Adnams:

Developed
by us,
enjoyed
by you.
Adnams plc Annual Report
and Accounts 2012

Contents
02 Chairmans report
04 Business review
14 Finance commentary
18 Report of the Directors
19 Notice of meeting
20 Profit and loss account
20 Statement of total recognised
gains and losses
21 Balance sheet
22 Cash flow statement
23 Statement of accounting policies
25 Notes to the accounts
37 Corporate governance
38 Directors responsibilities in
respect of the accounts
39 I ndependent Auditors Report
40 Contact information

Financial
highlights

Turnover 000

56,922 +4.3%
2011: 54,570
2010: 50,912
2009: 51,321
2008: 47,065

Operating profit 000

3,392 +3.5%
2011: 3,277
2010: 3,188
2009: 3,238
2008: 1,521

(before exceptional operating costs)

Dividend

1.94 +2.1%

2011: 1.90
2010: 1.87
2009: 1.87
2008: 1.86
(per 1 share)

Debt levels 000

19,492 +0.3%
2011: 19,432
2010: 14,254
2009: 14,686
2008: 11,788

(including pension liability/asset)

Carbon
report

CO2
Carbon from fuels used
for combustion, owned
transport, process
emissions (Tonnes of CO2)

2,347

2011: 2,324
2010: 2,283

Carbon emissions from

purchased electricity
(Tonnes of CO2)

1,078

2011: 1,060
2010: 1,181

Total carbon emissions for

company (Tonnes of CO2)

3,425

2011: 3,384
2010: 3,464

Emissions attributable
to specific areas of the
business
Production
(Tonnes of CO2 per barrel
produced)

0.0177

2011: 0.0184
2010: 0.0190

Distribution
(Tonnes of CO2 per barrel
delivered)

0.0077

2011: 0.0077
2010: 0.0078

Retail
(Tonnes of CO2 per 1,000
of sales)

0.0175

2011: 0.0170
2010: 0.0207

Hotels and managed houses

(Tonnes of CO2 per 1,000
of sales)

0.1620

2011: 0.1408
2010: 0.1440
The attribution of carbon
emissions to different parts of
the company has been restated.
This has affected the emissions
disclosed for hotels (2011 and
2010) and retail (2010).

Adnams plc 01

Performance
Our performance in 2012 proved robust despite the
challenges of tough markets.

Pride
2012 was a year of tremendous achievements. We were
delighted to receive The Queens Award for Enterprise:
Sustainable Development and The Investors In People
Gold award. Both achievements are applied for by many,
but received by few.

Encouragement
Financial stability and business success can only be
achieved with an approach which encourages talented
employees to better themselves.

Long-term success

02 Adnams plc

Chairmans
report
Adnams enjoyed a good year in
2012, despite the challenges of tough
markets and lack of economic growth.
Our turnover increased 4.3% to
56.9 million, our operating profits
increased 3.5% to 3,392,000 from
3,277,000 (before exceptional
items), our debt fell 1.7 million to
13.7 million and the quantity of
Adnams beer sold rose by 3.8%.

A YEAR OF

Hard work,
Achievement
& Pride
Jonathan Adnams OBE,
Chairman

There seems now to be almost an

acceptance that the UK economy is
stagnant and a flat line economic
performance is becoming the norm. In
many cases the income of consumers,
allowing for inflation, has been falling.
Adnams operates in some very
tough markets. Beer consumption
is declining, several high profile
bankruptcies have demonstrated the
challenges faced by retail businesses,
and hotels, notably those outside
London, have had a very difficult year.
Government policy has done little
to help. In particular the continuing
beer duty escalator under which
each successive year has seen an
increase in excise duties at a rate
ahead of inflation, has been extremely
harmful to both beer and pubs. A
42% increase in beer duty since 2008
has been accompanied by a 17% fall
in beer consumption and closure of
5,800 pubs.
We have also seen a lack of
government interest in reducing
the duty inequality between small
brewers and their slightly larger
competitors. As a measure of
this, if Adnams had paid duty at
microbrewer rates its profits would
have been 5.4 million (160%) higher
in 2012.

Adnams plc 03

Industry data suggests that the cask

beer market fell by 2.5% in 2012
whilst the overall market for beer
declined by 4.7%. It is encouraging
to see a little more evidence that
cask beer is a growing proportion of
beer consumption, even though the
overall total is falling. Our brewing
and brands business made a profit
of 1,792,000 in 2012. This was 4%
down on the previous year, though
without the loss that we suffered
as a result of the insolvency of the
large wholesaler, Waverley The Beer
Seller, the result would have been
ahead of 2011. As with last year the
strongest growth within our business
was in the take home trade, though
interestingly the much anticipated
point at which home consumption
exceeds consumption in pubs has
been deferred another year as sales
through pubs and sales through shops
fell by almost identical amounts.
Our distillery has now been open for a
little over two years and we have seen
strong growth in both of those years.
We are also seeing an increasing
interest amongst those keen to follow
in our footsteps and we suspect
that plenty more micro-distilleries
will open in the next few years. In
part this reflects the strength of
the markets for gins and whiskies,
and it also reflects the quality and
new flavours that specialist craft
producers can offer. Our gins and
vodkas continue to win awards and
grow in recognition and our liqueur
range has been establishing a popular
following. There is growing interest
too in the Adnams whiskies that we
will launch at the end of 2013.
Our pubs business enjoyed a very
good 2011 and continued to do
well in 2012. We are fully aware of
the economic pressures on pubs
and closure rates are still running
at around eighteen per week.
Amongst other things, pubs have
had to contend with the smoking ban
imposed in 2007, with exceptional
increases in beer duty, with widening
leisure opportunities, with growing
price competition from supermarkets
(who have often used alcohol as a
loss leader), and with an increasingly
vocal health lobby.

We sold two pubs in the year and are

currently looking at further sales.
Wherever possible we seek to sell
pubs as going concerns, and we have
managed to do this for all pubs that
we have sold in recent years. We
understand a local pubs importance
to its community; indeed the first
project for The Pub is the Hub group
was within the Adnams estate. In
some circumstances, however, the
fact has to be faced that a pub may
no longer be sustainable. It is a disservice to incoming licensees to
encourage them to invest in a pub
which offers no realistic chance of a
profitable livelihood.
2012 proved to be a tough year for the
Swan and Crown hotels in Southwold.
Undoubtedly the wet weather that we
saw from April onwards contributed
to this, but we have noted in recent
years that we suspect that spending
on hotel visits has represented a
relatively easy saving in harder
economic times.
Our shops business had an improving
year. We have worked hard to grow
sales in the new stores that we
opened in later 2011 and also at the
Norwich store which opened in May
2012. Before allocating central costs,
our shops business contributed a
profit in 2012, but we believe that it
can and should do better. Whilst the
business overall is not in profit, it is
nonetheless the case that, allowing
for shared costs, our total profits are
higher with the business than they
would be without it.
In recent years we have enjoyed
excellent continuity on the Adnams
board, which has not changed since
Steve Sharp joined us in 2007.
2013 will however see a change as
William Kendall is leaving us after
eleven years of service. William has
a huge breadth of experience both
of different industries and different
roles. I would like to thank him
very much for all that he has done
for Adnams. We are delighted that
Bridget McIntyre will be joining us
on 1st May 2013 and a resolution to
appoint her is included in the AGM
Notice. Bridget was the UK Chief
Executive of RSA Insurance until
2008 and before that she held senior
roles at Aviva PLC. Since leaving RSA
she has set up a Suffolk-based social
enterprise company which focuses on
improving the lives of women in the
local community. We are sure that she
will be a great addition to the Adnams
board.

Adnams prides itself on doing the

right thing. Making such claims is
easy and it is important from time
to time to benchmark ourselves
against others. With this in mind
we were delighted to have received
two very prestigious third party
endorsements during 2012. At the
start of the year we heard that
we had been awarded the Queens
Award for Enterprise, Sustainable
Development. This is the second time
that we have won this award. Only
a small proportion of applicants are
successful and we feel that it speaks
volumes for our long-term view. At
the end of the year we received the
gold award of the Investors in People,
again a very prestigious and rarely
awarded accolade. Investors in People
benchmark performance against
world class standards and this
award is testament to our processes,
procedures and support that we
provide to our people and to their
development.
Outlook
It is difficult to be too positive about
an economy where things feel hard
and give little sign of being about to
improve. Our markets are tough ones
and 2013 has begun as 2012 ended
with difficult trading conditions,
exacerbated in January with a
covering of snow. Nonetheless we did
many of the right things to improve
our performance in 2012 and we
believe that our long-term view will
continue to hold us in good stead over
the years to come. I am grateful for
your continued support.
Jonathan Adnams OBE, Chairman

04 Adnams plc

Business review

Andy Wood, Chief Executive

It is pleasing to be able to talk about an improved financial

result and increased volumes in difficult times. We worked hard
in 2012 in all parts of our business and we also restructured
our management team to bring our different businesses closer
together and save costs. This has helped to bring consistency
and better communication and has contributed to the improved
performance that we have been able to report this year.

