferred tax – 227


The tax assessed for the year is lower (2015: higher) than the average rate of corporation tax in the UK of 20.00% (2015: 20.25%). The differences are reconciled below:

Profit on ordinary activities before tax 5,020 4,068

Profit on ordinary activities multiplied by average rate of corporation tax in the UK of 20.00% (2015: 20.25%) 1,004 824

Disallowed expenses 174 157

Non-taxable income (29) (151)

Adjustment relating to prior years and rate change (282) 9


The aggregate current and deferred tax credit relating to items that are recognised as items of other comprehensive income is £1,338,000 (2015: charge of £1,548,000).

During 2015 the UK corporation tax rate was decreased. Following Budget 2015 and 2016 announcements, there will be further planned reductions in the main rate of corporation tax to 19% from 1 April 2017 and 17% from 1 April 2020. We have used 17% in our deferred tax calculations with the exception of movements relating to the pension scheme deficit for which we have used 19% given the volatile deficit balance.

12 Dividends

2016 £000

2015 £000

Equity dividends on ordinary shares

Interim paid 3 October 2016 76% (2015: 1 October 72%) 359 340

Final paid 3 May 2016 144% (2015: 1 May 136%) 679 642

1,038 982

The directors propose a final dividend of £1.50 per £1 nominal share (totalling £708,000) for the year ended 31 December 2016. The dividend will be submitted for approval at the Annual General Meeting, to be held on 27 April 2017. This dividend has not been accounted for within the current year financial statements as it has yet to be approved or paid.

13 Earnings per share

2016 2015

Including property disposals:

‘A’ Ordinary shares 220.0p 171.1p

‘B’ Ordinary shares 880.2p 684.3p

Basic and diluted earnings per share for ‘A’ Ordinary shares are calculated by dividing the earnings available for ‘A’ Ordinary shareholders of £1,637,000 (2015: £1,273,000) by the number of issued 25p ‘A’ Ordinary shares (note 21): 744,000 (2015: 744,000).

Basic and diluted earnings per share for ‘B’ Ordinary shares are calculated by dividing the earnings available for ‘B’ Ordinary shareholders of £2,516,000 (2015: £1,956,000) by the number of issued £1 ‘B’ Ordinary shares (note 21): 285,842 (2015: 285,842).

Excluding property disposals:

‘A’ Ordinary shares 158.1p 138.8p

‘B’ Ordinary shares 632.2p 555.3p


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14 Tangible fixed assets

Freehold and

leasehold land and buildings

£000

Plant, equipment,

fixtures & fittings

and motor vehicles

£000Total £000

Cost

At 1 January 2016 31,532 39,071 70,603

Additions 1,117 4,070 5,187

Disposals (101) (460) (561)

At 31 December 2016 32,548 42,681 75,229

Depreciation

At 1 January 2016 7,790 24,268 32,058

Provided in the year 603 2,259 2,862

Disposals (7) (439) (446)

At 31 December 2016 8,386 26,088 34,474

Net book value at 31 December 2016 24,162 16,593 40,755

Net book value at 31 December 2015 23,742 14,803 38,545

At 31 December 2016 £4,250,000 (2015: £3,652,000) of assets were in the course of construction.

The cost of land and buildings comprises:2016 £000

2015 £000

Freehold land 2,263 2,264

Freehold buildings 28,936 27,945

Long leasehold 656 656

Short leasehold 693 667

32,548 31,532

The company carried out an annual impairment review of its pub and shop assets, as explained in the accounting policy disclosed on page 36.

No impairment losses were recognised during the year (2015: £nil).

15 Investments

2016 £000

2015 £000

Unlisted investments at cost and net book value 50 –

The £50,000 investment made during 2016 relates to 707 shares of £0.0001 in The Pint Shop Ltd, registered at 10 Peas Hill, Cambridge, CB2 3PN.

During 2015 the Company wrote-off its investment in Bio Renewable Projects Ltd, which held a 50% interest in the income of Adnams Bio Energy Ltd.

Investments2016 £000

2015 £000

At 1 January – 5

Additions 50 –

Written off in year – (5)

At 31 December 50 –


16 Stocks

2016 £000

2015 £000

Raw materials 927 640

Work in progress 1,270 1,160

Finished goods and goods for resale 5,033 4,577

7,230 6,377

A charge for slow moving and obsolete stock of £51,000 (2015: £53,000) was recognised in profit and loss during the year.

