160331 Muntons Annual Review Final version

Annual Review 2015

2 Annual Review 2015 Muntons

contents 4 This page: Cover photo:
6 Light Malt Maltose crystals
Science Meets Art 7 Extract David dehydrated
Chairman’s Statement 8 At 100x light malt
Managing Director’s Report 10 magnification extract to cause
Muntons Gold 12 the refraction of the maltose to
Waste Not 14 light creates a crystallise. After
Go Wild 16 dramatic effect. seven days of
Record Year for Malt 18 David Maitland crystal growth,
A Jolly Good Fellow 20 used Muntons these maltose
What a Harvest 22 malt extract here crystals can be
Bright Future 24 to form a classic seen forming their
Key Financial Information 26 ‘plastic’ film – classic triangular
Grass Roots 28 stringy yet solid, flat plates. The
Malt Extracts 30 almost unearthly in photograph was
Malt Teaser appearance. taken at 200x
Vision, Mission, Values magnification and
clearly shows the
striking colours
created by the
interference
patterns due to the
specific orientation
and thickness of
the crystals in
relation to the
clear background.

Muntons Annual Review 2015 3

srhisine e& £11.9M

EBITDA

22.2%

return on capital employed

£91.479M

TURNOVER

£7.876M

pre-tax profit

182,304

TONNES OF MALT SALES

27,084

TONNES of liquid extract

16,264

TONNES of milled products

3,373

TONNES OF DRIED MALT EXTRACT

40M

PINTS OF HOMEBREW BEER

1.2m

BOTTLES OF HOMEBREW WINE

4 Annual Review 2015 Muntons

science
meets
art Super-macro
photos showing
Barley Starch muntons raw
Finest quality malting materials closer
barley is the prime raw than ever before,
material used to make in an eye-catching
our malt and malted portfolio of
ingredients. The barley beautifully
starch amyloplasts can intricate images.
be seen here at 400x
magnification. The starch
molecules are laid down
in concentric rings which,
under polarised light,
appear as green and
purple crosses, indicating
that the starch granules
are semi crystalline.
The centre of the cross,
the Hilum, marks the
point where the starch
molecules began to grow
within the amyloplast.

Muntons Annual Review 2015 5

Where do all these
incredible colours
come from?

The vivid colours in the photographs About Dr David Maitland, was twice shortlisted in the Sony World
used throughout this review are the BSc (Hons), PhD, FRPS Photography Awards. He has twice
result of the interaction of the subject been awarded best of show at the
material with polarised light, I do not Recently appointed as Senior Lecturer International Photography Awards, New
use any artificial colours, filters or post in Photojournalism at Southampton York, and has received multiple awards
photographic editing techniques. Solent University, David combines from the Wildlife Photographer of the
careers as a zoologist, at universities Year, London. David is the current Royal
Materials that have a single refractive in Australia, South Africa and the Photographic Society gold award winner
index tend to appear black and, as UK, and a professional nature/science of the International Images for Science,
dense materials tend to bend light photographer. 2015.
more than lighter ones, it is this density
which determines the degree to which David uses Photography to elucidate His use of specialist macro and
light is bent on passing through the the intricacies of nature, combining an microscopy skills and attention to detail
material. Materials with two or three academic view point with a new sense have led David into collaborations
refractive indices appear multi-coloured of enquiry in the pursuit of art and with the BBC on their 2013 television
and material which is multi-coloured wonder in Nature. He uses his images as series “Wonders of Life” and “Human
in cross-polarised light is known as a tool to engage, enlighten and lure his Universe” in 2013 and 2014. David
“Anisotropic” or “Birefringent”. The audience towards a greater awareness is a regular presenter at international
polarised light can be further modified and understanding of the natural conferences and has juried leading
to enhance the colour contrast of world and science. He is the recipient international photo competitions
specimens using special polarising of numerous international awards. In including this year’s HIPA Awards.
techniques such as Differential 2008 he was named the European
Interference Contrast (DIC), a technique Wildlife photographer of the Year and Contact details:
which has been used in the pictures www.davidmaitland.com
selected for this Muntons Annual [email protected]
Review.

I had a wonderful time exploring,
in microscopic detail, the materials
supplied by Muntons and was amazed
by how complex, and technically
advanced, the production of malt is. The
big surprise for me was the incredible
purity and glass-like clarity of the
light malt extract. The maltose sugars
produced from the barley through the
malting process made it wonderfully
sweet and aromatic to the taste – my
wife loved it! Maltose was difficult to
crystallise and when crystals do form
they are very slow growing but it was
worth the wait however as the crystals
are spectacular, as you can clearly see on
the cover of this report.

6 Annual Review 2015 Muntons

Paul Wells, chairman’s statement
Chairman
admiring
As outlined the view
in last year’s
Review we have This review covers the calendar year In April 2016, band-dried malt extract
focused on 2015 now that our financial year ends in production will commence in the new
margin enhancing December. Two things make these results factory built by the Joint Venture project in
sales resulting unusually complicated; the previous year Thailand. The first order for raw material
in a growth of was 66 weeks and we are obliged to adopt from the UK has now been received and
five percentage a new Financial Reporting Standard (FRS despatched. Our partnership with Jebsen
points to 28%. 102), which replaces the old UK accounting & Jessen is well established and the market
principles. opportunities for band-dried malt extract
in South East Asia continue to expand.
2015 was a good year and our earnings We are proud of our roots in East Anglia
(EBITDA) reached £11.9m, which is a and the opportunities we have created to
record. During this unusual year and under export locally grown cereals as brewing
the new FRS rules, our pre-tax profit of and distilling malt and malted ingredients
£7.9m, and net profit after tax of £6.1m worldwide.
compared with £7.4m pre-tax and £6.2m
in the extended 2014/15 year is impressive. The referendum on membership of the EU
We are proposing an increased dividend to presents an uncertain future. An exit would
be paid in May. signal the prospect of extensive upheaval in
our supply chains as our agriculture policy
As outlined in last year’s Review our is reformed and new trade agreements are
strategy concentrates on growing sales. We forged with the UK’s worldwide markets.
have focused on margin enhancing sales This may take several years and like all
resulting in a growth of five percentage businesses we would adjust, but inevitably
points to 28%. Sales of bulk malt into the there would be a pause in investment and
major brewing groups, regional brewing, development decisions.
craft brewing and the worldwide distilling
sector increased to record levels of malt However this vote goes, your company
delivered. This concerted level of activity is well placed for any challenge with
delivered the highest profit margin ever strong financial resources and an
achieved by the Malt division. exceptional executive team. Effective
teamwork structures exist at every level
As our profits have improved so has our of the business and I would like to close
return on capital reaching 22.2% in the by offering my thanks, on behalf of the
year despite a continuing investment board and shareholders, to everyone in
programme. We completed the anaerobic the company for their hard work and
digester on the Stowmarket site and it enthusiasm.
is performing extremely well, generating
11% of the power used on the site. This
year we will upgrade the barley storage
and intake facilities at Stowmarket and
replace our information systems with the
latest generation of SAP.

