Barr (A.G.) Regulatory News (BAG)

29 March 2016

A.G. BARR p.l.c. 

FINAL RESULTS for the year ended 30 January 2016

A.G. BARR p.l.c. ("A.G. BARR"), which produces and markets some of the UK's leading brands, including IRN-BRU, Rubicon, Strathmore and Funkin, announces its final results for the 53 weeks ended 30 January 2016.

Financial headlines 

· Statutory profit before tax increased by 7.0% to £41.3m (2015: £38.6m) on net revenue of £258.6m (2015: £260.9m). No exceptional items were recognised in the period to January 2016.

· Adjusted* PBIT increased by 7.0% to £42.6m (2015: £39.8m) with adjusted* revenue increasing by 0.9% to £257.4m (2015: £255.2m).

· Robust financial position retained:

o Gross margin increased by 87 bps to 46.8%

o Net margin* increased by 14 bps to 16.3%

o Reported earnings per share increased by 14% to 29.63p (2015: 26.00p)

o Net debt position at year end £11.3m (Net debt / EBITDA ratio 0.2 times)

· Proposed final dividend of 9.97p per share (2015: 9.01p) to give a proposed total dividend for the year of 13.33p per share, an increase of 10.0% over the prior year.

Strategic highlights

· Maintained market share of total soft drinks in a challenging UK market

· International business volume growth of 40%

· Further significant investment in assets, infrastructure and systems

· Strong performance from Funkin Limited in first year of ownership

Roger White, Chief Executive, commented:

"We have delivered a creditable financial performance in difficult market conditions over the past 12 months through continued tight cost control, rigorous cash management, executional improvement and further investment in our brands, assets and people. We delivered a significant change programme across the year which has further strengthened our operational and process capability, providing a robust and flexible platform to underpin our long-term success.

Market conditions in the core UK soft drinks market are not expected to substantially change as we look forward. Top-line growth remains under pressure and changes in consumer preferences offer challenges and opportunities in equal measure. Although the details of the Chancellor's proposed soft drinks levy are still to be consulted upon, we believe our combination of brand strength, ongoing product reformulation and consumer driven innovation will allow us to minimise the financial impact on the business at the proposed point of implementation in April 2018.

We have, over many years, invested in our strong and flexible operating model and believe we are well placed to continue to deliver consistent long-term shareholder value."

For more information, please contact:

*Definitions

Adjusted

Adjusting for discontinued business (year ended January 2016: £0.3m, year ended January 2015: £1.5m), income received in the prior year associated with the termination of the Orangina franchise (£0.7m) and one-off transaction fees incurred in the year to January 2016 (£0.8m).

Net Margin

Operating profit before exceptional items and before the deduction of taxation, divided by revenue.

Next trading update - July 2016

Chairman's Statement

Over the course of the last 12 months the business has delivered substantial change designed to support the long-term delivery of shareholder value. We delivered a robust financial performance across the Group despite challenging consumer market conditions and the scale and complexity of our change activity.

Overall in the period we maintained our market share and, importantly, we have continued to invest in developing our brands for the long-term.

During the year we made further progress in the development of our portfolio. I am pleased to report that the Funkin business acquired in 2015 continued its expected growth momentum under our ownership and we plan to further develop the Funkin brand to ensure it continues to meet our acquisition expectations.

Our relationships with our key partners, Rockstar and Dr Pepper Snapple Group, with the Snapple brand, continued to progress with further growth and the development of new brand flavours and formats. In addition we have made significant progress in our ambition to extend our international footprint, building a growing and differentiated portfolio of brands to compete in our selected markets.

At the core of our development activity is our drive to reformulate and realign our portfolio to meet rapidly changing consumer preferences. I am pleased with our progress in this area, further details of which will be covered within this report.

Whilst we have continued to invest in the long-term health of the business, we have also maintained strong capital disciplines. We exit the year with a strong balance sheet, providing us with the flexibility to exploit growth opportunities as they arise and to maintain our progressive dividend policy.

