TIDMBVIC
RNS Number : 2097U
Britvic plc
22 November 2023
Britvic plc Preliminary Results - 22 November 2023
For the year ended 30 September 2023
'Excellent progress in a challenging market'
Group Financial Headlines:
-- Revenue increased 6.6%(1) to GBP1,748.6 million (statutory
increased 8.1%), driven by price/mix
-- Adjusted EBIT increased 5.9% to GBP218.4 million (actual
exchange rate increased 6.0%), reported EBIT decreased 5.6%
-- Adjusted EBIT margin decreased 10bps(1) to 12.5% (statutory decreased 20bps)
-- Adjusting EBIT items(2) net charge of GBP36.9 million, of which GBP28.8m was non-cash
o Including a GBP20.5 million non-cash pension adjustment
related to a mutually beneficial conclusion with the Trustees in
respect of the rate of future pension increases
-- Profit after tax decreased 11.6% to GBP124.0 million, mainly
driven by the impact of adjusting items
-- Adjusted earnings per share of 61.0p, increased 6.5%
-- Free cash flow generation of GBP129.8 million, with a djusted net debt to EBITDA at 1.9x
-- Full year dividend increased 6.2% at 30.8p, reflecting the
Board's confidence in our prospects and strong balance sheet
Operational Highlights:
-- Demand remained strong, modest volume decline due to tough Q4
comparable of the hot summer in Europe in 2022 and poor weather in
July and August 2023
-- Successfully managing the inflationary environment
-- Standout performances from Tango and Pepsi MAX
-- Leveraging our brand building capability to scale Plenish,
Aqua Libra and our Global Premium brands
-- Bolt-on acquisitions in Great Britain and Brazil to access fast-growing categories
-- Continued investment in growth capacity, with new lines
operational in Great Britain and Brazil
-- Healthier consumer choices (total portfolio average 22
calories per serve, 12.5 calories per serve in Great Britain), and
Healthier Planet, through investment in decarbonisation and water
stewardship programmes
-- Share buyback ongoing, GBP75 million repurchased over the last 12 months
Year ended Year ended % change Adjusted
30 September 30 September actual exchange % change
2023 2022 rate (statutory) constant
GBPm GBPm exchange rate(1)
Revenue 1,748.6 1,618.3 8.1% 6.6%
Adjusted EBIT 218.4 206.0 6.0% 5.9%
Adjusted EBIT margin 12.5% 12.7% (20)bps (10)bps
Adjusting EBIT items (36.9) (13.6) (171.3)% (171.3)%
(2) 181.5 192.4 (5.7)% (5.6)%
Reported EBIT 10.4% 11.9% (150)bps (130)bps
Reported EBIT margin 124.0 140.2 (11.6)% (11.4)%
Profit after tax 48.3p 52.6p (8.2)%
Basic EPS 61.0p 57.3p 6.5%
Adjusted basic EPS 30.8p 29.0p 6.2%
Full year dividend 1.9x 1.9x -
per share 17.9% 16.4% 150bps
Adjusted net debt/EBITDA
ROIC
-------------- -------------- ------------------ ------------------
See glossary on page 31 for definitions of performance measures and the
appendix of non-GAAP reconciliations on page 27 for the reconciliation
of alternative performance measures to IFRS measures.
1. Adjusted for constant currency.
2. Adjusting EBIT items of GBP36.9 million are detailed on page
27. Total adjusting items totalled GBP38.4 million, of which
GBP36.9 million are EBIT-related (year ended 30 September 2022:
GBP13.6 million).
Simon Litherland, Chief Executive Officer commented:
"We have delivered another set of excellent results, making
strong progress across our People, Planet and Performance measures.
Our portfolio of family favourite brands and focus on great
tasting, healthier drinks offer both quality and value at
affordable prices. We have continued to invest across our supply
chain, adding capacity and upgrading technology, while also
building our brands and portfolio, including the acquisitions of
Extra Power in Brazil and Jimmy's Iced Coffee in Great Britain.
Looking ahead, we have clear strategic priorities for 2024 and an
exciting programme of marketing and innovation launches coming to
market. With our fantastic portfolio and talented, engaged team, I
am confident Britvic will continue to make excellent progress next
year and beyond, delivering growth and creating value for all our
stakeholders."
For further information please contact:
Investors:
Rebecca Napier (Chief Financial Officer) +44 (0) 1442 284330
Steve Nightingale (Director of Investor
Relations) +44 (0) 7808 097784
Media:
Steph Macduff-Duncan (Head of Corporate
Communications) +44 (0) 7808 097680
Stephen Malthouse (Headland) +44 (0) 7734 956201
There will be a live webcast of the presentation today at
09:00am by Simon Litherland (Chief Executive Officer) and Rebecca
Napier (Chief Financial Officer). The webcast will be available at
www.britvic.com/investors with a transcript available in due
course.
About Britvic
Britvic is an international soft drinks business, rich in
history and heritage. Founded in England in the 1930s, it has grown
into a global organisation with 39 much-loved brands sold in over
100 countries. T he company combines its own leading brand
portfolio including Fruit Shoot, Robinsons, Tango, J2O, London
Essence, Teisseire and MiWadi with PepsiCo brands such as Pepsi,
7UP and Lipton Ice Tea which Britvic produces and sells in Great
Britain and Ireland under exclusive PepsiCo agreements.
Britvic is the largest supplier of branded still soft drinks in
Great Britain and the number two supplier of branded carbonated
soft drinks in Great Britain. Britvic is an industry leader in the
island of Ireland with brands such as MiWadi and Ballygowan, in
France with brands such as Teisseire, Pressade and Moulin de
Valdonne and in its growth market, Brazil, with Maguary, Bela
Ischia and Dafruta. Britvic is growing its reach into other
territories through franchising, export, and licensing.
Britvic is a purpose-driven organisation with a clear vision and
a clear set of values. Our purpose, vision and values sit at the
heart of our company, driving us forward together to create a
better tomorrow. We want to contribute positively to the people and
world around us. This means ensuring that our sustainable business
practices, which we call Healthier People, Healthier Planet, are
embedded in every element of our business strategy.
Britvic is listed on the London Stock Exchange under the code
BVIC and is a constituent of the FTSE 250 index. Find out more at
Britvic.com
Cautionary note regarding forward-looking statements
This announcement includes statements that are forward-looking
in nature. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance, or achievements of the Group to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Except as
required by the Listing Rules and applicable law, Britvic
undertakes no obligation to update or change any forward-looking
statements to reflect events occurring after the date such
statements are published.
Market data
Great Britain take-home market data referred to in this
announcement is supplied by Nielsen and runs to 23 September 2023.
ROI take-home market data referred to is supplied by Nielsen and
runs to 10 September 2023. French market data is supplied by
Nielsen and runs to 10 September 2023. Brazil market data is
supplied by Nielsen and runs to 30 September 2023.
Next scheduled announcement
Britvic will publish its quarter one trading statement on 25
January 2024.
Chief Executive Officer's Review
Performance highlights
Today we report our results for the year ended 30 September
2023. The Britvic team have continued to show resilience, agility,
and dedication to deliver a fantastic set of outcomes. I want to
thank them and their families for their unwavering commitment to
Britvic.
Revenue is ahead of last year, at +6.6% (+8.1% on a statutory
basis) . Through a combination of revenue growth management actions
and cost discipline we have been able to mitigate the substantial
cost inflation pressures, with adjusted EBIT margin only 10 basis
points down on last year. Consequently, adjusted EBIT increased
5.9% (actual exchange rate +6.0%). We have demonstrated that our
portfolio of trusted brands has been able to take and hold
significant price, with very limited volume impact. Strong customer
relationships are vital to our success, and we have successfully
executed our joint business plans, delivering engaging in-store
execution, price and promotional activity, innovation and high
service levels to ensure availability.
Heading into the key summer trading period we faced a tough
comparable due to the exceptional weather in Europe in 2022 and
while the conditions in June were very good, the weather in July
and August was wet and windy this year. Despite this, demand for
our brands has remained solid, with only a modest volume decline in
the full year.
We have continued to invest in our business to unlock growth and
deliver a great customer, shopper, and consumer experience. The
Advertising and Promotional (A&P) investment we have made
behind our compelling physical and digital marketing increased by
nearly 9%, keeping our brands relevant and in front of consumers.
Across our markets, innovation continued to be a driver of growth,
the detail of which is covered in the market highlights below.
Our focus and discipline on cash enabled us to generate a free
cash flow of GBP129.8 million, with our leverage ratio remaining
flat at 1.9x, while continuing to invest in the business, complete
an acquisition and return cash to shareholders through both the
dividend and the share buyback programme. Our strategy has driven
consistent revenue growth over the past five years, with a like for
like Compound Annual Growth Rate (CAGR) of 5.2%.
Our Healthier People, Healthier Planet programme is embedded in
our business and decision making and we have continued to make
progress on our sustainability journey. More detail is shared in
the review of the year below.
A clear strategy underpinning superior returns for
shareholders
We refreshed our strategy in 2019, to ensure the business was
well-placed to access growth opportunities in the changing consumer
and retail landscape across our markets. Throughout the external
turbulence of the pandemic and the subsequent high levels of
inflation, the strategy has continued to drive our performance.
With a portfolio of market-leading brands, a multi-channel route to
market, well-invested supply chain and strong customer
relationships, we believe we are well-positioned to continue to
deliver superior returns to shareholders.
Our future focus remains on four key strategic priorities:
-- Build local favourites and global premium brands
-- Flavour billions of water occasions
-- Healthier People, Healthier Planet
-- Access new growth spaces
Each of our markets has a defined role to play delivering the
strategy:
-- Great Britain - to lead market growth
-- Brazil - to accelerate growth and expand our presence
-- Other International - to globalise premium brands and improve profitability in Western Europe
Underpinning this strategy are three critical enablers:
-- Generate fuel for growth through efficiency
-- Transform organisational capability and culture
-- Selective Mergers and Acquisitions (M&A) to accelerate growth
Market highlights
Great Britain
We have delivered a strong performance, growing revenue across
both our own brands and the PepsiCo portfolio. We took price
earlier in 2023 than in 2022, in quarter one, to offset double
digit cost inflation and to minimise the lag we experienced last
year, when cost inflation impacted us from the start of the
financial year, but we were only able to respond in Q2.
Importantly, we have carefully managed promotional activity, pack
architecture and mix, ensuring that our brands continue to provide
consumers with great quality and value at affordable price points.
Volumes have been resilient despite price increases, growing in
both quarter two and quarter three. Volumes declined in quarter
four, as the disappointing weather across July and August
compounded the tough comparable we faced from last summer; the soft
drinks category, as measured by Nielsen, experienced an 8.9% volume
decline year on year over the final quarter.
We continued to win with consumers in carbonates, with our focus
on great tasting low and no sugar brands. Pepsi MAX is the fastest
growing cola brand, has continued to gain value share and is the
number one brand variant by volume within soft drinks in GB retail.
Flavour innovation has been a key part of the Pepsi MAX success
story, now accounting for over 30% of the brand's retail sales
value, and this year we added Mango to the range. Tango has also
been a huge success over recent years, and that has accelerated
further in 2023, with revenue up 20.7%. We extended the brand
flavour range, with the launch of Paradise Punch, to build on the
success of the Berry Peachy and Dark Berry innovations. Tango is
the fastest growing fruit flavoured carbonates brand, tripling in
size since 2018.
During the year, we installed a new, small bottle PET line at
our London factory, to support our growth ambitions in immediate
consumption. This line will be fully operational in 2024. We also
commissioned another can line at our Rugby factory to meet demand
for our carbonates brands. Not only will this support increasing
consumer demand for our multi-pack cans, but it has also enabled us
to bring Rockstar production in-house. Since taking on the Rockstar
brand in 2021 under a co-pack model, we have suffered several
issues that have impacted our ability to supply customers and
effectively activate marketing campaigns. The energy category is a
significant opportunity for us, and with PepsiCo, we will continue
building brand equity. This year we have increased investment,
resourcing a new regional field sales team to deliver outstanding
execution in outlet. We also announced a new global music platform
'Press Play', with Stormzy leading an international roster of stars
in an electrifying digital concert series.