Muntons Annual Review 2015 7

Managing Director’s report

flying
colours
Alan Ridealgh,
Group Managing Director

The eye catching images contained in this of Peru recently we have taken our There is a shadow however amongst all of
Review capture not only the vivid nature of geographical spread to 73 countries! this brightness and colour. We at Muntons
some of our raw materials and processed are very concerned at the possibility of the
products but also reflect on what has It was great to be recognised as the UK leaving the European Union. Whilst
been a colourful year for Muntons. It Global Malt Supplier of the Year at the recognising that this is a matter of personal
has been said that malting is both an art Brewing Conference in Dublin last spring conscience when the time comes to vote in
and a science. These images prove this surrounded by our customers, suppliers the Referendum, we view the uncertainty it
conclusively! and competitors. When the Award was is creating with dismay.
announced it was particularly rewarding
2015 was the first of our ‘new years’ to see one of our competitors put his head Should we choose to leave the EU there
following our migration from a financial in his hands and say “oh no, not Muntons would be a period, probably several years,
year ending in September to a calendar again!” of confusion as disengagement took place.
year ending in December. Our Review This would potentially affect investment
for 2014 was of course extended to 15 And it was “Muntons again” on a more plans, it would change the basis of our raw
months which set us a challenge to not local level when we won Business of the material pricing as we untangled ourselves
only improve on the adjusted 12 months Year at the annual awards sponsored by from the CAP and our voice in the world of
but to achieve an even better comparison the East Anglian Daily Times. trade barrier negotiations would become
with the published figures. Whether we weaker. We value the trade we have in
measure ourselves in net profit or EBITDA There is an energy around Muntons at the Europe with over 30% of our Ingredients
terms, we have achieved our target and moment and it is timely that we capture customers being located in the EU making
this gives us a good platform for growth in this in our Vision, Mission and Values so up over £11M of our turnover. Much of
2016. that we can ensure we propagate it for our UK trade is with international business
the future. Malt in all its forms is a product headquartered outside the UK. Clearly
So much has happened in 2015, some of to be passionate about. We want to currency fluctuations would concern us as
which is covered in this Review and some is share this across the world and to shed its would any decision by Scotland to change
to come in future years. We have included shell of being known as an undiscovered its status with the United Kingdom. An
a peek, towards the end of this Review, ingredient. enormous amount of our Malt business is
at future developments in our irresistibly now to the Scotch whisky industry.
phrased ‘Malt Teaser’ section. The completion of the anaerobic digester
project during the year was another It will be a relief to move on from the
There is an art and science also in balancing success and in turn this leads us into Referendum to escape the rhetoric, the
all of the elements of a business, making thinking how to best utilise other parts half-truths, the false statistics and the
sure we keep all of our stakeholders happy. of our Stowmarket site. The result, for downright misleading. The world likes our
Our funders need to know visibly that we the areas we are unlikely ever to develop malt and malted ingredients and we value
are using their money appropriately and we (because of their flood plain status), has the opportunity to continue to offer brand
need to reward shareholders to ensure they been to make it an amenity for all staff support to the big names in respect of food
remain confident. To maintain this balance, to share. This could be for exercise, for a safety, product quality and sustainability
we need to satisfy our customers on every break and fresh air or for many, a chance in every part of the world. And we see
level whilst at the same time supporting to observe and enjoy nature. I hope once the opportunity to bring new ideas, new
our key suppliers in seeking out bold new the project is finished in Thailand, and products and new processes across the
products and processes. Crucially we need our Joint Venture (JV) factory is up and whole spectrum of our customers and
our staff to feel part of our crusade to take running, that we can also provide, though what a colourful spectrum it is too.
malt in its many forms to as many people on a smaller scale, somewhere for both
and places as possible. With the addition staff to enjoy and nature to prosper.

8 Annual Review 2015 Muntons

award-winning muntons malt and folk

Award winning sums up the tone of this year perfectly. It started
at the RMI Analytics Global Brewing Supply Awards ceremony held
at The World Barley, Malt & Beer Conference (WBMB) in Dublin on
11th March, where Muntons picked up the top prize – ‘Maltster of
the Year’. This global award was presented to the company who, in
the opinion of the judges, best demonstrated exceptional financial
returns, strong growth and innovation strategies plus market
leadership in its sector. In addition, judges looked for evidence of
inventiveness, ethical credentials, good stakeholder relationships and
long term planning, balanced by the flexibility to deliver consistent
results in dynamic market conditions.

The WBMB attracted nearly 300 attendees from the global brewing
supply industry for their three-day conference, including over 70%
of the brewing trade, the majority of global barley malt traders and
many of the world’s maltsters. The theme of the conference was
’growing a better world’ focusing on the sustainable supply of the
key ingredients for beer; barley, malt, hops and yeast. RMI’s Dublin
based WBMB conference was the eighth in a long running series
of conferences serving the brewing industry since 2001. This year
the brewing supply industry awards was added to the event for
the first time, putting Muntons on the top of the list.

