A.G. BARR P.L.C. Annual Report and Accounts

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A.G. BARR P.L.C. Annual Report and Accounts A.G. BARR p.l.c. Annual Report and Accounts January 2010 Business Review Our Brands 02 Chairman’s Statement 04 Business Review IRN-BRU, Rubicon, Strathmore, Tizer, 14 Financial Review Simply, KA, D’N’B, St. Clement’s, Findlays, Corporate and Social Responsibility Abbott’s, Barr Brands, Vitsmart, Taut. 21 Corporate and Social Responsibility 36 Board of Directors 38 25 Years Service Awards Partnership Brands Accounts Orangina, Snapple, Rockstar. 40 Directors’ Report 43 Statement on Corporate Governance 47 Directors’ Remuneration Report 53 Independent Auditor’s Report to the Members of A.G. BARR p.l.c. Head Offi ce 54 Consolidated Income Statement and 01 Cumbernauld Statement of Comprehensive Income 55 Statement of Changes in Equity Regional Offi ce 57 Statements of Financial Position 02 05 Middlebrook 58 Cash Flow Statements 11 Wembley 59 Accounting Policies 01 66 Notes to the Accounts Sales Branch 03 94 Review of Trading Results 04 04 Newcastle 06 Moston 07 Sheffi eld 09 Wednesbury 12 Walthamstow 05 06 11 Factory 07 01 Cumbernauld 08 02 Forfar 03 Pitcox 09 08 Mansfi eld 10 Tredegar 10 11 12 Distribution Depot 01 Cumbernauld Financial Highlights Key Performance Indicators Turnover growth Return on capital employed 201,410 2010 18.7% 2010 19.2% total sales generated 2009 14.4% 2009 16.0% Gross margin EBITDA margin % 2010 51.3% 2010 18.7% 18.7 increase in sales year on year 2009 49.9% 2009 18.1% Operating profi t margin Free cash flow (£m) 20.8% 2010 14.8% 2010 17.9 profi t before exceptional items 2009 13.6% 2009 18.0 01 Building Momentum We’ve built our business by consistently delivering great tasting, high-quality products at great value. Our future aim is to provide a growing and increasingly diverse consumer base with brands that deliver taste, quality and value across a wide portfolio. A.G. BARR p.l.c. Annual Report and Accounts 2010 02 Chairman’s Statement R.G. Hanna Chairman “ I know that the strong results for the year to January 2010 were built on a solid base and I am confi dent that we are well placed to maintain the momentum in the business into the future.” A.G. BARR p.l.c. Annual Report and Accounts 2010 03 Prospects Shareholders will be well aware of the current diffi cult economic It remains clear that to maintain and develop our competitive climate and the resultant challenges such an environment brings. position we need to continue to invest in our major assets of I believe it is a great tribute to our management teams that I people, brands and operating infrastructure and we are doing am able to report, in my fi rst year as chairman, continuing strong so in each area. Extra resources are being provided to enhance growth and a real momentum for the future. our long standing commitment to training and development and we are also benchmarking our performance against the Investors The fi nancial performance of the business, as described in detail in People standard. in the business and fi nancial review, has been driven by strong revenue growth with turnover in the year increasing by 18.7% to The development of our brands is an ongoing and vital focus £201.4m. Like for like sales excluding the impact of the Rubicon of attention. We are also extending and strengthening the sales acquisition and the 53rd week in 2008/09 increased by 10.6%. execution effort in support of that. Continuing focus on costs and effi ciencies produced a profi t before tax, before exceptional items, of £27.9m, an increase of 20.8%. During the year we announced a further investment of £10m in production capacity at Cumbernauld and the planned closure The Rubicon acquisition in 2008 was partially funded by debt. of our Mansfi eld site. Rationalisation is always diffi cult and in this Good trading and diligent cash management have reduced net case will result in the loss of a number of jobs staffed by people debt from £31.3m last year to £22.1m at the end of January 2010. who have many years service with the Company. Our balance sheet remains strong. Within primary logistics we are planning a new approach which During the year a one for two share split was approved. After will improve our fl exibility and overall operational performance. adjusting for the share split, basic earnings per share increased by 5% to 46.8p (2009: 44.6p). The new fi nancial year has started well with sales ahead of last year. Our enthusiasm has to be tempered with caution, however, Consequently the board is pleased to recommend a fi nal dividend given the challenging overall economic and consumer outlook. of 16.85p to give a total dividend of 23.1p an increase of 10% on the prior year. I know that the strong