In 2020 we acquired The Boiling Tap Company. One of our
long-standing core areas of strength is dispense in pubs and
dining, and this acquisition, renamed as Aqua Libra Co, strengthens
Britvic's offer Beyond the Bottle. We have developed the Aqua Libra
proposition in four distinct product areas - packaged infused
water, commercial taps, hospitality table water and the flavour
tap. Aqua Libra is unique in this combination, offering healthy
hydration and a solution that enables a 99% reduction in packaging
materials.
In 2021, we acquired Plenish, to access the plant-based drinks
category. This offers a scale growth opportunity for the future and
added to our brand portfolio in an area where we had little
in-house expertise. Since acquisition, we have been leveraging our
brand building capability to realise the brand's full potential. We
have step changed distribution points in retail, with M*lks growing
+72% and Shots +463% year on year. Our M*lks range is now number
four in the category, with significant further headroom to grow.
Our Shots range is growing at four times the rate of the number one
brand and has nearly doubled share year on year. In September, we
launched our latest innovation, a Barista m*lk range, giving us
access to the hot drink category, which is the largest driver of
growth in plant-based milks. It has been extremely technically
challenging to create a Barista product which maintains Plenish's
unique positioning as the only brand on the market containing no
oils and no gums, so I am particularly proud that our technical
teams have achieved another industry first.
In July, we announced the acquisition of Jimmy's Iced Coffee,
giving us immediate access to the fast-growing UK ready-to-drink
iced coffee category. Jimmy's is the fastest growing brand in the
segment, with a strong brand positioning, lower calories per serve
than category average, distinctive recyclable packaging and fully
compliant with legislation in relation to products that are high in
fat, salt, and sugar (HFSS). As with our other recent acquisitions,
we will leverage our strong customer relationships, distribution
network, procurement, and innovation capability to continue its
strong growth trajectory.
Everywhere at Britvic, our brand and business investment is
underpinned by our ESG agenda: Healthier People, Healthier Planet.
This programme ranges from employee and community wellbeing and
healthier consumer choices to minimising our environmental impact
across packaging, water and carbon emissions.
Our corporate charity is Bounce Forward, whose aim is to support
parents and teachers in schools across the UK to develop young
people's psychological fitness, helping them lead happier, heathier
lives. Our support is enabling children and young people to be
taught the mental resilience and emotional wellbeing skills they
need to flourish as adults in the future. Our brands also support
communities. For example, Tango has successfully partnered with The
Prince's Trust, pledging a further GBP120,000 as we enter the
second year of this association. The partnership enables the Trust
to support young people who face disadvantage with the skills and
confidence they need to thrive.
We announced during the year that we are investing GBP8 million
in an industry-leading heat recovery system at our Beckton site in
east London, which will save 1,200 tonnes of carbon annually and
decarbonise 50% of the site's heat demand. We have also partnered
with Atrato Onsite Energy, a leading solar energy provider, to
deliver clean energy to Britvic via an innovative 10-year Power
Purchase Agreement at a new solar installation in Northamptonshire.
This will generate energy exclusively for Britvic and will be
capable of producing clean energy, the equivalent of powering
11,500 homes or planting 260,000 trees. The electricity generated
will be enough to power 75% of Britvic's current operations in
Great Britain.
Brazil
While Brazil is an identified growth market within our strategy
and has delivered double digit revenue growth over several years,
the extreme inflation experienced last year required a correction
in margin. Brazil is particularly reliant on juice pricing,
especially our fruit processing business Be Ingredient, which has
been impacted by the extreme volatility in agricultural
commodities, driven primarily by poor crop yields.
Achieving the margin improvement required several levers to be
pulled at the same time, including several increases to headline
price and flexing of our recipe agility to manage cost of goods. We
have also been proactively managing our mix by building our higher
margin categories such as flavour concentrates, premium grape juice
and Fruit Shoot. At the same time, we have maintained our
commercial and operational discipline, sharpening our focus on
superior in-store execution, and increasing production capacity on
growth brands such as Fruit Shoot. We have invested in sponsoring
selected Carnival events, a vast celebration that brings people out
onto the streets. In addition, we have activated our brands around
sport, sponsoring events such as Circuito das Estações (The Circuit
of the Stations), which is synonymous with street running across
the major cities of Brazil.
In July we announced a further bolt-on acquisition, which
completed on 2 October, and gives us access to the high growth and
higher margin energy category. The main brand we acquired was Extra
Power, which has 42% market share in its core region of Goias (in
the Centre-West, near Brasilia), as well as three additional
brands: Flying Horse (a small but long-standing energy drinks brand
primarily in the Sao Paulo region), Juxx (a premium juice brand)
and Amazoo (an acai smoothie brand). The transaction also includes
a modern, efficient warehouse near Brasilia, which will enhance the
efficiency of our supply and the effectiveness of our route to
market in the Centre-West region for both the new brands and our
existing portfolio, which has a smaller presence in this region.
The acquisition also offers substantial back-office synergies as we
bring the businesses together, and we anticipate it will be
accretive to growth, margin, and earnings.
Other International Markets
We had a strong year in Ireland, with growth across the
portfolio and successful revenue management activity. I am
particularly pleased with the success of Ballygowan's Hint of
Fruit. Leveraging the strong brand equity of Ireland's leading
water brand, we innovated into the growing flavoured water
category. Sugar-free, and with fewer than three calories per serve,
Ballygowan Hint of Fruit is sourced locally and available in three
great tasting flavours. Just one year after launch, it has achieved
a 24% share of the flavoured water category.
As part of our healthier planet strategy, we have recently
entered into an agreement for Ballygowan production to be 100% wind
powered, helping to reduce our direct carbon emissions by 90%. This
has been achieved through a new Customer Corporate Power Purchase
Agreement (CPPA) - the first of its kind with a drinks brand in
Ireland. It will allow us to fund electricity generation and
produce enough electricity annually to power our production
facility in Newcastle West. Every Ballygowan bottle is made from
100% recycled plastic, as well as being fully recyclable. We also
announced an investment of EUR6 million in our Ballygowan facility
in Newcastle West, to grow the site's production capacity by over
20% to meet growing consumer demand, creating 28 new jobs.
France trading has been more challenging, given the competitive
retail market. Pricing discussions have been difficult and
concluded much later than in our other markets, driven by the
mandatory timetable. While we have executed price increases, these
have not been sufficient to cover the significant levels of
inflation and we have therefore experienced margin compression,
which has been exacerbated by a softening in demand for our brands,
as the pricing differential versus private label has increased.
Strategically we continue to build resilience, simplifying and
harmonising the Teisseire range globally. This will improve supply
chain efficiency and flexibility, as well as support customer
negotiations. In addition, we continue to focus on innovation, with
lower sugar and natural ingredient ranges to better meet consumer
needs.
Our global premium brands, London Essence and Mathieu Teisseire,
have continued to make great progress, with the combined portfolio
growing double-digit this year. Amongst many new account wins,
London Essence secured an exclusive pouring agreement with
Ennismore Hotels, a premium global hospitality brand majority-owned
by Accor. The crafted soda range has expanded with two new flavours
- Aromatic Orange & Fig, and Raspberry & Rose. Mathieu
Teisseire won gold at the prestigious Monde selection awards 2023
for four of our new flavours and new listings have been secured in
Asia, Germany and Oman. Recently, we announced that local
production of Mathieu Teisseire had started in China to support
local growth. New pack formats have also been launched to access
new retail and hospitality channel opportunities.
Looking ahead
Our company's success is founded upon the breadth of our
portfolio of strong, family favourite brands, the depth of our
customer relationships, our well-invested infrastructure, our
long-term partnership with Pepsi and the agility and dedication of
our workforce. Sustainability is embedded in our business and our
culture, informing our choices daily. Our strategy is working, and
we have well-established drivers to continue our consistent track
record of growth.
Soft drinks is a strong, resilient and growing category, which
continues to outperform broader consumer goods. Consumption of
non-alcoholic beverages continues to grow and, even before the
significant inflation of the past couple of years, soft drinks have
consistently increased their retail sales value ahead of volume.
The category is a regular staple and an affordable treat, with
demand once again proving resilient, as it has in previous periods
of economic downturn and geopolitical volatility, with limited
trading down to own label.
Britvic's forward-looking growth drivers are clear and
compelling:
-- Continued growth forecast for the category, in both volume and value
-- Leading market growth through our family favourite brands, especially in targeted channels where we under-index
-- Accelerated growth in Brazil
-- Accessing new, fast-growing spaces
Near term, we have clear priorities to deliver in 2024. Despite
continuing macro uncertainty, we will continue to engage consumers
with compelling marketing, exciting innovation and strong in-store
feature and display, and to mitigate the impact of inflation across
our markets. We will also continue to invest, not only in our
brands, but also in our people, planet, technology and
infrastructure. All this, combined with our ongoing performance
momentum, gives us confidence that we will once again navigate the
external challenges to deliver further strategic progress in 2024
and continue to offer superior shareholder returns.
Chief Financial Officer's Review
Overview
I am delighted to present the 2023 Financial Review. Having
joined Britvic in early September, I have spent time getting to
know the business, visiting sites in Great Britain, France, and
Ireland, with plans to visit Brazil early in the new year. Britvic
is a great business, with a unique portfolio of family favourite
brands, of which we are all very proud.
The company has delivered a strong financial performance this
year, despite another year of highly significant cost inflation. A
modest volume decline of 2.2% was more than offset by strong
price/mix, demonstrated by Average Realised Price (ARP) growth of
9.1%. Consequently, Group revenue increased 6.6% (statutory +8.1%)
year on year.
Adjusted EBIT increased 5.9% (actual exchange rate +6.0%) to
GBP218.4 million and delivered an adjusted EBIT margin of 12.5%
(2022: 12.7%). Adjusted Earnings Per Share (EPS) increased 6.5%
year on year, reflecting the growth in adjusted EBIT and the
reduction of the number of shares in issuance due to the share
buyback programme. Basic EPS for the period was 48.3 pence, a
decrease of 8.2% on last year, while diluted EPS for the period was
47.9 pence, a decrease of 8.8% on the same period last year. This
was due to the impact of adjusting items, which were primarily
non-cash.
Statutory profit after tax reduced GBP16.2 million from GBP140.2
million to GBP124.0 million. Adjusted profit growth was offset by a
GBP24.8 million increase in adjusting items. Adjusting items
totalled GBP38.4 million, of which GBP36.9 million are EBIT-related
(year ended 30 September 2022: GBP13.6 million). The largest part
of the non-cash items relates to the successful settlement of a
case with the trustees of the GB defined benefit pension scheme.
This means that pension increases for certain members will increase
at RPI. The related adjustment to liabilities, of GBP20.5 million,
is recorded as a one-off past service cost. We also completed a
successful pension valuation, which indicated that the scheme is
fully funded on a technical provisions basis and is expected to
reach self-sufficiency by 31 March 2026, with no additional cash
contributions required. Overall, our pension scheme remains very
well-funded, and the Trustees and Company ensure high levels of
matching between the plan's assets and liabilities to limit funding
volatility.
Our cash performance remained robust, with free cash flow of
GBP129.8 million, driven by a continued focus on cash management.
Consequently, our adjusted net debt/EBITDA ratio remained flat at
1.9x, the lowest year end leverage since 2015. The full year
dividend equates to 30.8p per share, which represents a
year-on-year increase of 6.2%, maintaining our 50% pay-out ratio.
