Adnams has reported a 3.5% increase in first half operating profit before exceptionals to £1.06m, although said that, because so much of the group’s income was earned in the second half of the year, the figures were "not necessarily a good indication of future performance". Turnover was up 2.7% to £21.05m. The company said that its pubs had traded well after a "sluggish" start, with a similar picture at the group’s hotels. Wine sales to pubs and restaurants were described as "a little behind expectations" although " our shops did well and margins were stronger across the wine business". At the end of June the company opened its first Wine Cellar & Kitchen Store outside Southwold, at Holkham on the north Norfolk coast, with early signs said to be "very encouraging". Adnams said that the most difficult area to make progress was in sales of its own beers to the major pub companies, partly because the drinks market was depressed and partly because customers were "preoccupied with the time-consuming paperwork related to the new licensing procedures". Simon Loftus, the company’s chairman, said: "Our brand is stronger than ever but trading conditions for the first half of the year were quite difficult, for us and for our customers. "We had just begun to experience a revival of consumer confidence when the London bombings brought grief, gloom and uncertainty. The future is much less easy to predict than it has been in recent years."