Cains Brewery owners ‘optimistic’ but auditor serves survival warning
The comments by auditor Mazars LLP in the firm’s 2010 accounts reflect turbulent times for R C Brewery, which makes traditional lagers and beers at the 160-year-old former Robert Cain brewery in Toxteth, Liverpool.
R C Brewery employs 70 staff and owns six pubs in the city, but only exited administration in August 2008 after brothers Sudarghara Dusanj and Ajmail Dusanj (the latter pictured on a 2005 Food Manufacture cover) bought the brewery back from administrators.
The director-owners initially bought the former Cains brewery business in 2002, but the acquisition of a loss-making pub chain Honeycombe Leisure in 2007 led to administration in August 2008 with £50m debts; they then repurchased the brewery minus the pubs for a relatively small sum.
Survival doubts?
Reporting on the brewery’s filed accounts for the year to September 30 2010, auditor Mazars LLP noted that it lost £896,000 and amassed net liabilities of £2.765m.
“These conditions…indicate the existence of a material uncertainty, which may cast significant doubt about the company’s ability to continue as a going concern, ” it said.
RC Brewery increased its turnover by £6m to £24.6m for the year, but the accounts show that sales alone cost £21.961m; when administrative expenses of £2.737m and selling and distribution costs were applied the firm ended 2010 in the red.
Despite “difficult trading conditions” and “pressure on cashflows” the Dusanj brothers pointed in their directors' report to RC Brewery’s increased turnover as a result of “a number of new customers and contracts”, which meant it cut operating losses by £1m year-on-year.
New customers and contracts
“The company continues to win further contracts and the directors are therefore optimistic that the turnaround will continue into 2011,” they wrote.
Cains beer exports to the US, China, Denmark and Ireland would fuel further growth, the Dusanj's said, while the firm is also looking to expand into other world markets while driving down costs “with equal vigour in 2011”.
Meanwhile, HMRC has also granted the firm a licence to expand its contract packing operations, thus opening up another potential revenue stream.
And although the firm’s survival now depends upon its finance facility provider and support from “key suppliers”, the directors said an internal financial review indicated that the firm could recover to a “profitable position within the foreseeable future”.
*FoodManufacture.co.uk contacted RC Brewery for further comment but the company did not return our call.
