TIDMBAG
RNS Number : 1031L
Barr(A.G.) PLC
28 September 2016
CORRECTION: Interim Results for the 6 months ended 30 July
2016
This announcement has been corrected and reissued to reflect
changes to the wording of the column headings in Notes 10, 11, 13,
14 and 15 to the accounts which were previously stated as GBP000
instead of GBPm.
27 September 2016
A.G. BARR p.l.c. ("A.G. BARR")
INTERIM RESULTS FOR THE 6 MONTHSED 30 JULY 2016
A.G. BARR p.l.c., the soft drinks Group, which produces and
markets some of the UK's leading brands, including IRN-BRU,
Rubicon, Strathmore and Funkin, announces its interim results for
the 6 months ended 30 July 2016.
Key Points
-- Total revenue was GBP125.6m (2015: GBP130.3m). Like for like
revenue from ongoing business* declined 2.8%
-- Profit on ordinary activities before tax and exceptional items at GBP17.0m (2015: GBP16.9m)
-- Profit before tax was GBP21.1m including an exceptional
credit of GBP4.1m** (2015: GBP16.9m with no exceptional items)
-- Free cash flow*** was GBP19.6m. Net debt stood at GBP6.6m
(representing a net debt/EBITDA ratio of 0.3 times)
-- The Funkin business continues to perform ahead of
expectations with revenue up 28% in the period
-- Strong International performance, with revenue up 16%
-- Rockstar franchise territory extension signed September 2016 - includes Russia and Italy
-- Entering final stage of 3-year Fit for the Future programme
with announcement of business reorganisation
-- Interim dividend of 3.53p per share (2015: 3.36p), an increase of 5% on the prior year
Commenting on the results, Roger White, Chief Executive
said:
"We have delivered a solid first half performance, maintaining
market share, improving our operating margin with a slight
improvement in our pre-exceptional profit versus the prior year.
This is despite continued price deflation in the UK market, a
challenging customer and consumer environment as well as poor
weather in the important early summer months leading up to the end
of the reporting period.
Good progress has been made across the key areas of innovation,
product reformulation, brand development and operational
efficiency. We will continue to focus on these areas throughout the
second half of the financial year.
Following our significant investment in assets, infrastructure
and systems, delivered through our Fit for the Future business
improvement programme, we are announcing the programme's final
phase, a business reorganisation which will create a faster, more
efficient and leaner organisational structure.
We are beginning to see the benefits of our product development
and innovation initiatives with both consumers and customers.
Market conditions remain volatile and somewhat unpredictable
however, assuming a strong trading performance in the key festive
period, we remain on track to deliver profit (before tax and
exceptionals) slightly ahead of last year."
For more information, please contact:
A.G. BARR 01236 852400 Instinctif Partners 020 7457 2020
Roger White, Chief Executive Justine Warren
Stuart Lorimer, Finance Director Matthew Smallwood
*Note: Like for like revenue from ongoing business, for the 6
months ended 25 July 2015 is calculated as the reported turnover of
GBP130.3m, including Funkin Limited, but excludes the GBP1.1m sales
revenue derived from the discontinued Orangina franchise.
**Note : Net exceptional credit related in the main to the
closure of our defined benefit pension scheme to future
accrual.
***Note : Free cash flow is defined as net cash flow excluding
movements in borrowings, expansionary capex, shares, dividend
payments and non cash exceptional items.
Interim Statement
A.G. BARR has delivered a solid performance in the first half of
the financial year, maintaining market share and improving
operating margins in what was a volatile and deflationary
market.
Internally we are now seeing the benefits of an improved
operating platform, following the challenges experienced in the
prior year. We have delivered excellent customer service across the
summer and have driven numerous efficiency improvements across our
business.
Trading
The soft drinks market in the period was down 0.7% in value and
0.4% in volume reflecting a deflationary market with increased
promotional activity. The stills sector, although flat in revenue,
was bolstered in volume terms by a 7% growth in water and
consequently overall stills volume was up 1.5%, despite declines
elsewhere in the stills sub sector. Carbonates were down 2.4% in
volume and almost 1% in value. Deflation, although still a feature,
has levelled out from its previous position and it is generally
anticipated that the current period of food and drink price
deflation could turn into a period of modest price inflation in
2017.
Total revenue for the period was GBP125.6m, with like for like
revenue* declining 2.8%.
While maintaining overall market share we have seen the impact
of changing consumer preferences across our portfolio. In line with
general market trends, lower and no sugar products have performed
better as consumers respond to the significant weight of negative
media coverage pointed towards added sugar products particularly in
the last 6 months.
We continue to make good progress across our longer term
reformulation and innovation programme. Our most recent innovations
to come to market, IRN-BRU XTRA and Rubicon Spring, both of which
contain no added sugar, are both performing well at this early
stage. We expect these new introductions to our portfolio to make a
material contribution to the business across the balance of the
year.
The Funkin business continues to perform strongly with 28%
revenue growth in the period driven by distribution gains in the UK
and the US, a successful innovation pipeline and investment in new
digital platforms.
Our International business has also delivered a creditable
performance with revenue up 16%. We expect this growth momentum to
continue, supported by a further territory extension agreement with
our partner Rockstar, signed on 1 September 2016, covering the
Russian Federation, a number of central eastern European
countries.
Margins in the period have been supported by ongoing cost
control actions as well as the positive impact of our longer term
structural cost reduction and capital investment programme, and we
expect these factors to have a positive impact on margin over the
full year.
Exceptional items
In the period we have reported a net GBP4.1m exceptional credit
(before tax). This comprises recognition of a net GBP5.6m benefit
arising from the closure, on 1 May 2016, of our defined benefit
pension scheme to future accrual, partially offset by GBP1.5m of
costs relating mainly to organisational change activities and some
uncompleted corporate development activity (2015: Nil).
