REG - Barr(A.G.) PLC - Final results for the year ended 30 January 2022
29/03/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220329:nRSc3069Ga&default-theme=true
RNS Number : 3069G Barr(A.G.) PLC 29 March 2022
29 March 2022
A.G. BARR p.l.c.
("A. G. BARR" or "the Group")
Final results for the year ended 30 January 2022
Excellent financial performance generated by strong sales growth
A.G. BARR p.l.c., which produces and markets some of the UK's leading drinks
brands, including IRN-BRU, Rubicon and Funkin, today announces its final
results for the 53 weeks ended 30 January 2022.
Financial summary
53 wks to 30 Jan 2022 52 wks to 24 Jan 2021 vs 21/22 52 wks to 25 Jan 2020 * vs 21/22
Revenue £268.6m £227.0m 18.3% £255.7m 5.0%
Profit before tax (before exceptional items)* £41.5m £32.8m 26.5% £37.4m 11.0%
Statutory profit before tax £42.2m £26.0m 62.3% £37.4m 12.9%
Operating profit margin (before exceptional items)* 15.6% 14.8% 0.83 pp 14.9% 0.73 pp
Basic EPS (before exceptional items)* 25.09 p 17.18 p 46.1% 26.50 p (5.3%)
Net cash from operating activities £43.4m £50.7m (14.4%) £40.1m 8.2%
Net cash at bank £68.4m £50.0m 36.8% £10.9m 527.5%
Dividend per share (proposed final & interim) 12.00 p - - 4.00 p 200.0%
Highlights
∙ Excellent financial performance, generated by strong sales growth,
resulting in a profit performance ahead of 2019/20 pre-Covid levels
∙ Strong trading reflecting the successful execution of our growth
strategy - investing in our brands, innovation, operations and people -
combined with a general market recovery
∙ All brands in growth with core brands now ahead of pre-Covid levels
∙ Barr Soft Drinks : strong momentum across the soft drinks portfolio
supported by continued brand investment and innovation, with a particular
focus on the energy category
∙ Funkin : significant progress made in further establishing Funkin as
the leading consumer cocktail brand in both the take home and the hospitality
sectors
∙ "No Time To Waste" environmental sustainability programme continued
at pace
∙ Completion of full carbon footprint assessment has enabled setting of
science-based targets that will guide the Group on its net zero journey
∙ Strong cash generation and robust balance sheet continues to support
capital and dividend programmes
∙ Dividend payments recommenced - interim (2p), proposed final (10p)
and one-off special dividend (10p paid in October 2021)
∙ Equity investment in MOMA Foods Limited in December 2021,
demonstrating the Group's continued ambition and drive to find opportunities
to participate in exciting high growth categories
∙ We were pleased to welcome Mark Allen OBE and Zoe Howorth to the
Board in July 2021 as independent Non-Executive Directors
Roger White, Chief Executive, commented :
"Our business and brands have once again proven their resilience in uncertain
and often challenging circumstances.
"We have accelerated our revenue growth and consequently delivered a strong
financial performance. In the year we have recommenced our dividend, alongside
paying a one-off special dividend, and our balance sheet has continued to
strengthen.
"Our focus on environmental sustainability has accelerated, as we increase our
use of recycled materials, reduce our carbon footprint and ready our business
for a successful deposit return scheme implementation, due to go live in
Scotland in August 2023.
"We enter the new financial year with good momentum and exciting brand and
sales plans. Trading in the early weeks of the new financial year has been
well ahead of the prior year and in line with our expectations.
"Like most companies we are facing significant inflationary pressures but we
are well placed as a Group to deal with these and will continue to seek to
manage our exposure proactively through mitigating actions across revenue
management, pricing, procurement and cost control.
"The growth potential of our business is underpinned by our growing brands,
our highly capable people and our resilient infrastructure. We plan to
invest further in all of these important areas and I remain confident in our
ability to deliver continued growth in both revenue and profit in the coming
year."
For more information, please contact :
A.G. BARR 0330 390 3900 Instinctif Partners 020 7457 2010/05
Roger White, Chief Executive Justine Warren
Stuart Lorimer, Finance Director Matthew Smallwood
Next trading update - July 2022
* Items marked with an asterisk are non-GAAP measures. Definitions
and relevant reconciliations are provided later in this announcement.
(1 )52 weeks to 25 January 2020 included as a pre Covid-19 comparison
(2) Excludes the one-off special dividend of 10p per share paid in October
2021
Chairman's introduction
As my tenure at A.G. Barr draws to a close, I am delighted to see the business
return to strong growth. I hand the Chairman's role across to Mark Allen OBE
with the business in good health and with a team excited and motivated for the
future. During my seven years as Chairman, the business has shown both its
resilience and decisiveness in response to external factors, from a sugar tax
to a global pandemic, but more importantly it has demonstrated its internal
strength and drive for growth. This resolve and ambition have been as
evident as ever in the past 12 months.
Revenue grew by 18.3% year-on-year and we finished the year with profit before
tax and exceptional items* of £41.5m, 26.5% ahead of the prior year and ahead
of our pre Covid-19 profit levels, which included the Rockstar brand.
These results are all the more pleasing taking into account the continued
impact of the Covid-19 pandemic, industry-wide labour and supply chain
challenges and the current inflationary backdrop. Highlights during the year
included:
· strong momentum across the soft drinks portfolio, supported by
continued brand investment
· significant progress made in further establishing Funkin as a
leading consumer cocktail brand
· innovation success, particularly in the energy category
· the 61.8% equity investment in MOMA Foods Limited, demonstrating
the Group's continued ambition and drive to find opportunities to participate
in exciting new growth categories
The entire A.G. Barr team has remained focused on delivering our brand
building strategy, investing for growth and creating a business to be proud
of.
Dividend
We recommenced dividend payments during the financial year with both an
interim and a special dividend paid in October 2021. The Group benefited
from a number of one-off cash inflows that were outside normal trading and the
Board concluded that a special dividend should be distributed to shareholders,
recognising the one-off and non-operating nature of the cash receipts.
At the end of the full financial year, the Board is now pleased to maintain
its progressive dividend policy and recommends a final dividend of 10.0p per
share to give a proposed total dividend for the full year of 12.0p per share,
plus the 10.0p special dividend paid in October 2021. The final dividend is
payable on 10 June 2022 to shareholders on the Register of Members at the
close of business on 13 May 2022. The ex-dividend date is 12 May 2022.
Board
As previously communicated, we were pleased to welcome Mark Allen OBE and Zoe
Howorth to the Board in July 2021 as independent Non-Executive Directors.
Both are already adding significant value to our Board discussions. Zoe also
chairs the newly established Environmental, Social and Governance (ESG)
Committee which has already played an important role in the development of the
Group's net zero commitments.
Mark will assume the role of Chairman in April 2022 and I have every
confidence that he will lead the Board very effectively, bringing his
significant experience and leadership capability to the fore.
Having completed eight years as a Non-Executive Director, Pam Powell stood
down from the Board at the end of June 2021 as part of the long-term Board
succession plan. We would like to thank Pam for her support, insight and
guidance during her term on the Board.
Responsibility
It has been a year of real progress throughout our responsibility agenda,
particularly so across our "No Time To Waste" environmental sustainability
programme. I would particularly highlight another year-on-year improvement
in our Climate Disclosure Project (CDP) climate change questionnaire score.
CDP is a globally recognised environmental disclosure system and our improved
A- classification is a welcome independent and external validation of the
great work being done across the business to address the impact of climate
change.
People and culture
A.G. Barr has a positive, results-driven and supportive culture, developed
over many years. It has been encouraging to see the progress made across a
range of people matters during my time as Chairman, particularly so in the
area of diversity and inclusion. One important illustration of note is the
increase in female leadership, with women now making up over 40% of A.G.
Barr's senior management.
Events over the past two years have been challenging for many of us, both
personally and professionally, and on behalf of the Board I want to extend my
thanks to the full team for the huge part they have played in overcoming the
challenges faced, and delivering such a strong performance across the year.
It has been more important than ever to support our people through these tough
times and I have been very encouraged to learn more about the strong mental
health awareness and support culture that is well established across the
business.
