TIDMBAG
RNS Number : 7619R
Barr(A.G.) PLC
26 September 2017
26 September 2017
A.G. BARR p.l.c. ("A.G. BARR")
INTERIM RESULTS FOR THE SIX MONTHSED 29 JULY 2017
A.G. BARR p.l.c., which produces and markets some of the UK's
leading drink brands, including IRN-BRU, Rubicon, Strathmore and
Funkin, announces its interim results for the six months ended 29
July 2017.
Financial headlines
-- Total revenue grew by 8.8% to GBP136.6m (2016 : GBP125.6m)
-- Profit on ordinary activities before tax and exceptional
items* increased 2.9% to GBP17.5m (2016 : GBP17.0m). Profit before
tax was GBP19.4m (2016 : GBP21.1m) including an exceptional credit
of GBP1.9m*
-- Operating margin before exceptional items* was 13.2% (2016 : 13.9%)
-- Free cash flow* of GBP20.0m (2016 : GBP19.6m) has resulted in
a net cash position of GBP7.9m (2016 : net debt (GBP6.6m)) at the
period end
-- An interim dividend of 3.71p per share (2016 : 3.53p) has
been declared, an increase of 5% on the prior year
Strategic highlights
-- Strong brand performance across the portfolio and in
particular the continuing success of last year's new product
launches - IRN-BRU XTRA and Rubicon Spring
-- Overall market share improvement, with sales performance in
England and Wales particularly pleasing
-- Good progress across our reformulation programme - on track
for at least 90% of Company owned brands to contain less than 5g of
total sugars per 100ml by the end of the financial year (January
2018)
-- Continued strong performance from the Funkin business with revenue up 31% in the period
-- New PET production line at Milton Keynes now operational - project on time and budget
-- GBP30m share repurchase programme commenced as planned
Commenting on the results, Roger White, Chief Executive said
:
"The strong sales momentum of the second half of last year has
continued and has combined with significant progress from our
innovation to deliver strong sales growth and market share gains in
the period.
"While we maintain tight cost control across the business, we
have increased investment in the support of our brands and
innovation launches and expect to continue this across the full
year. Our reformulation activities remain on track as we move into
the final implementation stages of this initiative in what will be
a busy second half.
"Although the soft drinks market has been impacted negatively in
the short term by the mixed weather since late July, assuming
market conditions across the balance of the year are reasonable,
the Company remains on course to meet the Board's expectations for
the full year."
For more information, please contact:
A.G. BARR 01236 852400 Instinctif Partners 020
Roger White, Chief Executive 7457 2020
Stuart Lorimer, Finance Justine Warren
Director Matthew Smallwood
Interim Statement
A.G. BARR has maintained the strong sales momentum of the second
half of last year during the first half of the current financial
year, growing revenue in the period by 8.8%. This is a significant
outperformance of the total soft drinks market which grew value by
4.2% in the 26 weeks to 30 July 2017 (IRI Market Place).
We have delivered strong brand performance across the portfolio
supported by the continuing success of last year's new product
launches. We increased our executional focus and investment in
support of our core brands, with a particular emphasis on
innovation, primarily IRN-BRU XTRA and Rubicon Spring.
This increased brand investment, along with the recognised
sector cost pressures related to the ongoing weakness of sterling,
led to a moderate reduction in margins during the period. However
the margin impact has been lessened through the combination of the
business re-organisation, completed early in 2017, and price
increases, albeit these were implemented later than anticipated.
Pre-exceptional operating margin* in the period was 13.2% (2016 :
13.9%).
Profit on ordinary activities before tax and exceptional items*
increased by 2.9% to GBP17.5m. Profit before tax was GBP19.4m
including an exceptional credit of GBP1.9m*.
Trading
The UK soft drinks market in the period was up 4.2% in value and
2.6% in volume reflecting the impact of seasonally better early
summer weather compared to last year and price inflation returning
to the market. Volume growth in the stills sector continues to be
driven by water, while low and no sugar drinks are the driving
force in the carbonates sector.
Our overall market share has grown in the period. Our sales
performance is particularly pleasing in England and Wales where our
innovation has driven new distribution and attracted new consumers
to our brands. In our core Scottish market, IRN-BRU has performed
particularly strongly, with our broadened no added sugar range
adding incremental sales to the brand.
The Funkin business continues to grow, benefiting from increased
cocktail consumption, wider product distribution and further
product innovation.
Reformulation programme
We are making good progress with our sugar reduction and
reformulation programme and are confident that we will meet the
previously communicated portfolio target of 90% of Company owned
brands to contain less than 5g of total sugars per 100ml by the end
of the financial year (January 2018).
A number of reformulated products have already successfully
entered the market and, as we complete the programme across the
next six months, we will ensure we have the appropriate plans and
resources in place to deliver a smooth transition across our total
supply chain and customer base.
Exceptional items
There were three exceptional items in the six months ended 29
July 2017 leading to a net exceptional credit of GBP1.9m.
The primary item was the sale, in February of this year, of our
site in Walthamstow for GBP3.8m, resulting in a gain on disposal of
GBP2.5m. In addition there have been one off costs of GBP0.3m
associated with our reformulation programme and a further GBP0.3m
of costs in relation to the now completed business reorganisation
announced in September 2016.
Balance sheet
Our balance sheet remains strong, with free cash flow* in the
period of GBP20.0m (2016 : GBP19.6m) and a net cash position of
GBP7.9m (2016 : net debt (GBP6.6m)).
In the period we paid the Funkin acquisition earn-out (GBP4.5m),
progressed our capacity expansion with the installation of a new
production line at our Milton Keynes facility, and commenced the
share repurchase programme announced in March.
We have continued our strategy of actively managing our pension
scheme liabilities. Despite the benefit of several de-risking
activities in the period, the pension deficit, on an IAS19 basis,
has risen from GBP25.0m (July 2016) to GBP28.0m (July 2017), driven
by the movement in discount rates and inflation assumptions. A full
triennial valuation was conducted as at April 2017 and the results
of this are expected to be available prior to the year end.
Our closing net cash surplus benefited from our continued tight
management of working capital and payment cycle phasing and the
sale proceeds from our Walthamstow site disposal. Free cash flow
conversion* was just over 90%, in line with the same period last
year.
