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

25 March 2014

A.G. BARR p.l.c.

FINAL RESULTS for the year ended 26 January 2014

A.G. BARR p.l.c. ("A.G. BARR"), which produces and markets some of the U.K.'s leading brands, including IRN-BRU, Rubicon and Strathmore water, announces its final results for the 12 months to 26 January 2014.

Key Points

● Profit on ordinary activities, before tax and exceptional items, increased by 9.6% to £38.1m (2013: £34.8m - restated for IAS19)

● Total turnover increased by 6.9% to £254.1m (2013: £237.6m)

● Underlying earnings per share increased by 10.1%* to 27.02p (2013: 24.55p - restated for IAS19)

● Core brands, IRN-BRU, Barr, Rubicon and Rockstar, grew and outperformed the market in the period with particularly strong growth coming from the carbonates segment.

● Robust financial position

○ ROCE increased to over 22%

○ substantial underlying free cash flow of £37.7m

○ net debt at the period end of £2.1m (2013: £25.6m)

● New production and warehouse facility at Magna Park, Milton Keynes Phase I fully operational

● Proposed final dividend of 8.19p per share (2013: 7.4p) to give a proposed total dividend for the year of 11.02p per share, an increase of 10.0% over the prior year

Roger White, Chief Executive, commented:

"It has been another year of significant progress at A.G. BARR which has seen us outperform the market and improve our conversion of sales into profit growth.

"The financial position of the Group has grown stronger in the past 12 months and the platform for growth has been further reinforced by the performance of our brands, assets and people. The business has benefited hugely from the challenges of the past year, emerging stronger, fitter and more ambitious to develop. Despite remaining cautious regarding the environment we operate in and the challenges we face, we are confident in our future prospects."

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*The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.

Underlying earnings per share exclude the effect of exceptional items after tax on the basic earnings per share calculation. In the year to 26 January 2014 these exceptional items after tax represented a charge of £2,991,000 (2013: a charge of £3,058,000).

Reconciliations of underlying measures to IFRS measures for earnings per share in respect of each period are provided in the earnings per share note.

Chairman's Statement

The Group's results are again excellent, outperforming the U.K. soft drinks market and delivering growth in profit before tax and exceptional items of 9.6%; sales increased by 6.9% to £254.1m. It was an eventful year including the termination of the proposed merger with Britvic plc, which despite the initial recommendation of both Boards and eventual clearance by the Competition Commission, could not subsequently be agreed by both Boards. I reported last year that, despite the potential distraction of the Britvic deal, our priority remained on the business elements within our control - building brand equity, driving sales fundamentals, seeking efficiency gains and controlling costs and that is exactly what we have done. As a consequence, our business has had another strong financial year.

In addition to our efforts to deliver our financial plans, the business has also embarked on a number of structural improvement initiatives, outlined in more detail in the Operational Review which are designed to support the long term delivery of sustained business performance and maximisation of shareholder value. This is an exciting time for A.G. BARR, in which we aim to accelerate our growth, building on the strong platform we have created.

2013 also saw the completion of our initial investment in our new production and warehousing facilities at Milton Keynes. I am delighted that the first phase of this investment is now complete - on time and to budget - which was a significant achievement for all of the team and now equips us with a highly efficient and flexible site, increasing our capacity immediately and providing further scope for future growth.

Dividend

The Board is pleased to recommend a final dividend of 8.19p per share to give a total dividend for the year of 11.02p per share, a full year increase of 10.0% on the prior year reflecting the financial strength of the business and our confidence in the future.

Future Prospects

We continue to operate in challenging markets but our combination of great people, strong brands, proven business model, excellent asset base and growth potential gives us real confidence in our future prospects.

The markets in which we operate have performed relatively robustly despite the economic, regulatory and consumer related headwinds. However we are cognisant that we must remain vigilant to the fast pace of change in our markets and ensure we are fully focused on consumers. We face these challenges from a position of strength, with a clear growth strategy, well invested asset base, strong balance sheet and a committed and capable team.