Fit for the Future Business Reorganisation
We are now moving into the final phase of our Fit for the Future
business improvement programme which has seen us invest
significantly in assets, infrastructure, processes and systems over
the last 3 years. We will now optimise these improvements through
the implementation of a business-wide reorganisation, creating an
improved organisational design better aligned to our strategy and
better structured to improve our service, efficiency and speed to
market. Our organisational restructure is likely to impact around
10% of our total employee base, and as such around 90 job losses
are possible across our Commercial, Supply Chain and Central
functions. Subject to consultation, we expect that the majority of
the changes will be implemented before the end of the current
financial year. The likely one-off cash cost associated with this
reorganisation is c.GBP4m but with an ongoing annual benefit of
c.GBP3m. All of these costs will be recognised as exceptional in
the current year financial statements (see note 21 to the financial
statements).
We believe that the actions we have taken, and continue to take,
to develop and improve the business put us in a strong position to
grow and develop shareholder value in the short, medium and longer
term.
Balance Sheet
Our balance sheet remains robust with net debt of GBP(6.6)m and
a net debt/EBITDA ratio of 0.3. Both measures show substantial
reductions from the prior year as we have utilised our strong cash
flow to pay down the debt associated with the purchase of Funkin
Limited in February 2015. Free cash flow conversion was 90%, driven
by a combination of tight capital management and payment cycle
timing.
Our recent major capital initiatives including the continued
development of our Milton Keynes site, the implementation of a
business-wide systems and process redesign, and the installation of
a new glass line at our Cumbernauld facility, have all been
successfully completed. Ongoing capital expenditure will focus
primarily on ensuring we maintain our well invested and flexible
asset base and appropriately supporting our innovation agenda. Cash
capital expenditure during the period amounted to GBP5.3m, in line
with our long term capital plans and a significant reduction on the
prior year spend of GBP7.9m.
Working capital continues to be tightly managed with net working
capital in line with the prior year. Lower payables offset slightly
higher inventories and lower receivables. Our aged inventory
profile is strong, our adherence to payment terms is high and aged
debt is low.
The closure of our defined benefit pension scheme to future
accruals is part of our ongoing strategy to manage our pension
scheme liabilities. Despite several de-risking activities being
executed in the period, the pension deficit, on an IFRS19 basis,
has risen from GBP13.7m (July 2015) to GBP25m (July 2016), driven
by the reduction
in discount rates. The next full triennial valuation will be conducted as at April 2017.
Free cash flow of GBP19.6m was generated in the 6 month period.
This was GBP12.3m greater than in the comparable period in the
prior year due to tight capital management and payment cycle
timing.
The strong balance sheet and consistent cash generation provide
the ability to maintain our asset base, continue our progressive
dividend policy and secure bank funding at very competitive rates
while providing the flexibility to seek acquisitions should value
creating opportunities present themselves.
Dividend
The Board has declared an interim dividend of 3.53 pence per
share, payable on 21 October 2016 to shareholders on the register
on 7 October 2016. This represents an increase on the prior year of
5% and reflects the Board's confidence in the current financial
position and the future prospects of the Group.
Regulatory Update
Recently published official National Dietary and Nutritional
Survey data shows that soft drinks are continuing to reduce their
contribution of sugar to the UK diet, in stark contrast to many
other food and drinks categories where sugar contribution is
increasing. We have continued to reformulate and reduce sugar
across our portfolio, as well as bringing new lower and no sugar
products to the market. We continue to play our part in delivering
the soft drinks industry-wide 5-year voluntary target of 20%
calorie reduction by 2020, as well as being on track to have two
thirds of our own portfolio lower or no sugar by 2018.
The Government's proposed soft drinks sugar tax is now in the
consultation phase and we will participate fully in the process. We
believe this proposed tax is a punitive and unnecessary distortion
to competition in the UK market which will be very complex,
expensive and difficult to implement. Our aggressive reformulation
and sugar reduction actions, along with our innovation and
marketing, will drive sustained and significant improvements in the
balance and choice offered across our portfolio. We believe our
positive actions and sugar reduction progress, along with those of
many of our competitors within the soft drinks industry, make the
implementation of a soft drinks only sugar tax an unnecessary
measure in the context of Government health policy objectives.
Brexit
We anticipate the recent reduction in the value of Sterling, if
sustained, will lead to higher input costs across a number of our
key commodities. We currently forecast this to have a year on year
impact of circa GBP3m - GBP4m in 2017 however we are taking action
to offset this cost where possible.
Outlook
We are beginning to see the benefits of our product development
and innovation initiatives with both consumers and customers.
Market conditions remain volatile and somewhat unpredictable
however, assuming a strong trading performance in the key festive
period, we remain on track to deliver profit (before tax and
exceptionals) slightly ahead of last year.
