REG - Barr(A.G.) PLC - Interim Results
27/09/2022 07:00
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RNS Number : 7115A Barr(A.G.) PLC 27 September 2022
IMMEDIATE RELEASE
27 September 2022
A.G. BARR p.l.c.
("A.G. BARR" or "the Group")
A.G. BARR produces and markets some of the UK's leading drinks brands,
including IRN-BRU, Rubicon and Funkin.
INTERIM RESULTS FOR THE 26 WEEKS ENDED 31 JULY 2022
Strong first half performance
Financial summary
26 wks to 31st July 2022 27 wks to 1 Aug 2021** % Change
Revenue £157.9m £135.3m 16.7%
Reported profit before tax £24.7m £24.4m 1.2%
Adjusted profit before tax * £25.3m £20.6m 22.8%
Adjusted operating profit margin * 16.2% 16.2% Flat
Cash and cash equivalents £61.3m £65.6m (6.6%)
Basic EPS 18.98p 12.78p 48.5%
Interim dividend per share 2.50p 2.00p 25.0%
Highlights
○ Strong sales momentum across both business units : **
○ Barr Soft Drinks : Up 12.3%
○ Funkin : Up 21.4%
○ Trading benefited from year-on-year Covid-19 recovery, particularly
in the on-trade and out of home sectors, as well as good summer weather
○ Core brand growth highlights our portfolio strength, our ability to
flex price and promotions, the value we offer to consumers and customers,
alongside the positive impact of brand innovation
○ Operating margin, while impacted by cost inflation, has been
supported by sales growth, cost control and our pricing approach
○ Continued progress across "No Time To Waste" environmental
sustainability programme including the approval of our near and long-term
science-based emissions reduction targets with the Science Based Target
initiative (SBTi).
○ Strong balance sheet with £61.3m of cash and cash equivalents
○ Interim dividend of 2.5 pence per share representing an increase on
the prior year of 25%
Roger White, Chief Executive, commented:
"We made a very strong start to the year and continue to see good momentum
across our business and brands. That said, the UK's high level of inflation
has accelerated across the summer and is creating a well documented cost of
living crisis for many consumers, alongside increasing challenges for
industry.
We continue to take action to mitigate the cost pressures we face both in the
short term across the balance of the current financial year and where possible
into 2023.
We anticipate in the coming months that the current economic environment will
impact consumer purchasing behaviour, however we currently remain confident
that our strategy and actions will allow us to deliver a full-year profit
performance ahead of the prior year."
For more information, please contact :
A.G. BARR 0330 390 3900 Instinctif Partners 020 7457 2020
Roger White, Chief Executive Justine Warren
Stuart Lorimer, Finance Director Matthew Smallwood
_________________________________________________________________________________
Interim statement
We are pleased to report a strong performance in the first half of our 2022/23
financial year.
Revenue was £157.9m representing year on year growth of :
● 20% on a like-for-like basis*, excluding both the 27th week in prior
year** and the revenue contribution from MOMA Foods in the current reporting
period
● 17% on a reported revenue basis (27 weeks** to 1 August 2021 :
£135.3m)
Reported profit before tax in the period was £24.7m (2021/22 H1 : £24.4m).
This strong profit performance was supported by revenue growth across all of
our core brands.
The prior year first half profit performance benefited from a number of
one-off factors, as reported at the time, and therefore this year's strong H1
profit delivery is all the more positive.
Adjusted profit* in the period was £25.3m an increase of 22.8% on the prior
year first half (2021/22 H1 : £20.6m). This takes into account the
following :
● H1 2021/22 : the impact of the additional week and the gain on sale
of property
● H1 2022/23 : the time value adjustment related to the MOMA deferred
consideration
Inflation continued to accelerate across the UK in the reporting period.
Against this backdrop we have actively managed our position through ongoing
cost management actions and the successful execution of our pricing and
promotional strategies across all our markets and channels.
Market context
Soft drinks : We maintained our value share of the total UK soft drinks market
which increased by 8.1% across the period, while volume fell by 3.0%. Market
performance was driven by broad-based consumer price inflation leading to
significant value growth but reduced volumes. The soft drinks market also
experienced year-on-year recovery in "drink now" out of home consumption in
the more difficult to measure impulse channel. These dynamics are consistent
across both carbonates and stills.
(Source : IRI Marketplace data for the 26 weeks to 30 July 2022)
Cocktails : The value of GB cocktails across the ontrade continues to grow and
is now worth £664m, up 13.2% year on year, while ready to drink (RTD)
cocktails grew 24%, four times the rate of the RTD category as a whole.
(Source: Nielsen pre-mixed alcoholic drinks total coverage MAT 30/07/2022 ;
CGA Q1 2022)
Oat milk : Across the UK grocery market, oat milk is growing 16% year on year,
with one in three British consumers now drinking plant based milk.
