REG - Barr(A.G.) PLC - Interim Results
26/09/2023 07:00
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RNS Number : 5944N Barr(A.G.) PLC 26 September 2023
IMMEDIATE RELEASE
26 September 2023
A.G. BARR p.l.c.
("A.G. BARR" or "the Group")
A.G. BARR p.l.c., a branded multi-beverage business with a portfolio of
market-leading UK brands, including IRN-BRU, Rubicon, FUNKIN and Boost
INTERIM RESULTS FOR THE 26 WEEKS ENDED 30 JULY 2023
Strong first half performance - confident of delivering full year profit in
line with recently increased market expectations.
Financial summary
26 wks to 30 July 2023 26wks to 31 July 2022 Change
Revenue £210.4m £157.9m 33.2%
Like-for-like revenue * £174.3m £157.9m 10.4%
Reported profit before tax £27.8m £24.7m 12.6%
Adjusted profit before tax *(1) £27.0m £25.3m 6.7%
Adjusted operating profit margin *(1) 12.5% 16.2% (3.7)pp
Cash and cash equivalents £47.3m £61.3m (22.8)%
Basic EPS 18.87p 18.98p (0.6)%
Interim dividend per share 2.65p 2.50p 6.0%
Highlights
○ Strong financial performance and significant progress across
strategic priorities - including successfully bringing Boost Drinks and MOMA
Foods into the A.G. Barr Group
○ Increased profit delivered by strong trading across the Group, with
volume growth and market share gains in soft drinks in particular
○ Acceleration of innovation plans enabling a number of exciting brand
launches across the Group in the second half of the year
○ Operating margin in line with expectations reflecting the impact of
current lower margin Boost business model
○ EPS down as a result of higher tax rate; excluding this impact, EPS
in growth (up 12%)*
○ Strong balance sheet with £47.3m of cash and cash equivalents,
reflecting H2 2022/23 acquisitions
○ Interim dividend of 2.65 pence per share representing an increase on
the prior year of 6.0%
Roger White, Chief Executive, commented:
"We have made significant financial and strategic progress in the first half
and have exciting plans in place for the balance of the year to sustain our
growth momentum.
We remain confident in delivering a full year profit performance in line with
our recently increased market expectations and are well positioned to deliver
strong shareholder returns for the long-term."
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 financial performance in the first half of
the current year and have made significant progress across our strategic
priorities.
Revenue was £210.4m representing year on year growth of :
● 33.2% on a reported revenue basis, including the contribution from
the Boost Drinks business acquired in December 2022
● 10.4% on a like-for-like* basis
Reported profit before tax in the period increased 12.6% to £27.8m (2022/23
H1 : £24.7m) as a result of revenue growth across the Group, with strong
volume growth and market share gains in soft drinks in particular.
Adjusted profit*(1) in the period was £27.0m, an increase of 6.7% on the
prior year first half (2022/23 H1 : £25.3m).
Adjusted operating profit margin*(1) of 12.5% in the reporting period (2022/23
H1 : 16.2%) was in line with our expectations, impacted by persistent cost
inflation, alongside the known near-term impact of the lower margin Boost
division. In addition, we chose not to pass on the full impact of cost
inflation to customers in order to remain focused on offering consumers great
value, affordable brands in an uncertain and challenging economic
environment.
Market context
Soft drinks : The total UK soft drinks market increased in value by 8.8%
across the period, while reported volumes fell by 4.2%. Sustained price
inflation has continued to feature across the market. Against this backdrop
we have gained both value and volume market share.
(Source : Circana data for the 26 weeks to 29 July 2023)
Cocktails : The value of GB cocktails across the on-trade continues to grow
and is now worth £716m. This growth in value has been driven primarily by
inflation, with a slight reduction in cocktails' overall share of the spirits
market. We believe this reflects current wider economic conditions, and
expect on-trade cocktail consumption to return to growth in the longer term.
Ready to drink (RTD) cocktails in the take home market grew 14.6%, more than
four times the rate of the RTD category as a whole. FUNKIN remains the
number one RTD cocktail brand within this growing sector.