John Nicolson Roger White
Chairman Chief Executive
Consolidated Condensed Income Statement
Year
6 months 6 months ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
=================== ============ ======= ============ =============
Exceptional
Before exceptional items
items (Note 8) Total Total Total
Note GBPm GBPm GBPm GBPm GBPm
----------------------------- ----- ------------------- ------------ ------- ------------ -------------
Revenue 6 125.6 - 125.6 130.3 258.6
Cost of sales (66.7) - (66.7) (69.1) (137.5)
----------------------------- ----- =================== ------------ ------- ------------ -------------
Gross profit 6 58.9 - 58.9 61.2 121.1
Operating (expenses)/income (41.5) 4.1 (37.4) (43.9) (79.0)
============================= ===== =================== ============ ======= ============ =============
Operating profit 8 17.4 4.1 21.5 17.3 42.1
Finance income - - - - 0.1
Finance costs (0.4) - (0.4) (0.4) (0.9)
----------------------------- ----- =================== ------------ ======= ------------ -------------
Profit before tax 17.0 4.1 21.1 16.9 41.3
Income tax expense 9 (3.8) (0.7) (4.5) (3.6) (7.0)
----------------------------- ----- =================== ------------ ======= ------------ -------------
Profit attributable
to equity holders 13.2 3.4 16.6 13.3 34.3
----------------------------- ----- ------------------- ------------ ======= ------------ -------------
Earnings per share
(p)
----------------------------- ----- ------------------- ============ ======= ============ =============
Basic earnings per
share 10 14.33 11.57 29.63
Diluted earnings
per share 10 14.31 11.50 29.51
----------------------------- ----- ------------------- ------------ ------- ------------ -------------
Ex-div date: 6 October 2016
Record date: 7 October 2016
Consolidated Condensed Statement of Comprehensive Income
6 months 6 months Year ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
GBPm GBPm GBPm
============================================== =========== =========== ============
Profit for the period 16.6 13.3 34.3
Other comprehensive income
Items that will not be reclassified
to profit or loss
Remeasurements on defined benefit
pension plans (note 18) (19.2) 4.6 5.4
Deferred tax movements on items taken
direct to equity 3.0 (1.4) (2.5)
Current tax movements on items taken
direct to equity 0.5 0.5 1.3
Items that will be or have been reclassified
to profit or loss
Effective portion of changes in fair
value of cash flow hedges (0.8) - 1.7
Deferred tax movements on items above - - (0.3)
Other comprehensive expenditure/income
for the period, net of tax (16.5) 3.7 5.6
Total comprehensive income attributable
to equity holders of the parent 0.1 17.0 39.9
---------------------------------------------- ----------- ----------- ------------
Consolidated Condensed Statement of Changes in Equity
Cash
Share Share flow
Share premium options hedge Retained
capital account reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
======================= ========= ========= ========= ========= ========== =======
At 30 January 2016 4.9 0.9 1.4 1.0 171.9 180.1
Profit for the period - - - - 16.6 16.6
Other comprehensive
expenditure - - - (0.8) (15.7) (16.5)
----------------------- --------- --------- --------- --------- ---------- -------
Total comprehensive
(expenditure)/income
for the period - - - (0.8) 0.9 0.1
Company shares
purchased for
use by employee
benefit trusts
(note 19) - - - - (0.8) (0.8)
Proceeds on disposal
of shares
by employee benefit
trusts
(note 19) - - - - 1.2 1.2
Recognition of
share-based
payment costs - - 0.5 - - 0.5
Transfer of reserve on
share
award - - (0.3) - 0.3 -
Deferred tax on items
taken
direct to reserves - - - - - -
Dividends paid - - - - (11.5) (11.5)
----------------------- --------- --------- --------- --------- ---------- -------
At 30 July 2016 4.9 0.9 1.6 0.2 162.0 169.6
----------------------- --------- --------- --------- --------- ---------- -------
At 25 January 2015 4.9 0.9 2.3 (0.4) 148.8 156.5
Profit for the period - - - - 13.3 13.3
Other comprehensive
income - - - - 3.7 3.7
----------------------- --------- --------- --------- --------- ---------- -------
Total comprehensive
income
for the period - - - - 17.0 17.0
Company shares
purchased for
use by employee
benefit trusts
(note 19) - - - - (1.9) (1.9)
Proceeds on disposal
of shares
by employee benefit
trusts
(note 19) - - - - 1.3 1.3
Recognition of
share-based
payment costs - - 0.4 - - 0.4
Transfer of reserve on
share
award - - (0.3) - 0.3 -
Deferred tax on items
taken
direct to reserves - - (0.1) - - (0.1)
Dividends paid - - - - (10.4) (10.4)
----------------------- --------- --------- --------- --------- ---------- -------
At 25 July 2015 4.9 0.9 2.3 (0.4) 155.1 162.8
----------------------- --------- --------- --------- --------- ---------- -------
Consolidated Condensed Statement of Changes in Equity
Cash
Share Share flow
Share premium options hedge Retained
capital account reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
==================================== ========= ========= ========= ========= ========== =======
At 25 January 2015 4.9 0.9 2.3 (0.4) 148.8 156.5
Profit for the year - - - - 34.3 34.3
Other comprehensive income - - - 1.4 4.2 5.6
------------------------------------ --------- --------- --------- --------- ---------- -------
Total comprehensive income for
the year - - - 1.4 38.5 39.9
Company shares purchased for
use by employee benefit trusts
(note 19) - - - - (5.1) (5.1)
Proceeds on disposal of shares
by employee benefit trusts (note
19) - - - - 3.1 3.1
Recognition of share-based payment
costs - - 0.5 - - 0.5
Transfer of reserve on share
award - - (0.9) - 0.9 -
Deferred tax on items taken
direct to reserves - - (0.5) - - (0.5)
Dividends paid - - - - (14.3) (14.3)
------------------------------------ --------- --------- --------- --------- ---------- -------
At 30 January 2016 4.9 0.9 1.4 1.0 171.9 180.1
------------------------------------ --------- --------- --------- --------- ---------- -------
Consolidated Condensed Statement of Financial
Position
As at As at As at
30 July 25 July 30 January
2016 2015 2016
Note GBPm GBPm GBPm
------------------------------------------- ------ --------- --------- ------------
Non-current assets
Intangible assets 13 106.8 108.3 107.5
Property, plant and equipment 14 87.4 82.0 85.3
194.2 190.3 192.8
------------------------------------------- ------ --------- --------- ------------
