TIDMBAG

RNS Number : 7323Z

Barr(A.G.) PLC

22 September 2015

22 September 2015

A.G. BARR p.l.c.

INTERIM RESULTS FOR THE 6 MONTHS ENDED 25 JULY 2015

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 and Strathmore, announces its interim results for the 6 months ended 25 July 2015.

Key Points

-- Total turnover was GBP130.3m (2014: GBP135.7m). Adjusting for the impact of discontinued business, turnover from ongoing business, including the recently acquired Funkin Limited ("Funkin"), declined 2.8%

-- Adjusted* profit on ordinary activities before tax, interest and exceptional items increased by 3.3% to GBP17.8m. Statutory profit before tax decreased by 11.3% to GBP16.9m (2014: GBP19.0m)

-- Free cash flow was GBP7.4m. Net debt stands at GBP19.9m (representing a net debt/EBITDA ratio of 0.4 times)

   --     The Funkin business is performing well against our pre-acquisition expectations 

-- Investment in our Milton Keynes site continued during the period with the successful commissioning of carton packaging capability and the commencement of the warehouse capacity increase project, due to be completed in early 2016

   --     Interim dividend of 3.36p per share (2014: 3.11p), an increase of 8.0% on the prior year 

Commenting on the results, Roger White, Chief Executive said:

"We have delivered a number of significant system, business process and operational improvement projects over the course of the last 6 months, which will ensure we can successfully deliver our long-term growth and efficiency ambitions. These important changes have been made against a challenging backdrop of stretching prior year comparatives, disappointing weather and tough market conditions.

Our focus in the coming months will be to build our sales momentum and continue our long-term brand investment strategy.

Market conditions across the first half have been difficult and are forecast to remain so. The business is responding well to the market challenges but the weather since we last updated the market in July has been poor and, although we have recovered some sales momentum, it is not yet at the run rate we have targeted. Assuming a satisfactory trading performance in the key Christmas period, the Board now expects the Company to deliver a full year result broadly similar to that achieved last year.

As we look towards 2016 it is anticipated that the business will return to growth and begin to see the benefits of our improved operating platform."

For more information, please contact:

 
 A.G. BARR    01236 852400                   Instinctif Partners   020 7457 2020 
              Roger White, Chief Executive                         Justine Warren 
              Stuart Lorimer, Finance                              Matthew Smallwood 
               Director 
 

*Adjusted profit is defined as statutory operating profit before interest and tax and after adjusting for discontinued business (GBP1.0m), income associated with the 2014 termination of the Orangina franchise (GBP0.7m) and one-off transaction fees related to the acquisition of the Funkin Cocktails business (GBP0.7m).

Interim Statement

A.G. BARR has been through an extremely demanding 6 months in which we have delivered a substantial level of change and business improvement. The period began with the closure of the Tredegar factory and the subsequent successful clearance and sale of the site which completed in September 2015. During the early part of the year we also commissioned carton packaging capability at our Milton Keynes site, increasing capacity and improving flexibility in this important product format. The acquisition of the Funkin cocktail mixer business also completed in the period and we are pleased to report the business is meeting our high expectations. Alongside all of these highly visible actions and activities we have completed the planning and go-live of our Business Process Redesign (BPR) project which means we are now operating our business on a much more effective, modern and robust system and business process platform, capable of supporting sustained future growth.

As we reported in July, the go-live of our BPR project, despite our significant efforts to reduce executional risk, proved to be more challenging than anticipated. We experienced a period of difficult internal operating conditions post go-live which undoubtedly impacted our revenue performance and our customer service. We have now stabilised our systems and our focus is to realise the business benefits our new improved operating platform offers.

Trading

The soft drinks market in the period has been impacted by continued price deflation and very poor weather, especially in the north of the UK. As expected, our relative revenue performance has also been affected by the stretching prior year comparatives driven by better than average weather, strong execution behind the Glasgow 2014 Commonwealth Games and specific brand promotional phasing changes in the current year.

Total revenue for the period was GBP130.3m. Adjusting for the impact of discontinued business, turnover from ongoing business, including the recently acquired Funkin Limited ("Funkin"), declined 2.8%.

The total soft drinks market, as measured by Nielsen, experienced a 0.6% decline in revenue during the period, with modest growth of 1.4% in volume driven by strong performance in water and the continued positive performance of the energy drinks category.

We have maintained our long-term strategy of investing behind our core brands with further significant marketing activity. The prior year's activity was weighted to the first half in support of the Glasgow 2014 Commonwealth Games. This year's marketing programme sees a return to more normal phasing with greater proportionate activity later in the year.

In the period we have continued to see gross margin improvement benefiting from a combination of improved procurement conditions and further delivery of supply chain savings. Operating margins have been adversely impacted by a combination of lower volumes and our commitment to maintaining brand and business investment.

Adjusted* profit increased by 3.3% to GBP17.8m. Statutory profit before tax and exceptional items in the period was GBP16.9m.

In the period we have continued to support the long-term growth of IRN-BRU, developing the brand across the UK as a whole, with national TV and digital advertising and the development of an exciting sponsorship plan with both the English Football League and the Scottish Professional Football League.

The IRN-BRU brand continues to feature heavily in social media and digital channels, with positive consumer engagement during both our "Tartan Packs" promotion and our "Bru Planet" summer initiative.

We announced in late August a GBP5m investment at our Cumbernauld factory with the installation of new, high-speed glass filling capability. The investment will lead to the discontinuation of our returnable glass bottle system at the end of 2015. However moving to non returnable, recyclable glass will support the long-term development of this popular product format. The investment will also facilitate a number of exciting brand development projects in 2016.

In the period, we also announced phase 3 of the ongoing investment at our Milton Keynes site. Our plans include the building of increased warehouse capacity to improve operational efficiency, flexibility and costs, as well as the purchase of 4 acres of development land adjacent to the site. The total expected cost of this development phase, including the additional land for future expansion, is GBP11m.

Our actions to drive efficiency, as well as our continued investment in our asset base and brands, indicate our commitment to building a platform which will effectively support significant future growth across our whole business.

In the period we had no exceptional charges (2014: GBP2.5m).

Balance Sheet

Our balance sheet remains strong.

Intangible asset additions of GBP27.7m reflect the brand and goodwill valuation associated with the Funkin acquisition and the capitalisation of the investment in our BPR Project.