(Source: Nielsen pre-mixed alcoholic drinks total coverage MAT 29/07/2023 ;
CGA Q1 2023)
Oat milk : Total dairy milk alternatives grew in value by 1.0% however within
this market the oat milk sub category grew by 12%. Oat milk is driving
category growth and is now the biggest segment, making up 52% of the dairy
milk alternatives category.
MOMA's oat milk sales grew twice as fast as the oat milk category as a whole.
(Source : Nielsen Top 5 Grocery 52 weeks to 3 June 2023)
Business performance
Trading has been strong across the Group :
Reported revenue (£m) Change vs Like for like revenue* (£m) Change vs
H1 2022/23 (%) H1 2022/23 (%)
Soft drinks £181.9m 38.9% £145.8m 11.3%
FUNKIN £23.3m 2.6% £23.3m 2.6%
Other £5.2m 23.8% £5.2m 23.8%
Across soft drinks, revenue growth has been driven by volume, price and mix,
alongside effective execution of our sales plans and successful consumer
marketing activity. The IRN-BRU brand grew revenue by 8% gaining further
market share in England and Wales and the Rubicon brand enjoyed a very strong
period with revenue increasing by 17%. The Boost brand grew by 37% and made
excellent volume progress driven by significant distribution gains.
FUNKIN delivered further UK off-trade growth of 11%, supported by increased
consumer marketing investment and continued exciting innovation. While
cocktail consumption in the on-trade slowed following last year's post-Covid
high, FUNKIN maintained its position as the UK's Number 1 cocktail brand.
Within the MOMA Foods division, brand and consumer marketing investment
supported significant year on year revenue growth of 24%, as oat milk
continued to outperform other plant-based milk categories.
Having accelerated our innovation plans across the summer, we have a number of
exciting brand launches planned across the Group in the second half of the
year. We are particularly excited to extend the IRN-BRU brand further with
PWR-BRU, a new and distinctive addition to our portfolio within the high
growth energy category which launched in August.
Cash flow and balance sheet
Net cash from operating activities at £15.1m was ahead of the prior year
(2022/23 H1 : £11.4m). Our strong profit performance was partially offset
by higher working capital and an increased corporation tax rate (25% versus
19% in the prior year).
The absolute levels of working capital have increased versus the prior year
through the inclusion of the Boost business, acquired in December 2022. The
increase in overall net working capital primarily reflects the phasing of
trading activity during the period, with strong revenues achieved in June
remaining in receivables at the balance sheet date and higher inventory levels
reflecting strong production performance but lower, weather impacted, revenues
in July. Our balance sheet management remains tightly controlled with
healthy inventory levels and no significant unrecoverable trade debt.
Capital expenditure in the first half of the year was £6.5m (2022/23 H1 :
£7.0m). This reflects the phasing of the capital investment programme towards
the second half of the year. Our asset refresh programme at our Cumbernauld
factory continues on plan and to budget, with the successful upgrade of the
site's primary PET line completed and successfully commissioned during the
period. Full year capital expenditure is estimated at around £15m
(2022/23 : £14.6m). In the medium term capital expenditure is expected to
be maintained in the range of £15-20m as our Cumbernauld programme completes
and we continue our capacity expansion plans across the Group to support our
growth and access to benefits from production in-sourcing.
The Group closed the period with cash balances of £47.3m (2022/23 H1 :
£61.3m), a reduction of £14.0m on the prior year as a result of the Boost
and MOMA acquisitions at the end of 2022/23. The closing cash balance was
£5.6m less than the period opening position (£52.9m) due to the normal
funding of dividend, tax and capital expenditure, alongside the seasonal
demands for working capital during our peak summer trading period.
Earnings per share reduced by 0.6% to 18.87p per share. This was
attributable to the new higher corporation tax rate despite the increase in
ongoing operating profit, the addition of the contribution from the Boost
acquisition and the benefit of increased finance income from cash on deposit.