(Source: Kantar May 22, Nielsen 52 w/e July 2022, Mintel Sept 2021)
Business performance
Trading has been strong across both our business units with a 12.3% revenue
increase across Barr Soft Drinks and Funkin's sales up 21.4%.
The addition of the MOMA business has also supported our overall revenue
performance. While, as anticipated, there is no positive impact on profit at
this early stage, growth potential in this sector continues to be exciting.
Growth across the Group has been driven by ongoing brand investment and the
successful execution of our pricing and promotional activity. Trading
performance further benefited from the year-on-year Covid-19 recovery across
the market, particularly in the on-trade and out of home sectors, as well as
good summer weather. The positive revenue growth in our core brands
highlights the strength of our portfolio, our ability to flex price and
promotions, the value we offer to consumers and customers as well as the
positive impact of brand innovation - this includes further growth in Rubicon
RAW Energy and Funkin nitro cocktails.
Operating margins in the period have been supported by sales growth, cost
control and our pricing approach. We anticipate that this level of margin
will not be sustained across the second half of the financial year given the
impact of increasing costs, our continued brand investment and the volume
impact of reduced consumer confidence. Therefore we anticipate our full year
adjusted operating margin to be around 14%.
Cash flow and balance sheet
Net cash from operating activities was £11.4m, a decrease of £5.5m compared
to 2021/22 (£16.9m).
Cash generated from the growth in operating profit was offset by the impact of
an increase in debtors associated with strong summer trading and increased
inventory from a combination of inflation and higher stock cover.
Capital expenditure in the first half of the year was £7.0m (2021/22 H1 :
£1.4m). This reflects investment in production capacity and capability,
including new canning capacity at our Milton Keynes site and the commencement
of our asset refresh programme at our Cumbernauld factory. Full year capital
expenditure is estimated at £16-20m (2021/22 : £5m) and expected to be
maintained at this level for at least two further years.
The Group closed the period with cash balances of £61.3m (2021/22 H1 :
£65.6m), which was £7.4m less than the period opening position (£68.7m).
Cash generated from operations funded the final 2021/22 dividend (£11.1m)
paid in June, our capital investment programme and ongoing corporation tax
payments (£3.4m).
Adjusted earnings per share* were 19.52p (2021/22: 9.36p). This significant
increase on the prior period reflects the improved trading performance and the
one-off impact in the prior period from the deferred tax adjustment arising
from the change in corporation tax rate due in 2023. Excluding the one-off
impact adjusted earnings per share grew by 35%.
Responsibility
We have continued to make good progress across our responsibility agenda,
particularly with our "No Time To Waste" environmental sustainability
programme. Highlights during the period include increased use of recycled
material across our packaging as well as the approval of our near and
long-term science-based emissions reduction targets with the Science Based
Target initiative (SBTi) and an SBTi verified science-based net-zero target
across our value chain of 2050. These targets are aligned with the SBTi's
new Net-Zero Standard. ***
Dividend
The Board has declared an interim dividend for the 26 weeks ended 31 July 2022
of 2.5 pence per share (2021/22 : 2.0 pence) payable on 28 October 2022 to
shareholders on the register on 7 October 2022.
Outlook
The UK's high level of inflation continued across the summer and is not
expected to abate in the short-term, leading to challenging economic
conditions for both consumers and industry.
We will continue to invest behind our brands to support long-term growth while
at the same time taking appropriate mitigating action to limit the full year
impact of cost inflation.
Our brands are performing well and our business and people have continued to
demonstrate both their resilience and flexibility. We anticipate in the
coming months that the economic environment will impact consumer purchasing
behaviour. However we currently remain confident that our portfolio of
strong brands and our established strategy will allow us to deliver a
full-year profit performance ahead of the prior year.