People

I am delighted that Pam Powell joined the Board in November 2013. I welcome her experience and continued contribution following an established career in innovation and brand strategy in fast moving consumer goods and latterly within beverages through her nine year tenure at SAB Miller plc.

Finally, I would like to thank all of the team at A.G. BARR on behalf of our shareholders and Board for delivering superior performance in what has been a challenging period for all.

Ronald G. Hanna

Chairman

Operational Review

Across the last financial year we have continued to make excellent progress in both short term financial performance and also the development of our longer term plans and actions to ensure the business is fit for the future.

Our revenue in the 12 months to 26 January 2014 grew by 6.9%, outpacing the wider soft drinks market, as measured by Nielsen, continuing A.G. BARR's track record of outperformance in this regard. It is particularly pleasing in this context that we grew our volume by 5.0%, which is more than double the market rate.

Pre tax profit, before exceptional items, increased by 9.6% to £38.1m, with operating margins increasing by 0.4% to 15.1%, reflecting the improvements in cost of goods, well controlled overheads and positive product sales mix. The improvement in our margins has not come at the expense of our continued investment in our brands, where marketing and promotional spend has further increased year on year.

Market Performance

The U.K. soft drinks market has performed relatively strongly across 2013, with the exceptionally hot weather in July and generally warm summer more than making up for a cold, wet start to the year.

The total soft drinks market grew by 3.8% in value terms, with 1.9% of this growth coming from volume. Still drinks performed marginally better than carbonates in value terms and were significantly ahead in volume terms, driven by the water sub category which performed particularly well.

A.G. BARR's overall performance was driven by excellent growth in carbonates, which grew by 8.2% in overall value. This was as a result of the consistent growth of our core carbonate brands IRN-BRU and Barr, with the addition of a strong performance from our franchise energy brand Rockstar. Our still drinks portfolio had a more subdued year, growing by 2.7% in overall value terms. Within this performance, Rubicon stills grew by 4.0% and the Strathmore water brand grew by over 9%, reflecting the delivery of a number of business development activities and the positive impact of the warm summer weather on the category. KA stills declined by 3.8% following a very strong prior year growth. Overall the KA brand was down 1% in the period.

Our Strategy

The objective of our strategy is to create value for shareholders through:

· Core brands and markets;

· Brand portfolio;

· Route to market;

· Partnerships;

· Efficient operations;

· People development; and

· Sustainability and responsibility.

Our focus on all of the above areas was tested across the 2013/14 financial year, with the impact of the work load and uncertainty created by the planned merger with Britvic plc and associated anti-trust activity. The strength of the performance ethic across the teams at A.G. BARR and the consistency of our strategy and execution enabled us to weather this difficult period and emerge stronger. We have delivered considerable progress across all areas of our business over the last 12 months, all of which equip us to meet our long term growth and value creation objectives.

Core Brands, Markets and Innovation

Delivering growth despite numerous challenges, year in year out, has been the hallmark of our core brands' performance over many years and last year was no different. Our core Group brands, IRN-BRU, Rubicon and Barr, together with franchise brand Rockstar, delivered total revenue growth of 8%.

In geographical terms, our sales in Scotland now account for 40% of our total revenue and continue to grow in line with the overall market, whilst our sales in England and Wales, which account for the balance of our domestic revenues grew at over 9% in the period, reflecting both the significant opportunities for growth and the successful execution of our strategy.

IRN-BRU

Total IRN-BRU invoiced sales grew by 4.3%, as brand performance improved across the full year following a slow start, where aggressive competitor promotional activity impacted our volume performance. Overall sales growth of IRN-BRU in the second half of the year was double that of the first half as we realigned our promotional pricing relative to our competitor set. Our growth last year once again highlights the positive annual performance and significant potential in England and Wales which saw 7.5% growth in the period, driven by double digit growth in IRN-BRU Sugar Free.

