REG - Barr(A.G.) PLC - Final results for the year ended 29 January 2023
28/03/2023 07:00
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RNS Number : 3773U Barr(A.G.) PLC 28 March 2023
28 March 2023
A.G. BARR p.l.c.
("A.G. BARR" or "the Group")
Final results for the year ended 29 January 2023
Excellent financial performance driven by strong sales growth
A.G. BARR p.l.c., a multi-beverage business with a portfolio of market-leading
UK brands, including IRN-BRU, Rubicon, Funkin and Boost, today announces its
final results for the year ended 29 January 2023.
Financial summary
2022/23 Versus 2021/22
Reported revenue £317.6m £268.6m 18.2%
Reported profit before tax £44.4m £42.2m 5.2%
Adjusted profit before tax* £43.5m £38.4m 13.3%
Adjusted operating margin* 13.6% 14.9% (1.3)pp
Net cash at bank* £52.9m £68.4m (22.7)%
Reported EPS (basic p/share) 30.47p 25.09p 21.4%
Dividend per share (proposed final & interim) 13.10p 12.00p 9.2%
Highlights
● Revenue increased by 18.2% on a reported basis and 15.9% on a
like-for-like basis
● Significant progress across strategic objectives delivering strong
organic growth
○ Barr Soft Drinks - Strong performance across soft drinks portfolio
driven by continued focus on consumer engagement and investment in brand
building
○ FUNKIN - Continued product innovation consolidates Funkin's position
as the Number 1 take home cocktail brand in the fast-growing UK cocktail
market
● Building a multi-beverage portfolio leveraging our scalable business
model
○ Completion of the acquisition of both Boost Drinks and the remaining
equity in MOMA Foods in December 2022
○ Operating in the high growth functional beverage and plant based
milk categories, both businesses are exciting additions to the Group
● Adjusted profit before tax of £43.5m, an increase of 13.3%
● 13.6% adjusted operating margin reflects supply chain cost inflation
plus the expected short-term impact of lower margin MOMA and Boost, alongside
accelerated investment, including significant Funkin and MOMA marketing
● Strong cash generation and robust balance sheet with a net cash
position of £52.9m post significant capex investment and the acquisitions of
MOMA and Boost
● Full year dividend of 13.1 pence per share including final
recommended dividend of 10.6 pence per share
● Delivering growth responsibly
○ Additional financial and wellbeing support provided to our teams
○ Further progress across our "No Time To Waste" environmental
sustainability programme including approval of our science-based targets and
net-zero commitment
Outlook
At this early stage we remain confident of delivering further revenue and
profit growth in the year ahead in line with management expectations.
Roger White, Chief Executive, commented :
"Over the past 12 months we delivered an excellent financial performance and
made significant progress across our strategic objectives, an achievement only
made possible by our committed and hardworking teams.
Our strategy to build and develop a multi-beverage portfolio capable of
significant long-term growth is progressing well. We are now in an
investment phase, designed to capitalise on the strategic growth opportunities
ahead. We do anticipate a short-term impact on operating margins, as a
result of the combination of this investment, ongoing inflationary cost
pressures, and the initial dilutive impact from the Boost acquisition. This
growth and investment phase will support the rebuilding of our operating
margin over the medium term and the creation of a stronger and more
sustainable business."
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 2023
* Items marked with an asterisk are non-GAAP measures. Definitions and
relevant reconciliations are provided later in this announcement.
CHAIRMAN'S INTRODUCTION
I am incredibly proud to have taken on the role of Chair at A.G. Barr. I am
delighted to report that the business has made excellent progress in pursuit
of both its strategic objectives and its short-term operating performance.
Following the challenges of the global pandemic we had all hoped for a period
of more stability and perhaps some return to normality, however the tragic
events in Ukraine have led directly to a significant level of human suffering
and we have all felt a sense of collective grief. We have also seen the rise
of global economic uncertainty, rampant inflation and the resultant cost of
living crisis impacting consumers and businesses.
Against this difficult backdrop the whole team across the A.G. Barr Group has
delivered an excellent performance. Reported revenue grew by 18.2%
year-on-year and we finished the year with adjusted profit before tax* of
£43.5m, 13.3% ahead of the prior year.
Highlights during the year included:
· Strong growth across our soft drinks portfolio as consumers
return to more established purchasing patterns, post pandemic
· Innovation and growth in cocktails across all channels as Funkin
consolidated its position as the Number 1 cocktail brand in the UK take home
market
· The strength of our balance sheet, our clear strategy and
scalable business model have supported the exciting acquisition of Boost
Drinks and the early completion of our planned acquisition of the remaining
equity in MOMA Foods
The entire A.G. Barr team has remained focused on delivering our brand
building strategy, investing for growth and creating a business we are proud
of.
Dividend
The Board is pleased to maintain its progressive dividend policy and
recommends a final dividend of 10.6p per share to give a proposed total
dividend for the full year of 13.1p per share. The final dividend is payable
on 9 June 2023 to shareholders on the Register of Members at the close of
business on 12 May 2023. The ex-dividend date is 11 May 2023.
Board
In the reporting period we said a fond farewell to John Nicolson who I
succeeded in the role of Chair in March 2022. It has been a pleasure to
transition into the role working alongside our diverse, experienced and
capable Board and management team.
Succession planning is an important Board responsibility and with that in mind
I can confirm that after over 62 years with the business, Robin Barr has
informed me of his intention to step down from the Board at the Annual General
Meeting in 2023. Robin epitomises all that is great in UK corporate
leadership - knowledge, honesty, balance, commitment and capability, not to
mention experience and a great sense of humour. We will all miss Robin's
counsel and camaraderie but after 58 years on the Board we can understand his
decision. I am delighted to announce that Julie Barr will relinquish her
Company Secretarial duties to join the Board as a Non-Executive Director.
Julie, who has been with the Company for 19 years, and is a qualified
corporate lawyer, will stand for election at the Annual General Meeting in
May.
We will continue to seek to strengthen the capability, diversity and
experience of our Board as we grow and develop the Company.
Responsibility
A.G. Barr has always put responsible behaviour at the heart of its business
and the last year has seen further excellent progress across our core areas of
focus.
Our environmental sustainability programme No Time To Waste has continued to
drive innovative thinking and actions across a wide range of areas. We have
now agreed and validated our science-based targets as we head towards our
net-zero ambition. We have increased our use of more sustainable packaging
and are taking a very active role in the run up to the launch of the Deposit
Return Scheme (DRS) in Scotland, planned for August 2023.
People and culture
I believe that A.G. Barr has a unique and positive culture which although
longstanding, is embodied, nurtured and developed by the executive leadership
team. With high levels of colleague engagement across the Group, each
operating business has its own unique feel, but are all connected by some
shared A.G. Barr cultural characteristics - a challenger mentality, a people
first approach and a drive for performance.
Whilst we have performed well as a Group, in these challenging times we
recognise that many of our team are facing a period of difficulty and where
possible we have taken steps to support our colleagues. Where appropriate we
have tried to make our working patterns as flexible as possible. We continue
to provide mental health support to those who want our help and made two
special cost of living payments during the course of the year to those in our
business who need it most. We are equally as proud of our values and
behaviours as we are of our performance.