Brewing & Brands

We again succeeded in growing Adnams beer volumes in a declining market.
Our cask beer sales were just ahead of 2011 and our overall sales of Adnams
beers were up by 3.8%. 2012 was the fourth year in which the Adnams beer
business held the price of its own beer. 2013 will be the fifth. Our strategy has in
part been a recognition that with falling consumption and increasing producer
numbers industry margins have been under continuous pressure. In part too
it reflects a statement of our values to do the right thing to support pubs in a
very difficult market. We recognise that at a time of rising raw material and
utility prices this position cannot continue indefinitely, and that part of our
ability to pursue this strategy has been driven by the efficiencies created when
we finished the rebuilding of our brewery in 2007 and our continual drive to
improve processes and lower costs.
Aside from sales to our own pubs, the key market in which the holding of
price has been relevant is our sales to free trade pubs which are not part of
a larger tied group and where we deliver the beer using our own transport
(Direct sales). Sales to larger pub groups (National sales) and Take Home
sales to supermarkets and off licenses are often governed by more structured
negotiation processes and sometimes by longer-term contracts.
The brewing and brands business seeks to ensure that it offers customers a
coherent and consistently high quality experience. We try to explain the ethos
of the Company and to communicate the attractiveness of our values and
brand. We try to ensure that we have a range of products that are desirable,
characterful, innovative and made to the highest standards. We try also to
ensure that customers have a positive experience when dealing with our
teams in delivery, in sales, in our back office and in our contact centre. It is
by concentrating on all these aspects that we have been able to grow our beer
volumes in a very competitive market and whilst profits have slipped slightly
compared to last year they have been maintained at a similar level to that
achieved over the preceding three years.
We have continued to develop new beers. 2012 saw the launch of Diamond Ale to
mark the Jubilee, Flame Runner, at the time of the Olympics, Shingle Shells at
Christmas and during the year we launched Topaz Gold and English Red. There
is now a growing interest in craft keg beer, high quality small batch production,
but sold in keg and not cask. Our Spindrift beer, launched in 2007, somewhat
ahead of its time, fits very well into that category and saw good growth in 2012.
The Adnams Direct business performed reasonably well. Volumes of own beer
were fractionally behind the prior year, but this was mainly as a result of some
larger customers being acquired by other breweries during that year and
subsequently locking out our beers.

FROM

TEMP
PERM
TO

Described as a wonderfully
wicked pale ale when we
launched it as a seasonal beer
in 2010, Adnams Ghost Ship
became an instant hit. To
celebrate its graduation into
our permanent beer range,
we held a party in Southwold.
We turned the brewery into
a ghost ship by projecting a
film on to the outside. If you
missed it, you can still see the
film on the Adnams YouTube
Channel. Ghost Ship is now
available in cask, 5-litre
mini-casks, 500ml bottles and
440ml cans all year round!

Adnams plc 05

From Admin

to managing
installs, bar
refurbs, cellar
service
issues...

Meet Sue aka wonder woman...

I first joined Adnams in 1974
working in the Beer Order
department situated in the main
office where I stayed for seven years
before becoming pregnant with my
first daughter.After an absence of
about four years and the birth of my
second daughter I was offered a parttime job in Telesales, which I took.A
few years later my role changed to
Cellar Service administrator and
gradually as the children grew
older I returned to working fulltime.When we relocated to the new
Distribution Centre I was promoted to
my current role of Technical Service
Asset Manager meaning that I am
responsible for making sure that pubs
have all the necessary equipment and
support to serve Adnams beers in
perfect condition.

Technical Service Asset Manager

Cellar Service administrator
Telesales
Beer order

My job is made enjoyable because of

the people I work with, I have met
some real characters and made
many good friends over the years.
Help and support has always been
given when required and I have
been encouraged to take on extra
responsibilities. It helps to work with
a fantastic team.The business has
changed considerably since I first
started but if it hadnt we wouldnt be
where we are today!

06 Adnams plc

From Chef, to chef,

to proud
landlord
& local
personality

Congratulations to Karl and

Shirley Barber at the Railway
Inn, Aldeburgh for winning
the hotly-contested title of
Adnams Pub of the Year.
Every year we seek one pub
that is a shining example
of all that exemplifies the
Great British Pub it is not
always the biggest or busiest
or the one offering the widest
selection of food. What we
are looking for is a warm
friendly welcome, great beer
and beverages, good food and
people who are passionate
about their community.
Well done to all our finalists
and winners, a full list can be
found at adnams.co.uk

The rise and rise of Dave Pickles, proud

landlord at The Five Bells, Wrentham

I think it was 2008 when I started at the Crown Hotel. I started as a

relief chef, just for two weeks but after a busy summer I was offered
a full time position. I started as Sous Chef, but as time went on my role
became more senior. What I loved about working for Adnams was that
I was encouraged to get out of the kitchen and get involved with other
initiatives such as the Employee Forum and the Hotel Green Team.
Working for the company was a pleasure, and I enjoyed every minute,
even though it was very busy at times! The support network was
amazing, I had a health problem two years ago, and Adnams really
looked after me, what else can anyone ask for?
Ive made a lot of very good friends whilst working at Adnams and feel
very privileged to have worked for the company - I am very proud of
the brand and what it stands for.
It is now slightly different; I am one of a number of employees who
Adnams has helped set up their own business, by taking on a pub
tenancy. I have the best of all worlds, running my own business,
promoting the Adnams brand and lots of support from Adnams.
I just wish Id found Adnams years ago!

Adnams plc 07

Street food is a growing and

vibrant sector of the foodie
scene in Britain. Nick, from
the Harbour Inn, Southwold
takes his famous Fish Hut
to many top notch events.
His efforts were rewarded
at the 2012 Great British
Street Food Awards when
his Lowestoft Line-caught
Cod in Adnams Ginger Beer
Batter won Best Main Dish.
So, if youre not able to get
to Southwold for lunch, you
might be lucky enough to see
the award-winning Fish Hut
out and about at events
this year.

2012 saw a continuation of our National business moving towards sales to

managed houses and away from sales to leased and tenanted groups. This
in part reflects the relative success of managed house groups at the present
time and this is in turn partly a result of the difficult times faced by leased and
tenanted companies as they have tried to reduce the substantial debt levels
taken on before the 2008 financial crisis. One particular disappointment in the
National business in 2012 was the failure of one of our larger customers, the
wholesaler, Waverley The Beer Seller. Waverley failed whilst owing Adnams
164,000, and whilst some of this was recouped through returned stock or
trading after the date of Administration, it had nonetheless a very unwelcome
impact on this years results.
The Take Home business again saw good volume growth in 2012, up by about
14% on the previous year. Margins are extremely tight in this market, but
we were pleased to achieve an improvement in profit. We launched two lower
alcohol products during the year, Sole Star and Adnams Ginger Beer and later
in the year we launched a canned version of our highly successful Ghost Ship
beer. The market for cask beer in mini-casks, whilst still small, has continued
to grow robustly.
Our export volumes remain small, but they grew strongly during 2012 and we
have developed our customer base so that we can anticipate further growth in
the future.
We have UK distribution for the German Pilsner, Bitburger and for the Greek
beer, Mythos. After a good 2011, Bitburger had a less successful 2012, though it
grew strongly in our tied estate. Mythos, from a lower base, performed well.

126mm

126mm

QUE E NS

We dont need much of an

excuse to bring out a new
beer and what better reason
than Her Majestys Diamond
Jubilee? Amongst other new,
and new-look beers, Adnams
Ginger Beer became the
latest addition to our lower
alcohol range and Spindrift
& Explorer were treated to a
refreshed design.

ARTWORK INCLUDES AN AGREED 1.5mm BLEED BEYOND CUTTER GUIDE.

2012 will of course be remembered for the London Olympics and the Diamond
Jubilee. We enjoyed good trade over the Jubilee weekend, however, the
Olympics, hugely successful though they were for the Country, were not
especially positive for the pub and hospitality industry. London in particular
was significantly impacted.
We have maintained our strong focus on marketing and communicating the
positive messages about what we do. Local sponsorships and distribution
agreements, notably at Newmarket Racecourse, Ipswich Town Football Club,
Diss Rugby Club and a number of high profile cycling events have been key
to this.

TO BE BASE SILVER FOIL

Adnams
Diamond Jubilee Ale
Temporary PumpClip A/W
11.01.12

FIVE

BEER PRICES HELD FOR

YEARS

It has been widely reported

that government duty on beer
has risen 42% since 2008.
Adnams has been doing its
best to help Tied and Freetrade customers by freezing
pre-tax Adnams beer prices
for the fifth year in a row.

Distilling
The second year of the distillery built on the successes of the first. We have
developed a strong portfolio of products and we added a few more in 2012,
notably, Spirit of Broadside, a cask aged spirit made by distilling our popular
bottled Broadside beer. This was launched in May 2012 to celebrate the 340th
anniversary of the Battle of Sole Bay, fought off the coast of Southwold. On
5th December 2013 we are looking forward to the launch of the first Adnams
whiskies. We have held interim tastings and they appear to be developing
well. We believe that our spirits will prove not only to be popular products in
our local market and in the wider UK market, but they should also offer good
export opportunities.

08 Adnams plc

Retail Businesses
Pubs
Despite selling two pubs, our income from our pub estate grew in 2012. This is
in the context of a very tough trading environment and volumes of beer sold
were down on 2011. The improvement was achieved through ensuring that we
had good licensees, that pubs did not remain vacant and that tenant turnover
was low. The pressure on pubs has been evident for a long while and remains
intense despite the closures that have already occurred.
We have some wonderful rural pubs, but those not in large villages and those
not equipped to become food-led destinations can often find conditions very
difficult. We plan to sell perhaps half a dozen pubs in 2013. We are very keen
that pubs should remain pubs if this is viable, but change of use is sometimes
the only sensible option.

