Interim Results

RNS Number : 7884Z

Barr(A.G.) PLC

29 September 2009

 



For immediate release                                                                                                         29 September 2009

A.G.BARR p.l.c.

INTERIM RESULTS 

A.G.BARR p.l.c. the soft drinks group announces its interim results today for the six months ended  1 August 2009.

Key Points

• Total turnover versus the comparable period up 27.1% at £104.7m (2008 - £82.4m).

• Like for like turnover stripping out the acquisition of Rubicon increased by 11.5%.

• Profit on ordinary activities before tax increased by 19.5% to £13.50m (2008 - £11.26m).

• Strong free cash flow in the period of £11.0m.

• Net debt of £25.5m significantly better than forecast.

• The IRN-BRU brand grew revenue by 6.5%, with particularly strong market share gains in England and Wales.

• Rubicon has grown sales on a like for like basis by 22% - contributing £12.8m sales revenue in the period.

• Rubicon integration delivered earlier than planned with little disruption and minimal cost.

• Interim dividend of 6.25p per share, a like for like increase of 7.8% post share split.

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

'We are pleased to report a strong financial performance in a period of continued economic uncertainty. We have benefited from some better year on year weather, although not the previously forecast 'barbecue summer'. In the period, sales momentum across our portfolio has continued to gain pace. Strong performances from all our core carbonates brands and some real momentum behind the Rubicon brand have delivered excellent revenue growth.

The early integration of the Rubicon business has gone to plan and is now beginning to deliver further opportunities to grow the brand across a wider front. The acquisition has, to date, been financially enhancing to our business and is also improving our overall business balance across product sectors and geographically.

As a consequence of our increased focus on cash across the business we have delivered strong free cash flow and improvements in our net debt position ahead of expectations.

Comparative sales growth in the second half of the year is more challenging than that of the first half, however we believe we are well positioned to meet our expectations for the full year.'  

For more information, please contact:

A.G.Barr    Tel: [phone]    Buchanan Communications    Tel: [phone]

Roger White, Chief Executive       Tim Thompson / Nicola Cronk

Alex Short, Finance Director

Interim Statement

We are pleased to report strong sales and profit growth in the six months to 1 August 2009.

Trading

Total turnover increased by 27.1% to £104.7m delivered by both strong organic growth in our core business and from Rubicon which was acquired in August 2008. Rubicon contributed £12.8m of turnover. Eliminating the effect of Rubicon, like for like sales increased by 11.5%.

Profit before tax increased by 19.5% to £13.5m. Basic earnings per share were 51.3 pence (2008: 44.2 pence), an increase of 16.2%.

The trading environment during the period remained challenging.  Against the backdrop of difficult general economic conditions, the soft drinks market declined by 1% in both volume and value (source Nielsen).  The carbonates segment performed better with 3% volume growth and 1% growth in value with consumers appearing to favour high-quality established brands.

It was widely reported that better than average weather was forecast for the U.K. this summer however the impact of weather was less marked than anticipated, with favourable comparisons in late June and early July but a less favourable comparison in May.

Operating margins held up despite continued pressure on input costs. Recent increases in oil and plastic pricing would suggest that cost volatility is likely to be an ongoing feature of our operating environment.

The integration benefits from the Rubicon acquisition are being achieved ahead of schedule, with minimal cost and as forecast the acquisition is earnings enhancing.  The combination of the positive integration performance and strong sales growth in the period has meant that overall Rubicon has delivered ahead of our expectations.  This is testament to the cooperation between the teams across the business.

Our core business remains the main driver of our performance.  Our growth in the carbonates sector substantially outperformed the market.  IRN-BRU grew revenue by 6.5% in the period with growth being particularly strong in England and Wales reflecting further increases in brand distribution.

Overall our regional portfolio continued to show strong growth in both carbonates and stills. The  water market however remains competitive and Strathmore sales were down 5.9% reflecting the decline in the out of home channel.