Capital expenditure during the period amounted to GBP3.1m, in
line with our long-term capital plans and a slight reduction on the
prior year spend of GBP5.3m. We have continued the development of
our Milton Keynes site, with investment in a new PET line which has
been delivered on time and on budget. This will expand both the
capacity and the flexibility of the site, supporting our ongoing
innovation programme.
We commenced our GBP30m share repurchase programme in the period
and will continue to progress towards completion within the planned
24 months as market conditions allow.
With strong banking facilities in place we remain well
positioned to make acquisitions should value creating opportunities
present themselves.
Dividend
The Board has declared an interim dividend of 3.71 pence per
share, payable on 20 October 2017 to shareholders on the register
on 6 October 2017. This represents an increase on the prior year of
5% and reflects the Board's confidence in the current financial
position and the future prospects of the Group.
Outlook
The business has made significant progress year to date, albeit
versus softer prior year comparative trading, and expects continued
growth in the second half of the current financial year.
Although the soft drinks market has been impacted negatively in
the short term by the mixed weather since late July, assuming
market conditions across the balance of the year are reasonable,
the Company remains on course to meet the Board's expectations for
the full year.
John Nicolson Roger White
Chairman Chief Executive
*Note : Items marked with an asterisk are non GAAP measures.
Definitions and relevant reconciliations are provided in the
Glossary at the end of this statement.
Consolidated Condensed Income
Statement
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended 28
29 July 2017 30 July 2016 January 2017
----------------------------------- ----------------------------------- ------------------------------------
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 6 136.6 - 136.6 125.6 - 125.6 257.1 - 257.1
Cost of
sales (73.6) - (73.6) (66.7) - (66.7) (136.4) - (136.4)
-------------- ----- ------------ ------------ ------- ------------ ------------ ------- ------------ ------------ --------
Gross profit 6 63.0 - 63.0 58.9 - 58.9 120.7 - 120.7
Other income - - - - - - 0.7 - 0.7
Operating
expenses (45.0) 1.9 (43.1) (41.5) 4.1 (37.4) (78.3) 0.7 (77.6)
-------------- ----- ------------ ------------ ------- ------------ ------------ ------- ------------ ------------ --------
Operating
profit 8 18.0 1.9 19.9 17.4 4.1 21.5 43.1 0.7 43.8
Finance
costs (0.5) - (0.5) (0.4) - (0.4) (0.7) - (0.7)
-------------- ----- ------------ ------------ ------- ------------ ------------ ------- ------------ ------------ --------
Profit
before
tax 17.5 1.9 19.4 17.0 4.1 21.1 42.4 0.7 43.1
Income
tax expense 9 (3.9) 0.1 (3.8) (3.8) (0.7) (4.5) (7.4) (0.1) (7.5)
-------------- ----- ------------ ------------ ------- ------------ ------------ ------- ------------ ------------ --------
Profit
attributable
to equity
holders 13.6 2.0 15.6 13.2 3.4 16.6 35.0 0.6 35.6
-------------- ----- ============ ============ ======= ============ ============ ======= ============ ============ ========
Earnings
per share
(p)
-------------- ----- ------------ ------------ ------- ------------ ------------ ------- ------------ ------------ --------
Basic
earnings
per share 10 13.46 14.33 30.78
Diluted
earnings
per share 10 13.45 14.31 30.57
Earnings
per share
before
exceptional
items 10 11.73 11.40 30.26
-------------- ----- ------------ ------------ ------- ------------ ------------ ------- ------------ ------------ --------
5 October
Ex- divdate: 2017
Record 6 October
date: 2017
Consolidated Condensed Statement of Comprehensive
Income
Unaudited Unaudited Audited
6 months
ended 6 months Year ended
29 July ended 30 28 January
2017 July 2016 2017
GBPm GBPm GBPm
----------------------------------------- ---------- ----------- ------------
Profit for the period 15.6 16.6 35.6
Other comprehensive income
Items that will not be reclassified
to profit or loss
Remeasurements on defined benefit
pension plans (note 18) (1.8) (19.2) (21.9)
Deferred tax movements on items
above 0.3 3.0 2.7
Current tax movements on items
above - 0.5 1.0
Items that will be or have been
reclassified to profit or loss
Effective portion of changes
in fair value of cash flow hedges 0.4 (0.8) (1.4)
Deferred tax movements on items
above - - 0.2
Other comprehensive expenditure
for the period, net of tax (1.1) (16.5) (19.4)
Total comprehensive income attributable
to equity holders of the parent 14.5 0.1 16.2
----------------------------------------- ---------- ----------- ------------
Consolidated Condensed Statement of Changes
in Equity (Unaudited)
Restated*
Share Share
Share premium options Other Retained
capital account reserve reserves earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ========= ========= ========= ========== ========== =======
At 28 January 2017 4.9 0.9 1.8 (0.2) 172.8 180.2
Profit for the period - - - - 15.6 15.6
Other comprehensive
income/(expenditure) - - - 0.4 (1.5) (1.1)
----------------------------- --------- --------- --------- ---------- ---------- -------
Total comprehensive
income for the period - - - 0.4 14.1 14.5
Company shares purchased
for use by employee
benefit trusts (note
19) - - - - (1.1) (1.1)
Proceeds on disposal
of shares by employee
benefit trusts (note
19) - - - - 1.2 1.2
Recognition of share-based
payment costs - - 0.5 - - 0.5
Transfer of reserve
on share award - - (0.5) - 0.5 -
Repurchase and cancellation
of shares - - - - (2.5) (2.5)
Dividends paid - - - - (12.6) (12.6)
----------------------------- --------- --------- --------- ---------- ---------- -------
At 29 July 2017 4.9 0.9 1.8 0.2 172.4 180.2
----------------------------- --------- --------- --------- ---------- ---------- -------
At 30 January 2016 4.9 0.9 1.4 1.0 170.3 178.5
Profit for the period - - - - 16.6 16.6
Other comprehensive
expenditure - - - (0.8) (15.7) (16.5)
----------------------------- --------- --------- --------- ---------- ---------- -------
Total comprehensive
(expenditure)/income
for the period - - - (0.8) 0.9 0.1
Company shares purchased
for use by employee
benefit trusts (note
19) - - - - (0.8) (0.8)
Proceeds on disposal
of shares by employee
benefit trusts (note
19) - - - - 1.2 1.2