Prospects
We have a portfolio with strong brand equity, a successful growth strategy and
a team of passionate, committed and capable people across the Group. With
our proven track record of delivery we are well positioned to further grow and
develop our business in 2022 and beyond.
John Nicolson
CHAIRMAN
*Items marked with an asterisk are non-GAAP measures. Definitions and
relevant reconciliations are provided later in this announcement.
Chief Executive's review
I am pleased to report our results for the 53 weeks ended 30 January 2022.
We have delivered a strong financial performance during what was another
volatile year. We successfully navigated intermittent Covid-19 restrictions
and periods of significant market recovery, as well as the well documented
issues associated with labour shortages, material availability challenges and
the beginning of a period of higher inflation across the UK.
We have made significant progress across all our key financial metrics as
follows:
· Group revenue £268.6m (2021 : £227.0m)
· Profit before tax and exceptional items* £41.5m (2021 : £32.8m)
· Profit before tax and after exceptional items £42.2m (2021 :
£26.0m)
· Operating margin before exceptional items* 15.6% (2021 : 14.8%)
· Net cash at bank* of £68.4m (2021 : £50.0m)
· Basic earnings per share before exceptional items* 24.46p (2021 :
22.31p)
Note : 2021 comparatives above are for the 52 weeks ended 24 January 2021.
I would like to take this opportunity to thank the entire A.G. Barr team who
have continued to demonstrate their ability to adapt to all the challenges
faced. I would also like to recognise our suppliers and our customers, with
whom we have worked in partnership throughout the pandemic to maintain
consumer availability.
Our trading has strengthened across the year as a consequence of the
successful execution of our growth strategy, investing in our brands,
innovation, operations and people, combined with a general market recovery.
While there were several periods across 2021 when social restrictions were in
place, impacting consumption patterns, we have also experienced periods of
elevated demand, such as in Spring 2021 when the hospitality sector reopened
and restocked accordingly. As restrictions eased across Summer and into
Autumn 2021, we saw notable uplifts in our out of home and hospitality
channels, while retaining strong take home trading, alongside strong growth in
online channels. While the emergence of the Omicron variant towards the end
of our financial year led to further unexpected social restrictions, and some
operational challenges related to employee absence, our brand momentum was not
materially impacted and we exited the year strongly.
Statutory profit before tax of £42.2m is a 62.3% year-on-year increase and
sees us materially ahead of our 2019/20 (52-week) pre Covid-19 profit levels,
which included the contribution from the Rockstar brand.
Soft drinks market
At the outset of the Covid-19 pandemic in March 2020 we saw significant shifts
in consumer purchasing behaviour, largely in response to the social
restrictions put in place by Governments across the UK. Hospitality and
on-the-go consumption fell, while take home purchasing increased. This in
turn led to a corresponding decline in those sub sectors more associated with
impulse purchasing, such as water and sports drinks. It also led to an
increase in share for sub categories such as dilutes, with more people working
and schooling at home, as well as for mixers, cola and lemonade, as sales
moved from the hospitality channel, largely unmeasured by retail data
sets, into the home.
Over the past 12 months, particularly as lockdown restrictions have eased,
these trends are gradually reversing, with both consumer behaviour and market
data beginning to return to pre Covid-19 levels.
Once again, the soft drinks market has proven its resilience in volatile times
with IRI Marketplace data for the 52 weeks to 29 January 2022 recording the
total UK soft drinks retail market increasing in value by 8.9% and in volume
by 1.7%. Carbonates grew in value by 7.3%, while stills grew 11.1%. The
strong value growth across the market reflects a number of dynamics, including
the recovery of the "drink now" channel and a reduction in promotional
activity against a backdrop of UK cost inflation.
We have maintained our value share of the soft drinks retail market, however
the category disruption, as detailed above, means our strong revenue
performance is not fully reflected in the retail market data read. That
said, we have seen market share value gains in England and Wales, driven by
significant growth in take home multipack formats. Our share in Scotland has
been impacted by strong growth in certain channels not captured in the market
read.
Cocktail market
The hospitality sector remained closed at the outset of our financial year.
However since the channel began to reopen in the Spring of 2021, the cocktail
category has performed extremely well, benefiting from increased numbers of
consumers returning to venues and increasing levels of participation in the
category. Cocktails outperformed other categories and experienced 61%
like-for-like growth in the 10 weeks post reopening versus the same 10 weeks
in 2019. This outperformance continued, with cocktails accounting for 9.9%
of total venue drink sales from April 2021 to the 23 October 2021, versus 6.0%
in the same 2019 period.
While the emergence of the Omicron variant towards the end of 2021 led to both
the reintroduction of some social restrictions and increased consumer caution
over the festive period, the cocktail category remains a significant growth
opportunity for the hospitality sector in general. GB consumers drinking
cocktails out of the home have now reached 7.4m, the equivalent of 15% of the
adult population, with 43% of those consumers drinking cocktails at least
weekly, a 13% increase versus 2019.
Cocktail consumption at home, which accelerated dramatically during 2020, has
continued its positive growth momentum notwithstanding the reopening of the
hospitality sector. The total ready to drink (RTD) category is in strong
growth, now worth £509m on a moving annual total basis. Within this RTD
category, cocktails make up 18% (£92m) and have grown by 44%
year-on-year.
(Sources : CGA Mixed Drinks Report Q1 2021 ; CGA Drinks Recovery Tracker ;
CGA Mixed Drinks Report Q3 2021 ; Source: Nielsen Pre Mixed Alcoholic Drinks
Total Coverage Data MAT 15/01/2022)
Strategy execution
We remain committed to our strategic priorities - connecting with consumers,
building brands, driving efficiency and building trust. Within this
framework we have made good progress in short-term delivery, in medium-term
planning as well as in our longer-term goal setting, particularly across our
environmental sustainability agenda and our net zero commitments.
Connecting with consumers
We entered the 2021/22 financial year with a large number of Covid-19 related
social restrictions still in place. However, having continued to invest in
our brands in 2020, we were determined to accelerate our core brand growth in
2021 through a materially higher level of brand development activity and an
enhanced sales execution programme.
We developed and executed exciting marketing campaigns across our core brands,
IRN-BRU, Rubicon and Funkin, with extensive activity, both above and below the
line, across the year. As a result :
Brand Revenue growth versus 2020/21* Revenue growth versus 2019/20* (pre Covid-19)
IRN-BRU 16.8% 5.5%
Rubicon 39.8% 26.1%
Funkin 117.6% 92.1%
*52-week financial years
Building brands
We have continued to deliver on our strategic aim of building a multi-beverage
portfolio of brands, with a specific focus on developing within higher growth
sectors.
We have a long-standing and proven brand building capability within the energy
sector, which we brought to bear within our Company-owned portfolio, initially
with IRN-BRU Energy, and more recently with the creation and launch of our new
Rubicon RAW Energy range. This new addition to our Rubicon portfolio is
specifically aimed at the growing number of consumers entering the energy
category who are looking for a more natural, juice-based energy proposition.
We have successfully supported Rubicon RAW Energy with our first ever major
digital only marketing campaign, utilising a range of marketing channels
focused around outdoor activities and their associated communities. After
a successful launch phase, we are now building on the strong rate of sale and
are further developing the UK-wide distribution of this exciting addition to
our portfolio.
Funkin has made particularly strong progress across the past 12 months as a
market-leading consumer brand with first mover advantage within RTD cocktails.
As we anticipated 12 months ago, the reopening of the hospitality sector
and the outperformance of cocktails within this channel have not impacted the
growth momentum of Funkin RTD cocktails in the take home channel. Funkin has
grown its RTD distribution base and delivered successful product and pack
innovation. This has been supported by above the line marketing investment,
aimed at building Funkin brand awareness and trial in this exciting new take
home category. Funkin remains the UK's number one RTD cocktail brand.
In addition to the innovation and development of our existing brand portfolio,
we have further invested in growth potential with our initial 61.8% equity
stake in MOMA Foods Limited. Plant-based milk is a fast-growing category and
MOMA's oat milk is a premium quality product which we believe has significant
potential.