Current assets
Inventories 18.6 18.0 15.6
Trade and other receivables 59.1 65.0 52.7
Derivative financial instruments 15 0.4 - 1.1
Cash and cash equivalents 7.4 10.6 6.8
Assets held for sale 12 - 0.9 -
85.5 94.5 76.2
------------------------------------------- ------ --------- --------- ------------
Total assets 279.7 284.8 269.0
------------------------------------------- ------ --------- --------- ------------
Current liabilities
Loans and other borrowings - - 0.7
Trade and other payables 57.8 58.4 37.4
Derivative financial instruments 15 - 0.5 -
Provisions 16 - 0.1 0.1
Current tax 3.2 2.6 3.6
61.0 61.6 41.8
------------------------------------------- ------ --------- --------- ------------
Non-current liabilities
Loans and other borrowings 14.2 30.4 17.5
Trade and other payables - 4.5 4.5
Deferred tax liabilities 9.9 11.8 12.2
Retirement benefit obligations 18 25.0 13.7 12.9
49.1 60.4 47.1
------------------------------------------- ------ --------- --------- ------------
Capital and reserves attributable to equity
holders
Share capital 4.9 4.9 4.9
Share premium account 0.9 0.9 0.9
Share options reserve 1.6 2.3 1.4
Cash flow hedge reserve 0.2 (0.4) 1.0
Retained earnings 162.0 155.1 171.9
169.6 162.8 180.1
------------------------------------------- ------ --------- --------- ------------
Total equity and liabilities 279.7 284.8 269.0
------------------------------------------- ------ --------- --------- ------------
Consolidated Condensed Cash Flow Statement
6 months 6 months Year ended
ended 30 ended 30 January
July 2016 25 July 2016
2015
GBPm GBPm GBPm
==================================================== =============== ========= ============
Operating activities
Profit for the period 21.1 16.9 41.3
Adjustments for:
Interest receivable - - (0.1)
Interest payable 0.4 0.4 0.9
Depreciation of property, plant and equipment 3.5 3.6 7.3
Amortisation of intangible assets 0.7 0.3 1.1
Share-based payment costs 0.5 0.4 0.5
Loss on sale of property, plant and equipment - 0.1 0.2
Operating cash flows before movements in
working capital 26.2 21.7 51.2
(Increase) / decrease in inventories (3.0) (0.6) 1.8
(Increase) / decrease in receivables (6.4) (11.6) 0.6
Increase / (decrease) in payables 15.4 3.9 (16.8)
Difference between employer pension contributions
and amounts recognised in the income statement (7.3) (0.4) (0.7)
---------------------------------------------------- --------------- --------- ------------
Cash generated by operations 24.9 13.0 36.1
Tax on profit paid (3.7) (3.7) (6.8)
---------------------------------------------------- --------------- --------- ------------
Net cash from operating activities 21.2 9.3 29.3
Investing activities
Acquisition of subsidiary (net of cash acquired) - (15.7) (15.7)
Acquisition of intangible assets - (4.7) (4.8)
Purchase of property, plant and equipment (5.3) (7.9) (14.7)
Proceeds on sale of property, plant and
equipment - 0.1 0.9
Interest received - - 0.1
---------------------------------------------------- --------------- --------- ------------
Net cash used in investing activities (5.3) (28.2) (34.2)
Financing activities
New loans received 16.0 47.0 34.0
Loans repaid (19.5) (31.5) (31.5)
Bank arrangement fees paid - (0.1) (0.1)
Purchase of Company shares by employee benefit
trusts (0.8) (1.9) (5.1)
Proceeds from disposal of Company shares
by employee benefit trusts 1.2 1.3 3.1
Dividends paid (11.5) (10.4) (14.3)
Interest paid (0.1) (0.2) (0.3)
---------------------------------------------------- --------------- --------- ------------
Net cash generated (used in)/generated by
financing activities (14.7) 4.2 (14.2)
Net increase / (decrease) in cash and cash
equivalents 1.2 (14.7) (19.1)
---------------------------------------------------- --------------- --------- ------------
Cash and cash equivalents at beginning of
period 6.2 25.3 25.3
Cash and cash equivalents at end of period 7.4 10.6 6.2
---------------------------------------------------- --------------- --------- ------------
1 General information
A.G. BARR p.l.c. ('the Company') and its subsidiaries (together
'the Group') manufacture, market, distribute and sell soft drinks.
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 the UK. The
address of its registered office is A.G. BARR p.l.c., Westfield
House, 4 Mollins Road, Cumbernauld, G68 9HD.
This consolidated condensed interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. Statutory accounts for the year ended 30
January 2016 were approved by the board of directors on 29 March
2016 and delivered to the Registrar of Companies. The comparative
figures for the financial year ended 30 January 2016 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 six months ended 30 July 2016 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority (previously the Financial Services Authority) and with
IAS 34, 'Interim Financial Reporting' as adopted by the European
Union. The consolidated condensed interim financial information
should be read in conjunction with the annual financial statements
for the year ended 30 January 2016, which have been prepared in
accordance with IFRSs as adopted by the European Union.
Going concern basis
The Group meets its day-to-day working capital requirements
through its bank facilities. After making enquiries, the directors
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
The Group's forecasts and projections, taking account of reasonable
sensitivities, show that the Group should be able to operate within
available facilities. The Group therefore continues to adopt the
going concern basis in preparing its consolidated condensed interim
financial statements.
3 Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 30 January 2016.
New and amended standards and interpretations need to be adopted
in the first interim financial statements issued after their
effective date (or date of early adoption).
No new accounting standards have been adopted by the Group that
have a material impact on the half year results or balances.
The following standards which have been issued have not yet been
adopted by the Group:
i) IFRS 15 'Revenue from contracts with customers' is effective
on 1 January 2018, subject to European Union (EU) endorsement;
ii) IFRS 9 'Financial instruments' which will be effective on 1
January 2018, subject to EU endorsement; and
iii) IFRS 16 'Leases' is effective on 1 January 2019, subject to
EU endorsement.