Recognition of share-based
payment costs - - 0.5 - - 0.5
Transfer of reserve
on share award - - (0.3) - 0.3 -
Dividends paid - - - - (11.5) (11.5)
----------------------------- --------- --------- --------- ---------- ---------- -------
At 30 July 2016 4.9 0.9 1.6 0.2 160.4 168.0
----------------------------- --------- --------- --------- ---------- ---------- -------
*Refer to Note 3
Consolidated Condensed Statement of
Changes in Equity (Audited)
Restated*
Share Share
Share premium options Other Retained
capital account reserve reserves earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
========================================== ========= ========= ========= ========== ========== =======
At 30 January 2016 4.9 0.9 1.4 1.0 170.3 178.5
Profit for the year - - - - 35.6 35.6
Other comprehensive expenditure - - - (1.2) (18.2) (19.4)
------------------------------------------ --------- --------- --------- ---------- ---------- -------
Total comprehensive (expenditure)/income
for the year - - - (1.2) 17.4 16.2
Company shares purchased
for use by employee benefit
trusts (note 19) - - - - (1.0) (1.0)
Proceeds on disposal of
shares by employee benefit
trusts (note 19) - - - - 1.3 1.3
Recognition of share-based
payment costs - - 0.9 - - 0.9
Transfer of reserve on share
award - - (0.4) - 0.4 -
Deferred tax on items taken
direct to reserves - - (0.1) - - (0.1)
Dividends paid - - - - (15.6) (15.6)
------------------------------------------ --------- --------- --------- ---------- ---------- -------
At 28 January 2017 4.9 0.9 1.8 (0.2) 172.8 180.2
------------------------------------------ --------- --------- --------- ---------- ---------- -------
*Refer to Note 3
Consolidated Condensed Statement
of Financial Position
Unaudited Unaudited Audited
Restated* Restated*
As at As at As at
29 July 30 July 28 January
2017 2016 2017
Note GBPm GBPm GBPm
-------------------------------- ----- ----------- ----------- ------------
Non-current assets
Intangible assets 13 105.3 106.8 106.0
Property, plant and
equipment 14 88.8 87.4 89.4
-------------------------------- ----- ----------- ----------- ------------
194.1 194.2 195.4
-------------------------------- ----- ----------- ----------- ------------
Current assets
Inventories 17.3 18.6 17.3
Trade and other receivables 63.6 59.1 51.4
Derivative financial
instruments 15 0.1 0.4 0.1
Assets classified
as held for sale 12 - - 1.3
Cash and cash equivalents 16.3 7.4 10.1
-------------------------------- ----- ----------- ----------- ------------
97.3 85.5 80.2
-------------------------------- ----- ----------- ----------- ------------
Total assets 291.4 279.7 275.6
-------------------------------- ----- ----------- ----------- ------------
Current liabilities
Loans and other borrowings 8.3 - 0.5
Trade and other payables 60.0 57.8 52.3
Derivative financial
instruments 15 - - 0.3
Provisions 16 0.6 - 0.9
Current tax liabilities 3.3 3.2 2.7
-------------------------------- ----- ----------- ----------- ------------
72.2 61.0 56.7
-------------------------------- ----- ----------- ----------- ------------
Non-current liabilities
Loans and other borrowings - 14.2 0.1
Deferred tax liabilities 11.0 11.5 11.2
Retirement benefit
obligations 18 28.0 25.0 27.4
-------------------------------- ----- ----------- ----------- ------------
39.0 50.7 38.7
-------------------------------- ----- ----------- ----------- ------------
Capital and reserves attributable
to equity holders
Share capital 4.9 4.9 4.9
Share premium account 0.9 0.9 0.9
Share options reserve 1.8 1.6 1.8
Other reserves 0.2 0.2 (0.2)
Retained earnings 172.4 160.4 172.8
-------------------------------- ----- ----------- ----------- ------------
180.2 168.0 180.2
-------------------------------- ----- ----------- ----------- ------------
Total equity and liabilities 291.4 279.7 275.6
============
*Refer to Note
3
Consolidated Condensed Cash Flow
Statement
Unaudited Unaudited Audited
6 months 6 months Year ended
ended 29 ended 28 January
July 2017 30 July 2017
2016
GBPm GBPm GBPm
---------------------------------------- ----------- ---------- ------------
Operating activities
Profit for the period before tax 19.4 21.1 43.1
Adjustments for:
Interest payable 0.5 0.4 0.7
Depreciation of property, plant
and equipment 3.4 3.5 7.1
Amortisation of intangible assets 0.7 0.7 1.5
Share-based payment costs 0.5 0.5 0.9
Gain on sale of property, plant
and equipment (2.5) - -
Operating cash flows before movements
in working capital 22.0 26.2 53.3
Increase in inventories - (3.0) (1.7)
(Increase) / decrease in receivables (12.2) (6.4) 1.3
Increase in payables 11.9 15.4 11.0
Difference between employer pension
contributions and amounts recognised
in the income statement (1.6) (7.3) (7.9)
---------------------------------------- ----------- ---------- ------------
Cash generated by operations 20.1 24.9 56.0
Tax on profit paid (3.1) (3.7) (7.2)
---------------------------------------- ----------- ---------- ------------
Net cash from operating activities 17.0 21.2 48.8
Investing activities
Acquisition of subsidiary (4.5) - -
Purchase of property, plant and
equipment (3.1) (5.3) (12.4)
Proceeds on sale of property,
plant and equipment 4.1 - 0.1
Net cash used in investing activities (3.5) (5.3) (12.3)
Financing activities
New loans received 5.0 16.0 25.5
Loans repaid (5.0) (19.5) (43.0)
Bank arrangement fees paid (0.2) - -
Purchase of Company shares by
employee benefit trusts (1.1) (0.8) (1.0)
Proceeds from disposal of Company
shares by employee benefit trusts 1.2 1.2 1.3
Repurchase of own shares (2.5) - -
Dividends paid (12.6) (11.5) (15.6)
Interest paid (0.1) (0.1) (0.2)
---------------------------------------- ----------- ---------- ------------
Net cash used in financing activities (15.3) (14.7) (33.0)
Net (decrease) / increase in cash
and cash equivalents (1.8) 1.2 3.5
---------------------------------------- ----------- ---------- ------------
Cash and cash equivalents at beginning
of period 9.7 6.2 6.2
======================================== =========== ========== ============
Cash and cash equivalents at end
of period 7.9 7.4 9.7
---------------------------------------- ----------- ---------- ------------
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
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 the UK. The
address of its registered office is A.G. BARR p.l.c., Westfield
House, 4 Mollins Road, Cumbernauld, G68 9HD.
