TIDMBAG
RNS Number : 6408Z
Barr(A.G.) PLC
22 September 2020
22 September 2020
A.G. BARR p.l.c. ("A.G. BARR" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 25 JULY 2020
A.G. BARR p.l.c., which produces and markets some of the UK's
leading drink brands, including IRN-BRU, Rubicon and Funkin,
announces its interim results for the six months ended 25 July
2020.
Financial summary
July 2020 July 2019 Change
Revenue GBP113.2m GBP122.5m (7.6)%
---------- ---------- ----------
Profit before tax (before exceptional
items)* GBP16.6m GBP13.9m 19.4%
---------- ---------- ----------
Statutory profit before tax GBP5.1m GBP13.5m (62.2)%
---------- ---------- ----------
Operating margin before exceptional
items* 15.1% 11.7% 343 bps
---------- ---------- ----------
Earnings per share before exceptional
items* 10.52p 9.83p 7.0%
---------- ---------- ----------
Net cash flow from operating
activities GBP24.0m GBP11.7m 105.1%
---------- ---------- ----------
Net cash at bank GBP30.4m GBP4.6m +GBP25.8m
---------- ---------- ----------
Covid-19 response
-- Successfully introduced range of enhanced safety and hygiene measures across all operations
-- Swift action taken to control costs, conserve cash and underpin financial stability
-- Maintained continuity of production and continued to deliver
high levels of service and quality
-- Brought to a close use of the Government's Job Retention Scheme by end July
-- Strong teamwork across the Group supporting our year to date performance
Performance headlines
-- Barr Soft Drinks : Value share of total UK soft drinks market up 1.2%
-- Funkin : Sales decline of 34% driven by very challenging
hospitality sector - within this retail and on-line sales grew by
over 170%
-- Pre-tax exceptional charge of GBP11.5m related to ongoing
business re-engineering programme and impairment of Strathmore
brand and assets
-- Cash flow generated from operations of GBP30.1m
-- Strong balance sheet and with GBP30.4m of net cash at bank
-- Dividend position remains under review - dividend payments are expected to resume in 2021
Roger White, Chief Executive , commented:
"We remain on course to deliver a full year performance in line
with the revised expectations we communicated in the July 2020
trading update. We have continued to invest in our core brand
equity for the long term, maintained our quality and service
standards and remain a profitable and cash generative business in a
robust drinks sector. We are confident that our business will
continue to prove its resilience for the balance of this year and
beyond."
For more information, please contact :
A.G. BARR 0330 390 3900 Instinctif Partners 020 7457 2020
Roger White, Chief Executive Justine Warren
Stuart Lorimer, Finance Director Matthew Smallwood
* Items marked with an asterisk are non-GAAP measures.
Definitions and relevant reconciliations are provided at the end of
this announcement.
Interim statement
The first 8 weeks of the new financial year continued the strong
momentum with which we exited the 2019/20 financial year. However,
the circumstances which have arisen as a result of the COVID-19
pandemic have significantly impacted life and business in the UK
and beyond.
As previously communicated, the UK lockdown measures introduced
on 23 March 2020, and the resultant changes in consumer purchasing
and consumption patterns, have unsurprisingly had an adverse impact
on the Group's trading.
For the six months ended 25 July 2020 the Group delivered
revenue of GBP113.2m (2019/20 : GBP122.5m).
In March 2020, as the crisis began to unfold, we took swift
action to conserve cash and underpin our financial stability.
Despite the difficult prevailing circumstances and subsequent
impact on our revenue and product mix, the business generated
positive cashflow for the 26 weeks ended 25 July 2020 and, as a
result of our cost control measures, delivered profit before tax
and exceptional items(*) of GBP16.6m, a 19.4% increase on the same
period in the prior year (H1 2019/20 : GBP13.9m). Taking into
account exceptional items, detailed below, statutory profit before
tax was GBP5.1m, a 62.2% decrease on the prior year. (H1 2019/20 :
GBP13.5m).
Soft drinks market
IRI Marketplace data for the 26 weeks to 26 July 2020 records
the total UK soft drinks market increasing in value by 0.2% and in
volume by 0.6%. While the overall market has proven resilient in
the circumstances, there is a notable difference between the value
growth in carbonates (up 7.3%) and the value decline in stills
(down 7.8%).
Despite our revenue decline across the past 26 weeks, we have
grown our market value share of soft drinks, both in Scotland and
in England and Wales, reflecting the unusual market dynamics being
experienced. The closure of the hospitality sector, where
availability of market data is more limited, has contributed
significantly to our fall in revenue. Our strong performance in the
more widely measured channels, such as take-home, has driven our
improved market share position. Against this backdrop our broad and
balanced coverage across the full spectrum of shopping channels and
formats has proven effective.
Safety, wellbeing and operational resilience
As the COVID-19 pandemic has evolved, safety and wellbeing have
been our number one priority. Having successfully introduced a
range of enhanced safety and hygiene measures across all our
operations, we have maintained continuity of production and
continued to deliver a high level of customer service and
quality.
We would like to thank our colleagues and teams across the
business who have worked tirelessly to support our customers and
consumers in these challenging times.
Business performance
As detailed in our July 2020 trading update, during lockdown we
saw significant changes in consumption and purchasing patterns
across our customer channels as well as notable shifts in sales
mix, related to brand and product formats. As lockdown measures
eased we began to see a gradual return to pre-COVID-19 shopping and
consumer dynamics.
We are pleased to report that the IRN-BRU brand has grown
revenue by 1% in the first half of the financial year versus the
corresponding period in 2019/20, continuing the positive momentum
which the brand delivered across the second half of the prior year.
We have continued to invest in a range of IRN-BRU focused consumer
marketing activities both prior to and during lockdown, including
digital and social activity and a Scottish TV advertising
campaign.
Following a difficult 2019 for the fruit drinks sub category, to
which our Rubicon brand was not immune, we have continued our
Rubicon brand recovery plan including introducing reformulated
products, new packaging design, and delivering a national marketing
campaign focused on our Rubicon carbonated products. Despite our
actions, Rubicon sales declined by 9% over the first 6 months of
the financial year, reflecting the COVID-19 market disruption and
in particular the impact on the key Ramadan trading period. We will
continue to pursue our recovery strategy and remain confident in
our long term approach.
The Barr Flavours carbonated range has continued to build on the
strong growth it delivered last year, with sales up 13% benefiting
from further increased levels of distribution.
Our contract with Rockstar terminated on 23 August 2020 and,
while we will continue to manufacture, sell and distribute Rockstar
energy drinks up to 1 November 2020, thereafter the brand will
cease to be part of the Barr Soft Drinks portfolio. We have now
agreed that we will continue to manufacture Rockstar products on a
contract packing basis until the end of January 2021. In accordance
with the terms of the contract, a one-off compensation payment,
currently being finalised, will be received by the Group in the
second half of the current financial year.