Hotels
We reported last year that economic conditions had been tough for the hotels
and that did not change during 2012. The Crown was shut during the early
part of the year whilst ten of its rooms were refurbished. We believe that
they now provide a very attractive offer, and the Crown was awarded Suffolk
Dining Pub of the Year.
We have focussed on achieving a cost base that is appropriate both for the
level of business and for the high standards that our hotels set themselves.
The Swan in particular managed to reduce its costs and both hotels have also
focussed on managing the difficult balance between room rate and occupancy
levels. Staff training and events have also been priorities. Trading was not at
its best this year, and no doubt the weather played a part. Even if the economy
does not improve we hope that the weather will be kinder in 2013.

GOLD
We were delighted to
receive the news in July
that our spirits picked up
an impressive seven medals
at the International Wine &
Spirits Competition. Since
we opened the distillery in
October 2010, Adnams spirits
have been judged at a national
and international level against
well-established big brands
and smaller craft distillers
like ourselves. With over 20
medals, every one of our core
brands has been recognised
at least once. This gives us
enormous confidence and of
course, reason to celebrate!

During the year we continued our management contract with the Holkham
Estate to run the Victoria Hotel at Holkham and the Globe Inn at Wells.
Earnings from this contract, and from the supply of drinks to these
businesses, remained at a similar level to 2011.

Shops
2012 was another year of change for the Cellar & Kitchen shops. We opened
three new shops in the later part of 2011, two in London, at Bloomsbury
and Spitalfields, and one at the Waterside garden centre near Peterborough.
The Spitalfields shop was taken on a one year lease and whilst trade started
to build towards the end of that time we made the decision to close the
shop rather than commit to a longer-term and more expensive lease. The
Bloomsbury shop provides a valuable centre for Adnams in London including
a basement room available for meetings and tastings.
We have seen reasonable progress in our continuing estate, overall sales were
up by 6.5%, and were up by 3.3% on a like-for-like basis, and most shops have
been improving. The new stores, however, performed less well than we had
hoped ahead of their opening. We believe that trade will build in these shops,
as it has done elsewhere, but they held back performance in 2012 and we
determined around the middle of the year to stop, at least for the near future,
any further roll-outs beyond the already planned opening in Norwich and to
reorganise this business on a leaner cost base. This has had a beneficial effect
both in terms of financial performance and in terms of being able to bring the
overall Adnams business closer together.
The Norwich shop opened in the same premises, the Grapevine on Unthank
Road, where Adnams had traded some ten years earlier. We are delighted to
have found a more permanent home in Norwich, after our relatively brief stay
in the Chapelfield shopping centre. Given our new Norwich presence we also
decided to close the small concession that we had been running in the Norwich
House of Fraser. This happened at the start of 2013.

365, 364, 363...

Does anyone know what the
collective noun is for whisky
journalists? With one year to
go until Adnams Whisky is
launched, we invited a gaggle
of them to the Bloomsbury
Cellar & Kitchen Store to
taste the two-year old spirit.
We have already received a
number of terrific write-ups
and anticipate a queue at the
door when it goes on sale in
December.

Adnams plc 09

From brewing
engineer
to award
winning
artisan
distiller

USA

Southwold

960,485
Since it began in 1992, the
Adnams Charity has given
over 960,000 to 1020
different organisations. In
addition to a percentage of
Adnams profits donated
each year, we are incredibly
grateful to many shareholders
who kindly donate their
dividends.

Meet John - Award winning distiller - not that he wants to talk about it...
Of course I love coming to work Im the Adnams Distiller! I started at
Adnams in 2001 as Brewery Engineer making sure that the brewery and
everything associated with it runs smoothly. I took my brewing exams and
became one of the Duty Brewers, which involves checking fermentations,
counting yeast cells and various other beer quality bits and pieces.
In 2010, when the Board approved the plans for the Distillery, Jonathan and
myself went to the University of Michigan on a distilling course. He wanted to
make sure that I understood the process before installing the distillery. I loved
it and on the flight home, we discussed the possibility of me not only building
the distillery, but becoming the distiller too. The rest, as they say, is history
and by the end of this year I hope to have completed the Diploma in Distilling.
The people, the working environment and Southwold all make Adnams such a
special place to come every day. I love it that I have the freedom to experiment
with new ideas, but youll have to wait to see whats next!

In October, we signed up to
Pennies, an electronic charity
box, which allows Cellar &
Kitchen Store customers
to donate their spare
electronic change. When
making a purchase with their
card, customers have the
opportunity to round up to
the nearest pound and give
their change to charity. In the
first few months, the stores
have raised an impressive
6,000 for Prostate Cancer
UK.

10 Adnams plc

From WINE
APPRECIATION
Meet some of the all
conquering WSET Team...
Many moons ago, Helen Duddridge
left the Adnams wine team to set
up her own wine tasting & tutoring
business. We believe that it is
essential that anyone at Adnams,
remotely connected with wine and
spirits, is given the opportunity to
study for and sit the Wine & Spirit
Education Trusts exams. From
Intermediate to Diploma level, since
2001, we have welcomed Helen back
every year as tutor to some 300+
Adnams employees.
Sarah Strachan joined Adnams
as a Wine Sales Co-ordinator
and is now one of our Telephone
Account Managers, Taking part
in the Advanced WSET certificate
was key for my role in the Wine
department. I understood customer
service and sales when I joined,
however my product knowledge
was slim making my ability to talk
to some customers a little testing at
times. Upon completing the course,
I felt well-equipped to talk to a
wider spectrum of enquiries and
sell wines confidently. I now have
this knowledge for life and since I
have a personal love for wine, it is
invaluable.

to wine
buffs but not
bores!

Adnams plc 11

The shops made a profit in 2012, before allocation of central costs.

Whilst the bottom line after allocations remains negative, the business
is nonetheless valuable to Adnams. Not only does it provide a marketing
shop front, it is also clear, given its absorption of central costs and its
contribution to beer sales, that our financial result would be worse if we
were not to have it. Our fledgling distillery business in particular has
benefited from the Cellar & Kitchen shops as they helped that business to
become known more quickly and produce in more commercial volumes.
Our shops sell a substantial volume of Adnams beer, approaching half as
much as we sell through our pub estate.
2012 was another bumper
year of sponsoring and
attending events. Despite
the sometimes gloomy
summer weather, Julie and
her team love the buzz of
being involved in such a
wide variety of events. Our
support ranges from the tasty
offerings at the regions food
and drink festivals, through to
the more active participation
and spectator-ing at cycle
events such as the prestigious
Tour of Britain.

On-line and Mail Order

The Adnams on-line presence and reputation has continued to grow and
we have extended this to include social media developments such as the
Man of the Match app for Ipswich Town Football Club. We have around
19,000 followers on Twitter and over 4,000 friends on Facebook. Web sales
were up by 11% in 2012 and we also managed to reduce our cost base. Web
development and improving on-line sales are an important focus. Our stores
offer an attractive shopping experience, but even for our style of retailing
a strong on-line presence is a necessity. During the year we redesigned the
Adnams website to improve clarity and the user experience.
Our mail order business improved its performance in 2012, with en primeur
deliveries and cases sold through our Seasonal Cellar wine club both doing
well. The wine agency business slipped slightly in 2012, but showed better
growth towards the end of the year following integration into our National
sales business.

Adnams Bio Energy

The Reydon-based anaerobic digester facility run by the joint venture Adnams
Bio Energy Ltd continued to increase its feedstock inputs steadily throughout
2012. The nature of the feedstock changed somewhat to include significant
levels of packaged food and as a result, a new de-packaging system was
successfully installed at the plant and is running very well. Liquid wastes
from the brewery are now all being processed by the plant, and in a unique
innovation, these liquids are being used to replace water in the digestion
process. Gas injection has been interrupted by a technical decision to install
new gas processing equipment. This refit will take several months but will
result in enhanced revenue.
2012 was a difficult year for the economy, but we came through it well and
achieved both beer volume growth and profit growth. 2013 promises every bit
as much challenge and we look forward to the task. My sincere thanks go to
our staff.
Andy Wood, Chief Executive

12 Adnams plc

To get these...

we do this...
The Queens Award for Enterprise judging panel said: Adnams plc
wins a Sustainable Development Award for pursuing a values-based
approach to management within its brewery, wine and hotelier
business. As a result, it has reduced its negative environmental impact
and made significant contributions to the well-being of its surrounding
communities. It provides an excellent example to its industry.
Through the introduction of carbon-neutral beer and lighter beer
bottles, it reduced operational impact. It established an innovative
Eco-distribution Centre, regarded as an exemplar. Partnering a local
small business, it harnessed anaerobic digestion technology for
generating gas from organic waste to supply its own requirements and
feed surpluses to the national grid. The company provides leadership,
staff resource and funding to promote responsible drinking and
support work experience and training, especially for disabled and
disadvantaged people.
The Adnams team said: thank you, lets celebrate!

Adnams plc 13

14 Adnams plc

Finance commentary
Property
No pubs were acquired in 2012, but two were sold: The Mustard Pot in
Norwich and the Star at Wenhaston. Proceeds were 432,000 and profit of
267,000 was achieved on these sales. We are likely to see a somewhat higher
rate of pub sales in 2013.

