A G BARR p l c : Interim Report FY 2023/24

Interim Report 2023

"We have made significant financial and strategic progress in the first half and have exciting plans in place for the balance of the year to sustain our growth momentum.

We remain confident in delivering a full year profit performance in line with our recently increased market expectations and are well positioned to deliver strong shareholder returns for the long-term."

Roger White

Chief Executive

A.G. BARR p.l.c.  Annual Report and Accounts 2023

In this report

Interim Statement	1
Consolidated Condensed Income Statement	4
Consolidated Condensed Statement
of Financial Position	5
Consolidated Condensed Statement
of Comprehensive Income	6
Consolidated Condensed Statement
of Changes in Equity (Unaudited)	7
Consolidated Condensed Statement
of Changes in Equity (Audited)	8
Consolidated Condensed Cash Flow Statement	9
Notes to the Consolidated Condensed
Financial Statements	10
Statement of Directors' Responsibilities	22
Glossary	23
Reconciliation of non-GAAP measures	24
Independent Review Report to A.G. BARR p.l.c.	26

Interim statement

We are pleased to report a strong financial performance in the first half of the current year and have made significant progress across our strategic priorities.

	Roger White
Mark Allen OBE

A.G. BARR p.l.c.  Annual Report and Accounts 2023

Revenue was £210.4m representing year on year growth of:

• 33.2% on a reported revenue basis, including the contribution from the Boost Drinks business acquired in December 2022
• 10.4% on a like-for-like* basis

Reported profit before tax in the period increased 12.6% to £27.8m (2022/23 H1: £24.7m) as a result of revenue growth across the Group, with strong volume growth and market share gains in soft drinks in particular.

Adjusted profit*1 in the period was £27.0m, an increase of 6.7% on the prior year first half (2022/23 H1: £25.3m).

Adjusted operating profit margin*1 of 12.5% in the reporting period (2022/23 H1: 16.2%) was in line with our expectations, impacted by persistent cost inflation, alongside the known near-term impact of the lower margin Boost division. In addition, we chose not to pass on the full impact of cost inflation to customers in order to remain focused on offering consumers great value, affordable brands in an uncertain and challenging economic environment.

Market context

Soft drinks: The total UK soft drinks market increased in value by 8.8% across the period, while reported volumes fell by 4.2%. Sustained price inflation has continued to feature across the market. Against this backdrop we have gained both value and volume market share.

(Source: Circana data for the 26 weeks to 29 July 2023).

Cocktails: The value of GB cocktails across the on- trade continues to grow and is now worth £716m. This growth in value has been driven primarily by inflation, with a slight reduction in cocktails' overall share of the spirits market. We believe this reflects current wider economic conditions, and expect on-trade cocktail consumption to return to growth in the longer term.

Ready to drink (RTD) cocktails in the take home market grew 14.6%, more than four times the rate of the RTD category as a whole. FUNKIN remains the number one RTD cocktail brand within this growing sector.

(Source: Nielsen pre-mixed alcoholic drinks total coverage MAT 29/07/2023; CGA Q1 2023).

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A.G. BARR p.l.c.  Annual Report and Accounts 2023

Interim statement continued

Oat milk: Total dairy milk alternatives grew in value by 1.0% however within this market the oat milk sub category grew by 12%. Oat milk is driving category growth and is now the biggest segment, making up 52% of the dairy milk alternatives category.

MOMA's oat milk sales grew twice as fast as the oat milk category as a whole.

(Source: Nielsen Top 5 Grocery 52 weeks to 3 June 2023).

Business performance

Trading has been strong across the Group:

		Change	Like	Change
	Reported	vs H1	for like	vs H1
	revenue	2022/23	revenue*	2022/23
	(£m)	(%)	(£m)	(%)
Soft drinks	£181.9m	38.9%	£145.8m	11.3%
FUNKIN	£23.3m	2.6%	£23.3m	2.6%
Other	£5.2m	23.8%	£5.2m	23.8%

Across soft drinks, revenue growth has been driven by volume, price and mix, alongside effective execution of our sales plans and successful consumer marketing activity. The IRN-BRU brand grew revenue by 8% gaining further market share in England and Wales and the Rubicon brand enjoyed a very strong period with revenue increasing by 17%. The Boost brand grew by 37% and made excellent volume progress driven by significant distribution gains.

FUNKIN delivered further UK off-trade growth of 11%, supported by increased consumer marketing investment and continued exciting innovation. While cocktail consumption in the on-trade slowed following last year's post-Covid high, FUNKIN maintained its position as the UK's Number 1 cocktail brand.

Within the MOMA Foods division, brand and consumer marketing investment supported significant year on year revenue growth of 24%, as oat milk continued to outperform other plant-based milk categories.

Having accelerated our innovation plans across the summer, we have a number of exciting brand launches planned across the Group in the second half of the year. We are particularly excited to extend the IRN-BRU brand further with PWR-BRU, a new and distinctive addition to our portfolio within the high growth energy category which launched in August.