This consolidated condensed interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. Statutory accounts for the year ended 28
January 2017 were approved by the Board of directors on 28 March
2017 and delivered to the Registrar of Companies. The comparative
figures for the financial year ended 28 January 2017 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 29 July 2017 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 28 January 2017, 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 28 January 2017.
There is one exception, as detailed below.
(i) Change in the treatment of deferred tax on the recovery of
the carrying value of property
The carrying value of the property is expected to be recovered
through both use and subsequent disposal. Previously, a single tax
base was attributed to that asset, compared against a single
carrying amount, resulting in a single temporary difference being
recognised.
Following a review of the accounting policies with our auditor
we have changed our accounting policy such that the deferred tax
recognised more closely reflects the extent to which the applicable
tax rules interact. Under the new policy the deferred tax is based
on consideration of how much of the carrying value of the property
is expected to be recovered through use and how much through sale,
comparing each against their relevant tax bases. The deductible
temporary difference from the capital gains tax base is not viewed
as recoverable since there is no expectation of a capital gain
against which to offset it, so no deferred capital gains tax asset
is recognised. As a result, the opening deferred tax balance at
January 2016 has been adjusted to reflect only the taxable
temporary difference arising to the extent recovery of the property
is expected through use.
The accounting policy for tax is now as follows:
Deferred tax is provided in full using the liability method,
providing for temporary differences between the tax bases of assets
and liabilities and their carrying amounts, in the consolidated
financial statements.
The following temporary differences are not provided for:
- The initial recognition of goodwill; and
- Differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
Where the expected manner of recovery will impact which tax
rules apply, for example with properties, the deferred tax is
calculated by considering how much of the carrying value will be
recovered through use and how much through sale, and then being
calculated by assessing these amounts against the relevant tax
bases and respective tax rules.
Deferred tax is determined using tax rates and laws that have
been enacted or substantively enacted by the year end date and are
expected to apply when the related deferred tax asset is realised
or the deferred tax liability is settled. A deferred tax asset is
recognised only to the extent that it is probable that future
taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be
realised.
As this change is a historic adjustment the effect of the change
to the accounting policy has been taken to retained earnings for
the earliest reporting period that will be presented in the annual
report and accounts to 27 January 2018:
30 January 30 July 28 January
2016 2016 2017
GBPm GBPm GBPm
--------------------------------- ----------- -------- -----------
Deferred tax liability
under previous accounting
policy 12.2 9.9 9.6
Effect of change in accounting
policy 1.6 1.6 1.6
--------------------------------- ----------- -------- -----------
Restated deferred tax
liability 13.8 11.5 11.2
30 January 30 July 28 January
2016 2016 2017
GBPm GBPm GBPm
--------------------------------- ----------- -------- -----------
Retained earnings under
previous accounting policy 171.9 162 174.4
Effect of change in accounting
policy (1.6) (1.6) (1.6)
--------------------------------- ----------- -------- -----------
Restated retained earnings 170.3 160.4 172.8
This change in accounting policy has no other impact on the
financial statements.
During the 6 months ended 29 July 2017, a share repurchase
programme has been in progress. The adopted accounting policy is to
cancel the repurchased shares and replace the permanent capital
through creation of a Capital Redemption Reserve.
The Capital Redemption Reserve is included in "Other reserves"
within equity. Refer to Note 23.
No new accounting standards have been adopted by the Group for
the 26 weeks ended 29 July 2017.
The following standards which have been issued have not yet been
adopted by the Group:
i) IFRS 15 'Revenue from contracts with customers' is effective
on 1 January 2018, subject to European Union (EU) endorsement;
ii) IFRS 9 'Financial instruments' which will be effective on 1
January 2018, subject to EU endorsement; and
iii) IFRS 16 'Leases' is effective on 1 January 2019, subject to
EU endorsement.
Management have considered the potential impact of the
implementation of IFRS 9, IFRS 15 and IFRS 16. It is expected that
neither IFRS 9 nor IFRS 15 will have a material impact on the
consolidated financial statements of the Group.
It is expected that IFRS 16 will materially affect the
consolidated financial statements. Management has performed an
analysis of non-cancellable operating leases held in relation to
production equipment held at the Milton Keynes facility in order to
assess the expected impact of IFRS 16. If IFRS 16 was implemented
in the 6 months to 29 July 2017, its effect would be to increase
the net book value of property, plant and equipment by GBP8.6m,
with a corresponding finance lease liability of GBP10.2m. The net
impact on the income statement for the 6 months ended 29 July 2017
would be immaterial. To date, GBP7.6m of operating lease rentals
have been recognised in respect of the assessed leases. Under IFRS
16, GBP6.7m of depreciation would have been charged, plus a further
GBP1.7m of interest charges.
4 Principal risks and uncertainties
The directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance in the remaining 26 weeks of the financial year remain
substantially the same as those stated on pages 32-34 of the
Group's annual financial statements as at 28 January 2017, which
are available on our website, www.agbarr.co.uk. These are
summarised below:
- Changes in consumer preferences, perception or purchasing behaviour
- Changing consumer attitudes towards sugar/further government intervention on sugar
- Adverse publicity in relation to the soft drinks industry, the Group or its brands
- 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
- Loss of continuity of supply of major raw materials
- Loss of product integrity
- Failure of critical IT systems
- Financial risks
We do note that the result of the referendum in favour of the UK
leaving the European Union may have an impact on the group. Like
many other businesses, we are closely following developments in
this area but we believe that at this stage it is not possible
quantify or determine with certainty the impact on the Group of the
UK leaving the European Union. The Group is a UK based group whose
sales are predominantly made in the UK but it has some non-UK
income and an exposure to US Dollars and Euros through the purchase
of commodities. We will continue to monitor developments and adapt
our strategy as appropriate.