Dividend

The board is pleased to recommend a final dividend of 9.97p per share to give a total dividend for the full year of 13.33p per share, a full year increase of 10.0% on the prior year.

People

I would like to take this opportunity to thank the whole team across the Group for their hard work and diligence in what has been a demanding year.

I was pleased to welcome David Ritchie to our board in April 2015. David has made a very positive impact and brings a wealth of experience and insight which will support the business going forward.

We expect to further strengthen our board across the next year as we strive to develop an even more balanced and effective team.

Prospects

The business is in good shape to navigate through the challenges that exist across the market. The combination of strong foundations and a motivated and experienced management team, capable of both adapting and then successfully executing our strategy, ensures we are well positioned to further grow and develop our business across 2016 and beyond.

John Nicolson

Chairman

Chief Executive's Review

We have delivered a creditable financial performance in what has ultimately been a successful but challenging year for the business.

The markets we operate in have seen significant levels of change and volatility and the consumers in our core UK business have continued to develop their tastes, habits and preferences for products, shopping and communication, at real pace. Although we recognised the changes in our marketplace some time ago, we have accelerated our actions over the last 12 months to ensure we are set to meet the challenges now and in the future.

· In the reporting period we maintained overall market share in UK soft drinks and total group revenue was £258.6m (2015: £260.9m)

· Statutory profit before tax increased from £38.6m to £41.3m, an increase of 7.0%

· Adjusted* profit before interest and tax increased by 7.0% from £39.8m to £42.6m

· Operating margins advanced once again as we maintained a tight control of our cost base

· Business Process Redesign implemented and stabilised

· Further significant capital investment across our supply chain footprint

· We also benefited from the inclusion of a strong profit performance from the Funkin business in its first year of our ownership

Market performance

The UK soft drinks market has not yet appeared to benefit from the improvement in underlying consumer purchasing power. Using data from our new data provider IRI (IRI Marketplace data to 31 January 2016) we can see the impact of general price deflation, poor summer weather and retail competition feeding through into the overall soft drinks category performance.

The market was down in value terms by 1.8% with volume flat. Within this performance carbonates were down c.1.5% in both value and volume, and stills, although slightly up in volume terms, were down 2.0% in value.

The growth driver in overall soft drinks was once again water, offset by significant value declines in fruit juice, dilutables, sports drinks and some areas of carbonates. At a channel level, soft drinks performance was influenced by deflation and poor weather, the latter having a marked impact on the impulse channel. Previously much of the market growth has been delivered by the significant growth in carbonated energy, however this subsector only grew by 1% in volume terms and was flat in value in the period.

The market has seen growth in brands which appeal to consumers' changing lifestyles and preferences - sugar free products, lower sugar brands and premium products, such as those within mixers, have continued to outperform the overall category.

Our portfolio continues to develop to meet these market challenges and opportunities. We are well positioned to benefit from the high levels of loyalty to our existing brands along with the opportunities to further drive the distribution of our differentiated portfolio of increasingly relevant brands.

Our core brands have stood up well in the market despite the difficulties of the weather and the challenges related to our internal change agenda, which hampered our performance during the summer period. We are particularly pleased that we have been able to capitalise on the growing cocktail consumption trend with our successful and market-leading Funkin product portfolio.

Strategy update

The fundamentals of our strategy remain in place, having served us well in the creation of long-term shareholder value. However, we continue to evolve and develop specific areas of focus within our overall strategy. In particular, we have prioritised the development of our portfolio into further consumption occasions, as demonstrated by the development of the Funkin business and brand. Similarly, the realignment of our portfolio to respond to changes in consumer attitudes and preferences will see a significant amount of our effort and focus in the coming period.

We have created a select and differentiated portfolio to develop in our chosen international focus markets and we expect to see continued growth in this area of the business. During the period our international business grew revenue by almost 30% on last year and would have grown by over 40% if measured on a constant currency basis. Our push to develop outside the UK core market is also allowing us to build stronger, more significant relationships with our chosen partners, Rockstar and Dr Pepper Snapple Group. We expect to create increasingly significant growth opportunities in both our core UK market and in our selected international territories as we go forward.