Top row: Muntons staff at the EADT awards ceremony
Bottom row: Tim Stonehouse accepting the Global maltster of the year award.

Muntons Annual Review 2015 9

This form of Tim Stonehouse, Muntons Malt Sales The award ceremony was a grand,
peer recognition Director, graciously accepted the award black tie event hosted by Terry Baxter,
acts as a shot thanking RMI Analytics, the judges and Chief Executive of ‘Inspire Suffolk’, at
in the arm for our customers, commenting that it was the Trinity Park conference and event
the staff as Muntons philosophy to put our customers centre in Ipswich. A table of ten Muntons
their hard work and people first. He stated that being representatives from across the company
and dedication recognised through this award was very were privileged to attend the event along
is formally important to all at Muntons and he with Alan on the ‘top table’ and Melissa
appreciated. strongly recommended other companies Abbott and Mary Narey on the sponsors
in the brewing industry to put themselves table. The winners in each category were
forward in future years. duly announced and applauded and then
came the ‘Large Business’ category. We
A few short months later Alan Ridealgh were delighted when they pronounced
received a ‘summons’ from the Police Muntons as winners of the category.
and Crime Commissioner, Tim Passmore, Melissa and Mary graciously collected
inviting him to join other hand-picked the award on behalf of the company and
dignitaries at the East Anglian Daily Times posed as requested for the camera. The
business awards. last award of the night was for the overall
winner – the ‘Business of the Year’ award.
We had applied for these awards earlier in When Muntons were announced the
the year, involving a comprehensive on-line winner, we were jubilant; we could not
application. This led to Muntons being have hoped for a better result.
shortlisted and subsequently judged in an
hour long question and answer session by This form of peer recognition not only
representatives from the East Anglian Daily generates a great deal of press activity
Times and the category sponsor, Larking but also acts as a shot in the arm for the
Gowen. The judges were particularly staff as their hard work and dedication is
interested in our human resources and formally appreciated.
recruitment strategies, looking for evidence
of best practice and a commitment to staff
training and development. They were also
interested in hearing about our corporate
social responsibility activities such as care
for the environment, involvement in the
local community and support for charities.
Details were communicated and evidence
provided.

muntons gold

10 Annual Review 2015 Muntons

nwoats.t..e

Digester turns
Muntons waste
into bio-fertiliser,
cutting out
3,000 tanker
movements a year.

Muntons Annual Review 2015 11

It took us five years persuading, trialling the only materials we feed it with are the Baroness commented: “It is a
and proving that we could turn waste the end products left after processing great privilege to have been invited
into cash but it paid off. Within one locally grown cereals into malt or other to open this facility today. Muntons
year of the initial commissioning trials, malted ingredients. As such we are are a company with their roots firmly
the Anaerobic Digestion (AD) Plant was ideally placed to claim this is highly established in the local area and this
achieving its target electricity output. environmentally beneficial and a true new plant is an important commitment
The £5.4m investment in the AD plant ‘cradle to cradle’ project. to the Stowmarket site and the
enabled us to produce nearly 11% environment.” This was a strong
of our total electricity usage on site The output of the AD process is endorsement of our approach
and saved many thousands of miles in water, which can be treated by our to sustainability.
vehicle movements by diverting waste aerobic plant prior to discharge to
into methane generation, rather than river, methane gas sufficient to power We are continuously looking for
being spread onto land that is simply a 499kWh electricity generator and investments that remove risk from
registered for waste disposal, not for a nutrient rich material suitable as our business, contribute positively
growing high quality cereals. an alternate fertiliser. This is high in to the bottom line and improve our
Nitrogen, Phosphate and Potassium and environmental impact. It is heartening
During our project design phase we is much in demand from our malting to read in applications for employment
considered, and dismissed as unsuitable, barley growers having been de-watered that our approach resonates with
a number of plants that were either by a large centrifuge rendering it easy people’s aspirations to work for an
‘unavailable’ for us to visit or had never to spread onto the land. Our board environmentally sensitive and financially
been used to treat malt extract. Of supported the investment decision, as prosperous company. Our strapline
two remaining possible plants both through this project we were able to save ‘P.S. Practical Sustainability - It’s no
were run as pilot scale trials. One failed the £750,000 every year we were paying afterthought’ continues to drive us
miserably but the other succeeding for 3,000 truck-loads of residue from our to address the so called triple bottom
to a greater extent than even the processes to be removed from site. line: People, Profit, Planet. There is
manufacturer would have hoped for, absolutely no shame in heralding that
and of course we chose the latter. To The official opening of the plant on our sustainability agenda is driven by
have hit the electricity generating goal 25th September 2015 by The Baroness a desire to generate greater profit.
within a year of starting up the plant Scott of Needham Market, coincided The real knack we have developed is
was outstanding. Our AD plant is not with coverage on ITV evening news in that we can address our impact on
really a waste treatment plant because a piece celebrating sustainable energy the planet at the same time as making
production in the East of England. ITV our business more profitable and
Bio-fertiliser – took this opportunity to televise the sustainable in terms of cost, leading
residue from Munton official opening and showcase the edge environmental performance and
Anaerobic Digester new plant within their news item that our ability to attract talent for a secure
The residue from our evening. During the official opening, and prosperous future.
anaerobic digester
plant is a rich bio-
fertiliser containing
the essential nutrients,
Nitrogen, Phosphate
and Potassium.
The picture shows
granules taken at
100x magnification
using Differential
Interference Contrast
microscopy. Although
the fertilizer granules
appear to be dry, they
hold an impressive
amount of water,
which can be seen here
bubbling under the
heat of the microscope
light and condensing
on the microscope slide
cover slip.