Our business re-engineering programme, which commenced in
2019/20, identified a number of actions to simplify our operations
and reshape our internal supply chain by rationalising and reducing
the complexity of our portfolio and routes to market. As part of
this programme, we will cease to produce and sell the franchise
brand Snapple during the first half of 2021/22. Snapple accounted
for less than 1% of revenue in 2019/2020.
Clearly, the hospitality sector has been significantly
challenged by the lockdown measures over recent months. Across the
first six months of the financial year, Group sales to our
hospitality customers fell by c.65%, peaking at c.95% during the
full lockdown period.
The Strathmore brand in particular has been impacted given the
significance of its sales in this sector. Whilst we are seeing some
recovery across hospitality, it will take time for the sector to
regain momentum and as such we do not anticipate Strathmore
returning to pre-COVID-19 sales levels in the foreseeable future.
Regrettably, as a consequence we have reduced our manufacturing
workforce at our Forfar site and the brand and asset valuations
have been impaired, as outlined below.
For the Funkin business, sales declined by 34% reflecting the
hospitality sector challenges, however within this retail and
on-line sales grew by over 170%, with the nitro infused
ready-to-drink cocktails in particular delivering a strong
performance. The Funkin brand remains a significant long-term
growth opportunity in both the recovering on-trade and in the
retail channel, where the brand is gaining momentum. In support of
our drive to build Funkin into a relevant consumer brand we will
deliver, during the second half of the financial year, our first
Funkin TV advertising campaign in partnership with Sky alongside
the launch of a number of new and exciting products across the
Funkin portfolio.
Exceptional items
In the period, we have reported a pre-tax exceptional charge of
GBP11.5m (GBP10m non-cash and GBP1.5m cash). This covers :
-- our ongoing business re-engineering programme, which
commenced in 2019 and has been extended in 2020 in light of the
impact of COVID-19. In the first 6 months of the current financial
year GBP1.5m costs are primarily associated with redundancy
payments related to this programme which will complete in January
2021; and
-- following a review of our intangible asset brand valuations,
a GBP10m impairment of our Strathmore brand and assets which has
been significantly affected by the challenges in the hospitality
sector.
The 2019/20 comparator was a GBP0.4m net cash charge.
Cash Flow
Cash flow generated from operations* of GBP30.1m was GBP14.1m
higher than the corresponding period in the prior year. This was
driven by higher operating profit, before non-cash exceptional
items, and inflows driven from working capital.
Capital expenditure in the half year was GBP2.8m (GBP8.4m in the
first half of the prior year), reflecting our decision to put all
discretionary capital programmes on hold. Full year capital
expenditure is estimated to be in the region of GBP6-8m (2019/20:
GBP14.8m) as we recommence our capital investment programme in the
second half of the financial year.
The combination of operational cash conservation, the temporary
suspension of dividends, the lower capital expenditure and the
drawdown of credit facilities has resulted in a closing cash
position of GBP90.4m.
Balance sheet
We closed the 2019/20 financial year with a strong balance sheet
and with GBP10.9m of net cash at bank. We recognised quickly the
uncertainty and disruption that could result from COVID-19 and took
prudent steps to protect our business including the full draw down
of our GBP60m revolving credit facilities, the implementation of
cash conservation measures, such as pausing all discretionary
capital programmes, suspending our dividends and further
strengthening our working capital controls.
Our total working capital* has reduced from GBP25.2m as at 27
July 2019 to GBP13.2m as at 25th July 2020. This reflects the
impact of lower trading and improved inventory management following
the first phases of our business re-engineering programme in the
prior year, as well as the benefit of deferred VAT payments as part
of the Government's COVID response measures. To date our bad debt
and overdue balances remain minimal, despite having extended credit
to some of our smaller customers and having agreed repayment plans
with others who have been particularly impacted by the on-trade
lock down.
Dividend
We continue to keep our dividend position under review and, on
the basis of our current underlying assumptions related to the UK's
COVID-19 recovery, it is expected that we will resume dividend
payments in 2021.
Outlook
Given the difficult prevailing circumstances the business has
responded well to the challenges we have faced and has delivered a
creditable performance in the first six months of trading,
notwithstanding the relatively weaker comparatives of the prior
year.
While UK-wide lockdown measures have been gradually lifted,
there remains a continued high degree of uncertainty associated
with further potential COVID-19 outbreaks, such as significant
localised lockdowns, and the resulting impacts.
Our current scenario planning, based on an underlying assumption
that the UK will not enter into a further significant period of
lockdown, continues to indicate that our full year revenue
performance for the year ending January 2021 will be in the region
of 12-15% below the prior year, with a modest reduction in
operating profit margin reflecting the impact of adverse sales mix
and operational de-leverage, mitigated by our strong delivery of
ongoing overhead cost savings.
Despite the challenging environment, we have continued to invest
in our core brand equity for the long term, maintained our quality
and service standards and remain a profitable and cash generative
business in a robust drinks sector. We are confident that our
business will continue to prove its resilience for the balance of
this year and beyond.
