25th Sep 2007 07:02
Barr(A.G.) PLC25 September 2007 For immediate release 25 September 2007 A.G.BARR p.l.c. INTERIM RESULTS A.G.BARR p.l.c. the soft drinks group announces its interim results today forthe 6 months ended 28th July 2007. Key Points • Profit on ordinary activities before tax and exceptional items increased by 8.0% to £10.13 million (2006 - £9.38 million). • Total turnover including Strathmore versus the comparable period was up 7.9% at £77.9 million (2006 - £72.2 million). • Combined IRN-BRU and Diet IRN-BRU brands grew revenue by 2% and gained further market share in England. • Atherton factory closure completed. • Exclusive UK franchise agreement signed with Rockstar Inc energy drinks - the fastest growing significant energy drink in the US. • Interim dividend increased by 0.75p to 11.00p per share (2006 - 10.25p). Commenting on the results Chief Executive, Roger White, said: "Despite the extremely poor weather experienced across the UK in the period fromMay to July, we have continued to deliver consistent sales growth and at thesame time maintained our strategy of investing behind our brands and furtherdeveloping our portfolio. Operationally in the period we have commissioned our new can line at Cumbernauldand delivered the closure of our Atherton site. As well as rising input costs, there is huge competition for market sharehowever, given the changes we have already made and our plans for the balance ofthe year, we anticipate meeting our expectations for the full year." For more information, please contact: A.G.Barr Tel: 01236 852400 Buchanan Communications Tel: 020 7466 5000 Roger White, Chief Executive Tim Thompson / Nicola Cronk / Susanna Gale Iain Greenock, Finance Director Interim Statement Profit on ordinary activities before taxation for the six months to 28th July,2007 was, excluding exceptional items, £10.1m - an increase of 8.0% comparedwith the same period last year. Turnover increased by 7.9% to £77.9m includingStrathmore which we acquired in June 2006; underlying sales increased by 2.3% ona like-for-like basis. The total soft drinks market, although buoyant in our first quarter, has beensignificantly impacted by the exceptionally wet weather experienced during May,June and July. Over the full six months the U.K. soft drinks market as reportedby Nielsen grew by 1% in value but was 5% down in volume terms. This first halfmarket performance masks the comparative effect of the weather in the last threemonths particularly in July when the market was 19% behind in value and 25%behind in total soft drinks volume. Combined sales revenue for IRN-BRU and Diet IRN-BRU was 2% up on last year.However, IRN-BRU 32 was down on the same period last year as it suffered fromcomparison with the exceptionally strong launch phase which saw significantcustomer pipeline fill and consumer trial. IRN-BRU and Diet IRN-BRU haveperformed particularly well in market share terms in the second quarter andspecifically in July demonstrating both the resilience of the brand to difficultmarket conditions and our stated intent of increasing promotional focus onIRN-BRU in the summer months. During the course of the first six months we have refreshed the IRN-BRUpackaging design as well as running a number of new pieces of creativeadvertising. In July we announced the exciting sponsorship deal with theScottish Football League which sees the creation of IRN-BRU League Divisions 1,2 & 3 in Scotland and gives IRN-BRU and A.G.BARR an excellent opportunity towork with the Scottish Football League, its Clubs and local communities acrossScotland. The relaunch of 'new original' Tizer has continued to gather momentum with salesvalue increasing by 3% despite poor weather. This increase in sales has beenachieved through a combination of regaining previously lost listings and a veryencouraging overall performance in the impulse channel. The Strathmore brand has now been launched into the impulse channel and we haverecently commenced our first Strathmore brand advertising, including TV, postersand PR. The impulse launch is progressing well; however the water category hasbeen hit hard by the poor weather across the last three months which has ofcourse impacted our performance. During the recent floods in the west of EnglandStrathmore