Mark Allen Roger White
Chairman Chief Executive
* Items marked with an asterisk are non-GAAP measures. Definitions and
relevant reconciliations are provided at the end of this announcement
** 2021/22 was a 53-week financial year with a 27-week first half. 2022/23
reverts to a 52-week year with a 26-week first half
*** Full details of our science-based emissions reduction and science-based
net-zero targets can be found at
https://www.agbarr.co.uk/responsibility/no-time-to-waste/
(https://www.agbarr.co.uk/responsibility/no-time-to-waste/)
Consolidated Condensed Income Statement
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
Total Total Total
Note £m £m £m
Revenue 6 157.9 135.3 268.6
Cost of sales (88.5) (73.8) (150.0)
Gross profit 6 69.4 61.5 118.6
Other income - 0.7 0.7
Operating expenses (43.9) (37.6) (76.6)
Operating profit 8 25.5 24.6 42.7
Finance costs 9 (0.7) (0.2) (0.4)
Share of results of associate (0.1) - (0.1)
Profit before tax 24.7 24.4 42.2
Tax on profit 10 (3.8) (10.2) (14.4)
Profit for the period 20.9 14.2 27.8
Attributable to:
Equity shareholders of the parent Company 21.1 14.2 27.9
Non-controlling interests (0.2) - (0.1)
Earnings per share (p)
Basic earnings per share 11 18.98 12.78 25.09
Diluted earnings per share 11 18.81 12.71 24.95
Consolidated Condensed Statement of Financial Position
Unaudited Unaudited Audited
As at 31 July 2022 As at 1 August 2021 As at 30 January 2022
Note £m £m £m
Non-current assets
Intangible assets 97.9 89.8 98.6
Property, plant and equipment 96.6 93.3 93.8
Right-of-use assets 3.8 2.2 4.2
Loans and receivables 1.5 1.0 1.5
Investment in associates 0.6 0.8 0.7
200.4 187.1 198.8
Current assets
Inventories 24.0 17.8 24.2
Trade and other receivables 68.5 59.7 44.3
Derivative financial instruments 13 - 0.1 -
Current tax assets 0.6 - 0.3
Cash and cash equivalents 61.3 65.6 68.7
154.4 143.2 137.5
Total assets 354.8 330.3 336.3
Current liabilities
Loans and other borrowings 14 - - 0.3
Trade and other payables 63.5 56.5 54.0
Derivative financial instruments 13 0.2 0.2 0.2
Lease liabilities 14 1.1 1.0 1.3
Provisions 0.9 1.4 2.0
Current tax liabilities - 0.2 -
65.7 59.3 57.8
Non-current liabilities
Loans and other borrowings 14 0.2 - -
Deferred tax liabilities 21.7 18.9 21.5
Lease liabilities 14 2.7 1.1 2.8
Put liabilities 5.6 - 5.0
Retirement benefit obligations 15 1.2 4.8 1.0
31.4 24.8 30.3
Capital and reserves attributable to equity holders
Share capital 4.7 4.7 4.7
Share premium account 0.9 0.9 0.9
Share options reserve 2.6 1.1 1.6
Other reserves (5.1) 0.1 (5.1)
Retained earnings 251.1 239.4 242.4
Total shareholder equity 254.2 246.2 244.5
Non-controlling interest in equity 3.5 - 3.7
257.7 246.2 248.2
Total equity and liabilities 354.8 330.3 336.3
Consolidated Condensed Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
£m £m £m
Profit for the period 20.9 14.2 27.8
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans (Note 15) (1.9) 1.5 4.7
Deferred tax movements on items above 0.5 (0.4) (1.2)
Deferred tax remeasurement for movement in tax rate - 1.5 1.5
Items that will be or have been reclassified to profit or loss
Cash flow hedges:
Gains arising during the period - (0.1) 0.1
Deferred tax movements on items above - - -
Other comprehensive (expense)/income for the period, net of tax (1.4) 2.5 5.1
Total comprehensive income for the period 19.5 16.7 32.9
Attributable to:
Equity shareholders of the parent Company 19.7 16.7 33.0
Non-controlling interests (0.2) - (0.1)
Consolidated Condensed Statement of Changes in Equity (Unaudited)
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
Profit for the period - - - - 21.1 21.1 (0.2) 20.9
Other comprehensive (expense)/income - - - - (1.4) (1.4) - (1.4)
Total comprehensive (expense)/income for the period - - - - 19.7 19.7 (0.2) 19.5
Recognition of share-based payment costs - - 1.0 - - 1.0 - 1.0
Transfer of reserve on share award - - (0.1) - 0.1 - - -
Deferred tax on items taken directly to reserves - - 0.1 - - 0.1 - 0.1
Dividends paid - - - - (11.1) (11.1) - (11.1)
At 31 July 2022 4.7 0.9 2.6 (5.1) 251.1 254.2 3.5 257.7
Consolidated Condensed Statement of Changes in Equity (Unaudited)
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 period - - - - 14.2 14.2 - 14.2
Other comprehensive (expense)/income - - - (0.1) 2.6 2.5 - 2.5
Total comprehensive (expense)/income for the period - - - (0.1) 16.8 16.7 - 16.7
Company shares purchased for use by employee benefit trusts (Note 16) - - - - (0.1) (0.1) - (0.1)
Recognition of share-based payment costs - - 0.4 - - 0.4 - 0.4
Transfer of reserve on share award - - (1.5) - 1.5 - - -
Deferred tax on items taken directly to reserves - - 0.4 - - 0.4 - 0.4
Reallocation between reserves - - - 0.4 (0.4) - - -
At 1 August 2021 4.7 0.9 1.1 0.1 239.4 246.2 - 246.2
Consolidated Condensed Statement of Changes in Equity (Audited)
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 (Note 16) - - - - (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 - - -
Recognition of non-controlling interests - - - (5.0) - (5.0) 3.8 (1.2)
Deferred tax on items taken direct to reserves - - 0.4 - - 0.4 - 0.4
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
Consolidated Condensed Cash Flow Statement
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
£m £m £m
Operating activities
Profit for the period before tax 24.7 24.4 42.2
Adjustments for:
Finance costs 0.7 0.2 0.4
Depreciation of property, plant and equipment 4.9 5.2 9.9
Amortisation of intangible assets 0.7 0.7 1.3
Share-based payment costs 1.0 0.4 1.2
Gain on sale of fixed assets (0.2) (0.7) (0.7)
Share of results of associates 0.1 - 0.1