In addition, we continued the share buyback programme, with shares
to the value of GBP73.7 million repurchased and subsequently
cancelled in our financial year 2023.
Below is a summary of the segmental performance and explanatory
notes related to items including taxation, interest and free cash
flow generation.
Great Britain Year ended Year ended
30 September 30 September % change
2023 2022 actual
GBPm GBPm exchange rate
--------------------------- -------------- -------------- ---------------
Volume (million litres) 1,750.2 1,790.8 (2.3)%
Average Realised Price
(ARP) per litre 67.9p 61.4p 10.6%
Revenue 1,187.7 1,100.4 7.9%
Brand contribution 479.6 426.0 12.6%
Brand contribution margin 40.4% 38.7% 170bps
--------------------------- -------------- -------------- ---------------
In Great Britain, revenue increased by 7.9%, with ARP growth of
10.6% partly offset by a modest volume decline of 2.3%. The volume
decline was primarily driven by a softer fourth quarter
performance, reflecting a tough comparable from the hot summer last
year and the disappointing weather across this year's summer. The
ARP growth resulted from the actions taken during the year to
mitigate cost inflation, including implementing price increases,
optimising promotional activity and brand/channel mix. Revenue
increased across both the retail and hospitality channels, up 7.2%
and 8.9% respectively. Consequently, brand contribution increased
12.6% and brand contribution margin increased 170bps.
Both our owned-brand and PepsiCo portfolios were in growth.
Pepsi, led by MAX, and Tango were the major growth drivers, with
revenue increasing 7.7% and 20.7% respectively. J2O, Fruit Shoot
and Lipton also enjoyed strong growth and we delivered significant
acceleration in London Essence, Plenish and Aqua Libra, where we
are investing to realise the long-term future growth potential in
these fast-growing spaces. Robinsons growth was led by the ready to
drink pack format, while the flavour concentrates pack format was
broadly flat. Up to quarter three, Robinsons was in strong growth,
before the poor summer weather heavily impacted the category, which
underperformed total soft drinks. While Rockstar continued to be a
drag on performance, we did deliver a significant improvement in
the second half of the year, following the upweighting of marketing
activity and field sales resource. Full year revenue declined over
19%, compared to a 25% decline in the first half, with a sequential
improvement into quarter four.
Brazil Adjusted
Year ended Year ended % change % change
30 September 30 September actual constant
2023 2022 exchange exchange
GBPm GBPm rate rate
---------------------------- -------------- -------------- ---------- ----------
Volume (million litres) 296.5 299.3 (0.9)% (0.9)%
Average Realised Price
(ARP) per litre 52.7p 47.8p 10.3% 1.0%
Revenue 156.2 143.0 9.2% -
Brand contribution* 36.2 32.4 11.6% 2.2%
Brand contribution margin* 23.2% 22.7% 50bps 50bps
---------------------------- -------------- -------------- ---------- ----------
* Brand contribution for the year ended 30 September 2022
restated by GBP9.7 million from GBP22.7 million to GBP32.4 million
to correctly present certain costs that are fixed in nature (see
fixed costs below). Brand contribution margin for the year ended 30
September 2022 adjusted accordingly from 15.9% to 22.7%.
In Brazil, revenue was flat, on a constant currency basis, with
volume down 0.9%. This was due to the weaker performance of the
fruit processing business known as 'Be Ingredient', where revenue
was down over 60%, reflecting the impact of poor weather on crop
yields and a competitive trading environment. The brand portfolio
generated strong growth across our scale brands of Maguary, Dafruta
and Bela Ischia. Ready to drink pack format revenue increased 10.2%
and flavour concentrates revenue increased 8.7%. Recent brand
launches now account for over 30% of total revenue, with Fruit
Shoot increasing 56.8% this year, Seleção grape juice +38.0% and
Natural Tea +46.8%.
Other International Adjusted
Year ended Year ended % change % change
30 September 30 September actual constant
2023 2022 exchange exchange
GBPm GBPm rate rate
--------------------------- -------------- -------------- ---------- ----------
Volume (million litres) 416.5 428.0 (2.7)% (2.7)%
Average Realised Price
(ARP) per litre 97.2p 87.6p 11.0% 8.6%
Revenue 404.7 374.9 7.9% 5.7%
Brand contribution 99.6 107.0 (6.9)% (8.7)%
Brand contribution margin 24.6% 28.5% (390)bps (390)bps
--------------------------- -------------- -------------- ---------- ----------
Note: Other International consists of France, Ireland, and other
international markets. Volumes and ARP include own-brand soft
drinks sales and third-party product sales included within total
revenue and brand contribution. Concentrate sales are included in
both revenue and ARP but do not have any associated volume.
In Ireland, revenue increased 9.4%, driven by both volume and
ARP growth. Scale brands in revenue growth were Pepsi +18.2%, 7UP
+9.4%, MiWadi +9.8% and Ballygowan +14.8%. Last year's highly
successful Ballygowan Hint of Fruit innovation increased revenue by
a further 88.3%. In France, revenue marginally increased, by 0.5%.
Trading continued to be challenging; although we realised
substantial price increases, they were still insufficient to fully
offset inflation, and were made worse by adverse mix, as the
branded portfolio of Teisseire, Moulin de Valdonne, Pressade and
Fruit Shoot all declined, offset by growth in private label syrups,
which are materially lower margin than their branded equivalents.
In other markets, we delivered growth across various sub-channels,
including other European markets, the travel sector, and Asia.
Fixed costs - pre-adjusting % change
items like for
Year ended Year ended % change like
30 September 30 September actual at constant
2023 2022 exchange exchange
GBPm GBPm rate rate
----------------------------- -------------- -------------- ---------- -------------
Non-brand A&P (11.8) (10.3) (14.6)% (13.5)%
Fixed supply chain* (145.5) (135.7) (7.2)% (5.6)%
Selling costs (96.7) (82.0) (17.9)% (16.2)%
Overheads and other (143.0) (131.4) (8.8)% (7.8)%
Total (397.0) (359.4) (10.4)% (9.0)%
----------------------------- -------------- -------------- ---------- -------------
Total A&P investment (67.0) (61.7)
A&P as a % of own brand
revenue 3.8% 3.8%
* Fixed supply chain costs for the year ended 30 September 2022
restated by GBP9.7 million from GBP126.0 million to GBP135.7
million to correctly present Brazil costs that are fixed in
nature.
Overall, our fixed cost base increased 9.0% on a like-for-like
basis, due to inflationary cost pressure and investment in our
future growth drivers. Total A&P was GBP5.3 million higher year
on year, as we continued to increase investment in our brands.
Fixed supply chain investment during the period included increased
production capacity, adding a new can line in Great Britain and
additional capacity in Brazil. The additional capacity in Great
Britain enabled savings in third-party co-packing costs. These
savings were largely offset by increased spend on packaging
recovery notes (PRNs), certificates that provide evidence that
waste packaging material has been recycled.
Selling costs increased as we invested in additional field sales
resource to support our channel growth strategy. Overheads and
other costs increased as we invested in our people costs,
reflecting investment in both additional resources and
remuneration, to retain and recruit the best talent. We adopted a
tiered approach to salary increases, ensuring that those on lower
salaries received a higher percentage increase, in recognition of
the increased costs of living.
Interest
The net finance charge for the year ended 30 September 2023 is
GBP24.7 million, compared with GBP17.3 million in the comparative
year, primarily due to higher cost of borrowing on floating rate
debt.
Adjusting items - pre-tax
In the year, the Group incurred, and has separately disclosed, a
net charge of GBP38.4 million of pre-tax adjusting items, of which
GBP36.9 million was EBIT-related (2022: GBP13.6 million). Adjusting
items comprise:
EBIT-related
-- GBP20.5 million in relation to past pension service cost on the Great Britain defined benefit scheme, resulting
from an amendment to the scheme rules. This amendment followed the settlement of the legal case between the
Company and trustees relating to inflationary pension increases;
-- Strategic restructuring costs of GBP5.2 million, predominantly in relation to redundancy costs from operating
changes to provide additional production capacity in Ireland;
-- Strategic M&A costs of GBP2.4 million, in relation to the acquisition costs of Jimmy's Iced Coffee, energy brand
Extra Power in Brazil, and other M&A in the year that did not complete;
-- GBP0.5 million in relation to costs for the setup of the deposit return scheme (DRS) in Ireland;
-- Acquisition-related amortisation of GBP8.3 million.
Interest-related
-- GBP1.5 million relating to hedge ineffectiveness on private placement loan hedging.
Taxation
The adjusted tax charge was GBP38.5 million (2022: GBP36.1
million), which equates to an effective tax rate of 20.6% (2022:
20.0%). The statutory net tax charge was GBP32.8 million (2022:
GBP34.9 million), which equates to an effective tax rate of 20.9%
(2022: 19.9%).
Earnings per share (EPS)
Adjusted basic EPS for the year was 61.0p, an increase of 6.5%
on the prior year, due to higher operating profits and the impact
of a lower number of shares in issue following the share buyback.
Basic EPS for the period was 48.3 pence, a decrease of 8.2% on last
year, while diluted EPS for the period was 47.9 pence, a decrease
of 8.8% on the same period last year . This was due to the impact
of adjusting items, which were primarily non-cash.
Dividends
The Board is declaring a final dividend of 22.6p per share, with
a total value of GBP57.4 million, resulting in a full year dividend
of 30.8p (GBP78.4 million). This is in line with our stated 50%
pay-out ratio. The final dividend for 2023 will be paid on 7
February 2024 to shareholders on record as of 22 December 2023. The
ex-dividend date is 21 December 2023.
Share buyback programme
In May 2022, the company started an initial share buyback
programme to repurchase ordinary shares with a market value of up
to GBP75 million. The purpose of the programme was to reduce share
capital and, accordingly, the shares repurchased are subsequently
cancelled. During the year ended 30 September 2023, the company
completed the initial share buyback.
In May 2023, the Board approved a second GBP75 million share
buyback programme to be executed over the period to 30 April 2024.
Excluding transaction costs, the company has returned GBP74.8
million to shareholders via the buyback programmes during the year
ended 30 September 2023. There remains GBP37.6 million of the
second share buyback to be executed during the forthcoming
financial year.
In the context of Britvic's expected free cash flow and its
capital requirements over the next three years, the Board believes
it is appropriate to complete the current share buyback. Britvic
will continue to review the balance sheet on a regular basis, to
assess its strength in the context of the company's growth
ambitions. The dividend policy remains unchanged.
Free cash flow
Free cash flow (defined as cash generated from operating
activities, plus proceeds from sale of property, plant and
equipment, less capital expenditure, interest and repayment of
lease liabilities) was an inflow of GBP129.8 million, compared with
GBP128.8 million in the previous year.
Net cash flow from operating activities was broadly flat at
GBP238.4 million, compared to GBP239.6 million in the previous
year. There was a working capital outflow of GBP16.6 million (2022:
GBP1.3 million outflow), comprising an outflow from increases in
inventory of GBP37.8 million (2022: GBP26.0 million outflow) and an
outflow from decreases in provisions of GBP0.9 million (2022:
GBP3.2 million outflow), offset by an inflow from increases in
trade and other payables of GBP5.8 million (2022: GBP84.3 million
inflow) and an inflow from decreases in trade and other receivables
of GBP16.3 million (2022: GBP56.4 million outflow).
The inflow in trade and other payables was due to continued
disciplined cash management throughout the year. The outflow in
inventories, which were up year on year, is due to inflation and an
increased level of both raw materials and finished goods stock,
both to protect our customer service levels across the Group and
following softer quarter four volumes.
Net income taxes paid in the year were GBP21.9 million (12
months ended 30 September 2022: GBP18.4 million). Cash capital
expenditure was GBP77.9 million (2022: GBP84.6 million).