John Nicolson Roger White
Chairman Chief Executive
Consolidated Condensed Income Statement
Unaudited Unaudited Audited
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
================================ ================================ =================================
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
items items* Total items items* Total items items* Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ---- ----------- ----------- ------ ----------- ----------- ------ ----------- ----------- -------
Revenue 6 113.2 - 113.2 122.5 - 122.5 255.7 - 255.7
Cost of sales (64.9) (0.3) (65.2) (71.8) - (71.8) (149.6) (1.1) (150.7)
------------------ =========== ----------- ====== ----------- =========== ====== ----------- =========== =======
Gross profit 6 48.3 (0.3) 48.0 50.7 - 50.7 106.1 (1.1) 105.0
Other Income - - - - - - - 1.8 1.8
Operating expenses (31.2) (11.2) (42.4) (36.4) (0.4) (36.8) (68.0) (0.7) (68.7)
================== =========== =========== ====== =========== =========== ====== =========== =========== =======
Operating
profit 8 17.1 (11.5) 5.6 14.3 (0.4) 13.9 38.1 - 38.1
Finance costs (0.4) - (0.4) (0.3) - (0.3) (0.6) - (0.6)
Share of results
of associate (0.1) - (0.1) (0.1) - (0.1) (0.1) - (0.1)
================== =========== =========== ====== =========== =========== ====== =========== =========== =======
Profit
before tax 16.6 (11.5) 5.1 13.9 (0.4) 13.5 37.4 - 37.4
Income tax
expense 9 (4.9) 1.7 (3.2) (2.8) 0.1 (2.7) (7.6) - (7.6)
------------ ---- =========== ----------- ====== =========== =========== ====== =========== =========== =======
Profit
attributable to
equity holders 11.7 (9.8) 1.9 11.1 (0.3) 10.8 29.8 - 29.8
------------------ =========== =========== ====== =========== =========== ====== =========== =========== =======
Earnings per share (p)
============================================ ====== =========== =========== ====== =========== =========== =======
Basic
earnings
per share 10 1.71 9.57 26.50
Diluted
earnings
per share 10 1.71 9.55 26.49
Earnings per
share
before
exceptional
items 10 10.52 9.83 26.50
============ ==== =========== =========== ====== =========== =========== ====== =========== =========== =======
* Refer to Note 8
Consolidated Condensed Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
GBPm GBPm GBPm
================================ =========================== =========================== ==========================
Profit for the period 1.9 10.8 29.8
Other comprehensive income
Items that will not be
reclassified to profit or loss
Remeasurements on defined
benefit pension plans (Note 17) (0.8) 1.3 1.2
Deferred tax movements on items
above 0.2 (0.2) (0.2)
Remeasurement to deferred tax
for change in deferred tax rate 0.5 - -
Items that will be or have been
reclassified to profit or loss
Cash flow hedges:
Gains arising during the period - 0.5 0.3
Deferred tax movements on items
above - (0.1) (0.1)
================================ =========================== =========================== ==========================
Other comprehensive
(expense)/income for the
period, net of tax (0.1) 1.5 1.2
Total comprehensive income
attributable to equity holders
of the parent 1.8 12.3 31.0
-------------------------------- --------------------------- --------------------------- --------------------------
Consolidated Condensed Statement of Changes in Equity (Unaudited)
Share premium Share options
Share capital account reserve Other reserves Retained earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
=================== ============= ================== =================== ============== ================= ======
At 25 January 2020 4.7 0.9 1.4 - 201.3 208.3
Profit for the
period - - - - 1.9 1.9
Other comprehensive
expense - - - - (0.1) (0.1)
------------------- ------------- ------------------ ------------------- -------------- ----------------- ------
Total comprehensive
income for the
period - - - - 1.8 1.8
Company shares
purchased for use
by employee
benefit trusts
(Note 18) - - - - (0.1) (0.1)
Recognition of
share-based
payment costs - - (0.1) - - (0.1)
At 25 July 2020 4.7 0.9 1.3 - 203.0 209.9
------------------- ------------- ------------------ ------------------- -------------- ----------------- ------
Consolidated Condensed Statement of Changes in Equity (Unaudited)
At 26 January 2019
as previously
reported 4.7 0.9 2.4 (0.2) 202.0 209.8
Impact of IFRS 16 - - - - (0.3) (0.3)
=================== ============= ================== =================== ============== ================= ======
At 26 January 2019
restated 4.7 0.9 2.4 (0.2) 201.7 209.5
Profit for the
period - - - - 10.8 10.8
Other comprehensive
income - - - 0.4 1.1 1.5
------------------- ------------- ------------------ ------------------- -------------- ----------------- ------
Total comprehensive
income for the
period - - - 0.4 11.9 12.3
Company shares
purchased for use
by employee
benefit trusts
(Note 18) - - - - (1.0) (1.0)
Recognition of
share-based
payment costs - - 0.5 - - 0.5
Transfer of reserve
on share award - - (0.6) - 0.6 -
Deferred tax on
items taken
directly to
reserves - - (0.1) - - (0.1)
Repurchase and
cancellation of
shares - - - - (2.5) (2.5)
Dividends paid - - - - (14.4) (14.4)
------------------- ------------- ------------------ ------------------- -------------- ----------------- ------
At 27 July 2019 4.7 0.9 2.2 0.2 196.3 204.3
------------------- ------------- ------------------ ------------------- -------------- ----------------- ------
Consolidated Condensed Statement of Changes in Equity (Audited)
Share premium
Share capital account Share options reserve Other reserves Retained earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
================= ============= ================ ====================== ================= ================= ======
At 26 January
2019 previously
reported 4.7 0.9 2.4 (0.2) 202.0 209.8
Impact of IFRS 16 - - - - (0.3) (0.3)
================= ============= ================ ====================== ================= ================= ======
At 26 January
2019 restated 4.7 0.9 2.4 (0.2) 201.7 209.5
Profit for the
year - - - - 29.8 29.8
Other
comprehensive
income - - - 0.2 1.0 1.2
----------------- ------------- ---------------- ---------------------- ----------------- ----------------- ------
Total
comprehensive
income for the
year - - - 0.2 30.8 31.0
Company shares
purchased for
use by employee
benefit trusts
(Note 18) - - - - (1.4) (1.4)
Proceeds on
disposal of
shares by
employee benefit
trusts (Note 18) - - - - 0.1 0.1
Recognition of
share-based
payment costs - - (0.2) - - (0.2)
Transfer of
reserve on share
award - - (0.6) - 0.6 -
Deferred tax on
items taken
direct to
reserves - - (0.2) - - (0.2)
Repurchase and
cancellation of
shares - - - - (11.5) (11.5)
Dividends paid - - - - (19.0) (19.0)
----------------- ------------- ---------------- ---------------------- ----------------- ----------------- ------
At 25 January
2020 4.7 0.9 1.4 - 201.3 208.3
----------------- ------------- ---------------- ---------------------- ----------------- ----------------- ------
Consolidated Condensed Statement of Financial Position
Unaudited Unaudited Audited
As at 25 July As at 25 January
2020 As at 27 July 2019 2020
Note GBPm GBPm GBPm
----------------- ------------- ---------------- ---------------------- -------------------
Non-current
assets
Intangible assets 12 92.3 102.4 101.8
Property, plant
and equipment 13 97.0 98.5 101.2
Right-of-use
assets 6.4 7.9 7.6
Investment in
associates 0.8 0.9 0.9
----------------- ------------- ---------------- ---------------------- -------------------
196.5 209.7 211.5
----------------- ------------- ---------------- ---------------------- -------------------
Current assets
Inventories 18.4 23.6 18.3
Trade and other
receivables 54.3 56.4 57.2
Derivative
financial
instruments 15 0.1 0.1 -
Assets classified
as held for sale 14 0.4 - -
Current tax asset 0.4 - -
Cash and cash
equivalents 90.4 9.0 10.9
----------------- ------------- ---------------- ---------------------- -------------------
164.0 89.1 86.4
----------------- ------------- ---------------- ---------------------- -------------------
Total assets 360.5 298.8 297.9
----------------- ------------- ---------------- ---------------------- -------------------
Current
liabilities
Loans and other
borrowings 16 59.9 4.4 -
Trade and other