We also continue to invest in our tangible asset base. Cash capital expenditure during the period amounted to GBP7.9m, a combination of normal operational replacement and the acquisition of additional land at our Milton Keynes site.

Working capital continues to be tightly managed. The impact of lower receivables, a result of the Glasgow 2014 Commonwealth Games impact on comparatives, has more than offset slightly higher inventories.

The Group continues to benefit from strong cash-flow and low leverage. Net debt at 25 July 2015 stood at GBP19.9m, having funded the Funkin acquisition, the Milton Keynes land purchase and the BPR project investment.

Free cash flow of GBP7.4m was generated in the 6 month period. This was GBP3.8m less than in the comparable period in the prior year, arising from the addition of Funkin, underlying trading performance and slightly higher tax payments.

Dividend

The Board has declared an interim dividend of 3.36 pence per share, payable on 16 October 2015 to shareholders on the register on 2 October 2015. This represents an increase on the prior year of 8.0% and reflects the Board's confidence in the current financial position and the future prospects of the Group.

Board Update

In April, we were very pleased to welcome David Ritchie, CEO of Bovis Homes Group PLC, on to the Board as an independent non-executive director and Chair of the Remuneration Committee.

Outlook

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September 22, 2015 02:00 ET (06:00 GMT)

Having delivered significant internal change over the last 6 months our focus is to return the business to sales growth. Market conditions across the first half have been difficult and are forecast to remain so. The business is responding well to the market challenges but the weather since we updated the market in July has been poor and, although we have recovered some sales momentum, it is not yet at the run rate we have targeted. Assuming a satisfactory trading performance in the key Christmas period, the Board now expects the Company to deliver a full year result broadly similar to that achieved last year.

Despite the specific challenges of the current year, our business is well placed and we remain confident in delivering further on our growth potential and continuing to generate long-term shareholder value. We expect to regain sales momentum and to see the benefits of improved operational execution as we enter 2016.

 
 John R. Nicolson     Roger A. White 
 Chairman             Chief Executive 
 

22 September 2015

*Adjusted profit is defined as statutory operating profit before interest and tax and after adjusting for discontinued business (GBP1.0m), income associated with the 2014 termination of the Orangina franchise (GBP0.7m) and one-off transaction fees related to the acquisition of the Funkin Cocktails business (GBP0.7m).

 
 Consolidated Condensed Income Statement 
                                      6 months 
                                    ended 25 July 
                                        2015                          6 months ended 27 July 2014 
                                 ----------------  --------------------------------------------------------------- 
                                                          Before 
                                                     exceptional 
                                                           items 
                                                        Restated 
                                                           (note   Exceptional items (note                   Total 
                                            Total          3(c))                        8)    Restated (note 3(c)) 
                           Note            GBP000         GBP000                    GBP000                  GBP000 
------------------------  -----  ----------------  -------------  ------------------------  ---------------------- 
 Revenue                    6             130,260        135,703                         -                 135,703 
 Cost of sales                           (69,068)       (74,362)                   (2,325)                (76,687) 
------------------------  -----  ================  -------------  ------------------------  ---------------------- 
 
 Gross profit               6              61,192         61,341                   (2,325)                  59,016 
 
 Other income               8                   -            747                         -                     747 
 Operating expenses                      (43,882)       (42,923)                     (218)                (43,141) 
========================  =====  ================  =============  ========================  ====================== 
 Operating profit           8              17,310         19,165                   (2,543)                  16,622 
 
 Finance income                                26             46                         -                      46 
 Finance costs                              (460)          (183)                         -                   (183) 
------------------------  -----  ================  -------------  ------------------------  ---------------------- 
 Profit before tax                         16,876         19,028                   (2,543)                  16,485 
 
 Income tax expense         9             (3,538)        (4,202)                       532                 (3,670) 
------------------------  -----  ================  -------------  ------------------------  ---------------------- 
 
 Profit attributable to 
  equity holders                           13,338         14,826                   (2,011)                  12,815 
------------------------  -----  ----------------  -------------  ------------------------  ---------------------- 
 
 Earnings per share (p) 
------------------------  -----  ----------------  =============  ========================  ====================== 
 Basic earnings per 
  share                     10              11.57                                                            11.09 
 Diluted earnings per 
  share                     10              11.50                                                            11.03 
------------------------  -----  ----------------  -------------  ------------------------  ---------------------- 
 
 

Ex-div date: 1 October 2015

Record date: 2 October 2015

 
 Consolidated Condensed Income Statement 
                                                 Year ended 25 January 2015 
                                    --------------------------------------------------- 
                                   Before exceptional 
                                                items     Exceptional             Total 
                                       Restated (note     items (note          Restated 
                                                3(c))              8)       (note 3(c)) 
                            Note               GBP000          GBP000            GBP000 
========================  ========  =================   =============   =============== 
 Revenue                      6               260,895               -           260,895 
 Cost of sales                              (140,996)         (2,910)         (143,906) 
------------------------  --------  -----------------   -------------   --------------- 
 
 Gross profit                 6               119,899         (2,910)           116,989 
 
 Other income                 8                   747               -               747 
 Operating expenses                          (78,513)           (376)          (78,889) 
========================  ========  =================   =============   =============== 
 Operating profit             8                42,133         (3,286)            38,847 
 
 Finance income                                   103               -               103 
 Finance costs                                  (322)               -             (322) 
------------------------  --------  -----------------   -------------   --------------- 
 Profit before tax                             41,914         (3,286)            38,628 
 
 Income tax expense           9               (9,318)             687           (8,631) 
------------------------  --------  -----------------   -------------   --------------- 
 
 Profit attributable 
  to equity holders                            32,596         (2,599)            29,997 
------------------------  --------  -----------------   -------------   --------------- 
 
 Earnings per share 
  (p) 
------------------------  --------  -----------------   -------------------   --------- 
 Basic earnings per 
  share                      10                                                   26.00 
 Diluted earnings per 
  share                      10                                                   25.86 
------------------------  --------  -----------------   -------------------   --------- 
 
 
 
 
 
 Consolidated Condensed Statement of Comprehensive Income 
 
                                          6 months     6 months    Year ended 
                                          ended 25     ended 27    25 January 
                                         July 2015    July 2014          2015 
                                            GBP000       GBP000        GBP000 
=====================================  ===========  ===========  ============ 
 
