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EFIM10030: Accounting and Finance for Managers

2022

Established in 1927, Markham Ales Ltd. (or simply ‘Markham’) operate from a base in Cirencester, UK, where their brewery is also located. They brew a range of ‘real ales’ and these are sold to public houses (‘pubs’) in Oxfordshire, Gloucestershire, Wiltshire and Somerset. In addition, they also own four pubs outright and so they enjoy ‘retail’ profits from those outlets.

They brew three real ale brands (listed below, from lightest in colour to darkest):

Golden Haze – most popular in summer months

Staple Diet – a brown bitter with steady all round sales

Kemble Porter – a dark ale, popular in winter.

These are brewed with the specialist knowledge of two ‘Master Brewers’, both of whom have been with Markham since the mid-1990’s, and their expertise is considered to be highly thought-of throughout the industry. Markham Ales frequently win ‘Champion Beer’ awards from organisations such as CAMRA (The ‘Campaign for Real Ale’). The four ‘owned’ pubs are all based in the Cotswolds and have these names:

The Grey Heron

The Glass Bottle

The Green Dragon

The Ampney Arms

In these four pubs, collectively referred to as ‘The Estate’, all three Markham ale brands are on offer, whereas in non-owned pubs, some of them feature on a ‘guest ale’ basis only (so, only one is likely be on offer).

Covid-19

In March 2020, many parts of the world (including the UK) went into ‘lockdown’ owing to the emergence of the Coronavirus. Pubs were forced to close and although they were subsequently re-opened, further lockdowns ensued during 2020 and 2021. Unsurprisingly, the revenues across the sector were negatively affected. For this reason, the 2021 final accounts have been presented below alongside those for a ‘normal’ (i.e. pre-covid) year, 2019, for the purpose of comparison.

Their Annual Report and Accounts for 2019 and 2021 showed the following (‘owned’ refers to the four pubs owned outright, and ‘non-owned’ to other pubs) – see figure 1.

Figure 1: Income Statements for the years ended 31^st December 2019 and 2021

*included in the cost of sales figures are credit purchases of £556k in 2019, and £451k in 2021.

The Statement of Financial Position appears on the next page, this space is deliberately blank.