Prospects
There remain many headwinds to consider as we look forward, however I am
confident that the brand momentum, quality and strategy of the business will
continue to deliver superior returns to shareholders for many years to come.
Mark Allen OBE
CHAIR
CHIEF EXECUTIVE'S REVIEW
I am pleased to report our results for the 52 weeks ended 29 January 2023.
Over the past 12 months we delivered an excellent financial performance and
made significant progress across our strategic objectives. We emerged from
the pandemic period a stronger business and I would like to thank all the
teams across the business, as well as our partners, suppliers and customers,
for their support.
The following financial metrics quantify our strong performance:
· Reported revenue £317.6m (2022 : £268.6m)
· Adjusted profit before tax* £43.5m (2022 : £38.4m)
· Reported profit before tax £44.4m (2022 : £42.2m)
· Adjusted operating margin* 13.6% (2022 : 14.9%)
· Net cash at bank* £52.9m (2022 : £68.4m)
· Basic earnings per share 30.47p (2022 : 25.09p)
Note : 2022 reported comparatives above are for the 53 weeks ended 30 January
2022. Adjusted item information is detailed later in this announcement.
Strategic objectives
Our overarching purpose - to create value with values - remained central to
A.G. Barr across the year, underpinned by our consistent strategic
priorities:
· connecting with consumers
· building brands
· driving efficiency
· building trust
We continued to invest in our brands, operations and people, driving
innovation and delivering strong organic growth across all our business
units. We are proud to have delivered this growth responsibly.
Our organic growth ambition remains as strong as ever, as is our desire to
acquire high quality brands with strong future growth potential. This was
evidenced in 2022 by the completion of both the Boost Drinks Holdings Limited
acquisition and the early completion of full ownership of the MOMA business.
Operating in the high growth functional beverage and oat milk categories, both
businesses are exciting additions to the A.G. Barr Group.
As our portfolio grows, so does our opportunity to increase our connection and
engagement with consumers. By entering different markets, supporting
different consumption occasions and appealing to different consumers, we are
increasing the long-term growth potential for the Group as a whole.
While the economic uncertainty being felt across the UK has the potential to
stifle industry and business progress, we believe that both our brand and
financial strengths ensure we are well positioned to invest through the
economic cycle. By driving operational efficiency from the bottom up, and by
providing great brands that offer real value to consumers, we are in a strong
position to accelerate our growth both organically and through further
acquisition, in turn creating long-term shareholder value.
Soft drinks market
The UK's high cost inflation is reflected across the total UK soft drinks
retail market, which saw value increase by 8.8% while volumes fell by 2.2%.
The impact of higher prices and lower promotional activity, coupled with the
associated impact on volume and general consumer caution, are mirrored across
Carbonates and Stills, both of which increased in value and experienced lower
volume. Taking a longer term view, and comparing to the pre-pandemic soft
drinks market in 2019, soft drinks volumes have grown by 1.5%, with carbonates
the key contributor, growing by 5% over the same period despite the
significant headwinds created by the pandemic in particular.
At a subcategory level we continue to see some of the effects of the pandemic
unwinding across the soft drinks retail market. Lemonade, Mixers, Dilutes
and Fruit Juice have declined in both value and volume, reflecting the
normalisation of at home consumption and the steady recovery of the on-trade
hospitality sector. By contrast, Flavoured Carbonates, Sports and Energy are
increasing in volume, supported by the recovery of the "drink now" channel.
Against this backdrop Barr Soft Drinks has enjoyed particularly strong market
share value gains in England and Wales balanced by a more subdued performance
in Scotland which did not benefit from the better summer weather experienced
in much of the rest of the UK.
The Boost business, which became part of the Group in December 2022, has
performed exceptionally well within the total soft drinks market across the
past 12 months, with a double digit increase in its value and volume
share.
(Source: IRI Marketplace Total Soft Drinks Market 52 weeks to 28 January
2023)
Cocktail market
The hospitality sector continued its recovery across the year despite
experiencing significant challenges. The cocktail category in particular has
proven its strength and increasing popularity, with cocktails in the on-trade
now worth £686m, an increase of more than 13% versus 2019 pre-pandemic
levels. With 9.6 million UK consumers now drinking cocktails out of home,
1.6 million of whom joined the category since 2019, cocktails remain a
significant growth opportunity for the hospitality sector.
The growth momentum of the ready to drink (RTD) category in the off-trade has
continued, with consumers increasingly seeking to replicate the bar quality
experience at home. The RTD market has grown to over £500m and continues to
be driven by RTD cocktails which have grown by more than 20% in value terms
over the past 12 months.
Within this market we are delighted to report that Funkin remains the UK's
Number 1 RTD cocktail brand, the UK's fastest growing Top 10 RTD brand and is
now a Top 5 RTD Grocery brand.
(Sources: CGA Mixed Drinks Report Q3 2022 ; Nielsen Pre-Mixed Alcoholic Drinks
Total Coverage Data MAT 14/01/2023)
Plant-based milk market
The value of the total plant-based milk market fell by 1.4% in the year to
September 2022, driven largely by a decline in soya, nut and coconut milks.
In contrast, oat milk continues to grow, up 13.3% to £166m in the same
period. One in five UK households now purchases oat milk, with 750,000 more
households adding it to their shopping baskets in the last 12 months.
As a challenger oat milk brand, the MOMA business has had a particularly
strong year, with the MOMA business growing by 41% on a year on year basis,
well ahead of the category, driven by increased sales of its ambient range and
distribution gains for its new chilled range that launched in the Spring of
2022.
(Sources: Kantar UK Market 52 weeks ending 04/09/2022; Kantar UK Household
Penetration 52 weeks ending 02/10/2022)
Connecting with consumers
The connection we make with consumers is central to our strategy. Over the
past 12 months we have continued to invest in a wide range of consumer
marketing, promotion and communication programmes across our business units
and brands.
With a growing consumer base, covering a broad demographic and geographic
spread, we have evolved our engagement approach considerably over recent
years. Social and digital media play an increasingly important role, as does
our commitment to bringing a pipeline of great tasting, innovative new
products to market, in new pack formats which unlock new drinker occasions.
More traditional media channels of TV, print and outdoor remain an important
part of our marketing mix.
The acceleration of the investment in our portfolio demonstrates the
importance we place on supporting the long-term development of our core
brands. In March 2022 we launched our new IRN-BRU "Taste Debate" campaign on
TV, digital and social media to ensure our biggest brand remains fun, fresh
and relevant. We also invested in Funkin, which launched its biggest ever
brand investment with the highly successful "It's Funkin Time" campaign which
ran throughout the key trading periods of summer and Christmas. The Funkin
brand has significantly increased its brand awareness to 45% within the 18-34
year old cohort (Source: Kantar January 2023).