Borrowing
Having risen from 12.4 million to 15.4 million in 2011, partly on the back
of the 1.6 million purchase of the White Horse at Blakeney, borrowings
were reduced in 2012 to 13.7 million. We think that this level is comfortably
within the affordable range for Adnams and our interest expense was covered
eight times by our operating profits.
Towards the end of 2012 we asked a range of banks to tender for our banking
services. We are not of a size where the use of two banks would be likely to
be advantageous and our banking business has been with Barclays for many
years. We were pleased and encouraged by the interest shown and two other
banks put forward very attractive offers. Nonetheless Barclays retained the
business and Adnams, we believe, has benefited from achieving very good
rates.
In recent years Adnams has kept its borrowings short term. The reason we
have done this is because we have been unwilling to pay the premium that
attaches to supposedly longer-term loans that come with financial covenants.
The risk of breaching these covenants in a poor year means that what appears
to be long-term money may cease to be available at the very moment when it
is most needed. However, the loan that Barclays offered us through the tender
process uses cheaper finance from the Bank of Englands Funding for Lending
Scheme. Whilst the loan is a three year loan the cheaper funding has removed
the need to pay a premium and has allowed us to agree an attractive rate for a
three year period.
The new loan was drawn down at the start of February 2013. Whilst the fees
and margins are agreed for three years, we have not fixed the underlying rate
of interest for this period and we are still using short-term rates. Whether
this proves to be our cheapest option we will only know towards the end of the
loan. Whilst we have certainly made savings over the last few years by using
shorter-term rates, we claim no prescience for this.

Tax
The effective rate of tax (the tax charge in the accounts as a proportion of
the pre-tax profit) fell sharply in 2012, down from 61% to 23%. Last years
charge was affected by the 1.7 million of exceptional costs, which included a
substantial element of cost that was not tax deductible, notably impairment
charges against fixed assets.
The basic UK rate of corporation tax has continued downwards and was cut
from 26% to 24% in 2012/13. The government plans that it will be cut to 22%.
When estimating our future tax liabilities we have assumed a rate of 23%.
This was the tax rate considered to be substantially enacted at the balance
sheet date.

Financial highlights

Operating profit

2008

2009

1,521 3,238

(before exceptional operating costs, 000)

2010

2011

2012 Variance**

3,188 3,277 3,392

3.5%

ROCE (percentage)*
4.1% 8.7% 8.5% 8.7% 9.5% 9.4%
Gearing (book value)
48.2% 53.4% 49.4% 69.4% 62.8% (9.4%)
Net debt (000)
12,082 12,882 12,386 15,421 13,739 (10.9%)
Interest cover****
2.1
9.0
7.0
9.2
8.2 (10.9%)
Ord dividend (per 1 share)*** 1.86 1.87 1.87 1.90 1.94
2.1%
* The return on capital is based on the operating profit line and capital employed, including debt
** % variance between 2011 and 2012
*** Including proposed final dividend for 2012
**** Excluding exceptional items and interest on pension deficit

The Good Pub Guide is

described as a national
institution a bible for
pub-goers. The 2013 edition
named the Crown Southwold
as Suffolk Dining Pub of
the Year. The bedrooms
at the Crown received
some attention too. Ten of
them were refurbished at
the beginning of the year
using dcor and furniture
sympathetic to the Adnams
values and location.

COME

& SEE FOR

YOURSELF

By the end of the year, we

estimated that over 15,000
people joined us on either a
brewery or distillery tour
and sometimes it was for
both! We were delighted
when in September the tours
were awarded a Tripadvisor
Certificate of Excellence.

Adnams plc 15

From barman,
to FOOD & BEVERAGE
MANAGER

PLEASE DISTURB!

to manager
at The
Crown

ITS A

DATE
Lukas tells us how Adnams supports him
and his whirlwind career path...

I still remember when Sadie called me for an interview Id just

climbed six flights of stairs and needed a minute to catch my breath
before I was able to speak.
I started on 18th October 2006 I think! I began as a waiter and now,
six years on, I am manager of the Crown hotel. In my spare time, I am
also a tour guide for the Adnams Distillery Tours.
Why do I like Adnams? Because of the opportunities for development
(WSET in particular), both professionally and personally. Its quite
amazing how many people, and not just me, we have taught to
appreciate good wine. I recently took two members of my team to
Portugal to meet some of our producers.
The Crown is such a great place to work; the food, the buzz, and the
recent refurbishment of the bedrooms are all incredible.

Over the years, we have

welcomed many Adnams
shareholders to our Open
Days. 2013 dates are set at
29 May and 24 October. You
will be reminded of the dates
nearer the time, but should
you want to book early,
please email sarah.tilbrook@
adnams.co.uk

16 Adnams plc

From part-time
ADMINISTRATOR

to the head
of human
resources
Meet Sadie and her
secret to success
I was on maternity leave when I
saw the part-time HR admin post
advertised. I applied and was offered
the role in October 2001. Following
half a day handover with the lady I
was replacing, I wrote to Michael that
evening saying that I had changed my
mind as the role did not really suit
me! The letter is still on my file. He
obviously persuaded me to change my
mind and Im so glad he did.
Since then, my role in HR has
developed. Along the way I have
been HR Assistant, HR Officer,
Recruitment Manager, Recruitment
and Training Manager and I am now
Head of HR.
I love how we do business, how we
treat people and the fact that every
single day is different. I look at the
clock and groan that the day has
disappeared so quickly rather than
thinking is it only three oclock?
From day one I have been encouraged
to grow and develop in whatever role
I have been in. Being nosey helps, as
the more questions you ask and the
more interest you show, the more
likely it is that opportunities will
come your way. I have been fortunate
to receive a wide range of learning
and development with Adnams, both
formal and informal, accredited
learning, mentoring and coaching.
I think Adnams is great at spotting
people at all levels and within
all areas of the business that are
enthusiastic and passionate about
what they do and want to do more
than just turn up. These people will
flourish at Adnams and are exactly
the people who make for a successful
business.

SED
SELF CONFES R!
E
K
NOSEY PAR

Adnams plc 17

Pensions

Adnams has officially been

named a CoolBrand in an
influential annual initiative
to identify the UKs coolest
brands. The CoolBrands
list, now in its eleventh
year, follows a vote by a
combination of just under
3,000 consumers and a panel
of 39 designers, style experts,
media personalities and
prominent figures from the
worlds of TV, fashion
and music.

INNOVATIVE

BUSINESS
When many of Norfolks
most innovative businesses
gathered together in
November for a glittering
Eastern Daily Press Business
Awards ceremony hosted
by BBC Look Easts Stewart
White, we were very
pleased to win the Online
Performance category.

The seemingly inexorable increase in the pension liabilities of a scheme that

was closed to all accrual over seven years ago has continued. These liabilities
are calculated by discounting projected pension payments to a current value.
The discount rate applied is crucial to the calculation and for accounting
purposes the rate required is that applicable to AA (high quality) bonds.
The fall in discount rates over recent years has led to a corresponding increase
in the calculation of scheme liabilities.
We have seen some, though rather less, offsetting increase in the market
value of assets. The net impact on assets and liabilities has led to an increase
in the scheme deficit (pre tax) from 5.3 million to 7.5 million. This will be
reassessed as at 1st April 2013 when the triennial scheme valuation takes
place. The results of this valuation will drive contribution rates for the future.
For the last few years the Company has been contributing 420,000 per annum.

Treasury policies
During 2012, the board has continued its policy of not hedging interest rate and
foreign exchange exposures. We are not in a position that annual fluctuations
in rates are so important to our results that we feel the need to hedge them.
Not having an active hedging policy saves us money both in terms of time
that would have been spent on such an activity and margins that would have
been given away to the providers of the relevant financial instruments. Not
having substantial budget-based incentive packages we have also avoided
the temptation to lock-in budget rates in an attempt to secure payments to
management rather than cash to shareholders.
The default of Waverley The Beer Seller during the year was a painful loss,
both to Adnams and to the wider industry. Their debts outstanding totalled
64 million. Because there was little prior indication of the insolvency, credit
insurance would have been valuable. We have chosen not to insure debts owed
to us as we have been concerned by an overly prudent attitude from insurers
and we have also been reluctant to tie ourselves to the restrictive procedures
required by credit insurance. We seek to manage credit risk by setting
appropriate customer limits based on payment history and credit references.
We review limits regularly and actively chase outstanding debt.
Further details of financial risk are contained in note 27 of the accounts.

Exceptional item
In 2011 we changed the way in which we assess whether our fixed assets have
become impaired. We now look at each asset separately instead of grouping
similar assets into income generating units before assessing potential
impairments. This change was in large part responsible for the 0.9 million
of asset impairment costs that we provided in 2011 as part of a 1.7 million
exceptional item. The change also means that we are likely to see more
impairment charges in the future and in 2012 we had charges of 55,000,
though these have not been treated as exceptional.

Dividend policy
We are recommending a 3p (2.4%) increase in our final dividend for 2012 to
1.28 per 1 B share. The equivalent for A shares is a move to 32p from
31.25p per 25p share. This will mean that the full year dividend will be 1.94
per B share (48.5p per A share), a 2.1% increase on 2011.
Whilst we retain discretion to vary our payment 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 2013 interim dividend which
will make the B share payment 68p and the A share payment 17p, a 3%
increase on 2012.
Stephen Pugh, Finance Director

18 Adnams plc

Report of the Directors

For the year ended 31 December 2012

The Chairmans Report, Business Review and Finance Commentary on pages 2 to 17 include information about the
companys business and financial performance during the year and indications of likely future developments and
should be read in conjunction with this report.
The principal activities of the company are brewing, retailing and wholesaling beer, wines, spirits and minerals,
property ownership and hotel management.

Trading results and dividends

000

Company profit on ordinary activities after taxation

2,455
Dividends to ordinary shareholders
Final 125% (paid 1 May 2012)
(590)
Interim 66% (paid 1 October 2012)
(312)
Retained profit

1,553

Proposed final dividend of 604,000 (128%) to be paid 2 May 2013.

Principal risks and uncertainties

It is our objective that our Chairmans Report and Business Review discuss the business in such a way that we properly
explain the principal risks and uncertainties that we face. However, for claritys sake and in line with the practice adopted
by most others, we note below a description of these principal risks and uncertainties, beyond those explained in the
Finance Commentary. We believe that they fall into four main categories.
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.