payables 59.5 54.8 52.4
Derivative
financial
instruments 15 0.1 - 0.1
Lease liabilities 16 3.0 3.0 3.2
Provisions 0.3 0.4 1.2
Current tax
liabilities - 2.0 3.0
----------------- ------------- ---------------- ---------------------- -------------------
122.8 64.6 59.9
----------------- ------------- ---------------- ---------------------- -------------------
Non-current
liabilities
Deferred tax
liabilities 14.5 14.1 14.5
Lease liabilities 16 3.6 5.1 4.7
Retirement
benefit
obligations 17 9.7 10.7 10.5
----------------- ------------- ---------------- ---------------------- -------------------
27.8 29.9 29.7
----------------- ------------- ---------------- ---------------------- -------------------
Capital and
reserves
attributable to
equity holders
Share capital 4.7 4.7 4.7
Share premium
account 0.9 0.9 0.9
Share options
reserve 1.3 2.2 1.4
Other reserves - 0.2 -
Retained earnings 203.0 196.3 201.3
----------------- ------------- ---------------- ---------------------- -------------------
209.9 204.3 208.3
----------------- ------------- ---------------- ---------------------- -------------------
Total equity and
liabilities 360.5 298.8 297.9
----------------- ------------- ---------------- ---------------------- -------------------
Consolidated Condensed Cash Flow
Statement
Unaudited Unaudited Audited
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
GBPm GBPm GBPm
================================ =========================== =========================== ==========================
Operating activities
Profit for the period before tax 5.1 13.5 37.4
Adjustments for:
Interest payable 0.4 0.3 0.6
Depreciation of property, plant
and equipment 5.4 5.4 11.7
Amortisation of intangible
assets 0.6 0.7 1.3
Share-based payment costs (0.1) 0.5 (0.2)
Share of results of associates 0.1 0.1 0.1
Impairment of intangibles assets 8.9 - -
Impairment of fixed assets 1.1 - -
Exceptional income - - (0.2)
================================ =========================== =========================== ==========================
Operating cash flows before
movements in working capital 21.5 20.5 50.7
(Increase)/decrease in
inventories (0.1) (3.2) 1.8
Decrease in receivables 2.9 1.3 2.1
Increase/(decrease) in payables 7.5 (1.0) (4.5)
Difference between employer
pension contributions and
amounts recognised in the
income statement (1.7) (1.6) (2.1)
-------------------------------- --------------------------- --------------------------- --------------------------
Cash generated by operations 30.1 16.0 48.0
Tax on profit paid (6.1) (4.3) (7.9)
-------------------------------- --------------------------- --------------------------- --------------------------
Net cash from operating
activities 24.0 11.7 40.1
Investing activities
Acquisition of investment in
associate - (1.0) (1.0)
Purchase of property, plant and
equipment (2.8) (8.4) (14.8)
Proceeds on sale of property,
plant and equipment - - 0.1
Net cash used in investing
activities (2.8) (9.4) (15.7)
Financing activities
New loans received 60.0 12.0 29.5
Loans repaid - (12.0) (29.5)
Lease payments (1.6) (1.6) (3.3)
Purchase of Company shares by
employee benefit trusts (0.1) (1.0) (1.4)
Proceeds from disposal of
Company shares by employee
benefit trusts - - 0.1
Repurchase of own shares - (2.5) (11.5)
Dividends paid - (14.4) (19.0)
Interest paid - - (0.2)
-------------------------------- =========================== --------------------------- --------------------------
Net cash used in financing
activities 58.3 (19.5) (35.3)
Net increase/(decrease) in cash
and cash equivalents 79.5 (17.2) (10.9)
-------------------------------- --------------------------- --------------------------- --------------------------
Cash and cash equivalents at
beginning of period 10.9 21.8 21.8
================================ =========================== =========================== ==========================
Cash and cash equivalents at end
of period 90.4 4.6 10.9
-------------------------------- --------------------------- --------------------------- --------------------------
Notes to the Consolidated Condensed Financial Statements
1 General information
A.G. BARR p.l.c. ('the Company') and its subsidiaries (together 'the Group') manufacture,
market, distribute and sell soft drinks, ready to drink cocktails and cocktail solutions.
The Group has manufacturing sites in the UK and sells mainly to customers in the UK with some
international sales.
The Company is a public limited company, which is listed on the London Stock Exchange and
incorporated and domiciled in Scotland. The address of its registered office is 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 2020 were approved by the Board of directors on 8 April 2020 and delivered
to the Registrar of Companies. The comparative figures for the financial year ended 25 January
2020 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
2020 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial
Conduct 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 2020, which have been prepared
in accordance with IFRSs as adopted by the European Union.
Going concern basis
The directors have reviewed a number of future trading scenarios for the purposes of going
concern in light of the current environment. The Group has continued trading throughout the
COVID-19 period and the directors have used the experience gained through the last six months
to inform the reasonable variability of trading in these scenarios. In addition, although
we consider the likelihood of such a scenario arising remote, we have modelled a severe downturn
in sales in order to stress test the Group's liquidity. This scenario assumed a 50% reduction
in like for like sales compared to the base forecast, with no cost mitigation. This assessment
concluded that the Group would operate within its existing overdraft facilities over the 12
months to September 2021, and would not require access to any loan funding or government support.
The Group has a GBP60m revolving credit facility (RCF) which matures in February 2022 (GBP40m)
and February 2025 (GBP20m) all of which was drawn down as a prudent contingency measure but
which is currently unused. The Group is compliant with all covenants on this funding and,
under all reasonable forecasts, this remains the case for the going concern period. The next
testing of covenant compliance will be based on January 2021 results. The Group has cash funds
of GBP30.4m as at 27 July 2020 excluding the GBP60m RCF. In addition, in June 2020 the Group
qualified for, but have not accessed, GBP125m of Bank of England Covid Corporate Financing
Facilities (CCFF). It was not necessary to take access to CCFF or RCF funding into account
in forming the conclusion on going concern.
Based on this assessment, the directors have formed a judgement that there is a reasonable
expectation the Group will have adequate resources to continue in operational existence for
the foreseeable future. Furthermore the directors believe that the funding options available
to the Group provide a level of liquidity and flexibility that will allow both management
of the ongoing COVID situation and the continued investment in the business to support our
long term growth prospects.
3 Accounting policies
The accounting policies applied are consistent with those of the annual financial statements
for the year ended 25 January 2020 and corresponding interim reporting period. In addition
to these, the Group has also applied a new accounting policy following the receipt of government
grants during the six month period ended 25 July 2020 in the form of furlough income.
The Group recognises government grants in accordance with IAS 20. These grants are received
by the Group in the UK in the form of furlough payments made by the Government under the Coronavirus
Job Retention Scheme ('JRS'). The grants received by the Group are recognised in the income
statement and matched against the costs that the grants are intended to compensate and are
therefore shown net. Furlough income included under this JRS and included within the income
statement at 25 July 2020 amounted to GBP1.3 million.
A number of amended standards became applicable for the current reporting period. The application
of these amendments has not had any material impact on the disclosures, net assets or results
of the Group.