MOMA's award-winning oat milk has high growth potential and we have invested
in its first ever above the line advertising campaign, which appeared on
screens at the start of September across TV, outdoor and digital/social
channels. The advert highlights how MOMA is perfectly crafted for both
expert and home coffee creations, as "The Barista's Choice".
Sponsorship remains an effective and exciting engagement tool and is a key
focus for our Rubicon RAW Energy brand, supporting its brand positioning as "A
Force of Nature" in the great outdoors. Part of a multimillion pound marketing
campaign, the brand sponsored the Boardmasters Festival in Cornwall in August
2022 and we are also pleased to have announced the brand's four year
partnership as the official energy drink of GB Snowsport.
Our recent addition to the brand portfolio, Boost, has fostered a strong
consumer connection through its sponsorship of Leeds United Football Club.
We are excited to be a part of this successful partnership and look forward to
building the brand's awareness in the year ahead.
Building brands
Our brand building strategy remains focused on growing awareness, trial and
loyalty through consumer engagement activity, increasing our product
distribution through effective sales execution and supporting brand
development through innovation.
Barr Soft Drinks has delivered a strong revenue performance across its core
brands.
IRN-BRU's total revenue grew by 6% while volumes, as anticipated, fell by 4%,
reflecting the short-term impact of price changes across the market. The
IRN-BRU growth strategy has delivered increases in low calorie (IRN-BRU XTRA
up 9%), increased innovation (IRN-BRU 1901 up 5%), development in the Energy
category (IRN-BRU Energy up 15%) and increased distribution within England and
Wales.
The Rubicon masterbrand performed very strongly across all variants -
Sparkling (up 18%), Still (up 14%), Spring (up 27%) and Rubicon RAW Energy (up
30%). It is particularly pleasing to see the acceleration in Rubicon Spring
which has been in the market for over six years and is now the UK's number 1
sparkling flavoured water brand.
Funkin benefited from the recovery of the hospitality sector and the ongoing
market growth of cocktail consumption, with on-trade revenue up by 23%. The
momentum in the take home RTD cocktail category was sustained with Funkin's
sales in this channel up 8%, consolidating its Number 1 position. Funkin
continues to innovate across product, packaging and formats and in addition
has progressed its international business development, on track to launch a
state specific market trial within the US in 2023.
Our drive to build a multi-beverage portfolio has made positive progress
across the last year. The successful acquisition of the Boost and MOMA
businesses highlight our desire to participate in high growth categories where
our brand building expertise and business model can add significant value.
Driving efficiency
Our drive for continuous improvement across our assets, processes and
technology remains a constant across the business. This is particularly the
case in Barr Soft Drinks where we invest significantly in our asset base to
drive efficiency and increase our manufacturing and logistics capacity and
capability.
2022 saw us embark on the first phase of an extensive asset replacement
programme at our Cumbernauld facility. Over the next 3-4 years this
programme will deliver new high speed PET and can filling lines, advanced
packaging and palletising capability, as well a number of associated energy
and environmental sustainability benefits. Phase 1 of the programme is now
well underway and we expect to have a new small format PET line and new
downstream packaging machinery installed and commissioned in the next 12
months.
As a high growth and innovative business, Funkin has operated with an
outsourced manufacturing business model that provides both agility and
flexibility. Its recent move into RTD cocktails in cans presented an
opportunity to leverage some of the benefit of being part of the wider A.G.
Barr Group. Following a £9m investment at our Milton Keynes facility in
2022, we successfully installed and commissioned new slim 250ml can filling
and cardboard multipack capabilities. This opens up new growth opportunities
for Barr Soft Drinks, and allows us to produce Funkin's nitro-infused ready to
drink cocktail cans in-house, bringing with it significant operational
efficiency benefits.
Building trust
Trust is earned. We continue to work hard to retain the trust of all our
employees, our wide range of stakeholders and our communities, as we have done
for over 145 years.
As the cost of living crisis continues to place pressure on households and
businesses across the UK, we recognise the duty of care that we have for our
people. Our employees have shown huge levels of commitment over recent years
and in recognition of this, and the difficult economic landscape, we made two
special cost of living payments in 2022 to those colleagues who we believed
would benefit the most from additional financial support. We will continue
to monitor the welfare and wellbeing of our people and have plans in 2023 to
offer additional financial support services, as well as maintaining our
longstanding commitment to mental health support within the workplace.
Our environmental sustainability programme No Time To Waste continued to
deliver clear and tangible progress throughout the year, from our first
plastic bottles made of 100% recycled content, launched in April 2022, to the
formal approval of our science-based targets and net-zero commitments by the
Science Based Targets Initiative. We have a stretching yet achievable
net-zero roadmap, coupled with a genuine drive and ambition to push further
and faster. This is particularly the case for our use of recycled material,
notwithstanding current challenges associated with availability and quality.
We are well advanced in our DRS preparations, due to go live in Scotland in
August 2023, which has the potential to increase the availability and quality
of recycled material, as well as supporting our long-term circular packaging
goals.
For us, a successful business also means being a sustainable business and we
will continue to demonstrate our values in this respect through honest and
meaningful actions.
Outlook
We anticipate a continuation of our strong brand momentum across the Group in
2023/24 as we continue to invest in the development of our business, brands
and people. This is despite a backdrop of continued high inflation and the
planned introduction of the Scottish DRS in August 2023, both of which have
the potential to impact consumer purchasing behaviour.
We do however anticipate a short-term impact on operating margins, as a result
of the combination of this investment, ongoing inflationary cost pressures,
and the initial dilutive impact from the Boost acquisition.
It is our belief that our growing brand portfolio and our ongoing actions to
mitigate cost inflation will support the delivery of our growth ambitions and
at this early stage we remain confident of delivering further revenue and
profit growth in the year ahead in line with management expectations.
Looking to the long term, it is our strategy to build and develop a
multi-beverage portfolio capable of significant growth. We are now in an
investment phase, designed to capitalise on the strategic growth opportunities
ahead. This growth and investment phase will support the rebuilding of our
operating margin over the medium term and the creation of a stronger and more
sustainable business.
Roger White
CHIEF EXECUTIVE
FINANCIAL REVIEW
OVERVIEW
The business has delivered another year of impressive financial performance
with top and bottom line growth during a year of high cost inflation, supply
chain challenges and macroeconomic uncertainty:
2022/23 Versus 2021/22
Reported revenue £317.6m £268.6m + 18.2%
Reported profit before tax £44.4m £42.2m + 5.2%
Adjusted profit before tax* £43.5m £38.4m + 13.3%
Adjusted operating margin* 13.6% 14.9% (1.3)pp
Net cash at bank* £52.9m £68.4m (22.7)%
Reported EPS (basic p/share) 30.47p 25.09p + 21.4%
Dividend per share (proposed final & interim) 13.10p 12.00p + 9.2%
Our revenue increase was driven by a combination of brand momentum, revenue
management and the incremental contribution from our MOMA and Boost Drinks
acquisitions. Like-for-like revenue growth*, adjusting for MOMA and Boost
new business and the extra week in the prior year, was 15.9%.
Throughout the pandemic, and the disruption that followed as the economy
reopened, we worked collaboratively with our customers to ensure we recognised
the impact of restrictions on the brand support and discounts we provided.
