Annual report and accounts 2023 - Flipbook - Page 59
Strategic Report
In a challenging cost environment our adjusted profit
before tax* increased by 13.3%. While recessionary
concerns, inflationary pressures and supply chain
disruption were clear headwinds, we continued to
invest for the future, in our brands, our people and
our assets. Our operating margin was compressed
as a result of supply chain cost inflation, the impact of
MOMA and Boost’s lower margins, and investment in
marketing ahead of sales in both FUNKIN and MOMA.
Our cash generation remains strong having generated
£35.9m of net cash from operations.
Our capital allocation principles are consistent with our
strategic ambition to consistently grow our business.
We prioritise the utilisation of funds to support organic
growth, finance appropriate acquisition opportunities,
provide shareholder income and optimise debt when
appropriate. In 2022/23, in addition to increased
marketing spend across our core brands, we chose
to invest in long-term sustainable growth through our
acquisitions and a step up in capital investment across
our operating sites. Our capital programme is expected
to result in investment in excess of £50m over the next
three years.
Our core brand strength, our clear strategy and our
engaged workforce provide a strong foundation to
deliver sustainable long-term shareholder value.
Adjusting items
The Group reported results include a net credit of
£0.9m (2021/22: £0.7m credit) relating to pre-tax
adjusting items which are excluded from adjusted profit:
• M&A – MOMA: A net credit of £1.6m relating to the
re-measurement and release of the excess
contingent consideration in respect of MOMA Foods
Limited following the Group’s acquisition of the
remaining 38.2% minority interest in December
2022.
• M&A – Boost Drinks: A net charge of £2.0m
relating to costs associated with the successful
acquisition of Boost Drinks Holdings Limited. This
comprises £1.2m of one-off acquisition fees and a
further £0.8m accrual related to the potential
•
2024/25 payment of £10m associated to the
acquisition earn-out. Both the acquisition fees
and the earn-out accrual have been charged to
operating expenses in the income statement.
Asset disposal: A £1.3m one-off gain on the sale
of our Newcastle distribution site which was closed
in April 2022 as part of the completed Group-wide
restructuring programme that was announced
in 2021/22.
Segmental performance
There are three reportable segments in the Group:
• Soft drinks
• Cocktail solutions
• Other
Soft drinks
The soft drinks segment comprises two business units,
Barr Soft Drinks and Boost Drinks, with decisions made
at a business unit level. This allows agile and effective
operational management and strong Group oversight.
Barr Soft Drinks
Barr Soft Drinks delivered a year of strong top line
revenue growth, up 12.4% on 2021/22, driven by
volume growth, disciplined pricing and promotional
management as well as a small element of favourable
brand and channel mix. Gross margin declined as high
and sustained raw material inflation was only partially
mitigated by pricing action and disciplined cost
management.
IRN-BRU revenue grew by 6% with a strong
performance in the out-of-home channel more
than compensating for lower take home sales
as the channels continue to rebalance following
pandemic disruption.
Corporate Governance
Accounts
Gross margin in the second half of the financial year
was impacted by high exotic fruit costs following
particularly poor harvests.
Our other portfolio brands, including Barr Flavours,
KA and Simply Fruity, grew in both volume and revenue
terms as consumers sought value in the face of cost of
living challenges.
Boost Drinks
The Boost Drinks portfolio, spanning energy, sport,
iced coffee, protein and including the franchise brand,
Rio, was acquired by the Group in December 2022.
Our financial results include Boost’s contribution for
the two months since acquisition – c.£7m of revenue
and c.£1m of gross profit. The impact to Group profit
was negligible and is in line with the acquisition
business case.
Our capital allocation
principles are consistent
with our strategic
ambition to consistently
grow our business.
Rubicon’s growth was particularly pleasing, up 8%
in volume and over 20% in revenue, with the brand
benefiting from increased distribution, continued
innovation, and a strong marketing programme.
Growth was broad based across the whole Rubicon
range with Sparkling, Spring, Stills and RAW Energy,
all delivering double digit revenue growth.
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