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 balance of the financial year remain the same as
those stated on pages 42 - 47 of the Group's annual financial statements as at 25 January
2020, which are available on our website, www.agbarr.co.uk. These are summarised below:
- Changes in consumer preferences, perception or purchasing behaviour
- Consumer rejection of reformulated products
- Loss of product integrity
- Loss of continuity of supply of major raw materials
- Adverse publicity in relation to the soft drinks industry, the Group or its brands
- Government intervention on climate change and environmental issues e.g. packaging waste
- Failure to maintain customer relationships or take account of changing market dynamics
- Inability to protect the Group's intellectual property rights
- Failure of the Group's operational infrastructure
- Failure of critical IT systems or a breach of cyber security
- Financial risks
- Third party relationships
- Impact of the current COVID-19 environment on the business
The volatile and uncertain economic environment created by the UK's decision to leave the
European Union ('EU') has continued over the past six months. Like many other businesses,
we have continued to monitor developments in this area. Overseen by the Risk Committee, the
Company Brexit working group has continued to monitor the potential impact of Brexit on the
Group and to take appropriate actions to ensure that the business is as well prepared as possible
for Brexit. The Brexit working group has prepared for a range of Brexit outcomes, including
"no deal". Given the continuing uncertainty regarding the outcome of Brexit, it is challenging
to quantify or determine the impact of Brexit on the Group. However, given that the Group
is a UK-based Group whose sales are predominantly made in the UK, our ongoing assessment is
that Brexit will not have a significant impact on the Group.
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 2020 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 Executive Committee has been identified as the chief operating decision-maker.
The Executive Committee reviews the Group's internal reporting in order to assess performance
and allocate resources. The Executive Committee has determined the operating segments based
on these reports.
The Executive 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.
6 months ended 25 July 2020
Carbonates Still drinks and water Funkin Total
GBPm GBPm GBPm GBPm
-------------------------------------- --------------- ------------------------------ -------- -------
Total revenue 93.6 13.1 6.5 113.2
Gross profit 42.7 2.9 2.7 48.3
----------------------------------------- --------------- ------------------------------ -------- =======
6 months ended 27 July 2019
Carbonates Still drinks and water Funkin Total
GBPm GBPm GBPm GBPm
-------------------------------------- --------------- ------------------------------ -------- -------
Total revenue 91.2 21.7 9.6 122.5
Gross profit 40.8 5.3 4.6 50.7
----------------------------------------- --------------- ------------------------------ -------- =======
Year ended 25 January 2020
Carbonates Still drinks and water Funkin Total
GBPm GBPm GBPm GBPm
-------------------------------------- --------------- ------------------------------ -------- -------
Total revenue 196.4 40.1 19.2 255.7
Gross profit 88.6 8.6 8.9 106.1
----------------------------------------- --------------- ------------------------------ -------- -------
There are no material intersegment sales. All revenue is in relation to product sales, which
is recognised at point in time, upon delivery to the customer.
"Carbonates" segments represent the sale of carbonates and other soft drink related items.
The gross profit from the segment reporting is stated before exceptional costs.
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 and liabilities of the Group are managed by the Executive Committee on a
central basis rather than at a segment level. As a result no reconciliations of segment assets
and liabilities to the consolidated condensed statement of financial position has been disclosed
for any of the periods presented.
Included in revenues arising from Carbonates, Still drinks and water and Funkin are revenues
of approximately GBP22m which arose from sales to the Group's largest customer. In the year
ended 25 January 2020 and six months ended 27 July 2019, revenues of approximately GBP41m
and GBP21m respectively arose from sales to the Group's largest customer. No other single
customers contributed 10 per cent or more to the Group's revenue in the comparative period
to July 2019 or January 2020.
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 reported profits are affected by weather conditions, the timing of marketing
investment and execution of promotional activity. As a result it is anticipated that the reported
profits for the second half of the year to January 2021 will be higher than those for the
six months ended 25 July 2020.
8 Operating profit
The following items have been charged to operating profit during the period:
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
GBPm GBPm GBPm
---------------------------- --------------------------- --------------------------- --------------------------
Impairment of inventories 0.1 0.2 0.8
Impairment of brands 7.0 - -
Impairment of goodwill 1.9 - -
Impairment of property, plant
and equipment 1.1 - -
Foreign exchange gains
recognised (0.2) (0.1) (0.2)
------------------------------- --------------------------- --------------------------- --------------------------
Inventories are stated at the lower of cost and net realisable value. Net realisable value
is the estimated selling price in the ordinary course of business less the estimated costs
of completing production and selling expenses.
The items discussed below have been classified as exceptional. The Group identifies items
as exceptional where the nature or scale of the items requires to be separately presented
in order to better understand trading performance.
The items that have been included in exceptional items have been analysed in the table below:
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
GBPm GBPm GBPm
---------------------------- --------------------------- --------------------------- --------------------------
Wind turbine removal - - (1.8)
Simplification and
standardisation of operations - - 1.1
Impairment of Strathmore brand
(Note 8) 7.0 - -
Impairment of Strathmore
goodwill (Note 8) 1.9 - -
Impairment of Strathmore
property, plant and equipment
(Note 9) 1.1 - -
Redundancy costs for business
reorganisation and restructure 1.5 0.4 0.7
=============================== =========================== =========================== ==========================
Net exceptional charge 11.5 0.4 -
------------------------------- --------------------------- --------------------------- --------------------------
During the six months ended 25 July 2020 costs of GBP1.5m were incurred relating to the ongoing
change programme within the business which commenced in the year to 25 January 2020 noted
below.
In addition, the hospitality sector has been significantly challenged by the lockdown measures
over recent months. This has impacted on Strathmore performance given a significant proportion
of Strathmore sales are made in this sector. As a result, an impairment review of the Strathmore
Water business operations was undertaken which resulted in the impairment of the Strathmore
brand of GBP7.0m, goodwill of GBP1.9m and property, plant and equipment of GBP1.1m. Due to
their nature management believes that these are required to be separately presented in trading
performance so as not mislead the users of the financial statements. These costs are included
in 'Operating expenses' in the income statement.
In the year to 25 January 2020 income of GBP1.8m was received for compensation for the removal
of a wind turbine at our Cumbernauld site. Management believe that this should be treated
as exceptional due to the non-recurring nature and size of the income received. Additionally,
the Group embarked on a change programme with the aim of returning the soft drinks business
to long-term sustainable growth. The programme had two main objectives:
- to simplify and standardise our operations by significantly rationalising our portfolio
including simplifying our core brand ranges and routes to market. This involved discontinuing
certain product lines and formats at a cost of GBP0.6m and the closure of our Sheffield sales
depot in March 2020 at a cost of GBP0.5m (primarily redundancy costs).
- to strategically restructure and refocus the business so that resources and investment
target those areas with the greatest profitable growth opportunities. This initiative will
deliver a more contribution focussed Commercial team prioritised on our core brands and a
Supply Chain organisation that optimises the balance between agility, resilience and capacity.
As a result the Group has incurred exceptional costs related to employee severance of GBP0.7m.
During the six months ended 27 July 2019 costs of GBP0.4m were incurred relating to the initial
costs of the ongoing reorganisation within the business.
9 Tax on profit
The total tax charge is GBP3.2m (six months ended 27 July 2019: GBP2.7m; year ended 25 January
2020: GBP7.6m) which equated to an effective tax rate of 62.7% (six months ended 27 July 2019:
20.0%; year ended 25 January 2020: 20.3%). The effective tax rate in the current year has
increased as a result of the remeasurement of deferred tax balances. In March 2020, the UK
government announced that the corporation tax rate would remain at 19% effective from 1 April
2020 (previously 17%) which was substantively enacted on 17 March 2020. The impact of this
was a one-off increase in the deferred tax charge of GBP2.2m. Excluding this adjustment the
effective tax rate for the six months ended 25 July 2020 was 20.1%.