Responsibility
We continue to make good progress across our responsibility agenda. Our
journey towards net-zero is progressing, with the arrival of a number of new
lower emission bio-fuelled commercial vehicles. We have strengthened our
charity partnership with Marie Curie, enjoying high levels of employee
engagement and enthusiastic fundraising support. We are also proud to report
that FUNKIN achieved a further significant milestone in its development,
successfully attaining B Corp status, certifying its high standards of social
and environmental performance.
Board
After over 62 years with the business, Robin Barr stepped down from the Board
in May and we would once again like to recognise the invaluable role Robin
played for over six decades.
The Board welcomed Julie Barr and Louise Smalley, who took up their
Non-Executive Director positions in May and June respectively.
As communicated on 1 August, Roger White intends to step down from his role as
CEO, and retire from the Group within the next 12 months. The Board has
commenced a formal succession process, including an external search, to ensure
a smooth leadership transition.
Dividend
The Board has declared an interim dividend for the 26 weeks ended 30 July 2023
of 2.65 pence per share (2022/23 : 2.50 pence) payable on 27 October 2023 to
shareholders on the register on 6 October 2023.
Outlook
In a year of investment across the business, supporting the Group's long-term
revenue and profit growth ambitions, we are pleased to report we have made
significant financial and strategic progress in line with our plan.
Our medium-term plan to rebuild operating profit margin is progressing well,
supported by brand and portfolio development, Group manufacturing optimisation
and disciplined cost control.
We have strong plans in place across the business for the balance of the year
to support our growth momentum. In August we communicated our expectation of
delivering a full year profit performance marginally above the top end of
analyst consensus. Despite the extended period of poor weather across the
summer, we remain confident in delivering in line with these revised market
expectations.
Our portfolio of leading brands, clear business strategy, talented teams and
the quality of our infrastructure all ensure we are well positioned to deliver
strong shareholder returns for the long-term.
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
(1) Adjusted profit* and adjusted profit margin* reflect the release of a
£0.8m prior year accrual related to two months of the earn-out associated
with the acquisition of Boost Drinks Limited in December 2022. Certain
conditions associated to the earn-out have not been met and as such the
earn-out, agreed at the time of the acquisition, is now not payable. New
incentive arrangements have been put in place with Simon Gray pursuant to
which a cash bonus of up to £3.0m may be earned by him, in the period to
January 2025, subject to certain performance targets being achieved. This
incentive arrangement constitutes a smaller related party transaction for the
purposes of Listing Rule 11.1.10R. As a result, a written confirmation has
been obtained by the Company from its sponsor pursuant to LR 11.1.10R(2)(b)
stating that the terms of the incentive arrangement are fair and reasonable as
far as the Company's shareholders are concerned.
Consolidated Condensed Income Statement
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
Note £m £m £m
Revenue 6 210.4 157.9 317.6
Cost of sales (131.0) (88.5) (189.5)
Gross profit 6 79.4 69.4 128.1
Other income - - 1.3
Operating expenses (52.2) (43.9) (84.1)
Operating profit 8 27.2 25.5 45.3
Finance income 9 0.7 - 0.5
Finance costs 9 (0.1) (0.7) (1.4)
Share of after tax results of associates - (0.1) -
Profit before tax 27.8 24.7 44.4
Tax on profit 10 (6.8) (3.8) (10.5)
Profit for the period 21.0 20.9 33.9
Earnings per share (p)
Basic earnings per share 11 18.87 18.98 30.47
Diluted earnings per share 11 18.67 18.81 30.22
Consolidated Condensed Statement of Financial Position
Unaudited Unaudited Audited
As at 30 July 2023 As at 31 July 2022 As at 29 January 2023
Note £m £m £m
Non-current assets
Intangible assets 115.6 97.9 116.2
Property, plant and equipment 102.2 96.6 102.5
Right-of-use assets 5.2 3.8 5.4
Loans and receivables - 1.5 1.5
Investment in associates - 0.6 0.7
Retirement benefit surplus 3.2 - 2.4
226.2 200.4 228.7
Current assets
Inventories 36.0 24.0 34.7