Scotland, where we enjoy significant consumer loyalty and brand presence, continued to successfully grow in line with the overall market. The brand benefited from strong underlying brand equity and the execution of a well-developed commercial plan, including further value added promotional activity in the period. All of this activity helped to underpin sales at a time when competitor average pricing was driven down by aggressive promotional pricing.

The IRN-BRU brand continued to benefit from significant advertising support across all major media platforms and particularly benefited from the well-executed "BRU-SKIES" summer promotion, which helped build on the positive impact of the warm summer weather during which we gave away thousands of pairs of free sunglasses. The opportunities to drive further brand growth, by building on a loyal base of consumers in Scotland and geographical expansion with an increasing awareness and loyalty in the North of England, as well as innovation, will remain our main focus.

IRN-BRU Sugar Free, in line with our strategy, will continue to be exploited as a major growth opportunity across the U.K. and has received a further packaging and branding refresh in recent months. It is our aim to grow our Sugar Free brands ahead of our total growth. Following our successful launch of Rubicon ice cream, we have fully developed a further ice cream treat under the IRN-BRU brand which was launched in February 2014. We expect this product to add further brand value and deliver additional sales potential across 2014.

Exotics - Rubicon and KA

Following several years of significant growth, it has been a more modest year for our exotics brands, Rubicon and KA. Total Rubicon brand sales continued to grow, with stills drinks growth of 4.0% and carbonates achieving marginal growth. The past 12 months has seen a period of intense competitor activity, as a number of competing carbonate brands launched exotic flavours in response to the success of Rubicon. We have weathered the storm well and have continued to increase our brand development investment and Rubicon is well positioned to regain its growth momentum in 2014. We have completed a full artwork refresh, which will ensure the brand stands out more on shelf and we also aired national television advertising across 2013, to help broaden awareness and credibility of the brand with a wider audience. We continue to believe that this strong combination of product quality, innovation and brand recognition will ensure that Rubicon continues its positive growth trajectory to drive our exotics portfolio.

In mainland Europe and Scandinavia, Rubicon is an untapped source of future potential. Currently 5% of the Rubicon brand sales come from these territories with growth last year of 6.5%.

Barr Brands

The Barr range posted growth of 3.2% and further demonstrated its flexibility and potential through innovation and distribution growth. Across the year the brand growth was impacted by actions taken to phase out some flavours in advance of the planned merger with Britvic plc. We have now however successfully reversed these actions and, in addition, introduced a Bubblegum flavoured soft drink to the Barr portfolio. Initially launched as a special pack, Bubblegum is now a new permanent range extension following its success and feedback from our consumers. This, together with the development of an additional cola product - Barr XTRA Cola - for 2014, leaves us confident that Barr will regain its strong growth momentum.

Rockstar

The Rockstar brand continued to go from strength to strength in 2013, supported by the development and subsequent launch of a number of new flavours and pack designs. The energy market has slowed down significantly in overall terms from its growth high points, however Rockstar has continued to appeal to increasing numbers of consumers with growth of over 60%, as distribution levels continue to build across the U.K. This brand, like the category, will continue to rely on innovation and excitement around the category to generate further growth but Rockstar is now an important component of the A.G. BARR portfolio and consumer offering.

Strathmore

Strathmore, in tandem with the wider market as a whole, enjoyed good growth of 9.3%. Within this, 7.3% has come from volume and encouragingly value was driven by incremental listings in the flavoured water variant Strathmore Twist. Strathmore continues to enjoy a leading position within the on-trade and has a strong platform to develop in 2014, specifically with our Commonwealth Games sponsorship activity.

Route to Market

We continue to believe that developing our various route to market strategies and executing them with excellence is a core area of competence which presents exciting further potential for A.G. BARR. As an example of the many actions we are taking to improve our executional capability, we initiated the centralisation of our in-house telesales operation in the second half of 2013. This operation supports our impulse customers and has historically been based at six sites across the U.K. Following employee consultation, we have announced that this important business process will be fully centralised by mid 2014, with new premises and technology to support the development of our important impulse business.