was able to help the flood victims with significant donations ofbottled water. As a consequence of our focus on the Strathmore brand and the increasinglycompetitive nature of the water category we have chosen to scale back ourFindlays business. The production site at Pitcox will now focus on the fillingof 19 litre water containers for which demand continues to expand. A smallnumber of redundancies resulted from this decision. Overall the development of our portfolio is continuing to plan. Orangina had astrong performance in the period with revenue up by 23% and our regional brandsdriven by specific activity with the 'BARR flavours range' also experienced goodgrowth. We have once again adapted our school ranges to meet further legislativechanges. We expect the new St Clements range to do well in both schools and theimpulse channel in the second half of the year. The St Clements brand nowfeatures new juice and smoothie products which are currently in the launch phasein addition to the existing fruit-based products range. Across the industry input costs continue to rise especially in commodity relatedareas such as glass, plastic, aluminium and juices. Gross margins have beenprotected in the period by a combination of cost control measures and theincreased use of risk management tools across a number of our more volatileinput price areas. We expect gross margins will be under further pressure in thesecond half but anticipate our cost-cutting actions, in tandem with our currentpurchasing position, should counteract much of this pressure during the currentyear. Last year saw very significant operational changes across the business and thefirst six months of this year has seen no reduction in the pace of our changeprogramme. We have installed and commissioned our new high speed can line atCumbernauld and carried out a number of significant line improvements at theMansfield site. This activity has, although later than planned, allowed for theclosure of our Atherton factory. The last can was produced on 28th June, 2007and our thanks go to everyone at that site who worked effectively andefficiently until the closure. We are currently clearing and making good thepremises in advance of establishing the optimum marketing plan for the site. The new warehouse operations at Cumbernauld continue to settle in and goodprogress is being made across all fronts towards meeting our previouslyindicated savings plans. We are pleased to announce that A.G.BARR has signed an exclusive U.K. franchiseagreement with Rockstar Inc energy drinks. The Rockstar brand is in the topthree energy drink brands in the USA and we are working with them towards whatwill be an exciting launch into the U.K. during the second half of our financialyear. The energy category continues to give good growth opportunities andRockstar with its unique image, brand and product proposition will sit well inour existing portfolio. Given the increase in underlying profit and the continued satisfactory financialposition of the company your directors have declared an interim dividend of11.00p per share, payable on 26th October, 2007. This is a 7.3% increase on theinterim dividend paid last year. Turnover to date, in the second half of the year has been impacted by thecontinued poor weather but remains ahead of the prior year. Market conditions across all channels in the soft drinks category are expectedto be hugely competitive as individual companies fight for market share. Despitethe pressure of rising input costs and assuming market conditions do notmarkedly weaken we remain confident that, in the period, the changes we havealready made plus our ongoing plans should allow us to meet our expectations forthe full year. W R G Barr R A White CHAIRMAN CHIEF EXECUTIVE A.G.BARR p.l.c Consolidated Income Statement 6 months 6 months Year ended ended ended 28.07.07 29.07.06 27.01.07 Notes £000 £000 £000 Revenue 77,883 72,184 141,876Cost of sales 37,351 33,584 71,453Gross profit 40,532 38,600 70,423Net operating expenses 30,593 29,736 52,089Operating profit before 9,939 8,864 18,334exceptional items Exceptional itemsRestructuring costs 4 107 - 5,076Gain on disposal - (819) (2,315) Exceptional items 107 (819) 2,761 Operating profit 9,832 9,683 15,573 Finance income 435 669 