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 28
January 2017 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
29 July 2017
Still
drinks
Carbonates and water Other Total
GBPm GBPm GBPm GBPm
------------------------ ----------- ----------- ------ ------
Total revenue 98.9 28.9 8.8 136.6
Gross profit before
exceptional items 49.3 9.2 4.5 63.0
------------------------ ----------- ----------- ------ ------
6 months ended 30
July 2016
Still
drinks
Carbonates and water Other Total
GBPm GBPm GBPm GBPm
------------------------ ----------- ----------- ------ ------
Total revenue 92.0 26.9 6.7 125.6
Gross profit before
exceptional items 47.9 7.5 3.5 58.9
------------------------ ----------- ----------- ------ ------
Year ended 28 January
2017
Still
drinks
Carbonates and water Other Total
GBPm GBPm GBPm GBPm
------------------------ ----------- ----------- ------ ------
Total revenue 188.3 56.0 12.8 257.1
Gross profit before
exceptional items 97.3 17.0 6.4 120.7
------------------------ ----------- ----------- ------ ------
There are no intersegment sales. All revenue is from external
customers.
"Other" segments represent the sale of Funkin cocktail
solutions, the sale of ice-cream and other soft drink related
items.
The gross profit before exceptional items from the segment
reporting is reconciled to the total profit before income tax as
shown in the consolidated condensed income statement.
All of the assets of the Group are managed by the management
committee on a central basis rather than at a segment level. As a
result no reconciliation of segment assets and liabilities to the
consolidated condensed statement of financial position has been
disclosed for any of the periods presented.
All of the segments included within "Carbonates" and "Still
drinks and water" meet the aggregation criteria set out in IFRS 8
Operating Segments.
7 Seasonality of operations
Revenues and operating profits are affected by weather
conditions, the timing of marketing investment and execution of
promotional activity. As a result it is anticipated that the
operating profits for the second half of the year to 27 January
2018 will be higher than those for the six months ended 29 July
2017.
8 Operating profit
The following items have been charged to operating profit during
the period:
6 months 6 months Year ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
GBPm GBPm GBPm
---------------------------------- ----------- ----------- ------------
Inventory write down 0.3 0.2 0.6
Foreign exchange losses/(gains)
recognised 0.1 (0.8) 0.1
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completing
production and selling expenses.
During the period several items have been classified as
exceptional. The Group identifies items as exceptional where the
nature or scale of the item requires to be separately presented in
order to better understand trading performance.
All items have been included within operating expenditure, and
have been analysed in the table below:
6 months 6 months Year ended
ended 29 ended 28 January
July 2017 30 July 2017
2016
GBPm GBPm GBPm
----------------------------------- ----------- --------- ------------
Gain on sale of distribution
site (2.5) - -
Sugar reduction and reformulation
programme costs 0.3 - -
Redundancy costs for business
reorganisation 0.1 - 2.7
Other costs relating to business
reorganisation 0.2 - 0.6
Abortive acquisition costs - 0.4 0.4
Investigation of online sales
capabilities - 0.5 0.5
Redundancy costs - reorganisation
of direct sales routes - 0.6 0.6
Curtailment gain on closure
of pension scheme to future
accrual - (7.0) (7.0)
Other costs relating to pension
scheme closure to future
accrual - 1.4 1.5
-----------------------------------
Net exceptional credit (1.9) (4.1) (0.7)
----------------------------------- ----------- --------- ------------
During the period, a GBP2.5m gain on sale was made on disposal
of the Walthamstow distribution site. This asset was classified as
an asset held for sale as at 28 January 2017 and the sale was
completed on 1 February 2017. Due to its scale, management believes
that treating this item as exceptional provides a fair
representation of trading performance.
To date, GBP0.3m of costs have been incurred as part of the
ongoing sugar reduction and reformulation programme, through which
the business has committed to ensuring that 90% of Company owned
brands contain less than 5g of total sugars per 100ml by the end of
the financial year ended 27 January 2018. Costs in relation to the
sugar reduction and reformulation programme are forecast to
significantly exceed the level of expenditure that would ordinarily
be incurred in the course of new product development or
reformulation. Costs of this level are not expected to recur in
future periods, therefore these are considered to be
exceptional.
The items discussed below all relate to significant,
non-recurring items that have taken place in the current or
preceding period. All of the below items are considered to be
material to the financial statements, and have not been incurred in
the normal course of business. Therefore, these are classified as
exceptional items.
In September 2016 a Company-wide restructure was announced,
which was largely complete by the end of the financial year to 28
January 2017. During the current period, a further GBP0.3m of costs
have been incurred, primarily being an increase in the required
redundancy provision and further recruitment costs.
In the year ended 28 January 2017, GBP0.4m of acquisition fees
were incurred in relation to an unsuccessful acquisition. These
costs included advisory and legal fees. GBP0.5m of advisory costs
were also incurred as part of a strategic review of the market
threats posed by new and emerging digital trading models. GBP0.6m
of redundancy costs were also incurred in relation to a
reorganisation of direct sales routes.
The Group's defined benefit pension scheme closed to future
accrual in May 2016. This resulted in a GBP7.0m curtailment gain,
which was recognised as exceptional in the year ended 28 January
2017. Offsetting the curtailment gain was a further GBP1.5m of
costs incurred in relation to the closure of the scheme, including
cost of GBP1.3m past service cost for one year's additional service
negotiated with the active members of the scheme.
9 Tax on profit
The interim period tax charge is accrued based on the estimated
average annual effective income tax rate of 19.6% (six months ended
30 July 2016: 21.3%; year ended 28 January 2017: 17.4%).
The Chancellor announced in his Autumn Budget on 23 November
2016 that the main rate of corporation tax will be reduced to 19%
from 1 April 2017 and 17% from 1 April 2020 and the future charges
will reduce accordingly. Finance No.2 Bill 2016 became
substantively enacted on 23 November 2016. The deferred tax
liability at 29 July 2017 has therefore been calculated having
regard to the rate of 17% substantively enacted at the balance
sheet date.
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.
Year
6 months 6 months ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
---------------------------------- ------------ ------------ -------------
Profit attributable to equity
holders of the Company (GBPm) 15.6 16.6 35.6
Weighted average number of
ordinary shares in issue 115,910,498 115,805,375 115,664,757
---------------------------------- ------------ ------------ -------------
Basic earnings per share (pence) 13.46 14.33 30.78
---------------------------------- ------------ ------------ -------------
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.