Trade and other receivables 93.9 68.5 60.4
Derivative financial instruments 13 - - 0.1
Current tax assets - 0.6 -
Short-term investments - - 40.0
Cash and cash equivalents 47.3 61.3 13.6
177.2 154.4 148.8
Total assets 403.4 354.8 377.5
Current liabilities
Loans and other borrowings 14 - - 0.7
Trade and other payables 90.7 63.5 72.3
Derivative financial instruments 13 0.3 0.2 0.1
Lease liabilities 14 1.6 1.1 1.5
Provisions 0.5 0.9 0.8
Current tax liabilities 0.9 - 0.7
94.0 65.7 76.1
Non-current liabilities
Loans and other borrowings 14 - 0.2 -
Deferred tax liabilities 28.8 21.7 28.2
Lease liabilities 14 3.2 2.7 3.6
Put liability - 5.6 -
Contingent consideration - - 0.8
Retirement benefit obligations 15 - 1.2 -
32.0 31.4 32.6
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 4.0 2.6 3.4
Other reserves (0.1) (5.1) 0.1
Retained earnings 267.9 251.1 259.7
Total shareholder equity 277.4 254.2 268.8
Non-controlling interest in equity - 3.5 -
277.4 257.7 268.8
Total equity and liabilities 403.4 354.8 377.5
Consolidated Condensed Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
£m £m £m
Profit for the period 21.0 20.9 33.9
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans (Note 15) 0.7 (1.9) (1.5)
Deferred tax movements on items above (0.2) 0.5 0.6
Items that will be or have been reclassified to profit or loss
Cash flow hedges:
(Losses)/gains arising during the period (0.3) - 0.2
Deferred tax movements on items above 0.1 - -
Other comprehensive income/(expense) for the period, net of tax 0.3 (1.4) (0.7)
Total comprehensive income for the period 21.3 19.5 33.2
Attributable to:
Equity shareholders of the parent Company 21.3 19.7 33.2
Non-controlling interests - (0.2) -
Consolidated Condensed Statement of Changes in Equity (Unaudited)
Share capital Share premium account Share options reserve Other reserves Retained earnings Total
£m £m £m £m £m £m
At 29 January 2023 4.7 0.9 3.4 0.1 259.7 268.8
Profit for the period - - - - 21.0 21.0
Other comprehensive (expense)/income - - - (0.2) 0.5 0.3
Total comprehensive (expense)/income for the period - - - (0.2) 21.5 21.3
Company shares purchased for use by employee benefit trusts (Note 16) - - - - (2.6) (2.6)
Proceeds on disposal of shares by employee benefit trusts - - - - 0.8 0.8
Recognition of share-based payment costs - - 1.0 - - 1.0
Transfer of reserve on share award - - (0.3) - 0.3 -
Deferred tax on items taken directly to reserves - - (0.1) - - (0.1)
Dividends paid - - - - (11.8) (11.8)
At 30 July 2023 4.7 0.9 4.0 (0.1) 267.9 277.4
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 - - - - (1.4) (1.4) - (1.4)
Total comprehensive income/(expense) 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 (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
As at 30 January 2022 4.7 0.9 1.6 (5.1) 242.4 244.5 3.7 248.2
Profit for the year - - - - 33.9 33.9 - 33.9
Other comprehensive income/(expense) - - - 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 (Note 16) - - - - (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 - - -
Derecognition of put liability - - - 1.3 (1.3) - - -
Recognition of 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
Consolidated Condensed Cash Flow Statement
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
£m £m £m
Operating activities
Profit for the period before tax 27.8 24.7 44.4
Adjustments for:
Interest and dividends receivable (0.7) - (0.5)
Interest payable 0.1 0.7 1.4
Impairment of investment in associate 0.7 - -
Write off of loans and receivables 1.5 - -
Contingent consideration (0.8) - 0.8
Revaluation of put liability - - (2.7)
Depreciation of property, plant and equipment 5.4 4.9 9.8
Amortisation of intangible assets 0.6 0.7 1.2
Share-based payment costs 1.0 1.0 2.0
Loss/(gain) on sale of fixed assets 0.1 (0.2) (1.0)
Share of results of associates - 0.1 -
Operating cash flows before movements in working capital 35.7 31.9 55.4
(Increase)/decrease in inventories (1.3) 0.2 (4.5)
Increase in receivables (33.5) (24.2) (7.6)
Increase in payables 20.4 8.6 4.3
Difference between employer pension contributions and amounts recognised in - (1.7) (4.9)
the income statement
Cash generated by operations 21.3 14.8 42.7
Tax paid (6.2) (3.4) (6.8)
Net cash from operating activities 15.1 11.4 35.9
Investing activities
Acquisition of subsidiary (net of cash acquired) - - (18.6)
Purchase of property, plant and equipment (6.5) (7.0) (14.6)
Proceeds on sale of property, plant and equipment - 0.2 1.6
Funds placed on fixed term deposit (25.0) - (40.0)