Whilst controlling overhead costs closely, we have also substantially bolstered our central commercial management teams across our various channels over the last year. This will ensure that we have the most effective and efficient commercial programmes available to customers and that we are able to support these with significantly improved customer service. It is our aim to deliver the best possible service and pricing to all of our customers regardless of which route to market we employ.

Partnerships

There have been significant changes in the soft drinks landscape in the U.K. over the last year. Suntory's acquisition of Lucozade and Ribena provides their business with a U.K. operating platform. As a result, we anticipate that our Orangina contract, which is due to expire at the end of 2014, will transfer into the new Suntory Lucozade Ribena operation. At this stage we have not completed the planning for the transfer of the brand but we do not anticipate that this will have any material impact on either our operational or financial performance going forward due to the relatively insignificant scale of the brand, its revenues and gross profit generation.

Rockstar, as previously highlighted, continues to perform strongly and is approaching five times the size of Orangina in revenue terms. We have long term contractual commitments in place with Rockstar stretching through to 2024.

Efficient Operations

We have made excellent progress across our asset base in driving efficiency, building flexibility and improving customer service. Our new site at Magna Park, Milton Keynes is now fully operational, with the can line and associated processes fully commissioned. The seamless transfer of our distribution centre from Lutterworth to Milton Keynes was completed in the period and with the site now fully operational, it has the potential to add significantly more capacity to the Group.

As a direct consequence, we have also substantially reduced our finished goods inventories as our new operating platform begins to deliver the planned benefits. We are currently planning our Phase II activities at Milton Keynes and are conducting a full review of our current and future operational requirements and options, mapped out against our forward views of consumer trends, to ensure we make the very most of the potential of this world class operating site. We anticipate reaching concrete conclusions of this review during the course of 2014.

A special thank you should go to all of our colleagues at Milton Keynes, both in the project team and the local team, for their hard work and dedication in delivering this complex and significant project.

Across all of our operating sites we have continued to make great progress in 2013/14 driving improved efficiency and delivering excellent customer service.

Our capital expenditure in the financial year 2013/14 was slightly less than previous guidance at £13.4m, primarily due to the re-phasing of a number of capital projects into 2014/15. Overall, we have a well invested and scalable operating platform from which to grow our business.

People, Sustainability and Responsibility

Across the business everyone has responded positively to both change and challenges throughout the last 12 months. The flexibility, adaptability and resilience of the whole team is a huge credit to them and the delivery of our financial plan, during an extended period of corporate uncertainty, speaks volumes for our people.

We have learned a great deal about ourselves as a business over the last 12 months and we have channelled much of this insight and energy into a change programme which we launched across the second half of 2013. Our Fit for the Future programme is designed to support our internal change agenda across a broad range of development and change projects. All of these projects are designed to ensure we can successfully and sustainably accelerate the growth of our business. Our change programme will cover all key aspects of our business going forward: systems and processes; people and performance; and assets and brands. The adoption of enhanced project and programme management tools and processes will allow us to accelerate and de-risk our major project activity, as well as improve overall resource planning and execution as we enter a new and exciting growth phase of the business. It should be highlighted that the Milton Keynes project was delivered successfully using our new programme project management methodologies.

Safety performance in the period made further significant progress as all of our teams continue the journey to transform safety behaviours across each site. We have built on our previously described near-miss reporting and corrective actions plans which, together with increased safety audit activity, have delivered a real reduction in lost time accidents and continue to help keep safety at the top of our agenda across the business.