Despite the difficult economic climate we have continued to invest in our business and brands - increasing spend on marketing activity across our core brands and investing  in increased instore execution and sales resources. Operationally our performance has continued to improve reflecting the significant investments in prior years.

Balance Sheet

During the period the business has increased its focus on cash management and has generated a free cash flow of £11m and increased EBITDA by 29.8% to £18.2m.

The Group net debt position as at 1 August 2009 of £25.5m was substantially better than previously forecast. However this position is flattered to an extent by payables which fell due in early August.

As previously announced, the 2 for 1 share split, which is aimed at improving liquidity and marketability of the company's shares became effective on 21 September.

The only note of substance to the strong Statement of Financial Position (formerly the Balance Sheet) is the change in the net pension deficit which has increased to £8.9m reflecting the increase in pension liabilities driven by lower gilt yields but partially offset by improved asset values in the period.  A formal actuarial valuation was carried out as at April 2008 and concluded that the pension deficit recovery plan was performing as expected.  The pension trustees and the company have agreed that no change to the deficit recovery plan is required at this time.

Dividend

Given the increase in profits and the continued satisfactory financial position of the company the board has declared an interim dividend of 6.25 pence per share, payable on 23 October 2009. This is an increase of 7.8% on a like for like basis on the interim dividend paid last year.

Current Trading and Outlook

Despite mixed weather in August and September in contrast to the forecast 'barbecue summer' total turnover has continued to run ahead of last year. In contrast the overall soft drinks market has performed less well in August and overall competition in the sector is forecast to remain fierce.

In the first half we moved decisively to integrate the Rubicon business ahead of plan to help offset cost pressures due to weak sterling and the business has responded extremely well with strong sales momentum.

We anticipate continued volatility in our material costs and expect strong competition in our market place.  Given our platform for sustainable, profitable growth and our investment in the development of the business, we are confident that we will meet our expectations for the full year.

R G Hanna       R A White

CHAIRMAN    CHIEF EXECUTIVE

29 September 2009

Consolidated Condensed Income statement
		6 months ended   1 August 2009		6 months ended  26 July 2008		Year ended   31 January 2009
		£000		£000		£000
Revenue		104,658		82,373		169,698
Cost of sales		50,390		41,807		84,962
Gross profit		54,268		40,566		84,736
Net operating expenses		40,048		29,920		61,552
Operating profit		14,220		10,646		23,184
Operating profit before exceptional items		14,220		10,516		23,054
Exceptional credit		-		(130)		(130)
Operating profit		14,220		10,646		23,184
Finance income		46		689		1,062
Finance costs		(804)		(74)		(1,037)
Profit before tax		13,462		11,261		23,209
Tax on profit		3,589		2,775		6,134
Profit attributable to equity holders		9,873		8,486		17,075
Earnings per share
Basic earnings per share		51.31	p	44.16	p	89.12	p
Diluted earnings per share		51.02	p	43.52	p	88.16	p
Dividends
Dividend per share paid		30.40	p	28.00	p	39.60	p
Dividend paid (£000)		5,837		5,373		7,604
Dividend per share proposed		6.25	p	11.60	p	30.40	p
Dividend proposed (£000)		2,433		2,258		5,916

Consolidated Condensed Statement of Comprehensive Income
		6 months ended   1 August 2009		6 months ended  26 July 2008		Year ended  31 January 2009
Profit after tax for the period		9,873		8,486		17,075
Other comprehensive income
Actuarial loss recognised on defined benefit pension plans		(5,009)		-		(62)
Fair value gains on cash flow hedges		-		-		102
Effective portion of changes in fair value of cash flow hedges		280		-		(1,476)
Deferred tax movements on items taken directly to equity		1,493		(87)		(63)
Current tax movements on items taken directly to equity		-		-		193
Other comprehensive income for the period, net of tax		(3,236)		(87)		(1,306)
Total comprehensive income attributable to equity holders of the parent		6,637		8,399		15,769

