A.g. Barr P.l.c. · LSE:BAG
A.g. Barr P.l.c — FY2019 Earnings Presentation
38 slides from A.g. Barr P.l.c's earnings presentation, March 2020
Slide 1: AG Barr plc Final Results
AG Barr plc FINAL RESULTS 52 weeks ended 25 January 2020 1
Slide 2: Welcome and introduction
Roger White Welcome and introduction 2
Slide 3: Contents
Contents ○ Introduction ○ COVID-19 update ○ Financial review ○ Strategy execution update ○ Summary ○ Questions ○ Appendix - Market update Roger White Stuart Lorimer Chief Executive Finance Director 3
Slide 4: COVID-19
COVID-19 ○ Exited 2019/20 financial year with renewed momentum ○ Feb and early March trading on track ○ Now beginning to see the impact of the Government’s COVID-19 delay measures and the effects on consumer behaviour 3 key priorities 1. safety and wellbeing 2. Group operating resilience 3. financial
Slide 5: COVID-19: Safety and wellbeing
COVID-19 Safety and wellbeing ○ following Government guidance throughout ○ supporting higher risk and vulnerable people across our organisation ○ additional safety, hygiene and 2 metre social distancing measures in place ○ home working activated where possible ○ increased flexibility and support for
Slide 6: COVID-19: Operating resilience
COVID-19 Operating resilience ○ Two main production sites with commonality across many SKUs ○ Currently no major raw material issues and good finished goods inventory levels ○ Multiple routes to market serviced by multiple distribution partners including Company-owned fleet ○ Action taken to prioritis
Slide 7: COVID-19: Financial stability
COVID-19 Financial stability ○ Strong financial base and historically cash generative business ○ £60m revolving credit facilities now drawn down and available ○ Cash preservation actions : ○ New capital projects on hold ○ Scaling back immediate marketing and commercial activity ○ Focused working capi
Slide 8: Financial review
Stuart Lorimer Financial review 8
Slide 9: Profit bridge: Jan 2019 to Jan 2020
Profit bridge : Jan 2019 to Jan 2020 PBT down (pre exceptionals) £7.8m (17.3%) 0.1 Gross profit down 16.4m (13.4%) 9
Slide 10: Financial scorecard
Financial scorecard Jan 2020 v to Jan 2019 % v Jan 2019 Case volumes (million cases) 52.9 (6.0) (10.2) % Net revenue (£m) 255.7 (23.3) (8.4) % Profit before tax and exceptionals (£m) 37.4 (7.8) (17.3) % Gross margin before exceptional items 41.5% (241) Bps Operating margin before exceptional items 14
Slide 11: Gross margin (%)
Gross margin (%) Carbonates - 84% of gross profit Down Down Return to value over volume strategy. Down Down 4.2pp 2.4pp Good performance from IRN-BRU and Barr 1.8pp 8.6pp flavours offset by challenges with Rockstar Stills & water - 8% of gross profit Margin pressure from a combination of market structu
Slide 12: Operating costs and margin
Operating costs and margin Combination of logistics and general cost saving actions. Brand investment maintained. ○ Discretionary spend review savings ○ Barr Soft Drinks organisational restructuring (phase 1) benefits in Q4 ○ Funkin expansion continued with upweighted headcount and enhanced marketing
Slide 13: Exceptional items
Exceptional items 2017 £0.7m Pension closure and reorganisation 2020 £ Nil - Net exceptional £(1.8)m Total reorganisation programme 2018 £0.8m Portfolio & RTM : simplification and Sugar reformulation £(1.1)m rationalisation programme and site sale Brand prioritisation & revenue £(0.7)m management opt
Slide 14: IFRS 16 Impact (£m)
IFRS 16 Impact (£m) Impact Per Accounts Excl IFRS 16 PBT nil 37.4 37.4 Depreciation 3.2 11.7 8.5 EBITDA 3.3 51.1 47.8 Non-current assets (incl right of use assets) 7.6 211.5 203.9 Liabilities (Leases) 7.9 7.9 nil Net assets 0.3 208.3 208.6 Net cash from operating activities 3.3 40.1 36.8 Net cash ni
Slide 15: Cash flow
Cash flow Cash generation funded increased dividend and share repurchase programme £m 15
Slide 16: Capital expenditure
Capital expenditure January January Total 2020 2019 project Delivery fleet investment programme 1.7 1.7 3.4 Cumbernauld liquid to line 7.5 1.6 13.6 Can line upgrades 1.1 2.1 3.2 Other (IT equipment, chillers, change parts etc.) 4.2 3.1 Total capex additions 14.5 8.5 Accrual movement 0.3 0.4 Cash cape
Slide 17: Share repurchase programme
Share repurchase programme Cash Shares Average Issued share outflow (£M) repurchased price (pence) capital (%) January 2018 £8.2m 1.3m 6.15 1.14% January 2019 £10.3m 1.5m 6.82 1.28% January 2020 £11.5m 1.9m 6.06 1.64% £30.0m 4.7m 6.33 4.06% Programme now complete 17
Slide 18: Balance sheet: Key ratios
Balance sheet : Key ratios Strong funding platform Consistent cash generation Net cash (£m) Net cash positive at year end Banking facilities of £40m for 2 years and £20m over 5 years Well invested asset base Net assets (£m) Net assets have been updated to reflect IFRS 16 2020 capital plan forecast at