 Profit for the period                      13,338       12,815        29,997 
 
 Other comprehensive income 
 Items that will not be reclassified 
  to profit or loss 
 Remeasurements on defined 
  benefit pension plans (note 
  19)                                        4,600      (2,660)      (19,770) 
 Deferred tax movements on 
  items taken direct to equity             (1,434)           22         2,934 
 Current tax movements on items 
  taken direct to equity                       514          544         1,121 
 
 Items that will be or have 
  been reclassified to profit 
  or loss 
 Effective portion of changes 
  in fair value of cash flow 
  hedges                                       114        (294)            67 
 Deferred tax movements on 
  items above                                 (22)           59          (14) 
 Other comprehensive income 
  for the period, net of tax                 3,772      (2,329)      (15,662) 
 
 Total comprehensive income 
  attributable to equity holders 
  of the parent                             17,110       10,486        14,335 
-------------------------------------  -----------  -----------  ------------ 
 
 
 
 
 Consolidated Condensed Statement of Changes 
  in Equity 
                                                      Share      Share   Cash flow 
                                          Share     premium    options       hedge    Retained 
                                        capital     account    reserve     reserve    earnings      Total 
                                         GBP000      GBP000     GBP000      GBP000      GBP000     GBP000 
    ================================  =========  ==========  =========  ==========  ==========  ========= 
 
  At 25 January 2015                      4,865         905      2,318       (481)     148,930    156,537 
 
  Profit for the period                       -           -          -           -      13,338     13,338 
  Other comprehensive income                  -           -          -          92       3,680      3,772 
 -----------------------------------  ---------  ----------  ---------  ----------  ----------  --------- 

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September 22, 2015 02:00 ET (06:00 GMT)

  Total comprehensive income 
   for the period                             -           -          -          92      17,018     17,110 
 
  Company shares purchased 
   for use by employee benefit 
   trusts (note 20)                           -           -          -           -     (1,976)    (1,976) 
  Proceeds on disposal of shares 
   by employee benefit trusts 
   (note 20)                                  -           -          -           -       1,305      1,305 
  Recognition of share-based 
   payment costs                              -           -        265           -           -        265 
  Transfer of reserve on share 
   award                                      -           -      (262)           -         262          - 
  Deferred tax on items taken 
   direct to reserves                         -           -       (66)           -           -       (66) 
  Dividends paid                              -           -          -           -    (10,402)   (10,402) 
 -----------------------------------  ---------  ----------  ---------  ----------  ----------  --------- 
  At 25 July 2015                         4,865         905      2,255       (389)     155,137    162,773 
 -----------------------------------  ---------  ----------  ---------  ----------  ----------  --------- 
 
 
  At 26 January 2014                      4,865         905      1,826       (534)     148,174    155,236 
 
  Profit for the period                       -           -          -           -      12,815     12,815 
  Other comprehensive income                  -           -          -       (235)     (2,094)    (2,329) 
 -----------------------------------  ---------  ----------  ---------  ----------  ----------  --------- 
  Total comprehensive income 
   for the period                             -           -          -       (235)      10,721     10,486 
 
  Company shares purchased 
   for use by employee benefit 
   trusts (note 20)                           -           -          -           -     (1,214)    (1,214) 
  Proceeds on disposal of shares 
   by employee benefit trusts 
   (note 20)                                  -           -          -           -       1,164      1,164 
  Recognition of share-based 
   payment costs                              -           -        470           -           -        470 
  Transfer of reserve on share 
   award                                      -           -      (463)           -         463          - 
  Deferred tax on items taken 
   direct to reserves                         -           -        136           -           -        136 
  Dividends paid                              -           -          -           -     (9,455)    (9,455) 
 -----------------------------------  ---------  ----------  ---------  ----------  ----------  --------- 
  As at 27 July 2014                      4,865         905      1,969       (769)     149,853    156,823 
 -----------------------------------  ---------  ----------  ---------  ----------  ----------  --------- 
 
 
 
 Consolidated Condensed Statement of Changes in Equity 
                                                                        Cash 
                                                 Share      Share       flow 
                                      Share    premium    options      hedge    Retained 
                                    capital    account    reserve    reserve    earnings      Total 
                                     GBP000     GBP000     GBP000     GBP000      GBP000     GBP000 
================================  =========  =========  =========  =========  ==========  ========= 
 
 At 26 January 2014                   4,865        905      1,826      (534)     148,174    155,236 
 
 Profit for the year                      -          -          -          -      29,997     29,997 
 Other comprehensive income               -          -          -         53    (15,715)   (15,662) 
--------------------------------  ---------  ---------  ---------  ---------  ----------  --------- 
 Total comprehensive income 
  for the year                            -          -          -         53      14,282     14,335 
 
 Company shares purchased 
  for use by employee benefit 
  trusts (note 20)                        -          -          -          -     (2,310)    (2,310) 
 Proceeds on disposal of shares 
  by employee benefit trusts 
  (note 20)                               -          -          -          -       1,301      1,301 
 Recognition of share-based 
  payment costs                           -          -        893          -           -        893 
 Transfer of reserve on share 
  award                                   -          -      (534)          -         534          - 
 Deferred tax on items taken 
  direct to reserves                      -          -        133          -           -        133 
 Dividends paid                           -          -          -          -    (13,051)   (13,051) 
--------------------------------  ---------  ---------  ---------  ---------  ----------  --------- 
 At 25 January 2015                   4,865        905      2,318      (481)     148,930    156,537 
--------------------------------  ---------  ---------  ---------  ---------  ----------  --------- 
 