MOMA's oat milk, launched in 2020, is one of the UK's leading oat milk brands
and sits alongside their existing porridge and oat based products. This is a
really exciting investment for A.G. Barr and a positive indication of our
growth ambition. We expect to acquire the remaining 38.2% of MOMA over the
next three years.
Driving efficiency
2021/22 was a year characterised by supply chain challenges, including key
material availability issues and driver shortages. Against this backdrop,
our focus for much of the year was on the resilience of our operations,
prioritising customer service and product availability over costs.
However our drive for long-term efficiency and effectiveness continued at
pace. Our value optimisation programme identified a pipeline of product
optimisation and cost reduction initiatives, which are now helping to mitigate
the higher inflation that began to bite at the end of 2021. This is a
long-term programme which we expect to add considerable value for some time to
come across a wide range of business areas, from reductions in packaging
weight and usage through to minimising miles travelled and optimising our
distribution network.
We have also developed and launched a new multi-year manufacturing excellence
programme - "Brilliance in the Making" - investing significantly in our people
and processes to drive long-term operational efficiency across our
manufacturing base.
While we chose to limit our capital expenditure during the pandemic, we will
now begin to accelerate our capital investment programme in both normal
replacement and growth projects. In the short-term, this will see higher
capital investment, before returning to more normal levels in the medium-term
as we prioritise investment for growth, sustainability and efficiency.
Building trust
In another year when Covid-19 permeated much of our personal and professional
lives, we continued to prioritise the safety and wellbeing of our employees,
while at the same time looking beyond the pandemic, making positive changes to
support our cultural development. From hybrid working and mental health
support, to progressing gender balance and engaging with our communities, we
are proud of the responsible actions we have taken across the year and the
progress we continue to make.
It is becoming increasingly clear that corporate commitments alone are not
enough, they need to be supported by honest and meaningful actions. We are
proud of how our values have underpinned our behaviours and decision making
over many decades, however we know that the trust we have earned from our
consumers, customers and stakeholders needs to be backed up by purposeful and
responsible actions, today.
We reached a major milestone in 2021 within our environmental sustainability
programme, "No Time To Waste", completing an assessment of our carbon
footprint across our full product life cycle and value chain. This data has
now allowed us to set science-based targets that will guide us on our journey
to becoming a net zero business. Mindful of the importance of balancing
ambition with genuine deliverability, and using the Science Based Target
Initiative's new Net Zero Standard to ensure the most credible basis of
measurement, we are committing to be net zero across our own operations by
2035. We have developed a deliverable and realistic decarbonisation roadmap
to underpin this commitment and we are already making good progress. We are
working closely with our suppliers and partners with a commitment to become
net zero across our full supply chain by 2050, if not sooner.
Outlook
Our business and brands have once again proved their resilience in uncertain
and often challenging circumstances.
We have delivered an excellent financial performance, generated by strong
topline sales growth, resulting in a profit performance ahead of 2019/20
pre-pandemic levels and underpinned by a very robust balance sheet with a
recommencement of our progressive and sustainable dividend.
We continue to take action to improve our environmental sustainability. Much
of our focus in the coming year will be on increasing our use of recycled
materials, reducing our carbon footprint and readying our business for a
successful deposit return scheme implementation due to go live in Scotland in
August 2023.
We enter the new financial year with good momentum, exciting brand and sales
plans, and have taken action to mitigate the significant inflationary
pressures we face.
The growth potential of our business is underpinned by our growing brands, our
highly capable people and our resilient infrastructure. We plan to invest
further in all of these important areas and I remain confident in our ability
to deliver continued growth in both revenue and profit in the coming year.
Roger White
CHIEF EXECUTIVE
( )
( )
Financial review
The following is based on results for the 53 weeks ended 30 January 2022.
Comparatives, unless otherwise stated, relate to the 52 weeks ended 24 January
2021.
OVERVIEW
We have produced a strong set of financial results in 2021/22 (53-week) that
returns the business to a position ahead of 2019/20 (52-week) pre Covid-19
revenue and profit levels, despite the continued backdrop of the pandemic, its
impact on consumer behaviours and various supply chain challenges.
We have delivered strong growth across all key financial metrics and are on a
positive trajectory:
2021/22 Versus 2020/21
(52-weeks)
(53-weeks)
Revenue £268.6m +£41.6m +18.3%
Gross margin (before exceptionals) 44.2% +239bps
Profit before tax (reported) £42.2m +£16.2m +62.3%
Profit before tax (before exceptionals) £41.5m +£8.7m +26.5%
Operating margin (before exceptionals) 15.6% +83bps
Net cash at bank £68.4m +£18.4m +36.8%
EPS (basic p/share) 25.09p +7.9p +46.1%
We entered the pandemic with strong financial fundamentals and took prompt
action to protect and right-size the Group in the face of both Covid-19 and
the loss of the Rockstar franchise. We believe these actions have been
successful and have enabled us to emerge as a stronger, more resilient
business with a clear strategy for value enhancing growth.
Our revenue increase was driven by the powerful combination of volume growth,
favourable mix, tight cost control and selective pricing benefits. Volume
advanced across the portfolio with all our core carbonated soft drinks and
Funkin cocktails in strong growth. Volume and mix were both supported,
particularly in the first half, by the relaxation of Covid-19 restrictions and
the reopening of the hospitality sector, and further underpinned by successful
innovation and £6m of revenue from an extra week of trading (53-week year).
Throughout the pandemic, we have worked collaboratively with our customers to
ensure we recognise the impact of restrictions on the brand support and
discounts we provide. This involved numerous commercial discussions and, in
certain cases, changes to promotional terms. This has resulted in a change in
estimate and recognition of £4.9m of additional variable consideration, which
has contributed to the revenue growth experienced in the year. Our brand
support spend (including this additional consideration) as a percentage of
revenue remained consistent year-on-year.
We were not immune from the well-publicised impact of the pandemic on supply
chains and freight networks in terms of both labour availability and input
costs. We face continued cost pressure and high commodity prices. Despite
these headwinds, the operating leverage benefits from higher volumes, combined
with gains from operational efficiency programmes and the benefits of our
rolling commodity hedges, secured a 239 basis point improvement in gross
margin. Operating costs increased 25% primarily driven by the impact of
increased volumes, higher logistics costs, increased variable rewards and our
strategy to drive long-term brand equity through enhanced marketing
investment. Despite the cost pressures faced and the investments made,
operating margins improved 83 basis points to 15.6% to deliver profit before
tax (PBT) of £41.5m - a 26.5% improvement year-on-year.
Covid-19 UPDATE
During the 2020/21 financial year, numerous actions were implemented to
mitigate the adverse impact of Covid-19 restrictions, including reduced
marketing investment and discretionary spend as well as curtailing all
non-essential capital expenditure. The past 12 months have seen a
disciplined rebuild of investment in these areas. Previous sensitivity
analysis that quantified the expected impact of Covid-19 on our business
proved to be reasonable during the period of the most widespread restrictions
and these have continued to be used as the basis of our scenario analysis to
model different levels of impact on revenue, profit and cash. Under all the
scenarios modelled, and before any mitigating actions, our forecasts indicate
a high level of financial headroom and ongoing business resilience.
SEGMENTAL PERFORMANCE
We make decisions on a business unit basis which allows agile, responsive and
effective operational management. The information reviewed by the Board and
senior executives is based on this divisional segmentation. As a result, the
financial performance discussed below is primarily focused on the performance
of our two business units, Barr Soft Drinks and Funkin, as this best reflects
our management of the Group. Further detail on the segmental performance is
detailed in note 2 to the financial statements.
Barr Soft Drinks
Barr Soft Drinks, which represents over 85% of Group sales and gross profits,
returned to revenue growth with strong volume gains across the core
portfolio. This growth was driven by a resurgence in out of home
consumption, as Covid-19 restrictions eased, the successful launch of Rubicon
RAW Energy in February 2021, which partially mitigated the loss of the
Rockstar franchise, as well as the underlying positive momentum of our core
brands. Gross margin improved by 264 basis points to 44.9%, benefitting from
stronger volume and improved mix.