This involved numerous commercial discussions, and in certain circumstances,
changes to promotional terms. This has resulted in a change in estimate and
recognition of £5.1m (2021/22: £4.9m) of additional variable
consideration.
In a challenging cost environment our adjusted profit before tax* increased by
13.3%. While recessionary concerns, inflationary pressures and supply chain
disruption were clear headwinds, we continued to invest for the future, in our
brands, our people and our assets. Our operating margin was compressed as a
result of supply chain cost inflation, the impact of MOMA and Boost's lower
margins, and investment in marketing ahead of sales in both Funkin and
MOMA.
Our cash generation remains strong having generated £35.9m of net cash from
operations.
Our capital allocation principles are consistent with our strategic ambition
to consistently grow our business. We prioritise the utilisation of funds to
support organic growth, finance appropriate acquisition opportunities, provide
shareholder income and optimise debt when appropriate. In 2022/23, in
addition to increased marketing spend across our core brands, we chose to
invest in long-term sustainable growth through our acquisitions and a step up
in capital investment across our operating sites. Our capital programme is
expected to result in investment in excess of £50m over the next three years.
Our core brand strength, our clear strategy and our engaged workforce provide
a strong foundation to deliver sustainable long-term shareholder value.
ADJUSTING ITEMS
The Group reported results include a net credit of £0.9m (2021/22 : £0.7m
credit) relating to pre-tax adjusting items which are excluded from adjusted
profit :
· M&A - MOMA : A net credit of £1.6m relating to the
re-measurement and release of the excess contingent consideration in respect
of MOMA Foods Limited following the Group's acquisition of the remaining 38.2%
minority interest in December 2022.
· M&A - Boost Drinks : A net charge of £2.0m relating to costs
associated with the successful acquisition of Boost Drinks Holdings Limited.
This comprises £1.2m of one-off acquisition fees and a further £0.8m accrual
related to the potential 2024/25 payment of £10m associated to the
acquisition earn-out. Both the acquisition fees and the earn-out accrual
have been charged to operating expenses in the income statement.
· Asset disposal : A £1.3m one-off gain on the sale of our
Newcastle distribution site which was closed in April 2022 as part of the
completed Group-wide restructuring programme that was announced in 2021/22.
SEGMENTAL PERFORMANCE
There are three reportable segments in the Group:
· Soft drinks
· Cocktail solutions
· Other
Soft drinks
The soft drinks segment comprises two business units, Barr Soft Drinks and
Boost Drinks, with decisions made at a business unit level. This allows
agile and effective operational management and strong Group oversight.
Barr Soft Drinks
Barr Soft Drinks delivered a year of strong top line revenue growth, up 12.4%
on 2021/22, driven by volume growth, disciplined pricing and promotional
management as well as a small element of favourable brand and channel mix.
Gross margin declined as high and sustained raw material inflation was only
partially mitigated by pricing action and disciplined cost management.
IRN-BRU revenue grew by 6% with a strong performance in the out-of-home
channel more than compensating for lower take home sales as the channels
continue to rebalance following pandemic disruption.
Rubicon's growth was particularly pleasing, up 8% in volume and over 20% in
revenue, with the brand benefiting from increased distribution, continued
innovation, and a strong marketing programme. Growth was broad based across
the whole Rubicon range with Sparkling, Spring, Stills and RAW Energy, all
delivering double digit revenue growth. Gross margin in the second half of
the financial year was impacted by high exotic fruit costs following
particularly poor harvests.
Our other portfolio brands, including Barr Flavours, KA and Simply Fruity,
grew in both volume and revenue terms as consumers sought value in the face of
cost of living challenges.
Boost Drinks
The Boost Drinks portfolio, spanning energy, sport, iced coffee, protein and
including the franchise brand, Rio, was acquired by the Group in December
2022. Our financial results include Boost's contribution for the 2 months
since acquisition - c.£7m of revenue and c.£1m of gross profit. The impact
to Group profit was negligible and is in line with the acquisition business
case.
Cocktail solutions
Funkin delivered another year of significant growth with revenue up 16.0% and
gross profit up 10.2%. The business benefited from a strong on-trade
recovery, especially in the first half of the financial year, and continued
distribution gains in the growing off-trade ready to drink cocktail market.
Gross margin was impacted by increases in input costs, fruit in particular,
and a more challenging macroeconomic environment for our on-trade customers in
the second half of the year.
Other
The 'Other' segment represents our MOMA business unit, comprising oat milk
drinks and other oat based products. MOMA continues to build distribution
across both grocery and food service channels with revenue up over 41% versus
the prior year. Cost inflation in both processing and raw materials has
adversely impacted gross margin. The Group secured full ownership of the
MOMA business in December 2022 and this will now allow us to invest for the
long-term growth of the brand.
OPERATING MARGIN
The combination of the inflationary macroeconomic environment, the medium-term
margin dilutive impact of the Boost and MOMA acquisitions and our commitment
to maintaining marketing investment behind our long-term growth drivers, led
to an adjusted operating margin* of 13.6% (2021/22 : 14.9%)
Our marketing spend was ahead of sales growth for the second successive year
as we continued to invest behind our core brands, innovation and our
acquisitions.
During the year we also provided support with the immediate cost of living
challenges, through targeted one-off payments as well as longer term
investment in personal skills and capabilities.
INTEREST
The Group remained net cash positive throughout 2022/23. Finance income of
£0.5m relates to interest earned on cash held on rolling short-term
deposits. The finance charge of £1.4m primarily relates to the non-cash
MOMA acquisition accounting (£1.1m), included as an adjusting item in
determining adjusted profit as explained in the adjusting items section. The
remaining finance charge of £0.3m relates to banking costs associated with
the Group's revolving credit facilities and lease interest costs under IFRS
16.
TAXATION
The reported tax rate for the year ended 29 January 2023 was 23.6% compared
with 34.1% for the year ended 30 January 2022. The tax rate for the year is
above the 19% UK corporation tax rate due to c.£2m of M&A related costs
recognised in the year that are non-deductible for tax purposes. These
primarily rate to c.£1m of acquisition transaction costs and £0.8m of
accrued earn-out recognised in the year.
The reported tax charge for the prior year included the impact of the change
in corporation tax rate from 19% to 25% on deferred tax which increased the
deferred tax liability by £5.7m. Excluding the impact of the increase in
rate for deferred tax, the effective tax rate for the year ended 30 January
2022 would be c.21%.
EARNINGS PER SHARE (EPS)
Adjusted basic EPS* for the year was 29.66p, an increase of 37.4% on the prior
year due to higher operating profits and the adverse impact on the prior year
EPS from an increase in deferred tax as detailed above. Basic reported EPS
was 30.47p, an increase of 21.4% on last year. Based on a diluted weighted
average of 112,178,721 shares, diluted EPS was 30.22p (2021/22: 24.95p).
DIVIDENDS
The Group resumed dividends, after the pandemic related pause, with the
announcement in September 2021 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 had been received but that were not part of normal
trading.