The weight of regulatory activity, media interest and political comment on the soft drinks sector has never been greater. A.G. BARR continues to take a very positive and proactive role in driving our responsibility actions to ensure we support consumers to do the right thing. We have successfully met our annual objectives related to our commitments under the Government sponsored Responsibility Deal to reduce the average calorie content of our drinks portfolio by 5% by 2016. In addition, we will be adopting the non mandatory, traffic light, front-of-pack labelling system during the course of 2014, ensuring that we give consumers maximum visibility of the nutritional content of our drinks, further emphasising our commitment to supporting consumers' right to clear and well informed choice.

Commonwealth Games Glasgow 2014

We are now only a few months away from the Glasgow 2014 Commonwealth Games, to which A.G. BARR is both an official supporter and supplier. Our portfolio of brands - IRN-BRU, Strathmore, Barr and Rubicon - will have a role to play for both spectators and athletes as the Games approach and also during the Games themselves. We have committed significant resources to support the Games, not only across the Games period but across the last 12 months, and support will continue in the run up to and during the Games. The Games will provide a great platform for sport, the city of Glasgow and also our brand activity across the key summer trading months of 2014.

Summary

We are firmly at the start of a new phase in the development of A.G. BARR. We have organic growth potential in our range of unique brands, driven by our geographical growth potential and consumer diversity, as well as efficient scalable operating asset base, allied to a team across the business hungry for continued growth and success. We will ensure that our rigorous management of cash and costs will continue to be at the heart of our strategy, along with our culture of delivering. We plan to increase the internal pace of development and change in our business, as we deliver on the significant existing growth potential of the business and seek new routes to grow further shareholder value.

Roger A. White

Chief Executive

Financial Review

Overview

All of our key financial measures have improved relative to the prior year. Revenue increased by 6.9% to £254.1m, profit before tax (pre-exceptional items) by 9.6% to £38.1m and underlying Earnings per Share (EPS) by 10.1% to 27.02p. Including the effect of £3.8m of exceptional items, profit before tax increased by 8.6%.

During the year, the Group generated very strong free cash flow amounting to £37.7m, which contributed to a substantial reduction in our net debt position. Strong EBITDA margins, tight working capital management and continued investment in the asset base contributed to a further strengthening of the balance sheet. Net assets increased by 18.8% to £155.2m. More importantly, Return on Capital Employed (ROCE), increased a further 197 basis points to 22.4%.

These results once again underpin the consistent delivery of key business metrics over the long term. Based on a proven business model, a strong portfolio of brands and a consistent management approach the Group has delivered five year compound annual growth in turnover of 9.7% and profit before tax of 10.5%.

Segment Performance

During the year ended 26 January 2014, the Group's turnover increased by 6.9%. This strong performance was driven by the continuation of the strategy to drive distribution gains throughout England and Wales whilst protecting a strong core Scottish market position. In 2013/14 the Group sold over 50 million cases of products, which represented an increase of 5.0% on the prior year. Average realised price (net of promotional investment) increased by 1.9%. In absolute terms, revenue of £254.1m was achieved, which represented an increase of £16.5m on the previous year.

The carbonates segment delivered year on year turnover growth of 8.2%, with volume growing by 5.8% and value by 2.4%. In absolute terms, the increase in carbonates equated to additional turnover of £14.9m.

The still drinks and water segment (stills) delivered year on year turnover growth of 2.7%, with volume growing by 1.8% and value by 0.9%. In absolute terms, the increase in stills equated to additional turnover of £1.5m.

All subsequent comparisons exclude the effect of exceptional items.

Margins

Despite improved market sentiments we have continued to see the level of promotion across branded products intensify. Overall, on a like for like basis (net of volume growth) our cost of goods increased by 1.4%. The delivery of modest price increases across the portfolio and a more benign cost environment led to an improvement in gross margins, which increased to 45.7%.

Carbonates gross margins experienced a slight decline due to the mix of lower margin products within the segment growing at a faster rate. Overall, carbonates achieved an average margin of 50.1% (down 50 bps) but cash margins per case increased by 1.3%.

Within stills, the combination of price increases and reduced costs of goods led to an improvement in gross margins from 27.6% to 29.7%, with cash margins increasing by 8.4%.