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
Analysis of tax charge GBPm GBPm GBPm
---------------------------- --------------------------- --------------------------- --------------------------
Current income tax charge 2.6 2.7 6.9
Deferred income tax charge 0.6 - 0.7
=============================== =========================== =========================== ==========================
Total tax charge in the
condensed income statement 3.2 2.7 7.6
------------------------------- --------------------------- --------------------------- --------------------------
10 Earnings per share
Basic earnings per share has been calculated by dividing the earnings attributable to equity
holders of the parent by the weighted average number of shares in issue during the year, excluding
shares held by the employee share scheme trusts.
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
=========================== =========================== =========================== ==========================
Profit attributable to equity
holders of the Company (GBPm) 1.9 10.8 29.8
Weighted average number of
ordinary shares in issue 111,175,040 112,895,598 112,452,517
------------------------------- --------------------------- --------------------------- --------------------------
Basic earnings per share
(pence) 1.71 9.57 26.50
------------------------------- --------------------------- --------------------------- --------------------------
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 ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
=========================== =========================== =========================== ==========================
Profit attributable to equity
holders of the Company (GBPm) 1.9 10.8 29.8
Weighted average number of
ordinary shares in issue 111,175,040 112,895,598 112,452,517
Adjustment for dilutive effect
of share options - 141,506 57,931
------------------------------- --------------------------- --------------------------- --------------------------
Diluted weighted average number
of ordinary shares in issue 111,175,040 113,037,104 112,510,448
------------------------------- --------------------------- --------------------------- --------------------------
Diluted earnings per share
(pence) 1.71 9.55 26.49
------------------------------- --------------------------- --------------------------- --------------------------
The adjusted EPS figure is calculated by using profit attributable to equity holders before
exceptional items:
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
=========================== =========================== =========================== ==========================
Profit attributable to equity
holders of the Company before
exceptional items (GBPm) 11.7 11.1 29.8
Weighted average number of
ordinary shares in issue 111,175,040 112,895,598 112,452,517
------------------------------- --------------------------- --------------------------- --------------------------
Earnings per share before
exceptional items (pence) 10.52 9.83 26.50
------------------------------- --------------------------- --------------------------- --------------------------
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 and proposed
6 months ended 6 months ended Year ended 25 6 months ended 6 months ended Year ended 25
25 July 2020 27 July 2019 January 2020 25 July 2020 27 July 2019 January 2020
per share per share
(p) (p) per share (p) GBPm GBPm GBPm
---------------- -------------- -------------- -------------- -------------- -------------- ---------------
Paid final dividend - 12.74 12.74 - 14.4 14.5
Paid interim
dividend - - 4.00 - - 4.5
-------------------- ============== ============== ============== ============== ============== ===============
- 12.74 16.74 - 14.4 19.0
-------------------- ============== ============== ============== ============== ============== ===============
The Board reviews the Group's capital allocation policy annually. The Group's capital allocation
framework defines its priorities for uses of cash, underpinned by its principle to maintain
a strong balance sheet with solid investment grade credit metrics. The framework has four
priorities for the use of cash generated from operations:
- re-investment in the business to drive organic growth;
- maintaining a progressive dividend policy;
- continuing to pursue selective strategic investment; and
- to the extent that there is surplus capital to these needs, provide additional returns
to shareholders.
While the capital allocation policy will remain in place for the long term, as a result of
the impact of COVID-19 the Board has reviewed actions to safeguard the business as a temporary
modification of the policy. While funding organic growth remains the Board's first priority,
pressure on profit and cash in the short term requires a reduction in operating and capital
expenditure. With a focus on capital retention and sourcing of capital during the current
period, the Board has decided to suspend capital returns to shareholders until there is greater
visibility on market recovery.
12 Intangible assets
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
GBPm GBPm GBPm
----------------------- ---------------------------- --------------------------- --------------------------
Opening net book value 101.8 103.1 103.1
Impairment (8.9) - -
Amortisation (0.6) (0.7) (1.3)
--------------------------- ---------------------------- --------------------------- --------------------------
Closing net book value 92.3 102.4 101.8
--------------------------- ---------------------------- --------------------------- --------------------------
The amortisation charge for the six months ended 25 July 2020 represents GBP0.6m (six months
ended 27 July 2019: GBP0.7m; year ended 25 January 2020: GBP1.3m) of charges in relation to
the Business Process Redesign project and GBPnil (six months ended 27 July 2019: GBP0.1m;
year ended 25 January 2020: GBP0.1m) of charges for Funkin customer lists.
The Group tests whether there has been any impairment of intangibles assets on an annual basis
or when there is an indication of impairment. The recoverable amount of a CGU is determined
based on value in use calculations. These calculations use pre-tax cash flow projections based
on financial forecasts approved by management which cover a three year period. Cash flows
beyond the three years are extrapolated using the growth rates and other key assumptions.
In light of COVID-19 a full impairment exercise has been completed on all CGUs as at 25 July
2020. The hospitality sector has been significantly challenged by the lockdown measures over
recent months. This has impacted on Strathmore performance given a significant proportion
of Strathmore sales are made in this sector and as a result the assets of the Strathmore operating
unit have been impaired by GBP7.0m of brand and GBP1.9m of goodwill being the total value
of the assets. The impairment reviews did not identify any other areas of impairment. The
following growth rates and key assumptions were used for the Strathmore operating unit:
Key assumptions 6 months ending 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
----------------------- ---------------------------- --------------------------- --------------------------
Gross margin (%) 19.8 32.2 32.2
Growth rate (%) - 2.5 2.5
Discount rate (%) 11.1 11.1 11.1
--------------------------- ---------------------------- --------------------------- --------------------------
13 Property, plant and equipment
The closing balance includes GBP13.6m (as at 27 July 2019: GBP10.0m; as at 25 January 2020:
GBP14.4m) of assets under construction.
The Strathmore Water business was tested for impairment resulting in the impairment of land
and buildings of GBP0.4m and plant and equipment of GBP0.7m. Further details are included
in Note 12.
14 Assets held for sale
The property related to the distribution depot at Sheffield has been presented as held for
sale following the closure of the site in March 2020. The property is currently under offer.
15 Financial instruments
Current assets of GBP0.1m (at 27 July 2019: GBP0.1m; 25 January 2020: GBPnil) relate to forward
foreign currency contracts with a maturity of less than 12 months and are recognised at fair
value through the cash flow hedge reserve, included within other reserves.
Current liabilities of GBP0.1m (at 27 July 2019: GBPnil; 25 January 2020: GBP0.1m) relate
to forward foreign currency contracts with a maturity of less than 12 months and are recognised
as fair value through the cash flow hedge reserve, included within other reserves.