The Group's dividend policy aims to deliver a progressive and sustainable
dividend to shareholders that has regard to current performance trends
including revenue, profit after tax and cash, and that satisfies certain
guiding principles:
· Dividend cover: targeting two times cover
· Payout ratio: targeting 50% of free cash flow *
· Consistent with medium-term profit outlook
Based on this framework, and following the interim dividend of 2.50p per share
paid in October 2022, the Board is recommending a final dividend for the
period of 10.60p. This will bring the full year dividend to 13.10p per
share (2021/2022 : 12.0p per share) which provides two times dividend cover
and delivers a payout ratio of 43%. The Board believes the final dividend
growth of 6.0% is sustainable. Subject to approval by shareholders at the
AGM in May, the final dividend will be paid to holders of ordinary shares on
the register as of 12 May 2023 with an ex-dividend date of 11 May 2023.
BALANCE SHEET AND CASH FLOW
The balance sheet as at 29 January 2023 recognises the first time inclusion of
the Boost Drinks acquisition and the associated assets and liabilities of this
company.
The Group remains financially strong with net cash at bank, no material trade
debt issues, healthy inventory levels, a defined benefit pension surplus and a
£20.6m increase in the net asset base to £268.8m.
Inventory values have increased due to the Boost Drinks acquisition, inflation
and a planned stock-build to support the installation of our new PET line as
part of our Cumbernauld factory refresh. Year end payables and accruals have
increased, reflecting the Boost Drinks acquisition, significant capital spend
accruals and the timing of our month end payment run which took place after
the year end in 2022/23 but before the year end in the prior year.
Global disruptions and geo-political challenges have reinforced the importance
of resilient supply chain capabilities. We remain committed to internal
manufacturing when scale and capabilities permit, and recognise the value of a
well-invested asset base. After a period of restricted spend associated
with the pandemic, our capital programme resumed with total additions in the
year of £17.0m (2021/22 : £5.8m) comprising £14.6m of cash capital
expenditure and £2.4m of accruals. This reflects investment in production
capacity, capability and sustainability. The commissioning of a new can
filler in Milton Keynes delivers the capability and capacity for 250ml cans
and alcoholic products for the first time. We have utilised these facilities
to successfully bring a proportion of Funkin can requirements in-house. Our
multi-year production line refresh in Cumbernauld continues to plan with an
upgraded PET line scheduled for commissioning by summer 2023.
Despite the return to a more typical level of capital investment, the higher
inventory levels and the inclusion of the Boost Drinks acquisition, return on
capital employed remains robust at 18.0%, a modest decline from 19.9% in
2021/22.
ACQUISITIONS
In the year ended 29 January 2023, the Group completed the early full
acquisition of MOMA Foods Limited and the acquisition of Boost Drinks Holdings
Limited. Both acquisitions were fully funded from Group cash reserves and
the Group remains net cash positive. The primary financial implications of
these acquisitions were:
MOMA Foods Limited
The Company acquired an initial 62.8% equity stake in MOMA in December 2021.
MOMA was consolidated as a fully owned subsidiary in the 2021/22 accounts,
with a non-controlling interest reported in respect of the 38.2% not acquired
at that time, alongside a put option liability that recognised a commitment
(contingent consideration) to secure full A.G. Barr ownership by the end of
financial year 2024/25.
In December 2022 the Company acquired the remaining 38.2% equity stake in
MOMA. As A.G. Barr now owns a 100% equity stake in MOMA, the minority
interest in the business and the put liability have been removed from the
balance sheet. There has been no change in the year to goodwill or brand
valuation and the removal of the contingent consideration has resulted in a
net non-cash credit to the income statement of £1.6m. This release has been
recognised within adjusting items as detailed in the adjusting items section
above.
Boost Drinks Holdings Limited
In December 2022 the Group acquired 100% of Boost Drinks Holdings Limited for
an initial consideration of £20m, on a cash-free debt-free basis. Boost
will operate as a standalone business unit during a two year earn-out
period. The financial reporting impact of the Boost acquisition is as
follows :
· Initial acquisition consideration (£19.9m) recognised within the
consolidated financial position as £16.9m of brand intangibles, £1.9m of
goodwill intangibles and net assets of £1.1m
· Consolidated in Group results from December 2022
· Boost revenue recognised within 'Soft Drinks' segmental reporting
· The acquisition includes a potential additional consideration of
up to £12m, contingent on the future performance of the Boost business over a
two year period from completion. Any earn-out will be charged through the
Group's income statement over the earn-out period and reported as an
adjustment to reported profit. The financial statements ending 29 January
2023 included £0.8m in respect of this earn-out accrual.
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 and financial plans. 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 updates to risks and
mitigation plans are made as required. 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 and 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 reduce risk.
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 29 January 2023, the Group had £40m of funds held on short-term,
interest earning, deposit with two relationship banks. In addition to the
Group's cash position, the Group had £20m of committed and unutilised debt
facilities, consisting of a revolving credit facility with our principal
relationship bank. This expires in February 2026. Our funding requirements
and facilities are continually reviewed to ensure they remain appropriate,
providing a balance of security and optionality.
ACCOUNTING POLICIES
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards 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 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 pandemic. 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 was
approved by the Pension Regulator. A deficit recovery contribution of £1.0m
was made by the Company under this arrangement in May 2022. At the end of
September 2022 gilt yields rose rapidly in reaction to the UK Government's
mini budget. As gilt yields rose, the value of liability driven investment
(LDI) assets held by many defined benefit pension schemes in the UK fell
sharply. Additional cash was required in order to rebalance the Company's
defined benefit pension scheme's LDI portfolio and maintain the majority of
the hedging that the Scheme had in place. The Trustee took a number of
actions to meet these recapitalisation calls. In support, the Company made a
further payment of £1.0m to the Scheme in October 2022 as a prepayment of the
deficit recovery contribution due in May 2023 and also pre-paid the Central
Asset Reserve (CAR) contribution payments of £1.5m due in 2023. 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
CAR funding arrangement, the deficit of £1.0m as at 30 January 2022 improved
to a surplus of £2.4m as at the balance sheet date. As noted above, 2022
was an unusually volatile year for the pension industry generally and the
Group scheme was impacted by this. The A.G. Barr defined benefit scheme has
a long established financial risk strategy that includes pensioner buy-in
policies and asset hedging. The purpose of the strategy is to provide an
element of protection against pension assumption and financial market
volatility. During the year 2022/23 this strategy resulted in the scheme
reporting both a significant decrease in the scheme's liabilities, driven by a
large increase in discount rates, and a similarly significant decrease in the
value of scheme assets due to changes in financial markets, particularly the
bond market. The move from deficit to surplus is attributable to these
changes and to the £4.9m (2021/22 : £2.4m) Company contributions made in the
year. The Company contributions comprise both agreed 2022/23 contributions
of £2.4m and £2.5m of 2023/24 contributions paid in advance to support
scheme liquidity.
The Group continues to work proactively with the Pension Trustee to further
de-risk the pension liabilities and secure the commitments to employee
benefits as part of the Group's ongoing strategic risk management.