Consolidated Condensed Statement of Financial Position
		As at  1 August 2009		Restated  As at  26 July 2008		Restated As at  31 January 2009
		£000		£000		£000
Non-current assets
Intangible assets		76,612		10,687		76,807
Property, plant and equipment		56,265		53,869		58,861
Financial instruments		98		-		33
		132,975		64,556		135,701
Current assets
Inventories		15,178		11,687		14,528
Trade and other receivables		39,505		35,093		27,139
Cash and cash equivalents		10,469		21,290		6,680
Assets classified as held for sale		2,864		2,864		2,864
		68,016		70,934		51,211
Total assets		200,991		135,490		186,912
Current liabilities
Borrowings		10,000		-		5,000
Trade and other payables		41,895		35,344		30,978
Provisions		75		80		80
Current tax		4,098		2,734		2,857
		56,068		38,158		38,915
Non-current liabilities
Borrowings		25,702		-		32,665
Deferred income		110		72		144
Financial instruments		1,197		-		1,477
Retirement benefit obligations		8,900		6,595		4,989
Deferred tax liabilities		14,808		2,634		16,057
		50,717		9,301		55,332
Capital and reserves attributable to equity holders
Called up share capital		4,865		4,865		4,865
Share premium account		905		905		905
Share options reserve		838		582		716
Cash flow hedge reserve		(1,094)		-		(1,374)
Retained earnings		88,692		81,679		87,553
		94,206		88,031		92,665
Total equity and liabilities		200,991		135,490		186,912

Consolidated Condensed Cash Flow Statement
		6 months ended   1 August 2009				6 months ended  26 July 2008				Year ended  31 January 2009
		£000				£000				£000
Operating activities
Profit before tax		13,462				11,261				23,209
Adjustments for:
Interest receivable		(46)				(689)				(1,062)
Interest payable		804				74				1,037
Depreciation of property, plant and equipment		3,781				3,387				7,018
Fair value adjustment to financial instruments		(65)				-				82
Amortisation of intangible assets		195				114				340
Impairment of intangible assets		-				-				284
Share-based payment costs		243				175				341
Loss / (Gain) on sale of property, plant and equipment		3				(15)				(13)
Government grants written back		(34)				-				(28)
Operating cash flows before movements in working capital		18,343				14,307				31,208
(Increase) / decrease in inventories		(815)				721				1,038
(Increase) / decrease in receivables		(12,582)				(9,044)				1,976
Increase / (decrease) in payables		11,146				7,406				(468)
Net (decrease) in retirement benefit obligation		(1,098)				(1,920)				(2,996)
Cash generated by operations		14,994				11,470				30,758
Tax on profit paid		(2,104)				669				(2,142)
Net cash from operating activities		12,890				12,139				28,616
Investing activities
Refund of payment for / (acquisition) of subsidiary		216				(20)				(58,694)
Acquisition of intangible assets		-				(140)				(140)
Purchase of property, plant and equipment		(1,381)				(3,995)				(10,639)
Proceeds on sale of property, plant and equipment		94				113				161
Interest received		43				689				1,041
Net cash used in investing activities		(1,028)				(3,353)				(68,271)
Financing activities
New loans received		5,000				-				54,500
Loans repaid		(7,000)				-				(16,500)
Bank arrangement fees paid		-				-				(366)
Purchase of financial instrument		-				-				(114)
Purchase of company shares by employee benefit trusts		(228)				(767)				(1,482)
Proceeds from disposal of company shares by employee benefit trusts		726				819				862
Dividends paid		(5,837)				(5,373)				(7,604)
Interest paid		(734)				(74)				(860)
Net cash (used in) / generated by financing activities		(8,073)				(5,395)				28,436
Net increase/(decrease) in cash and cash equivalents		3,789				3,391				(11,219)
Cash and cash equivalents at beginning of period		6,680				17,899				17,899
Cash and cash equivalents at end of period		10,469				21,290				6,680