Impairment testing
Impairment reviews of goodwill and intangible assets with
indefinite lives are undertaken by management annually. Recoverable
amounts are calculated in line with accounting standards at the
higher of value in use and fair value. During the current year
there has been no impairment to goodwill or intangible assets with
indefinite lives. Further details will be provided in the Annual
Report and Accounts.
Treasury management
The financial risks faced by the Group are identified and
managed by a central treasury department, whose activities are
carried out in accordance with Board approved policies and subject
to regular Audit and Treasury Committee reviews. The department
does not operate as a profit centre and no transaction is entered
into for trading or speculative purposes. Key financial risks
managed by the treasury department include exposures to movements
in interest rates, foreign exchange rates and commodities, while
managing the Group's debt and liquidity profile. The Group uses
financial instruments to hedge against raw materials, interest rate
and foreign currency exposures.
On 30 September 2023, the Group had GBP932.5 million of
committed debt facilities, consisting of a GBP400.0 million bank
facility, of which GBP44.7 million was drawn, and a series of
private placement notes, with maturities between February 2024 and
May 2035. A one-year extension to the maturity of the Group's
GBP400.0 million bank facility was approved by six of the seven
lenders in February 2022, extending the maturity of GBP366.7
million of this facility to February 2027. The remaining GBP33.3
million will mature in February 2025. The next maturity for the
company's private placement notes is in February 2024, when notes
with outstanding principal amounts of US$39.0 million and GBP15.0
million will be due for repayment.
On 30 September 2023, the Group's adjusted net debt, including
the impact of cross currency swaps hedging the private placement
notes, was GBP538.1 million, which compares with GBP474.8 million
at 30 September 2023. Adjusted net debt to EBITDA leverage at 30
September 2023 was 1.9x, maintaining the same level as at 30
September 2022.
The Group uses derivative financial instruments to hedge its
exposure to movements in interest rates, foreign exchange rates and
commodity prices. At 30 September 2023, the Group's balance sheet
included derivatives with a net fair value of GBP24.8 million
(2022: GBP73.2 million), comprising cross currency swaps of GBP22.3
million (2022: GBP41.9 million), forward currency contracts of
GBP0.2 million (2022: GBP3.1 million), interest rate swaps of
GBP2.4 million (2022: GBP3.4 million and commodity swaps
liabilities of GBP0.1 million (2022: GBP24.8 million). The decrease
in fair value compared to 30 September 2022 is driven by
settlements during the year and fair value decreases linked to the
appreciation of sterling against the dollar and falling gas and
power commodity prices.
Acquisitions and disposals
The Group paid cash of GBP24.8 million (net of cash acquired) to
acquire Jimmy's Iced Coffee and consolidated this business in its
financial statements from 1 August 2023. The Group also announced
an acquisition in Brazil, which includes the Extra Power energy
brand. This acquisition completed after the year-end, resulting in
a cash out flow equivalent to GBP24.0 million in October 2023 (net
of derivatives hedging this transaction).
At 30 September 2023, the Norwich production site remains
classified as held for sale in the balance sheet at its historical
cost of GBP16.8 million. Contracts have been exchanged for the
sale, however completion remains subject to conditions precedent,
including certain planning consents being obtained by the buyer.
The sale is expected to complete by October 2024.
Pensions
At 30 September 2023, the Group had IAS 19 defined benefit
pension surpluses in Great Britain, Ireland and Northern Ireland
totalling GBP74.0 million and IAS 19 pension deficits in France
totalling GBP1.4 million, resulting in a net pension surplus of
GBP72.6 million (30 September 2022: net surplus of GBP137.5
million). The decrease in the net pension assets primarily relates
to the Great Britain scheme, where there has been a net
remeasurement loss recognised through the statement of
comprehensive income of GBP48.9 million and a past service cost
recognised through the income statement of GBP20.5 million.
The Group has recognised a net defined benefit pension expense
of GBP15.2 million in the income statement for the year ended 30
September 2023 (2022: net income of GBP1.5 million). This includes
a GBP20.5 million past service cost for the Great Britain scheme,
presented within adjusting items, which has arisen following an
amendment to the scheme rules in relation to pension increases. The
amendment has clarified that the Group does not have the power to
set alternative rates of pension increases and that certain annual
increases will be based on the RPI measure of inflation. The
previous valuation at 30 September 2022 was based on the assumption
that that certain members would receive pension increases based on
the CPI measure of inflation, which is lower than RPI. As a result,
the IAS 19 surplus has decreased. This amendment to the Great
Britain pension scheme does not result in any cash impact for the
Group. The triennial valuation as of 31 March 2022 was finalised in
April 2023 and did not result in any change to the schedule of
contributions.
The defined benefit section of the Great Britain plan was closed
to new members on 1 August 2002 and closed to future accrual for
active members from 1 April 2011, with new employees being invited
to join the defined contribution scheme. The Northern Ireland
scheme was closed to new members on 28 February 2006 and future
accrual from 31 December 2018, and new employees are eligible to
join the defined contribution scheme. All new employees in Ireland
join the defined contribution plan.
Contributions are ordinarily paid into the defined benefit
section of the Plan as determined by the Trustee, agreed by the
company and certified by an independent actuary in the Schedule of
Contributions. No deficit funding payments were paid during the
year except for the GBP5.0 million pension funding partnership
payment which will continue annually until 2025.
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 September 30 September
2023 2022
Note GBPm GBPm
------------------------------------------------------------ ---- ------------- -------------
Revenue 4 1,748.6 1,618.3
Cost of sales (1,049.1) (952.4)
------------------------------------------------------------ ---- ------------- -------------
Gross profit 699.5 665.9
Selling and distribution expenses (271.1) (266.8)
Administration expenses (246.9) (206.7)
------------------------------------------------------------ ---- ------------- -------------
Operating profit 181 .5 192.4
Finance income 1.1 0.9
Finance costs (25.8) (18.2)
------------------------------------------------------------ ---- ------------- -------------
Profit before tax 156.8 175.1
Income tax expense 5 (32.8) (34.9)
------------------------------------------------------------ ---- ------------- -------------
Profit for the year attributable to the equity shareholders 124.0 140.2
------------------------------------------------------------ ---- ------------- -------------
Earnings per share
Basic earnings per share 6 48.3p 52.6p
Diluted earnings per share 6 47.9p 52.5p
------------------------------------------------------------ ---- ------------- -------------
All activities relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 September 30 September
2023 2022
GBPm GBPm
-------------------------------------------------------------------------------------- ------------- -------------
Profit for the year attributable to the equity shareholders 124.0 140.2
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
Remeasurement losses on defined benefit pension plans (55.5) (2.1)
Current tax on pension contributions - 0.1
Deferred tax on defined benefit pension plans 13.4 2.3
-------------------------------------------------------------------------------------- ------------- -------------
(42.1) 0.3
-------------------------------------------------------------------------------------- ------------- -------------
Items that may be subsequently reclassified to profit or loss
(Losses)/gains in respect of cash flow hedges (34.3) 56.6
Amounts reclassified to the income statement in respect of cash flow hedges (4.6) (23.8)
Current tax in respect of cash flow hedges accounted for in the hedging reserve (0.2) 0.5
Deferred tax in respect of cash flow hedges accounted for in the hedging reserve 7.3 (6.8)
Exchange differences reclassified to profit or loss on disposal of foreign operations (0.3) (0.8)
Exchange differences on translation of foreign operations (3.4) 28.9
Tax on exchange differences accounted for in the translation reserve (0.6) 0.5
-------------------------------------------------------------------------------------- ------------- -------------
(36 .1) 55.1
-------------------------------------------------------------------------------------- ------------- -------------
Other comprehensive (loss)/income for the year, net of tax (78.2) 55.4
-------------------------------------------------------------------------------------- ------------- -------------
Total comprehensive income for the year attributable to the equity shareholders 45.8 195.6
-------------------------------------------------------------------------------------- ------------- -------------
CONSOLIDATED BALANCE SHEET
Restated* Restated*
30 September 30 September 1 October
2023 2022 2021
Note GBPm GBPm GBPm
--------------------------------- ---- ------------ ------------- ----------
Non-current assets
Property, plant and equipment 535.3 513.9 472.4
Right-of-use assets 61.1 68.7 71.7
Goodwill and intangible assets 434.3 416.4 406.5
Other receivables 8.1 6.0 5.8
Derivative financial instruments 9 16.0 45.9 22 .2
Deferred tax assets 4.2 4.4 4.0
Retirement benefit assets 74.0 138.9 141.2
--------------------------------- ---- ------------ ------------- ----------
1,133.0 1,194.2 1,123.8
--------------------------------- ---- ------------ ------------- ----------
Current assets
Inventories 209.8 172.0 135.0
Trade and other receivables 425.6 445.2 376.1
Current income tax receivables 5.3 10.9 7.2
Derivative financial instruments 9 17.4 38.9 4.0
Interest-bearing deposits 10.9 11.5 -
Cash and cash equivalents 79.2 85.9 97.1
Other current assets - 3.1 -
--------------------------------- ---- ------------ ------------- ----------
748.2 767.5 619 .4
Assets held for sale 16.8 16.8 16.8
--------------------------------- ---- ------------ ------------- ----------
765.0 784.3 636.2
--------------------------------- ---- ------------ ------------- ----------
Total assets 1,898.0 1,978.5 1,760.0
--------------------------------- ---- ------------ ------------- ----------
Current liabilities
Trade and other payables (533.6) (508.8) (417.8)
Commercial rebate liabilities (123.3) (137.0) (122.3)
Lease liabilities (7.5) (8.6) (8.9)
Interest-bearing loans and borrowings 8 (50.9) (42.2) (2.2)
Derivative financial instruments 9 (8.3) (11.2) (1.4)
Current income tax liabilities (0.1) (0.2) (1.4)
Overdrafts (48.9) (9.8) (26.0)
Provisions (0.7) (1.9) (5.3)
Other current liabilities (8.4) (11.1) (5.5)
-------------------------------------- --------- --------- ---------
(781.7) (730.8) (590.8)
-------------------------------------- --------- --------- ---------
Non-current liabilities
Lease liabilities (59.8) (65.3) (66.2)
Interest-bearing loans and deposits 8 (551.0) (563.1) (576.9)
Deferred tax liabilities (111.1) (123.1) (98.5)
Retirement benefit obligations (1.4) (1.4) (9.6)
Derivative financial instruments 9 (0.3) (0.4) (0.6)
Provisions (1.0) (0.9) (0.5)
Other non-current liabilities - (5.5) (6.2)
-------------------------------------- --------- --------- ---------
(724.6) (759.7) (758.5)
-------------------------------------- --------- --------- ---------
Total liabilities (1,506.3) (1,490.5) (1,349.3)
-------------------------------------- --------- --------- ---------
Net assets 391.7 488.0 410.7
-------------------------------------- --------- --------- ---------
Restated* Restated*
30 September 30 September 1 October
2023 2022 2021
Note GBPm GBPm GBPm
---------------------- ---- ------------ ------------- ----------
Equity
Issued share capital 10 50.9 52.7 53.5
Share premium account 157.2 157.2 156.2
Own shares reserve 10 (21.4) (7.2) (1.5)
Other reserves 78.8 106.0 53.7
Retained earnings 126.2 179.3 148.8
---------------------- ---- ------------ ------------- ----------
Total equity 391.7 488.0 410.7
---------------------- ---- ------------ ------------- ----------
* Comparative figures for interest-bearing deposits, overdrafts
and cash and cash equivalents have been restated as set out in Note
2.