4 Principal risks and uncertainties
The directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance in the remaining 26 weeks of the financial year remain
substantially the same as those stated on pages 42-44 of the
Group's annual financial statements for the year ended 30 January
2016, which are available on our website, www.agbarr.co.uk.
We do note that the result of the recent referendum in favour of
the UK leaving the European Union may have an impact on the Group.
Like many other businesses, we are closely following developments
in this area, but we believe that it is still too early to quantify
or determine with certainty the impact on the Group of the UK
leaving the European Union. The Group is a UK based group whose
sales are predominantly made in the UK but it has some non-UK
income and an exposure to US Dollars and Euros through the purchase
of commodities. We will continue to monitor developments and adapt
our strategy as the impact of the UK exit from the European Union
becomes clear.
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 for the
year ended 30 January 2016 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 Group's management committee has been identified as the
chief operating decision-maker. The management committee reviews
the Group's internal reporting in order to assess performance and
allocate resources. The management committee has determined the
operating segments based on these reports.
The management committee considers the business from a product
perspective. This led to the operating segments identified in the
table below: there has been no change to the segments during the
period (after aggregation).
The performance of the operating segments is assessed by
reference to their gross profit before exceptional items.
Exceptional items are reported separately in note 8.
6 months ended 30
July 2016
Still
drinks
Carbonates and water Other Total
GBPm GBPm GBPm GBPm
---------------------------------- --------------- ----------- ------ ------
Total revenue 92.0 26.9 6.7 125.6
Gross profit before exceptional
items 47.9 7.5 3.5 58.9
---------------------------------- --------------- ----------- ------ ======
6 months ended 25 July 2015
Still
drinks
Carbonates and water Other Total
GBPm GBPm GBPm GBPm
---------------------------------- --------------- ----------- ------ ------
Total revenue 96.3 27.6 6.4 130.3
Gross profit before exceptional
items 50.2 8.2 2.8 61.2
---------------------------------- --------------- ----------- ------ ------
Year ended 30 January 2016
Still
drinks
Carbonates and water Other Total
GBPm GBPm GBPm GBPm
---------------------------------- --------------- ----------- ------ ------
Total revenue 189.7 57.1 11.8 258.6
Gross profit before exceptional
items 98.6 16.9 5.6 121.1
---------------------------------- --------------- ----------- ------ ------
There are no intersegment sales. All revenue is from external
customers.
Other segments represent the sale of Funkin cocktail solutions,
rental income for vending machines, and the sale of ice-cream and
other soft drink related items.
The gross profit before exceptional items from the segment
reporting is reconciled to the total profit before income tax as
shown in the consolidated condensed income statement.
All of the assets of the Group are managed by the management
committee on a central basis rather than at a segment level. As a
result, no reconciliation of segment assets and liabilities to the
consolidated condensed statement of financial position has been
disclosed for any of the periods presented.
All of the segments included within "Carbonates" and "Still
drinks and water" meet the aggregation criteria set out in IFRS 8
Operating segments.
7 Seasonality of operations
Revenues and operating profits are affected by weather
conditions, the timing of marketing investment and execution of
promotional activity. As a result it is anticipated that the
operating profits for the second half of the year ending 28 January
2017 will be higher than those for the six months ended 30 July
2016.
8 Operating profit
The following items have been charged to operating profit during
the period:
6 months 6 months Year ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
GBPm GBPm GBPm
------------------------------------ ----------- ----------- ------------
Acquisition costs - 0.7 0.7
Inventory write down 0.2 - 0.4
Foreign exchange (gains) / losses
recognised (0.8) 0.6 1.0
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.
During the period several items have been classified as
exceptional due to their nature and scale. All items have been
included within operating expenditure, and have been analysed in
the table below:
6 months 6 months Year ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
GBPm GBPm GBPm
------------------------------------------- ------------- ------------- --------------
Abortive acquisition costs 0.4 - -
Investigation of online sales capabilities 0.5 - -
Redundancy costs 0.6 - -
Curtailment gain (7.0) - -
Other costs relating to pension scheme
closure 1.4 - -
-------------------------------------------
Net exceptional credit (4.1) - -
------------------------------------------- ------------- ------------- --------------
During the period, GBP0.4m of acquisition fees were incurred in
relation to an unsuccessful acquisition. These costs included
advisory and legal fees.
GBP0.5m of advisory costs have been incurred as part of a
strategic review of the market threats posed by new and emerging
digital trading models.
GBP0.6m of redundancy costs have been incurred, arising from a
reorganisation of direct sales routes that was completed in the
period.
The Group's defined benefit pension scheme closed to future
accrual in May 2016. This resulted in a GBP7.0m curtailment gain.
Offsetting the curtailment gain is a further GBP1.4m of costs
incurred in relation to the closure of the defined benefit pension
scheme. This includes the cost of GBP1.3m past service cost for one
year's additional service negotiated with the active members of the
scheme and GBP0.1m of further costs relating to the closure of the
scheme.
9 Tax on profit
The interim period tax charge is accrued based on the estimated
average annual effective income tax rate of 21.3% (six months ended
25 July 2015: 21.3%; year ended 30 January 2016: 17.1%).
The Chancellor announced in his Summer Budget on 8 July 2015
that the main rate of corporation tax will be reduced to 19% from 1
April 2017 and 18% from 1 April 2020 and the future current tax
charges will reduce accordingly. Finance No.2 Bill 2015 became
substantively enacted on 26 October 2015. The deferred tax
liability at 30 July 2016 has therefore been calculated using the
rate of 18% substantively enacted at the balance sheet date.
10 Earnings per share
Basic earnings per share have 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.