Operating cash flows before movements in working capital 31.9 30.2 54.4
Decrease/(increase) in inventories 0.2 1.5 (4.3)
Increase in receivables (24.2) (22.1) (5.6)
Increase in payables 8.6 12.4 7.7
Difference between employer pension contributions and amounts recognised in (1.7) (1.7) (2.3)
the income statement
Cash generated by operations 14.8 20.3 49.9
Tax paid (3.4) (3.4) (6.5)
Net cash from operating activities 11.4 16.9 43.4
Investing activities
Acquisition of subsidiary (net of cash acquired) - - (5.1)
Purchase of property, plant and equipment (7.0) (1.4) (5.0)
Proceeds on sale of property, plant and equipment 0.2 1.1 1.1
Net cash used in investing activities (6.8) (0.3) (9.0)
Financing activities
Loan receivable - - (0.5)
Loans repaid (0.1) - -
Lease payments (0.8) (0.8) (1.5)
Purchase of Company shares by employee benefit trusts - (0.1) (0.2)
Dividends paid (11.1) - (13.4)
Interest paid - (0.1) (0.1)
Net cash used in financing activities (12.0) (1.0) (15.7)
Net increase in cash and cash equivalents (7.4) 15.6 18.7
Cash and cash equivalents at beginning of period 68.7 50.0 50.0
Cash and cash equivalents at end of period 61.3 65.6 68.7
Notes to the Consolidated Condensed Financial Statements
1. General information
A.G. BARR p.l.c. (the "Company") and its subsidiaries (together the "Group")
manufacture, market, 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.
This consolidated condensed interim financial information does not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 30 January 2022 were approved by
the Board of directors on 29 March 2022 and delivered to the Registrar of
Companies. The comparative figures for the financial year ended 30 January
2022 are an extract of the Company's statutory accounts for that year. The
report of the auditor on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under section
498 (2) or (3) of the Companies Act 2006.
This consolidated condensed interim financial information is unaudited but has
been reviewed by the Company's Auditor.
2. Basis of preparation
This consolidated condensed interim financial information for the 26 weeks
ended 31 July 2022 has been prepared in accordance with UK-adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. The interim report does not include all of the
notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the annual report
for the year ended 30 January 2022, which has been prepared in accordance with
UK-adopted international accounting standards and with the requirements of the
Companies Act 2006.
Going concern basis
The directors have adopted the going concern basis in preparing these accounts
after assessing the principal risks.
This assessment was undertaken through modelling a number of severe but
plausible downside scenarios that could impact the business (both individually
and cumulatively) over the period until January 2025. These scenarios include
a global pandemic and associated restrictions, significant disruption to our
supply chain, a cyber attack, significant energy cost inflation, and the
impact of significant inflationary pressures on consumers. In each the Group
continues to be cash generative throughout the forecast horizon, resulting in
our liquidity headroom being maintained.
Our experience through the Covid-19 pandemic has given us confidence that the
Group can remain profitable and cash-generative through prolonged disruption.
The most significant potential financial impact would be due to a significant
reduction in sales. The revenue and operational leverage impact of such a
volume loss would have a negative impact on Group profitability, however the
scenario modelling would indicate that the Group would remain profitable over
the next 12 months and we would anticipate a recovery in the following years.
The Group has £30m of committed and unutilised debt facilities, consisting of
two revolving credit facilities from two individual banks, providing the
business with a secure funding platform. One of these facilities (£10m)
expires in April 2023, and will not be renewed given the Group's current
liquidity headroom. The other facility (£20m) expires in February 2026.
Throughout the above severe but plausible downside scenarios, the Group
continues to have significant liquidity headroom on facilities and against
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 and parent Company will have adequate resources to continue in
operation for at least 12 months from the signing date of these condensed
consolidated financial statements. They therefore consider it appropriate to
adopt the going concern basis of accounting in preparing these financial
statements.
3. Accounting policies
New standards and interpretations applied for the first time
There are no new or amended standards that became applicable for the current
reporting period. The accounting policies set out in the annual financial
statements for the year ended 30 January 2022 have been applied consistently
to all periods presented in these Consolidated Condensed Interim Financial
Statements.
New standards and interpretations not yet applied
There were no new or revised IFRS, amendments or interpretations in issue but
not yet effective that are potentially material for the Group and which have
not yet been applied.
4. Principal risks and uncertainties
The directors consider that the following principal risks and uncertainties
could have a material impact on the Group's performance in the balance of the
financial year. Further detail can be found on pages 52 - 56 of the Group's
annual financial statements as at 30 January 2022, which are available on our
website, www.agbarr.co.uk.