The financial statements were approved by the Board of Directors
and authorised for issue on 21 November 2023. They were signed on
its behalf by:
Simon Litherland Rebecca Napier
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
Restated*
Year ended Year ended
30 September 30 September
2023 2022
Note GBPm GBPm
---------------------------------------------------------------------------------- ---- ------------- -------------
Cash flows from operating activities
Profit before tax 156.8 175.1
Net finance costs 24.7 17.3
Other financial instruments (0.6) 0.8
Depreciation of property, plant and equipment 44.8 40.9
Depreciation of right-of-use assets 10.1 10.9
Amortisation 15.6 15.6
Loss on disposal of property, plant and equipment and intangible assets 3.2 0.9
Impairment of property, plant and equipment 3.8 -
Share-based payments charge 9.3 4.2
Net pension charge less contributions 9.4 (7.6)
Net foreign exchange differences 0.1 2.0
Exchange differences reclassified to profit or loss from other comprehensive
income (0.3) (0.8)
Increase in inventories (37.8) (26.0)
Decrease/(increase) in trade and other receivables 16.3 (56.4)
Increase in trade, other payables and commercial rebate liabilities 5.8 84.3
Decrease in provisions (0.9) (3.2)
Income tax paid (21.9) (18.4)
---------------------------------------------------------------------------------- ---- ------------- -------------
Net cash flows from operating activities 238.4 239.6
---------------------------------------------------------------------------------- ---- ------------- -------------
Cash flows from investing activities
Purchases of property, plant and equipment (69.8) (72.9)
Government grants towards purchase of equipment 1.3 -
Purchases of intangible assets (8.1) (11.7)
Investments in interest-bearing deposits (11.2) (11.8)
Proceeds from interest-bearing deposits 11.8 0.3
Interest received 0.5 0.2
Acquisition of subsidiaries, net of cash acquired (24.8) -
---------------------------------------------------------------------------------- ---- ------------- -------------
Net cash flows used in investing activities (100.3) (95.9)
---------------------------------------------------------------------------------- ---- ------------- -------------
Cash flows from financing activities
Interest paid, net of related derivative financial instruments (21.1) (14.8)
Net movement on revolving credit facility 45.5 -
Repayment of other loans 8 (1.9) -
Payment of principal portion of lease liabilities (9.0) (9.3)
Payment of interest portion of lease liabilities (1.9) (2.1)
Repayment of private placement notes, net of related derivative financial
instruments 8 (27.8) -
Other net derivative cashflows (0.2) (0.8)
Issue costs paid 8 - (0.3)
Proceeds from employee share incentive schemes 2.3 1.0
Purchase of own shares related to share schemes (20.3) (9.0)
Share buyback programme (73.7) (36.7)
Dividends paid to equity shareholders (75.5) (67.9)
---------------------------------------------------------------------------------- ---- ------------- -------------
Net cash flows used in financing activities (183.6) (139.9)
---------------------------------------------------------------------------------- ---- ------------- -------------
Net (decrease)/increase in cash and cash equivalents (45.5) 3.8
Cash and cash equivalents at the beginning of the year 76.1 71.1
Net foreign exchange differences on cash and cash equivalents (0.3) 1.2
---------------------------------------------------------------------------------- ---- ------------- -------------
Cash and cash equivalents at the end of the year 30.3 76.1
---------------------------------------------------------------------------------- ---- ------------- -------------
* Comparative figures restated for reclassification of
interest-bearing deposits separate from cash and cash equivalents
see note 2.
Presented in the balance sheet as:
Cash and cash equivalents(1) 79.2 85.9
Overdrafts(1)(2) (48.9) (9.8)
-------------------------------------- ------ -----
Cash and cash equivalents at the end
of the year 30.3 76.1
-------------------------------------- ------ -----
(1) Comparative figures for overdrafts and cash and cash
equivalents have been restated as set out in Note 2.
(2) Bank overdrafts are included in the cash and cash
equivalents presented in the statement of cash flows because they
form an integral part of the Group's cash management.
CONSOLIDATED STATEMENt OF CHANGES IN EQUITY
Other reserves
--------------------------------------------------
Issued Share Own Capital
share premium shares redemption Hedging Translation Merger Retained
capital account reserve reserve reserve reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
At 1 October 2021 53.5 156.2 (1.5) - 4.5 (38.1) 87.3 148.8 410.7
Profit for the
year - - - - - - - 140.2 140.2
Other
comprehensive
income - - - - 26.5 28.6 - 0.3 55.4
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
Total
comprehensive
income - - - - 26.5 28.6 - 140.5 195.6
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
Issue of shares 0.1 1.0 (1.1) - - - - - -
Share buyback
programme (0.9) - (1.1) 0.9 - - - (36.7) (37.8)
Own shares
purchased for
share schemes - - (9.0) - - - - 3.2 (5.8)
Own shares
utilised for
share schemes - - 5.5 - - - - (12.5) (7.0)
Movement in
share-based
schemes - - - - - - - 4.1 4.1
Current tax on
share options
exercised - - - - - - - 0.3 0.3
Deferred tax on
share options
granted to
employees - - - - - - - (0.5) (0.5)
Transfer of cash
flow hedge
reserve to
inventories - - - - (3.7) - - - (3.7)
Payment of
dividend - - - - - - - (67.9) (67.9)
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
At 30 September
2022 52.7 157.2 (7.2) 0.9 27.3 (9.5) 87.3 179.3 488.0
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
Other reserves
--------------------------------------------------
Issued Share Own Capital
share premium shares redemption Hedging Translation Merger Retained
capital account reserve reserve reserve reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
At 1 October 2022 52.7 157 .2 (7.2) 0.9 27.3 (9.5) 87.3 179.3 488.0
Profit for the
year - - - - - - - 124.0 124.0
Other
comprehensive
loss - - - - (31.8) (4.3) - (42.1) (78.2)
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
Total
comprehensive
income/ (loss) - - - - (31.8) (4.3) - 81.9 45.8
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
Share buyback
programme (1.8) - (1.7) 1.8 - - - (73.7) (75.4)
Own shares
purchased for
share schemes - - (20.1) - - - - 9.8 (10.3)
Own shares
utilised for
share schemes - - 7.6 - - - - (5.3) 2.3
Movement in
share-based
schemes - - - - - - - 9.3 9.3
Current tax on
share-based
payments - - - - - - - 0.2 0.2
Deferred tax on
share-based
payments - - - - - - - 0.2 0.2
Transfer of cash
flow hedge
reserve to
inventories - - - - 7.1 - - - 7.1
Payment of
dividend - - - - - - - (75.5) (75.5)
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
At 30 September
2023 50.9 157.2 (21.4) 2.7 2.6 (13.8) 87.3 126.2 391.7
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The preliminary consolidated financial information was
authorised for issue by the Board of Directors on 21 November
2023.
The preliminary consolidated financial information for the year
ended 30 September 2023 has been prepared in accordance with the
Companies Act 2006 and UK-adopted international accounting
standards. The preliminary consolidated financial information does
not constitute statutory consolidated financial statements as
defined by section 434 of the Companies Act 2006.
The Annual Report and Accounts for the year ended 30 September
2023 was approved by the board on 21 November 2023. The report of
the auditor on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006. The Annual Report and
Accounts for 2023 will be filed with the Registrar of Companies in
due course.
The Annual Report and Accounts for the year ended 30 September
2022 was approved by the board on 22 November 2022 and has been
delivered to the Registrar of Companies. The report of the auditor
on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
2. Accounting policies
The accounting policies applied by the Group for the year ended
30 September 2023 are consistent with those applied by the Group in
its financial statements for the year ended 30 September 2022.
There were no new amendments, standards or interpretations that had
a material effect on the financial position or performance of the
Group in the period.
The Group has not identified any changes to its key sources of
accounting judgements or estimations of uncertainty compared with
those disclosed in the 2022 Annual Report and Accounts.
Restatement of overdrafts and cash and cash equivalents
The Group has identified that the balance sheet presentation of
its notional cash pooling arrangements did not comply with the
requirements of IAS 32 'Financial Instruments: Presentation'. The
Group has previously presented cash and overdraft balances subject
to notional cash pooling arrangements on a net basis within cash
and cash equivalents. However, following a review of this facility
and guidance issued by the IFRS Interpretations Committee, it was
determined that the balances did not meet all of the criteria in
IAS 32 for offset. The prior period balance sheets have therefore
been restated to show cash and overdraft balances on a gross basis.
The impact is to increase both cash and cash equivalents and
overdrafts by GBP9.8m at 30 September 2022 and by GBP26.0m at 30
September 2021. There is no impact to the Group's net debt
position, income statement or earnings per share for the affected
periods. There is also no impact on the previously presented
statement of cash flows, as the overdrafts are repayable on demand
and form an integral part of the Group's cash management and are
therefore included in the cash and cash equivalents presented in
the statement of cash flows.
The above prior period misstatement came to the company's
attention when responding to an enquiry from the Corporate
Reporting Review team at the Financial Reporting Council (the FRC).
The FRC carried out a review of the Britvic Annual Report and
Accounts 2022 in accordance with Part 2 of the FRC Corporate
Reporting Review Operating Procedures. The FRC requests that in
disclosing this engagement we note the limitations of their review,
namely that it was based solely on their reading of the annual
report and accounts and did not benefit from a detailed knowledge
of our business or an understanding of the underlying transactions
entered into. They also noted that their review provided no
assurance that the annual report and accounts are correct in all
material respects and that the FRC's role is not to verify the
information provided but to consider compliance with reporting
requirements.
The Group places surplus cash on deposit with banks to earn a
fixed rate of interest over the maturity period, and these deposits
have historically been presented within cash and cash equivalents.
Following a review of deposit terms, the Group has identified that
GBP11.5m of deposits held at 30 September 2022 did not meet the
definition of cash and cash equivalents in IAS 7 'Statement of Cash
Flows', as the deposits were not held for the purpose of meeting
short-term cash commitments and had contractual maturities in
excess of three months. The prior period balance sheet has
therefore been restated to show such interest-bearing deposits
separately within current assets. There is no impact to the Group's
net debt position. The value of cash and cash equivalents shown in
the statement of cash flows at 30 September 2022 has been restated
to exclude the GBP11.5m of deposits held, and new lines for
"investments in interest-bearing deposits" and "proceeds from
interest-bearing deposits" have been included within net cash flows
used in investing activities.
The below table reconciles the restated balances to those
previously reported.
Deposits previously
Overdrafts included in
subject to cash and cash
As reported pooling arrangements equivalents Restated
30 September 2022 GBPm GBPm GBPm GBPm
-------------------------- ----------- --------------------- ------------------- ---------
Interest-bearing deposits - - 11.5 11.5
Cash and cash equivalents 87.6 9.8 (11.5) 85.9
-------------------------- ----------- --------------------- ------------------- ---------
Current assets 774.5 9.8 - 784.3
-------------------------- ----------- --------------------- ------------------- ---------
Total assets 1,968.7 9.8 - 1,978.5
-------------------------- ----------- --------------------- ------------------- ---------
Overdrafts - (9.8) - (9.8)
-------------------------- ----------- --------------------- ------------------- ---------
Current liabilities (721.0) (9.8) - (730.8)
-------------------------- ----------- --------------------- ------------------- ---------
Total liabilities (1,480.7) (9.8) - (1,490.5)
-------------------------- ----------- --------------------- ------------------- ---------
Net assets 488.0 - - 488.0
-------------------------- ----------- --------------------- ------------------- ---------
Deposits previously
Overdrafts included in
subject to cash and cash
As reported pooling arrangements equivalents Restated
30 September 2021 GBPm GBPm GBPm GBPm
-------------------------- ----------- --------------------- ------------------- ---------
Interest-bearing deposits - - - -
Cash and cash equivalents 71.1 26.0 - 97.1
-------------------------- ----------- --------------------- ------------------- ---------
Current assets 610.2 26.0 - 636.2
-------------------------- ----------- --------------------- ------------------- ---------
Total assets 1,734.0 26.0 - 1,760.0
-------------------------- ----------- --------------------- ------------------- ---------
Overdrafts - (26.0) - (26.0)
-------------------------- ----------- --------------------- ------------------- ---------
Current liabilities (564.8) (26.0) - (590.8)
-------------------------- ----------- --------------------- ------------------- ---------
Total liabilities (1,323.3) (26.0) - (1,349.3)
-------------------------- ----------- --------------------- ------------------- ---------
Net assets 410.7 - - 410.7
-------------------------- ----------- --------------------- ------------------- ---------
3. Going concern
The Directors are satisfied that the Group has adequate
resources to continue to operate as a going concern for the
foreseeable future and that no material uncertainties exist which
could cause significant doubt with respect to this assessment. In
making this assessment, the Directors have considered the Group's
balance sheet position and forecast earnings and cash flows for the
period from the date of approval of these financial statements to
30 September 2025. Further details of the Directors' assessment are
set out below.