1,158Finance costs (241) (154) (377)Profit on ordinary activities 10,026 10,198 16,354before taxTax on profit on ordinary 5 2,594 3,059 3,163activitiesProfit attributable to equity 7,432 7,139 13,191shareholders Basic earnings per share 39.22 p 37.70 p 69.65 pFully diluted earnings per 38.53 p 36.68 p 68.15 pshare Dividend per share paid 24.75 p 22.00 p 32.25 pDividend paid (£'000) 4,673 4,143 6,077Dividend per share proposed 11.00 p 10.25 p 24.75 pDividend proposed (£'000) 2,141 1,995 4,817 A.G.BARR p.l.c.Consolidated Statement of Recognised Income and Expense Restated 6 months 6 months Year ended ended ended 28.07.07 29.07.06 27.01.07 Notes £000 £000 £000Actuarial loss recognised on - - (907)defined benefit pension plansDeferred tax recognised directly 2,5 334 210 366in equityNet income recognised directly 334 210 (541)in equityProfit for the period 7,432 7,139 13,191 Total recognised income and 7,766 7,349 12,650expense for the period Attributable to equity 7,766 7,349 12,650shareholders A.G.BARR p.l.c. Consolidated Balance Sheet Restated As at As at As at 28.07.07 29.07.06 27.01.07 Notes £000 £000 £000 Non-current assetsIntangible assets 6 10,368 9,951 9,742Property, plant and 7 55,202 46,373 52,278equipmentDeferred tax assets 774 657 699 66,344 56,981 62,719 Current assetsInventories 13,236 9,521 11,409Trade and other receivables 32,804 34,912 25,406Cash at bank 12,963 23,079 19,097 59,003 67,512 55,912 Total assets 125,347 124,493 118,631 Current liabilitiesTrade and other payables 33,304 37,146 28,776Provisions 8 788 - 2,262Current tax 1,739 2,912 59 35,831 40,058 31,097 Non-current liabilitiesDeferred income 73 74 73Retirement benefit 9 15,240 16,025 16,084obligations 15,313 16,099 16,157 Capital and reservesattributable to equityshareholdersCalled up share capital 10 4,865 4,865 4,865Share premium account 10 905 905 905Own shares held 10 (4,391) (3,976) (4,439)Share options reserve 10 1,921 1,645 1,923Retained earnings 10 70,903 64,897 68,123 74,203 68,336 71,377Total equity and liabilities 125,347 124,493 118,631 A.G.BARR p.l.c. Consolidated Cash Flow Statement 6 months 6 months Year ended ended ended 28.07.07 29.07.06 27.01.07 £000 £000 £000 Operating activitiesProfit on ordinary activities 10,026 10,198 16,354before taxAdjustments forInterest receivable (435) (669) (1,158)Interest payable 241 154 377Depreciation of property, plant 3,312 2,705 5,654and equipmentImpairment of plant - - 300Amortisation of intangible 117 - 160assetsShare options costs 163 181 359Gain on sale of property, plant (24) (1,761) (1,485)and equipmentGovernment grants written back - (537) (538)Operating cash flows before 13,400 10,271 20,023movements in working capital Increase in inventories (1,827) (1,247) (1,727)Increase in receivables (7,398) (12,769) (1,893)Increase in payables and 3,351 14,540 6,212provisionsDecrease in retirement benefit (844) (223) (1,071)obligationsCash generated by operations 6,682 10,572 21,544 Tax on profit paid (655) (1,667) (4,786)Net cash from operating 6,027 8,905 16,758activities Investing activitiesAcquisition of subsidiary - (15,347) (15,537)Acquisition of intangible assets (743) - -Proceeds on sale of property, 767 6,597 6,760plant and equipmentPurchase of property, plant and (6,968) (4,865) (14,501)equipmentInterest received 435 669 1,158Net cash used in investing (6,509) (12,946) (22,120)activities Financing activitiesPurchase of own shares (802) (523) (1,052)Sale of own shares 64 528 553Interest paid (241) (154) (377)Dividends paid (4,673) (4,143) (6,077)Net cash used in financing (5,652) (4,292) (6,953)activities Net decrease in cash and cash (6,134) (8,333) (12,315)equivalents Cash and cash equivalents at 19,097 31,412 31,412beginning of period Cash and cash equivalents at end 12,963 23,079 19,097of period Notes to the Accounts 1. Basis of preparation These interim financial statements do not constitute statutory accounts and areunaudited. The condensed financial statements have been prepared using accounting policiesconsistent with International Financial Reporting Standards and in accordancewith IAS 34 Interim Financial Reporting. A copy of this report is distributed to all registered shareholders of thecompany and is available for members of the public upon application to theCompany Secretary at Westfield House, 4 Mollins Road, Cumbernauld G68 9HD and onour corporate website at www.agbarr.co.uk. The statutory financial statements for the year to 27th January, 2007 have beenfiled with the Registrar and a copy may be obtained from Companies House. Thesehave been audited and contained an unqualified audit opinion and did not containa statement under Section 237(2) or Section 237(3) of the Companies Act 1985. 