12 Annual Review 2015 Muntons

go wild
It has long been recognised that the health As well as providing the opportunity for
New wildlife and wellbeing of a company’s workforce is some gentle exercise and fresh air, those
walks at Muntons important, not just for the staff but for the using the walks can also see a diverse
offer staff and benefit of the business itself. We are lucky, range of flora and fauna – a selection of
visitors the being based on a 45-acre site located on which have been itemised and described in
opportunity to the edge of Stowmarket in rural Suffolk. a leaflet produced specifically for the staff.
enjoy some gentle Only half of the site has been developed
exercise, fresh air since we located there in 1948, leaving There are four walks clearly marked
and the chance the other half available for potential future ranging in length from a gentle half mile,
to see a diverse expansion. Some of the land is a managed 10-minute stroll to a more ‘brisk’ 1.2
range of wildlife. floodplain, acting as an overflow for when mile 25-minute hike, taking the walker
the River Gipping breaks its banks, the completely around the perimeter of the
remaining area is an intriguing combination 45-acre site. Little Egrets, Dragonflies and
of wild floodplain and woodland. Damselflies, Butterflies, Grey Squirrels plus
Chub and Pike (in the river) are just some
A portion of the spare land has been of the wildlife to be seen. Couple this with
converted into allotments, which our various fungi, some ancient examples of
staff lovingly tend producing a wonderful Hawthorn, Elder and Oak trees, Burdock,
array of fruits and vegetables for their Ragwort and Ladies Smock and the extent
own consumption. This year however, a of the diversity becomes clear.
small, dedicated team from the company
have been hard at work creating a series The walks are currently limited for Muntons
of walks in the woodland and floodplains staff to enjoy but in time it may be
for us to enjoy during our breaks and possible to open them to local schools and
lunchtimes. institutions for accompanied, educational
trips.

Muntons Annual Review 2015 13

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Cedars Maltings photographed in the 1980s gaciHbniSrnoseeasodlJoeeewuuncunlankttrrhsesepgtperehrteseoeorentanygsOmrr‘meHaehcaneattiadlhondeww-ebaphbkekilaiarrarneo.tsragcrwgTnlh’iheDmndensisirsteescahdaaoaggrrnnnearoodeyghtnueehofofnsraenvl.sywesfttlphreyoTosoohohttrredsuaffllxnmayaly.itlnnosaTbdgnihwnagaecdefrkrtlfelialwhegagamehawwotrbandaepolefsyledll.ieirfiyMsnir,soopt;bodomtalshulftteoeehlwyryr-egawbtcetrhlaeieavtitsrehcecknandhpnirienanatdyhlggeeeh.osiarnsfly

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For more i0nM1fo4ur4nm9toa6tni1os,8nC3ae0bd0oaurinst ftMoh@ealmtMinuugnnst,tooSnntoss.wcWommildarlikwfeewtW, Swaul.kfmfso,ulckno,tnIPot1an4cst.2cMoAmeGlissa Abbott

Willow Circular
0.4 miles (8 mins)

Woodland Meander
0.5 miles (10 mins)

Floodplain Circular
0.8 miles (15 mins)

Perimeter Walk
1.2 miles (25 mins)

River Path (Public Footpath)
0.7 miles (15 mins)

The photographs above were all taken in the wildlife walk areas in Muntons grounds.
Courtesy of Melissa Abbott.

14 Annual Review 2015 Muntons

During the 1970’s we built a brand A series of immediate improvements
spanking new maltings at our were authorised such as the painting of
Stowmarket site, which we named the large barley storage silos, not only to
‘Cedars maltings.’ At the time it was protect our investment in these and the
state-of-the-art and we marvelled at its grains they store, but to extend the life
output, control mechanisms and the of these for at least another 20 years.
quality of the malt it produced. The The grain intake office and steep house
problem is, as with anything mechanical, have been refurbished, tired equipment
time has a habit of overtaking things, replaced and redundant plant removed.
so this year we bit the bullet and took Where possible stainless steel has been
the decision to invest in updating the used to ensure the longest possible
maltings. plant life.

We questioned everything before we The result of the improvements was
started making changes including tangible. In the Stowmarket Cedars
operating practices, systems and maltings, output was 10.6% higher
choices of equipment to ensure than budget for the year, with the
that we achieved the best possible maltings producing a record 80,124
outcome. Simple things, such as could tonnes of malt. We have also seen
we just take in one variety of barley a similar trend at our maltings at
during a week? This would simplify Bridlington, which has previously
grain intake and remove the potential undergone significant strategic
for cross varietal contamination. We investment, aimed at making the
measured and plotted data using operation more robust and future
Overall Equipment Effectiveness (OEE) proof. Our northern team registered an
methodology, and considered ways output of 4.4% better than the annual
of improving throughput, increasing budgeted figure for 2015.
quality, reducing waste and ensuring
plant longevity. It was a lengthy but
worthwhile process.

record
year for
malt

Muntons Annual Review 2015 15

The results were The changes made however not only Crystallised malt
tangible – our increased output, we have also had extract
Cedars maltings positive reactions to our malt quality Seven days of crystal
produced a from customers and have experienced growth encourages
record 80,124 no lost time or increases in plant maltose to form
tonnes of malt breakdowns. They did however require small crystals within
during the year. a radical review of working practice, the malt extract.
which was only possible with the full Here, at 200x
involvement and cooperation of the magnification,
operators and team leaders. And of David has captured
course there is little point in making the sharp, almost
more malt if there are no customers for ‘frosted,’ appearance
the extra capacity, so praise must go to of the maltose
the sales and customer services teams with vivid colours
for placing the additional output. highlighting the
thickness and
The plan is to continue with direction of the
refurbishment and upgrading the crystals.
maltings and over the next three
years we will undertake a complete
refurbishment of the germination boxes,
continue to modify the steep house,
streamline barley routes and upgrade
the grain intake plant. Achieving the
right product mix and making the
correct type of malt for the customer
is paramount and these alterations
will ensure that we are well placed for
future demand.