- Changes in consumer preferences, perception or purchasing behaviour
- Consumer rejection of enhanced sweeteners used in reformulated products
- Loss of product integrity
- Loss of continuity of supply of major raw materials
- Adverse publicity in relation to the soft drinks industry, the Group or its
brands
- Government intervention on climate change and environmental issues e.g.
packaging waste
- Failure to maintain customer relationships or take account of changing
market dynamics
- Inability to protect the Group's intellectual property rights
- Failure of the Group's operational infrastructure
- Failure of critical IT systems or a breach of cyber security
- Financial risks
- Environmental Social and Governance (ESG) risks
- Cost inflation
The Group has reviewed its exposure to climate-related and other emerging
business risks but has not identified any specific risks that would impact the
financial performance or position of the Group at 31 July 2022.
5. Financial risk management and financial instruments
The Group's activities expose it to a variety of financial risks: market risk
(including foreign exchange risk, cash flow and fair value interest rate risk
and price risk), credit risk and liquidity risk.
The condensed interim financial statements should be read in conjunction with
the Group's annual financial statements as at 30 January 2022 as they do not
include all financial risk management information and disclosures contained
within the annual financial statements. There have been no changes in the risk
management policies since the year end.
6. 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.
During the year ended 30 January 2022, the Group amended the composition of
reportable segments to better reflect internal reporting. Accordingly, the
Group has restated the previously reported segment information for the 6
months ended 1 August 2021.
Unaudited
Six months ended 31 July 2022
Soft drinks Cocktail solutions Other Total
£m £m £m £m
Total revenue 131.0 22.7 4.2 157.9
Gross profit 58.9 9.1 1.4 69.4
Unaudited
Six months ended 1 August 2021 restated
Soft drinks Cocktail solutions Other Total
£m £m £m £m
Total revenue 116.6 18.7 - 135.3
Gross profit 54.2 7.3 - 61.5
Audited
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
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.
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 reconciliations of segment
assets and liabilities to the consolidated condensed statement of financial
position has been disclosed for any of the periods presented.
Included in revenues arising from the above segments are revenues of
approximately £30.5m which arose from sales to the Group's largest customer.
In the year ended 30 January 2022 and six months ended 1 August 2021, revenues
of approximately £51.5m and £28m respectively arose from sales to the
Group's largest customer. No other single customers contributed 10 per cent or
more to the Group's revenue in the comparative period to August 2021 or
January 2022.
All of the segments included within "Soft drinks" and "Cocktail solutions"
meet the aggregation criteria set out in IFRS 8 Operating Segments.
7. Seasonality of operations
Revenues and reported profits are affected by weather conditions, cost
inflation, the timing of marketing and promotional investment and innovation
launches. It is anticipated that the reported profits for the second half of
the year to 29 January 2023 will be lower than those for the 26 weeks ended 31
July 2022.
8. Operating profit
The following items have been charged/(credited) to operating profit during
the period:
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
£m £m £m
Gain on sale of property, plant and equipment (0.2) (0.7) (0.7)
Impairment of inventories 0.1 0.1 0.2
Foreign exchange gains recognised (0.1) (0.2) (0.2)
Inventories are stated at the lower of cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of
business less the estimated costs of completing production and selling
expenses.
9. Finance costs
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
£m £m £m
Interest payable (0.1) (0.1) (0.2)
Lease interest - - (0.1)
Finance costs relating to defined benefit pension plans - (0.1) (0.1)
Unwind of put option discount (0.6) - -
(0.7) (0.2) (0.4)
10. Tax on profit
The interim period total tax charge of £3.8m (six months ended 1 August 2021:
£10.2m; year ended 30 January 2022: £14.4m) is accrued based on the
estimated annual effective tax rate of 15.4% (six months ended 1 August 2021:
41.8%; year ended 30 January 2022: 34.1%). The effective tax rate in the
current year has decreased as a result of the remeasurement of deferred tax
balances in the prior year and the increase in capital allowances available.
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 in the comparative reporting periods. Excluding
the impact of the change in tax rate the effective tax rate for the six months
ended 1 August 2021 was 17.6%. The Finance Act 2022, which received Royal
Assent on 24 February 2022, will not have any impact on the corporation tax
figures. However, in the September 2022 Mini Budget it was announced that
the increase to 25% would now not occur and the Corporation Tax Rate would
instead be held at 19%. This rate had not been substantively enacted at the
balance sheet date, and as a result the deferred tax balances as at 31 July
2022 were measured using the 25% noted above. The estimated impact of the
reversal of the corporation tax rate increase would be to reduce the deferred
tax liability by around £5m.
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
Analysis of tax charge £m £m £m
Current income tax charge 3.2 4.4 6.8
Deferred income tax charge 0.6 5.8 7.6
Total tax charge in the condensed income statement 3.8 10.2 14.4
11. Earnings per share
Basic earnings per share has been calculated by dividing the earnings
attributable to equity holders of the parent by the weighted average number of
shares in issue during the year, excluding shares held by the employee share
scheme trusts.