The IRN-BRU brand grew volume, revenue and gross margin, benefitting from
distribution gains in England as well as the reintroduction of IRN-BRU 1901 in
Scotland. Particularly strong growth of single serve cans and smaller PET
packs, along with optimisation of promotional mix and price, supported
improved margins. The launch of Rubicon RAW Energy and the strong growth of
Rubicon Spring were major contributors to revenue and margin growth across the
Rubicon portfolio. Other portfolio brands, including Barr Flavours, KA and
Simply Fruity, grew revenue and margin. The Strathmore Water brand grew
volume and revenue as the hospitality sector reopened, although margin was
constrained by significant inflation in glass costs.
Funkin
Funkin revenue and gross margin both grew strongly in 2021/22, benefitting
from the reopening of the hospitality sector and the continued success of the
take home business, which maintained momentum across the full period, building
on the strong foundations laid in the prior year. Funkin revenue more than
doubled the prior year up £19.9m to £36.9m, with margin up 396 basis points
at 39.8%. This strong performance was delivered despite industry-wide supply
chain challenges, including the shortage of cans which somewhat constrained
overall growth opportunities. As previously communicated, Funkin did benefit
from the restocking of the hospitality sector, particularly in the first half
of the financial year.
Other
The 'Other' segment primarily represents two months of sales and contribution
associated with MOMA Foods Limited following the Group's investment in a
c.61.8% equity stake in December 2021.
OPERATING MARGIN
At a Group level, our marketing spend grew ahead of sales as we increased
investment behind our core growth driving brands, IRN-BRU, Rubicon and
Funkin. Other operating costs increased year-on-year as the business began
to return to more normal working practices and as inflationary cost pressures
were experienced in areas such as logistics. Our strong trading performance
and cost controls more than offset these cost pressures, enabling operating
margin before exceptional items to expand 83bps to 15.6%.
EXCEPTIONAL ITEMS
In the year ended 30 January 2022, we have recognised, and have separately
disclosed, a £0.7m gain on the sale of our Sheffield site, which closed in
2020. Although not material in size or nature if taken in isolation, the
site disposal was part of a Group-wide re-engineering programme, the costs of
which were considered to be non-recurring and exceptional in nature and were
reported as exceptional in 2020/21. As such, it is considered appropriate to
take the associated gain as exceptional in 2021/22.
INTEREST
Net finance charges, totalling £0.4m, comprise the service fees associated
with the Group's revolving credit facilities, lease interest costs under IFRS
16 and notional finance costs associated with the defined benefit pension
deficit under IAS 19.
TAXATION
Our reported tax expense of £14.4m (2020/21: £6.9m) represents an effective
tax rate of 34.1% (2020/21: 26.8%). This is higher than the UK statutory rate
of 19.0%, primarily due to the impact of the change in corporation tax rate
from 19% to 25% on deferred tax which has increased the deferred tax liability
by £5.7m. Excluding the impact of the increase in rate for deferred tax,
the effective tax rate would be c.21%.
The prior year tax charge and effective tax rate of 26.8% were significantly
higher primarily due to a one-off revaluation of deferred tax balances,
following the UK Government decision to reverse the planned reduction in UK
corporation tax rate from 19% to 17% as well as non-deductible elements within
our 2020/21 exceptionals items.
EARNINGS PER SHARE (EPS)
Basic EPS, before exceptionals, was 24.46p (2020/21: 22.31p), an increase of
9.7%, based on a basic weighted average of 111,187,778 shares (2020/21:
111,171,047). This reflects the strong profit performance offset by the
increased tax charge as detailed above. Basic EPS post exceptionals was
25.09p (2020/21: 17.18p), an increase of 46.1%. Based on a diluted weighted
average of 111,844,852 shares, diluted EPS was 24.95p (2020/21: 17.16p).
DIVIDENDS
In March 2020 the Board took the decision to temporarily suspend dividend
payments, with the aim of protecting liquidity at the onset of the Covid-19
pandemic. In September 2021 the Group communicated its intention to resume
dividend payments with the announcement of a 2.0p interim dividend and a
one-off special dividend of 10.0p in recognition of the benefit from a number
of one-off cash inflows that were not part of normal trading. The resumption
of dividends after the Covid-19 related pause in 2020/2021 reflects the
Board's confidence in the Group's financial resilience and future growth
prospects.
The Group's dividend policy aims to deliver a progressive and sustainable
dividend to shareholders that has regard to current performance trends
including sales, profit after tax and cash, and satisfies certain guiding
principles :
· Dividend cover: targeting 2 times cover
· Payout ratio: targeting 50% of free cash flow
· Consistent with medium-term profit outlook
For the period ended 30 January 2022 dividend cover was 2 times. The
recommended final dividend for the period, to be put to the shareholders for
approval at the Annual General Meeting is 10.0 pence. This will bring the
full year dividend to 12.0 pence per share. Subject to approval by
shareholders, the final dividend will be paid to holders of ordinary shares on
the register as of 12 May 2022 with an ex-dividend date of 10 June 2022.
BALANCE SHEET AND CASH FLOW
We entered the pandemic with a strong balance sheet and significant liquidity,
and we exit the year in a stronger financial position.
The balance sheet has further strengthened on the back of the strong trading
performance with £68.4m net cash at bank* as of 30 January 2022. This is a
£18.4m increase on the prior year after the payment of total shareholder
dividends of £13.4m and the MOMA investment.
The total asset base has increased £34.2m to £336.3m, reflecting the MOMA
investment, including the future contingent consideration, the increased cash
position and higher working capital.
Working capital has increased as a result of the underlying growth in trading,
an element of receivables phasing given year end timing and a conscious effort
to rebuild our inventory base of both finished goods and raw materials to
provide increased resilience across the supply chain. Year end payables and
accruals have increased £16.7m reflecting the reintroduction of employee
incentives, the consolidation of MOMA and an element for marketing and trade
investment phasing.
We remain committed to a well-invested asset base and continue to invest in
our manufacturing infrastructure. At £5.8m (2020/21: £5.9m), our capital
additions reflect a year when we experienced both longer equipment lead times
and the effect of restrictions on our operations. Our multi-year process
facility replacement programme at Cumbernauld was completed on budget and is
now fully operational. During the year we also took the decision to increase
our canning capacity and capability in our Milton Keynes site. Equipment
deposits are included in the 2021/22 capital spend with the capacity due to
come on-stream in Quarter 1 2023.
The strong trading and profit performance, alongside an abnormally low capital
spend and lower pension deficit resulted in a return on capital employed
(ROCE), increasing from 16.0% in 2020/21 to 19.6% in 2021/22.
INVESTMENT IN MOMA FOODS LIMITED
On 6 December 2021 the Group completed a 61.8% equity investment in MOMA Foods
Limited (MOMA) for a total consideration of £6.2m in cash. At the same
time, the Group and the vendor entered into a put/call agreement whereby the
Group and the vendor have the right to sell/buy the remaining 38.2%
shareholding to the other party in three tranches over the next three years.
This provides AG Barr with a path to full ownership by the end of financial
year 2024/25. The call options have no value for accounting purposes.
However, the put options are required to be valued and booked on the balance
sheet. Accordingly a liability of £5.0m has been recognised at the period
end, recorded at the present value of the estimated redemption value, using
forecast revenue and earnings of MOMA. Under this basis, for the 2021/22
financial year MOMA has an investment valuation of £10.0m, contributed £1.1m
to revenue and had an immaterial impact on profit. A non- controlling interest
in equity of £3.8m has been recognised in respect of this acquisition.
INVESTMENT IN ASSOCIATE - ELEGANTLY SPIRITED LIMITED (STRYKK BRAND)
In June 2019, the Group made a 20% minority equity investment in Elegantly
Spirited Limited (ESL), a business start-up in the emerging zero proof spirits
market, and the owner of the STRYKK brand, a range of zero proof spirits
products. During the financial year 2020/21 the Group exercised its right to
participate in further ESL funding through a £1m convertible loan note.