Properties

In 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 companys intention to retain ownership of its existing properties for use in its
activities for the foreseeable future.

Directors

The Directors who held office at 31 December 2012 and their beneficial interests in the share capital of the company,
at the beginning and end of the financial year, are shown below.
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
2012
2011 2012
2011

Ordinary shares
J P A Adnams
184,061
183,924
3,263
W B Kendall*
2,644
2,644

S P D Loftus*
36,339
36,339

S C Pugh
1,709
1,572

S M Sharp*
304
304

A C Wood
4,097
3,960


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

3,263

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.

Adnams plc 19

Report of the Directors

For the year ended 31 December 2012

Employee matters

Disabled persons
It is the companys 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.

Involvement
Adnams 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 Independence
executive directors, benefit from the
Adnams continues to value and work
companys success through a profit
for its independence as a regional
sharing scheme, and through a share
family brewer.
incentive plan which distributes shares
to employees during their period of
Charitable donations
service with the company.
Adnams is committed to giving not
Health, welfare and development of
less than 1% of its annual profits to
employees
charitable causes. Charitable donations
For many years Adnams has operated during the year amount to 34,000
schemes for the welfare and benefit
(2011: 32,000).
of employees. As well as pension
and life assurance, we provide cover
Supplier payment
for illness and we make available to
employees qualified specialists to cover It is the companys policy to make
every effort to agree terms of payment
medical welfare, pension advice and
with suppliers in advance, to ensure
any counselling needs. Health and
that suppliers are made aware of
safety policies are given a high profile
the terms and to abide by them. At
in all areas with wide representation
throughout the company on the Health 31 December 2012, the company
had an average of 23 days (2011: 20
and Safety Committee. It is our policy
days) purchases outstanding in trade
to train and develop the knowledge
creditors.
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.

Directors qualifying third

party indemnity provisions
The 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 auditor
The directors confirm that:
so far as each director is aware,
there is no relevant audit
information of which the companys
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.

Auditor
Grant Thornton UK LLP offer
themselves for reappointment as
auditor in accordance with section 489
of the Companies Act 2006.
By Order of the Board
S C Pugh
Secretary
19 March 2013

Notice of meeting

Notice is hereby given that the One Hundred and Twenty-Third Annual General Meeting will be held at St.Edmunds Hall,
Southwold on 29 April 2013 at 12 oclock noon for the following purposes:
Ordinary Resolutions
1. To consider the Accounts and Directors report
2. To declare a final dividend
3. To re-elect S C Pugh, who retires by rotation
4. To re-elect S M Sharp, who retires by rotation
5. To elect B F McIntyre as a director of the Company with effect from 1 May 2013
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.
Registered Office
By Order of the Board
Sole Bay Brewery, Southwold , Suffolk, IP18 6JW
S C Pugh
Company registered number 31114
Secretary
19 March 2013

20 Adnams plc

Profit and loss account

For the year ended 31 December 2012

2012 2011
Notes
000
000

Turnover 1
56,922 54,570
Operating expenses (including exceptional items)
2
(53,530) (52,961)
Operating profit before exceptional items
Exceptional operating items
2

3,392
3,277
(1,668)

Operating profit
Profit on disposal of properties
5
Interest receivable
7
Interest payable
8
Other finance (charge)/income on pension scheme
26

3,392
1,609
267
1 1
(415) (356)
(61) 45

Profit on ordinary activities before taxation

Tax on profit on ordinary activities

3,184
1,299
(729) (796)

Profit for the financial year

9
20

2,455

503

Earnings per share basic and diluted

11
A Shares of 25p each
130.1p
26.7p
B Shares of 1 each
520.3p
106.6p
All amounts relate to continuing activities.

Statement of total recognised gains and losses

For the year ended 31 December 2012

2012 2011
Notes
000 000
Profit for the financial year
Actuarial loss on pension scheme
26
Movement on deferred tax relating to actuarial loss
18
Total recognised gains and losses relating to the year

2,455 503
(2,482) (3,290)
571 823
544

(1,964)

Adnams plc 21

Balance sheet

As at 31 December 2012

2012 2011
Notes
000 000

Fixed assets
Tangible assets
12
38,129 38,341
Investments 13
247 298

38,376

38,639

Current assets
Stocks 14
4,803 5,147
Debtors 15
7,072 7,132
Cash at bank and in hand
12 14

Creditors: amounts falling due within one year

16

11,887

12,293

(21,814)

(23,776)

Net current liabilities

(9,927)
(11,483)
Total assets less current liabilities

28,449

27,156

Creditors: amounts falling due after more than one year

17

(299) (304)

Provision for liabilities

18

(525)

(611)

(824)

(915)

Net assets excluding pension liability

Pension liability
26

27,625
(5,753)

26,241
(4,011)

Net assets including pension liability

21,872

22,230

Capital and reserves

Called up share capital
Share premium
Profit and loss account

19
20
20

472 472
144 144
21,256 21,614

Equity shareholders funds

21

21,872

22,230

The financial statements were approved by the board of directors on 19 March 2013, authorised for issue and signed
on its behalf by:
S C Pugh
Director
Company registered number 31114

22 Adnams plc

Cash flow statement

For the year ended 31 December 2012

2012 2011
Notes
000 000
Net cash inflow from operating activities

22

5,668

4,156

Returns on investment and servicing of finance

Interest received
Interest paid

1 1
(417) (423)

(416)

Taxation
Corporation tax paid

(595) (1,187)

(595)

Capital expenditure and financial investment

Payments to acquire tangible fixed assets
Receipts from sales of tangible fixed assets
Payments to acquire investments
Receipts from investments/deposits

(422)

(1,187)

(2,608) (4,794)
539 105
(86) (112)
82 102
(2,073)

(4,699)

Equity dividends paid

(902)

(883)

Net cash inflow/(outflow) before financing

Financing - (decrease)/increase in loans

1,682
(1,800)

(3,035)
800

Decrease in cash

(118)

(2,235)

Reconciliation of net cash flow to movement in net debt

Decrease in cash
23
(118) (2,235)
Cash flow from decrease/(increase) in loans
23
1,800 (800)
Movement in net debt
23
Net Debt at 1 January
Net debt at 31 December

23

1,682
(3,035)
(15,421) (12,386)
(13,739)

(15,421)

Adnams plc 23

Statement of accounting policies

Basis of preparation
The financial statements have been prepared in accordance with applicable United Kingdom accounting standards
(United Kingdom Generally Accepted Accounting Practice) and under the historical cost convention. The policies
remain unchanged from the prior year.
Going concern
The company has considerable property assets and is soundly based. As at 31 December 2012 the company has chosen
to keep its borrowings short term, and therefore has net current liabilities. The Directors have a 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. Since the year end 10 million of borrowings has
moved to a three year maturity, subject to financial covenants. The short-term facilities have been renewed at 7 million.
Turnover
Turnover is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer,
usually on despatch of the goods; or on provision of services. 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.
Tangible fixed assets
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
Leasehold property
long lease
short lease
Plant, equipment, fixtures and fittings and motor vehicles

2% to 4% p.a.
2% p.a.
period of lease
4% to 25% p.a.

Fixed assets in the course of construction are not depreciated until they are brought into use.
Impairment reviews
In accordance with FRS 11, asset 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) returns are forecast and compared to the carrying value of the assets. Any shortfall is
recognised as an impairment loss.
Stocks
Stocks 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.
Deferred taxation
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 with the following exceptions:
P
 rovision 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. However, no provision is made where, on the basis of all
available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into
replacement assets and charged to tax only when the replacement assets are sold;
D
 eferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that
there will be suitable taxable profits from which the future reversal of the underlying timing differences can be
deducted.
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 substantially enacted at the balance sheet date.
Foreign currencies
Transactions 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.
Pension costs - defined benefit scheme
The service cost of providing defined benefit pension entitlements to employees during the year is charged to
operating profit. This scheme closed to future accrual on 30 June 2005. The cost of providing amendments to benefits
in respect of past service is also charged to operating profit. The expected return on the assets of the scheme during
the year based on the current bid price of scheme assets at the start of the financial year is included within other
finance (charge)/income on pension scheme. This also includes a charge representing the expected increase in
liabilities of the scheme during the year, arising from the liabilities of the scheme being one year closer to payment.
Differences between actual and expected returns on assets during the year are recognised in the statement of total
recognised gains and losses, together with (losses)/gains arising on scheme liabilities and differences from changes
in assumptions. The (deficit)/surplus on the defined benefit pension scheme is reported on the balance sheet, net of
related deferred tax. Additional information is included in note 26.

24 Adnams plc

Statement of accounting policies continued

Pension costs - defined contribution scheme

In respect of the defined contribution pension scheme, the amounts charged to the profit and loss account are the
contributions payable in the year.
Leasing
Total rentals payable under operating leases are charged to the profit and loss account on a straight line basis over the
lease term, taking into account any rent free periods.
Fixed asset investments
Fixed asset investments are stated at historic cost and include unlisted investments and trade loans to customers.
The carrying values of the fixed asset investments are reviewed for impairment if events or changes in circumstances
indicate that the carrying amount may not be recoverable.
Dividends
Dividends 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.
Financial instruments
Financial 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.
Share Incentive Plan and Employee Benefit Trust
For 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 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 Companys 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
2012 as it did in relation to 2011. The unallocated shares are small in number and accordingly the Company does
not consolidate the Employee Benefit Trust on grounds of materiality. 1,830 shares, all of which were Adnams plc A
shares, were held by the Employee Benefit Trust at 31 December 2012 (2011: 5,659 shares).