The development of our existing soft drinks portfolio will continue to be a key area of our strategic focus. To ensure success in the UK market we are focusing our marketing efforts on our "lower" and "no" sugar products and are substantially reducing the sugar content of our portfolio to reflect consumers' changing preferences. We have already made significant progress in this area, reducing the average calorific content of our company owned portfolio by 8.8% in 4 years, and we anticipate the scale of this change to accelerate over the next year as we reduce our overall exposure to high sugar products where appropriate. We remain convinced that our decisive actions, and the progress we have made to date, demonstrate that we are playing an important part in addressing the complex and very important UK consumer health issues.

Motivated and engaged employees are at the heart of our successful business and I am pleased to report that employee engagement levels, as measured in our latest employee engagement survey, are steadfastly industry-leading. Across the business, our functional and site teams have worked both effectively and safely across the last 12 months to ensure we continue to deliver for our customers.

Summary

The second half of the last financial year saw our sales and financial performance recover as we stabilised our operating platform following a very significant level of investment and consequential change across the summer of 2015. I am confident that our investments in the business, not just in 2015 but over the last few years, will benefit us greatly as we look forward and face the market challenges over the coming years.

Although the details of the Chancellor's proposed soft drinks levy are still to be consulted upon, we believe our combination of brand strength, ongoing product reformulation and consumer driven innovation will allow us to minimise the financial impact on the business at the proposed point of implementation in April 2018. Based on the Government's currently proposed metrics, should a levy be introduced, we expect at least two thirds of our portfolio will be lower or no sugar, and would therefore be levy-free at that time. For the balance of our portfolio, which would attract a levy, we anticipate that brand loyalty and consumer preference will drive continued demand. We will, of course, play an active role in the consultation between the Government and the soft drinks industry on the proposed levy, and are fully committed to working towards an outcome that benefits consumers, shareholders and other stakeholders.

We are well placed to continue our delivery of consistent long-term shareholder value based on our proven solid business fundamentals, our balance sheet strength and capacity and our ability to flex and develop our strategy to maximise our long-term growth potential.

Roger White

Chief Executive

*Adjusting for discontinued business, income received in the prior year associated with the termination of the Orangina franchise and one-off transaction fees incurred in the year ended January 2016.

Financial Review

Unless otherwise stated the following is based on results for the 53 week period ended 30 January 2016. Comparatives are for the 52 week period ended 25 January 2015.

Our 2015/16 performance reflects the combination of a challenging external commercial environment, disappointing summer weather and the implementation of our business process redesign project which disrupted customer service during the summer period, when 2014/15 comparatives benefited from considerably better weather and a well executed Glasgow 2014 Commonwealth Games campaign. It is a testament to the commitment of our people and the underlying resilience of the business model that we have been able to deliver a creditable performance in the year.

While certain brands experienced volume underperformance, and general market deflation resulted in lower net sales, our focus on sustained cost control and commodity risk management underpinned our performance and improved margins. Our robust business model, combined with the integration of our newly acquired Funkin cocktail business, delivered profit before tax of £41.3m, 7.0% ahead of the prior year. On an adjusted* basis, profit before tax and interest was £42.6m, an increase of 7.0% on the prior year.

Key performance metrics

· Net revenue down 0.9% to £258.6m (2015: £260.9m)

· Gross margin up 87 bps to 46.8%

· Net margin up 14 bps to 16.3%

· Net debt of £11.3m

· Earnings per share (EPS) increasing 14% to 29.63 pence per share (2015: 26.00 pence per share)

· Proposed final dividend of 9.97p per share (2015: 9.01p) to give a proposed total dividend for the year of 13.33p per share, an increase of 10.0% over the prior year

In a difficult economic environment we have continued our business strategy of focusing on long-term sustainable profit growth through margin improvement, driven by brand growth and cost discipline. Our strong cash generation has supported the funding of our Funkin acquisition, investment in our core asset base and the continuation of our progressive dividend policy.