Overall gross profit increased by £8.2m or 7.5% relative to 2012/13.

In the year ahead we anticipate some further reduction in the pace of input cost inflation, which we expect to be at a low single digit level. We have good visibility of our forward raw material requirements and good levels of foreign exchange cover in place. Current market pricing for PET and sugar is down year on year, aluminium is flat, whilst the costs of our key fruit pulps are marginally higher.

Below gross profit, distribution costs increased by 6.0%, reflecting increased volume driven activity together with a double digit increase in marketing expenditure. This is in line with our strategy of building long term brand equity to accelerate our future growth.

Year on year administration costs increased by 6.9%. During the year we experienced significant increases in pension contributions through the higher ongoing service charges for the defined benefit pension scheme but also through the additional costs associated with auto enrolment, where we have seen a further 302 employees join the defined contribution pension scheme since November 2013. Professional fees were also incurred in the implementation of the Asset Backed Pension Funding arrangement put in place during the year. The Group saw expenditure on rates increase by 30% with the addition of the Milton Keynes production and distribution facility as well as through an increase in the base charges. Net of pension and rates related expenditure, administration costs increased by 3.9%, reflecting the additional investment deployed in developing our organisational capability.

The Group has continued to experience the benefits of operational gearing, with operating margins growing ahead of gross margins. An operating profit of £38.5m (before exceptional items) was delivered, representing an increase of 10.1% on the prior year. Operating margins, before exceptional items, increased from 14.7% to 15.1%.

Profit before tax (and exceptional items) increased by 9.6% to £38.1m, reflecting slightly higher average borrowing costs associated with the purchase of the land and buildings at Milton Keynes.

EBITDA (pre-exceptional items) of £45.2m was generated in the period, representing an EBITDA margin of 17.8%.

Interest

Net finance charges which amounted to £0.4m were £0.2m higher than in the prior year. The constituent elements of the charge are summarised below:

Finance income has benefited from the expected return on pension scheme assets being £0.1m higher than the interest costs associated with the scheme liabilities. The cash interest cost includes the full year interest charges of £0.5m, offset to a small extent by interest income on cash balances.

Taxation

The tax charge of £6.1m is £0.1m lower than the prior year charge and represents an effective tax rate of 17.8%, a reduction of 180 basis points from the prior year. The key components in this reduction are; the impact on both current and deferred tax of the reduction in the corporation tax rate; the impact of accelerated capital allowances for the Milton Keynes site; and final agreed deductions relating to the costs of the failed merger with Britvic plc. We have worked hard to develop our excellent relationship with HMRC and have maintained our low risk status.

Earnings Per Share (EPS)

The reduced tax charge in the year has once again had a beneficial impact on underlying EPS, which at 27.02p represents an increase of 10.1% on the prior year.

Dividends

The Board is recommending a final dividend of 8.19p per share to give a total dividend for the year of 11.02 pence. This represents an increase of 10.0% compared to the prior year and represents a payout ratio of 45.1% of basic EPS.

Balance Sheet

Over the 12 month period to 26 January 2014 the Group's balance sheet strength increased significantly. Overall net assets grew by just under 19% to £155.2m. Property, plant and equipment assets increased by £6.8m, predominantly due to the completion of the production and distribution facility at Milton Keynes. Tight management of working capital and strong cash generation led to a significant reduction in borrowings. This was supplemented by lower current and deferred tax liabilities and a reduction in the defined benefit pension deficit.

The key balance sheet metrics can be summarised as:

· ROCE increased to 22.4%, increasing by 197 bps relative to the prior year.

· Inventory reduced by 23% with inventory days reducing from an average of 59 to 43.

· Trade receivable days remained flat at 65 days.

· Trade payable days reduced from 35 to 25.

· Total capital investment of £13.4m at 5.3% of revenue reflected the six year average.

· The ratio of net debt to EBITDA reduced to below 0.1 times.