 
 Consolidated Condensed Statement of Financial Position 
 
                                            As at 25 July 2015   As at 27 July 2014   As at 25 January 2015 
                                     Note               GBP000               GBP000                  GBP000 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 Non-current assets 
 Intangible assets                    14               108,266               76,349                  80,917 
 Property, plant and equipment        15                82,090               74,688                  79,663 
                                                       190,356              151,037                 160,580 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 Current assets 
 Inventories                                            18,029               16,115                  16,761 
 Trade and other receivables                            64,988               74,535                  51,899 
 Derivative financial instruments     16                    20                    -                      66 
 Cash and cash equivalents                              10,583               11,281                  25,437 
 Assets held for sale                 12                   850                    -                       - 
                                                        94,470              101,931                  94,163 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 Total assets                                          284,826              252,968                 254,743 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 Current liabilities 
 Loans and other borrowings           18                     -                    -                      73 
 Trade and other payables                               58,371               63,341                  51,119 
 Derivative financial instruments     16                   508                  914                     666 
 Provisions                           17                   112                1,100                   1,009 
 Current tax                                             2,625                3,172                   3,314 
                                                        61,616               68,527                  56,181 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 Non-current liabilities 
 Loans and other borrowings           18                30,402               14,931                  14,944 
 Derivative financial instruments     16                 4,500                   47                       - 
 Deferred tax liabilities                               11,777               10,854                   8,612 
 Retirement benefit obligations       19                13,758                1,786                  18,469 
                                                        60,437               27,618                  42,025 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 Capital and reserves attributable to equity holders 
 Share capital                                           4,865                4,865                   4,865 
 Share premium account                                     905                  905                     905 
 Share options reserve                                   2,255                1,969                   2,318 
 Cash flow hedge reserve                                 (389)                (769)                   (481) 
 Retained earnings                                     155,137              149,853                 148,930 
                                                       162,773              156,823                 156,537 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 Total equity and liabilities                          284,826              252,968                 254,743 
----------------------------------  -----  -------------------  -------------------  ---------------------- 
 
 
 Consolidated Condensed Cash Flow 
  Statement 
                                              6 months     6 months    Year ended 
                                              ended 25     ended 27    25 January 
                                             July 2015    July 2014          2015 
                                                GBP000       GBP000        GBP000 
========================================   ===========  ===========  ============ 
 Operating activities 

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September 22, 2015 02:00 ET (06:00 GMT)

 Profit for the period                          16,876       16,485        38,628 
 Adjustments for: 
 Interest receivable                              (26)         (46)         (103) 
 Interest payable                                  460          183           322 
 Depreciation of property, plant 
  and equipment                                  3,593        3,347         6,739 
 Impairment of property, plant and 
  equipment                                          -        1,365         1,483 
 Amortisation of intangible assets                 343          126           253 
 Share-based payment costs                         265          470           893 
 Loss / (gain) on sale of property, 
  plant and equipment                              138         (35)         (119) 
 Operating cash flows before movements 
  in working capital                            21,649       21,895        48,096 
 
 Increase in inventories                         (611)         (69)         (715) 
 Increase in receivables                      (11,651)     (27,060)       (4,424) 
 Increase in payables                            4,045       21,730        10,208 
 Difference between employer pension 
  contributions and amounts recognised 
  in the income statement                        (379)        (963)       (1,368) 
-----------------------------------------  -----------  -----------  ------------ 
 Cash generated by operations                   13,053       15,533        51,797 
 
 Tax on profit paid                            (3,689)      (3,383)       (7,031) 
-----------------------------------------  -----------  -----------  ------------ 
 Net cash from operating activities              9,364       12,150        44,766 
 
 Investing activities 
 Acquisition of subsidiary (net of 
  cash acquired)                              (15,757)            -             - 
 Acquisition of intangible assets              (4,757)      (2,368)       (7,063) 
 Purchase of property, plant and 
  equipment                                    (7,941)      (2,198)      (11,493) 
 Proceeds on sale of property, plant 
  and equipment                                     87          487           585 
 Interest received                                  26           24            60 
-----------------------------------------  -----------  -----------  ------------ 
 Net cash used in investing activities        (28,342)      (4,055)      (17,911) 
 
 Financing activities 
 New loans received                             47,000       15,000        15,000 
 Loans repaid                                 (31,500)     (15,000)      (15,000) 
 Bank arrangement fees paid                       (55)         (80)          (80) 
 Purchase of Company shares by employee 
  benefit trusts                               (1,976)      (1,214)       (2,310) 
 Proceeds from disposal of Company 
  shares by employee benefit trusts              1,305        1,164         1,301 
 Dividends paid                               (10,402)      (9,455)      (13,051) 
 Interest paid                                   (175)        (161)         (283) 
-----------------------------------------  -----------  -----------  ------------ 
 Net cash generated by / (used in) 
  financing activities                           4,197      (9,746)      (14,423) 
 
 Net (decrease) / increase in cash 
  and cash equivalents                        (14,781)      (1,651)        12,432 
-----------------------------------------  -----------  -----------  ------------ 
 
 Cash and cash equivalents at beginning 
  of period                                     25,364       12,932        12,932 
 Cash and cash equivalents at end 
  of period                                     10,583       11,281        25,364 
-----------------------------------------  -----------  -----------  ------------ 
 

1. General information

A.G. BARR p.l.c. ('the Company') and its subsidiaries (together 'the Group') manufacture, distribute and sell soft drinks. The Group has manufacturing sites in the U.K. and sells mainly to customers in the U.K. 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 U.K. 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 25 January 2015 were approved by the board of directors on 24 March 2015 and delivered to the Registrar of Companies. The comparative figures for the financial year ended 25 January 2015 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 25 July 2015 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 25 January 2015, 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 25 January 2015, as described in those annual financial statements except as noted below.

Changes in accounting policy and disclosures

(a) New and amended standards adopted by the Group

The following revised IFRSs have been adopted in this consolidated condensed interim financial information. The application of these revised IFRSs has not had any material impact on the amounts reported for the current and prior periods.

-- Annual Improvements 2010-2012 Cycle, IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 38 and IAS 24

-- Amendments to IAS 19 Defined Benefit Plans relating to employee contributions

-- Annual Improvements 2011-2013 Cycle, IFRS 1, IFRS 3, IFRS 13 and IAS 40

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 26 January 2015 and not adopted early

A number of new standards and amendments to standards and interpretations are effective for future year ends, and have not been applied in preparing these interim financial statements. These standards and amendments are listed in the table below:

 
 International Accounting Standards and Interpretations          Effective date 
 IFRS 9 Financial Instruments (as amended in 2014)               1 January 2018 
  IFRS 9 (2014) supersedes IFRS 9 (2009), IFRS 9 
  (2010) and IFRS 9 (2013) 
 
 Amendment to IFRS 7 Financial Instruments: Disclosures          When IFRS 9 is 
  relating to transition to IFRS 9 (or otherwise                  first applied 
  when IFRS 9 is first applied) 
 
 IFRS 14 Regulatory deferral accounts                            1 January 2016 
 Amendments to IAS 39 Financial instruments - Continuation       When IFRS 9 is 
  of hedge accounting                                             first applied 
 