Segment performance

In a competitive market, our overall carbonates business delivered share gains (as measured by IRI) in a deflationary environment. Adjusted* year-on-year revenue from carbonates declined 3.1% (£6.1m), with favourable product mix partially offsetting price deflation and volume decline. Our flagship IRN-BRU brand held market share and our partnership brand, Rockstar, continues to grow both overall volume and value share.

The still drinks and water segment experienced modest volume growth (excluding the discontinued Findlays water cooler business) but was negatively impacted by general market deflation and price repositioning of our Sun Exotic brand.

The Others segment is dominated by the first time inclusion of our newly acquired Funkin cocktail mixer business in 2015/16 and by the discontinued Orangina and Findlay businesses in 2014/15. Funkin is performing well in a growing market. All areas of its business, syrups, purees and mixers, grew volume and value resulting in overall strong revenue and margin growth for the business which remains well on track with the acquisition business case.

Margins

Carbonates gross margins, stripping out the effect of discontinued Orangina sales, benefited from favourable commodity pricing and supply chain savings and improved 1.3pp to 52%. Margins in the stills business were impacted as promotional pricing pressure and Rubicon availability challenges in the summer offset very positive growth in the Snapple brand following our new franchise agreement.

Adjusted* gross profit increased by £2.5m, delivering a 0.5% increase in gross margin to 46.9%.

We remain risk aware and constantly review the outlook on commodity costs, locking in pricing when we consider it optimal from a risk management perspective. We enter 2016 with good coverage across all our core commodity requirements.

Below gross profit, administration and distribution costs were broadly flat reflecting our continued focus on cost control and supply chain efficiencies.

Profit benefited from the contribution from the Funkin business and improved process controls which enabled our trade receivables and inventory provisions to be reduced. Operating margin increased from 16.1% to 16.3%.

Interest

Net finance charges, totalling £0.8m, are £0.6m higher than the prior year due to the notional (non cash) interest costs related to the final salary pension scheme deficit which, on an IAS19 basis, increased from £0.1m at January 2014 to £18.3m at January 2015. As at January 2016, the reported deficit was £12.9m.The constituent elements of the interest charge comprised:

Taxation

The tax charge of £7.0m is £1.6m lower than the prior year and represents an effective tax rate of 17.1%. This is a decrease of 5.2pp from the prior year and reflects the change in corporation tax rates in the year from 21% to 20% and the impact on deferred tax resulting from the future reduction in the corporation tax rates to 18% in 2020.

Balance sheet

The Group's balance sheet strengthened over the 12 month period ended 30 January 2016 with net asset growth of over 15% to £180.1m. The acquisition of Funkin Limited, significant expansionary capital expenditure and a £5.4m IAS19 pension deficit reduction were the main drivers.

The key balance sheet highlights can be summarised as:

· Non-current assets increased by over £32m as we reflected the Funkin acquisition and completed our company wide business process redesign implementation as well as the next phase of our Milton Keynes investment

· Our expansion plans continued with the acquisition of land and the subsequent warehouse build at Milton Keynes and the new glass line in Cumbernauld, which will enable us to bring Snapple brand production in-house during 2016

· Successful sale of our Tredegar site

· Inventory reduced by £1.1m (6.6%), as the prior year inventory build in advance of the Tredegar site closure was unwound

· Trade payables reduced by £13.7m. Prior year payables were distorted by large capital creditors while the 53 week year in 2015/16 resulted in month end supplier payments occurring before the year end

· ROCE was 18.8% reflecting the investment in Funkin Limited

The movement from a net cash position as at January 2015 (£10.3m) to a net debt position as at January 2016 (£11.3m) primarily reflects the Funkin acquisition (£17.5m) and the continued capital investment in land, warehousing and production capabilities.

In the year ahead, capital expenditure is anticipated to continue at a similar level with the completion of several key expansion projects, including our new flexible glass line in Cumbernauld and the warehouse expansion at Milton Keynes.

We remain well financed with significant facility headroom and a low level of balance sheet leverage.

Cash flow

The business remains highly cash generative with EBITDA of £50.5m (up 2.9%), representing an EBITDA margin of 19.5%.