Adnams plc 25

Notes to the accounts

For the year ended 31 December 2012

1. Turnover
Represents sales invoiced (excluding VAT and net of discounts), rents, commissions and royalties in the United Kingdom.

As restated

2. Operating expenses

2012 2011
000 000

Raw materials, consumables and duty

Change in stock of finished goods and work in progress
Staff costs (note 4)
SIP scheme for employees (note 28)
Depreciation (note 12)
(Profit)/loss on disposal of plant and vehicles
Auditors remuneration - Audit services

- Audit of pension schemes

- Taxation services
Operating lease rentals - Land and buildings
Foreign exchange gain
Exceptional expenses (note below)
Other operating costs

33,575 32,743
337 (822)
9,418 9,570
176 197
2,631 2,443
(33) 17
31 31
6 7
5 5
488 458
(112) (88)
1,668
7,008 6,732

53,530

52,961

Of the exceptional charge of 1,668,000 in 2011, 884,000 related to impairment provisions against five properties,
and 784,000 related to the closure of premises. In the current year there are 55,000 of impairment charges not
considered exceptional.
Potential impairments are assessed by comparing the book value of properties against 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
real rate of 7.5%.
1,006,000 of the exceptional items represented a charge against fixed assets. This comprised all of the impairment
charge and 122,000 of the other costs.
The 2011 operating expense analysis has been restated to show 2,062,000 of packaging and related costs as raw
materials, consumables and duty rather than other operating costs.
3. Segmental analysis
The companys business segments are Adnams Brewing & Brands, which comprises brewing and distribution of beer,
spirits and other products and Adnams Retail which comprises tenanted pubs, Hotels and Managed Houses and Cellar
& Kitchen stores together with home delivery and web sales.

Brewing & Brands

Retail

Central Management

Total

2012
2011
2012 2011 2012 2011 2012 2011

000 000 000 000 000
000
000 000
Total sales
Operating expenses

33,511 31,401 23,386 23,122

(31,719) (29,536) (20,425) (20,441)

25
(1,386)

47 56,922 54,570
(1,316) (53,530) (51,293)

Operating profit/(loss)
1,792
1,865
2,961
2,681 (1,361) (1,269) 3,392
3,277
before exceptionals
Exceptional items
(1,668)
(1,668)
Operating profit/(loss)
1,792
1,865
2,961
1,013 (1,361) (1,269) 3,392
1,609
Profit on disposal of properties
267
267
Interest receivable 1 1 1 1
Interest payable (415) (356) (415) (356)
Other finance (charge)/income
(61) 45 (61) 45
on pension scheme
Profit/(loss) on ordinary
activities before taxation

1,792

1,865

3,228

1,013

(1,836) (1,579)

3,184

1,299

Net assets employed

21,549 21,769 22,387 22,830 (22,064) (22,369) 21,872 22,230

26 Adnams plc

4. Staff costs

2012 2011
000 000

Wages and salaries

Social security costs
Other pension costs (note 26)

8,268 8,406
763 778
387 386

9,418

9,570

The average monthly number of persons employed by the

company, including executive directors, was as follows:
Number
Number
Trading
23 24
Customer services
85 85
Production
25 24
Wine/Shops
69 71
Hotels
149 152
Corporate services
47 46

Total number of part-time workers included in above:

5. Profit on disposal of properties

398

402

99

95

2012 2011
000 000
267

Profit on sale of properties

Profit on disposal of properties includes profits on properties sold at the year end.
The effect on the current tax charge for the year of the above items is nil (2011: nil).

6. Directors remuneration

2012 2011
000 000

Fees
Basic salaries
Benefits
Car and pension allowances
Performance related pay

84
84
550
523
4
5
56 42
40
38

734

692

Salaries Car and pension
Performance
and fees
Benefits
allowances
related pay
2012 2011
000
000
000 000 000 000

J P A Adnams
W B Kendall
S P D Loftus
S C Pugh
S M Sharp
A C Wood

185
28
28
139
28
226

1


2

1

28


14

14

14
228 211
28 28
28 28
10
165 163
28 28
16
257 234

634

56

40

734

692

As a result of regulations governing pension contributions, the companys contributions for J P A Adnams stopped
during the year and an equivalent amount has been paid as a pension allowance which has been included within car
and pension allowances above.

Adnams plc 27

Directors remuneration continued

J P A Adnams and A C Wood are members of the companys defined benefit pension scheme which closed to future
accrual on 30 June 2005. The following disclosures are made in respect of that scheme:

J P A Adnams
A C Wood

Accumulated total
accrued pension at
31 Dec 2012
31 Dec 2011

86,447
25,457

84,627
24,921

Accumulated total accrued pension normally represents scheme service to retirement, but for 31 December 2011 and
2012 this figure reflects the scheme closure in June 2005.
The transfer value of the highest paid directors accrued benefits in the defined benefit pension scheme amounted to
411,376 (2011: 385,733).
The following contributions were paid to the Adnams defined contribution pension scheme in respect of the directors:
2012
2011


J P A Adnams
S C Pugh
A C Wood

4,615 18,190
13,924 13,668
22,626 20,362

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:
2012

A shares
J P A Adnams
S C Pugh
A C Wood

137
137
137

2011
A shares
108
108
108

There were no share option arrangements in place.

7. Interest receivable
Trade loans

2012
2011
000 000
1

1
1

8. Interest payable and similar charges

2012
2011
000 000

Bank loans and overdraft

Preference share dividends paid: 3.85% cumulative 10 shares
Preference share dividends paid: 4.9% non-cumulative 5 shares

413
354
1 1
1 1

415

356

28 Adnams plc

9. Taxation

2012 2011
000 000

The charge based on the profit for the year comprises:

UK corporation tax @ 24.5% (2011: 26.5%)
820 788
Tax (over)/under provided in prior years
(196)
119
Total current tax

624

907

Deferred taxation (note 18)

Origination and reversal of timing differences
Pension cost relief in excess of pension cost charge
Adjustment in respect of prior years

(34) (211)
191 176
(52)
(76)

105

(111)

Tax on profit on ordinary activities

729

796

Factors affecting the current tax charge

The tax assessed on the profit on ordinary activities for the year is lower (2011: higher) than the average rate of
corporation tax in the UK of 24.5% (2011: 26.5%). The differences are reconciled below:
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by standard rate of
corporation tax in the UK of 24.5% (2011: 26.5%)
Disallowed expenses and non-taxable income
IBAs received with no balancing charge
Capital allowances less than depreciation
Rollover relief claimed on property disposal
Other timing differences
Adjustment relating to prior years
Current tax charge for the year

3,184

1,299

780
344
82 226

(4)
29 72
(79)
(2)
8 152
(196)
119
624

907

Factors that may affect future tax charges

No provision has been made for deferred tax on gains recognised on the sale of properties where potential gains will
be rolled over into replacement assets. Such tax would become payable only if the property were sold without it being
possible to claim rollover relief. The total amount unprovided is 1,299,000 (2011: 1,331,000). At present it is not
envisaged that any tax will become payable in the foreseeable future.

10. Dividends

2012 2011
000 000

Equity dividends on ordinary shares

Interim paid 1 October 2012 66% (2011: 3 October 65%)
Final paid 1 May 2012 125% (2011: 9 May 122%)

312
307
590 576

902

883

he directors propose a final dividend of 1.28 per 1 nominal share (totalling 604,000) for the year ended
T
31 December 2012. The dividend will be submitted for formal approval at the Annual General Meeting, to be held
on 29 April 2013. This dividend has not been accounted for within the current year financial statements as it has
yet to be approved.
11. Earnings per share
Including property disposals:
A Ordinary shares
B Ordinary shares

2012 2011
130.1p
520.3p

26.7p
106.6p

asic and diluted earnings per share for A Ordinary shares are calculated by dividing the earnings available for A
B
Ordinary shareholders of 968,000 (2011: 198,000) by the number of issued 25p A Ordinary shares (note 19):
744,000 (2011: 744,000).
asic and diluted earnings per share for B Ordinary shares are calculated by dividing the earnings available for B
B
Ordinary shareholders of 1,487,000 (2011: 305,000) by the number of issued 1 B Ordinary shares (note 19):
285,842 (2011: 285,842).
Excluding property disposals:
A Ordinary shares
115.9p
B Ordinary shares
463.7p

26.7p
106.6p

Adnams plc 29

12. Tangible fixed assets
Cost
At 1 January 2012
Additions
Disposals at cost
At 31 December 2012
Depreciation
At 1 January 2012
Provided in the year
Disposals

Freehold and Plant, equipment

leasehold
fixtures and
land and
fittings and
buildings
motor vehicles
000
000

Total
000

32,097 30,611 62,708

408 2,200 2,608
(131) (1,276) (1,407)

32,374

31,535

63,909

5,484 18,883 24,367

596 2,035 2,631
(4) (1,214) (1,218)

6,076

19,704

25,780

Net book value at 31 December 2012

26,298

11,831

38,129

Net book value at 31 December 2011

26,613

11,728

38,341

At 31 December 2012

At 31 December 2012 18,000 (2011: 106,000) of assets were in the course of construction.

2012
2011
000 000

The cost of land and buildings comprises:

Freehold land
2,556 2,586
Freehold buildings
28,576 28,312
Long leasehold
575 532
Short leasehold
667 667

32,374

32,097

he company carries out an annual impairment review of its pub and shop assets. This is assessed by comparing the
T
carrying value of these assets to the value in use or if necessary fair value. As at 31 December 2012 a loss of 55,000
was recognised in line w
ith the accounting policy disclosed on page 23 (2011: 884,000). A further 122,000 was
recognised in 2011 in relation to closure costs (2012: nil).