16 Annual Review 2015 Muntons

The 27th September 2015 was a special Dr Nigel Davies with the top 100 Manufacturer Just a few short months later in November
day for three Muntons employees at an magazine award. 2015, Dr Nigel Davies, Manufacturing
event organised by the University Campus and Sustainability Director at Muntons
Suffolk (UCS), held at the Cathedral Richard Lister, Provost and Chief Executive was placed as one of the top 100
in Bury St Edmunds. Lawrence Howes of UCS, who presented the Fellowship to exceptional individuals in The Manufacturer
was presented with his Bachelor of Arts Alan particularly praised the work that magazine’s recently published list, which
with Honours in Professional Studies. Alan and Muntons have done developing recognises exceptional individuals within
Additionally, however, Lawrence also won a successful business in the area of work the UK manufacturing sector. Nigel was
the Towergate Insurance Brokers Award in the community, especially with schools, singled out as an ‘Inspiring Leader’; a
for the most outstanding student on a and with the sustainability agenda, which category covering people who create
management course. Lewis Cocksedge has made Muntons leaders in their field wealth and stable employment within a
collected his Higher National Certificate and across East Anglia. UK based manufacturing firm. He was
in Electrical Engineering having already also recognised in the ‘Driver of Cultural
previously won ‘Apprentice Trainee of the Change’ category, reflecting the impact
Year’ in his category last year. Impressively, that Nigel has had in bringing sustainability
Alan Ridealgh was also made an Honorary to the Board room agenda.
Fellow of the University Campus Suffolk,
one of the highest awards that the This was only the second year that the
University can bestow. Manufacturer had compiled the top 100
list, which was designed to improve the
On receiving the Fellowship award, Alan visibility of positive manufacturing role
Ridealgh was quick to pass on his thanks models, providing a series of inspirational
from all at Muntons and offered the stories from a varied cross section of the
heartiest congratulations to Lawrence and manufacturing community. They stated
Lewis on such a tremendous achievement. that Nigel had been instrumental in driving
He commented that to be awarded the ‘practical sustainability’ within Muntons
honorary fellowship was totally unexpected and spearheading the company’s carbon
but that he was pleased to accept the foot-printing initiative, focusing on energy
award on behalf of everyone at Muntons, management.
particularly on behalf of the many people
there who have been supportive and
involved in the areas cited.

A JOLLy
GOOD fellow

Muntons Annual Review 2015 17

Awards such
as these are
more about the
endeavours and
aspirations of
individuals within
the organisation

His driver was to demystify the debate
on sustainability and show that it is a key
part of Board strategy. This recognition
underlined the success of the sustainability
strategies that Muntons were employing,
making genuine, practical and positive
environmental impacts.

Corporate awards are important in
recognising business success, but awards
such as these are more about the
endeavours and aspirations of individuals
within an organisation. They say something
about the type of person employed within
a company and do not simply reflect the
visible achievements of the company
itself. Alan Ridealgh summed it up quite
succinctly, by stating that it was well
recognised that a company was only as
good as its people. Also reflecting that
perhaps, it was occasions such as these
that underlined the quality of the people
who work at Muntons.

Top: Alan Ridealgh accepts the honorary fellowship award.
Bottom: Lewis Cocksedge, Alan Ridealgh and Lawrence Howes at the award ceremony.

18 Annual Review 2015 Muntons

what areviewof2015
harvest

Muntons Annual Review 2015 19

Despite the wet 2014/15 was one of the mildest winters on Ensuring that we secure top quality malting
weather there record followed by a very dull spring with barley, at the right price, is vital for our
was little crop high rainfall and very little direct sunshine, business. This year saw the appointment
damage, as big which delayed the harvest due to the of Zoe Robinson as Grain Buyer for our
yields easily slower growing, maturing and ripening Stowmarket operation, a pivotal role
replaced any of the crop. When harvest did start it with the grain team and who, along with
tonnage lost quickly became apparent that the crop Mark Ineson at our Bridlington maltings,
to quality. had not suffered yield penalties from lack collectively buy around a quarter of a
of sunshine but quite the opposite, with million tonnes of grains. The grain team
several winter barleys exceeding 11 tonnes performs an important function, not just
per hectare (t/ha). This is a new milestone in the buying of the grains but also in
for growers with many only thinking of matching customer requirements through
this figure as achievable for wheat. Then, to the raw materials purchased from our
around two weeks later than normal, along suppliers.
came spring barleys with the first yields at This year’s harvest has proved to be one
close to 10t/ha. Late ripening of the crop of the best on record, with high yields and
combined with cool, dull, wet weather in low nitrogen barleys in plentiful supply.
August and September meant that harvest Premiums paid were low, not good for the
was very prolonged and yields fell. Despite farmer who may question in the future
the wet weather there was little crop whether malting barley is the best crop to
damage, as big yields easily replaced any sow. One of the challenges we face is to
tonnage lost to quality. convince the farmer that malting barley
is part of a sustainable mix of crops. One
Over the past 10 years few farms invested with an assured future.
in on-farm storage, which created
increased pressure and reliance on Zoe Robinson
immediate movement, to enable growers
to continue with the harvest. This lack of
farm storage also led to growers selling
surplus malting-quality grain as feed just
to get movement. In times of surplus it is
tempting to think all is well, but with a
late harvested crop, with high moistures
leading to low premiums, we saw surplus
tonnes going into the lower value feed
barley heap.

Barley varieties are continually moving
forward with advantageous improvements
trickling in, courtesy of plant breeders and
advances in agronomic practices on the
farm. New varieties go through extensive
assessments considering factors such as
resistance to field diseases, yields, and
resistance to lodging*. They are micro
malted to assess potential uses for each
variety, looking at specific traits for the
end-user such as extract and beta glucan
enzyme levels. The barley variety ‘Propino’
is the current safe bet and after several
seasons continues to give a consistently
good performance. New varieties showing
promise for brewing are ‘Irina’ and ‘Planet’
which are both showing improvements
in yield, agronomy, malting and brewing
performance. These alongside ‘Propino’
are likely to constitute the majority of
European spring barleys over the next few
years.

*Lodging is the displacement of stems
or roots from their vertical and proper
placement.

20 Annual Review 2015 Muntons

Partially
crystallised malt
extract
At 100x
magnification,
maltose crystals have
been captured by
David Maitland as
they have just started
to form within
our liquid malt
extract. The contrast
between the viscous
liquid extract and
the angular maltose
crystals is stark and
the clever use of the
polarising techniques
employed brings a
particular drama
to the image with
startling effect.

