BREWING, distilling and leisure retail company Adnams today reported a 5.5% increase in operating profits for the first-half of 2012.

The Southwold-based firm posted turnover of �25.748million for the six months to June 30, up 5.1% from �24.509m for last year’s first half.

Operating profit improved from �812,000 to �857,000 while the pre-tax total was 7.7% ahead, at �754,000 against �700,000 at last year’s half-way stage.

The pre-tax figure benefited from a one-off gain on a property sale which more than off-set increased interest charges.

Adnams chairman Jonathan Adnams said: “Our beer and pubs business had a good six months. We have continued to hold our beer prices in support of the UK on-trade, we have produced more innovative products and we have focused on strong customer service. In today’s market this combination has proved powerful.”

“The balance of our beer business has continued to move towards sales to managed pub operators relative to the leased and tenanted sector, though both remain very important to us.

“Our directly delivered free trade has also continued to perform well, though conditions have been tougher partly as a result of some bigger customers being bought by our competitors. Our take home beer business has continued the good growth that we saw last year and has grown volumes by a further 13%.”

He added: “Our tenanted pub estate made good progress in 2011 and is again showing an improved result in the first half of 2012, though beer volumes have not kept up with last year. The poor weather has depressed sales particularly amongst pubs with gardens, and these comprise an important part of our estate.”

Overall, however, sales by volume of Adnams’ own beers increased by 5% – against the back-drop of a 2% decline in the overall cask ale market – while volumes for Bitburger lager, for which it is UK distributor, were 3% ahead.

“After seeing many years in which ale has declined compared to lager we may be witnessing some reversal of this trend,” said Mr Adnams. “We believe that Adnams and others are providing a range and quality of ales that appeal to all.

“We have been particularly pleased with the success of some of our newer beers, notably Adnams Ghost Ship.”

Adnams’ hotels in Southwold, The Swan and The Crown, continued to encounter tough trading, with poor weather during the second quarter adding to the challenging economic climate.

“We have sought to ensure that the hotels achieve the premium room rates that they warrant whilst maintaining levels of occupancy,” said Mr Adnams. “We have also focussd on cost control, efficient use of our resources, staff training and management of events. Overall the contribution from our hotels was 3% behind last year.

“We have made further investments in the infrastructure of our hotels and ten of the bedrooms at the Crown were refurbished at the start of the year.

“Our management of the Victoria hotel at Holkham and Globe Inn at Wells, on behalf of the Holkham

Estate, has continued to provide a steady stream of income,” he added.

The company’s wine and shops business had again showed good turnover growth, assisted by the contribution from new stores opened in the second half of 2011 and the new shop in Norwich which opened at the end of May.

Shop sales were 7.5% ahead of last year, and up 5.4% on a like-for-like basis, although profits were slightly behind 2011.

“The costs of the new stores played a part in this,” said Mr Adnams. “We have taken the difficult decision to scale back overheads and not to renew the lease on the shop that we opened in Spitalfields last year. Having opened in Norwich we are not planning any further openings at the present time.”

Mr Adnams added that the company’s Copper House Distillery, which opened in 2010, had “continued to exceed our expecations”, with sales of its spirits performing strongly in its shops, alongside its range of beers.

The mail order and web businesses had also performed well in the last six months, with the mail order business helped by delivery of the successful 2009 wine vintage which had been sold en primeur. Sales through the company’s Seasonal Cellar wine club also grew, although wine agency sales were “slightly disappointing”.

Interest charges grew from �182,000 for last year’s first half to �216,000, with bank debt as of June 30 totalling �15.9m – up from �13.2m at the end of 2011’s first half and �15.4m at the year-end.

However, Mr Adnams said this was partly a matter of timing, with last year’s capital expenditure having been heavily weighted towards the second half while the plan for this year was the reverse.

One pub was sold during the first half, the Mustard Pot in Norwich, producing a profit of �95,000, and the Star at Wenhaston was sold shortly after the half year, with one other pub still for sale.

Looking ahead, Mr Adnams said: “At a time when there has been so much focus on the failings of company behaviour it is increasingly apparent that the way that things are done is a vital ingredient in long-term success.

“We feel that our positive values-led approach has served us well and will continue to do so in the future. We were delighted to have this approach publically recognised when in April we heard that we had been awarded he Queen’s Award for Enterprise: Sustainable Development.

“Making comments about the future seems particularly problematic in times such as these, but Adnams

will continue to take a long term view and seek to build the trust and confidence of its stakeholders.”