Annual report and accounts 2023 - Flipbook - Page 62
A.G. BARR p.l.c. Annual Report and Accounts 2023
Financial review continued
60
Boost Drinks Holdings Limited
In December 2022 the Group acquired 100% of Boost
Drinks Holdings Limited for an initial consideration
of £20m, on a cash-free debt-free basis. Boost will
operate as a standalone business unit during a two year
earn-out period. The financial reporting impact of the
Boost acquisition is as follows:
• Initial acquisition consideration (£19.9m) recognised
within the consolidated financial position as £16.9m
of brand intangibles, £1.9m of goodwill intangibles
and net assets of £1.1m
• Consolidated in Group results from December 2022
• Boost revenue recognised within ‘Soft Drinks’
segmental reporting
• The acquisition includes a potential additional
consideration of up to £12m, contingent on the
future performance of the Boost business over a
two year period from completion. Any earn-out will
be charged through the Group’s income statement
over the earn-out period and reported as an
adjustment to reported profit. The financial
statements ending 29 January 2023 included
£0.8m in respect of this earn-out accrual.
Financial risk management
The Group’s risk management process is owned by
the Board and operates at every level within the
business to support the successful delivery of our
strategic objectives and financial plans. The process is
based on a balance of risk and opportunity, determined
through assessment of the likelihood and impact of the
risk and within the context of the Group’s risk appetite,
as established by the Board. Risks are monitored
throughout the year with consideration to internal and
external factors, and updates to risks and mitigation
plans are made as required. The principal risks that
could potentially have a significant impact on our
business have not changed since the end of the
financial year.
Our core brand strength,
our clear strategy and
our engaged workforce
provide a strong
foundation to deliver
sustainable long-term
shareholder value.
The Group seeks to mitigate risks in relation to
the continuity of supply of key raw materials and
ingredients by developing strong commercial
relationships with its key suppliers. The Group
manages commodity pricing risk actively and where
commercially appropriate will enter into fixed price
supply contracts with suppliers to reduce risk.
Treasury and commodity risk management
The treasury and commodity risks faced by the Group
continue to be identified and managed by the Group
Treasury and Commodity Committee whose activities
are carried out in accordance with Board approved
policies and subject to regular Audit and Risk
Committee reviews. No transactions are entered into
for speculative purposes. Key financial risks managed
by this committee include exposures to foreign
exchange rates and the management of the Group’s
debt, commodity and liquidity positions. The Group
uses financial instruments to hedge against foreign
currency exposures.
The Group enters into insurance arrangements to
cover certain insurable risks where external insurance
is considered by management to be an appropriate
economic means of mitigating these risks.
As at 29 January 2023, the Group had £40m of funds
held on short-term, interest earning, deposit with two
relationship banks. In addition to the Group’s cash
position, the Group had £20m of committed and
unutilised debt facilities, consisting of a revolving
credit facility with our principal relationship bank.
This expires in February 2026. Our funding
requirements and facilities are continually reviewed
to ensure they remain appropriate, providing a balance
of security and optionality.
Accounting Policies
The Group’s financial statements have been prepared
in accordance with International Financial Reporting
Standards and the Listing Rules of the Financial
Conduct Authority.
There have been no changes to the accounting policies
applied this year. All new or amended standards that are
applicable have been adopted with no material impact
on the results for the current and prior reporting periods.
Pensions
The Group continues to operate two pension plans:
the A.G. Barr p.l.c. (2005) Defined Contribution Pension
Scheme and the A.G. Barr p.l.c. (2008) Pension and
Life Assurance Scheme. The latter is a defined benefit
scheme based on final salary, which also includes
a defined contribution section for pension provision
to senior managers.
The defined benefit scheme has been closed to new
entrants since 5 April 2002 and closed to future accrual
for members in May 2016. Existing and new employees
have been invited to join the Company-wide defined
contribution scheme.
The defined benefit pension scheme triennial valuation
as at April 2020 identified a £7.7m deficit on a technical
provisions basis as at that date, reflecting the substantial
reduction in the value of the Scheme’s investments
which occurred at the start of the pandemic. The
Company agreed with the Pension Scheme Trustee
that the ongoing deficit recovery plan of a £1.0m per
annum Company contribution should continue for the
next three years with the intention of eliminating the
deficit over the medium-term. This plan was approved