Investment in
new technology
brings
analytical
services to the
forefront of
the industry.

Annual Review 2015 21
brightMuntons
future
Muntons reputation for analytical This will soon be installed in the new These latest acquisitions follow the pattern
performance is well established amongst plant in Thailand to give rapid results set with the quite amazing ‘Beermaster’
key customers. The question is how to safely without the need for a complex analyser purchased just over four years
keep that standard and improve the ‘wet chemistry’ set up as used with ago, which measures the malt beta
way in which we deliver laboratory and traditional analysis. At a price of £52,000 glucan content (high levels can make beer
technical services. The verification schemes the equipment seemed pricey but after hazy or process times slow). It proved so
that we participate in confirm that we around 18 months the equipment will pay successful, rapid and accurate that we
have the expertise and equipment to for itself and will continue to give cost and have now added on other analyses: Free
achieve accurate results every time. Yet time benefits. This is also being used for Amino Nitrogen (measures the amount
it is vital that we invest in our equipment method development in our UK laboratory of nutrients essential for yeast to ferment
portfolio so that we can not only achieve for phenol content of malt and analysis of wort), alpha amylase content (how much
high quality results but enable us to our milled products. The equipment was starch can be turned into glucose), sulphur
deliver them in a timely and cost effective specifically bought to allow us to develop dioxide content. This year, after extensive
manner. Our industry requires us to follow our own bespoke calibrations and widen trial work to prove the correlations, we
recommended methods of analysis but our ability to analyse in house, rather than hope to introduce testing for the amount
there is a drive to use rapid methods engage more expensive external expertise. of alpha and beta amylases combined
wherever possible, so these are used for called diastatic power or DP (the total
essential food safety tests on grain coming Our other new NIR machine will be used ability of the wort to convert all starch to
into our maltings, at a fraction of the cost for barley and wheat analysis and is a vital sugar). These analyses are notoriously time
of external laboratories. link to the UK Grain Network which shares consuming and difficult – conventional
the exact same calibrations amongst all analysis time is well over two hours, yet
During the year we purchased equipment laboratories analysing barley around the UK now this can be performed in less than an
that facilitated rapid analysis of multiple and Europe, to ensure we all use the same hour and without the need for the strict
characteristics at the same time, and in methodology. For some years Muntons health and safety protection required with
a very safe manner, which required no has been chosen by the Laboratory of the normal chemical tests.
chemicals. The method uses near infrared the Government Chemist to pre-test its
light (NIR) to scan the samples and uses ring-check samples, which it pays for, and These time and money saving
mathematical correlations to produce in one year brings in the same amount of improvements allow us to keep up
the same result that would be obtained income as the cost of the new equipment. with the increasing production volumes
by conventional chemical analysis. We Additional value will be extracted from this requiring analysis, to give our customers
purchased two NIR machines. The Foss model of NIR because it now allows us to the excellent and responsive technical
DS2500 measures moisture, solids, participate in method development for backup that they demand and to develop
protein and colour content on liquid and distilling malt with the Scottish distillers, new methods for the future.
dried extracts and has been used in our in a project co-ordinated by the Scotch
main laboratory to develop improved Whisky Research Institute.
calibrations.

22 Annual Review 2015 Muntons

key financial information

The data shown below for financial year 2014 has been adjusted to a 12 month period for comparative purposes.

Sales turnover (£M) Return on Capital Employed (ROCE) Borrowings (£M)
– Excludes Exceptional Items %
105 30
25
100 20 25
15
95 10 20

90 5 15
0
85 -5 10

80 11 12 13 14 15

75 ROCE has increased over the period on 5
an annualised basis, showing the higher
70 earnings. 0

11 12 13 14 15 11 12 13 14 15

Malt & MI Other Long Term Short Term

Sales turnover decreased by £30.7m in At the end of the period, our net
absolute terms during 2015 reflecting the borrowings were £24.5m, an increase of
return to the standard accounting period. £1.0m from the previous year, following
On an annualised basis turnover declined significant investment in the business, as
from 2014 as raw material prices fell and noted under capital expenditure.
we focused upon driving margin.

Capital expenditure (£M) Earnings before interest, tax,
depreciation and amortisation (£M)
7 (EBITDA)
6
5 12
4
3 10
2
1 8
0
6
11 12 13 14 15
4
Expenditure on capital items was £4.7m,
reflecting the ongoing level of strategic 2
investment which included the anaerobic
digester and malt handling project. 0

-2
11 12 13 14 15

Depreciation
Finance Charge on Pension Deficit
Interest
Profit / Loss Before Tax

EBITDA increased (on an annualised
basis) due to greater focus on the
margin achieved on sales and significant
improvements in operational efficiencies.

Muntons Annual Review 2015 23

summary group income statement 2015 2014*
(52 weeks) (66 weeks)
£’000 £’000

91,479 122,173
Turnover
Cost of Sales (65,725) (93,761)
Gross Profit
Administrative and Distribution Costs 25,754 28,412
Profit before Interest
Share of Loss in Joint Venture (16,330) (19,709)
Interest Payable
Pension Scheme Finance Charge 9,424 8,703
Profit before Tax
Tax on Profit (261) (184)
Profit after Tax
Earnings per Share (833) (1,258)

(454) (531)

7,876 6,730

(1,791) (1,084)

6,085 5,646

714.5 663.0

Summary group statement of financial position 28,460 26,929
46,485 47,432
Fixed Assets 26,309 31,046
Current Assets 20,176 16,386
Current Liabilities 48,636 43,315
Net Current Assets (12,930) (10,844)
Total Assets less Current Liabilities
Long term Creditors (273) -
Deferred Tax 35,433 32,471
Net Assets before Pension Liability (8,958) (13,928)
Pension Liability 26,475 18,543
Net Assets
Share Capital 852 852
Reserves 25,623 17,691
Total Shareholders’ Funds 26,475 18,543

Summary group statement of cash flows 4,559 8,260
(4,096) (5,465)
Net Cash from Operating Activities (2,402)
Net Cash from Investing Activities (104)
Net Cash used in Financing Activities 359 393
Net Increase in Cash and Cash Equivalents (10,764)
Cash and Cash Equivalents at the beginning of the year (10,371) (10,371)
Cash and Cash Equivalents at the end of the year (10,012)

*Note: The financial information provided for 2014 has been restated to comply with Financial Reporting Standard (FRS) 102.

