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 H1 2022/23 (%)	Like for like revenue* (£m)	Change vs 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 the income statement	-	(1.7)	(4.9)
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.