Coronavirus Update

Barr(A.G.) Plc - Final Results

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A.G. BARR p.l.c.

FINAL RESULTS for the year ended 25 January 2020

A.G. BARR p.l.c., ("A.G. BARR" or the "Group"), which produces and markets some of the UK's leading drinks brands, including IRN-BRU, Rubicon, Strathmore and Funkin, announces its final results for the 52 weeks ended 25 January 2020.

Financial headlines

Operational review - year ended 25 January 2020

  • Strategic focus maintained against challenging prior year comparators
  • Decisive response including a business re-engineering and simplification programme
  • IRN-BRU returned to growth in the final quarter and Rubicon and Rockstar recovery plans being implemented
  • Funkin continued to perform strongly and multi-beverage strategy progressed :
  • introduction of Funkin ready-to-drink cocktails including alcohol
  • investment in the zero proof spirits sector through our 20% minority investment in Elegantly Spirited Limited, owners of the STRYYK brand
  • Further action taken to progress our responsibility and sustainability commitments including :
  • increased use of recycled PET in soft drinks portfolio
  • continued engagement with Scottish DRS project
  • new 10-year 100% renewable electricity agreement for all sites
  • Strong cash generation - £30m share repurchase programme completed during the period and a robust balance sheet

COVID-19

The circumstances resulting from COVID-19 are creating an unprecedented level of uncertainty for the UK and beyond.  We have been following Government guidance since the outset of the COVID-19 outbreak and will continue to do so. 

In response we are taking swift action across 3 priority areas:

  • safety and wellbeing
  • Groupoperating resilience
  • financial stability

Our primary focus is on the safety and wellbeing of our employees, suppliers, customers and consumers.  We have taken steps to protect our colleagues who are considered most vulnerable across the organisation.  In addition, those employees whose roles permit them to do so, are working from home.  For our colleagues who work in key production, warehousing and delivery roles, we have introduced strict safety, hygiene and 2 metre social distancing measures.

Along with our fellow food and drink manufacturers we are working closely with the Government, and DEFRA in particular, to maintain continuity of the food and drink supply chain, helping to keep shop shelves well stocked.

Our production and logistics sites currently remain operational and we are extremely grateful to our dedicated supply chain employees and partners.

Following the Government's 'lock-down' measures, introduced on 23 March, which initially saw the closure of pubs, bars and other hospitality venues across the UK, we are now understandably also seeing a significant impact on the "out of home" consumption of soft drinks in general.  Sales via our "impulse" customers (c.40% of total revenue) have significantly reduced as a result.  'Take-home' purchases have remained more resilient although sales since 23 March have been more volatile than usual.  As a result, we expect there to be a material adverse impact to the Group's financial performance due to these fast changing circumstances, however at the current time the quantum of this remains uncertain.

The Group has a strong financial base and our balance sheet is robust, with net cash in the bank of £10.9m at the financial year end, however given the highly unusual circumstances arising from COVID-19, we believe it is important to conserve cash at this time and maintain maximum balance sheet flexibility.  We have drawn down our £60m revolving credit facilities in full.  In addition, we have now frozen all new capital projects, as well as scaling back immediate marketing and commercial activity where sensible across the Group.  In accordance with the Government's Job Retention Scheme, we have commenced the "furlough" process for a limited number of colleagues at this stage.  In addition the Board and Senior Executive team have agreed to a voluntary 20% salary reduction for a minimum of 3 months to help support the business through these difficult times.  We continue to take a prudent and vigilant approach to all working capital to minimise risk in the current climate.

The Board is not proposing a final dividend at this time, and will review the dividend position when there is greater visibility of the impact of COVID-19.

Annual General Meeting

As a result of the requirements of the UK and Scottish Governments with regard to social distancing, and in order to protect the health and safety of our shareholders and employees, the Board has decided to postpone the 2020 Annual General Meeting (AGM). The Board is hopeful that circumstances will improve and that shareholders will be able to attend the meeting at a later date if restrictions on public gathering and social distancing requirements are reduced.  Details of the date and arrangements for the AGM will be provided as soon as possible.

Roger White, Chief Executive , commented

A.G. Barr is a results driven business with a motivated and resolute team, whom I wish to thank for their ongoing resilience, commitment and flexibility.

We exited the financial year with improved trading performance and momentum, which continued into the new year however the COVID-19 situation is now materially impacting our business.  There is no immediate certainty around the severity and duration of the impact on our business and as such the Board is unable to provide guidance for the current financial year at this time.  However, the actions we are taking to conserve cash and reduce costs, combined with our strong financial base, give us confidence in the resilience of our business for the long term.

We will continue to monitor developments closely, responding appropriately as required, while also ensuring that we play our part in supporting our communities through these unprecedented times.