The business has faced the challenges posed by a prolonged
period of high inflation and has been able to successfully respond
by implementing revenue growth management actions, including price
increases, and optimising promotions. As inflation rates stabilise,
the level of uncertainty in the cost base of the business has
reduced, however the lasting impact of inflation and the ongoing
cost of living crisis pose a risk to demand for the Group's
products.
As part of the going concern assessment, volume demand scenarios
have been combined with the potential impact of key risks that
could reasonably arise in the period. The Group has modelled both a
base case scenario and a severe but plausible downside scenario, to
assess the extent to which mitigating actions would be required,
all of which are within management's control. Mitigating actions
can be initiated as they relate to discretionary and investment
spend, without significantly impacting the ability to meet
demand.
At 30 September 2023, the Group was operating within the banking
covenants related to its revolving credit facility and private
placement notes. The consolidated balance sheet reflects a net
asset position of GBP391.7m and the liquidity of the Group remains
strong. In 2022, the Group successfully secured a one-year
extension of its GBP400.0m revolving credit facility with six of
the seven participating banks. As a result, GBP366.7m of this
facility now matures in February 2027, with the remaining GBP33.3m
maturing in February 2025. As of 30 September 2023, GBP44.7m was
drawn on the revolving credit facility. The Group's next debt
maturity is in February 2024 when GBP39.2m of private placement
notes mature, net of derivative financial instruments. Both the
Group's revolving credit facility and private placement notes have
a net debt/EBITDA covenant limit of 3.5x, excluding IFRS 16 impact.
Based on adjusted net debt of GBP538.1m and adjusted EBITDA of
GBP276.7m for the preceding 12 months, the adjusted net
debt/adjusted EBITDA ratio at 30 September 2023 was 1.9x and well
within the covenant limit.
Under all the scenarios modelled, including the impact of the
share buyback programme, and after taking available mitigating
actions, our forecasts did not indicate a covenant breach or any
liquidity shortages.
On the basis of these reviews, the Directors consider it is
appropriate for the going concern basis to be adopted in preparing
the Annual Report and Accounts.
4. Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the plc Executive team and Board
of Directors of the company.
For management purposes, the Group is organised into business
units and has five reportable segments:
-- Great Britain (United Kingdom excluding Northern Ireland)
-- Brazil
-- Ireland (Republic of Ireland and Northern Ireland)
-- France
-- International
These business units sell soft drinks into their respective
markets. Management monitors the operating results of its business
units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on brand contribution. This is defined as revenue
less material costs and all other marginal costs that management
considers to be directly attributable to the sale of a given
product. Such costs include brand specific advertising and
promotion costs, raw materials and marginal production and
distribution costs. All other costs, including net finance costs
and income taxes, are managed on a centralised basis and are not
allocated to reportable segments.
The 'Other International' subtotal comprising the Ireland,
France and International reportable segments has been presented to
provide linkage to the Chief Financial Officer's Review section of
this preliminary results announcement.
Other International
----------------------------------------
Year ended 30 September 2023 GB Brazil Ireland France International Subtotal Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Revenue from external customers 1,187.7 156.2 160.3 185.0 59.4 404.7 1,748.6
--------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Brand contribution 479.6 36.2 52.3 35.7 11.6 99.6 615.4
Non-brand advertising and promotion(i) (11.8)
Fixed supply chain(ii) (145.5)
Selling costs(ii) (96.7)
Overheads and other costs(i) (143.0)
--------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Adjusted EBIT(iii) 218.4
Net finance costs pre-adjusting items (23.2)
Adjusting items(iii) (38.4)
--------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Profit before tax 156.8
--------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Other International
--------------------------------------------
Year ended 30 September 2022 GB Brazil Ireland France International Subtotal Total
(restated (iv) ) GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ------- ------- -------- ------- -------------- --------- -------
Revenue from external customers 1,100.4 143.0 143.9 179.4 51.6 374.9 1,618.3
--------------------------------------- ------- ------- -------- ------- -------------- --------- -------
Brand contribution(iv) 426.0 32.4 49.6 45.9 11.5 107.0 565.4
Non-brand advertising and promotion(i) (10.3)
Fixed supply chain(ii) (135.7)
Selling costs(ii) (82.0)
Overheads and other costs(i) (131.4)
--------------------------------------- ------- ------- -------- ------- -------------- --------- -------
Adjusted EBIT(iii) 206.0
Net finance costs pre-adjusting items (17.3)
Adjusting items(iii) (13.6)
--------------------------------------- ------- ------- -------- ------- -------------- --------- -------
Profit before tax 175.1
--------------------------------------- ------- ------- -------- ------- -------------- --------- -------
(i) Included within 'administration expenses' in the
consolidated income statement. 'Overheads and other costs' relate
to central expenses including salaries, IT maintenance,
depreciation and amortisation (excluding acquisition-related
amortisation).
(ii) Included within 'selling and distribution costs' in the consolidated income statement.
(iii) See non-GAAP reconciliations at the end of this
announcement for further details on adjusting items.
(iv) The Group has restated the classification of certain prior
period costs in Brazil within the segmental reporting note. For the
year ended 30 September 2022, GBP9.7m of costs that are fixed in
nature previously included within brand contribution have been
reclassified to fixed supply chain. There has been no impact of
this disclosure change on the consolidated income statement.
5. Income tax
2023 2022
GBPm GBPm
------------------------------------------------------ ------ ------
Current income tax
Current tax charge (31.1) (20.0)
Amounts over provided in previous years 2.5 4.7
------------------------------------------------------ ------ ------
Total current tax charge (28.6) (15.3)
------------------------------------------------------ ------ ------
Deferred income tax
Origination and reversal of temporary differences (3.3) (16.7)
Impact of change in tax rates (0.1) (1.3)
Amounts under provided in previous years (0.8) (1.6)
------------------------------------------------------ ------ ------
Total deferred tax charge (4.2) (19.6)
------------------------------------------------------ ------ ------
Total tax charge in the income statement (32.8) (34.9)
------------------------------------------------------ ------ ------
6. Earnings per share
Basic earnings per share amounts are calculated by dividing the
net profit for the year attributable to the equity shareholders of
the parent by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to the ordinary equity shareholders of
the parent by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of
ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in
the basic and diluted earnings per share computations:
2023 2022
----------------------------------------------------------------------------------- ----- -----
Basic earnings per share
Profit for the year attributable to equity shareholders (GBPm) 124.0 140.2
Weighted average number of ordinary shares in issue for basic earnings per share 256.9 266.5
Basic earnings per share (pence) 48.3p 52.6p
----------------------------------------------------------------------------------- ----- -----
Diluted earnings per share
Profit for the year attributable to equity shareholders (GBPm) 124.0 140.2
Effect of dilutive potential ordinary shares - share schemes 1.9 0.5
Weighted average number of ordinary shares in issue for diluted earnings per share 258.8 267.0
Diluted earnings per share (pence) 47.9p 52.5p
----------------------------------------------------------------------------------- ----- -----
The Group has granted share options to employees which have the
potential to dilute basic earnings per share in the future which
have not been included in the calculation of diluted earnings per
share as they are anti-dilutive for the year presented.
7. Dividends paid and proposed
2023 2022
GBPm GBPm
--------------------------------------------------------------------- ----- -----
Declared and paid during the year
Equity dividends on ordinary shares
Final dividend for 2022: 21.2p per share (2021: 17.7p per share) 54.5 47.2
Interim dividend for 2023: 8.2p per share (2022: 7.8p per share) 21.0 20 .7
--------------------------------------------------------------------- ----- -----
Dividends paid 75.5 67.9
--------------------------------------------------------------------- ----- -----
Proposed
Final dividend for 2023: 22.6p per share (2022: 21.2p per share) 57.4 55.8
--------------------------------------------------------------------- ----- -----
8. Interest-bearing loans and borrowings
2023 2022
GBPm GBPm
-------------------------------------------- ------- -------
Current
Private placement notes (51.1) (42.9)
Less: unamortised issue costs 0.2 0. 7
-------------------------------------------- ------- -------
Total current (50.9) (42.2)
-------------------------------------------- ------- -------
Non-current
Bank loans (44.7) -
Private placement notes (508.1) (565.0)
Less: unamortised issue costs 1.8 1.9
-------------------------------------------- ------- -------
Total non-current (551.0) (563.1)
-------------------------------------------- ------- -------
Total interest-bearing loans and borrowings (601.9) (605.3)
-------------------------------------------- ------- -------
Total interest-bearing loans and borrowings comprise the
following:
2023 2022
GBPm GBPm
-------------------------------------------- ------- -------
2010 notes - (39.4)
2014 notes (108.5) (117.2)
2017 notes (175.0) (175.0)
2018 notes (119.7) (120.1)
2020 notes (151.9) (152.7)
Bank loans (44.7) -
Accrued interest (4.1) (3.5)
Unamortised issue costs 2.0 2.6
-------------------------------------------- ------- -------
Total interest-bearing loans and borrowings (601.9) (605.3)
-------------------------------------------- ------- -------
Analysis of changes in interest-bearing loans and
borrowings:
2023 2022
GBPm GBPm
------------------------------------------------------------ ------- -------
At the beginning of the year (605.3) (579.1)
Net drawdown on revolving credit facility (45.5) -
Other loans acquired (1.9) -
Other loans repaid 1.9 -
Repayment of private placement notes* 36.6 -
Issue costs - 0.3
Amortisation of issue costs and write-off of financing fees (0.6) (0.6)
Net translation gain and fair value adjustment 13.5 (25.2)
Accrued interest (0.6) (0.7)
------------------------------------------------------------ ------- -------
At the end of the year (601.9) (605.3)
Derivatives hedging balance sheet debt** 22.6 42.9
------------------------------------------------------------ ------- -------
Debt translated at contracted rate (579.3) (562.4)
------------------------------------------------------------ ------- -------
* During the year ended 30 September 2023, the Group repaid
GBP36.6m of the 2010 private placement notes. GBP7.8m was also
received on maturity of derivatives hedging the 2010 notes and
GBP1.0m was received in respect of the firm commitment for the 2010
notes, resulting in net cash outflows presented in the consolidated
statement of cash flows of GBP27.8m.
** Represents the element of the fair value of interest rate
currency swaps hedging the balance sheet value of the private
placement notes. This amount has been disclosed separately to
demonstrate the impact of foreign exchange movements which are
included in interest-bearing loans and borrowings.