6 months 6 months Year ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
---------------------------------------
Profit attributable to equity holders
of the Company (GBPm) 16.6 13.3 34.3
Weighted average number of ordinary
shares in issue 115,805,375 115,280,958 115,714,487
--------------------------------------- ------------ ------------ ------------
Basic earnings per share (pence) 14.33 11.57 29.63
--------------------------------------- ------------ ------------ ------------
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.
6 months 6 months Year ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
Profit attributable to equity holders
of the Company (GBPm) 16.6 13.3 34.3
Weighted average number of ordinary
shares in issue 115,805,375 115,280,958 115,714,487
Adjustment for dilutive effect of
share options 159,822 676,859 505,871
--------------------------------------- ------------ ------------ ------------
Diluted weighted average number of
ordinary shares in issue 115,965,197 115,957,817 116,220,358
Diluted earnings per share (pence) 14.31 11.50 29.51
--------------------------------------- ------------ ------------ ------------
The underlying EPS figure is calculated using profit
attributable to equity holders before exceptional items:
6 months 6 months Year ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
---------------------------------------
Profit attributable to equity holders
of the Company before exceptional
items (GBPm) 13.2 13.3 34.3
Weighted average number of ordinary
shares in issue 115,805,375 115,280,958 115,714,487
--------------------------------------- ------------ ------------
Underlying earnings per share (pence) 11.40 11.57 29.63
--------------------------------------- ------------ ------------ ------------
This measure has been included in the financial statements as it
provides a closer guide to the underlying financial performance as
the calculation excludes the effect of exceptional items.
11 Dividends paid
6 months Year 6 months
ended 6 months ended 6 months ended Year ended
30 July ended 25 30 January ended 30 25 July 30 January
2016 July 2015 2016 July 2016 2015 2016
per share per share per share
(p) (p) (p) GBPm GBPm GBPm
--------------------- ----------- ----------- ------------ ----------- --------- ------------
Paid final dividend 9.97 9.01 9.01 11.5 10.4 10.4
Paid first interim
dividend - - 3.36 - - 3.9
9.97 9.01 12.37 11.5 10.4 14.3
--------------------- =========== =========== ============ =========== ========= ============
An interim dividend of 3.53p (an increase of 5% on last year)
per share was approved by the board on 27 September 2016 and will
be paid on 21 October 2016 to shareholders on record as at 7
October 2016.
12 Held for sale assets
In the comparative period the property, plant and equipment
related to the manufacturing site at Tredegar have been presented
as held for sale as at 25 July 2015 following the decision to close
the site. The property, plant and equipment was subsequently sold
during September 2015.
13 Intangible assets
6 months 6 months Year
ended ended ended
30 July 25 July 30 January
2016 2015 2016
GBPm GBPm GBPm
------------------------ --------- --------- ------------
Opening net book value 107.5 80.9 80.9
Additions - 27.7 27.7
Amortisation (0.7) (0.3) (1.1)
Closing net book value 106.8 108.3 107.5
------------------------ --------- --------- ------------
The additions for periods presented represent goodwill and other
intangible assets acquired as part of the acquisition of Funkin
Limited, internally generated software development costs and third
party consultancy costs incurred in relation to the Business
Process Redesign project that completed in the year ended 30
January 2016.
The amortisation charge for the six months ended 30 July 2016
represents GBP0.6m (six months ended 25 July 2015: GBP0.2m; year
ended 30 January 2016: GBP0.8m) of charges in relation to the
Business Process Redesign project and GBP0.1m (six months ended 25
July 2015: GBP0.1m; year ended 30 January 2016: GBP0.3m) of charges
for the Rubicon and Funkin customer lists.
14 Property, plant and equipment
6 months
ended 6 months Year ended
30 July ended 25 30 January
2016 July 2015 2016
GBPm GBPm GBPm
------------------------------------------ --------- ----------- ------------
Opening net book value 85.3 79.6 79.6
Additions 5.6 7.1 14.1
Disposals - (0.2) (1.1)
Property, plant and equipment classified
as held for sale (note 12) - (0.9) -
Depreciation (3.5) (3.6) (7.3)
Closing net book value 87.4 82.0 85.3
------------------------------------------ --------- ----------- ------------
The closing balance includes GBP4.8m (as at 25 July 2015:
GBP0.6m; as at 30 January 2016: GBP5.5m) of assets under
construction.
15 Financial instruments
Current assets of GBP0.4m (at 25 July 2015: GBPnil; 30 January
2016: GBP1.1m) relate to forward foreign currency contracts with a
maturity of less than 12 months and are classified as fair value
through the cash flow hedge reserve.
Current liabilities of GBPnil (at 25 July 2015: GBP0.5m; 30
January 2016: GBPnil) represents forward foreign currency contracts
with a maturity of less than 12 months and are classified as fair
value through the cash flow hedge reserve.
Fair value hierarchy
IFRS 7 requires all financial instruments carried at fair value
to be analysed under the following levels:
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
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 table below sets out the comparison between the carrying
amount and fair value of all of the Group's financial instruments,
with the exception of trade and other receivables and trade and
other payables.