Working capital movements have been impacted by the incorporation of Funkin which has increased the movements in inventory, receivables and payables.

Despite a stock build to support the downtime associated with the glass line installation at Cumbernauld, overall inventories have decreased, a result of the reduction of the prior year's increased inventory (put in place to mitigate risk ahead of the now completed Tredegar site closure) and the improved stock management enabled by our new business processes and systems.

Receivables are marginally above the prior year as a result of strong last quarter sales and the extra week of trading in the current year. Our aged debt remains in line with previous years.

2015/16 has witnessed a significant increased cash outflow within payables as the phasing of supplier payments at the end of the current year combined with an unusually high level of opening capital payables brought forward from the prior year. We continue to pay suppliers on time and in full.

The Group utilises its cash appropriately and with care. More than £19m was invested in long-term assets (both infrastructure investment and the business process redesign) and £14.3m was distributed in dividends to our shareholders.

Shares with a net value of £2.0m were purchased on behalf of various employee benefit trusts to satisfy the ongoing requirements of the Group's employee share schemes.

The Group closed the year with a net debt position of £11.3m, £6.8m of cash offset by £18.1m of bank borrowings including overdrafts. The Group has sufficient banking facilities at its disposal to meet expected future requirements.

Given the current low debt, the benign outlook for short term interest rates and the expectation of continued strong free cash generation, no interest rate hedging activity has taken place during the period.

Exceptional items

The Group had no exceptional items in the year. Prior year reorganisations (including the closure of our Tredegar operation) were completed successfully in the year with cost in line with provisions created in prior periods. One-off transaction fees totalling £0.8m, relating to the successful Funkin acquisition and other smaller projects, have been included within operational overheads and have not been treated as exceptional items. The exceptional cash items for the year ended 30 January 2016 reflect redundancy costs included in the exceptional items charged in the year ended 25 January 2015.

Pensions

The Group continues to operate two pension plans, being the A.G. BARR p.l.c. (2005) Defined Contribution Pension Scheme and the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme. The latter is a defined benefit scheme based on final salary, which also includes a defined contribution section for pension provision to senior managers.

The defined benefit scheme is closed to new entrants. As at the end of January 2016 the IAS 19 valuation of the scheme was a deficit of £12.9m, a £5.4m improvement from the prior year. The reduction in the deficit was driven by changing financial assumptions.

The pension scheme commitments and risk position are under continual review as part of the Group's ongoing strategic risk management. While the Group believes that the overall pension deficit is supportable, we are currently in consultation with the pension Trustee and membership on a proposal to close this scheme to future accruals during 2016.

Share Price and Market Capitalisation

At 30 January 2016 the closing share price for A.G. BARR p.l.c. was £5.28, a reduction of 15.5% on the closing January 2015 position. The Group is a member of the FTSE 250, with a market capitalisation of £617m at the year end.

Stuart Lorimer

FINANCE DIRECTOR

*Adjusting for discontinued business, income received in the prior year associated with the termination of the Orangina franchise and one-off transaction fees incurred in the year ended January 2016.

A.G. BARR p.l.c.

Consolidated Income Statement for the year ended 30 January 2016

The following are the final results for the year ended 30 January 2016

Record date: 13 May 2016

Ex-div date: 12 May 2016

A.G. BARR p.l.c.

Consolidated Statement of Comprehensive Income for the year ended 30 January 2016

A.G. BARR p.l.c.

Statement of Changes in Equity for the year ended 30 January 2016

A.G. BARR p.l.c.

Consolidated Statement of Financial Position as at 30 January 2016

A.G. BARR p.l.c.

Consolidated Cash Flow Statements for the year ended 30 January 2016

A.G. BARR p.l.c.

1. General information

A.G. BARR p.l.c. ('the Company') and its subsidiaries (together 'the Group') manufacture, distribute and sell soft drinks. The Group has manufacturing sites in the U.K. and sells mainly to customers in the U.K. with some international sales.