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
Profit attributable to equity holders of the Company (£m) 21.1 14.2 27.9
Weighted average number of ordinary shares in issue 111,192,917 111,104,168 111,187,778
Basic earnings per share (pence) 18.98 12.78 25.09
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares. These represent share options granted to employees where the exercise
price is less than the average market price of the Company's ordinary shares
during the period. The number of shares calculated as above is compared with
the number of shares that would have been issued assuming the exercise of the
share options.
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
Profit attributable to equity holders of the Company (£m) 21.1 14.2 27.9
Weighted average number of ordinary shares in issue 111,192,917 111,104,168 111,187,778
Adjustment for dilutive effect of share options 998,620 633,701 657,074
Diluted weighted average number of ordinary shares in issue 112,191,537 111,737,869 111,844,852
Diluted earnings per share (pence) 18.81 12.71 24.95
12. Dividends
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022 Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
per share (p) per share (p) per share (p) £m £m £m
Paid final dividend 10.00 - - 11.1 - -
Paid interim dividend - - 2.00 - - 2.2
Paid special dividend - - 10.00 - - 11.2
10.00 - 12.00 11.1 - 13.4
An interim dividend of 2.5 pence per share was approved by the Board on 27
September 2022 and will be paid on 28th October 2022 to shareholders on the
register as at 7th October 2022.
13. Financial instruments
Current assets of £nil (at 1 August 2021: £0.1m; 30 January 2022: £nil)
relate to forward foreign currency contracts with a maturity of less than 12
months and are recognised at fair value through the cash flow hedge reserve,
included within other reserves.
Current liabilities of £0.2m (at 1 August 2021: £0.2m; 30 January 2022:
£0.2m) relate to forward foreign currency contracts with a maturity of less
than 12 months and are recognised at fair value through the cash flow hedge
reserve, included within other reserves.
Fair value hierarchy
Fair value hierarchies 1 to 3 are based on the degree to which fair value is
observable:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable
market data
The fair value of financial instruments that are not traded in an active
market (for example, over-the-counter derivatives) is determined by using
valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on
entity specific estimates. The fair value of the forward foreign exchange
contracts is determined using forward exchange rates at the date of the
consolidated condensed statement of financial position, with the resulting
value discounted accordingly as relevant.
All financial instruments carried at fair value are Level 2.
Fair values of financial assets and financial liabilities
The following table shows the carrying amounts and fair values of financial
assets and financial liabilities. It does not include fair value information
for financial assets and financial liabilities not measured at fair value if
the carrying amount is a reasonable approximation of fair value.
Carrying amount
Unaudited Fair value - hedging instruments Other financial assets at amortised cost Other financial liabilities at amortised cost Total
As at 31 July 2022 £m £m £m £m
Financial assets - Non-current
Loan receivable - 0.5 - 0.5
Loan receivable from associate - 1.0 - 1.0
- 1.5 - 1.5
Financial assets - Current
Trade receivables - 68.5 - 68.5
Cash and cash equivalents - 61.3 - 61.3
- 129.8 - 129.8
Financial liabilities - Non-current
Bank borrowings - - 0.2 0.2
Lease liabilities - - 2.7 2.7
- - 2.9 2.9
Financial liabilities - Current
Foreign exchange contracts used for hedging 0.2 - - 0.2
Lease liabilities - - 1.1 1.1
Trade payables - - 63.5 63.5
0.2 - 64.6 64.8
Carrying amount
Unaudited Fair value - hedging instruments Other financial assets at amortised cost Other financial liabilities at amortised cost Total
As at 1 August 2021 £m £m £m £m
Financial assets - Non-current
Loan receivable from associate - 1.0 - 1.0
- 1.0 - 1.0
Financial assets - Current
Foreign exchange contracts used for hedging 0.1 - - 0.1
Trade receivables - 56.9 - 56.9
Cash and cash equivalents - 65.6 - 65.6
0.1 122.5 - 122.6
Financial liabilities - Non-current
Lease liabilities - - 1.1 1.1
- - 1.1 1.1
Financial liabilities - Current
Foreign exchange contracts used for hedging 0.2 - - 0.2
Lease liabilities - - 1.0 1.0
Trade payables - - 13.3 13.3
0.2 - 14.3 14.5
Carrying amount
Audited Fair value - hedging instruments Other financial assets at amortised cost Other financial liabilities at amortised cost Total
As at 30 January 2022 £m £m £m £m
Financial assets - Non-current
Loan receivable - 0.5 - 0.5
Loan receivable from associate - 1.0 - 1.0
- 1.5 - 1.5
Financial assets - Current