Year
6 months 6 months ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
Profit attributable to equity
holders of the Company (GBPm) 15.6 16.6 35.6
Weighted average number of
ordinary shares in issue 115,910,498 115,805,375 115,664,757
Adjustment for dilutive effect
of share options 58,537 159,822 781,074
--------------------------------- ------------ ------------ -------------
Diluted weighted average number
of ordinary shares in issue 115,969,035 115,965,197 116,445,831
Diluted earnings per share
(pence) 13.45 14.31 30.57
--------------------------------- ------------ ------------ -------------
The EPS before exceptional items figure is calculated by using
profit attributable to equity holders before exceptional items:
Year
6 months 6 months ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
-------------------------------- ------------ ------------ -------------
Profit attributable to equity
holders of the Company before
exceptional items (GBPm) 13.6 13.2 35.0
Weighted average number of
ordinary shares in issue 115,910,498 115,805,375 115,664,757
-------------------------------- ------------ ------------ -------------
Earnings per share before
exceptional items (pence) 11.73 11.40 30.26
-------------------------------- ------------ ------------ -------------
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 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
29 July 30 July 28 January 29 July 30 July 28 January
2017 2016 2017 2017 2016 2017
per
share per share per share
(p) (p) (p) GBPm GBPm GBPm
-------------- ---------- ---------- ------------- ---------- ---------- -------------
Paid final
dividend 10.87 9.97 9.97 12.6 11.5 11.5
Paid interim
dividend - - 3.53 - - 4.1
10.87 9.97 13.50 12.6 11.5 15.6
-------------- ========== ========== ============= ========== ========== =============
An interim dividend of 3.71p (an increase of 5% on last year)
per share was approved by the Board on 26 September 2017 and will
be paid on 20 October 2017 to shareholders on record as at 6
October 2017.
Held for
12 sale assets
At 28 January 2017 the property, plant and equipment relating to
the distribution site at Walthamstow was presented as held for
sale. The site was sold on 1 February 2017 for GBP3.8m. The Group
has entered into a 3 year operating lease to continue to operate
from the site for the short term. The lease includes a 6 month
break clause.
Intangible
13 assets
6 months Year ended
6 months ended ended 30 28 January
29 July 2017 July 2016 2017
GBPm GBPm GBPm
------------------ --------------- ----------- ------------
Opening net book
value 106.0 107.5 107.5
Amortisation (0.7) (0.7) (1.5)
Closing net book
value 105.3 106.8 106.0
------------------ --------------- ----------- ------------
The amortisation charge for the six months ended 29 July 2017
represents GBP0.6m (six months ended 30 July 2016: GBP0.6m; year
ended 28 January 2017: GBP1.2m) of charges in relation to the
Business Process Redesign project and GBP0.1m (six months ended 30
July 2016: GBP0.1m; year ended 28 January 2017: GBP0.3m) of charges
for the Rubicon and Funkin customer lists.
Property, plant
14 and equipment
6 months 6 months Year ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
GBPm GBPm GBPm
------------------------- ----------- ----------- ------------
Opening net book value 89.4 85.3 85.3
Additions 3.1 5.6 12.6
Disposals (0.3) - (0.1)
Property, plant and
equipment classified
as held for sale (note
12) - - (1.3)
Depreciation (3.4) (3.5) (7.1)
Closing net book value 88.8 87.4 89.4
------------------------- ----------- ----------- ------------
The closing balance includes GBP5.9m (as at 30 July 2016:
GBP4.8m; as at 28 January 2017: GBP3.7m) of assets under
construction.
15 Financial instruments
Current assets of GBP0.1m (at 30 July 2016: GBP0.4m; 28 January
2017: GBP0.1m) relate to forward foreign currency contracts with a
maturity of less than 12 months and are recognised at fair value
through the cash flow hedge reserve, included within other
reserves.
Current liabilities of GBPnil (at 30 July 2016: GBPnil; 28
January 2017: GBP0.3m) represents 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
IFRS 7 requires all financial instruments carried at fair value
to be analysed under the following levels:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on
observable market data
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is
available and rely as little as possible on entity specific
estimates. The fair value of the forward foreign exchange contracts
is determined using forward exchange rates at the date of the
statement of financial position, with the resulting value
discounted accordingly as relevant.
All financial instruments carried at fair value are Level 2.
Fair values of financial assets and financial liabilities
The table below sets out the comparison between the carrying
amount and fair value of all of the Group's financial
instruments.
Fair
Carrying amount value
Other
Fair financial
value liabilities
- hedging Loans at amortised Level
instruments and receivables cost Total 2
As at 29 July 2017 GBPm GBPm GBPm GBPm GBPm
------------------------------- ------------- ----------------- -------------- ------ -------
Financial assets not measured
at fair value
Foreign exchange contracts
used for hedging 0.1 - - 0.1 0.1
Trade receivables - 60.9 - 60.9 60.9
Cash and cash equivalents - 16.3 - 16.3 16.3
------------------------------- ------------- ----------------- -------------- ------ -------
0.1 77.2 - 77.3 77.3
------------------------------- ------------- ----------------- -------------- ------ -------
Financial liabilities not
measured at fair value
Finance lease liabilities - - 0.1 0.1 0.1
Unsecured bank borrowings - - 8.4 8.4 8.4
Trade payables - - 24.2 24.2 24.2
- - 32.7 32.7 32.7
------------------------------- ------------- ----------------- -------------- ------ -------
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 1.5% and a discount rate of 1.5%.