Funds returned from fixed term deposit 65.0 - -
Interest received 1.1 - 0.1
Net cash used in investing activities 34.6 (6.8) (71.5)
Financing activities
Acquisition of minority interest - - (3.4)
Loans received 5.0 - -
Loans repaid (5.7) (0.1) (0.3)
Lease payments (1.0) (0.8) (1.7)
Purchase of Company shares by employee benefit trusts (2.6) - (0.7)
Proceeds from disposal of Company shares by employee benefit trusts 0.8 - -
Dividends paid (11.8) (11.1) (13.9)
Interest paid - - (0.2)
Net cash used in financing activities (15.3) (12.0) (20.2)
Net increase/(decrease) in cash and cash equivalents 34.4 (7.4) (55.8)
Cash and cash equivalents at beginning of period 12.9 68.7 68.7
Cash and cash equivalents at end of period 47.3 61.3 12.9
Cash and cash equivalents per the cash flow statement 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.
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, 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.
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 29 January 2023 were approved by
the Board of Directors on 28 March 2023 and delivered to the Registrar of
Companies. The comparative figures for the financial year ended 29 January
2023 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 30 July 2023 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 29 January 2023, 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 2027. These scenarios include
a major brand issue which impacts reputation and consumer purchasing, a cyber
attack and a global pandemic. In each scenario 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 £20m of committed and unutilised revolving credit facility
providing the business with a secure funding platform. The facility expires in
February 2026. Throughout these severe but plausible downside scenarios, the
Group continues to have significant liquidity headroom on existing facilities
and against the revolving credit facilities financial covenants.
The directors believe that the Group is well placed to manage its financing
and other business risks satisfactorily, and have a reasonable expectation
that the Group 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
In the current year, the Group has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board
(IASB) and endorsed for use in the UK which are mandatorily effective for
accounting periods beginning on or after 30 January 2023. Apart from those
changes to accounting policies noted below, the accounting policies applied in
these condensed interim financial statements are the same as those applied in
the most recent annual report for the year ended 29 January 2023. There has
been no material impact on the amounts reported or disclosures required in
these condensed interim financial statements.
- IAS 12 Income Taxes - International Tax Reform - Pillar Two Model Rules
- IFRS 17 Insurance Contracts
- Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
- Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Materiality Judgements - Disclosure of Accounting Policies
- Amendments to IAS 8 Accounting Policy, Changes in Accounting Estimates and
Errors - Definition of Accounting Estimates
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 62 - 69 of the Group's
annual financial statements as at 29 January 2023, which are available on our
website, www.agbarr.co.uk.
- Changes in consumer preferences, perception or purchasing behaviour
- Consumer rejection of 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 30 July 2023.
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 29 January 2023 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.
Unaudited
Six months ended 30 July 2023
Soft drinks Cocktail solutions Other Total
£m £m £m £m
Total revenue 181.9 23.3 5.2 210.4
Gross profit 69.9 7.9 1.6 79.4
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
Audited
Year ended 29 January 2023
Soft drinks Cocktail solutions Other Total
£m £m £m £m
Total revenue 266.6 42.8 8.2 317.6
Gross profit 109.6 16.2 2.3 128.1
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 £37.5m which arose from sales to the Group's largest customer.
In the year ended 29 January 2023 and six months ended 31 July 2022, revenues
of approximately £60.3m and £30.5m 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 July 2022 or January
2023.
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 28 January 2024 will be lower than those for the 26 weeks ended 30
July 2023.