Fair
Carrying amount value
--------------------------------------------------------
Other
financial
Fair value liabilities
- hedging Loans at amortised Level
instruments and receivables cost Total 2
As at 30 July 2016 GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------------- ----------------- -------------- ------ -------
Financial assets not measured
at fair value
Cash and cash equivalents - 7.4 - 7.4 7.4
Trade receivables - 55.0 - 55.0 55.0
- 62.4 - 62.4 62.4
------------------------------------ ------------- ----------------- -------------- ------ -------
Financial assets measured at
fair value
Foreign exchange contracts used
for hedging 0.4 - - 0.4 0.4
0.4 - - 0.4 0.4
------------------------------------ ------------- ----------------- -------------- ------ -------
Financial liabilities measured
at fair value
Contingent consideration - - 4.5 4.5 4.5
- - 4.5 4.5 4.5
------------------------------------ ------------- ----------------- -------------- ------ -------
Financial liabilities not measured
at fair value
Finance lease liabilities - - 0.2 0.2 0.2
Unsecured bank borrowings - - 14.0 14.0 14.0
Trade payables - - 26.0 26.0 26.0
- - 40.2 40.2 40.2
------------------------------------ ------------- ----------------- -------------- ------ -------
Fair
Carrying amount value
---------------------------------------------------------------------
Other
financial
Fair value liabilities
- hedging Loans at amortised Level
instruments and receivables cost Total 2
As at 25 July 2015 GBPm GBPm GBPm GBPm GBPm
---------------------- ------------------ ----------------- -------------- -------------- -------
Financial assets not
measured
at fair value
Trade receivables - 28.6 - 28.6 28.6
Cash and cash
equivalents - 10.6 - 10.6 10.6
- 39.2 - 39.2 39.2
---------------------- ------------------ ----------------- -------------- -------------- -------
Financial assets
measured at
fair value
Foreign exchange
contracts
used for hedging - - - - -
- - - - -
---------------------- ------------------ ----------------- -------------- -------------- -------
Financial liabilities
measured
at fair value
Foreign exchange
contracts
used for hedging 0.5 - - 0.5 0.5
Contingent
consideration - - 4.5 4.5 4.5
0.5 - 4.5 5.0 5.0
---------------------- ------------------ ----------------- -------------- -------------- -------
Financial liabilities
not measured
at fair value
Unsecured bank
borrowings - - 30.5 30.5 30.5
Trade payables - - 20.6 20.6 20.6
- - 51.1 51.1 51.1
---------------------- ------------------ ----------------- -------------- -------------- -------
Fair
Carrying amount value
====================== -------------------------------------------------------------
Other
financial
Fair value liabilities
- hedging Loans at amortised Level
instruments and receivables cost Total 2
As at 30 January 2016 GBPm GBPm GBPm GBPm GBPm
---------------------- ------------------ ----------------- -------------- ------ -------
Financial assets not
measured
at fair value
Foreign exchange
contracts
used for hedging 1.1 - - 1.1 1.1
Trade receivables - 50.0 - 50.0 50.0
Cash and cash
equivalents - 6.8 - 6.8 6.8
1.1 56.8 - 57.9 57.9
---------------------- ------------------ ----------------- -------------- ------ -------
Financial liabilities
measured
at fair value
Contingent
consideration - - 4.5 4.5 4.5
- - 4.5 4.5 4.5
---------------------- ------------------ ----------------- -------------- ------ -------
Financial liabilities
not measured
at fair value
Finance lease
liabilities - - 0.2 0.2 0.2
Unsecured bank
borrowings - - 18.0 18.0 18.0
Trade payables - - 8.4 8.4 8.4
- - 26.6 26.6 26.6
---------------------- ------------------ ----------------- -------------- ------ -------
The carrying value of non-current borrowings is disclosed before
the deduction of the unamortised arrangement fee of GBPnil (at 25
July 2015: GBP0.1m; 30 January 2016: GBP0.1m).The fair values of
the non-current borrowings are based on cash flows discounted using
the current variable interest rate charged on the borrowings of
1.50% and a discount rate of 1.50%.
16 Provisions
6 months
ended 6 months Year ended
30 July ended 25 30 January
2016 July 2015 2016
GBPm GBPm GBPm
-------------------------------------- --------- ----------- --------------
Opening provision 0.1 1.0 1.0
Provision utilised during the period (0.1) (0.9) (0.9)
Closing provision - 0.1 0.1
-------------------------------------- --------- ----------- ------------
17 Borrowings and loans
Movements in borrowings are analysed as follows:
6 months
ended 6 months Year ended
30 July ended 25 30 January
2016 July 2015 2016
GBPm GBPm GBPm
----------------------------------------- --------- ----------- ------------
Opening loan balance 18.1 15.1 15.1
Borrowings made 16.0 47.0 34.0
Bank overdrafts - - 0.5
Repayments of borrowings and overdrafts (20.1) (31.6) (31.5)
========================================= ========= =========== ============
Closing loan balance before arrangement
fees 14.0 30.5 18.1
Unamortised arrangement fee - (0.1) (0.1)
Closing loan balance 14.0 30.4 18.0
----------------------------------------- --------- ----------- ------------
The reconciliation of the above closing loan balance to the
figures on the face of the consolidated condensed statement of
financial position is as follows:
As at As at As at
30 July 25 July 30 January
2016 2015 2016
GBPm GBPm GBPm
----------------------------- --------- --------- ------------
Overdraft - - 0.6
Closing loan balance 14.0 30.5 17.5
Unamortised arrangement fee - (0.1) (0.1)
Finance lease liabilities 0.2 - 0.2
Total borrowings and loans 14.2 30.4 18.2
----------------------------- --------- --------- ------------
Disclosed as
Current liabilities - - 0.7
Non-current liabilities 14.2 30.4 17.5
============================= ========= ========= ============
The reconciliation to net debt is as follows:
As at As at As at
30 July 25 July 30 January
2016 2015 2016
GBPm GBPm GBPm
============================ --------- --------- ------------
Closing borrowings balance 14.0 30.5 18.1
Cash and cash equivalents (7.4) (10.6) (6.8)
Net debt 6.6 19.9 11.3
---------------------------- --------- --------- ------------
The undrawn facilities at 30 July 2016 are as follows:
Total
facility Drawn Undrawn
GBPm GBPm GBPm
----------------------------- ---------- ------ --------
Revolving credit facilities 45.0 14.0 31.0
Overdraft 5.0 - 5.0
50.0 14.0 36.0
----------------------------- ---------- ------ --------
During the six months ended 25 July 2015, the Group renegotiated
a GBP35m revolving credit facility. A total arrangement fee of
GBP0.1m was incurred and is being amortised over the life of the
loan facility. The revolving credit facility will expire in January
2018. A further GBP10m revolving credit facility was arranged in
the year ended 26 January 2014 and will expire in March 2017.
