Annual report and accounts 2023 - Flipbook - Page 63
Strategic Report
by the Pension Regulator. A deficit recovery
contribution of £1.0m was made by the Company
under this arrangement in May 2022. At the end of
September 2022 gilt yields rose rapidly in reaction to
the UK Government’s mini budget. As gilt yields rose,
the value of liability driven investment (LDI) assets held
by many defined benefit pension schemes in the UK
fell sharply. Additional cash was required in order to
rebalance the Company’s defined benefit pension
scheme’s LDI portfolio and maintain the majority of the
hedging that the Scheme had in place. The Trustee
took a number of actions to meet these recapitalisation
calls. In support, the Company made a further payment
of £1.0m to the Scheme in October 2022 as a
prepayment of the deficit recovery contribution due in
May 2023 and also pre-paid the Central Asset Reserve
(CAR) contribution payments of £1.5m due in 2023. The
next triennial actuarial valuation will be as at April 2023.
The Group continues to work proactively with the
Pension Trustee to further de-risk the pension liabilities
and secure the commitments to employee benefits as
part of the Group’s ongoing strategic risk management.
On an IAS 19 valuation basis, which is determined before
the benefit of the CAR funding arrangement, the deficit
of £1.0m as at 30 January 2022 improved to a surplus of
£2.4m as at the balance sheet date. As noted above,
2022 was an unusually volatile year for the pension
industry generally and the Group scheme was impacted
by this. The A.G. Barr defined benefit scheme has a long
established financial risk strategy that includes pensioner
buy-in policies and asset hedging. The purpose of the
strategy is to provide an element of protection against
pension assumption and financial market volatility.
During the year 2022/23 this strategy resulted in the
scheme reporting both a significant decrease in the
scheme’s liabilities, driven by a large increase in discount
rates, and a similarly significant decrease in the value of
scheme assets due to changes in financial markets,
particularly the bond market. The move from deficit to
surplus is attributable to these changes and to the
£4.9m (2021/22: £2.4m) Company contributions made
in the year. The Company contributions comprise both
agreed 2022/23 contributions of £2.4m and £2.5m of
2023/24 contributions paid in advance to support
scheme liquidity.
Stuart Lorimer
Finance Director
28 March 2023
The Group has, again, delivered a strong financial
performance despite the challenging economic
backdrop. This performance demonstrates the
consistent delivery of our strategy and a successful
blend of resilience, agility, efficiency and strong
commercial execution. In an environment that remains
volatile and challenging, the business has a well
invested asset base backed by strong financial
fundamentals and is well placed to continue to invest
for the future in our brands, assets and people.
Corporate Governance
Accounts
F I N A N C I A L S TAT E M E N T S
Can be found on pages 138 to 198
G LOS SARY
Can be found on pages 199 to 204
Note: Financial metrics marked with an asterisk are non-GAAP
measures. Definitions and relevant reconciliations are provided in
the Glossary on pages 199 to 204.
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