The difference between purchase price or production cost of stocks and their replacement cost is not material.

17 Debtors

2016 £000

2015 £000

Trade debtors 7,493 6,438

Prepayments 1,146 1,149

Deferred tax asset 348 –

8,987 7,587

Amounts due after more than one year comprised £77,000 (2015: £95,000) included in trade debtors.

A provision for specific trade debts which are not considered recoverable of £22,000 (2015: £26,000) was recognised in profit and loss during the year.

Reconciliation of the deferred tax asset is shown in note 20.

18 Creditors: amounts falling due within one year

2016 £000

2015 £000

Bank overdraft and loans 4,226 8,935

Trade creditors 5,705 4,895

Taxation and social security 1,405 1,251

Corporation tax 424 283

Accruals 2,669 2,660

14,429 18,024

The bank overdraft and loans are secured by a debenture to Barclays Bank plc over the assets of the company.

19 Creditors: amounts falling due after more than one year

2016 £000

2015 £000

Tenants’ deposits 183 177

Bank loans (repayable in less than 5 years) 5,000 –

3.85% cumulative preference shares of £10 each (3,100 shares) 31 31

4.9% non-cumulative preference shares of £5 each (3,100 shares) 15 15

5,229 223

The £5,000,000 increase in Bank loans above results from a five year loan facility, which commenced in February 2016. As at December 2015 a previous three year facility had less than a year to run, so it was shown as a creditor falling due within one year.

The bank loan is secured by a debenture to Barclays Bank plc over the assets of the company.

See note 21 for full details of the preference shares.


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20 Deferred taxation

2016 £000

2015 £000

Accelerated capital allowances 577 558

Other timing differences 8 (2)

Chargeable gains 950 1,046

Deferred tax excluding that relating to pension liability 1,535 1,602

Deferred tax on pension scheme deficit (note 27) (1,883) (612)

Total deferred tax (asset)/liability (348) 990

Movement in the provision

At 1 January 2016 1,602

Deferred tax charge to the profit and loss account (current year movement at 17%) 139

Adjustment in respect of prior years (206)

At 31 December 2016 1,535

Deferred tax asset relating to pension deficit

At 1 January 2016 (612)

Deferred tax charged in the profit and loss account (current year movement at 19%) 67

Deferred tax charged in the statement of comprehensive income (1,338)

At 31 December 2016 (1,883)

The deferred tax asset of £348,000 is included within debtors (note 17).

The amount of the net reversal of deferred tax expected to occur next year is £33,000 (2015: £32,000), relating to the reversal of existing timing differences on fixed assets offset by tax deductions from payments to utilise provisions. In addition it includes cash contribution to the pension fund offset by anticipated finance charges relating to the scheme.

21 Called up share capital

Authorised Allotted, called up and fully paid

2016 £000

2015 £000

2016 £000

2015 £000

Ordinary shares

‘A’ of 25p each (744,000 shares) 186 186 186 186

‘B’ of £1 each (285,842 shares) 288 288 286 286

474 474 472 472

Profits distributed by the company are applied first to the 3.85% cumulative preference shares, then to the 4.9% non-cumulative preference shares before distribution on the ordinary shares. The preference shares carry no votes at meetings, the ordinary shares have a single vote for each ‘A’ or ‘B’ share. On a winding up of the company, the surplus assets will be applied first to repay capital on the 3.85% cumulative preference shares, then capital plus any dividend arrears on the 4.9% non-cumulative preference shares; the remaining surplus is applied to the ‘A’ and ‘B’ ordinary shares in proportion to the amounts paid up. Preference shares are classed as financial liabilities and held within creditors falling due after more than one year, see note 19.

22 ReservesCalled-up share capital – represents the nominal value of shares that have been issued.

Share premium account – includes any premiums received on issue of share capital.

Profit and loss account – includes all current and prior period retained profits and losses.

23 Capital commitments

2016 £000

2015 £000

Contracted for 5,125 3,285

The amount for 2016 principally reflects capital commitments for plant and building work in respect of the brewery development, the Swan Hotel Southwold refurbishment and whisky casks (prior year commitment principally relates to the brewery development and capital projects within our pubs and shops).