The directors confirm that the Group has sufficient headroom to
enable it to meet the covenants on its existing borrowings. There
are sufficient working capital and undrawn funding facilities
available to meet the Group's ongoing requirements.
18 Retirement benefit obligations
On 20 January 2016 the Company announced its intention to close
the defined benefit section of the A.G. BARR p.l.c (2008) Pension
and Life Assurance Scheme to future accrual. Following consultation
with the pension scheme Trustee and active members, the scheme
closed to future accrual from 1 May 2016 giving rise to a
curtailment gain of GBP7.0m.
As part of the consultation with the pension scheme Trustee and
active members an additional year of service was accrued for active
member employees prior to the closure, resulting in a past service
cost of GBP1.3m.
These two items have been treated as exceptional items in the
six months ended 30 July 2016.
The defined retirement benefit scheme had a deficit of GBP25.0m
as at 30 July 2016 (as at 25 July 2015: GBP13.7m; 30 January 2016:
GBP12.9m). The reconciliation of the closing deficit is as
follows:
6 months 6 months Year ended
ended 30 ended 25 30 January
July 2016 July 2015 2016
GBPm GBPm GBPm
====================================== ----------- ----------- ------------
Opening present value of obligation (120.2) (131.0) (131.0)
Current service cost (0.4) (0.8) (1.9)
Curtailment gain 7.0 - 0.2
Interest cost (2.2) (2.1) (4.3)
Past service cost (1.3) - -
Remeasurement - changes in financial
assumptions (27.9) 10.2 12.7
Benefits paid 1.6 1.6 4.0
Premiums paid - - 0.1
Closing position (143.4) (122.1) (120.2)
-------------------------------------- =========== =========== ============
Opening fair value of plan assets 107.3 112.7 112.7
Interest income 2.0 1.7 3.6
Remeasurement - actuarial return on
assets 8.7 (5.6) (7.3)
Employer contributions 2.0 1.2 2.4
Benefits paid (1.6) (1.6) (4.0)
Premiums paid - - (0.1)
Closing fair value of plan assets 118.4 108.4 107.3
-------------------------------------- =========== =========== ============
As at 30
As at 30 As at 25 January
July 2016 July 2015 2016
GBPm GBPm GBPm
====================================== ----------- ----------- ------------
Closing present value of obligation (143.4) (122.1) (120.2)
Closing fair value of plan assets 118.4 108.4 107.3
Closing net deficit (25.0) (13.7) (12.9)
-------------------------------------- =========== =========== ============
The key financial assumptions used to value the liabilities were
as follows:
As at 30
As at 30 As at 25 January
July 2016 July 2015 2016
% % %
------------------------- ----------- ----------- ---------
Discount rate 2.40 3.70 3.70
Future salary increases 3.90 4.40 4.20
Inflation assumption 2.90 3.40 3.20
------------------------- ----------- ----------- ---------
19 Movements in own shares held by employee benefit trusts
During the six months ended 30 July 2016 the employee benefit
trusts of the Group acquired 151,042 (six months ended 25 July
2015: 321,789; year ended 30 January 2016: 913,724) 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 2016 the shares held by the Company's
employee benefit trusts represented 1,099,331 (25 July 2015:
1,366,277; 30 January 2016: 1,254,095) shares at a purchased cost
of GBP6.2m (25 July 2015: GBP8.6m; 30 January 2016: GBP8.9m).
There were 300,114 (six months ended 25 July 2015: 305,696; year
ended 30 January 2016: 1,009,813) shares 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 ended 30 July 2016 was GBP5.15 (six months ended
25 July 2015: GBP6.18; year ended 30 January 2016: GBP5.28) per
share.
20 Contingencies and commitments
As at As at 30
As at 30 25 July January
July 2016 2015 2016
GBPm GBPm GBPm
---------------------------------------------- ----------- --------- ---------
Commitments for the acquisition of property,
plant and equipment 2.5 6.4 6.1
---------------------------------------------- ----------- --------- ---------
21 Events occurring after the reporting period
Interim dividend
As disclosed in note 11, an interim dividend of 3.53p per share
will be paid to shareholders on 21 October 2016.
External audit tender
Noting the requirements on audit tendering set out in the
Combined Code, the Competition and Markets Authority Order and the
Department for Business, Innovation and Skills proposals to
implement the EU's June 2014 Audit Directive and Regulation, the
Audit Committee has agreed that a competitive tender process be
commenced during the second half of this year in readiness for the
external audit for the year ending 27 January 2018.
Organisational restructure
Today, 27 September 2016, the Company announces a proposed
organisation restructure that is likely to impact around 10% of the
total employee base. This is expected to result in around 90 job
losses across the Company.
The consultation process with the impacted employees will
commence immediately and it is anticipated that the majority of the
changes resulting from the process will have been implemented by
the end of the financial year, 28 January 2017.
The expected cost of the reorganisation has been estimated at
c.GBP4m and will be recognised as an exceptional cost in the
financial statements for the year ending 28 January 2017.
22 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.
Statement of Directors' Responsibilities
The directors' confirm that these consolidated condensed interim
financial statements have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting,
as adopted by the European Union. 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.
The directors of A.G. BARR p.l.c. are listed in the Annual
Report and Accounts for the 53 weeks ended 30 January 2016.
For and on behalf of the board of directors
Roger White Stuart Lorimer
Chief Executive Finance Director
27 September 2016 27 September 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UWAORNRAKUAR
(END) Dow Jones Newswires
September 28, 2016 09:14 ET (13:14 GMT)
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