9. Derivatives and hedge relationships
2023 2022
GBPm GBPm
---------------------------------------------------------- ----- ------
Non-current assets: derivative financial instruments
USD GBP cross currency fixed interest rate swaps* 14.0 31.1
Forward currency contracts* 0.1 0.4
Commodity contracts* 1.2 11.0
Interest rate swaps* 0.7 3.4
---------------------------------------------------------- ----- ------
16.0 45.9
---------------------------------------------------------- ----- ------
Current assets: derivative financial instruments
USD GBP cross currency fixed interest rate swaps* 8.3 7.4
USD GBP cross currency floating interest rate swaps** - 4.4
Forward currency contracts*** - 0.5
Forward currency contracts* 1.1 3.3
Forward currency contracts 0.2 0.2
Commodity contracts* 6.1 11.6
Commodity contracts**** - 11.5
Interest rate swaps* 1.7 -
---------------------------------------------------------- ----- ------
17.4 38.9
---------------------------------------------------------- ----- ------
Current liabilities: derivative financial instruments
Forward currency contracts* (1.2) -
Forward currency contracts - (1.3)
GBP euro cross currency floating interest rate swaps*** - (1.0)
Commodity contracts* (7.1) (8.2)
Commodity contracts**** - (0.7)
---------------------------------------------------------- ----- ------
(8.3) (11.2)
---------------------------------------------------------- ----- ------
Non-current liabilities: derivative financial instruments
Commodity contracts* (0.3) (0.4)
(0.3) (0.4)
---------------------------------------------------------- ----- ------
Net derivative financial assets 24.8 73.2
---------------------------------------------------------- ----- ------
* Instruments designated as part of a cash flow hedge relationship.
** Instruments designated as part of a fair value hedge relationship.
*** Instruments designated as part of a net investment hedge relationship.
**** Instruments for which cash flow hedge accounting has been discontinued.
10. Share capital and own shares reserve
The movements in the company's issued share capital were as
follows:
Nominal value
Issued, called up and fully paid ordinary shares No. of shares GBPm
---------------------------------------------------------- ------------- -------------
At 1 October 2021 267,314,637 53.5
Shares issued relating to incentive schemes for employees 445,546 0.1
Shares cancelled pursuant to share buyback (4,459,302) (0.9)
---------------------------------------------------------- ------------- -------------
At 30 September 2022 263,300,881 52.7
Shares cancelled pursuant to share buyback (9,032,384) (1.8)
---------------------------------------------------------- ------------- -------------
At 30 September 2023 254,268,497 50.9
---------------------------------------------------------- ------------- -------------
The issued share capital is wholly comprised of ordinary shares
carrying one voting right each.
The nominal value of each ordinary share is GBP0.20. There are
no restrictions placed on the distribution of dividends, or the
return of capital on a winding up or otherwise.
The movements in the company's own shares reserve were as
follows:
Value
GBPm
-------------------------------------------- -------
At 1 October 2021 1.5
Shares issued/purchased for share schemes 10.1
Shares used to satisfy share schemes (5.5)
Shares purchased pursuant to share buyback 37.7
Shares cancelled pursuant to share buyback (36.6)
--------------------------------------------- -------
At 30 September 2022 7.2
Shares issued/purchased for share schemes 20.1
Shares used to satisfy share schemes (7.6)
Shares purchased pursuant to share buyback 74.8
Shares cancelled pursuant to share buyback (73.1)
--------------------------------------------- -------
At 30 September 2023 21.4
--------------------------------------------- -------
The own shares reserve represents shares in the company
purchased from the market and held by an employee benefit trust to
satisfy share awards under the Group's share schemes as well as
shares purchased for cancellation as part of the share buyback
programme (see below). Shares purchased for cancellation are
included in the own shares reserve until cancellation, at which
point the consideration paid is transferred to retained earnings
and the nominal value of the shares is transferred from share
capital to the capital redemption reserve.
Share buyback programme
On 23 May 2022, the company commenced a share buyback programme
to repurchase ordinary shares with a market value of up to
GBP75.0m. The purpose of the programme was to reduce the company's
share capital and therefore the shares purchased pursuant to the
programme were subsequently cancelled. The programme took place
within the limitations of the authority granted to the Board at the
company's Annual General Meeting held on 27 January 2022, pursuant
to which the maximum number of shares that could be bought back by
the company is 26,736,653. During the year ended 30 September 2023,
the company purchased 5,015,350 ordinary shares under the programme
(2022: 4,612,302) at an average price of 769.0p per share (2022:
816.4p) and an aggregate cost of GBP37.6m including GBP0.2m of
transaction costs (2022: GBP37.8m including GBP0.1m of transaction
costs).
On 24 May 2023, the Company commenced a second share buyback
programme to repurchase ordinary shares with a market value of up
to GBP75.0m. The programme takes place within the limitations of
the authority granted to the Board at the Company's last annual
general meeting, held on 26 January 2023, pursuant to which the
maximum number of shares that can be bought back by the Company is
26,081,857. During the year ended 30 September 2023, the company
purchased 4,327,964 ordinary shares under the programme at an
average price of 865.0p per share and an aggregate cost of GBP37.5m
(including GBP0.1m of transaction costs).
11. Acquisitions
Acquisition of Jimmy's Iced Coffee Limited
On 1 August 2023, the Group acquired 100% of the issued share
capital of Jimmy's Iced Coffee Limited (Jimmy's), obtaining control
of the entity. Jimmy's was founded in 2011 and is a small but
established ready to drink (RTD) iced coffee business based on the
south coast of England. Jimmy's is the fastest growing RTD iced
coffee brand in the UK. The Jimmy's brand gives Britvic access to a
fast-growing category and is directly aligned to the Group's
strategic priorities of Accessing New Spaces and Healthier People,
Healthier Planet.
Jimmy's contributed GBP2.2m of net revenue and a loss of GBP0.3m
to the Group's profit after tax for the period between the date of
acquisition and the balance sheet date.
If the acquisition of Jimmy's had been completed on the first
day of the financial year, Group revenues for the year would have
been GBP1,757.5m and the Group profit after tax would have been
GBP122.4m.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of
Jimmy's at the date of acquisition were as follows:
Assets GBPm
-------------------------------------------- -----
Intangible assets: trademark 19.6
Property, plant and equipment 0.1
Leased assets 0.1
Inventories 1.4
Trade and other receivables 2.8
Cash and cash equivalents 0.1
-------------------------------------------- -----
Total assets 24.1
-------------------------------------------- -----
Liabilities
-------------------------------------------- -----
Trade and other payables (2.2)
Lease liabilities - current -
Lease liabilities - non current (0.1)
Interest-bearing loans and borrowings (1.9)
Deferred tax liabilities (4.9)
-------------------------------------------- -----
Total liabilities (9.1)
-------------------------------------------- -----
Total identifiable net assets at fair value 15.0
Goodwill arising on acquisition 9.9
-------------------------------------------- -----
Purchase consideration 24.9
-------------------------------------------- -----
The goodwill arising on acquisition of GBP9.9m has been
allocated entirely to the GB operating segment given the current
business operations are GB focussed.
The key constituent parts of goodwill comprise mainly the
potential for further strategic growth relating to new
products/categories, international expansion, and efficiency gains;
and the replacement cost of Jimmy's workforce. Jimmy's workforce is
not separately capitalised on the balance sheet under IFRS but is a
component of goodwill.
The trademark for the Jimmy's brand, recognised within
intangible assets, has been allocated a useful economic life of 10
years.
The fair value of the financial assets includes trade
receivables with a fair value of GBP2.5m and a gross contractual
value of GBP2.5m. The best estimate at acquisition date of the
contractual cash flows not expected to be collected is GBPnil.
Purchase consideration
The fair value of the purchase consideration at the acquisition
date comprised the following:
1 August
2023
GBPm
----------------------- --------
Cash 24.9
----------------------- --------
Purchase consideration 24.9
----------------------- --------
The net cash outflow on acquisition was GBP24.8m, comprising the
above purchase consideration of GBP24.9m less GBP0.1m of cash
acquired.
12. Events after the reporting period
Acquisition in Brazil
On 2 October 2023, the Group acquired 100% of the issued share
capital of GlobalBev Comércio de Bebidas Ltda. This comprised of
all the voting equity interests and resulted in the Group obtaining
control of the entity. The acquired entity owns the Extra Power
energy drink brand as well as the energy brand Flying Horse, the
juice brand Juxx and the acai smoothie brand Amazoo. Collectively,
this acquisition in Brazil enables the Group to expand its brand
portfolio and regional footprint. The acquisition marks an
important extension of Britvic's Brazilian operations, consistent
with the Group's strategy to accelerate and expand its presence
across Brazil. The Group expects to disclose the fair value of the
net assets acquired, the fair value of the consideration payable
and the goodwill arising on the acquisition in its financial
statements for the 2024 financial year.
NON-GAAP RECONCILIATIONS
Adjusting items
In addition to statutory financial measures, the Group uses
certain alternative performance measures (APMs) which are not
defined by adopted IFRS to assess the operating performance and
financial position of the Group. These APMs exclude certain items,
referred to as adjusting items, which are not incurred in the
ordinary course of business due to their size, frequency and
nature. These APMs are intended to provide additional useful
information on trading performance to the users of the Financial
Statements and are not intended to be a substitute for IFRS
measures.
For the year ended 30 September 2023 these items primarily
relate to pension past service costs, amortisation of acquisition
related intangibles, strategic M&A activity and hedge
ineffectiveness on private placement loan hedging.
Adjusted KPIs are used to measure the underlying profitability
of the Group and enable comparison of performance against peers.
They are also used in the calculation of short and long-term reward
schemes.
Year ended
Year ended 30 September
30 September 2023 2022
Notes GBPm GBPm
----------------------------------------------------------------------- ------ ------------------ -------------
Implementation of SaaS accounting guidance (a) - (7.5)
Strategic restructuring - business capability programme (b) (0.9) (0.5)
Strategic restructuring - organisational capability transformation (c) (4.3) 1.5
Credits in relation to the acquisition and integration of subsidiaries (d) - 0.3
Strategic M&A activity (e) (2.4) 1.0
Deposit and Return Scheme set-up costs in Ireland (f) (0.5) -
Pension scheme costs (g) (20.5) -
Acquisition-related amortisation (h) (8.3) (8.4)
----------------------------------------------------------------------- ------ ------------------ -------------
Total included in operating profit (36.9) (13.6)
------------------------------------------------------------------------------- ------------------ -------------
Ineffectiveness on cash flow hedges related to debt (i) (1.5) -
----------------------------------------------------------------------- ------ ------------------ -------------
Total included in finance costs (1.5) -
----------------------------------------------------------------------- ------ ------------------ -------------
Total adjusting items pre-tax (38.4) (13.6)
------------------------------------------------------------------------------- ------------------ -------------
Tax on adjusting items included in profit before tax 5.7 1.2
------------------------------------------------------------------------------- ------------------ -------------
Net adjusting items (32.7) (12.4)
------------------------------------------------------------------------------- ------------------ -------------
(a) In FY22, a change in accounting policy was implemented in
relation to customisation and configuration costs of SaaS: due to
the change in policy, these costs were presented as adjusting
items. In FY23 the costs have been recorded in underlying
performance as the costs now form part of normal business
activity.
(b) 'Strategic restructuring - business capability programme'
relates to a restructuring of supply chain and the operating model
across the Group, initiated in 2016. Costs in the period of GBP0.9m
relate to the closure of the Norwich site and are primarily site
running costs. FY22 costs were a similar nature.
(c) 'Strategic restructuring - organisational capability
transformation' in the year primarily relates to redundancy costs
in relation to additional production capacity within Kylemore in
Ireland. The prior year relates to the release of contract
termination costs in relation to the closure of the Counterpoint
business.
(d) FY22 included the release of provisions for Bela Ischia
Alimentos Ltda (Bela Ischia) and Empresa Brasileira de Bebidas e
Alimentos SA (Ebba) which have been fully utilised.
(e) Costs associated with acquiring Jimmy's Iced Coffee Ltd and
GlobalBev Comércio de Bebidas Ltda (Extra Power) as well as aborted
M&A costs. FY22 related to remeasurement and utilisation of
historic provisions.
(f) Costs for the setup of the deposit return scheme (DRS) in
Ireland.
(g) Pension scheme costs of GBP20.5m comprise past service costs
on the GB defined benefit pension scheme resulting from an
amendment to the scheme rules related to pension increases.