2. Accounting policies This condensed consolidated interim financial statements for the half-year ended28th July, 2007 have been prepared in accordance with the Disclosure andTransparency Rules (DTR) of the Financial Services Authority and with IAS 34 asadopted by the European Union. These condensed consolidated financial statementsshould be read in conjunction with the annual financial statements for the yearto 27th January, 2007, which have been prepared in accordance with IFRSs asadopted by the European Union. The accounting policies adopted are consistentwith those followed in the preparation of the group's annual financialstatements for the year ended 27th January, 2007. The following new standards, amendments to standards or interpretations aremandatory for the first time for the financial year ending 26th January, 2008. - IFRIC 7 Applying the restatement approach under IAS 29, effective forannual periods beginning on or after 1st March, 2006. This interpretation is notrelevant for the group. - IFRIC 8 Scope of IFRS 2, effective for annual periods beginning on orafter 1st May, 2006. This interpretation has not had any impact on therecognition of share-based payments in the group. - IFRIC 9 Re-assessment of embedded derivatives, effective for annualperiods beginning on or after 1st June, 2006. This interpretation has not hadany impact on the re-assessment of embedded derivatives as the group alreadyassessed if embedded derivative should be separated using principles consistentwith IFRIC 9. - IFRIC 10 Interims and impairment, effective for annual periodsbeginning on or after 1st November, 2006. This interpretation has not had anyimpact on the timing or recognition of impairment losses as the group alreadyaccounted for such amounts using principles consistent with IFRIC 10. - IFRS 7 Financial instruments: Disclosures, effective for annualperiods beginning on or after 1st January, 2007. IAS 1 Amendments to capitaldisclosures, effective for annual periods beginning on or after 1st January,2007. IFRS 4 Insurance contracts, revised implementation guidance, effectivewhen an entity adopts IFRS 7. As this interim report contains only condensedfinancial statements, and as there are no material financial instrument relatedtransactions in the period, full IFRS 7 disclosure is not required at thisstage. The full IFRS 7 disclosure, including the sensitivity analysis to marketrisk and capital disclosures required by the amendment of IAS 1, will be givenin the annual financial statements. Change of accounting policies As detailed in the financial statements for the year to 27th January, 2007 thegroup changed its accounting policy for deferred tax. The change in policy has had no impact on the income statement but has affectedthe figures presented in the balance sheet and in the statement of recognisedincome and expense (SoRIE). The impact on the balance sheet as at 29th July, 2006 has been as follows: Change in accounting policy for deferred tax £000 Decrease in deferred tax asset (5,216) Decrease in deferred tax liability 5,216 The impact on the SoRIE is as follows: Change in accounting policy for deferred tax recognised in the SoRIE £000 Increase in total recognised income 210 Change in estimate As explained in the financial statements for the year to 27th January, 2007 thegroup carried out a formal review of its accrual for customer volume rebates. Asa result of the review the level of the accrual was increased by £610,000 at28th July, 2007. 