 Amendments to IFRS 11 - Accounting for acquisitions             1 January 2016 
  of Interests in Joint operations 
                                                                 1 January 2016 
   Amendments to IAS 16 and IAS 38 - Clarification 
   of acceptable methods of depreciation and amortisation 
 
 Amendments to IAS 16 and IAS 41 - Agriculture:                  1 January 2016 
  Bearer plants 
 
 IFRS 15 - Revenue from contracts with customers                 1 January 2018 
 
 Amendment to IAS 27 Separate Financial Statements               1 January 2016 
  (as amended in 2011) relating to reinstating the 
  equity method as an accounting option for investments 
  in subsidiaries, joint ventures and associates 
  in an entity's separate financial statements 
 
 Amendments resulting from September 2014 Annual                 1 January 2016 
  Improvements to IFRS 5 Non-current Assets Held 
  for Sale and Discontinued Operations, IFRS 7 Financial 
  Instruments: Disclosures, IAS 19 Employee Benefits 
  and IAS 34 Interim Financial Reporting 
 
 Amendments to IFRS 10 and IAS 28 clarify that                   1 January 2016 
  the recognition of the gain or loss on the sale 
  or contribution of assets between an investor 
  and its associate or joint venture depends on 
  whether the assets sold or contributed constitute 
  a business 
 Amendments to IFRS 10, IFRS 12 and IAS 28 regarding             1 January 2016 
  the application of the consolidation exception 
 
   IAS 1 Presentation of Financial Statements: Amendments        1 January 2016 
   resulting from the disclosure initiative 
 
 

Management anticipates that the application of the above Standards and Interpretations in future periods will have no material impact on the consolidated financial statements of the Group.

(c) Restatement of segment reporting

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September 22, 2015 02:00 ET (06:00 GMT)

(i) In the segment reporting to 25 January 2015 a misstatement has been noted between the gross profit for Carbonates and the Other segments. An element totalling GBP2.3m of gross profit in relation to Carbonates was reported within the Others segment. This has been restated in the table below. There has been no change to the total reported revenue or gross profit before exceptional items or any other element of the financial statements.

(ii) In the six months to 25 July 2015 a new enterprise resource planning system was implemented. This implementation included an alignment of the internal management reporting and the statutory reporting. The review concluded that some distribution costs previously recorded within operating expenses would be more appropriately recorded within cost of sales as this reflects more accurately the costs incurred in manufacturing products. This has resulted in a reduction in the gross profit of GBP3.4m in the year to 25 January 2015 and a reduction of GBP1.8m in the six months to 25 July 2015. Operating expenses have reduced by an equivalent amount in these periods with there being no change to the previously reported operating profit. There has been no impact on any other element of the financial statements.

 
 6 months ended 27 July 
  2014 
                                                                       Still drinks 
                                                        Carbonates        and water       Other       Total 
                                                            GBP000           GBP000      GBP000      GBP000 
---------------  ----------------  -------------  ---  -----------  ---------------  ----------  ---------- 
 Total revenue                                             102,612           31,638       1,453     135,703 
 
 Gross profit before exceptional 
  items as previously stated                                53,189            9,495         490      63,174 
 Reclassification of distribution 
  costs (note ii)                                          (2,515)              654          28     (1,833) 
 Restated gross profit before exceptional 
  items                                                     50,674           10,149         518      61,341 
------------------------------------------------  ---  -----------  ---------------  ----------  ---------- 
 
 Year ended 25 January 
  2015 
                                                                       Still drinks 
                                                        Carbonates        and water       Other       Total 
                                                            GBP000           GBP000      GBP000      GBP000 
---------------  ----------------  -------------  ---  -----------  ---------------  ----------  ---------- 
 Total revenue                                             198,249           58,218       4,428     260,895 
 
 Gross profit before exceptional 
  items as previously stated                               102,235           17,349       3,729     123,313 
 Restatement of gross 
  profit (note i)                                            2,342                -     (2,342)           - 
 Reclassification of distribution 
  costs (note ii)                                          (4,852)            1,338         100     (3,414) 
 Restated gross profit before exceptional 
  items                                                     99,725           18,687       1,487     119,899 
------------------------------------------------  ---  -----------  ---------------  ----------  ---------- 
 
 

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 27 weeks of the financial year remain substantially the same as those stated on pages 26-29 of the Group's annual financial statements as at 25 January 2015, which are available on our website, www.agbarr.co.uk.

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 25 January 2015 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 25 July 
  2015 
                                                               Still drinks 
                                                Carbonates        and water    Other     Total 
                                                    GBP000           GBP000   GBP000    GBP000 
----------------------  ---  -----  ---------  -----------  ---------------  -------  -------- 
 Total revenue                                      96,298           27,563    6,399   130,260 
 Gross profit before 
  exceptional items                                 50,150            8,196    2,846    61,192 
---------------------------   ---------------  -----------  ---------------  -------  ======== 
 
 6 months ended 27 July 
  2014 
                                                               Still drinks 
                                                Carbonates        and water    Other     Total 
                                                    GBP000           GBP000   GBP000    GBP000 
----------------------  ---  -----  ---------  -----------  ---------------  -------  -------- 
 Total revenue                                     102,612           31,638    1,453   135,703 
 Gross profit before exceptional 
  items (Restated - note 3 (c))                     50,674           10,149      518    61,341 
---------------------------------------------  -----------  ---------------  -------  -------- 
 
 Year ended 25 January 
  2015 
                                                               Still drinks 
                                                Carbonates        and water    Other     Total 
                                                    GBP000           GBP000   GBP000    GBP000 
----------------------  ---  -----  ---------  -----------  ---------------  -------  -------- 
 Total revenue                                     198,249           58,218    4,428   260,895 
 Gross profit before exceptional 
  items (Restated - note 3(c))                      99,725           18,687    1,487   119,899 
---------------------------------------------  -----------  ---------------  -------  -------- 
 
 

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, the sale of ice-cream and other soft drink related items. In the six months to 27 July 2014 this segment also included income from water coolers for the Findlays 19 litre water business. This business was disposed of in the second half of the year to 25 January 2015.

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.

7. Seasonality of operations

Historically, approximately half the revenues and operating profits are expected in each half of the year.