In the year ahead, capital expenditure is anticipated to be higher than in the previous year. Total expenditure of £17.0m is anticipated, of which £5.5m relates to retained Milton Keynes final Phase I balances together with expenditure being planned for Phase II; also included is just under £5.0m towards the Enterprise Resource Planning (ERP) replacement project. A decision on the preferred solution to replace our existing ERP solution is imminent. Maintenance capital of £6.6m will more closely match ongoing depreciation.

Cash Flow and Net Debt

An exceptionally strong free cash flow of £37.7m was generated in the period, representing an increase of over £15.7m on the prior year. This was despite exceptional cash costs amounting to £5.0m. The increase in free cash flow was attributable to the improvement in underlying EBITDA, strong management of working capital and reduced taxation.

Below free cash flow, the significant cash out flows included repayments of existing banking facilities of £10.0m, expansionary capital expenditure of £9.6m, and dividends which amounted to £3.3m. The dividend paid in 2013 was significantly lower than the prior year which included a £8.5m early distribution, in lieu of the final dividend, ahead of the planned and subsequently aborted merger with Britvic plc.

Shares with a net value of £1.2m were purchased on behalf of various employee benefit trusts to satisfy the ongoing requirements of the Group's employee share schemes.

As at the end of January 2014, the Group's closing net debt position stood at £2.1m, being the closing cash position of £12.9m offset by borrowings of £15.0m. Repayments of £10.0m were made against existing bank facilities during the year which included the final payment to settle the Rubicon acquisition facility in full. The Group has sufficient banking facilities at its disposal to meet the expected future needs of the Group.

During the period, the Group has not undertaken any interest rate hedging activity given the current net debt position and the future expectations of short term interest rates and future free cash generation.

Exceptional Items

The Group incurred £3.8m of exceptional charges during the period. This represented a mixture of merger and Competition Commission activity in the first half of the year, Milton Keynes site set up costs not capitalised and provisions relating to redundancies following a number of organisation structural changes that have either been implemented or announced.

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 pension provision to senior managers.

The defined benefit scheme is closed to new entrants but remains open for future accrual. As at the end of January 2014 the IAS 19 deficit was valued at £0.1m, a £3.3m improvement on the prior year. The improvement has been driven by strong asset returns. Overall assets have grown by 12%, offset to some extent by the effect of a reduction in the discount rate. The latter has increased liabilities by a further £4.3m. The overall pension position is robust considering the historically low gilt yields that are being used to value the scheme liabilities.

Given the financial position of the defined benefit pension scheme, the Trustees continue to review opportunities to reduce risk, acknowledging both the long term nature of pension arrangements and the underlying objective of achieving full buy out of the liabilities. During the year the Trustees, together with the Company, implemented an Asset Backed Funding arrangement. This arrangement has improved both the funding and the level of security provided to the scheme. The arrangement will support the implementation of a less volatile investment strategy whilst providing the Company with accelerated tax relief on its pension contributions.

Summary

Our financial position has continued to improve as we have delivered growth in underlying trading performance, increased underlying operating profits and generated strong free cash flow. Our balance sheet is in great shape and our efficiency measures of operating margin, cash flow conversion and ROCE are very strong. We have increased the levels of investment deployed to support long term brand building activity and to develop our organisational capability. Capital investment levels are in excess of underlying depreciation as we continue to invest in our asset base to provide efficient platforms for future growth.

As we enter the next stage of our development we do so with a very strong financial foundation.

Share Price and Market Capitalisation

At 26 January 2014 the closing share price for A.G. BARR p.l.c. was £6.05, an increase of 10% on the closing January 2013 position. The Group is a member of the FTSE250, with a market capitalisation of £706.5m at the year end.

Alex Short

Finance Director

A.G. BARR p.l.c.

Consolidated Income Statement for the year ended 26 January 2014

The following are the final results for the year to 26 January 2014

Record date: 9 May 2014

Ex-div date: 7 May 2014

A.G. BARR p.l.c.