24 Annual Review 2015 Muntons

rgroaostss

2015 is a year
of which we are
proud. we achieved
record malt sales,
and became the
first company
to be awarded
‘Global Maltster
of the year’.

Tim Stonehouse

Muntons Annual Review 2015 25

It is difficult to review the 2015 year Michaela Crack We have been facilitating these events
for malt without feeling a tremendous for a number of years and firmly believe
sense of pride. Not only have we In export trade we have focused on that this enhanced understanding is
achieved record malt sales and markets such as Japan and North beneficial for all involved.
despatches but this year we were also America where volumes have grown
awarded the inaugural RMI Analytics through good service and high quality The North American craft brewing
award, proclaiming us to be the global and where price is less of an issue. Our movement is still gaining momentum,
‘Maltster of the Year’. To be presented other major export markets for bulk so this year we organised an inward
with this award in front of a crowd malt are Vietnam, which is the fastest mission for a party of 28 brewers from
of over 300 representatives from growing beer market in the world, the USA and Canada, accompanied by
the brewing, distilling and malting Thailand, Taiwan and Malaysia. Fred Johnson and Jeff Loranger from
community worldwide was an honour our US company Muntons Malted
indeed. To be the very first company The dynamic UK craft brewing market Ingredients (MMI) Inc. During the five-
named on the trophy was even more continues to grow and remains a day mission, the group were treated to
of an honour. The prospect of carrying feature of our sales strategy as we build tours of our Stowmarket and Bridlington
the exceptionally large Swiss cowbell our position firmly into that of market maltings with associated technical
from Dublin back to Stowmarket was leader. Michaela Crack heads the new presentations, visited plant breeders
however more of a challenge. The main young sales team in the UK giving and saw malting barley growing on
sponsor of the ‘Maltster of the Year’ us excellent sales coverage into this UK farms. They also enjoyed a number
award was Bühler the Swiss based burgeoning market. Couple this with of brewery visits and a few pints of
manufacturer of malting plant who we the establishment of local distribution Great British Ale from Charles Wells,
believe selected the prize as a nod to hubs designed to provide the craft the Old Cannon, Welbeck Abbey, Wold
their home country, although we did brewer with convenient access to our Top, Robinsons and The Black Sheep
wonder why they had not chosen a top quality brewing malts, and you breweries. This inward mission proved
cuckoo clock, army knife or a nice stylish gain an insight into the reasons for our to be enjoyable and educational and the
Swiss watch. success in this new and exciting market. delegates returned to their homes with
a far better understanding of malt and
Record malt sales were achieved in During the year we organised two a real taste of the passion that we feel
the year with the UK brewing sector ‘barley walks,’ one in Yorkshire followed (and the beer that we drink).
accounting for an impressive 42% by another a month later in Scotland.
followed by UK distilling at 25% and These provide an ideal opportunity for Finally, we are pleased to report that
exports at 23%. We also sell malt our brewing and distilling customers Tim Stonehouse has been newly
internally to our Ingredients division to see for themselves how malting re-elected as Vice-President of
who this year bought 10% of our barley crops are progressing during EUROMALT the UK representative of
output. Our malt sales to the whisky the latter stages of the growing year. the Europe-wide maltsters association.
industry have continuously increased Bringing together farmers, brewers
due to the growing demand for Scotch and distillers, with the maltster as an Barley leaf
whisky globally, coupled with good sales intermediary, provides a useful forum stomata
representation and our highly respected for discussion, and propagates an David shaved the
malt quality. enriched understanding of the main raw thin upper surface
material used in virtually all beers and all layer of the Barley
Muntons Malt Sales UK Scotch whisky and the factors that can leaf, just a single
Brewing influence both the quality of the crop cell thick, to expose
Exports 42% and the price paid. The farmer benefits the cells of the leaf
23% from these events too, gaining a closer with their green
association with the people who buy chloroplasts and the
Internal the malt made from their barley and an stomata (the pores).
Sales insight into the problems they face. It is through the
10% stomata that CO2
is exchanged under
UK Distilling photosynthesis which
25% in turn eventually
produces starch and
the oxygen that
life on earth relies
on. The picture
was taken at 400x
magnification.

26 Annual Review 2015 Muntons

Malt extract
In order to create
crystallisation of
the maltose within
malt extract, this is
dehydrated until it
forms flexible film,
firm yet stringy but
without crystals. The
three dimensional
form of the strands
is revealed by the
contour-lines of
interference fringes
produced as light
passes through the
material, known
as the ‘maltose
cross’. This picture
is taken at 100x
magnification
producing a
wonderfully simple
yet delightful image.

Muntons Annual Review 2015 27

malt took place just one week after the tragic
terrorist attack in the city and sensitivities
were high. Security was tightened but
it was a testament to the strength and
character of the business world that
everything carried on with little disruption.
Our staff were given the option to decline
the invitation to attend but, perhaps in a
show of solidarity, everyone scheduled to
go was present at the event. And it proved