30 Adnams plc

13. Fixed asset investment

2012 2011
000 000

Unlisted investments at cost and net book value

Trade loans

5
5
242 293

Total investments

247

Joint venture
Class of share
% held
undertaking

298

Country of
Year end
Principal
incorporation activities

Adnams Bio
1 ordinary
49.99%
England & Wales
30 April
Energy Limited

Conversion of
organic waste
into biogas

In the opinion of the Directors the value of these investments is not less than book value.
2012 2011
Trade loans
000 000
At 1 January
Loans transferred from debtors
Loans advanced during the year
Repayments
At 31 December

293 131
37
81 227
(132) (102)
242

293

Further details on trade loans are contained in note 27.

14. Stocks

2012 2011
000 000

Raw materials
Work in progress
Finished goods and goods for resale

224
231
397 112
4,182 4,804

4,803

5,147

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

15. Debtors

2012 2011
000 000

Trade debtors
Prepayments

5,795
6,034
1,277 1,098

7,072

16. Creditors: amounts falling due within one year

2012 2011
000 000

7,132

Bank overdraft and loans

Trade creditors
Taxation and social security
Corporation tax
Accruals

13,751
15,435
3,697 3,665
1,488 1,399
398 368
2,480 2,909

21,814

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

23,776

Adnams plc 31

17. Creditors: amounts falling due after more than one year

2012 2011
000 000

Tenants deposits
3.85% cumulative preference shares of 10 each (3,100 shares)
4.9% non-cumulative preference shares of 5 each (3,100 shares)

253
258
31 31
15 15

299

304

See note 19 for full details of these preference shares.

2012 Full
2011 Full

2012 potential
2011 potential

Provided liability Provided liability
18. Provision for liabilities
000 000 000 000
Deferred taxation
Accelerated capital allowances
Other timing differences
Chargeable gains
Deferred tax excluding that
relating to pension liability
Deferred tax on pension scheme deficit (note 26)
Total provision for deferred tax
Movement in the provision
At 1 January 2012
Deferred tax charge to the profit and loss account
(current year movement at 23%)
Adjustment in respect of prior years
31 December 2012
Deferred tax asset relating to pension deficit
At 1 January 2012
Change in brought forward provision arising from
change in future tax rates
Deferred tax charged in the profit and loss account
Deferred tax credited to the STRGL
31 December 2012

589
589
808
808
(64) (64) (197) (197)
1,299
1,331
525
(1,719)
(1,194)

1,824
611
1,942
(1,719) (1,338) (1,338)
105

(727)

604

611
(34)
(52)
525
1,338
(107)
(83)
571
1,719

On the balance sheet, the deferred tax liability of 525,000 (2011: 611,000) is shown before deferred tax on the
pension scheme deficit of 1,719,000 (2011: 1,338,000).


Authorised
Allotted, called

up and fully paid

2012 2011 2012 2011
19. Share capital
000
000
000 000
Ordinary shares
A of 25p each (744,000 shares)
B of 1 each (285,842 shares)

186
288

Called up share capital

474

186
186 186
288
286 286
474

472

472

rofits distributed by the company are applied first to the 3.85% cumulative preference shares, then to the 4.9% nonP
cumulative preference shares before distribution on the ordinary shares. T
he 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 17.

32 Adnams plc

Share Profit

Share
premium
and loss

capital account account Total
20. Reserves
000 000 000 000
1 January 2012
Profit for the year
Actuarial loss on pension scheme (note 26)
Movement on deferred tax relating to
pension scheme (note 18)
Dividends paid (note 10)

472
144
21,614
22,230

2,455 2,455

(2,482) (2,482)

31 December 2012

472

144

21,256

Pension deficit (note 26)

5,753

Profit and loss reserve excluding pension liability

27,009

571 571

(902) (902)
21,872

All reserves relate to equity.

21. Reconciliation of shareholders funds

2012 2011
000 000

Profit for the year

Dividends paid (note 10)
Actuarial loss on pension scheme (note 26)
Movement on deferred tax relating to pension scheme (note 18)

2,455
503
(902) (883)
(2,482) (3,290)
571 823

Net reduction in shareholders funds

(358)

(2,847)

Opening shareholders funds

22,230 25,077

Closing shareholders funds

21,872

22,230

22. Net cash inflow from operating activities

2012 2011
000 000

Operating profit
Depreciation charges
(Profit)/loss on sale of routine fixed asset disposals
Difference between pension charge and cash contributions
Decrease/(increase) in stock
Decrease/(increase) in debtors
(Decrease)/increase in creditors
Impairment (note 2)

3,392 1,609
2,631 2,443
(33) 97
(420)
(455)
344 (917)
60 (1,175)
(306) 1,548
1,006

5,668

23. Analysis of net debt

4,156

At 1 Jan
Cash
At 31 Dec
2012 flow 2012
000 000 000

Cash at bank and in hand

14 (2) 12
Bank overdraft (4,635) (116)
(4,751)
Reduction in cash
(118)
Bank loan
(10,800)
1800 (9,000)
Net debt

(15,421)

1,682

(13,739)

Adnams plc 33

24. Capital commitments and contingent liabilities
Contracted for

2012 2011
000 000
551

557

The amount for 2012 principally reflects capital commitments for new casks (prior year commitment principally
relates to new casks and the refurbishment of 10 bedrooms at the Crown Hotel).
The final settlement for the construction of the Reydon Distribution Centre has not yet been agreed.


Operating lease commitments

2012 Land &

2011 Land &
buildings buildings
000 000

On leases expiring:
Within one year 57
In 2 - 5 years 23 51
In over 5 years
413 422

436

530

t the year-end Barclays Bank held a bond guarantee on behalf of Adnams plc with Her Majestys Revenue and
A
Customs for 15,000 (2011: 1,000,000).
bank guarantee for 935,000 (2011: 935,000) was provided by Adnams plc to the Royal Bank of Scotland in
A
respect of the obligations of Adnams Bio Energy Ltd to that bank.
25. Related party transactions
During the year the company carried out trading activities with the following directors and/or organisations in which
Directors have an interest.
Mr W B Kendall: 22,000 (2011: 22,000) for consultancy services. These amounts are included within salaries and
fees in note 6. No amount was outstanding at 31 December 2012 (2011: nil).

Dividends paid to directors in the year
J P A Adnams
W B Kendall*
S P D Loftus*
S C Pugh
S M Sharp*
A C Wood

A Ordinary 25p
B Ordinary 1
2012
2011 2012
2011
87,369
85,475
6,232
6,102
1,263
1,236

17,352 16,998

773 698

145 142

1,914 1,791

5,095**
4,988**
7,258**
7,106**

*Denotes non-executive Director. **Dividends paid on shares held as Trustee.

The Directors are granted a discount of 25% on purchases from the company, in line with the discount given to all
other staff.
Dr A C Wood, Chief Executive of Adnams plc is a director of Adnams Bio Energy Ltd, a subsidiary of the Bio Group Ltd.
At the year end 36,000 (2011: 36,000) was owed by Adnams Bio Energy Ltd to Adnams plc.
The Employee Benefit Trust (EBT) held 1,830 Adnams plc A shares at 31 December 2012 (2011: 5,659 A shares).
During 2012 the EBT received dividends of 2,000 on its Adnams shares (2011: 1,000).
There is no overall controlling party of Adnams plc.
26. Pension scheme

Defined benefit pension scheme
The 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 2010. The next will be as at 1 April 2013.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 2010 that the pre-retirement investment returns would be 6.75% per annum and
that post-retirement returns would be 5% per annum.
The most recent actuarial valuation showed that the market value of the schemes assets was 22,525,000 and that
the actuarial value of these assets was sufficient to cover 93% of the benefits that have accrued to members. The
contributions of the Company and employees have been at least equal to the rates recommended by the actuary.

34 Adnams plc

Defined benefit pension scheme continued

The disclosures required by FRS17 are set out below.
Valuation of the scheme has been updated to 31 December 2012 by a qualified actuary in order to assess the following:
The major assumptions used by the actuary were (in nominal terms)
Financial assumptions

Valuation at Valuation at Valuation at

31 Dec 2012 31 Dec 2011 31 Dec 2010

Pensionable salary growth

Pension escalation in payment:
Benefits accrued prior to 1 October 1999
Benefits accrued after 1 October 1999 to 5 April 2005
Benefits accrued after 6 April 2005
Discount rate for liabilities
Inflation assumption
Pension revaluation in deferment

N/A N/A N/A

4.0%pa 4.0%pa 4.0%pa
3.1%pa 3.2%pa 3.6%pa
2.5%pa 2.5%pa 2.5%pa
4.1%pa 4.7%pa 5.3%pa
3.1%pa 3.2%pa 3.6%pa
2.3%pa 2.7%pa 3.6%pa

Demographic assumptions
Assumed life expectancy in years, on retirement at 65
31 Dec 2012 31 Dec 2011
Retiring today
Males
24.1 24.0
Females
26.0 26.0
Retiring in 20 years
Males
26.1 26.0
Females
27.2 27.2
Pre-retirement mortality rates
The following mortality rates represents the probability of a person of the age shown dying within one year.

