47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 55
Strategic Report
The Group remains financially strong, with over
£63m net cash at bank*, no material trade debt
issues, appropriate inventory levels, a defined
benefit pension surplus and a £24.9m increase
in the net asset base to £317.6m. Together with
strong growth in adjusted operating profit*
these deliver a healthy and improving adjusted
Return on Capital Employed* of 20.1%.
The Board retains a medium-term intention to
operate an efficient balance sheet, allowing for
the option of using a prudent level of debt to
capitalise on business growth opportunities
when appropriate. We are comfortable that the
cashflows and earnings profile of the Group could
support a debt capacity up to 2-2.5x EBITDA.
Cash Flow
Our cash performance remains robust, with cash
generated from operations of £57.6m (2023/24:
£60.2m) and a profit to cash conversion ratio*
of 82.6% (2023/24: 96.0%), driven by a continued
focus on disciplined cash management.
Overall working capital impact on cashflow has
been an outflow of almost £6.7m. Receivables
increased £13.0m as a result of good Q4 trading
and the timing of specific customer payments,
whilst inventories were lower as a result of
higher stocks in the prior year associated with
Cumbernauld line downtime relating to the
capex programme.
Corporate Governance
Accounts
We remain committed to internal manufacturing
when scale and capabilities permit, and
recognise the value of a well-invested asset base.
Cash capital expenditure* of £19.2m (2023/24:
£17.8m) was focused on our multi-year asset
refresh programme at our Cumbernauld site.
This programme has already installed and
commissioned two refreshed PET lines and is
currently focused on the replacement of our
Cumbernauld canning capability with a faster,
more efficient can line due to be commissioned
in early 2026.
Our capital expenditure programme is part of an
overall, longer term, supply chain optimisation
plan that aims to invest in production capacity,
capability and sustainability in support of future
growth. The programme is a critical component
of our Boost/Rio production insourcing initiative
which, in turn, is an important element of our
margin rebuild strategy. While the Boost/Rio
insourcing will be largely complete by 2027,
the capital programme will continue over the
foreseeable future, with anticipated capex
averaging £25m-£30m p.a. over the
medium term.
“Our core brand strength,
our clear strategy and our
engaged workforce provide
a strong foundation to deliver
sustainable long-term
shareholder value.”
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