Fair value hierarchy
Fair value hierarchies 1 to 3 are based on the degree to which fair value is observable:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability,
either directly (i.e. as
prices) or indirectly
(i.e. derived from
prices)
Level 3: inputs for the asset or liability that are not based on observable market data
The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is available and rely as little
as possible on entity specific estimates. The fair value of the forward foreign exchange contracts
is determined using forward exchange rates at the date of the consolidated condensed statement
of financial position, with the resulting value discounted accordingly as relevant.
All financial instruments carried at fair value are Level 2.
Fair values of financial assets and financial liabilities
The following table shows the carrying amounts and fair values of financial assets and financial
liabilities. It does not include fair value information for financial assets and financial
liabilities not measured at fair value if the carrying amount is a reasonable approximation
of fair value.
Carrying amount
========================= ------------------------------------------------------------------------------------
Other financial
Fair value - hedging Other financial assets liabilities at amortised
instruments at amortised cost cost Total
As at 25 July 2020 GBPm GBPm GBPm GBPm
------------------------- ------------------------- ------------------------ ------------------------ -----
Financial assets
Foreign exchange contracts
used for hedging 0.1 - - 0.1
Trade receivables - 51.7 - 51.7
Cash and cash equivalents - 90.4 - 90.4
----------------------------- ------------------------- ------------------------ ------------------------ -----
0.1 142.1 - 142.2
----------------------------- ------------------------- ------------------------ ------------------------ -----
Financial liabilities
Foreign exchange contracts
used for hedging 0.1 - - 0.1
Lease liabilities - - 6.6 6.6
Unsecured bank borrowings - - 59.9 59.9
Trade payables - - 19.5 19.5
----------------------------- ------------------------- ------------------------ ------------------------ -----
0.1 - 86.0 86.1
----------------------------- ------------------------- ------------------------ ------------------------ -----
Carrying amount
=========================== -----------------------------------------------------------------------------------------
Other financial
Fair value - hedging Other financial assets at liabilities at amortised
instruments amortised cost cost Total
As at 27 July 2019 GBPm GBPm GBPm GBPm
--------------------------- -------------------------- -------------------------- -------------------------- -----
Financial assets
Foreign exchange contracts
used for hedging 0.1 - - 0.1
Trade receivables - 52.9 - 52.9
Cash and cash equivalents - 9.0 - 9.0
--------------------------- -------------------------- -------------------------- -------------------------- -----
0.1 61.9 - 62.0
--------------------------- -------------------------- -------------------------- -------------------------- -----
Financial liabilities
Lease liabilities - - 8.1 8.1
Unsecured bank borrowings - - 4.4 4.4
Trade payables - - 23.9 23.9
--------------------------- -------------------------- -------------------------- -------------------------- -----
- - 36.4 36.4
--------------------------- -------------------------- -------------------------- -------------------------- -----
Carrying amount
=========================== -----------------------------------------------------------------------------------------
Other financial
Fair value - hedging Other financial assets at liabilities at amortised
instruments amortised cost cost Total
As at 25 January 2020 GBPm GBPm GBPm GBPm
--------------------------- -------------------------- -------------------------- -------------------------- -----
Financial assets
Trade receivables - 55.1 - 55.1
Cash and cash equivalents - 10.9 - 10.9
--------------------------- -------------------------- -------------------------- -------------------------- -----
- 66.0 - 66.0
--------------------------- -------------------------- -------------------------- -------------------------- -----
Financial liabilities
Foreign exchange contracts
used for hedging 0.1 - - 0.1
Lease liabilities - - 7.9 7.9
Trade payables - - 14.3 14.3
--------------------------- -------------------------- -------------------------- -------------------------- -----
0.1 - 22.2 22.3
--------------------------- -------------------------- -------------------------- -------------------------- -----
16 Borrowings and loans
Movements in borrowings are analysed as follows:
6 months ended 25 July
2020 6 months ended 27 July 2019 Year ended 25 January 2020
GBPm GBPm GBPm
--------------------------- -------------------------- --------------------------- ---------------------------
Opening borrowings balance 7.9 - -
Adjustment on transition to
IFRS 16 - 9.4 9.4
Net lease payments (1.3) (1.3) (1.5)
Borrowings made 60.0 12.0 29.5
Amortisation of loan
arrangement fee (0.1) - -
Repayments of borrowings - (12.0) (29.5)
Bank overdrafts drawn - 4.4 -
------------------------------- -------------------------- --------------------------- ---------------------------
Closing borrowings balance 66.5 12.5 7.9
------------------------------- -------------------------- --------------------------- ---------------------------
The reconciliation of the above closing borrowings balance to the figures on the face of the
consolidated condensed statement of financial position is as follows:
As at 25 July 2020 As at 27 July 2019 As at 25 January 2020
GBPm GBPm GBPm
--------------------------- -------------------------- --------------------------- ---------------------------
Overdraft - 4.4 -
Closing loan balance 59.9 - -
Lease liabilities 6.6 8.1 7.9
------------------------------- -------------------------- --------------------------- ---------------------------
Total borrowings and loans 66.5 12.5 7.9
------------------------------- -------------------------- --------------------------- ---------------------------
Disclosed as
Current liabilities 62.9 7.4 3.2
Non-current liabilities 3.6 5.1 4.7
=============================== ========================== =========================== ===========================
The reconciliation to net debt is as follows:
As at 25 July 2020 As at 27 July 2019 As at 25 January 2020
GBPm GBPm GBPm
=========================== -------------------------- --------------------------- ---------------------------
Closing borrowings balance (66.5) (12.5) (7.9)
Cash and cash equivalents 90.4 9.0 10.9
------------------------------- -------------------------- --------------------------- ---------------------------
Net funds/(deficit) 23.9 (3.5) 3.0
------------------------------- -------------------------- --------------------------- ---------------------------
The drawn/undrawn facilities at 25 July 2020 are as follows:
Total facility Drawn Undrawn
GBPm GBPm GBPm
--------------------------- -------------------------- --------------------------- ---------------------------
Revolving credit facilities 60.0 60.0 -
Overdraft 5.0 - 5.0
------------------------------- -------------------------- --------------------------- ---------------------------
65.0 60.0 5.0
------------------------------- -------------------------- --------------------------- ---------------------------
During the year to 27 January 2018 the Group entered into three revolving credit facilities
of periods of 3 - 5 years with Royal Bank of Scotland plc, Bank of Scotland plc and HSBC plc.
These facilities provided GBP60m of sterling debt facilities to February 2020, reducing to
GBP20m from February 2020 to February 2022. The Group reached agreement with its lenders,
on 18 March 2019 to extend those facilities, due to expire in 2020 and 2022, to 2022 and 2024.
Further, in March 2020 the Group reached agreement to extend the facility due to expire in
2024 to 2025. This is summarised in the table below:
Date of agreement
January March March
2018 2019 2020
Maturity GBPm GBPm GBPm
--------------------------- -------------------------- --------------------------- ---------------------------
February 2020 40.0 - -
February 2022 20.0 40.0 40.0
February 2024 - 20.0 -
February 2025 - - 20.0
------------------------------- -------------------------- --------------------------- ---------------------------
In March 2020 the facilities were drawn down in full as a contingency measure as a result
of COVID-19.