results for the year to January 2010 were built on a solid base and I am confi dent that we are well placed to maintain the momentum in the business into the future. R.G. Hanna Chairman £27.9m profi t before tax excluding exceptional items and impairment charges Chairman’s Statement 04 Business Review Roger White Chief Executive “The smooth integration of the Rubicon business with its growth potential combined with our strong core portfolio of national and regional brands have created a business with increased growth momentum and potential.” A.G. BARR p.l.c. Annual Report and Accounts 2010 05 Business Review “This strong fi nancial In the 52 week period ending 30 January 2010 A.G. BARR has substantially outperformed the U.K. soft drinks market. performance refl ects the The combination of signifi cant growth in our existing core business and a full 12 months of accelerating sales in the continued drive to deliver Rubicon brand have delivered full year sales revenue of £201.4m. This equates to growth, taking out the impact of the top line sales growth at the 53rd week in 2009, of 21.0%. Stripping out the further effects of the Rubicon acquisition, like for like sales grew by a very same time as strenuous healthy 10.6% in the period. efforts are made to control The business has gained signifi cant momentum over the past 12 months building on the solid foundations set over past years. and reduce costs across Pre-tax profi t, excluding exceptional items, increased by 20.8% to £27.9m from £23.1m. This strong fi nancial performance refl ects the business.” the continued drive to deliver top line sales growth at the same time as strenuous efforts are made to control and reduce costs across the business. This consistent approach in combination with the positive impact of the Rubicon business has increased operating margins by 1.2% in the period. The Rubicon business has been successfully integrated over the course of the last fi nancial year. I am pleased to report that the integration was successfully delivered with only £0.1m of exceptional restructuring costs which is well below our original expectations. Importantly during this integration process we have maintained sales momentum in both core Barr brands and in Rubicon. The acquisition of Rubicon has to date exceeded all of our pre-acquisition expectations. The net debt position of the Group has continued to improve and as at 30 January 2010 stood at £22.1m, a reduction of 29.5% on the prior year end position. This position refl ects our continuing effort to improve cash management and capital effi ciency across the business. £201.4m revenue for the year Business Review 06 In November 2009 we announced further manufacturing The water market has improved in the period posting 5% volume investment plans and restructuring of both our operating platform growth and 2% value growth – this performance has gained and supply chain. These plans include a £10m investment at momentum across the year. the Cumbernauld site in production capacity, the outsourcing of a portion of our primary supply chain and the consequential closure The soft drinks category has once again demonstrated its ability of our Mansfi eld site. Following extensive employee consultation we to deliver growth in volume and in value terms despite diffi cult have now commenced the investment programme which will stretch macro economic conditions. The landscape remains competitive across 2010/11 and into early 2011/12. As a consequence of this we but consumers continue to respond well to both existing brands are recognising signifi cant exceptional costs of £2.9m related to this and products and to well executed innovation. plan in our 2009/10 fi nancial performance. In addition we have a further £0.5m of exceptional charges outwith the Mansfi eld position. Strategy Our platform for sustained profi table growth is based on the The board has proposed a fi nal dividend of 16.85p which following key areas of strategic focus which remain consistent represents an increase in the total dividend of 10% on the previous with prior years: year refl ecting the continued fi nancial strength of the business and our continued confi dence in the future. · Core brands and markets · Portfolio development The Market · Route to market The U.K. soft drinks market, in contrast to the prior year’s volume · Partnerships decline of over 2%, increased by 1% in volume terms and by · Effi cient operations 2% in value terms in the 52 week period ending 23 January 2010. · People development The diffi cult economic environment appears to have had limited · Sustainability impact on the overall soft drinks market and carbonates in particular have continued to show good growth across the year.
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