8. Operating profit
The following items have been charged/(credited) to operating profit during
the period:
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
£m £m £m
Loss/(gain) on sale of property, plant and equipment 0.1 (0.2) (1.3)
Impairment of inventories 0.4 0.1 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. Net finance costs
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
Finance income £m £m £m
Interest receivable on short-term deposits 0.6 - 0.5
Finance costs relating to defined benefit pension plans 0.1 - -
0.7 - 0.5
Finance costs £m £m £m
Interest payable - (0.1) (0.2)
Lease interest (0.1) - (0.1)
Unwind of discount - (0.6) (1.1)
(0.1) (0.7) (1.4)
10. Tax on profit
The interim period total tax charge of £6.8m (six months ended 31 July 2022:
£3.8m; year ended 29 January 2023: £10.5m) is accrued based on the estimated
annual effective tax rate of 24.5% (six months ended 31 July 2022: 15.4%; year
ended 29 January 2023: 23.6%). The effective tax rate is calculated using the
forecast year end effective corporation tax rate and the movement in deferred
tax to 30 July 2023. The effective tax rate has increased in the six months
ended 30 July 2023 primarily due to a change in the anticipated level of
capital allowances available.
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
Analysis of tax charge £m £m £m
Current income tax charge 6.4 3.2 7.7
Deferred income tax charge 0.4 0.6 2.8
Total tax charge in the condensed income statement 6.8 3.8 10.5
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 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
Profit attributable to equity holders of the Company (£m) 21.0 21.1 33.9
Weighted average number of ordinary shares in issue 111,288,517 111,192,917 111,258,209
Basic earnings per share (pence) 18.87 18.98 30.47
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 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
Profit attributable to equity holders of the Company (£m) 21.0 21.1 33.9
Weighted average number of ordinary shares in issue 111,288,517 111,192,917 111,258,209
Adjustment for dilutive effect of share options 1,193,573 998,620 920,512
Diluted weighted average number of ordinary shares in issue 112,482,090 112,191,537 112,178,721
Diluted earnings per share (pence) 18.67 18.81 30.22
12. Dividends
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023 Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
per share (p) per share (p) per share (p) £m £m £m
Paid final dividend 10.60 10.00 10.00 11.8 11.1 11.1
Paid interim dividend - - 2.50 - - 2.8
10.60 10.00 12.50 11.8 11.1 13.9
An interim dividend of 2.65 pence per share was approved by the Board on 26
September 2023 and will be paid on 27 October 2023 to shareholders on the
register as at 6 October 2023.
13. Financial instruments
Current assets of £nil (at 31 July 2022: £nil; 29 January 2023: £0.1m)
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 £0.3m (at 31 July 2022: £0.2m; 29 January 2023:
£0.1m) 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 30 July 2023 £m £m £m £m
Financial assets - Current
Trade receivables - 93.9 - 93.9
Cash and cash equivalents - 47.3 - 47.3
- 141.2 - 141.2
Financial liabilities - Non-current
Lease liabilities - - 3.2 3.2
- - 3.2 3.2
Financial liabilities - Current
Foreign exchange contracts used for hedging 0.3 - - 0.3
Lease liabilities - - 1.6 1.6
Trade payables - - 90.7 90.7
0.3 - 92.3 92.6
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
Audited Fair value - hedging instruments Other financial assets at amortised cost Other financial liabilities at fair value through profit and loss Other financial liabilities at amortised cost Total
As at 29 January 2023 £m £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
Foreign exchange contracts used for hedging 0.1 - - - 0.1
Trade receivables - 55.8 - - 55.8
Short-term investments - 40.0 - - 40.0
Cash and cash equivalents - 13.6 - - 13.6
0.1 109.4 - - 109.5
Financial liabilities - Non-current
Contingent consideration - - 0.8 - 0.8
Lease liabilities - - - 3.6 3.6
- - 0.8 3.6 4.4
Financial liabilities - Current
Bank borrowings - - - 0.7 0.7
Foreign exchange contracts used for hedging 0.1 - - - 0.1
Lease liabilities - - - 1.5 1.5
Accruals - - - 27.2 27.2
Trade payables - - - 37.2 37.2
0.1 - - 66.6 66.7
The loans receivable balances at 29 January 2023 were reviewed during the
period to 30 July 2023 and it was assessed that there was no reasonable
expectation of recovery and the balances were written off.