Age
Males Females

30 0.00033 0.00019

40 0.00052
0.00041

50
0.00138 0.00104

60
0.00441 0.00278
The assets and liabilities in the scheme and the expected rate of return were

Expected
return
for 2013

Value at
31 Dec 2012
000

Expected
Value at
return 31 Dec 2011
for 2012
000

Expected
Value at
return 31 Dec 2010
for 2011
000

Equities
8.0% 11,430 8.0% 9,317 8.0% 11,531
Bonds
3.5% 10,553 4.5% 8,500 5.0% 8,356
Property
6.3% 2,080
6.3% 2,265 7.0% 1,790
Cash
1.5% 1,003
3.5% 3,269 3.5% 2,196
Total market value of assets
25,066
23,351 23,873
Present value of scheme liabilities
(32,538)

(28,700)
(26,432)
Deficit in the scheme
(7,472) (5,349) (2,559)
Related deferred tax asset
1,719 1,338 691
Net pension liability
(5,753)


Analysis of the amount included as other finance (charge)/income
Expected return on pension scheme assets
Interest on pension scheme liabilities
Other finance (charge)/income
Actual return on plan assets

(4,011)

(1,868)

For year to
For year to
31 Dec 2012 31 Dec 2011
000 000
1,284 1,440
(1,345)
(1,395)
(61)

45

1,878

(356)

Adnams plc 35

Defined benefit pension scheme continued

Changes in the present value of the defined benefit obligation are as follows

For year to
For year to
31 Dec 2012 31 Dec 2011
000 000

Opening defined benefit obligation

Interest cost
Actuarial losses
Benefits paid

28,700
26,432
1,345 1,395
3,076 1,459
(583) (586)

Closing defined benefit obligation

32,538

Changes in the fair value of plan assets are as follows

28,700

For year to
For year to
31 Dec 2012 31 Dec 2011
000 000

Opening fair value of plan assets

Expected return
Actuarial gains/(losses)
Contributions by employer
Benefits paid

23,351
23,873
1,284 1,440
594 (1,796)
420 420
(583) (586)

Closing fair value of plan assets

25,066

23,351

The company expects to contribute 420,000 to the Adnams Pension Fund in the next accounting year. Contributions
of 35,000 per month are paid. A change of payment date in 2011 led to 13 payments being made in the year, leading
to cash contributions of 455,000 in the table below.

Analysis of the amount recognised in the statement
of total recognised gains and losses (STRGL)

For year to
For year to
31 Dec 2012 31 Dec 2011
000 000

Actual return less expected return on pension assets

Experience (losses) arising on the scheme liabilities
Changes in assumptions underlying the present value of the scheme liabilities

594
(1,796)
(62) (52)
(3,014) (1,442)

Actuarial loss recognised in STRGL

(2,482) (3,290)

Movement in deficit during the year

Deficit in scheme at beginning of the year
Movements in year:

- Contributions paid by the employer

- Other finance (charge)/income

- Actuarial loss

(5,349) (2,559)
420 455
(61) 45
(2,482) (3,290)

Deficit in scheme at the end of the year

(7,472)

(5,349)

The cumulative amount of actuarial gains and losses recognised in the statement of total recognised gains and losses
at 31 December 2012 was a net loss of 15,238,000 (2011: 12,756,000).
History of experience gains and losses
Defined benefit obligations 000
Plan assets 000
(Deficit)/surplus 000
Difference between the expected
and actual return on scheme assets
amount 000
% of scheme assets
Experience gains and losses on scheme liabilities
amount 000
% of present value of scheme liabilities
Total amount recognised in STRGL

amount 000

% of present value of scheme liabilities

2012
2011 2010 2009 2008
32,538
25,066
(7,472)

28,700
26,432
24,191
18,360
23,351
23,873
21,685
18,769
(5,349) (2,559) (2,506) 409

594 (1,796) 1,113 1,975 (3,795)

2%
(8%)
5%
9%
(20%)
(62)
<1%

(52)
<1%

1,549
6%

28
<1%

(2,482)
(3,290)
(462)
(3,298)
(8%) (11%) (2%) (14%)

(44)
<1%
163
<1%

Defined contribution scheme

The company also operates a defined contribution pension scheme. The assets of the scheme are held separately from
those of the company in an independently administered fund. During the year the company contributed 387,000
(2011: 386,000) t o the scheme (note 4). There were no amounts outstanding at the year end (2011: nil).

36 Adnams plc

27. Financial instruments

The companys financial instruments comprise a bank loan, trade loans to customers, cash and bank overdraft. The
purpose of the financial instruments is to raise finance for the companys operations. The company has various other
financial instruments such as trade debtors and trade creditors, which arise directly from its operations, which have
not been included in the following disclosures.
Details of the companys policies in respect of borrowings, treasury management, interest rate and liquidity risk are
included within the Finance Commentary.
Financial assets
The company funds certain trade customers with loans. Amounts at the balance sheet date are disclosed in note 13
to the accounts. The maturity profile of these assets is 95,000 (2011: 99,000) recoverable within one year and
123,000 (2011: 168,000) recoverable within one to five years. The balance is due after five years.
Of these loans 182,000 (2011: 232,000) is expected to be repaid in cash and 60,000 (2011: 61,000) is expected
to be repaid by discounts. The level of discounts awarded and the interest charged depends on the trading performance
of each customer against set targets.
Interest rate profile
Bank loans of 9,000,000 (2011: 10,800,000) bear interest at 2.02% at 31 December 2012 (2011: 2.17%).
Bank overdrafts of 4,751,000 (2011: 4,635,000) bear interest at 1.50% above Barclays Bank base rate which was
0.50% at 31 December 2012 (2011: 1.50% above Barclays Bank base rate of 0.5%).
Fair values of financial assets and liabilities
Trade loans are financial assets carried at book value. It is not practicable for the company to estimate the fair value of
these loans with sufficient reliability given the cash flows are based upon improved sales revenues in future years.
There is no difference between book value and fair value in respect of the cash, bank loan and bank overdraft.
28. Share Incentive Plan
The Adnams Share Incentive Plan (SIP) 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 based upon employees salary and capped at a
maximum of 3,000 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 2012 and 2011 share awards vest unconditionally at the balance sheet date and the
total value of free shares awarded under the SIP scheme for 2012 and 2011 is disclosed in note 2 to the accounts.
These amounts also represent the year end liability and are included within accruals in note 16.
Shares are transferred to the SIP at an annual value approved by Her Majestys Revenue and Customs share
valuation team.

Adnams plc 37

Corporate governance
Standards
The company is committed to high standards of corporate governance incorporating best practice.
The workings of the Board and its committees
During 2012 the Board comprised three Executive Directors and three 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. The Committee provides a forum for the companys 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.
In anticipation of changes to the board during 2013, a Nominations Committee was convened in 2012. This comprised
Mr Sharp (Chairman), Mr Adnams and Mr Kendall.
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.

38 Adnams plc

Directors responsibilities in respect of the accounts

The 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
companys 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:
in so far as each director is aware, there is no relevant audit information of which the companys 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 companys website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.

Adnams plc 39

Independent Auditors report

to the members of Adnams plc

We have audited the financial statements of Adnams plc for the year ended 31 December 2012 which comprise the
profit and loss account, the statement of total recognised gains and losses, the balance sheet, the cash flow statement,
the statement of accounting policies 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).
This report is made solely to the companys 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 companys members those
matters we are required to state to them in an auditors 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 companys
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors Responsibilities Statement set out on page 38, 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 Boards (APBs) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APBs website at www.frc.org.uk/apb/
scope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
give a true and fair view of the state of the companys affairs as at 31 December 2012 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 2006
In our opinion the information given in the Report of the Directors for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We 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:
a
 dequate accounting records have not been kept by the company, 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.
Mark Handley
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
NORWICH
19 March 2013

40 Adnams plc

Contact information
Adnams plc

Cellar & Kitchen stores

Sole Bay Brewery

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

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

Hotels

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

The Swan
Market Place
Southwold
Suffolk
IP18 6EG
T: 01502 722186
The Crown
High Street
Southwold
Suffolk
IP18 6DP
T: 01502 722275
The Victoria at Holkham
Park Road
Holkham
Wells-next-the-Sea
Norfolk
NR23 1RG
T: 01328 711008
The Globe Inn
The Buttlands
Wells-next-the-Sea
Norfolk
NR23 1EU
T: 01328 710206

Woodbridge
Quay Point
Station Road
Woodbridge
Suffolk
IP12 4AU
T: 01394 386594
Stamford
Bath Row Warehouse
St Marys Passage
Stamford
Lincolnshire
PE9 2HG
T: 01780 753127
Harleston
The Cardinals Hat
23 The Thoroughfare
Harleston
Norfolk
IP20 9AS
T: 01379 854788
Saffron Walden
Old Auction Rooms
1 Market Street
Saffron Walden
Essex
CB10 1HZ
T: 01799 527281

Shareholders should note that changes of address, or other

details, should be sent to our registrars, Capita IRG at The
Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.

Holt
8 White Lion Street
Holt
Norfolk
NR25 6BA
T: 01263 715558
Hadleigh
73/75 High Street
Hadleigh
Suffolk
IP7 5DY
T: 01473 827796
Bloomsbury
30/31 Store Street
Bloomsbury
London
WC1E 7QE
T: 020 7580 2443
Waterside
Waterside Garden Centre
King Street
Baston
Peterborough
PE6 9NY
T: 01778 561510
Norwich
109 Unthank Road
Norwich
Norfolk
NR2 2PE
T: 01603 613243
The Wine Shop and
Adnams Tour Booking Office
Pinkneys Lane
Southwold
Suffolk
IP18 6EW
T: 01502 722138

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Photography: Anthony Cullen Print: Five Castles Press
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Adnams plc
Sole Bay Brewery,
Southwold, Suffolk,
IP18 6JW
adnams.co.uk