8. Operating profit

The following items have been charged to operating profit during the period:

 
                                      6 months ended     6 months    Year ended 
                                        25 July 2015     ended 27    25 January 
                                                        July 2014          2015 
                                              GBP000       GBP000        GBP000 
----------------------  -------      ---------------  -----------  ------------ 
 
 Acquisition costs 
  (note 13)                                      667            -             - 
 Inventory write down                             20           51           134 
 Foreign exchange losses 
  recognised                                     563          351         1,063 
 
 
 

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 six months to 27 July 2014 the contract for the production and selling of Orangina was terminated by the recently formed Lucozade Ribena Suntory Group. This resulted in compensation of GBP0.7m being received by A.G. BARR p.l.c. This has been shown on the consolidated condensed income statement as other income.

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The following exceptional items have been charged or credited before operating profit:

 
                                                    6 months     6 months    Year ended 
                                                    ended 25     ended 27    25 January 
                                                   July 2015    July 2014          2015 
                                                      GBP000       GBP000        GBP000 
--------------------------------------------    ------------  -----------  ------------ 
  Redundancy costs relating to the 
   closure of the Tredegar manufacturing 
   site                                                    -          960         1,427 
  Impairment charges relating to the 
   closure of the Tredegar manufacturing 
   site                                                    -        1,365         1,483 
  Total cost of sales                                      -        2,325         2,910 
----------------------------------------------    ----------  -----------  ------------ 
 
 
  Pension curtailment                                      -        (523)         (523) 
  Redundancy costs for finance, telesales, 
   distribution, demand and supply planning 
   reorganisation                                          -          741           899 
  Total operating 
   costs                                                   -          218           376 
----------------------------------------------    ----------  -----------  ------------ 
 
  Total exceptional 
   costs                                                   -        2,543         3,286 
----------------------------------------------    ----------  -----------  ------------ 
 

During the six months to 27 July 2014 A.G. BARR p.l.c. announced the closure of its manufacturing site at Tredegar. This resulted in an impairment charge of GBP1.4m in respect of buildings and plant at the site with a further GBP0.1m charge in the second half of the year ended 25 January 2015. GBP3,000 of redundancy related costs were incurred in the six months to 27 July 2014 with a further GBP1.0m of redundancy costs provided for. A further GBP0.5m was incurred in the second half of the year to 25 January 2015.

Redundancy, recruitment and training costs in relation to the finance, telesales, distribution, demand and supply planning operations within England were incurred during the six months to 27 July 2014 and year ended 25 January 2015 and treated as exceptional.

As a result of the finance, telesales, distribution, demand and supply planning reorganisation, a curtailment in the Group's retirement pension plan arose in the 6 months ended 27 July 2014 and year ended 25 January 2015. This resulted in an exceptional credit arising from the reduction in the retirement benefit obligation following a reduction in the number of employees remaining with the scheme. The value of this credit was GBP0.5m.

9. Tax on profit

The interim period tax charge is accrued based on the estimated average annual effective income tax rate of 21.0% (six months ended 27 July 2014: 22.3%; year ended 25 January 2015: 22.3%).

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. These changes are contained in the Finance Bill 2015 which is not expected to be substantively enacted until October 2015 and at that point the changes will be reflected in the Company's deferred tax liabilities.

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 25      ended 27    25 January 
                                             July 2015     July 2014          2015 
 Profit attributable to equity 
  holders of the Company (GBP000)               13,338        12,815        29,997 
 Weighted average number of ordinary 
  shares in issue                          115,280,958   115,516,417   115,377,541 
---------------------------------------   ------------  ------------  ------------ 
 Basic earnings per 
  share (pence)                                  11.57         11.09         26.00 
----------------------------------------  ------------  ------------  ------------ 
 

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 25      ended 27    25 January 
                                             July 2015     July 2014          2015 
 Profit attributable to equity 
  holders of the Company (GBP000)               13,338        12,815        29,997 
 
 Weighted average number of ordinary 
  shares in issue                          115,280,958   115,516,417   115,377,541 
 Adjustment for dilutive 
  effect of share options                      676,859       623,121       623,962 
--------------------------------------    ------------  ------------  ------------ 
 Diluted weighted average number 
  of ordinary shares in issue              115,957,817   116,139,538   116,001,503 
 Diluted earnings per 
  share (pence)                                  11.50         11.03         25.86 
----------------------------------------  ------------  ------------  ------------ 
 

The underlying EPS figure is calculated by using profit attributable to equity holders before exceptional items:

 
                                                           6 months      6 months    Year ended 
                                                           ended 25      ended 27    25 January 
                                                          July 2015     July 2014          2015 
 Profit attributable to equity 
  holders of the Company before 
  exceptional items (GBP000)                                 13,338        14,826        32,596 
 Weighted average number of ordinary 
  shares in issue                                       115,280,958   115,516,417   115,377,541 
----------------------------------------------  ---  --------------  ------------  ------------ 
 Underlying earnings 
  per share (pence)                                           11.57         12.83         28.25 
---------------------------------------------------  --------------  ------------  ------------ 
 
 

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                 6 months        6 months 
                          6 months       ended                    ended           ended    Year ended 
                          ended 25     27 July                  25 July         27 July    25 January 
                         July 2015        2014                     2015            2014          2015 
                                                ------------ 
                                                  Year ended 
                                                  25 January 
                                                    2015 per 
                         per share   per share         share 
                               (p)         (p)           (p)     GBP000          GBP000        GBP000 
---------------------  -----------  ----------  ------------  ---------  --------------  ------------ 
 Paid final dividend          9.01           -             -     10,402               -             - 
 Paid first interim 
  dividend                       -           -          3.11          -               -         3,596 
 Paid second interim 
  dividend                       -        8.19          8.19          -           9,455         9,455 
                              9.01        8.19         11.30     10,402           9,455        13,051 
---------------------  ===========  ----------  ------------  =========  --------------  ============ 
 

An interim dividend of 3.36p (an increase of 8% on last year) per share was approved by the board on 22 September 2015 and will be paid on 16 October 2015 to shareholders on record as at 2 October 2015.

12. Held for sale assets

The property, plant and equipment related to the manufacturing site at Tredegar have been presented as held for sale following the decision to close the site. The property, plant and equipment was sold during September 2015 (note 22).