Trade receivables - 41.6 - 41.6
Cash and cash equivalents - 68.7 - 68.7
- 110.3 - 110.3
Financial liabilities - Non-current
Lease liabilities - - 2.8 2.8
- - 2.8 2.8
Financial liabilities
Bank borrowings - - 0.3 0.3
Foreign exchange contracts used for hedging 0.2 - - 0.2
Lease liabilities - - 1.3 1.3
Trade payables - - 15.8 15.8
0.2 - 17.4 17.6
14. Loans and other borrowings
Movements in borrowings are analysed as follows:
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
£m £m £m
Opening borrowings balance 4.4 5.4 5.4
Net lease payments (0.3) (0.4) (1.3)
Borrowings acquired - - 0.3
Bank overdraft/loans repaid (0.1) (2.9) -
Closing borrowings balance 4.0 2.1 4.4
The reconciliation of the above closing borrowings balance to the figures on
the face of the consolidated condensed statement of financial position is as
follows:
Unaudited Unaudited Audited
As at 31 July 2022 As at 2 August 2021 As at 30 January 2022
£m £m £m
Bank borrowings 0.2 - 0.3
Lease liabilities 3.8 2.1 4.1
Total borrowings and loans 4.0 2.1 4.4
Disclosed as
Current liabilities 1.1 1.0 1.6
Non-current liabilities 2.9 1.1 2.8
The reconciliation to net debt is as follows:
Unaudited Unaudited Audited
As at 31 July 2022 As at 1 August 2021 As at 30 January 2022
£m £m £m
Closing borrowings balance (4.0) (2.1) (4.4)
Cash and cash equivalents 61.3 65.6 68.7
Net funds 57.3 63.5 64.3
The drawn/undrawn facilities at 31 July 2022 are as follows:
Total facility Drawn Undrawn
£m £m £m
Revolving credit facility - three years, expires April 2023 10.0 - 10.0
Revolving credit facility - five years, expires February 2026 20.0 - 20.0
Overdraft 5.1 - 5.1
CBILS loan facility - six years, expires June 2026 0.2 0.2 -
35.3 0.2 35.1
15. Retirement benefit obligations
On 1 May 2016 the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme
was closed to future accrual following a negotiated agreement between the
Company and the board of trustees.
The defined retirement benefit scheme had a deficit of £1.2m as at 31 July
2022 (as at 1 August 2021: £4.8m, 30 January 2022: £1.0m). The
reconciliation of the closing deficit is as follows:
Unaudited Unaudited Audited
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
£m £m £m
Opening present value of obligation (114.9) (123.9) (123.9)
Current service cost - - (0.1)
Interest cost (1.2) (0.9) (1.7)
Remeasurement - changes in financial assumptions 20.6 (1.4) 6.4
Benefits paid 2.5 2.8 4.4
Closing position (93.0) (123.4) (114.9)
Opening fair value of plan assets 113.9 116.0 116.0
Interest income 1.2 0.8 1.6
Remeasurement - actuarial return on assets (22.5) 2.9 (1.7)
Employer contributions 1.7 1.7 2.4
Benefits paid (2.5) (2.8) (4.4)
Closing fair value of plan assets 91.8 118.6 113.9
As at 31 July 2022 As at 1 August 2021 As at 30 January 2022
£m £m £m
Closing present value of obligation (93.0) (123.4) (114.9)
Closing fair value of plan assets 91.8 118.6 113.9
Closing net deficit (1.2) (4.8) (1.0)
The key financial assumptions used to value the liabilities were as follows:
As at 31 July 2022 As at 1 August 2021 As at 30 January 2022
% % %
Discount rate 3.5 1.6 2.2
Inflation assumption 3.2 3.3 3.6
16. Movements in own shares held by employee benefit trusts
During the six months to 31 July 2022 the employee benefit trusts of the Group
acquired 20,613 (six months to 1 August 2021: 21,936; year to 30 January 2022:
42,778) of the Company's shares. The total amount paid to acquire the shares
has been deducted from shareholders' equity and is included within retained
earnings. At 31 July 2022 the shares held by the Company's employee benefit
trusts represented 787,283 (1 August 2021: 781,002; 30 January 2022: 679,758)
shares at a purchased cost of £4.7m (1 August 2021: £4.7m; 30 January 2022:
£4.7m).
16,203 (six months to 1 August 2021: 112,594; year to 30 January 2022:
131,565) shares were utilised in satisfying share options from the Company's
employee share schemes during the same period. The related weighted average
share price at the time of exercise for the six months to 31 July 2022 was
£5.30 (six months to 1 August 2021: £5.19; year to 30 January 2022: £5.19)
17. Contingencies and commitments Unaudited Unaudited Audited
As at 31 July 2022 As at 1 August 2021 As at 30 January 2022
£m £m £m
Commitments for the acquisition of property, plant and equipment 21.9 0.6 9.5
18. Related party transactions
There have been no related party transactions in the first 26 weeks of the
current financial year which have materially affected the financial position
or performance of the Group.
RESPONSIBILITY AND CAUTIONARY STATEMENTS
RESPONSIBILITY STATEMENT
Company law requires the directors to prepare statements for each financial
year. Under that law the directors are required to prepare group financial
statements in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and UK-adopted International
Financial Reporting Standards.