14. Loans and other borrowings
Movements in borrowings are analysed as follows:
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
£m £m £m
Opening borrowings balance 5.8 4.4 4.4
Net lease movements (0.3) (0.3) 1.0
Borrowings made 5.0 - 0.7
Bank overdraft/loans repaid (5.7) (0.1) (0.3)
Closing borrowings balance 4.8 4.0 5.8
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 30 July 2023 As at 31 July 2022 As at 29 January 2023
£m £m £m
Bank borrowings - 0.2 0.7
Lease liabilities 4.8 3.8 5.1
Total borrowings and loans 4.8 4.0 5.8
Disclosed as:
Current liabilities 1.6 1.1 2.2
Non-current liabilities 3.2 2.9 3.6
The reconciliation to net debt is as follows:
Unaudited Unaudited Audited
As at 30 July 2023 As at 31 July 2022 As at 29 January 2023
£m £m £m
Closing borrowings balance (4.8) (4.0) (5.8)
Short-term investments - - 40.0
Cash and cash equivalents 47.3 61.3 13.6
Net funds 42.5 57.3 47.8
The drawn/undrawn facilities at 30 July 2023 are as follows:
Total facility Drawn Undrawn
£m £m £m
Revolving credit facility - five years, expires February 2026 20.0 - 20.0
Overdraft 1.5 - 1.5
21.5 - 21.5
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 surplus of £3.2m as at 30 July
2023 (deficit as at 31 July 2022: £1.2m; surplus as at 29 January 2023:
£2.4m). The reconciliation of the closing surplus/(deficit) is as follows:
Unaudited Unaudited Audited
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
£m £m £m
Opening present value of obligation (76.9) (114.9) (114.9)
Current service cost - - -
Interest cost (1.6) (1.2) (2.4)
Remeasurement - changes in financial assumptions 6.2 20.6 35.6
Benefits paid 1.9 2.5 4.8
Closing present value of obligation (70.4) (93.0) (76.9)
Opening fair value of plan assets 79.3 113.9 113.9
Interest income 1.7 1.2 2.4
Remeasurement - actuarial return on assets (5.5) (22.5) (37.1)
Employer contributions - 1.7 4.9
Benefits paid (1.9) (2.5) (4.8)
Closing fair value of plan assets 73.6 91.8 79.3
As at 30 July 2023 As at 31 July 2022 As at 29 January 2023
£m £m £m
Present value of funded obligations (70.4) (93.0) (76.9)
Fair value of plan assets 73.6 91.8 79.3
Surplus/(deficit) recognised under IAS 19 3.2 (1.2) 2.4
The key financial assumptions used to value the liabilities were as follows:
As at 30 July 2023 As at 31 July 2022 As at 29 January 2023
% % %
Discount rate 5.2 3.5 4.4
Inflation assumption 3.2 3.2 3.2
16. Movements in own shares held by employee benefit trusts
During the six months to 30 July 2023 the employee benefit trusts of the Group
acquired 520,218 (six months to 31 July 2022: 20,613; year to 29 January 2023:
141,890) 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 30 July 2023 the shares held by the Company's employee benefit
trusts represented 1,187,730 (31 July 2022: 787,283; 29 January 2023: 887,553)
shares at a purchased cost of £6.6m (31 July 2022: £4.7m; 29 January 2023:
£5.2m).