Cash flow and balance sheet

Net cash from operating activities at £15.1m was ahead of the prior year (2022/23 H1: £11.4m). Our strong profit performance was partially offset by higher working capital and an increased corporation tax rate (25% versus 19% in the prior year).

The absolute levels of working capital have increased versus the prior year through the inclusion of the Boost business, acquired in December 2022. The increase in overall net working capital primarily reflects the phasing of trading activity during the period, with strong revenues achieved in June remaining in receivables

at the balance sheet date and higher inventory levels reflecting strong production performance but lower, weather impacted, revenues in July. Our balance sheet management remains tightly controlled

with healthy inventory levels and no significant unrecoverable trade debt.

Capital expenditure in the first half of the year was £6.5m (2022/23 H1: £7.0m). This reflects the phasing of the capital investment programme towards the second half of the year. Our asset refresh programme at our Cumbernauld factory continues on plan and to budget, with the successful upgrade of the site's primary PET line completed and successfully commissioned during the period. Full year capital expenditure is estimated at around £15m (2022/23: £14.6m). In the medium term capital expenditure is expected to be maintained in the range of £15-20m as our Cumbernauld programme completes and we continue our capacity expansion plans across the Group to support our growth and access to benefits from production in-sourcing.

The Group closed the period with cash balances of £47.3m (2022/23 H1: £61.3m), a reduction of £14.0m on the prior year as a result of the Boost and MOMA acquisitions at the end of 2022/23. The closing cash balance was £5.6m less than the period opening position (£52.9m) due to the normal funding of dividend, tax and capital expenditure, alongside the seasonal demands for working capital during our peak summer trading period.

Earnings per share reduced by 0.6% to 18.87p per share. This was attributable to the new higher corporation tax rate despite the increase in ongoing operating profit, the addition of the contribution from the Boost acquisition and the benefit of increased finance income from cash on deposit.

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A.G. BARR p.l.c.  Annual Report and Accounts 2023

Interim statement continued

Responsibility

We continue to make good progress across our responsibility agenda. Our journey towards net-zero is progressing, with the arrival of a number of new lower emission bio-fuelled commercial vehicles. We have strengthened our charity partnership with Marie Curie, enjoying high levels of employee engagement and enthusiastic fundraising support. We are also proud to report that FUNKIN achieved a further significant milestone in its development, successfully attaining B Corp status, certifying its high standards of social and environmental performance.

Board

After over 62 years with the business, Robin Barr stepped down from the Board in May and we would once again like to recognise the invaluable role Robin played for over six decades.

The Board welcomed Julie Barr and Louise Smalley, who took up their Non-Executive Director positions in May and June respectively.

As communicated on 1 August, Roger White intends to step down from his role as CEO, and retire from the Group within the next 12 months. The Board has commenced a formal succession process, including an external search, to ensure a smooth leadership transition.

Outlook

In a year of investment across the business, supporting the Group's long-term revenue and profit growth ambitions, we are pleased to report we have made significant financial and strategic progress in line with our plan.

Our medium-term plan to rebuild operating profit margin is progressing well, supported by brand and portfolio development, Group manufacturing optimisation and disciplined cost control.

We have strong plans in place across the business for the balance of the year to support our growth momentum. In August we communicated our expectation of delivering a full year profit performance marginally above the top end of analyst consensus. Despite the extended period of poor weather across the summer, we remain confident in delivering in line with these revised market expectations.

Our portfolio of leading brands, clear business strategy, talented teams and the quality of our infrastructure

all ensure we are well positioned to deliver strong shareholder returns for the long-term.

Dividend

The Board has declared an interim dividend for the

26 weeks ended 30 July 2023 of 2.65 pence per share (2022/23: 2.50 pence) payable on 27 October 2023 to shareholders on the register on 6 October 2023.

Mark Allen	Roger White
Chairman	Chief Executive

• Items marked with an asterisk are non-GAAP measures. Definitions and relevant reconciliations are provided in the Glossary on pages 23 to 25.

1 Adjusted profit* and adjusted profit margin* reflect the release of a £0.8m prior year accrual related to two months of the earn-out associated with the acquisition of Boost Drinks Limited in December 2022. Certain conditions associated to the earn-out have not been met and as such the earn-out, agreed at the time of the acquisition, is now not payable. New incentive arrangements have been put in place with Simon Gray pursuant to which a cash bonus of up to £3.0m may be earned by him, in the period to January 2025, subject to certain performance targets being achieved. This incentive arrangement constitutes a smaller related party transaction for the purposes of Listing Rule 11.1.10R. As a result, a written confirmation has been obtained by the Company from its sponsor pursuant to LR 11.1.10R(2)(b) stating that the terms of the incentive arrangement are fair and reasonable as far as the Company's shareholders are concerned.

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