The directors confirm that these consolidated condensed interim financial
statements have been prepared in accordance with International Accounting
Standard 34 Interim Financial Reporting. The interim management report
includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
• an indication of important events that have occurred during the first six
months and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
• material related party transactions in the first six months and any
material changes in the related party transactions described in the last
annual report.
CAUTIONARY STATEMENT
This report is addressed to the shareholders 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
during the six months to 31 July 2022. 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 such 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.
The directors of A.G. BARR p.l.c. that served during the six months to 31 July
2022 and up to the date of signing, and their respective responsibilities,
were:
M. Allen OBE (Chairman)
J.R. Nicolson (resigned 31 March 2022)
R.A. White (Chief Executive)
S. Lorimer (Finance Director)
J.D. Kemp (Commercial Director)
W.R.G Barr
S.V. Barratt
Z.L. Howorth
D.J. Ritchie
N.B.E. Wharton
For and on behalf of the Board of directors
Roger White Stuart Lorimer
Chief Executive Finance Director
27 September 2022 27 September 2022
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.
Adjusting items
The Group excludes adjusting items from its non-GAAP measures because of their
size, frequency and nature to allow shareholders to understand better the
elements of financial performance in the year, so as to facilitate comparison
with prior periods and to assess trends in financial performance more readily.
These items are primarily non-operational.
Definitions 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
condensed cash flow statement.
Adjusted profit attributable to equity holders is a non-GAAP measure
calculated as adjusted profit attributable to equity holders.
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 operating margin is a non-GAAP measure calculated by dividing
adjusted operating profit by revenue.
Adjusted profit attributable to equity holders is a non-GAAP measure
calculated as adjusted profit attributable to equity holders.
Adjusted profit before tax is a non-GAAP measure calculated as reported profit
before tax after adjusting items.
Like for like revenue growth is a non-GAAP measure comparing adjusted revenue
less MOMA revenue to the prior period adjusted revenue.
Reconciliation of Non-GAAP measures
Adjusted Consolidated Income Statements
Six months ended 31 July 2022 Six months ended 1 August 2021 Year ended 30 January 2022
Reported Unwind of discount Adjusted Reported Gain on sale of property Extra week trading Adjusted Reported Gain on sale of property Extra week trading Adjusted
£m £m £m £m £m £m £m £m £m £m
Revenue 157.9 - 157.9 135.3 - (6.8) 128.5 268.6 - (6.8) 261.8
Cost of sales (88.5) - (88.5) (73.8) - 3.7 (70.1) (150.0) - 3.7 (146.3)
Gross profit 69.4 - 69.4 61.5 - (3.1) 58.4 118.6 - (3.1) 115.5
Other income - - - 0.7 (0.7) - - 0.7 (0.7) - -
Operating expenses (43.9) (43.9) (37.6) - - (37.6) (76.6) - - (76.6)
Operating profit 25.5 - 25.5 24.6 (0.7) (3.1) 20.8 42.7 (0.7) (3.1) 38.9
Share of results of associate (0.1) - (0.1) - - - - (0.1) - - (0.1)
Finance costs (0.7) 0.6 (0.1) (0.2) - - (0.2) (0.4) - - (0.4)
Profit before tax 24.7 0.6 25.3 24.4 (0.7) (3.1) 20.6 42.2 (0.7) (3.1) 38.4
Tax on profit (3.8) - (3.8) (10.2) - - (10.2) (14.4) - - (14.4)
Profit for the period 20.9 0.6 21.5 14.2 (0.7) (3.1) 10.4 27.8 (0.7) (3.1) 24.0
Attributable to:
Equity shareholders of the parent Company 21.1 0.6 21.7 14.2 - 10.4 27.9 - 24.1
Non-controlling interests (0.2) - (0.2) - - - (0.1) - (0.1)
Adjusting entries:
Unwind of discount - the time value adjustment of the put liability held on
balance sheet.
Gain on sale of property - the gain on the disposal of the Sheffield
distribution depot.
Extra week trading - the 6 months to 1 August 2021 was a 27 week period and
the year ended 30 January 2022 was a 53 week period. This extra week of
trading is removed for comparative purposes.
Adjusted EPS
Adjusted profit attributable to equity holders of the Company £m 21.7 10.4 24.1
Weighted average number of shares in issue 111,192,917 111,104,168 111,187,778
Adjusted EPS (p) 19.52 9.36 21.68
Adjusted operating margin £m £m £m
Revenue 157.9 128.5 261.8
Adjusted operating profit 25.5 20.8 38.9
Adjusted operating margin 16.2% 16.2% 14.9%
Like for like revenue growth £m
Adjusted revenue for period to 31 July 2022 157.9
Less MOMA revenue (4.2)
153.7
Adjusted revenue for period to 1 August 2021 128.5
Movement 25.2
Growth 20%
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