220,041 (six months to 31 July 2022: 16,203; year to 29 January 2023: 37,210)
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 30 July 2023 was £4.66 (six
months to 31 July 2022: £5.30; year to 29 January 2023: £4.69)
17. Contingencies and commitments
Unaudited Unaudited Audited
As at 30 July 2023 As at 31 July 2022 As at 29 January 2023
£m £m £m
Commitments for the acquisition of property, plant and equipment 7.7 21.9 8.7
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 required 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 30 July 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 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 30 July
2023 and up to the date of signing, and their respective responsibilities,
were:
Mark Allen OBE (Chair)
Roger A. White (Chief Executive)
Stuart Lorimer (Finance Director)
Jonathan D. Kemp (Commercial Director)
W. Robin G. Barr (resigned 26 May 2023)
Susan V. Barratt
Zoe L. Howorth
David J. Ritchie
Nicholas B. E. Wharton
Julie A. Barr (appointed 26 May 2023)
Louise H. Smalley (appointed 1 June 2023)
For and on behalf of the Board of Directors
Roger
White
Stuart Lorimer
Chief
Executive
Finance Director
26 September 2023
26 September 2023
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 operating profit margin is a non-GAAP measure calculated by dividing
adjusted operating profit by revenue.
Adjusted profit before tax is a non-GAAP measure calculated as reported profit
before tax after adjusting items.
Movement in earnings per share excluding the impact of tax is a non-GAAP
measure calculated as the current period profit before tax less the tax charge
if calculated at the prior period effective tax rate; then divided by the
weighted average number of ordinary shares in issue and compared to the
reported basic EPS.
Like-for-like revenue is a non-GAAP measure comparing adjusted revenue less
Boost revenue to the prior period adjusted revenue.
Reconciliation of Non-GAAP measures
Adjusted Consolidated Income Statements
Six months ended 30 July 2023 Six months ended 31 July 2022 Year ended 29 January 2023
Reported Boost earn-out accrual write back Adjusted Reported Unwind of discount Adjusted Reported MOMA acquisition impact Gain on sale of property Boost acquisition fees Boost earn-out Adjusted
£m £m £m £m £m £m £m £m £m £m £m
Revenue 210.4 - 210.4 157.9 - 157.9 317.6 - - - - 317.6
Cost of sales (131.0) - (131.0) (88.5) - (88.5) (189.5) - - - - (189.5)
Gross profit 79.4 - 79.4 69.4 - 69.4 128.1 - - - - 128.1
Other income - - - - - - 1.3 - (1.3) - - -
Operating expenses (52.2) (0.8) (53.0) (43.9) - (43.9) (84.1) (2.7) - 1.2 0.8 (84.8)
Operating profit 27.2 (0.8) 26.4 25.5 - 25.5 45.3 (2.7) (1.3) 1.2 0.8 43.3
Finance income 0.7 - 0.7 - - - 0.5 - - - - 0.5
Finance costs (0.1) - (0.1) (0.7) 0.6 (0.1) (1.4) 1.1 - - - (0.3)
Share of after tax results of associates - - - (0.1) - (0.1) - - - - - -
Profit before tax 27.8 (0.8) 27.0 24.7 0.6 25.3 44.4 (1.6) (1.3) 1.2 0.8 43.5
Tax on profit (6.8) - (6.8) (3.8) - (3.8) (10.5) - - - - (10.5)
Profit for the period 21.0 (0.8) 20.2 20.9 0.6 21.5 33.9 (1.6) (1.3) 1.2 0.8 33.0
Adjusting entries:
Boost earn-out reversal - certain conditions associated with the Boost
earn-out have not been met and as such the earn-out will not be payable in its
previous form but has been incorporated into employee reward incentives.
Adjusted operating profit margin £m £m £m
Revenue 210.4 157.9 317.6
Adjusted operating profit 26.4 25.5 43.3
Adjusted operating profit margin 12.5% 16.2% 13.6%
Like-for-like revenue £m £m
Reported revenue 210.4 157.9
Less Boost revenue (36.1) -
Like-for-like revenue 174.3 157.9
Net cash at bank £m £m
Cash and cash equivalents 47.3 13.6
Short term investments - 40.0
Loans and other borrowings - (0.7)
Net cash at bank 47.3 52.9
EPS excluding the impact of tax
Reported Profit before tax 27.8
Tax charge at prior year effective tax rate (15.3%) (4.3)
Profit after tax if calculated using prior year effective tax rate 23.5
Weighted average number of ordinary shares in issue 111,288,517
EPS if calculated using prior year effective tax rate 21.12
EPS reported 18.87
Movement 12%
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