(h) Acquisition-related amortisation relates to the amortisation
of intangibles recognised on acquisitions in Britvic Ireland,
Britvic France, Britvic Brazil, Aqua Libra Co, Plenish and Jimmy's
Iced Coffee.
(i) Ineffectiveness on cash flow hedges relate to hedge
ineffectiveness on private placement loan hedging.
Adjusted profit
Year ended Year ended
30 September 30 September
2023 2022
GBPm GBPm
---------------------------------------------------------------- ------------- -------------
Operating profit as reported 181.5 192.4
Add back: adjusting items in operating profit 36.9 13.6
---------------------------------------------------------------- ------------- -------------
Adjusted EBIT 218.4 206.0
Net finance costs (24.7) (17.3)
Add back: adjusting net finance costs 1.5 -
---------------------------------------------------------------- ------------- -------------
Adjusted profit before tax and acquisition-related amortisation 195.2 188.7
Acquisition-related amortisation (8.3) (8.4)
---------------------------------------------------------------- ------------- -------------
Adjusted profit before tax 186.9 180.3
---------------------------------------------------------------- ------------- -------------
Taxation (32.8) (34.9)
Less: adjusting tax credit (5.7) (1.2)
---------------------------------------------------------------- ------------- -------------
Adjusted tax (38.5) (36.1)
---------------------------------------------------------------- ------------- -------------
Adjusted profit after tax 148.4 144.2
---------------------------------------------------------------- ------------- -------------
Adjusted effective tax rate 20.6% 20.0%
---------------------------------------------------------------- ------------- -------------
Adjusted earnings per share
2023 2022
----------------------------------------------------------------------------------- ------ ------
Adjusted earnings per share
Profit for the year attributable to equity shareholders (GBPm) 124.0 140.2
Add: net impact of adjusting items (GBPm) 32.7 12.4
----------------------------------------------------------------------------------- ------ ------
Adjusted earnings (GBPm) 156.7 152.6
----------------------------------------------------------------------------------- ------ ------
Weighted average number of ordinary shares in issue for basic earnings per share 256.9 266.5
Adjusted earnings per share (pence) 61.0p 57.3p
----------------------------------------------------------------------------------- ------ ------
Adjusted diluted earnings per share
Adjusted earnings (GBPm) 156.7 152.6
Effect of dilutive potential ordinary shares - share schemes (m) 1.9 0.5
Weighted average number of ordinary shares in issue for diluted earnings per share 258.8 267.0
Adjusted diluted earnings per share (pence) 60.5p 57.2p
----------------------------------------------------------------------------------- ------ ------
Free cash flow
Year ended Year ended
30 September 30 September
2023 2022
GBPm GBPm
---------------------------------------------------------------------- ------------- -------------
Net cash flows from operating activities 238.4 239.6
Purchases of property, plant and equipment (net of government grants) (68.5) (72.9)
Purchases of intangible assets (8.1) (11.7)
Interest paid, net of derivative financial instruments (21.1) (14.8)
Repayment of principal portion of lease liabilities (9.0) (9.3)
Repayment of interest portion of lease liabilities (1.9) (2.1)
---------------------------------------------------------------------- ------------- -------------
Free cash flow 129 .8 128.8
---------------------------------------------------------------------- ------------- -------------
Adjusted net debt/EBITDA and EBITDA/net interest ratios
Year ended Year ended
30 September 30 September
2023 2022
GBPm GBPm
----------------------------------------------------------------------------- ------------- -------------
Operating profit as reported 181.5 192.4
Add back adjusting items in operating profit 36.9 13.6
----------------------------------------------------------------------------- ------------- -------------
Adjusted EBIT 218.4 206.0
Depreciation of property, plant and equipment 44.8 40.9
----------------------------------------------------------------------------- ------------- -------------
Depreciation of right-of-use assets 10.1 10.9
----------------------------------------------------------------------------- ------------- -------------
Amortisation (excluding acquisition-related amortisation) 7.3 7.2
----------------------------------------------------------------------------- ------------- -------------
Impairment of property, plant and equipment 3.8 -
----------------------------------------------------------------------------- ------------- -------------
Loss on disposal of property, plant and equipment and intangible assets 3.2 0.9
----------------------------------------------------------------------------- ------------- -------------
Adjusted EBITDA pre-IFRS 16 rental charges 287.6 265.9
Less: payment of lease liabilities as estimate for pre-IFRS16 rental charges (10.9) (11.4)
----------------------------------------------------------------------------- ------------- -------------
Adjusted EBITDA 276.7 254.5
----------------------------------------------------------------------------- ------------- -------------
Adjusted net debt 538.1 474.8
Adjusted EBITDA 276.7 254.5
----------------------------------------------------------------------------- ------------- -------------
Net debt/EBITDA ratio 1.9x 1.9x
----------------------------------------------------------------------------- ------------- -------------
Net interest as reported (24.7) (17.3)
----------------------------------------------------------------------------- ------------- -------------
Add back hedge ineffectiveness 1.5 (0.2)
----------------------------------------------------------------------------- ------------- -------------
Add back IFRS 16 interest on lease liabilities 1.9 2.1
----------------------------------------------------------------------------- ------------- -------------
Adjusted net interest (21.3) (15.4)
----------------------------------------------------------------------------- ------------- -------------
EBITDA/net interest ratio 13.0x 16.5x
----------------------------------------------------------------------------- ------------- -------------
Adjusted net debt
Restated*
30 September 30 September
2023 2022
GBPm GBPm
--------------------------------------- ------------ -------------
Interest-bearing deposits (10.9) (11.5)
Cash and cash equivalents (79.2) (85.9)
--------------------------------------- ------------ -------------
Overdrafts 48.9 9.8
--------------------------------------- ------------ -------------
Derivatives hedging balance sheet debt (22.6) (42.9)
--------------------------------------- ------------ -------------
Interest-bearing loans and borrowings 601.9 605.3
--------------------------------------- ------------ -------------
Adjusted net debt 538.1 474.8
--------------------------------------- ------------ -------------
* Comparative figures for interest-bearing deposits, overdrafts
and cash and cash equivalents have been restated as set out in Note
2.
Return On Invested Capital (ROIC)
ROIC is a performance ratio that shows how efficiently a company
is using investors' funds to generate profits. It is calculated by
dividing the Group's adjusted net operating profit after tax by
total invested capital:
30 September 30 September
2023 2022
GBPm GBPm
----------------------------------------- ------------ ------------
Equity 391.7 488.0
Adjusted net debt 538.1 474.8
----------------------------------------- ------------ ------------
Total invested capital 929.8 962.8
----------------------------------------- ------------ ------------
Adjusted EBIT 218.4 206.0
Less acquisition related amortisation (8.3) (8.4)
Adjusted net operating profit before tax 210.1 197.6
Adjusted effective tax rate 20.6% 20.0%
Tax (43.3) (39.5)
----------------------------------------- ------------ ------------
Adjusted net operating profit after tax 166.8 158.1
----------------------------------------- ------------ ------------
Adjusted ROIC 17.9% 16.4%
----------------------------------------- ------------ ------------
Glossary
A&P (Advertising and Promotions) is a measure of marketing
spend including marketing, research and advertising.
Acquisition-related amortisation is the amortisation of
intangibles recognised as part of a business combination.
Adjusted earnings per share (Adjusted EPS) is a non-GAAP measure
calculated by dividing adjusted earnings by the average number of
shares during the year. Adjusted earnings is defined as the
profit/(loss) attributable to ordinary equity shareholders before
adjusting items. Average number of shares during the year is
defined as the weighted average number of ordinary shares
outstanding during the period excluding any own shares held by
Britvic that are used to satisfy various employee share-based
incentive programmes.
Adjusted EBIT is a non-GAAP measure and is defined as operating
profit before adjusting items.
Adjusted EBIT margin is a non-GAAP measure and is defined as
Adjusted EBIT as a proportion of Revenue.
Adjusted EBITDA is a non-GAAP measure calculated by taking
Adjusted EBIT and adding back depreciation, amortisation and loss
on disposal of property, plant and equipment and deducting payments
of lease liabilities as an estimate for pre-IFRS16 rental
charges.
Adjusted effective tax rate is a non-GAAP measure and defined as
the income tax charge(credit), excluding the tax effect of
Adjusting items, as a proportion of the Adjusted profit before tax.
Adjusted net debt is a non-GAAP measure and is defined as net debt,
adding back the impact of derivatives hedging the balance sheet
debt.
Adjusted net debt/EBITDA is a is a non-GAAP measure and is
defined as the ratio of Adjusted net debt to Adjusted EBITDA
(calculated for the preceding 12 months).
Adjusted profit before tax is a non-GAAP measure and is defined
as profit before tax, excluding Adjusting items, with the exception
of acquisition-related amortisation.
Adjusted profit after tax is a non-GAAP measure and is defined
as profit after tax before adjusting items, with the exception of
acquisition related amortisation.
Adjusting items are those items of income and expense set out in
the non-GAAP reconciliations section that have been identified
because of their size, frequency and nature to provide shareholders
with management's view of the underlying financial performance in
the period.
Aqua Libra Co is the Britvic Aqua Libra Co Limited, previously
known as The Boiling Tap Company Limited (TBTC).
ARP is defined as average revenue per litre sold, excluding
factored brands and concentrate sales.
BPS is basis points and is a measure used to describe the
percentage change in a value. One basis point is equivalent to
0.01%.
Brand contribution is a non-GAAP measure and is defined as
revenue, less material costs and all other marginal costs that
management considers to be directly attributable to the sale of a
given product. Such costs include brand specific advertising and
promotion costs, raw materials and marginal production and
distribution costs. Brand contribution is reconciled to profit
before tax in note 4 of the financial statements.
Brand contribution margin is a non-GAAP measure and is a
percentage measure calculated as brand contribution divided by
revenue. Each business unit's performance is reported down to the
brand contribution level.
Constant exchange rate is a non-GAAP measure of performance in
the underlying currency to eliminate the impact of foreign exchange
movements.
DRS is Deposit Return Scheme. Deposit return schemes are used to
encourage more people to recycle packaging. The schemes work by
charging anyone who buys a drink a small deposit per container.
They get this money back when they return the container to a
collection point to be recycled.
EBIT is earnings before interest and taxation.
EBIT margin is operating profit as a proportion of revenue, both
as reported in the consolidated income statement.
EPS is Earnings Per Share.
Free cash flow is defined as cash generated from operating
activities, plus proceeds from the sale of property, plant and
equipment, less capital expenditure, interest and repayment of
lease liabilities.
GB is Great Britain.
Group is Britvic plc, together with its subsidiaries.
Immediate Consumption is defined as pack formats to be consumed
on purchase, rather than deferred packs which are purchased and
consumed later.
Innovation is defined as new launches over the last five years,
excluding new flavours and pack sizes of established brands.
M&A is mergers and acquisitions.
Net debt is the sum of interest-bearing loans and borrowings,
overdrafts, cash and cash equivalents and interest-bearing
deposits.
NI is Northern Ireland.
Non-GAAP measures are provided because they are closely tracked
by management to evaluate Britvic's operating performance and to
make financial, strategic and operating decisions.
Plenish is Plenish Cleanse Ltd, a company acquired on 1 May
2021.
RCF is revolving credit facility.
Revenue is defined as sales achieved by the Group net of price
promotional investment and retailer discounts.
ROI is Republic of Ireland.
ROIC is Return On Invested Capital, a performance ratio that
shows how efficiently a company is using investors' funds to
generate profits. It is calculated as set out in the non-GAAP
reconciliations section.
Volume is defined as number of litres sold. No volume is
recorded in respect of international concentrate sales or Brazil
fruit pulp sales.
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END
FR FIFFILDLFFIV
(END) Dow Jones Newswires
November 22, 2023 02:00 ET (07:00 GMT)
Britvic (LSE:BVIC)
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