24 Operating lease commitments

2016 £000

2015 £000

Future minimum lease payments:

Within one year 620 567

In 2-5 years 2,022 1,948

In over 5 years 3,446 3,618

6,088 6,133

25 Contingent liabilitiesAt the year end Barclays Bank held a bond guarantee on behalf of Adnams plc with HMRC for £30,000 (2015: £30,000).

26 Transactions with related parties

2016 £000

2015 £000

Dividends paid to directors 318 298

The key management of Adnams plc are considered to be the executive directors, the compensation for whom was £992,000 for the year (2015: £971,000) including employers national insurance and pension contributions.

The directors are granted a discount of 25% on purchases from the company, in line with the discount given to all other employees.

Mr A C Wood, Chief Executive of Adnams plc, was a director of Adnams Bio Energy Ltd, a subsidiary of the Bio Group Ltd. Adnams Bio Energy Ltd rented part of the Adnams site at Reydon to run a bio-digester. Adnams plc was a customer of Adnams Bio Energy Ltd, part of its brewery waste was processed by the Adnams Bio Energy Ltd digester. During the year Adnams Bio Energy Ltd went into administration and Mr A C Wood resigned his directorship. Adnams plc paid £40,000 to Adnams Bio Energy Ltd during 2015, no amounts were paid during 2016. Outstanding balances owed by Adnams Bio Energy Ltd to Adnams plc amounted to £203,000 on the company going into administration. The outstanding balance at 31 December 2015 was £166,000. These amounts were not recognised in the 2015 or 2016 accounts. The cost of the 50% investment in Adnams Bio Energy Ltd by Adnams plc was written down from £5,000 to zero during 2015. This investment was held as ‘A’ shares in Bio Renewable Projects Ltd.

Mr M G H Heald is a director of five companies that are customers of Adnams plc. The names of these companies, together with the sales made during the period since Mr Heald joined the Adnams board on 23 April 2015, and debtor balances outstanding at 31 December 2015 and 2016, are listed below. Transactions in each case were on arms length terms and outstanding balances were not overdue.

1. TA Hotel Collection Ltd: sales of £341,000 (2015: £222,000) and balance of £37,000 (2015: £30,000). Adnams also made purchases from TA Hotel Collection Ltd at a cost of £243 (2015: Nil).

2. The Soho Theatre Bar Ltd: sales of £189,000 (2015: £113,000) and a balance of £12,000 (2015: £12,000). Adnams signed a three year sponsorship agreement with The Soho Theatre with effect from 1 September 2014. The annual sponsorship fee is £30,000.

3. Zakari Wines Ltd: sales of £1,000 (2015: £1,400) and a balance of Nil (2015: £180).

4. Sagittarius Royaume-Uni Ltd: sales of £31,000 (2015: £1,100) and a balance of £10,000 (2015: Nil). Adnams also bought wines from Sagittarius Royaume-Uni Ltd at a cost of £35,000 (2015: £2,610).

5. Fishers Gin Ltd: sales of £35,000 (2015: Nil) and a balance of £21,000 (2015: Nil).

Aside from being a director, Mr Heald is also the majority shareholder in the above companies, with the exception of Fishers Gin Ltd and The Soho Theatre Bar Ltd.

During the year the company paid no amounts (2015: £367) for services to Dream On CIC of which Mrs B F McIntyre is a director and shareholder. Sales of £1,457 (2015: Nil) were made to Jarrold & Sons Ltd of which Mrs B F McIntyre is also a director.

During the year the company paid £2,137 (2015: Nil) for services to Notcutts Ltd of which Miss N J Dulieu is a director.

During the year the company made sales of £1,267 (2015: £703) and paid for purchases of £300 (2015: Nil) with Collen & Clare Ltd of which Mr S M Sharp is a director and shareholder.

The Employee Benefit Trust (EBT) held 6,054 Adnams plc ‘A’ shares at 31 December 2016 (2015: 5,753 ‘A’ shares). During 2016 the EBT received dividends of £3,000 on its Adnams shares (2015: £4,000).

There is no overall controlling party of Adnams plc.