A total arrangement fee of GBP0.3m was incurred and is being amortised over the life of the
loan facilities.
Retirement benefit
17 obligations
On 1 May 2016 the A.G. BARR p.l.c (2008) Pension and Life Assurance Scheme was closed to future
accrual following a negotiated agreement between the Company and the board of trustees.
The defined retirement benefit scheme had a deficit of GBP9.7m as at 25 July 2020 (as at 27
July 2019: GBP10.7m, 25 January 2020: GBP10.5m). The reconciliation of the closing deficit
is as follows:
6 months ended 25 July 2020 6 months ended 27 July 2019 Year ended 25 January 2020
GBPm GBPm GBPm
=========================== --------------------------- --------------------------- --------------------------
Opening present value of
obligation (127.3) (115.1) (115.1)
Current service cost -- (0.2)
Interest cost (1.1) (1.5) (3.0)
Remeasurement - changes in
financial assumptions (5.2) (12.5) (15.2)
Benefits paid 2.8 2.3 6.2
------------------------------- =========================== =========================== ==========================
Closing position (130.8) (126.8) (127.3)
------------------------------- =========================== =========================== ==========================
Opening fair value of plan
assets 116.8 101.6 101.6
Interest income 1.0 1.4 2.7
Remeasurement - actuarial
return on assets 4.4 13.8 16.4
Employer contributions 1.7 1.6 2.3
Benefits paid (2.8) (2.3) (6.2)
------------------------------- =========================== =========================== ==========================
Closing fair value of plan
assets 121.1 116.1 116.8
------------------------------- =========================== =========================== ==========================
As at 25 July 2020 As at 27 July 2019 As at 25 January 2020
GBPm GBPm GBPm
=========================== --------------------------- --------------------------- --------------------------
Closing present value of
obligation (130.8) (126.8) (127.3)
Closing fair value of plan
assets 121.1 116.1 116.8
------------------------------- =========================== =========================== ==========================
Closing net deficit (9.7) (10.7) (10.5)
------------------------------- =========================== =========================== ==========================
The key financial assumptions used to value the liabilities were as follows:
As at 25 July 2020 As at 27 July 2019 As at 25 January 2020
%% %
--------------------------- --------------------------- -------------------------- --------------------------
Discount rate 1.4 2.1 1.7
Inflation assumption 2.9 3.4 3.0
------------------------------- --------------------------- --------------------------- --------------------------
18 Movements in own shares held by employee benefit trusts
During the six months to 25 July 2020 the employee benefit trusts of
the Group acquired 22,763 (six months to 27 July 2019: 132,659; year
to 25 January 2020: 191,794) 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 25 July 2020 the shares
held by the Company's employee benefit trusts represented 857,078 (27
July 2019: 799,725; 25 January 2020: 844,151) shares at a purchased
cost of GBP5.2m (27 July 2019: GBP4.9m; 25 January 2020: GBP5.1m).
9,836 (six months to 27 July 2019: 131,410; year to 25 January 2020:
146,119) shares were utilised in satisfying share options from the
Company's employee share schemes during the same period.
There have been no sales in the six months to 25 July 2020. The related
weighted average share price at the time of exercise for the six months
to 27 July 2019 was GBP8.13 per share and the year to 25 January 2020
GBP7.13 per share.
19 Contingencies and commitments
As at 25 July 2020 As at 27 July 2019 As at 25 January 2020
GBPm GBPm GBPm
---------------------------------- ------------------ ------------------ ---------------------
Commitments for the acquisition
of property, plant and equipment 1.4 5.0 1.7
-------------------------------------- ------------------ ------------------ ---------------------
20 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 52
weeks ended 25 January 2020.
For and on behalf of the Board of directors
Roger White Stuart Lorimer
Chief Executive Finance Director
22 September 2020 22 September 2020
Glossary
Non-GAAP measures are provided because they are tracked by management to assess the Group's
operating performance and to inform financial, strategic and operating decisions.
Definition of non-GAAP measures used are provided below:
Capital expenditure is a non-GAAP measure and is defined as the cash purchases of property,
plant and equipment and is disclosed in the consolidated condensed cash flow statement.
Cash flow generated from operations is a non-GAAP measure and is defined as cash generated
from operations and appears on the cash flow statement.
Earnings per share before exceptional items is a non-GAAP measure calculated by dividing
profit attributable to equity holders before exceptional items by the weighted average number
of shares in issue.
Net cash at bank is a non-GAAP measure deducting loan balances from cash and cash equivalents.
Operating margin before exceptional items is a non-GAAP measure calculated by dividing operating
profit before exceptional items by revenue.
Profit attributable to equity holders after exceptional items is a non-GAAP measure calculated
as profit attributable to equity holders less any exceptional items. This figure appears on
the consolidated condensed income statement.
Profit before tax and exceptional items is a non-GAAP measure calculated as profit before
tax less any exceptional items. This figure appears on the consolidated condensed income statement.
Working capital is a non-GAAP measure calculated inventories plus trade and other receivables
less trade and other payables.
Reconciliation of non-GAAP measures
Profit before tax and exceptional items 6 months ended 25 July 2020 6 months ended 27 July 2019
------------------------------------------ --------------------------- ---------------------------
Profit before tax 5.1 13.5
Exceptional items 11.5 0.4
------------------------------------------ --------------------------- ---------------------------
Profit before tax and exceptional items 16.6 13.9
------------------------------------------ --------------------------- ---------------------------
Operating profit before exceptional items 6 months ended 25 July 2020 6 months ended 27 July 2019
------------------------------------------ --------------------------- ---------------------------
Operating profit 5.6 13.9
Exceptional items 11.5 0.4
------------------------------------------ --------------------------- ---------------------------
Operating profit before exceptional items 17.1 14.3
------------------------------------------ --------------------------- ---------------------------
Operating margin before exceptional items 6 months ended 25 July 2020 6 months ended 27 July 2019
------------------------------------------ --------------------------- ---------------------------
Revenue 113.2 122.5
Operating profit before exceptional items 17.1 14.3
------------------------------------------ --------------------------- ---------------------------
Operating margin before exceptional items 15.1% 11.7%
------------------------------------------ --------------------------- ---------------------------
Working capital 6 months ended 25 July 2020 6 months ended 27 July 2019
------------------------------------------ --------------------------- ---------------------------
Inventories 18.4 23.6
Trade and other receivables 54.3 56.4
Trade and other payables (59.5) (54.8)
------------------------------------------ --------------------------- ---------------------------
Working capital 13.2 25.2
------------------------------------------ --------------------------- ---------------------------
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END
IR FLFSRALILFII
(END) Dow Jones Newswires
September 22, 2020 02:00 ET (06:00 GMT)
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