47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 54
A.G. BARR p.l.c. Annual Report and Accounts 2025
FI N A N C I A L R E VI E W CO N T I N U ED
Other – Revenue up 7.6%, gross profit up 12.5%
Segmental
performance –
reported revenue
Soft drinks
+6.4%
This segment represents our MOMA business,
comprising primarily oat drinks and porridge.
Since we acquired MOMA in 2022, we have
consistently invested in the long-term potential of
oat milk, which continues to grow market share
and now represents over 57% of the plant-based
milk market. MOMA grew share of this growing
category driven by distribution gains within
hospitality and specialty coffee. While MOMA
remains small in relative terms, there have
been significant improvements in supply chain
efficiencies and the brand has contributed to
the Company-wide margin rebuild strategy
at both gross and operating margin.
Cocktail solutions
(6.1)%
Other
+7.6%
Margins
Inflation persists on the back of global conflicts,
political uncertainty and the strength of the US
dollar. With only a few exceptions, commodity
costs remained at elevated levels throughout
2024, with cost inflation particularly evident in
employment and service-related inputs. We
expect 2025 to continue the trend of moderate
inflation across the cost base led by salary
related expenditure.
Gross margin* of 39.1% was, as predicted,
up versus the prior year (2023/24: 38.6%).
A short-term supply issue with FUNKIN RTD cans
in Q2 resulted in customer disruption and some
incremental remedial costs in an otherwise
positive year for supply in terms of customer
service and productivity. The benefit of an
increasingly resilient supply chain, our capital
refresh programme and the ongoing Boost
insourcing initiative are anticipated to continue
to deliver margin improvements in 2025.
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Underlying overhead costs, which exclude
one-off costs treated as adjusting items,
increased by 2.3%. We continue to invest in
our brands and our people. We invested in
upweighted marketing, a core pillar of our growth
strategy, and additional field sales resources to
support our route to market (RTM) strategy.
The higher levels of investment in those areas
more than offset productivity and efficiency
gains from strategic projects
Earnings Per Share (EPS)
At 13.6%, adjusted operating margin* was 130
basis points above the prior period (2023/24:
12.3%). We remain on track with our margin
rebuild plans and our commitment to delivering a
sustainable 14.5 – 15.0% operating margin by the
end of 2025/26. Reported operating margin was
12.3% (2023/24: 12.5%) due to the impact of one-off
adjusting items which resulted in a £5.3m charge
in the current year (prior year £0.8m credit).
Dividends
Interest
The Group remained net cash positive
throughout 2024/25, with surplus cash held on
rolling short-term deposits. The resulting interest
income of £2.0m offset finance charges of £0.5m
relating to periodic overdraft charges and lease
interest costs under IFRS 16.
Taxation
The reported effective tax rate for the year ended
25 January 2025 was 25.4% (2023/24: 25.0%).
The standard rate of corporation tax applied
to reported profit is 25.0% (2023/24: 24.0%). The
effective tax rate is higher than the standard
applicable tax rate on account of a small number
of prior year tax adjustments and certain costs
being non-deductible tax expenses. Deferred tax
was calculated at 25% (2023/24: 25%).
Adjusted basic EPS* for the year was 39.77p, an
increase of 17.4% on the prior year. This reflects
the strong profit performance, with a slightly
smaller share base offsetting the modest
increase in effective tax rate. Basic reported
EPS was 35.81p, an increase of 3.5% on last year.
Based on a diluted weighted average of
112,050,469 shares, diluted EPS was 35.43p
(2023/24: 34.24p).
The Group’s dividend policy remains unchanged.
We aim to deliver a progressive and sustainable
dividend that has regard to performance trends
including revenue, profit after tax and cash,
and is in line with our target dividend cover
and payout ratios.
In line with this framework, and following
the interim dividend of 3.10p per share paid in
November 2024, the Board is recommending a
final dividend for the period of 13.76p. This will bring
the full year dividend to 16.86p per share (2023/24:
15.05p per share) which provides 2.1 times dividend
cover and delivers a payout ratio of 48%.
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 9 May
2025 with an ex-dividend date of 8 May 2025.
Balance Sheet
Disciplined capital allocation is a key component
of our business strategy as we target a consistent
ROCE above 20%. During the year, the Board
reviewed our strategy in the context of its
prevailing risk appetite, current capital
programme and our strategic plans. We continue
to believe that a strong balance sheet that
supports organic growth, M&A opportunities
and an ongoing progressive dividend is the right
strategy for AG Barr given our present plans.