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27 Pension schemeDefined benefit pension schemeThe assets of the defined benefit pension scheme are held separately from those of the company, being invested with a fund manager. The contributions are determined by a qualified actuary on the basis of triennial valuations using the defined accrued benefit method. The most recent valuation was at 1 April 2016. The next will be as at 1 April 2019. The assumptions that have the most significant effect on the results of the valuation are those relating to the rate of return on investments.

It was assumed in 2016 that the investment returns both pre and post retirement would be 4.5% per annum.

The most recent actuarial valuation showed that the market value of the scheme’s assets was £30,299,000 and that the actuarial value of these assets was sufficient to cover 95% of the benefits that had accrued to members.

Some obligations to pay pensions due from the Scheme have been met by the purchase of annuities. The value of these annuities, which match exactly the pension obligation, are included in the accounts of the pension scheme. The value at 31 March 2016 was £2,930,000 (2015: £3,060,000). No annuity value has been included in the asset and liability valuations shown in the note below.

The contributions of the company and employees have been at least equal to the rates recommended by the actuary.

Valuation of the scheme has been updated to 31 December 2016 by a qualified actuary.

Financial assumptions 2016 2015

Pensionable salary growth N/A N/A

Pension escalation in payment :

Benefits accrued prior to 1 October 1999 4.1% pa 4.1% pa

Benefits accrued after 1 October 1999 to 5 April 2005 3.4% pa 3.3% pa

Benefits accrued after 6 April 2005 2.5% pa 2.5% pa

Discount rate for liabilities 2.6% pa 4.0% pa

Inflation assumption 3.4% pa 3.3% pa

Pension revaluation in deferment 2.6% pa 2.5% pa

Demographic assumptions

Assumed life expectancy in years, on retirement at 65 2016 2015

Retiring today

Males 22.8 22.8

Females 25.2 25.1

Retiring in 20 years

Males 24.1 24.1

Females 26.6 26.5

Assets as a percentage of total plan assets 2016 2015

UK equities 19.2% 21.2%

Overseas equities 31.4% 28.8%

Corporate bonds 16.0% 15.9%

Government bonds 22.6% 20.6%

Property 8.0% 8.7%

Cash 2.8% 4.8%

Total assets 100.0% 100.0%


27 Pension scheme (continued)Defined benefit pension scheme (continued)

The assets and liabilities in the scheme

Value at 31 December

2016 £000

Value at 31 December

2015 £000

Total market value of assets 33,684 30,219

Present value of scheme liabilities (43,593) (33,444)

Deficit in the scheme (9,909) (3,225)

Related deferred tax asset 1,883 613

Net pension liability (8,026) (2,612)

Actual return on plan assets 3,807 1,216

Changes in the present value of the defined benefit obligation are as follows2016 £000

Opening defined benefit obligation 33,444

Interest cost 1,322

Actuarial losses 9,622

Benefits paid (795)

Closing defined benefit obligation 43,593

Changes in the fair value of plan assets are as follows2016 £000

Opening fair value of plan assets 30,219

Interest income 1,202

Actuarial gains 2,578

Contributions by employer 480

Benefits paid (795)

Closing fair value of plan assets 33,684

The company expects to contribute £480,000 to the Adnams Pension Fund in the next accounting year. Contributions of £40,000 per month are paid.

Analysis of other finance charge recognised in the profit and loss2016 £000

2015 £000

Interest income 1,202 991

Interest cost (1,322) (1,373)

Net interest cost (120) (382)

Analysis of the amount recognised in other comprehensive income2016 £000

2015 £000

Return on plan assets (excluding amounts included in net interest cost) 2,578 225

Experience losses arising on the scheme liabilities 779 229

Changes in assumptions underlying the present value of the scheme liabilities (10,401) 7,691

Actuarial (loss)/gain recognised in other comprehensive income (7,044) 8,145

Defined contribution pension schemesThe company also operates defined contribution pension schemes. The assets of these schemes are held separately from those of the company in independently administered funds. During the year the company contributed £396,000 (2015: £372,000) to the schemes (note 9). There were no amounts outstanding at the year end (2015: £nil).


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28 Financial instrumentsThe company’s principal financial instruments comprise a bank loan, cash and bank overdraft. The purpose of the financial instruments is to raise finance for the company’s operations. The company has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations, which are valued at transaction price less any related provision.

2016 £000

2015 £000

Financial assets measured at amortised cost 7,493 6,438

Financial liabilities measured at amortised cost 17,829 16,713

Financial assets includes trade debtors.