3. Segment information The group's primary basis of segmentation is by geography. For managementpurposes, the group is currently organised into one business segment being themanufacture, sale and distribution of soft drinks. The group operates predominantly in the U.K., with some worldwide customers. Thedirectors are of the opinion that the group has two reportable geographicsegments as defined by IAS 14 Segment Reporting. Geographic segments Total Inter-segment External Profit attributable to revenue revenue revenue equity shareholders £000 £000 £000 £000 £000 £00028th July,2007U.K. 77,546 111 77,435 15,235 - -Worldwide 448 - 448 166 - -Consolidated 77,994 111 77,883 15,401 - - 29th July,2006U.K. 71,854 153 71,701 - 14,092 -Worldwide 483 - 483 - 124 -Consolidated 72,337 153 72,184 - 14,216 - 27th January,2007U.K. 141,332 232 141,100 - - 29,011Worldwide 776 - 776 - - 197Consolidated 142,108 232 141,876 - - 29,208 Result 15,401 14,216 29,208 Unallocated corporate 5,462 5,352 10,874expensesExceptional 107 (819) 2,761itemsOperating 9,832 9,683 15,573profit Finance income 435 669 1,158Finance costs (241) (154) (377)Profit before 10,026 10,198 16,354tax Tax 2,594 3,059 3,163Profit for the 7,432 7,139 13,191period 4. Exceptional items During the six months to 28th July, 2007 the group incurred redundancy costs inrelation to its Pitcox site totalling £60,000. A further £47,000 of exceptional costs were incurred in relocating assets to theCumbernauld production site from the Atherton factory site which ceasedproduction during the period. In the six months to 29th July, 2006 an exceptional gain of £2,274,000 arose onthe sale of the Scottish distribution sites. This gain was reduced by £1,455,000of redundancy costs relating to the site closures and re-organisation of thesales and logistics facilities. 5. Tax charge The interim period tax charge is accrued based on the estimated average annualeffective income tax rate of 28% (six months ended 29th July, 2006: 30%) The tax charge for the period includes the reversal of the deferred tax assetsand deferred tax liabilities recognised in the balance sheet at 27th January,2007. The assets and liabilities at that date were calculated using acorporation tax rate of 30%, the effective tax rate at the time of signing thefinancial statements. The effect of the changes enacted in the Finance Act 2007 was to reduce thedeferred tax liability provided at 27th January, 2007 by £27,000. This decreasein the deferred tax liability has increased profit for the year by £5,000 andincreased other recognised gains by £22,000. The deferred tax asset provided at 27th January, 2007 has been reduced by£326,000 as a result of the Finance Act 2007. This decrease in the deferred taxasset has increased profit for the year by £93,000 and decreased otherrecognised gains by £422,000. 6. Intangible assets During the period to 28th July, 2007 the group purchased the water rights for anatural mineral water spring at a cost of £742,000. This cost has been treatedas an intangible asset in line with IAS 38 Intangible assets. 7. Property, plant and equipment 6 months 6 months Year ended ended ended 28.07.07 29.07.06 27.01.07 £000 £000 £000 At 27th January, 2007 52,278 42,335 42,335Additions 6,979 5,388 14,980Assets acquired through business - 5,255 5,255combinationsDisposals (743) (3,900) (4,338)Depreciation (3,312) (2,705) (5,654)Impairment of plant - - (300)At 28th July, 2007 55,202 46,373 52,278 The closing balance includes £784,000 (29th July, 2006: £11,359,000; 27thJanuary, 2007: £3,090,000) of assets under construction. 8. Provisions 6 months 6 months Year ended ended ended 28.07.07 29.07.06 27.01.07 £000 £000 £000 At 27th January, 2007 2,262 - -Provision made during period - - 2,262Provision utilised during period (1,474) - -Amount reversed during period - - -At 28th July, 2007 788 - 2,262 The provision represents the expected restructuring costs for the closure of theAtherton site. 9. Retirement benefit obligations The retirement benefit obligations have continued to be accounted for under theactuarial assumptions made at 27th January, 2007, which is consideredappropriate at 28th July, 2007. 