Consolidated Statement of Comprehensive Income for the year ended 26 January 2014

A.G. BARR p.l.c.

Consolidated Statement of Changes in Equity for the year ended 26 January 2014

A.G. BARR p.l.c.

Consolidated Statement of Financial Position as at 26 January 2014

A.G. BARR p.l.c.

Consolidated Cash Flow Statement for the year ended 26 January 2014

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.

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.

Restatements

IAS19 Employee benefits was revised in June 2011 (IAS 19R). The change to the Group's accounting policies has been to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit asset or liability. Prior year comparatives have been restated to take account of this change.

This net interest expense or income replaces the finance charge on scheme liabilities and the expected return on scheme assets and is expected to result in a higher annual expense. The effect of IAS 19R for the year ended 26 January 2013 is to reduce the net finance income relating to defined benefit plans to nil and create a net finance charge relating to defined benefit plans of £21,000. Under IAS 19R the plan administration costs relating to managing the assets should be included within operating profit. As the plan administration costs are met by the Group and as all plan administration costs not in connection with managing plan assets were previously charged as operating expenses, IAS 19R has no effect on the operating profit. In the current year, the implementation of IAS 19R has had a similar effect as in the prior year. Had IAS 19R been applied to the Group's financial statements for the year ended 26 January 2013 the consolidated statement of financial position would have been the same as that reported. The effect on the consolidated income statement, consolidated statement of comprehensive income and the consolidated cash flow statement is summarised as follows:

Extract of Consolidated Income Statement

Extract of Consolidated Statement of Comprehensive Income

Extract of Consolidated Cash Flow Statement

IAS 19R has no impact on any further line items in the consolidated cash flow statement.

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 led to the operating segments 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 are no intersegment sales. All revenue is from external customers.

Other segments represent income from water coolers for the Findlays 19 litre water business, rental income for vending machines, the sale of Rubicon ice-cream and other soft drink related items such as water cups.

The gross profit from the segment reporting is stated before exceptional costs as the Milton Keynes related exceptional costs allocated to cost of sales in the consolidated income statement relate to Carbonates 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.

Each of the following items are included in the reportable segments results and balances, and no adjustments are required in arriving at the costs included in the consolidated primary statements:

Capital expenditure comprises cash additions to property, plant and equipment.

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

Construction of a new production site at Crossley in Milton Keynes commenced in July 2012 with plant commissioning and associated training costs treated as exceptional items in the year to 26 January 2014. In the year to 26 January 2013, project set up and recruitment costs were treated as exceptional costs. The site commenced manufacturing in July 2013.

During the year to 26 January 2013, A.G BARR p.l.c. and Britvic plc worked together on a proposed all-share merger which was subsequently referred to the Competition Commission and following clearance, aborted. Professional, legal fees and certain employee related costs incurred in relation to the proposed merger and related Competition Commission enquiry have been treated as exceptional for the periods presented.

Redundancy, recruitment and training costs in relation to the reorganisation of the finance, telesales, demand and supply planning operations within England were incurred during the year and treated as exceptional. During the year to 26 January 2013, redundancy costs in relation to the reorganisation of the distribution operations within England were incurred.

During the year to 26 January 2013 preliminary work in relation to the replacement of the existing Enterprise Resource Planning (ERP) system was undertaken.

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 26 January 2014 of 8.19p per share, amounting to a dividend of £9,563,000. It will be paid on 6 June 2014 to all shareholders who are on the Register of Members on 9 May 2014.

A second interim dividend was paid to shareholders on 18 January 2013 in lieu of the final dividend for the year ended 26 January 2013.

6. Cash and cash equivalents

Annual General Meeting

The Annual General Meeting will be held at 9.30am on 27 May 2014 at the offices of KPMG, 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 26 January 2014 or 26 January 2013 but is derived from the 2014 accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 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.