The Covid-19 related challenges in the hospitality sector resulted in the
STRYKK brand temporarily refocusing its strategy from the on-premise to the
grocery channel. The retail market for zero proof spirits is becoming
increasingly competitive however the reopening of the hospitality sector is
expected to allow the STRYYK brand to develop further in the coming year.
ESL is recognised as an associate, with the investment accounted for under the
equity method of accounting. The investment was originally recognised at the
transaction investment price (£1.0m) and subsequently adjusted to reflect the
Group's share of the loss since our investment (£0.3m). The Loan note
(£1.0m) has been recognised on the balance sheet under loans and receivables.
The Group has the right, but not the obligation, to participate in future
equity funding initiated by ESL.
FINANCIAL RISK MANAGEMENT
The Group's risk management process is owned by the Board and operates at
every level within the business to support the successful delivery of our
strategic objectives. The process is based on a balance of risk and
opportunity, determined through assessment of the likelihood and impact of the
risk and within the context of the Group's risk appetite, as established by
the Board. Risks are monitored throughout the year with consideration to
internal and external factors and the Group's risk appetite, and updates to
risks and mitigation plans are made as required. During the year the
business undertook several dynamic risk assessments to ensure rapid and
appropriate responses to the evolving Covid-19 pandemic as well as the impact
of supply chain disruption and inflationary pressures on our operations. The
principal risks that could potentially have a significant impact on our
business have not changed since the end of the financial year.
TREASURY AND COMMODITY RISK MANAGEMENT
The treasury and commodity risks faced by the Group continue to be identified
and managed by the Group Treasury and Commodity Committee whose activities are
carried out in accordance with Board approved policies and subject to regular
Audit and Risk Committee reviews. No transactions are entered into for
speculative purposes. Key financial risks managed by this committee include
exposures to foreign exchange rates, the management of the Group's debt,
commodity and liquidity positions. The Group uses financial instruments to
hedge against foreign currency exposures.
The Group seeks to mitigate risks in relation to the continuity of supply of
key raw materials and ingredients by developing strong commercial
relationships with its key suppliers. The Group manages commodity pricing
risk actively and where commercially appropriate will enter into fixed price
supply contracts with suppliers to improve certainty.
The Group enters into insurance arrangements to cover certain insurable risks
where external insurance is considered by management to be an appropriate
economic means of mitigating these risks.
As at 30 January 2022, in addition to the Group's cash position, the Group had
£30m of committed and unutilised debt facilities, consisting of two revolving
credit facilities with two individual banks, providing the business with a
secure funding platform. These facilities are continually reviewed to ensure
they remain appropriate in terms of quantum, duration and cost effectiveness.
One of these facilities (£10m) expires in April 2023 and the other (£20m)
expires in February 2026. The ongoing facilities provide security and
optionality, should debt capacity be required to facilitate corporate
opportunities.
ACCOUNTING POLICIES
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and the Listing Rules of
the Financial Conduct Authority.
There have been no changes to the accounting policies applied this year. All
new or amended standards that are applicable have been adopted with no
material impact on the results for the current and prior reporting periods.
PENSIONS
The Group continues to operate two pension plans : the A.G. BARR p.l.c. (2005)
Defined Contribution Pension Scheme and the A.G. BARR p.l.c. (2008) Pension
and Life Assurance Scheme. The latter is a defined benefit scheme based on
final salary, which also includes a defined contribution section for pension
provision to senior managers.
The defined benefit scheme has been closed to new entrants since 5 April 2002
(and to new executive entrants since 14 August 2003) and closed to future
accrual for members in May 2016. Existing and new employees have been
invited to join the Company-wide defined contribution scheme.
The defined benefit pension scheme triennial valuation as at April 2020
identified a £7.7m deficit on a technical provisions basis, as at that date,
reflecting the substantial reduction in the value of the Scheme's investments
which occurred at the start of the Covid-19 crisis. The Company agreed with
the Pension Scheme Trustee that the ongoing deficit recovery plan of a £1.0m
per annum Company contribution should continue for the next three years with
the intention of eliminating the deficit over the medium-term. This plan has
been submitted to the Pension Regulator for approval. A deficit reduction
payment of £1.0m was made to the defined benefit pension scheme in May 2021.
The next triennial actuarial valuation will be as at April 2023.
On an IAS 19 valuation basis, which is determined before the benefit of the
asset back funding arrangement, the deficit reduced from £7.9m as at 24
January 2021 to £1.0m as at the balance sheet date. The reduction in the
net deficit is attributable to the favourable discount rate change, due to the
increase in returns from corporate bonds used to calculate the discount rates
on the liabilities of the post employment plans (from 1.4% to 2.2%) and cash
contributions, £2.4m, made by the company partially offset by the change in
inflation rate assumptions (from 2.9% to 3.6%). Total cash contributions by
the group to all post employment plans in the year ending 30 January 2022 were
£4.0m.
The Group continues to work proactively with the Pension Trustee to de-risk
the pension liabilities and secure the commitments to employee benefits as
part of the Group's ongoing strategic risk management. The Group remains of
the view that the overall pension deficit is manageable.
Having delivered a strong recovery in both top and bottom line performance,
the business is in a strong financial position and well placed to build on its
positive momentum.
Stuart Lorimer
FINANCE DIRECTOR
29 March 2022
Note : The Group utilises a range of financial and non-financial performance
indicators to manage and report on the business. Financial metrics marked
with an asterisk are non-GAAP measures. Definitions and relevant
reconciliations are provided later in this announcement.
( )
( )
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JANUARY 2022
2022 2021
Before exceptional items Exceptional items* Total Before exceptional items Exceptional items* Total
£m £m £m £m £m £m
Revenue 268.6 - 268.6 227.0 - 227.0
Cost of sales (150.0) - (150.0) (132.2) (1.2) (133.4)
Gross profit 118.6 - 118.6 94.8 (1.2) 93.6
Other income - 0.7 0.7 - 7.6 7.6
Operating expenses (76.6) - (76.6) (61.2) (13.2) (74.4)
Operating profit 42.0 0.7 42.7 33.6 (6.8) 26.8
Finance costs (0.4) - (0.4) (0.7) - (0.7)
Share of after tax results of associates (0.1) - (0.1) (0.1) - (0.1)
Profit before tax 41.5 0.7 42.2 32.8 (6.8) 26.0
Tax on profit (14.4) - (14.4) (8.0) 1.1 (6.9)
Profit for the year 27.1 0.7 27.8 24.8 (5.7) 19.1
Attributable to:
Equity shareholders of the Company 27.2 0.7 27.9 24.8 (5.7) 19.1
Non-controlling interests (0.1) - (0.1) - - -
Earnings per share (pence)
Basic earnings per share 25.09 17.18
Diluted earnings per share 24.95 17.16
Basic earnings per share before exceptional items 24.46 22.31
STATEMENT OF FINANCIAL POSITION AS AT 30 JANUARY 2022
2022 2021
£m £m
Non-current assets
Intangible assets 98.6 90.5
Property, plant and equipment 93.8 96.4
Right-of-use assets 4.2 2.5
Loans and receivables 1.5 1.0
Investment in associates 0.7 0.8
198.8 191.2
Current assets
Inventories 24.2 19.3
Trade and other receivables 44.3 37.6
Assets classified as held for sale - 0.4
Current tax asset 0.3 0.7
Cash and cash equivalents 68.7 52.9
137.5 110.9
Total assets 336.3 302.1
Current liabilities
Loans and other borrowings 0.3 2.9
Trade and other payables 54.0 43.4
Derivative financial instruments 0.2 0.1
Lease liabilities 1.3 1.1
Provisions 2.0 1.9
57.8 49.4
Non-current liabilities
Deferred tax liabilities 21.5 14.6
Lease liabilities 2.8 1.4
Put liability 5.0 -