13. Acquisition of subsidiary

On 2 February 2015, the Group acquired 100% of the share capital of Funkin Limited ('Funkin'), a company which offers a broad range of premium cocktail solutions including fruit purées, cocktail mixers and syrups.

In the six months to 25 July 2015, Funkin contributed revenue of GBP4.9m and an operating profit of GBP0.7m to the Group's results. Had Funkin been consolidated from 26 January 2015, the consolidated condensed income statement for the six months ended 25 July 2015 would not be materially different.

Consideration transferred

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The following table summarises the acquisition-date fair value of each major class of consideration transferred:

 
                             GBP000 
--------------------------  ------- 
 Cash                        17,511 
 Contingent consideration     4,500 
 Total consideration         22,011 
--------------------------  ------- 
 

Contingent consideration

The Group has agreed to pay the former owners of Funkin a contingent consideration based on achievement of certain financial targets by Funkin in the two years from the date of its acquisition by the Group. The potential undiscounted amount of all future payments that the Group could make under the acquisition agreement is between GBPnil and GBP4.5m.

The fair value of the contingent consideration arrangement of GBP4.5m was estimated by assessing the expected growth of Funkin over the two years trading post acquisition. No discount rate has been applied to the fair value estimate of the contingent consideration as due to the short time period the effect of discounting has a negligible effect on the fair value.

The fair value of trade and other receivables is GBP1.4m and includes trade receivables with a fair value of GBP1.2m. The gross contractual amount for trade receivables due is GBP1.3m of which GBP0.1m is expected to be uncollectible.

The fair value of the acquired identifiable intangible assets of GBP7.2m, is provisional pending receipt of the final valuations for those assets. A deferred tax liability of GBP1.5m has been provided in relation to these fair value adjustments in relation to intangible assets.

Acquisition-related costs

The Group incurred acquisition-related costs of GBP0.7m relating to external legal fees and due diligence costs. These costs have been included in operating costs in the consolidated condensed income statement.

Recognised amounts of identifiable assets acquired and liabilities assumed

 
                                   GBP000 
-------------------------------  -------- 
 Cash and cash equivalents          1,754 
 Funkin brand                       6,800 
 Customer list                        414 
 Property, plant and equipment         13 
 Inventories                          657 
 Trade and other receivables        1,438 
 Trade and other payables         (3,167) 
 Current tax liability              (149) 
 Deferred tax liabilities         (1,470) 
 Total identifiable net assets      6,290 
-------------------------------  -------- 
 
 Goodwill                          15,721 
-------------------------------  -------- 
 

None of the goodwill arising on the acquisition is expected to be deductible for tax purposes.

The goodwill of GBP15.7m arises from a number of factors including expected synergies through combining an experienced senior team and obtaining greater production efficiencies through knowledge transfer; marketing expertise; obtaining economies of scale by cost reductions from purchasing efficiencies; price reductions and greater volume rebates from suppliers; sales synergies arising from introducing Funkin to A.G. BARR's route to market and sales channels; and unrecognised assets such as the workforce.

14. Intangible assets

 
                        6 months     6 months    Year ended 
                        ended 25     ended 27    25 January 
                       July 2015    July 2014          2015 
                          GBP000       GBP000        GBP000 
------------------   -----------  -----------  ------------ 
 Opening net book 
  value                   80,917       74,107        74,107 
 Additions                27,692        2,368         7,063 
 Amortisation              (343)        (126)         (253) 
 Closing net book 
  value                  108,266       76,349        80,917 
-------------------  -----------  -----------  ------------ 
 

The additions for periods presented represent goodwill and other intangible assets acquired as part of the acquisition of Funkin (note 13), internally generated software development costs and third party consultancy costs incurred in relation to the Business Process Redesign project.

The amortisation charge for the six months to 25 July 2015 represents GBP0.2m (six months ended 27 July 2014: nil; year ended 25 January 2015: nil) of charges in relation to the Business Process Redesign project, GBP0.1m (six months ended 27 July 2014: GBP0.1m; year ended 25 January 2015: GBP0.3m) of charges for the Rubicon customer list and GBP34,000 of charges for the Funkin customer list.

15. Property, plant and equipment

 
                                                6 months     6 months    Year ended 
                                                ended 25     ended 27    25 January 
                                               July 2015    July 2014          2015 
                                                  GBP000       GBP000        GBP000 
------------------------------------------   -----------  -----------  ------------ 
 Opening net book value                           79,663       76,314        76,314 
 Additions                                         7,082        3,538        12,037 
 Additions acquired during acquisition 
  (note 13)                                           13            -             - 
 Disposals                                         (225)        (452)         (466) 
 Property, plant and equipment classified 
  as held for sale (note 12)                       (850)            -             - 
 Impairment of property, plant 
  and equipment                                        -      (1,365)       (1,483) 
 Depreciation                                    (3,593)      (3,347)       (6,739) 
 Closing net book value                           82,090       74,688        79,663 
-------------------------------------------  -----------  -----------  ------------ 
 

The closing balance includes GBP0.6m (as at 27 July 2014: GBP2.5m; as at 25 January 2015: GBP6.7m) of assets under construction.

16. Financial instruments

Current assets of GBP20,000 (at 27 July 2014: GBPnil; 25 January 2015: GBP0.1m) 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 GBP0.5m (at 27 July 2014: GBP0.9m; 25 January 2015: GBP0.7m) 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.

Non-current liabilities of GBPnil (at 27 July 2014: GBP47,000; 25 January 2015: GBPnil) relate to forward foreign currency contracts with a maturity of more 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   quoted prices (unadjusted) in active markets for identical 
  1:      assets or liabilities 
 Level   inputs other than quoted prices included within Level 
  2:      1 that are observable for the asset or liability, either 
          directly (i.e. as prices) or indirectly (i.e. derived 
          from prices) 
 Level   inputs for the asset or liability that are not based 
  3:      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.