____________
The Group has, again, delivered a strong financial performance despite the
challenging economic backdrop. This performance demonstrates the consistent
delivery of our strategy and a successful blend of resilience, agility,
efficiency and strong commercial execution. In an environment that remains
volatile and challenging, the business has a well invested asset base backed
by strong financial fundamentals and is well placed to continue to invest for
the future in our brands, assets and people.
Stuart Lorimer
FINANCE DIRECTOR
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 29 JANUARY 2023
2023 2022
£m £m
Revenue 317.6 268.6
Cost of sales (189.5) (150.0)
Gross profit 128.1 118.6
1.3 0.7
Other income
Operating expenses (84.1) (76.6)
Operating profit 45.3 42.7
0.5 -
Finance income
Finance costs (1.4) (0.4)
Share of after tax results of associates - (0.1)
Profit before tax 44.4 42.2
Tax on profit (10.5) (14.4)
Profit for the year 33.9 27.8
Earnings per share (pence)
Basic earnings per share 30.47 25.09
Diluted earnings per share 30.22 24.95
STATEMENT OF FINANCIAL POSITION AS AT 29 JANUARY 2023
2023 2022
£m £m
Non-current assets
Intangible assets 116.2 98.6
Property, plant and equipment 102.5 93.8
Right-of-use assets 5.4 4.2
Loans and receivables 1.5 1.5
Investment in associates 0.7 0.7
Retirement benefit surplus 2.4 -
228.7 198.8
Current assets
Inventories 34.7 24.2
Trade and other receivables 60.4 44.3
Derivative financial instruments 0.1 -
Current tax asset - 0.3
Short-term investments 40.0 -
Cash and cash equivalents 13.6 68.7
148.8 137.5
Total assets 377.5 336.3
Current liabilities
Loans and other borrowings 0.7 0.3
Trade and other payables 72.3 54.0
Derivative financial instruments 0.1 0.2
Lease liabilities 1.5 1.3
Provisions 0.8 2.0
Current tax liabilities 0.7 -
76.1 57.8
Non-current liabilities
Deferred tax liabilities 28.2 21.5
Lease liabilities 3.6 2.8
Put liability - 5.0
Contingent consideration 0.8 -
Retirement benefit obligations - 1.0
32.6 30.3
Capital and reserves
Share capital 4.7 4.7
Share premium account 0.9 0.9
Share options reserve 3.4 1.6
Other reserves 0.1 (5.1)
Retained earnings 259.7 242.4
Total shareholder equity 268.8 244.5
Non-controlling interest in equity - 3.7
268.8 248.2
Total equity and liabilities 377.5 336.3
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 29 JANUARY 2023
2023 2022
£m £m
Profit for the year 33.9 27.8
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans (1.5) 4.7
Deferred tax movements on items above 0.6 (1.2)
Deferred tax remeasurement for movement in tax rate - 1.5
Items that will be or have been reclassified to profit or loss
Cash flow hedges:
Gains arising during the period 0.2 0.1
Deferred tax movements on items above - -
Other comprehensive income for the year, net of tax (0.7) 5.1
Total comprehensive income for the year 33.2 32.9
Attributable to:
Equity shareholders of the parent Company 33.2 33.0
Non-controlling interests - (0.1)
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 29 JANUARY 2023
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 30 January 2022 4.7 0.9 1.6 (5.1) 242.4 244.5 3.7 248.2
- - - - 33.9 33.9 - 33.9
Profit for the year
Other comprehensive income - - - 0.2 (0.9) (0.7) - (0.7)
Total comprehensive income for the year - - - 0.2 33.0 33.2 - 33.2
Company shares purchased for use by employee benefit trusts - - - - (0.7) (0.7) - (0.7)
Recognition of share-based payment costs - - 2.0 - - 2.0 - 2.0
Transfer of reserve on share award - - (0.2) - 0.2 - - -
Deferred tax on items taken direct to reserves - - - - - - - -
Derecognition of put liability - - - 1.3 (1.3) - - -
Recognition of liabilities with non-controlling interests - - - 3.7 - 3.7 (3.7) -
Dividends paid - - - - (13.9) (13.9) - (13.9)
At 29 January 2023 4.7 0.9 3.4 0.1 259.7 268.8 - 268.8
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
Cash Flow Statements for the year ended 29 January 2023
2023 2022
£m £m
Operating activities
Profit before tax 44.4 42.2
Adjustments for:
Interest and dividends receivable (0.5) -
Interest payable 1.4 0.4
Contingent consideration 0.8 -
Revaluation of put liability (2.7) -
Depreciation of property, plant and equipment 9.8 9.9
Amortisation of intangible assets 1.2 1.3
Share-based payment costs 2.0 1.2
Share of results in associates - 0.1
Gain on sale of property, plant and equipment and available for sale assets (1.0) (0.7)
Operating cash flows before movements in working capital 55.4 54.4
Increase in inventories (4.5) (4.3)
Increase in receivables (7.6) (5.6)
Increase in payables 4.3 7.7
Difference between employer pension contributions and amounts recognised in (4.9) (2.3)
the income statement
Cash generated by operations 42.7 49.9
Tax paid (6.8) (6.5)
Net cash from operating activities 35.9 43.4
Investing activities
Acquisition of subsidiary (net of cash acquired) (18.6) (5.1)
Purchase of property, plant and equipment (14.6) (5.0)
Proceeds on sale of property, plant and equipment and assets held for sale 1.6 1.1
Funds placed on fixed term deposit (40.0) -
Interest received 0.1 -
Net cash used in investing activities (71.5) (9.0)
Financing activities
Acquisition of minority interest (3.4) -
Loans made - (0.5)
Loans repaid (0.3) -
Lease payments (1.7) (1.5)
Purchase of Company shares by employee benefit trusts (0.7) (0.2)
Dividends paid (13.9) (13.4)
Interest paid (0.2) (0.1)
Net cash used in financing activities (20.2) (15.7)
Net (decrease)/increase in cash and cash equivalents (55.8) 18.7
68.7 50.0
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year 12.9 68.7
Cash and cash equivalents per the cash flow statement above comprises cash and
cash equivalents per the statement of financial position of £13.6m, net of
bank overdrafts of £0.7m for the year ended 29 January 2023.
1. General information
A.G. BARR p.l.c. (the "Company") and its subsidiaries (together the "Group")
manufacture, distribute and sell a range of beverages. 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 52 weeks ended 29 January 2023 (prior
financial year 53 weeks ended 30 January 2022).
Basis of preparation
The financial information for the year ended 29 January 2023 contained in this
news release was approved by the Board on 28 March 2023. 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) as adopted by the UK and 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 31
January 2022. 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 30 January 2022 have been
delivered to the Registrar of Companies. Statutory financial statements for
the year ended 29 January 2023, 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 reasonably possible downside scenarios that could
impact the business (both individually and cumulatively).
These scenarios include 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.