Retirement benefit obligations 1.0 7.9
30.3 23.9
Capital and reserves
Share capital 4.7 4.7
Share premium account 0.9 0.9
Share options reserve 1.6 1.8
Other reserves (5.1) (0.2)
Retained earnings 242.4 221.6
Total shareholders equity 244.5 228.8
Non-controlling interest in equity 3.7 -
248.2 228.8
Total equity and liabilities 336.3 302.1
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JANUARY 2022
2022 2021
£m £m
Profit for the year 27.8 19.1
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans 4.7 0.6
Deferred tax movements on items above (1.2) (0.1)
Deferred tax remeasurement for movement in tax rate 1.5 0.5
Items that will be or have been reclassified to profit or loss
Cash flow hedges:
Losses arising during the period 0.1 -
Deferred tax movements on items above - -
Other comprehensive income for the year, net of tax 5.1 1.0
Total comprehensive income for the year 32.9 20.1
Attributable to:
Equity shareholders of the parent Company 33.0 20.1
Non-controlling interests (0.1) -
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JANUARY 2022
Share capital Share premium account Share options reserve Other reserves Retained earnings Total Non-controlling interests Total
£m £m £m £m £m £m £m £m
At 24 January 2021 4.7 0.9 1.8 (0.2) 221.6 228.8 - 228.8
Profit for the year - - - - 27.9 27.9 (0.1) 27.8
Other comprehensive income - - - 0.1 5.0 5.1 - 5.1
Total comprehensive income for the year - - - 0.1 32.9 33.0 (0.1) 32.9
Company shares purchased for use by employee benefit trusts - - - - (0.5) (0.5) - (0.5)
Recognition of share-based payment costs - - 1.2 - - 1.2 - 1.2
Transfer of reserve on share award - - (1.8) - 1.8 - - -
Deferred tax on items taken direct to reserves - - 0.4 - - 0.4 - 0.4
Recognition of liabilities with non-controlling interests - - - (5.0) - (5.0) 3.8 (1.2)
Dividends paid - - - - (13.4) (13.4) - (13.4)
At 30 January 2022 4.7 0.9 1.6 (5.1) 242.4 244.5 3.7 248.2
At 25 January 2020 4.7 0.9 1.4 - 201.3 208.3 - 208.3
Profit for the year - - - - 19.1 19.1 - 19.1
Other comprehensive income - - - - 1.0 1.0 - 1.0
Total comprehensive income for the year - - - - 20.1 20.1 - 20.1
Company shares purchased for use by employee benefit trusts - - - - (0.1) (0.1) - (0.1)
Recognition of share-based payment costs - - 0.7 - - 0.7 - 0.7
Transfer of reserve on share award - - (0.1) - 0.1 - -
Deferred tax on items taken direct to reserves - - (0.2) - - (0.2) - (0.2)
Reallocation between reserves - - - (0.2) 0.2 - - -
At 24 January 2021 4.7 0.9 1.8 (0.2) 221.6 228.8 - 228.8
Cash Flow Statements for the year ended 30 January 2022
2022 2021
£m £m
Operating activities
Profit before tax 42.2 26.0
Adjustments for:
Interest payable 0.4 0.7
Depreciation of property, plant and equipment 9.9 11.8
Amortisation of intangible assets 1.3 1.1
Share-based payment costs 1.2 0.7
Share of results in associates 0.1 0.1
Impairment of Strathmore brand - 7.0
Impairment of Strathmore goodwill - 1.9
Impairment of Strathmore property, plant and equipment - 1.1
Funkin goodwill adjustment - 1.3
Gain on sale of property, plant and equipment and available for sale assets (0.7) -
Operating cash flows before movements in working capital 54.4 51.7
Increase in inventories (4.3) (1.2)
(Increase)/decrease in receivables (5.6) 19.8
Increase/(decrease) in payables 7.7 (7.1)
Difference between employer pension contributions and amounts recognised in (2.3) (2.2)
the income statement
Cash generated by operations 49.9 61.0
Tax paid (6.5) (10.3)
Net cash from operating activities 43.4 50.7
Investing activities
Acquisition of subsidiary (net of cash acquired) (5.1) -
Loan to associate - (1.0)
Purchase of property, plant and equipment (5.0) (7.1)
Proceeds on sale of property, plant and equipment and assets held for sale 1.1 0.1
Net cash used in investing activities (9.0) (8.0)
Financing activities
New loans received - 60.0
Loans receivable (0.5) -
Loans repaid - (60.0)
Lease payments (1.5) (3.2)
Purchase of Company shares by employee benefit trusts (0.2) (0.1)
Dividends paid (13.4) -
Interest paid (0.1) (0.3)
Net cash used in financing activities (15.7) (3.6)
Net increase in cash and cash equivalents 18.7 39.1
Cash and cash equivalents at beginning of year 50.0 10.9
Cash and cash equivalents at end of year 68.7 50.0
Cash and cash equivalents per the cash flow statement above comprises cash and
cash equivalents per the statement of financial position of £52.9m, net of
bank overdrafts of £2.9m for the year ended 24 January 2021.
1. General information
A.G. BARR p.l.c. (the "Company") and its subsidiaries (together the "Group")
manufacture, distribute and sell soft drinks and cocktail solutions. The Group
has manufacturing sites in the UK and sells mainly to customers in the UK with
some international sales.
The Company is a public limited company, which is listed on the London Stock
Exchange and incorporated and domiciled in Scotland. The address of its
registered office is Westfield House, 4 Mollins Road, Cumbernauld, G68 9HD.
The financial year represents the 53 weeks ended 30 January 2022 (prior
financial year 52 weeks ended 24 January 2021).
Basis of preparation
The financial information for the year ended 30 January 2022 contained in this
news release was approved by the Board on 29 March 2022. This announcement
does not constitute statutory financial statements within the meaning of
Section 435 of the Companies Act 2006, but is derived from those financial
statements, which have been prepared in accordance with International
Financial Reporting Standards (IFRS) in conformity with the requirements of
the Companies Act 2006.
This information has been prepared under the historical cost method except
where other measurement bases are required to be applied under IFRS, using all
standards and interpretations required for the financial period beginning 25
January 2021. No standards or interpretations have been adopted before the
required implementation date. Whilst the financial information included
within this announcement has been prepared in accordance with the recognition
and measurement criteria of IFRS, it does not comply with all disclosure
requirements.
Statutory financial statements for the year ended 24 January 2021 have been
delivered to the Registrar of Companies. Statutory financial statements for
the year ended 30 January 2022, which have been prepared on the going concern
basis, will be delivered to the Registrar of Companies following the Group's
Annual General Meeting.
The directors have adopted the going concern basis in preparing these accounts
after assessing the principal risks. This assessment was undertaken through
the use of a number of severe but plausible downside scenarios that could
impact the business (both individually and cumulatively). The assessment
scenarios included adverse brand damage to the Group's largest brand
(IRN-BRU), reimposition of restrictions associated with the Covid-19 pandemic,
significant disruption to supply chain (including the closure of a factory), a
cyber attack, and significant energy cost inflation. In addition, potential
financial impacts from climate change were assessed, consistent with our Task
Force on Climate-related Financial Disclosures.
The directors' experience of the Covid-19 pandemic provides confidence over
the resilience of our brands, and that the business can react appropriately to
significant downside scenarios. Material cash preservation measures are
available, including reducing discretionary spend on overheads, non-essential
capital, marketing investment, and the suspension of dividends.
As at 30 January 2022, the consolidated balance sheet reflects a net asset
position of £248.2m, including net cash at bank of £68.4m. The Group has
£30m of committed and unutilised debt facilities, consisting of two revolving
credit facilities with two individual banks, providing the business with a
secure funding platform. One of these facilities (£10m) expires in April
2023, with the other (£20m) expiring in February 2026. Throughout these
severe but plausible downside scenarios, the Group continues to have
significant liquidity headroom on existing facilities and against the
revolving credit facilities financial covenants.
The directors believe that the Group is well placed to manage its financing
and other business risks satisfactorily, and have a reasonable expectation
that the Group will have adequate resources to continue in operation for at
least 12 months from the signing date of these consolidated financial
statements. They therefore consider it appropriate to adopt the going concern
basis of accounting in preparing the financial statements.