10. Capital and reserves attributable to equity shareholders Own Share Retained shares options earnings held reserve £000 £000 £000 At 27th January, 2007 (4,439) 1,923 68,123Own shares purchased (802) - -Proceeds of share option exercise 64 - -Recognition of share-based payment - 163 -costsRelease of shares on share award 308 - -Transfer of reserve on share award 478 (194) (284)Tax on items taken directly to - 29 305equityProfit for the period - - 7,432Dividends paid - - (4,673)At 28th July, 2007 (4,391) 1,921 70,903 At 28th January, 2006 (4,298) 1,416 62,056Own shares purchased (523) - -Proceeds of share option exercise 528 - -Recognition of share-based payment - 181 -costsTransfer of reserve on share award 317 (162) (155)Tax on items taken directly to - 210 -equityProfit for the period - - 7,139Dividends paid - - (4,143)At 29th July, 2006 (3,976) 1,645 64,897 The shares held in the company were purchased to meet future requirements of thecompany's employee share schemes. These shares are held in trust. During the six months to 28th July, 2007 the trusts purchased 62,154 (29th July,2006: 52,214) shares. The total amount paid to acquire the shares has been deducted from shareholders'equity and classified as Own shares held. 99,020 shares (29th July, 2006:115,703 shares) were released from the company's employee share schemes duringthe same period. The related weighted average share price at the time ofexercise was £12.93 per share (29th July, 2006: £9.89) The £308,000 release of shares on share award relates to the release of sharesawarded under a share award scheme which had a grant date before 7th November,2002. This award is not accounted for under IFRS through the exemption providedby IFRS 1 First-time Adoption of International Financial Reporting Standards There has been no change to the issued share capital or the share premiumaccount in any of the periods presented. 11. Contingencies and commitments As at As at As at 28.07.07 29.07.06 27.01.07 £000 £000 £000 Commitments for the acquisition of 901 5,155 4,685property, plant and equipment 12. Post Balance Sheet events The interim dividend of 11.00p per shares was approved by the board on 25thSeptember, 2007 and will be paid to shareholders on 26th October, 2007. The ex-div and record dates will be 3rd October, 2007 and 5th October, 2007respectively. 13. Related party disclosures Transactions between the company and its subsidiaries, which are relatedcompanies, have been eliminated on consolidation. The group's retirement benefit plans are administered by an independent thirdparty service provider. During the six months the service provider charged thegroup £227,000 (29th July, 2006: £213,000) for administration services inrespect of the retirement benefit plans. At 28th July, 2007 a nil balance (27thJanuary, 2007: nil) was outstanding to the service provider. Statement of directors' responsibilities The directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union, and thatthe interim management report herein includes a fair review of the informationrequired by DTR 4.2.7 and DTR 4.2.8. The current directors of A.G.BARR p.l.c. are as listed in the annual report forthe year to 27th January, 2007. By order of the board R.A. White Chief Executive 25th September, 2007 I.F. Greenock Finance Director 25th September, 2007 INDEPENDENT REVIEW REPORT TO A.G.BARR p.l.c Introduction We have been instructed by the company to review the financial information forthe six months ended 28th July, 2007 which comprises consolidated incomestatement, consolidated balance sheet, consolidated cash flow statement andconsolidated statement of recognised income and expense. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, therefore in producing this report, acceptor assume responsibility for any other purpose or to any other person to whomthis report is shown or into whose hands it may come save where expressly agreedby our prior consent in writing. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the U.K. A review consistsprincipally of making enquiries of group management and applying analyticalprocedures to the financial information and underlying financial data and basedthereon, assessing whether the disclosed accounting policies have been applied.A review excludes audit procedures such as tests of controls and verification ofassets, liabilities and transactions. It is substantially less in scope than anaudit and therefore provides a lower level of assurance. Accordingly, we do notexpress an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 28th July, 2007. Baker Tilly UK Audit LLP Breckenridge House 274 Sauchiehall Street Glasgow G2 3EH 25th September, 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Barr (A.G.)