The director's 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 29 January 2023, the consolidated balance sheet reflects a net asset
position of £268.8m, including net cash at bank of £52.9m. The Group has
£20m of committed and unutilised debt facilities, consisting of one revolving
credit facility with one bank, providing the business with a secure funding
platform. Throughout these severe but plausible downside scenarios, and with
no cost mitigation, the Group's liquidity requirements would be satisfied
within existing credit facilities, and headroom is maintained on associated
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:
· Property, Plant and Equipment Proceeds before Intended Use -
Amendments to IAS 16;
· Onerous contracts - Cost of Fulfilling a Contract - Amendments to
IAS 37;
· Annual Improvements to IFRS Standards 2018 - 2020; and
· Reference to the Conceptual Framework - Amendments to IFRS 3.
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 30 January 2023 and not adopted early
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 29 January 2023
reporting periods and have not been early adopted by the Group. These
standards, amendments or interpretations are not expected to have a material
impact on the entity in the current or future reporting periods or on
foreseeable future transactions.
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 reference to their
gross profit.
Soft drinks Cocktail solutions Other Total
Year ended 29 January 2023 £m £m £m £m
Total revenue 266.6 42.8 8.2 317.6
Gross profit 109.6 16.2 2.3 128.1
Soft drinks Cocktail solutions Other Total
Year ended 30 January 2022 £m £m £m £m
Total revenue 230.6 36.9 1.1 268.6
Gross profit 103.5 14.7 0.4 118.6
There are no material intersegment sales. All revenue is in relation to
product sales, which is recognised at a point in time, upon delivery to the
customer.
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 £60.3m, which arose from sales to the Group's largest customer
(2022: £51.5m). No other single customers contributed 10% or more to the
Group's revenue in either 2022 or 2023.
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.
2023 2022
Revenue £m £m
UK 303.7 257.3
Rest of the world 13.9 11.3
317.6 268.6
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.
3. Taxation
2023 2022
£m £m
Charge/(credit) to the income statement
Current tax on profits for the year 7.0 7.1
Adjustments in respect of prior years 0.7 (0.3)
Total current tax expense 7.7 6.8
Deferred tax
Origination and reversal of:
Temporary differences 3.5 1.3
Adjustment for change in corporation tax rate - 5.7
Adjustments in respect of prior years (0.7) 0.6
Total deferred tax expense 2.8 7.6
Total tax expense 10.5 14.4
In addition to the above movements in deferred tax, a deferred tax debit of
£0.6m (2022: credit of £0.3m) has been recognised in other comprehensive
income and a debit of £0.2m (2022: credit of £0.4m) has been taken direct to
reserves. In addition, a deferred tax liability of £4.3m has been recognised
on the acquisition of Boost.
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:
2023 2023 2022 2022
£m % £m %
Profit before tax 44.4 42.2
Tax at 19% (2022: 19.0%) 8.4 19.0 8.0 19.0
Tax effects of:
Items that are not deductible in determining taxable profit 2.1 4.6 0.4 0.9
Current tax adjustment in respect of prior years 0.7 1.6 (0.3) (0.7)
Deferred tax adjustment in respect of prior years (0.7) (1.6) 0.6 1.4
Deferred tax adjustment in respect of change in corporation tax rates - - 5.7 13.5
Total tax expense 10.5 23.6 14.4 34.1
The weighted average tax rate was 23.6% (2022: 34.1%).
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. The Finance Act 2022, which received Royal
Assent on 24 February 2022, will not have any impact on the corporation tax
figures.
4. Dividends
Dividends paid in the financial year were as follows:
2023 2022 2023 2022
per share per share £m £m
Final dividend 10.00 p - 11.1 -
Interim dividend 2.50 p 2.00 p 2.8 2.2
Special dividend - p 10.00 p - 11.2
12.50 p 12.00 p 13.9 13.4
The directors have proposed a final dividend in respect of the year ended 29
January 2023 of 10.6p per share. It will be paid on 9 June 2023 to all
shareholders who are on the Register of Members on 12 May 2023.
In the year ended 30 January 2022, 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.
Dividends payable in respect of the financial year were as follows:
2023 2022
per share per share
Final dividend 10.60 p 10.00 p
Interim dividend 2.50 p 2.00 p
13.10 p 12.00 p
Special dividend - 10.00 p
Total dividend payable 13.10 p 22.00 p
5. Investment in subsidiaries
2023 2022
£m £m
Opening investment in subsidiaries 90.3 84.1
Investments made in the year 23.3 6.2
Closing investment in subsidiaries 113.6 90.3
On 5 December 2022, the Group acquired 100% of the shares and voting interests
in Boost Drinks Holdings Limited ("Boost") granting it control. Included in
the identifiable assets and liabilities of Boost 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
soft drinks category, supported by the Group's brand building capability.
For the two months ended 29 January 2023, Boost contributed revenue of £7.3m
and had an immaterial impact on profit. Had Boost been a subsidiary for the
full financial year, it would have contributed c. £50m revenue to the Group
and c.£1.0m profit.
The value of the identifiable assets and liabilities of Boost at the date of
acquisition were:
£m
Property, plant and equipment 0.2
Right-of-use assets 0.3
Intangible assets 16.9
Inventory 6.0
Trade receivables 8.5
Cash and cash equivalents 1.3
Trade payables (7.1)
Accruals (2.8)
Lease creditors (0.3)
Other taxes and social security (0.7)
Current tax (0.2)
Deferred tax (4.1)
Total identifiable net assets acquired 18.0
Goodwill 1.9
Value on acquisition 19.9
Total consideration 19.9
Represented by:
Cash 19.9
The acquisition includes a potential additional consideration of up to £12.0m
payable depending on the successful delivery of future performance during an
earn-out period commencing 1 December 2022 and ending 20 November 2024.
On 20 December 2022 the Group acquired the remaining 38.2% equity stake in
MOMA Foods Ltd ("MOMA") for a total cash consideration of £3.4m.
On 6 December 2021, the Group acquired 61.8% of the shares and voting
interests in 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.
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. 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%.
The put liability was derived from an internal valuation, using forecast
revenue over the exercise period, discounted at a post-tax rate of 18% and
assumed the option was exercised in full in the third year following the date
of acquisition. As the Group now owns 100% of MOMA the put liability has been
released in the year to 29 January 2023.
Acquisition-related costs
The Group incurred acquisition-related costs of £1.2m (year to 30 January
2022 £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.
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 UK
Rubicon Drinks Limited Distribution of fruit based soft-drinks England UK
MOMA Foods Ltd Distribution and selling of oat drinks and cereals England UK
Boost Drinks Limited Distribution and selling of soft-drinks England UK
A.G. BARR p.l.c. holds 100% of the equity and votes of the subsidiaries. (Year
ended 30 January 2022: 100% with the exception of MOMA: 68.2%). The
subsidiaries have the same year end as A.G. BARR p.l.c. and have been included
in the Group consolidation. The companies listed are the trading subsidiaries.
CAUTIONARY STATEMENT
This report is addressed to the shareholder of A.G. BARR p.l.c. and has been
prepared solely to provide information to them.