The auditors have reported on those financial statements. Their reports were
not qualified, did not include a reference to any matters which the auditors
drew attention by way of emphasis without qualifying their report, and did not
contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current
reporting period and the Group had to change its accounting policies as a
result of adopting the following standards:
· Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16)
· IFRIC Agenda Paper 7 - Customer's Right to Receive Access to the
Supplier's Software Hosted on the Cloud (IAS 38 Intangible Assets)
· IFRS Agenda Paper 2 - Configuration or Customisation Costs in a
Cloud Computing Arrangement (IAS 38 Intangible Assets)
The amendments listed above do not have a material impact on the results for
the current and prior reporting periods.
(b) New standards, amendments and interpretations issued but not effective for
the financial year beginning 31 January 2022 and not adopted early
A number of new standards and amendments to standards and interpretations are
effective for future year ends, and have not been applied in preparing these
financial statements. These standards and amendments are listed in the table
below:
International Accounting Standards and Interpretation
· FRS 17 Insurance contracts
· Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
· Amendments to IAS 1 Classification of Liabilities as Current or
Non-current
· Amendments to IFRS 3 Reference to Conceptual Framework
· Amendment to IAS 16 Property, Plant and Equipment - Proceeds
before Intended Use
· Amendments to IAS 37 Onerous Contracts - Costs of Fulfilling a
Contract
· Annual Improvements to IFRS Standards 2018 - 2020 Cycle
· Amendments to IFRS 1 and IFRS Practice Statement 2 Disclosure of
Accounting Policies
· Amendments to IAS 8 Definition of Accounting Estimates
There are no new or revised IFRS, amendments or interpretations in issue but
not yet effective that are potentially material for the Group and that have
not yet been applied.
2. Segment reporting
The Board and senior executives have been identified as the Group's chief
operating decision-makers, who review the Group's internal reporting in order
to assess performance and allocate resources. The performance of the
operating segments is assessed by their reference to their gross profit before
exceptional items. During the year ended 30 January 2022, the Group has
amended the composition of reportable segments to better reflect internal
reporting. Accordingly, the Group has restated the previously reported
segment information for the year ended 24 January 2021.
Year ended 30 January 2022
Soft drinks Cocktail solutions Other Total
£m £m £m £m
Total revenue 230.6 36.9 1.1 268.6
Gross profit 103.5 14.7 0.4 118.6
Year ended 24 January 2021 restated
Soft drinks Cocktail solutions Other Total
£m £m £m £m
Total revenue 210.0 17.0 - 227.0
Gross profit 88.7 6.1 - 94.8
There are no material intersegment sales. All revenue is in relation to
product sales, which is recognised at point in time, upon delivery to the
customer. The gross profit before exceptional items from the segment
reporting is reconciled to the total profit before income tax, as shown in the
consolidated income statement.
All of the assets and liabilities of the Group are managed on a central basis
rather than at a segment level. As a result, no reconciliation of segment
assets and liabilities to the statement of financial position has been
disclosed for either of the periods presented.
Included in revenues arising from the above segments are revenues of
approximately £51.5m, which arose from sales to the Group's largest customer
(2021: £45.6m). No other single customers contributed 10% or more to the
Group's revenue in either 2021 or 2022.
All of the segments included within "Soft drinks" and "Cocktail solutions"
meet the aggregation criteria set out in IFRS 8 Operating Segments.
Geographical information
The Group operates predominantly in the UK with some worldwide sales. All of
the operations of the Group are based in the UK.
2022 2021
Revenue £m £m
UK 257.3 219.0
Rest of the world 11.3 8.0
268.6 227.0
The rest of the world revenue includes sales to the Republic of Ireland and
international wholesale export houses.
All of the assets of the Group are located in the UK.
Taxation
2022 2021
Before exceptional items Exceptional items Total Before exceptional items Exceptional items Total
£m £m £m £m £m £m
Charge / (credit) to the income statement
Current tax on profits for the year 7.1 - 7.1 6.4 0.8 7.2
Adjustments in respect of prior years (0.3) - (0.3) (0.5) - (0.5)
Total current tax expense 6.8 - 6.8 5.9 0.8 6.7
Deferred tax
Origination and reversal of:
Temporary differences 1.3 - 1.3 0.1 (1.9) (1.8)
Adjustment for change in corporation tax rate 5.7 - 5.7 2.2 - 2.2
Adjustments in respect of prior years 0.6 - 0.6 (0.2) - (0.2)
Total deferred tax expense 7.6 - 7.6 2.1 (1.9) 0.2
Total tax expense / (credit) 14.4 - 14.4 8.0 (1.1) 6.9
In addition to the above movements in deferred tax, a deferred tax credit of
£0.3m (2021: credit of £0.4m) has been recognised in other comprehensive
income and a credit of £0.4m (2021: debit of £0.2m) has been taken direct to
reserves.
The tax on the Group's profit before tax differs from the amount that would
arise using the tax rate applicable to the consolidated profits of the Group
as follows:
2022 2022 2021 2021
£m % £m %
Profit before tax 42.2 26.0
Tax at 19.0% (2021: 19.0%) 8.0 19.0 4.9 19.0
Tax effects of:
Items that are not deductible in determining taxable profit 0.4 0.9 0.6 2.3
Current tax adjustment in respect of prior years (0.3) (0.7) (0.5) (1.9)
Deferred tax adjustment in respect of prior years 0.6 1.4 (0.2) (0.8)
Deferred tax adjustment in respect of change in corporation tax rates 5.7 13.5 2.2 8.5
Other differences - - (0.1) (0.3)
Total tax expense 14.4 34.1 6.9 26.8
The weighted average tax rate was 34.1% (2021: 26.8%).
In March 2021, the UK Government announced that the corporation tax rate would
increase from 19% to 25% effective from 1 April 2023, which was substantively
enacted on 24 May 2021. The impact of this was a one-off increase in the
deferred tax charge of £5.7m.
Dividends
In April 2020, given the unprecedented circumstances arising from Covid-19, we
communicated our decision to temporarily suspend dividend payments, one of a
number of important actions we took to conserve cash and maintain balance
sheet flexibility. As a result, no dividends were paid or declared in the year
ended 24 January 2021.
As reported in the Annual Report and Accounts for the year ended 24 January
2021, the Board indicated their intention to recommence dividend payments
during the course of the current year.
An interim dividend of 2.0p per share was approved by the Board on 28
September 2021. In addition, following a review of the Group's net cash
position and future funding requirements, the Board approved a special
dividend of 10.0p per share recognising the benefit of a number of one-off
cash inflows that were outside normal trading. These dividends were paid on 29
October 2021 to shareholders on the Register of Members as of 8 October 2021.
The directors have proposed a final dividend in respect of the year ended 30
January 2022 of 10.0p per share. Subject to approval by shareholders it will
be paid on 10 June 2022 to shareholders on the Register of Members on 13 May
2022.
Dividends paid in the financial year were as follows:
2022 2021 2022 2021
per share per share £m £m
Final dividend - p - - -
Interim dividend 2.00 p - 2.2 -
Special dividend 10.00 p - 11.2 -
12.00 p - 13.4 -
Dividends payable in respect of the financial year were as follows:
2022 2021
per share per share
Interim dividend 2.00 p -
Special dividend 10.00 p -
Final dividend 10.00 p -
22.00 p -
Investment in subsidiaries
2022 2021
£m £m
Opening investment in subsidiaries 84.1 84.1
Investments made in the year 6.2 -
Closing investment in subsidiaries 90.3 84.1
On 6 December 2021, the Group acquired 61.8% of the shares and voting
interests in MOMA Foods Limited (MOMA) granting it control. Included in the
identifiable assets and liabilities of MOMA are inputs (inventories,
receivables and payables) and an experienced workforce with technical
expertise. The Group has concluded that, together, the acquired inputs and
processes are a business that will create value by generating revenue in the
growing plant-based drinks category, supported by the Group's brand building
capability.
For the two months ended 30 January 2022, MOMA contributed revenue of £1.1m
and had an immaterial impact on profit. Had MOMA been a subsidiary for the
full financial year, it would have contributed c. £6m revenue to the Group
and it would have broadly broken even on profit.