The Company is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in Scotland. The address of its registered office is Westfield House, 4 Mollins Road, Cumbernauld, G68 9HD.

The financial year represents the 53 weeks ended 30 January 2016 (prior financial year 52 weeks ended 25 January 2015).

Basis of preparation

The consolidated and parent Company financial statements of A.G. BARR p.l.c. have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. They have been prepared under the historical cost accounting rules except for the derivative financial instruments and the assets of the Group pension scheme which are stated at fair value and the liabilities of the Group pension scheme which are valued using the projected unit credit method.

Restatement of Cost of Sales and Segment Reporting

(i) In the segment reporting to 25 January 2015 a misstatement has been noted between the gross profit for Carbonates and the Other segments. An element totalling £2.3m of gross profit in relation to Carbonates was reported within the Other segment. This has been restated in the table below. There has been no change to the total reported revenue or gross profit before exceptional items or any other element of the financial statements.

(ii) In the year to 30 January 2016 a new enterprise resource planning system was implemented. This implementation included an alignment of the internal management reporting and the statutory reporting. The review concluded that some logistics and warehouse related costs previously recorded within operating expenses would be more appropriately recorded within cost of sales as this reflects more accurately the costs incurred in manufacturing products. This has resulted in a reduction in the gross profit of £3.4m in the year to 25 January 2015, with an increase in distribution costs of £5.4m and a decrease in administration costs of £8.8m. There was no impact to the previously reported operating profit.

2. Segment Reporting

The Group's management committee has been identified as the chief operating decision maker. The management committee reviews the Group's internal reporting in order to assess performance and allocate resources. The management committee has determined the operating segments based on these reports.

The management committee considers the business from a product perspective. This has led to the operating segment identified in the table below: there has been no change to the segments during the year (after aggregation). The performance of the operating segments is assessed by reference to their gross profit before exceptional items. There were no exceptional items in the year to 30 January 2016.

The operating segments disclosed have been aggregated by the nature of the products and the production processes that they share in addition to similar long-term average gross margins for the operating segments.

There are no intersegment sales. All revenue is from external customers.

Other segments represent income from the sale of Funkin cocktail solutions, rental income for vending machines the sale of ice-cream and other soft drink related items such as water cups. In the year to 25 January 2015 this segment also included income from water coolers for the Findlays 19 litre water business. This business was disposed of toward the end of the year to 25 January 2015.

The gross profit from the segment reporting is stated before exceptional costs. The prior year exceptional costs allocated to cost of sales in the consolidated income statement related to the 'Still drinks and water' segment only.

The gross profit from the segment reporting is reconciled to the total profit before income tax, as shown in the consolidated income statement.

All of the assets and liabilities of the Group are managed by the management committee on a central basis rather than at a segment level. As a result no reconciliation of segment assets and liabilities to the statement of financial position has been disclosed for either of the periods presented.

All of the segments included within Carbonates and Still drinks and water meet the aggregation criteria set out in IFRS 8 Operating Segments.

Geographical information

The Group operates predominately in the U.K. with some worldwide sales. All of the operations of the Group are based in the U.K.

The Rest of the world revenue includes sales to Ireland and wholesale export houses.

All of the assets of the Group are located in the U.K.

Major customers

No single customer accounted for 10% or more of the Group's revenue in either of the years presented.

3. Exceptional Items

During the year to 25 January 2015 A.G. BARR p.l.c. announced the closure of its manufacturing site at Tredegar. This resulted in an impairment charge of £1.5m in respect of buildings and plant at the site which were written down to the recoverable amounts calculated by reference to fair value less costs of disposal (valued by reference to an independent valuation and categorised as a level 2 fair value measurement). £0.5m of redundancy related costs were incurred in the year to 25 January 2015.

A further £0.9m of redundancy costs were provided for.

Redundancy, recruitment and training costs in relation to the finance, telesales, distribution, demand and supply planning operation within England were incurred during the year to 25 January 2015 and treated as exceptional.