Fair
Carrying amount value
Other
Fair financial
value liabilities
- hedging Loans at amortised Level
instruments and receivables cost Total 2
As at 30 July 2016 GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------------- ----------------- -------------- ------ -------
Financial assets not measured
at fair value
Foreign exchange contracts
used for hedging 0.4 - - 0.4 0.4
Trade receivables - 55.0 - 55.0 55.0
Cash and cash equivalents - 7.4 - 7.4 7.4
-------------------------------- ------------- ----------------- -------------- ------ -------
0.4 62.4 - 62.8 62.8
-------------------------------- ------------- ----------------- -------------- ------ -------
Financial liabilities measured
at fair value
Contingent consideration - - 4.5 4.5 4.5
-------------------------------- ------------- ----------------- -------------- ------ -------
- - 4.5 4.5 4.5
-------------------------------- ------------- ----------------- -------------- ------ -------
Financial liabilities not
measured at fair value
Finance lease liabilities - - 0.2 0.2 0.2
Unsecured bank borrowings - - 14.0 14.0 14.0
Trade payables - - 26.0 26.0 26.0
-------------------------------- ------------- ----------------- -------------- ------ -------
- - 40.2 40.2 40.2
-------------------------------- ------------- ----------------- -------------- ------ -------
Fair
Carrying amount value
Other
Fair financial
value liabilities
- hedging Loans at amortised Level
instruments and receivables cost Total 2
As at 28 January 2017 GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------------- ----------------- -------------- ------ -------
Financial assets not measured
at fair value
Foreign exchange contracts
used for hedging 0.1 - - 0.1 0.1
Trade receivables - 48.3 - 48.3 48.3
Cash and cash equivalents - 10.1 - 10.1 10.1
-------------------------------- ------------- ----------------- -------------- ------ -------
0.1 58.4 - 58.5 58.5
-------------------------------- ------------- ----------------- -------------- ------ -------
Financial liabilities measured
at fair value
Contingent consideration - - 4.5 4.5 4.5
-------------------------------- ------------- ----------------- -------------- ------ -------
- - 4.5 4.5 4.5
-------------------------------- ------------- ----------------- -------------- ------ -------
Financial liabilities not
measured at fair value
Foreign exchange contracts
used for hedging 0.3 - - 0.3 0.3
Finance lease liabilities - - 0.2 0.2 0.2
Unsecured bank borrowings - - 0.4 0.4 0.4
Trade payables - - 15.8 15.8 15.8
0.3 - 16.4 16.7 16.7
-------------------------------- ------------- ----------------- -------------- ------ -------
16 Provisions
6 months 6 months Year ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
GBPm GBPm GBPm
------------------------- ----------- ----------- ------------
Opening provision 0.9 0.1 0.1
Provision created
during the year 0.1 - 0.9
Provision utilised
during the period (0.4) (0.1) (0.1)
Closing provision 0.6 - 0.9
------------------------- ----------- ----------- ------------
17 Borrowings and loans
Movements in borrowings are analysed as follows:
6 months 6 months Year ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
GBPm GBPm GBPm
-------------------------------- ----------- ----------- ------------
Opening loan balance 0.4 18.1 18.1
Borrowings made 5.0 16.0 25.5
Repayments of borrowings (5.0) (20.1) (43.0)
Bank overdrafts drawn/(repaid) 8.0 - (0.2)
Closing loan balance before
arrangement fees 8.4 14.0 0.4
Unamortised arrangement
fee (0.2) - -
Closing loan balance 8.2 14.0 0.4
-------------------------------- ----------- ----------- ------------
The reconciliation of the above closing loan balance to the
figures on the face of the consolidated condensed statement of
financial position is as follows:
As at 28
As at 29 As at 30 January
July 2017 July 2016 2017
GBPm GBPm GBPm
--------------------------- ----------- ----------- ---------
Overdraft 8.4 - 0.4
Closing loan balance - 14.0 -
Unamortised arrangement
fee (0.2) - -
Finance lease liabilities 0.1 0.2 0.2
--------------------------- ----------- ----------- ---------
Total borrowings and
loans 8.3 14.2 0.6
--------------------------- ----------- ----------- ---------
Disclosed as
Current liabilities 8.3 - 0.5
Non-current liabilities - 14.2 0.1
=========================== =========== =========== =========
The reconciliation to net debt is as follows:
As
at
As at As at 28
29 July 30 July January
2017 2016 2017
GBPm GBPm GBPm
---------------------------- --------- --------- ---------
Closing borrowings balance (8.4) (14.0) (0.4)
Cash and cash equivalents 16.3 7.4 10.1
Net funds/(debt) 7.9 (6.6) 9.7
---------------------------- --------- --------- ---------
The undrawn facilities at 29 July 2017 are as follows:
Total
facility Drawn Undrawn
GBPm GBPm GBPm
----------------------------- ---------- ------ --------
Revolving credit facilities 60.0 - 60.0
Overdraft 10.0 8.4 1.6
70.0 8.4 61.6
----------------------------- ---------- ------ --------
In February 2017 the Group entered into three revolving credit
facilities over periods of 3-5 years with Royal Bank of Scotland
plc, Bank of Scotland plc and HSBC Bank plc. These facilities
provide GBP60m of Sterling debt facilities to 2019/20, reducing to
GBP20m for the period to 2021/22. A total arrangement fee of
GBP0.2m was incurred and is being amortised over the life of the
loan facilities.
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.
Retirement benefit
18 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.
A curtailment gain of GBP7.0m arose, as well as an additional past
service cost of GBP1.3m and a further GBP0.2m of related costs.
These items were treated as exceptional in the year to 28 January
2017.
The Company made a GBP1.0m contribution to the scheme in May
2016 and a further GBP1.0m contribution in May 2017.
The defined retirement benefit scheme had a deficit of GBP28.0m
as at 29 July 2017 (as at 30 July 2016: GBP25.0m; 28 January 2017:
GBP27.4m). The reconciliation of the closing deficit is as
follows:
6 months 6 months Year ended
ended 29 ended 30 28 January
July 2017 July 2016 2017
GBPm GBPm GBPm
---------------------------- ----------- ----------- ------------
Opening present value of
obligation (139.2) (120.2) (120.2)
Current service cost - (0.4) (0.4)
Past service cost - (1.3) (1.3)
Curtailment gain - 7.0 7.0
Interest cost (2.0) (2.2) (4.4)
Remeasurement - changes
in financial assumptions (5.8) (27.9) (25.4)
Benefits paid 10.2 1.6 5.5
Closing position (136.8) (143.4) (139.2)
---------------------------- =========== =========== ============
Opening fair value of plan
assets 111.8 107.3 107.3
Interest income 1.6 2.0 3.9
Remeasurement - actuarial
return on assets 4.0 8.7 3.5
Employer contributions 1.6 2.0 2.6
Benefits paid (10.2) (1.6) (5.5)
Closing fair value of plan
assets 108.8 118.4 111.8
---------------------------- ----------- ----------- ------------
As at
As at 29 As at 30 28 January
July 2017 July 2016 2017
GBPm GBPm GBPm
---------------------------- ----------- ----------- ------------
Closing present value of
obligation (136.8) (143.4) (139.2)
Closing fair value of plan
assets 108.8 118.4 111.8
Closing net deficit (28.0) (25.0) (27.4)
---------------------------- =========== =========== ============
The key financial assumptions used to value the liabilities were
as follows:
As at
As at 29 As at 30 28 January
July 2017 July 2016 2017
---------------------- ----------- ----------- ------------
% % %
---------------------- ----------- ----------- ------------
Discount rate 2.6 2.4 3.0
Inflation assumption 3.5 2.9 3.7
---------------------- ----------- ----------- ------------
Movements in own shares held
19 by employee benefit trusts
During the six months to 29 July 2017 the employee benefit
trusts of the Group acquired 185,691 (six months to 30 July 2016:
151,042; year to 28 January 2017: 203,410) 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
29 July 2017 the shares held by the Company's employee benefit
trusts represented 981,728 (30 July 2016: 1,099,331; 28 January
2017: 1,103,160) shares at a purchased cost of GBP5.6m (30 July
2016: GBP6.2m; 28 January 2017: GBP6.3m).
