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BAG Barr (a.g.) Plc

580.00
0.00 (0.00%)
Last Updated: 15:49:32
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Barr (a.g.) Plc LSE:BAG London Ordinary Share GB00B6XZKY75 ORD 4 1/6P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 580.00 579.00 580.00 587.00 575.00 582.00 139,277 15:49:32
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Btld & Can Soft Drinks,water 317.6M 33.9M 0.3046 19.14 648.81M

Barr(A.G.) PLC Interim Results (7619R)

26/09/2017 7:00am

UK Regulatory


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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

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