Adnams rejects shareholder's criticism

Adnams, the Suffolk brewer and pub operator, mounted a defence of its business tactics yesterday after coming under fierce criticism from a City shareholder.

The group told shareholders at its AGM that it realised its financial results for 2008 were "disappointing", but that it believed the strategy it was undertaking had the long term interests of the business in mind.

Last month the Southwold-based group said while turnover for the year to December 31, 2008, had dipped less than one per cent to £47.1m, rising costs meant operating profits fell 68 per cent to £1.5m.

Adnams' pre-tax profits for the year fell from £7.5m to £1.3m.

However in a reference to criticism from investment firm and activist shareholder Guinness Peat Group (GPG), Adnams said despite the slump in profits it would not be "distracted by short-termist overtures".

Last week GPG, which owns 5.4 per cent of Adnams' ordinary shares but only 2.5 per cent of voting rights, wrote to the brewer's investors demanding the company overhaul its share structure and provide more information regarding certain aspects of its operations.

GPG repeated its call that Adnams convert its 'A' shares into 'B' shares, which it said "represented the majority of the share capital of Adnams and which are freely traded".

GPG said the group's 'A' shares carried votes "disproportionate to their economic interest in the company" and could only be sold to a "limited pool of investors including the board of directors".

The investment firm made a similar call at last year's AGM, and in its letter to shareholders repeated another claim, that the group's financial communications were not good enough, particularly with regard to its Cellar & Kitchen retail concept.

"The conspicuous lack of disclosure regarding the retail chain is highly unsatisfactory for a venture so far removed from the company's core competencies as a regional brewer and owner of pubs," it wrote.

Shareholders had "every right to expect transparent reporting of its performance", it added.

Adnams countered by saying the chain had had a "strong start" to 2009, with sales in the first three months up more than a fifth on the same period last year.

"Whilst there seems little doubt that economic turbulence will continue for some time yet, we believe that Adnams has been responding appropriately," it said.

The brewer said it was managing its cost base in line with difficult times while supporting its tenants.

It was "appropriately cautious, given today's climate", it added, and believed it was "continuing to do the right things".

Last month Adnams won the inaugural Corporate Social Responsibility award at the Publican Awards, held in Grosvenor House in London.