Included in financial liabilities are bank loan and overdraft, trade creditors, accruals, tenants deposits and preference shares.

Borrowing facilitiesAt the year end borrowing facilities comprise a fixed rate 5 year loan of £5 million and an overdraft of £10 million. £5.8 million of these facilities were undrawn at 31 December 2016 (2015: £6.3 million). Since the year end, as of 2 February 2017 a further £5 million facility has been provided for a three year term, making total facilities £20 million. Finance is also provided through preference shares, details of which are included in note 21.

Interest rate profileBank loans of £5,000,000 (2015: £8,250,000) bear interest at 2.574% at 31 December 2016 (2015: 2.45%).

At 31 December 2016 bank overdrafts of £4,226,000 (2015: £685,000) bear interest at 1.10% (2015: 1.50%) above Barclays Bank base rate which was 0.25% (2015: 0.5%).

Credit riskThe company may offer credit terms to trade customers, whilst it has chosen not to insure its debts it seeks to manage credit risk by setting appropriate customer limits based on payment history and credit references. It reviews limits regularly and actively chases outstanding debts.

Currency riskThe main currency risks of the company relate to the import of wines, the largest value of which is denominated in Euros. Annual purchases of Euros amount to about €3.6 million.

Fair values of financial assets and liabilitiesThere is no difference between book value and fair value in respect of the cash, bank loan and bank overdraft.

29 Share Incentive Plan and Employee Benefit TrustFor many years the company has encouraged employee participation through incentive schemes under which shares are allocated to employees. The company currently uses a tax-approved Share Incentive Plan (SIP) for this purpose. The company does not issue shares for such schemes and so has to arrange the purchase of shares. It does this through an Employee Benefit Trust. The Employee Benefit Trust buys shares as required during the year and passes them annually to the Share Incentive Plan, at a valuation approved by the tax authorities. The shares held by the Share Incentive Plan are not consolidated in the company’s accounts as they are already allocated to employees. Shares held by the Employee Benefit Trust are a mixture of those already earned by employees, which are awaiting transfer to the Share Incentive Plan, and those not yet allocated.

As performance reached the requisite level a share transfer to the Share Incentive Plan will occur in relation to 2016 as it did in relation to 2015.

The unallocated shares are small in number and accordingly the company does not consolidate the Employee Benefit Trust on grounds of materiality. 6,054 shares, all of which were Adnams plc ‘A’ shares, were held by the Employee Benefit Trust at 31 December 2016 (2015: 5,753 shares).

The Adnams Share Incentive Plan is open to all employees with 18 months service at the award date. A free award of shares based upon profitability of the company is made proportionate to employees’ salary and capped at a maximum of £3,600 per person. The awarded shares are held in trust for five years with dividends accruing to employees during this period. Leavers before this time do not necessarily lose their right to these shares.

In the opinion of the directors the 2016 and 2015 share awards vest unconditionally at the balance sheet date and the total value of free shares awarded under the SIP scheme for 2016 and 2015 is disclosed in note 6 to the accounts.


Corporate governance

StandardsThe company is committed to high standards of corporate governance incorporating best practice.

The workings of the Board and its committeesUntil the April 2015 AGM the Board comprised three Executive Directors and three Non-Executive Directors. Since then it has comprised four Executive Directors and four Non-Executive Directors. The Board is responsible to shareholders for the proper management of the company. It meets monthly, setting and monitoring strategy, reviewing trading performance, ensuring adequate funding, examining acquisition possibilities, formulating policy on key issues and reporting to shareholders.

An Audit Committee has been appointed, which consists of the Non-Executive Directors and meets not less than twice annually. B F McIntyre chairs this committee. The Committee provides a forum for the company’s external auditors. The Finance Director attends meetings at the invitation of the Committee. The Committee is responsible for reviewing a wide range of financial matters including the annual figures and reports and monitoring the controls which are in force in the company to ensure the integrity of the financial information reported to shareholders. The same Non-Executive Directors form the Remuneration Committee and S M Sharp chairs this committee.

S M Sharp, the Senior Independent Director, periodically chairs a Nominations Committee when changes to the board are in progress.