 
                                                      Carrying amount                        Fair value 
                                 --------------------------------------------------------- 
                                                                            Other 
                                                                        financial 
                                    Fair value                        liabilities 
                                     - hedging              Loans    at amortised                 Level 
                                   instruments    and receivables            cost    Total            2 
 As at 25 July 2015                     GBP000             GBP000          GBP000   GBP000       GBP000 
-------------------------------  -------------  -----------------  --------------  -------  ----------- 
 Financial assets not measured 
  at fair value 
 Cash and cash equivalents                   -             10,583               -   10,583       10,583 
                                             -             10,583               -   10,583       10,583 
-------------------------------  -------------  -----------------  --------------  -------  ----------- 
 
 Financial assets measured 
  at fair value 
 Foreign exchange contracts 
  used for hedging - current                20                  -               -       20           20 
                                            20                  -               -       20           20 
-------------------------------  -------------  -----------------  --------------  -------  ----------- 
 
 
 Financial liabilities measured 
  at fair value 
 Foreign exchange contracts used 
  for hedging - current                508   -        -      508      508 
 Contingent consideration                -   -    4,500    4,500    4,500 
                                       508   -    4,500    5,008    5,008 

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------------------------------------  ----      -------  -------  ------- 
 Financial liabilities not measured 
  at fair value 
 Unsecured bank borrowings - 
  non-current                            -   -   30,500   30,500   30,402 
                                         -   -   30,500   30,500   30,402 
------------------------------------  ----      -------  -------  ------- 
 
 
                                                        Carrying amount                        Fair value 
                                   --------------------------------------------------------- 
                                                                              Other 
                                                                          financial 
                                      Fair value                        liabilities 
                                       - hedging              Loans    at amortised                 Level 
                                     instruments    and receivables            cost    Total            2 
 As at 27 July 2014                       GBP000             GBP000          GBP000   GBP000       GBP000 
---------------------------------  -------------  -----------------  --------------  -------  ----------- 
 Financial assets not measured 
  at fair value 
 Cash and cash equivalents                     -             11,281               -   11,281       11,281 
                                               -             11,281               -   11,281       11,281 
---------------------------------  -------------  -----------------  --------------  -------  ----------- 
 Financial liabilities measured 
  at fair value 
 Foreign exchange contracts 
  used for hedging - current                 914                  -               -      914          914 
 Foreign exchange contracts 
  used for hedging - non-current              47                  -               -       47           47 
                                             961                  -               -      961          961 
---------------------------------  -------------  -----------------  --------------  -------  ----------- 
 Financial liabilities not 
  measured at fair value 
 Unsecured bank borrowings 
  - non-current                                -                  -          14,931   14,931       14,931 
                                               -                  -          14,931   14,931       14,931 
---------------------------------  -------------  -----------------  --------------  -------  ----------- 
 
 
                                                       Carrying amount                        Fair value 
                                  --------------------------------------------------------- 
                                                                             Other 
                                                                         financial 
                                     Fair value                        liabilities 
                                      - hedging              Loans    at amortised                 Level 
                                    instruments    and receivables            cost    Total            2 
 As at 25 January 2015                   GBP000             GBP000          GBP000   GBP000       GBP000 
--------------------------------  -------------  -----------------  --------------  -------  ----------- 
 Financial assets not measured 
  at fair value 
 Foreign exchange contracts 
  used for hedging                           66                  -               -       66           66 
 Cash and cash equivalents                    -             25,437               -   25,437       25,437 
                                             66             25,437               -   25,503       25,503 
--------------------------------  -------------  -----------------  --------------  -------  ----------- 
 Financial liabilities measured 
  at fair value 
 Foreign exchange contracts 
  used for hedging                          666                  -               -      666          666 
                                            666                  -               -      666          666 
--------------------------------  -------------  -----------------  --------------  -------  ----------- 
 Financial liabilities not 
  measured at fair value 
 Unsecured bank borrowings 
  - current                                   -                  -              73       73           73 
 Unsecured bank borrowings 
  - non-current                               -                  -          14,944   14,944       14,944 
                                              -                  -          15,017   15,017       15,017 
--------------------------------  -------------  -----------------  --------------  -------  ----------- 
 

The carrying value of non-current borrowings is disclosed before the deduction of the unamortised arrangement fee of 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%.

17. Provisions

 
                                       6 months     6 months    Year ended 
                                       ended 25     ended 27    25 January 
                                      July 2015    July 2014          2015 
                                         GBP000       GBP000        GBP000 
---------------------------------   -----------  -----------  ------------ 
 Opening provision                        1,009          396           396 
 Provision created in the period              -        1,469         1,469 
 Provision released during the 
  period                                      -         (36)          (97) 
 Provision utilised during the 
  period                                  (897)        (729)         (759) 
 Closing provision                          112        1,100         1,009 
----------------------------------  -----------  -----------  ------------ 
 

18. Borrowings and loans

Movements in borrowings are analysed as follows:

 
                                               6 months     6 months    Year ended 
                                               ended 25     ended 27    25 January 
                                              July 2015    July 2014          2015 
                                                 GBP000       GBP000        GBP000 
-----------------------------------------   -----------  -----------  ------------ 
 Opening loan balance                            15,073       15,000        15,000 
 Borrowings made                                 47,000       15,000        15,000 
 Bank overdrafts                                      -            -            73 
 Repayments of borrowings and 
  overdrafts                                   (31,573)     (15,000)      (15,000) 
==========================================  ===========  ===========  ============ 
 Closing loan balance before arrangement 
  fees                                           30,500       15,000        15,073 
 Unamortised arrangement fee                       (98)         (69)          (56) 
 Closing loan balance                            30,402       14,931        15,017 
------------------------------------------  -----------  -----------  ------------ 
 

The reconciliation to net debt is as follows:

 
                                                             As at 
                                               As at 25    27 July        As at 25 
                                              July 2015       2014    January 2015 
                                                 GBP000     GBP000          GBP000 
=========================================   -----------  ---------  -------------- 
 Closing loan balance before arrangement 
  fees                                           30,500     15,000          15,073 
 Cash and cash equivalents                     (10,583)   (11,281)        (25,437) 
 Net debt                                        19,917      3,719        (10,364) 
------------------------------------------  -----------  ---------  -------------- 
 

The undrawn facilities at 25 July 2015 are as follows:

 
                                 Total facility    Drawn   Undrawn 
                                         GBP000   GBP000    GBP000 
-----------------------------   ---------------  -------  -------- 
 Revolving credit facilities             45,000   30,500    14,500 
 Overdraft                                5,000        -     5,000 
                                         50,000   30,500    19,500 
 -----------------------------  ---------------  -------  -------- 
 

During the six months to 25 July 2015, the Group renegotiated a GBP35m revolving credit facility.

A total arrangement fee of GBP0.1m was incurred and will be 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 to 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.

19. Retirement benefit obligations

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