As a result of the finance, telesales, distribution, demand and supply planning reorganisation, a curtailment in the Group's retirement pension plan arose. This resulted in an exceptional credit arising from the reduction in the retirement benefit obligation following a reduction in the number of employees remaining with the scheme. The value of this credit was £0.5m.

A tax credit of £nil (2015: £0.7m) was recognised as a result of the total exceptional costs.

4. Earnings per Share

Basic earnings per share have been calculated by dividing the earnings attributable to equity holders of the parent by the weighted average number of shares in issue during the year, excluding shares held by the employee share scheme trusts.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. These represent share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

The underlying EPS figure is calculated by using Profit attributable to equity holders before exceptional items:

This measure has been included in the financial statements as it provides a closer guide to the underlying financial performance as the calculation excludes the effect of exceptional items.

5. Dividends

The directors have proposed a final dividend in respect of the year ended 30 January 2016 of 9.97p per share, amounting to a dividend of £11.6m. It will be paid on 10 June 2016 to all shareholders who are on the Register of Members on 12 May 2016

The notice of Annual General Meeting for the year ended 26 January 2014 omitted the resolution seeking shareholder approval for the payment of a final dividend of 8.19p per ordinary share. Accordingly, the Board declared a second interim dividend for the year ended 26 January 2014 in place of the proposed final dividend. The interim dividend did not require the approval of shareholders.

The amount of this interim dividend was 8.19p per ordinary share.

This dividend was paid on 6 June 2014 to all shareholders who were on the Register of Members on 9 May 2014.

Dividends payable in respect of the financial year were as follows:

6. Acquisition of subsidiary

On 2 February 2015, the Group acquired 100% of the share capital of Funkin Limited ('Funkin'), a company which offers a broad range of premium cocktail solutions including fruit purées, cocktail mixers and syrups.

In the twelve months to 30 January 2016, Funkin contributed revenue of £9.8m and an operating profit of £1.3m to the Group's results. Had Funkin been consolidated from 26 January 2015, the consolidated income statement for the year ended 30 January 2016 would not be materially different.

 Consideration transferred

The following table summarises the acquisition-date fair value of each major class of consideration transferred:

Contingent consideration

The Group has agreed to pay the former owners of Funkin a contingent consideration based on achievement of certain financial targets Funkin in the two years from the date of its acquisition by the Group. The potential undiscounted amount of all future payments that the Group could make under the acquisition agreement is between £nil and £4.5m.

The fair value of the contingent consideration arrangement of £4.5m was estimated by assessing the expected growth of Funkin over the two years trading post acquisition. No discount rate has been applied to the fair value estimate of the contingent consideration as due to the short time period the effect of discounting has a negligible effect on the fair value. 

The fair value of trade and other receivables was £1.4m and includes trade receivables with a fair value of £1.2m.

The gross contractual amount for trade receivables due was £1.3m of which £0.1m is expected to be uncollectible.

The fair value of the acquired identifiable intangible assets was £7.2m.

A deferred tax liability of £1.5m has been provided in relation to these fair value adjustments in relation to intangible assets.

Acquisition-related costs

The Group incurred acquisition-related costs of £0.7m relating to external legal fees and due diligence costs. These costs have been included in operating costs in the consolidated income statement.

Recognised amounts of identifiable assets acquired and liabilities assumed

None of the goodwill arising on the acquisition is expected to be deductible for tax purposes.

The goodwill of £15.7m arises from a number of factors including expected synergies through combining an experienced senior team and obtaining greater production efficiencies through knowledge transfer; marketing expertise; obtaining economies of scale by cost reduction from purchasing efficiencies; sales synergies arising from introducing Funkin to A.G. BARR's route to market and sales channels; and unrecognised assets such as the workforce.

7. Cash and cash equivalents

Annual General Meeting

The Annual General Meeting will be held at 11.00am on 1 June 2016 at the offices of KMPG, 191 West George Street, Glasgow, G2 2LJ.

Statutory Accounts

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 January 2016 or 25 January 2015 but is derived from the 2016 accounts. Statutory accounts for 2015 have been delivered to the registrar of companies, and those for 2016 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified and (ii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.