Internal financial control The Board acknowledges its responsibility for maintaining a system of internal control which can provide reasonable, albeit not absolute, assurance against mis-statement or loss.

To meet this responsibility, the Board relies upon:

– an organisation structure with clearly defined lines of authority and responsibility, limits for authorisation of transactions and segregation of duties

– the production and review of regular monthly management information to agreed timescales

– the identification of key performance indicators with explanations of variances

– a formalised process for reviewing all company activities during the year

– detailed annual operating budgets for all businesses

– formal authorisation procedures for all investment and capital expenditure.

The Audit Committee considers the system of internal financial control operated effectively during the year.

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Directors’ responsibilities in respect of the accountsThe directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

– select suitable accounting policies and then apply them consistently

– make judgments and accounting estimates that are reasonable and prudent

– state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements

– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors confirm that:

– so far as each director is aware, there is no relevant audit information of which the company’s auditor is unaware; and

– the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.



14 March 2017


Independent auditor’s reportto the members of Adnams plc

We have audited the financial statements of Adnams Plc for the year ended 31 December 2016 which comprise the balance sheet, the profit and loss account, the statement of cash flow, the statement of comprehensive income, the statement of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement set out on page 51, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statementsIn our opinion the financial statements:

– give a true and fair view of the state of the company’s affairs as at 31 December 2016 and of its profit for the year then ended;

– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

– have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion, based on the work undertaken in the course of the audit:

– the information given in the Strategic Report and Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

– the Strategic Report and Directors’ Report has been prepared in accordance with applicable legal requirements.

Matter on which we are required to report under the Companies Act 2006In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatement in the Strategic Report and Directors’ Report.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

– adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

– the financial statements are not in agreement with the accounting records and returns; or

– certain disclosures of directors’ remuneration specified by law are not made; or

– we have not received all the information and explanations we require for our audit.

David NewsteadSenior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Norwich

14 March 2017

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Adnams plc

Sole Bay Brewery Southwold Suffolk IP18 6JW T: 01502 727200 W: adnams.co.uk

Hotels and Managed Inns

The Swan Market Place Southwold Suffolk IP18 6EG T: 01502 722186

The Crown High Street Southwold Suffolk IP18 6DP T: 01502 722275

The Ship Church Lane Levington Ipswich IP10 0LQ T: 01473 659573

The White Horse 4 High Street Blakeney Norfolk NR25 7AL T: 01263 740574

The Harbour Inn Black Shore Southwold Suffolk IP18 6TA T: 01502 722381

The Bell Inn Ferry Road Walberswick Suffolk IP18 6TN T: 01502 723109

The Plough Inn London Road Wangford Suffolk NR34 8AZ T: 01502 578239

Adnams Stores

Southwold 4 Drayman Square Southwold Suffolk IP18 6GB T: 01502 727244

The Wine Shop and Adnams Tour Booking Office Pinkney’s Lane SouthwoldSuffolk IP18 6EW T: 01502 722138

Woodbridge Quay Point Station Road Woodbridge Suffolk IP12 4AU T: 01394 386594

Aldeburgh 179b High Street Aldeburgh Suffolk IP15 5AN T: 01728 454520

Hadleigh 73/75 High Street Hadleigh Suffolk IP7 5DY T: 01473 827796

Norwich 109 Unthank Road Norwich Norfolk NR2 2PE T: 01603 613243

Holt 8 White Lion Street Holt Norfolk NR25 6BA T: 01263 715558

Holkham The Old School House Park Road Holkham Wells-next-the-Sea Norfolk NR23 1AB T: 01328 711714

Harleston The Cardinal’s Hat 23 The Thoroughfare Harleston Norfolk IP20 9AS T: 01379 854788

Stamford Bath Row Warehouse St Mary’s Passage Stamford Lincolnshire PE9 2HG T: 01780 753127

Saffron Walden Old Auction Rooms 1 Market Street Saffron Walden Essex CB10 1HZ T: 01799 527281

Bury St Edmunds 43A Cornhill Bury St Edmunds Suffolk IP33 1DX T: 01284 705746

Felixstowe 65 Hamilton Road Felixstowe Suffolk IP11 7BE T: 01394 547269

CBP0007710903170948

Contact information

Adnams plc Sole Bay Brewery Southwold Suffolk IP18 6JW

adnams.co.uk

@adnams

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