This report is intended to inform the shareholders of the Group's performance
for the year ended 29 January 2023. This report contains forward-looking
statements based on knowledge and information available to the directors as at
the date the report was prepared. These statements should be treated with
caution due to the inherent uncertainties underlying any forward-looking
information and any statements about the future outlook may be influenced by
factors that could cause actual outcomes and results to be materially
different.
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:
Adjusted earnings per share is a non-GAAP measure calculated by dividing
adjusted profit attributable to equity holders by the weighted average number
of shares in issue.
Adjusted EBITDA is a non-GAAP measure and is defined as adjusted operating
profit before depreciation and amortisation.
Adjusted EBITDA margin is a non-GAAP measure and is calculated as adjusted
EBITDA divided by adjusted revenue.
Adjusted operating margin is a non-GAAP measure calculated by dividing
adjusted operating profit by adjusted revenue.
Adjusted operating profit is a non-GAAP measure calculated as operating profit
after adjusting items.
Adjusted profit before tax is non-GAAP measure calculated as reported profit
before tax after adjusting entries as disclosed in the adjusting entries
accounting policy.
Adjusted revenue is a non-GAAP measure calculated as revenue after adjusting
items.
Capital expenditure is a non-GAAP measure and is defined as the purchases of
property, plant and equipment, and is disclosed in the property, plant and
equipment note.
EBITDA is a non-GAAP measure and is defined as operating profit before
depreciation and amortisation.
EBITDA margin is a non-GAAP measure and is calculated as EBITDA divided by
revenue.
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, the net
cash flow on the purchase and sale of shares by employee benefit trusts and
dividend payments.
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.
Like-for-like revenue growth is a non-GAAP measured comparing adjusted revenue
in the current year to the prior year excluding MOMA and Boost revenues in
each year.
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 plus short-term investments less loans and other borrowings
as shown in the statement of financial position.
Net funds/(debt) is a non-GAAP measure and is defined as cash and cash
equivalents plus short-term investments less lease liabilities and overdrafts.
Operating margin is a non-GAAP measure calculated by dividing operating profit
by revenue.
Return on capital employed (ROCE) is a non-GAAP measure and is defined as
reported profit before tax 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.
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.
Reconciliation of Non-GAAP measures
Adjusted Consolidated Income Statements
Year ended 29 January 2023 Year ended 30 January 2022
Reported MOMA acquisition impact Gain on sale of property Boost acquisition fees Boost earn-out Adjusted Reported Gain on sale of property Extra week trading Adjusted
£m £m £m £m £m £m £m £m £m £m
Revenue 317.6 - - - - 317.6 268.6 - (6.8) 261.8
Cost of sales (189.5) - - - - (189.5) (150.0) - 3.7 (146.3)
Gross profit 128.1 - - - - 128.1 118.6 - (3.1) 115.5
1.3 - (1.3) - - - 0.7 (0.7) - -
Other income
Operating expenses (84.1) (2.7) - 1.2 0.8 (84.8) (76.6) - - (76.6)
Operating profit 45.3 (2.7) (1.3) 1.2 0.8 43.3 42.7 (0.7) (3.1) 38.9
0.5 - - - - 0.5 - - - -
Finance income
Finance costs (1.4) 1.1 - - - (0.3) (0.4) - - (0.4)
Share of after tax results of associates - - - - - - (0.1) - - (0.1)
Profit before tax 44.4 (1.6) (1.3) 1.2 0.8 43.5 42.2 (0.7) (3.1) 38.4
Tax on profit (10.5) - - - - (10.5) (14.4) - - (14.4)
Profit for the period 33.9 (1.6) (1.3) 1.2 0.8 33.0 27.8 (0.7) (3.1) 24.0
Adjusting entries:
MOMA acquisition impact - the remeasurement and release of the contingent
consideration in respect of MOMA Foods Ltd following the Group's acquisition
of the remaining 38.2% minority interest in December 2022.
Gain on sale of property - the gain on the disposal of the Newcastle
distribution site in the year to 29 January 2023 and Sheffield distribution
depot in the year to 30 January 2022.
Boost acquisition fees - the acquisition fees incurred on the successful
acquisition of Boost Drinks Holdings Limited
Boost earn-out - the accrual related to the potential payment of £10m
associated with the acquisition of Boost Drinks Holdings Limited earn-out.
Extra week trading - the 12 months to 29 January 2023 was a 52 week period and
the year ended 30 January 2022 was a 53 week period. This extra week of
trading is removed for comparative purposes.
Like-for-like revenue growth £m
Adjusted revenue for year to 29 January 2023 317.6
Less Boost (7.3)
Less MOMA revenue (8.2)
302.1
Adjusted revenue for period to 30 January 2022 261.8
Less MOMA (1.1)
260.7
Movement 41.4
Growth 15.9%
Reconciliation of non-GAAP measures
EBITDA 2023 2022
£m
£m
Operating profit reported 45.3 42.7
Depreciation and amortisation 11.0 11.2
EBITDA 56.3 53.9
EBITDA margin 2023 2022
£m
£m
Revenue 317.6 268.6
EBITDA 56.3 53.9
EBITDA margin 17.7% 20.1%
Adjusted EBITDA 2023 2022
£m
£m
Operating profit adjusted 43.3 38.9
Depreciation and amortisation 11.0 11.2
Adjusted EBITDA 54.3 50.1
Adjusted EBITDA margin 2023 2022
£m
£m
Adjusted revenue 317.6 261.8
Adjusted EBITDA 54.3 50.1
Adjusted EBITDA margin 17.1% 19.1%
Adjusted EPS 2023 2022
Adjusted profit attributable to equity holders of the Company £m 33.0 24.0
Weighted average number of shares in issue 111,258,209 111,187,778
Adjusted EPS (p) 29.66 21.59
Full year dividend 2023 2022
pence
pence
Interim dividend paid 2.5 2.0
Final dividend declared 10.6 10.0
Full year dividend 13.1 12.0
Gross margin reported 2023 2022
£m
£m
Revenue 317.6 268.6
Reported gross profit 128.1 118.6
Gross margin reported 40.3% 44.2%
Net cash at bank 2023 2022
£m
£m
Cash and cash equivalents 13.6 68.7
Short-term investments 40.0 -
Loans and other borrowings (0.7) (0.3)
Net cash at bank 52.9 68.4
Operating margin 2023 2022
£m
£m
Revenue 317.6 268.6
Reported operating profit 45.3 42.7
Operating margin 14.3% 15.9%
Adjusted operating margin 2023 2022
£m
£m
Adjusted revenue 317.6 261.8
Adjusted operating profit 43.3 38.9
Adjusted operating margin 13.6% 14.9%
ROCE 2023 2022
£m
£m
Profit before tax 44.4 42.2
Intangible assets 116.2 98.6
Property, plant and equipment 102.5 93.8
Right-of-use assets 5.4 4.2
Investment in associates 0.7 0.7
Inventories 34.7 24.2
Trade and other receivables 60.4 44.3
Current tax (0.7) 0.3
Trade and other payables (72.3) (54.0)
Invested capital 246.9 212.1
ROCE 18.0% 19.9%
( )
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