to be very worthwhile as we presented

extractstoassembledcrowdsanopportunityto
taste for themselves the versatility of our
By the time we publish this review, the Chicago suburb of Lombard - a short ingredients in a range of meal styles, from
construction of JJ-Muntons (Thailand) Ltd drive from O’Hare International Airport. breakfast through to dinner, as foods made
manufacturing facility in Thailand will be The craft brewing scene in the USA is well with malted ingredients were served at
complete. This year construction of the established and now accounts for over the appropriate times during the day. This
plant moved on apace with, on occasions, 12% of US beer sales and uses almost the event also provided the chance to gather
more than 150 trades-people on site at a same volume of malt as that of the whole our channel partners together, this time in
one time. 273 deep piles were driven to of the UK brewing industry – and to think a dedicated Muntons games room where
support the building structure, of concrete we used to call them microbreweries! pool skills, table football prowess and
and steel construction, and by the end of pinball wizardry could be put to the test. A
the year most of the heavy equipment was We attended the Food Ingredients Asia good opportunity for networking.
installed. Everything is still on budget and (FIA) exhibition in Bangkok, sharing
on schedule for the official opening in April an impressively large stand with our Our sales successes and craving for
2016. Following Governmental approval, Joint Venture (JV) partner and exclusive customer satisfaction are only possible
the £5.4 million state-of-the-art vacuum South East Asian distributor, Jebsen and with the support and cooperation of
band drying plant will begin production in Jessen Ingredients. The event provided our production team, who have shown
July 2016. an ideal opportunity to present our diligence and when needed have reacted
new manufacturing facility to the food swiftly to changing demands. This year our
Meanwhile in the USA Fred Johnson manufacturers of South East Asia, focus has been to find improvements in the
joined us as Executive Vice President of brought to life through the creation of way we work to ensure that we remain a
MMI Inc. our US company. Fred spent his an architectural scale model and the competitive force in global markets.
last 13 years in executive positions with production of a bespoke DVD. The video
the Lauridesen Group and brought with highlighted the advantages that the Meanwhile in the homebrew market we
him a wealth of knowledge, experience new plant would bring, along with a launched a collaborative beer kit, which for
and an impressive track record of growing visual simulation of the construction and the first time saw a major commercial beer
businesses. We also started the process of appearance of the completed facility. brand lending its name to a mainstream
relocating our US offices from Seattle to homebrew kit. Courage Directors is not
Chicago, where we will be better placed to Nearer to home, in Paris, we attended the only now available from a hand-pump
serve the markets that we supply. By April Food Ingredients Europe (FIE) exhibition, in your local pub, or in bottles from the
2016 we plan to be comfortably settled in the largest of its type in Europe attracting supermarket but also for you to brew in
visitors from around the world. This event the comfort of your own home.

28 Annual Review 2015 Muntons

malt
teaser
Looking forward into the new year there as somewhere to hang our corporate The next financial
are a number of projects which will sign! year will see
come to fruition to take Muntons into some exciting
an exciting new phase in our corporate Another new project will see the projects coming
development. Our global growth will updating of our Enterprise Resource to fruition – we
reach a new milestone as we start Planning (ERP) computer system to can’t wait.
manufacturing outside of the UK for the provide the management information
first time. But it is not just expansionist needed to ensure that our business can
strategies that are being undertaken keep on track as we journey towards
next year. Equally important is the need the aspirational goal now encapsulated
to keep our business moving forward in our corporate vision statement:
in a sustainable manner and we will be “To find a place for malt and malted
continuing with our drive to increase ingredients in the lives of people - in the
the output of our maltings and invest in foods they eat and the drinks they enjoy,
increased grain storage. on every continent, in every country and
every household.”
2016 will see the completion of the
construction of our new vacuum band The work completed this year to
drying plant in Thailand manufacturing increase the output from our malting
tailor made dried ingredients for the plants will continue into the new
Asia Pacific food and beverage markets. year along with the construction of a
An exciting move which will see output new grain handling system. This will
from our Stowmarket malt extract plant not only ensure that we can handle
increased by nearly 10% to provide the additional barley needed for the
the raw base for these new dried enhanced output but will also ensure
ingredients. that site traffic is managed in a safe
manner.
An old dilapidated industrial building,
dating back to the early 20th century, The year just finished was a good one,
which we have historically named ‘A’ with excellent financial results, and
block, will be razed to the ground to our clear vision of the future is already
create space to provide room for further showing signs of success as the new
expansion. projects hinted at above suggest. 2016
should be a great year for Muntons by
This tired old building was of no historic any measure.
significance and latterly was used simply
We can’t wait.

Muntons Annual Review 2015 29

Brewing yeast 2016 in a nutshell:
Yeast is a vital
ingredient in the global growth will reach a new level
fermentation as we start manufacturing outside of
process, used by the uk for the first time
the brewing and we will complete the construction of
distilling industry our new vacuum band drying plant in
to great effect thailand
and vital for the an old dilapidated industrial building
homebrewer to will be razed to the ground to create
make beer from our space for further expansion
renowned Muntons our enterprise resource planning
beer kits. Here at (ERP) computer system will be
600x magnification updated
the unicellular construction of a new grain handling
microorganism, system
yeast, can be seen
as the live yeast cells
multiply.

30 Annual Review 2015 Muntons
vision
mission
values

Light malt extract
David Maitland used
Muntons malt extract
to form a solid yet
fluid, plastic film,
where polarised light
refraction is used to
create this ethereal
visual treat at just
100x magnification.

Muntons Annual Review 2015 31

‘To find a place for malt and malted ingredients in the lives of people -
in the foods they eat and the drinks they enjoy, on every continent,
in every country and every household.’

‘To make, distribute and sell the finest quality malt and malted
ingredients with a continued commitment to work with our
customers to meet their requirements for innovative, sustainable,
traceable and ethical products.

Agile – Adaptable, flexible and forward thinking
Trusted – Reliable people, dependable company
Creative – Innovative products, intelligent design
Sustainable – Protecting everyone’s tomorrow
Team working – Finding success through partnership and collaboration

‘Our roots are strong, with family ownership from the very beginning, back to the founding
of our company in 1921. We are a company soundly financed adopting long-term thinking,
solid forward planning and a visionary approach to business. Using locally sourced, top
quality cereals we make a diverse range of malt and ingredients which we are proud to
supply around the world. The nature and versatility of our products makes them ideal for
today’s demanding markets, bringing goodness and nutrition to global producers.

Importantly, we also appreciate the value that our people bring to our business
and the values that they care about and adopt on a daily basis.

muntons.com

Cedars Maltings, Stowmarket, Suffolk IP14 2AG
T: +44 (0)1449 618300 F: +44 (0)1449 677800

Muntons Malted Ingredients @Muntons