Consolidated Condensed Statement of Changes in Equity
		Share capital	Share premium account	Share options reserve	Cash flow hedge reserve	Retained earnings	Total
		£000	£000	£000	£000	£000	£000
At 31 January 2009		4,865	905	716	(1,374)	87,553	92,665
Cash flow hedge - recognition of fair value		-	-	-	280	-	280
Actuarial loss on defined benefit pension plans		-	-	-	-	(5,009)	(5,009)
Deferred tax on items taken directly to equity		-	-	90	-	1,403	1,493
Profit for the period		-	-	-	-	9,873	9,873
Total comprehensive income for the period		-	-	90	280	6,267	6,637
Purchase of company shares by employee benefit trusts		-	-	-	-	(228)	(228)
Proceeds from disposal of company shares by employee benefit trusts		-	-	-	-	726	726
Recognition of share-based payment costs		-	-	243	-	-	243
Transfer of reserve on share award		-	-	(211)	-	211	-
Dividends paid		-	-	-	-	(5,837)	(5,837)
At 1 August 2009		4,865	905	838	(1,094)	88,692	94,206
At 26 January 2008		4,865	905	964	-	78,044	84,778
Deferred tax on items taken directly to equity		-	-	(87)	-	-	(87)
Profit for the period		-	-	-	-	8,486	8,486
Total comprehensive income for the period		-	-	(87)	-	8,486	8,399
Purchase of company shares by employee benefit trusts		-	-	-	-	(767)	(767)
Proceeds from disposal of company shares by employee benefit trusts		-	-	-	-	819	819
Recognition of share-based payment costs		-	-	175	-	-	175
Transfer of reserve on share award		-	-	(470)	-	470	-
Dividends paid		-	-	-	-	(5,373)	(5,373)
At 26 July 2008		4,865	905	582	-	81,679	88,031
At 26 January 2008		4,865	905	964	-	78,044	84,778
Cash flow hedge - recognition of fair value		-	-	-	(1,476)	-	(1,476)
Movement in cash flow hedge		-	-	-	102	-	102
Actuarial loss on defined benefit pension plans		-	-	-	-	(62)	(62)
Current tax on items taken directly to equity		-	-	-	-	193	193
Deferred tax on items taken directly to equity		-	-	(80)	-	17	(63)
Profit for the period		-	-	-	-	17,075	17,075
Total comprehensive income for the period		-	-	(80)	(1,374)	17,223	15,769
Purchase of company shares by employee benefit trusts		-	-	-	-	(1,481)	(1,481)
Proceeds from disposal of company shares by employee benefit trusts		-	-	-	-	862	862
Recognition of share-based payment costs		-	-	341	-	-	341
Transfer of reserve on share award		-	-	(509)	-	509	-
Dividends paid		-	-	-	-	(7,604)	(7,604)
At 31 January 2009		4,865	905	716	(1,374)	87,553	92,665

Restatement

Consistent with the presentation in the financial statements for the year ended 31 January 2009, the deferred tax assets and liabilities as disclosed in the 26 July 2008 comparatives have both been reduced by £3.3m as they related to the same items of property that had historically been eligible for Industrial Buildings Allowance relief. Whilst the adjustment has no effect on the profit for the year or net assets, non-current assets and liabilities have reduced from £67.9m and £12.6m to £64.6m and £9.3m respectively.

The retained earnings figure as at 26 July 2008 has been restated to include the value of the own shares held for use by employee benefit trusts. Previously the purchased value of the shares held by the employee benefit trusts was disclosed as a separate line on the balance sheet. The inclusion of the balance with retained earnings is to bring the reporting in to line with common practice. The restatement has reduced the retained earnings figures and previously presented own shares held figure as follows:

Earnings per share				As at  26 July 2008 £000		As at   31 January 2009   £000
Reduction in own shares held				2,629		3,258
Reduction in retained earnings				2,629		3,258

 

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