The value of the identifiable assets and liabilities of MOMA at the date of
acquisition were:
£m
Property, plant and equipment 0.2
Intangible assets 8.4
Inventory 0.6
Trade receivables 1.0
Prepayments 0.1
Cash and cash equivalents 0.4
Trade payables (0.7)
Accruals (0.7)
Loans (0.3)
Total identifiable net assets acquired 9.0
Goodwill 1.0
Value on acquisition 10.0
Non-controlling interest (3.8)
Total consideration 6.2
Represented by:
Cash 6.2
As part of the arrangements with non-controlling shareholders of MOMA, the
Group issued put options to the sellers to sell the remaining shares and
simultaneously the seller issued call options to the Group to purchase the
remaining shares. The put option is exercisable in June 2025 and the call
options are exercisable in two tranches from 2024 to 2025. The exercise prices
are derived from a multiple of future earnings. The Group has recognised
non-controlling interests for the remaining shares because the interests
subject to the put and call options are not deemed to have been acquired upon
acquisition. Accordingly, the financial liability arising from the put option
has not been included in the consideration transferred and is accounted for
separately, with a corresponding entry recorded in equity.
At the acquisition date, the Group recognised a put liability of £8.6m
recorded at a present value of £5.0m being the estimated redemption value,
using forecast revenue of MOMA, discounted at a post-tax rate of 18%.
Acquisition-related costs
The Group incurred acquisition-related costs of £0.2m on legal fees and due
diligence costs. These costs have been included in 'Administrative expenses'.
The goodwill arising represents potential revenue synergies. It is anticipated
that on disposal, goodwill and brand will be deductible for tax purposes.
During the year to 24 January 2021, the following dormant subsidiary company
was dissolved:
Taut (UK) Limited
During the year to 24 January 2021, a new subsidiary was formed in the
Republic of Ireland being A.G. Barr (Ireland) Limited, in which the Company
has a 1 Euro investment.
The principal subsidiaries are as follows:
Principal subsidiary Principal activity Country of incorporation Country of principal operations
Funkin Limited Distribution and selling of cocktail solutions England UK
Funkin USA Limited Distribution and selling of cocktail solutions England USA
Rubicon Drinks Limited Manufacture, distribution and selling of soft drinks England UK
MOMA Foods Limited Distribution and selling of plant-based milk England UK
A.G. BARR p.l.c. holds 100% of the equity and votes of the subsidiaries with
the exception of MOMA noted above. The subsidiaries have the same year end as
A.G. Barr p.l.c. with the exception of MOMA with a 31 December 2021 year end,
and have been included in the Group consolidation. The companies listed are
the trading subsidiaries.
Glossary
Non-GAAP measures are provided because they are tracked by management to
assess the Group's operating performance and to inform financial, strategic
and operating decisions.
Definition of non-GAAP measures used are provided below:
Capital expenditure is a non-GAAP measure and is defined as the cash purchases
of property, plant and equipment, and is disclosed in the consolidated cash
flow statement.
EBITDA is a non-GAAP measure and is defined as operating profit before
exceptional items, depreciation and amortisation.
EBITDA margin is a non-GAAP measure and is calculated as EBITDA divided by
revenue.
Basic earnings per share before exceptional items is a non-GAAP measure
calculated by dividing profit attributable to equity holders before
exceptional items by the weighted average number of shares in issue.
Expansionary capex is a non-GAAP measure and is defined as the purchase of
property, plant and equipment that is not the normal replacement of property,
plant and equipment that has come to the end of its useful life. Maintenance
capex is a non-GAAP measure and is defined as the purchase of property, plant
and equipment that is the normal replacement of property, plant and equipment
that has come to the end of its useful life. Expansionary capex and
maintenance capex add together to the value of purchase of property, plant and
equipment that appears in the consolidated cash flow statement.
Free cash flow is a non-GAAP measure and is defined as the net cash flow as
per the cash flow statement excluding the movements in borrowings,
expansionary capex, the net cash flow on the purchase and sale of shares by
employee benefit trusts, dividend payments and non-cash exceptional items.
Full year dividend is a non-GAAP measure and is defined as the total dividends
declared for the financial year excluding any special dividends.
Gross margin is a non-GAAP measure calculated by dividing gross profit by
revenue.
Market capitalisation is a non-GAAP measure and is defined as the closing
share price at the end of a reporting period multiplied by the number of
issued and fully paid shares of the Company.
Net cash at bank is a non-GAAP measure and is defined as the net of cash and
cash equivalents and loans and other borrowings as shown in the statement of
financial position.
Net funds is a non-GAAP measure and is defined as cash and cash equivalents
less lease liabilities.
Operating margin is a non-GAAP measure calculated by dividing operating profit
by revenue.
Operating margin before exceptional items is a non-GAAP measure calculated by
dividing operating profit before exceptional items by revenue.
Operating profit before exceptional items is a non-GAAP measure calculated as
operating profit less any exceptional items. This figure appears on the income
statement.
Profit before tax and exceptional items is a non-GAAP measure calculated as
profit before tax less any exceptional items. This figure appears on the
income statement.
Revenue growth is a non-GAAP measure calculated as the difference in revenue
between two reporting periods divided by the revenue of the earlier reporting
period.
Return on capital employed (ROCE) is a non-GAAP measure and is defined as
profit before tax and exceptional items as a percentage of invested capital.
Invested capital is a non-GAAP measure defined as period end non-current plus
current assets less current liabilities excluding all balances relating to any
provisions, financial instruments, interest-bearing liabilities and cash or
cash equivalents.
Reconciliation of non-GAAP measures
Gross margin 2022 2021
£m
£m
Revenue 268.6 227.0
Reported gross profit 118.6 93.6
Gross margin 44.2% 41.2%
Gross margin before exceptional items 2022 2021
£m
£m
Revenue 268.6 227.0
Gross profit before exceptional items 118.6 94.8
Gross margin before exceptional items 44.2% 41.8%
Operating margin 2022 2021
£m
£m
Revenue 268.6 227.0
Reported operating profit 42.7 26.8
Operating margin 15.9% 11.8%
Operating margin before exceptional items 2022 2021
£m
£m
Revenue 268.6 227.0
Operating profit before exceptional items 42.0 33.6
Operating margin before exceptional items 15.6% 14.8%
EBITDA 2022 2021
£m
£m
Operating profit before exceptional items 42.0 33.6
Depreciation and amortisation 11.2 12.9
EBITDA 53.2 46.5
EBITDA margin 2022 2021
£m
£m
Revenue 268.6 227.0
EBITDA 53.2 46.5
EBITDA margin 19.8% 20.5%
Full year dividend 2022 2021
p
p
Interim dividend paid 2.0 -
Final dividend declared 10.0 -
Full year dividend 12.0 -
Expansionary capex 2022 2021
£m
£m
Expansionary capex 2.5 0.3
Maintenance capex 2.7 6.8
Capex per cash flow statement 5.2 7.1
Net cash at bank 2022 2021
£m
£m
Cash and cash equivalents 68.7 52.9
Loans and other borrowings (0.3) (2.9)
Net cash at bank 68.4 50.0
ROCE 2022 2021
£m
£m
Profit before tax 42.2 26.0
Exceptional items (0.7) 6.8
Profit before tax and exceptional items 41.5 32.8
Intangible assets 98.6 90.5
Property, plant and equipment 93.8 96.4
Right-of-use assets 4.2 2.5
Investment in associates 0.7 0.8
Inventories 24.2 19.3
Trade and other receivables 44.3 37.6
Asset held for sale - 0.4
Current tax 0.3 0.7
Trade and other payables (54.0) (43.4)
Invested capital 212.1 204.8
ROCE 19.6% 16.0%
( )
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR BKFBDFBKDKNBRecent news on A G Barr
See all newsREG - Barr(A.G.) PLC - Annual Financial Report
AnnouncementREG - Barr(A.G.) PLC - Director/PDMR Shareholding
AnnouncementREG - Barr(A.G.) PLC - Director/PDMR Shareholding
AnnouncementREG - Barr(A.G.) PLC - Director/PDMR Shareholding
AnnouncementREG - Barr(A.G.) PLC - Director/PDMR Shareholding
Announcement