Annual report and accounts 2023 - Flipbook - Page 61
Strategic Report
The Group’s dividend policy aims to deliver a
progressive and sustainable dividend to shareholders
that has regard to current performance trends including
revenue, profit after tax and cash, and that satisfies
certain guiding principles:
• Dividend cover: targeting two times cover
• Payout ratio: targeting 50% of free cash flow*
• Consistent with medium-term profit outlook
Based on this framework, and following the interim
dividend of 2.50p per share paid in October 2022, the
Board is recommending a final dividend for the period
of 10.60p. This will bring the full year dividend to 13.10p
per share (2021/2022: 12.0p per share) which provides
two times dividend cover and delivers a payout ratio
of 43%. The Board believes the final dividend growth of
6.0% is sustainable. Subject to approval by shareholders
at the AGM in May, the final dividend will be paid to
holders of ordinary shares on the register as of 12 May
2023 with an ex-dividend date of 11 May 2023.
Balance Sheet and Cash Flow
The balance sheet as at 29 January 2023 recognises
the first time inclusion of the Boost Drinks acquisition
and the associated assets and liabilities of this company.
The Group remains financially strong with net cash at
bank, no material trade debt issues, healthy inventory
levels, a defined benefit pension surplus and a £20.6m
increase in the net asset base to £268.8m.
Inventory values have increased due to the Boost Drinks
acquisition, inflation and a planned stock-build to
support the installation of our new PET line as part of
our Cumbernauld factory refresh. Year end payables
and accruals have increased, reflecting the Boost Drinks
acquisition, significant capital spend accruals and the
timing of our month end payment run which took
place after the year end in 2022/23 but before the year
end in the prior year.
Global disruptions and geo-political challenges have
reinforced the importance of resilient supply chain
capabilities. We remain committed to internal
manufacturing when scale and capabilities permit,
and recognise the value of a well-invested asset base.
After a period of restricted spend associated with
the pandemic, our capital programme resumed with
total additions in the year of £17.0m (2021/22: £5.8m)
comprising £14.6m of cash capital expenditure and
£2.4m of accruals. This reflects investment in
production capacity, capability and sustainability. The
commissioning of a new can filler in Milton Keynes
delivers the capability and capacity for 250ml cans and
alcoholic products for the first time. We have utilised
these facilities to successfully bring a proportion of
FUNKIN can requirements in-house. Our multi-year
production line refresh in Cumbernauld continues to
plan with an upgraded PET line scheduled for
commissioning by summer 2023.
Corporate Governance
Accounts
In December 2022 the Company acquired the
remaining 38.2% equity stake in MOMA. As A.G. Barr
now owns a 100% equity stake in MOMA, the minority
interest in the business and the put liability have been
removed from the balance sheet. There has been
no change in the year to goodwill or brand valuation
and the removal of the contingent consideration has
resulted in a net non-cash credit to the income
statement of £1.6m. This release has been recognised
within adjusting items as detailed in the adjusting items
section above.
Despite the return to a more typical level of capital
investment, the higher inventory levels and the
inclusion of the Boost Drinks acquisition, return on
capital employed remains robust at 18.0%, a modest
decline from 19.9% in 2021/22.
Acquisitions
In the year ended 29 January 2023, the Group
completed the early full acquisition of MOMA Foods
Limited and the acquisition of Boost Drinks Holdings
Limited. Both acquisitions were fully funded from
Group cash reserves and the Group remains net cash
positive. The primary financial implications of these
acquisitions were:
MOMA Foods Limited
The Company acquired an initial 62.8% equity stake in
MOMA in December 2021. MOMA was consolidated
as a fully owned subsidiary in the 2021/22 accounts,
with a non-controlling interest reported in respect
of the 38.2% not acquired at that time, alongside
a put option liability that recognised a commitment
(contingent consideration) to secure full A.G. Barr
ownership by the end of financial year 2024/25.
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