Slide 19: Liquidity
Liquidity ○ Strong balance sheet ○ Cash in bank : c.£10.9m at year end ○ £60m RCF drawn down from our syndicate of 3 large UK banks - standard covenants in place ○ Actions implemented to preserve cash 19
Slide 20: Strategy execution update
Roger White Strategy execution update 20
Slide 21: Business fundamentals
Business fundamentals OUR STRATEGIC PRIORITIES: ~~ a 1 é a coe el a BS Se €O3 Connecting Building Building Driving with consum brands trust efficiency OUR BUSINESS MODEL: Make —» Move —» Market —» Sell —- Behave Create responsibly value OUR RESPONSIBILITY COMMITMENTS: 6 3S ig C) Act with Respect the
Slide 22: Connecting with consumers - highlights
Connecting with consumers - highlights IRN-BRU “Get Some IRN in You” TV, digital and social media campaign IRN-BRU 1901 - premium, limited edition IRN-BRU made to the very first ‘old and unimproved’ 1901 recipe 22
Slide 23: Connecting with consumers - highlights
Connecting with consumers - highlights Above the line marketing investment for Funkin new range of ready-to-drink cocktails Rubicon - 3rd year as official partner of the England and Wales Cricket Board 23
Slide 24: Building brands
Building brands Return to long-term value based strategy with re-established consumer price positioning ○ Resetting of price positioning ○ Reduced promotional intensity ○ Volume impact as expected but with planned increase in average realised price 2L IRN-BRU illustration : 2L PET promotional price
Slide 25: Building brands - highlights
Building brands - highlights Launch of IRN-BRU Energy Action taken to address specific Rubicon issues - ○ recipe improvement for juice drinks ○ full brand redesign and relaunch 25
Slide 26: Building brands: Barr Soft Drinks market performance
Building brands : Barr Soft Drinks market performance 26 Source: IRI Marketplace 52 weeks to 26/01/20
Slide 27: Building trust - highlights
Building trust - highlights Climate change focus ○ Increased use of recycled PET ○ 100% renewable electricity across all sites ○ Working closely with Scottish Government on DRS planning Diversity and inclusion progress ○ Range of initiatives implemented in support of greater diversity and inclusion
Slide 28: Driving efficiency
Driving efficiency £14m capital investment in a new liquid processing facility at our Cumbernauld site is nearing completion Phase 1 of business re-engineering programme - ○ portfolio simplification ○ brand development prioritisation ○ commercial function reorganisation 28
Slide 29: DRS in Scotland
DRS in Scotland ○ 16 March - final legislation laid before Scottish Parliament for 54 days, prior to vote ○ Go-live date delayed to July 2022 ○ Legislation places obligations on individual producers and retailers ○ Producers can appoint non-for-profit Scheme Administrator to collectively discharge obl
Slide 30: PepsiCo acquisition of Rockstar
PepsiCo acquisition of Rockstar ○ 11th March 2020 - PepsiCo Inc. (PepsiCo) announced its intention to acquire Rockstar Energy Beverages ○ AG Barr - franchise partner of Rockstar since 2007 with exclusive distribution rights for the Rockstar brand in the UK, Ireland and certain European territories ○
Slide 31: Summary
Summary ○ Exited last financial year with improved trading performance and momentum, which continued into the early part of the new year ○ However COVID-19 situation evolving rapidly ○ Dynamic and uncertain demand conditions ○ No immediate certainty around the severity and duration of the impact on o
Slide 32: Questions
AGBarr BUILDING GREAT BRANDS 32
Slide 33: Appendix
Appendix AGBarr Barr BUILDING GREAT BRANDS 33
Slide 34: Total UK soft drinks market
Total UK soft drinks market Total UK soft drinks value Total UK soft drinks volume Up 0.4% Down 2.5% Carbonates value Carbonates volume Up 3.4% Up 1.3% Stills value Stills volume Down 2.8% Down 5.8% 34 Source: IRI Marketplace 52 weeks to 26/01/20
Slide 35: Total UK soft drinks market - sub categories
Total UK soft drinks market - sub categories Source: IRI Marketplace 52 weeks to 26/01/20 35
Slide 36: Barr Soft Drinks market performance
Barr Soft Drinks market performance Barr Soft Drinks value share of total soft drinks Total UK Scotland England & Wales 3.1% 12.6% 2.0% Value performance to 26 January 2020 52 weeks 26 weeks 13 weeks 4 weeks AG Barr value share of ▼8.1% ▼6.6% ▲0.3% ▲0.7% total UK soft drinks market Sources: IRI Mark
Slide 37: Barr Soft Drinks market performance
Barr Soft Drinks market performance 37 Source: IRI Marketplace 52 weeks to 26/01/20
Slide 38: Cocktail market dynamics
Cocktail market dynamics Value of cocktails in GB UK outlets stocking cocktails £604m 42k Up 9.9% Up 3.2% % GB population consuming cocktails in the on-trade UK bars stocking cocktails 22% (10.3m consumers) 77% Up from 18% (8.2m consumers) Source : CGA Mixed Drinks Report Q3 2019 - year on year chan