307,123 (six months to 30 July 2016: 300,114; year to 28 January
2017: 354,344) shares were utilised in satisfying share options
from the Company's employee share schemes during the same
period.
The related weighted average share price at the time of exercise
for the six months to 29 July 2017 was GBP6.19 (six months to 30
July 2016: GBP5.15; year to 28 January 2017: GBP5.11) per
share.
20 Contingencies and commitments
As at As at As at
29 July 30 July 28 January
2017 2016 2017
GBPm GBPm GBPm
----------------------------------- --------- --------- ------------
Commitments for the acquisition
of property, plant and equipment 3.8 2.5 6.0
----------------------------------- --------- --------- ------------
Events occurring after the reporting
21 period
Interim dividend
As disclosed in note 11, an interim dividend of 3.71p per share
will be paid to shareholders on 20 October 2017.
22 Related party transactions
There have been no related party transactions in the first 26
weeks of the current financial year which have materially affected
the financial position or performance of the Group.
23 Repurchase of own shares
During the 6 months to 29 July 2017 the Group commenced a share
repurchase programme of up to GBP30m, which is expected to complete
within 24 months. A total of 405,000 shares have been repurchased
and cancelled, at a cost of GBP2.5m. The permanent capital has been
replaced through the creation of a Capital Redemption Reserve,
which is included in other reserves. The nominal value of the
shares repurchased at 29 July 2017 is GBP16,875.
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 28 January 2017.
For and on behalf of the Board of directors
Roger White Stuart Lorimer
Chief Executive Finance Director
26 September 2017 26 September 2017
Reconciliation of adjusted performance measures
A.G. BARR p.l.c. uses adjusted figures as key performance
measures in addition to those reported under adopted IFRS, as
management believe these measures enable both management and other
stakeholders to assess the underlying trading performance of the
business, excluding items classified as exceptional in the
period.
The adjusted performance measures ('APMs') are consistent with
how business performance is measured and reported to internal
management and to the Board. The key APMs used are:
- Profit before tax and exceptional items
- Operating profit before exceptional items
- Operating margin before exceptional items
- EPS before exceptional items
- Free cash flow
Explanations of how these are calculated are provided in the
Glossary at the end of this document, and reconciliations to IFRS
statutory measures are set out below. The calculation of EPS before
exceptional items is set out in Note 10.
6 months 6 months
ended 29 ended 30
July 2017 July 2016
------------------------------------- ----------- -----------
Profit before tax 19.4 21.1
Exceptional items (1.9) (4.1)
------------------------------------- ----------- -----------
Profit before tax and exceptional
items* 17.5 17.0
------------------------------------- ----------- -----------
Revenue 136.6 125.6
Operating profit 19.9 21.5
Exceptional items (1.9) (4.1)
------------------------------------- ----------- -----------
Operating profit before exceptional
items* 18.0 17.4
------------------------------------- ----------- -----------
Operating margin before exceptional
items* 13.2% 13.9%
------------------------------------- ----------- -----------
Net increase/(decrease) in cash
and cash equivalents (1.8) 1.2
Expansionary capex* 2.1 3.8
Dividends 12.6 11.5
Acquisition of subsidiary (net
of cash acquired) 4.5 -
Purchase of Company shares by
employee benefit trusts 1.1 0.8
Proceeds from disposal of Company
shares by employee benefit trusts (1.2) (1.2)
Repurchase of own shares 2.5 -
New loans received (5.0) (16.0)
Loans repaid 5.0 19.5
Bank arrangement fees paid 0.2 -
------------------------------------- ----------- -----------
Free cash flow* 20.0 19.6
------------------------------------- ----------- -----------
Operating profit before exceptional
items 18.0 17.4
Depreciation and amortisation 4.1 4.2
------------------------------------- ----------- -----------
EBITDA* 22.1 21.6
------------------------------------- ----------- -----------
Free cash flow conversion* 90.5% 90.7%
------------------------------------- ----------- -----------
Glossary
EBITDA is a non-GAAP measure defined as operating profit before
exceptional items, depreciation and amortisation.
EPS 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.
Expansionary capex is a non-GAAP measure and is defined as the
purchase of property, plant and equipment that is not the normal
replacement of property, plant and equipment that has come to the
end of its useful life. Maintenance capex is a non-GAAP measure and
is defined as the purchase of property, plant and equipment that is
the normal replacement of property, plant and equipment that has
come to the end of its useful life. Expansionary capex and
maintenance capex add together to the value of purchase of
property, plant and equipment that appears in the Consolidated
Condensed Cash Flow Statement.
Free cash flow is a non-GAAP measure and is defined as the net
cash flow as per the cash flow statement excluding the movements in
borrowings, expansionary capex, the net cash flow on the purchase
and sale of shares by employee benefit trusts, dividend payments
and non-cash exceptional items.
Free cash flow conversion is a non-GAAP measure and calculated
as free cash flow divided by EBITDA.
Operating margin before exceptional items is a non-GAAP measure
calculated by dividing operating profit before exceptional items by
revenue.
Operating profit before exceptional items is a non-GAAP measure
calculated as operating profit less any exceptional items. This
figure appears on the Consolidated Condensed Income Statement.
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.
Revenue growth is a non-GAAP measure calculated as the
difference in revenue between two reporting periods divided by the
revenue of the earlier reporting period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAKNSAANXEFF
(END) Dow Jones Newswires
September 26, 2017 02:00 ET (06:00 GMT)
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