TIDMFEVR
RNS Number : 9519T
Fevertree Drinks PLC
26 March 2019
26(th) March 2019
Fevertree Drinks plc
("Fever-Tree" or the "Group")
Preliminary Results
Fever-Tree, the world's leading supplier of premium carbonated
mixers, today announces its Preliminary Results for the year ended
for 31 December 2018.
Financial highlights:
-- Revenue up 40% to GBP237.4m (2017: GBP170.2m)
-- Gross profit margin of 51.8% (2017: 53.5%)
-- Adjusted EBITDA* of GBP78.6m (2017: GBP58.7m)
-- Profit after tax of GBP61.8m (2017: GBP45.5m)
-- Diluted EPS of 53.19 pence (2017: 39.15 pence)
-- Net cash at year end of GBP83.6m (2017: GBP50.9m)
-- Final dividend of 10.28 pence per share recommended to
shareholders, bringing the total dividend for the year to 14.50
pence per share (2017: 10.65 pence per share)
* Adjusted EBITDA is earnings before interest, tax,
depreciation, amortisation, share based payment charges and finance
costs.
Operational highlights:
-- Consolidated position as number one mixer brand by value(1)
in the UK Off-Trade channel while continuing to gain share across
the On-Trade
-- Transition to wholly-owned operations in the US with
Fever-Tree USA now directly managing marketing, sales and
distribution
-- Made gains across Continental Europe in both the On and
Off-Trade, as well as driving category growth in many of the key
markets in the region
-- Continued focus on innovation & product development with
the extension of the Refreshingly Light low-calorie range as well
as successful new product launches of Cucumber Tonic and Citrus
Tonic
-- Further strengthening of the Board with the appointment of
three non-executive Directors with a breadth of relevant beverage
and international experience
-- Named the no.1 best-selling and no.1 trending tonic water in
Drinks International's survey of world's top 250 bars for the fifth
year running
1. (IRI - Total UK Retail Mixer Market value share - 13 weeks to 31/12/18).
Tim Warrillow, Co-founder and CEO of Fever-Tree said:
"2018 was a significant year for Fever-Tree. In the UK, we
strengthened our position as the leading mixer brand in the Off
Trade. In the US, we successfully established our own operations
and the business made real progress in deepening and widening its
presence in multiple European regions. As the world's leading
premium mixer brand with a strengthening global distribution
network we are well set to drive the international opportunity as
the move towards the premium long mixed drink continues to gather
momentum around the world.
At this early stage in the year, the Group is trading in line
with Board expectations and we remain excited about the size of the
opportunity that lies ahead."
For further information:
Fevertree Drinks plc +44 (0)20 7349 4922
Tim Warrillow, Co-founder and CEO
Andy Branchflower, Finance Director
Oliver Winters, Communications & IR Director
Numis Securities - Nominated Adviser and Joint Broker +44 (0)20 7260 1000
Garry Levin
Matt Lewis
Hugo Rubinstein
Investec Bank plc - Joint Broker +44 (0)20 7597 5970
David Flin
Alex Wright
David Anderson
Brunswick Group +44 (0) 20 7404 5959
Jonathan Glass
Fiona Micallef-Eynaud
Cerith Evans
Notes to Editors:
Fever-Tree is the world's leading supplier of premium carbonated
mixers for alcoholic spirits by retail sales value, with
distribution to over 70 countries worldwide. Based in the UK, the
brand was launched in 2005 to provide high quality mixers which
could cater to the growing demand for premium spirits, in
particular gin, but also increasingly for vodka, rum and whisky.
The Company now sells a range of carbonated mixers to hotels,
restaurants, bars and cafes ("On-Trade") as well as selected retail
outlets ("Off-Trade").
CHAIRMAN'S STATEMENT
2018 has been a year of further operational and financial
progress for Fever-Tree. The Group reinforced its market leading
position in the global premium mixer category, expanded its
international footprint, including the establishment of Fever-Tree
USA, and continued to build a talented team across the globe - all
the while remaining true to the entrepreneurial and pioneering
culture of its co-founders.
Results
Group revenue was GBP237.4m, reflecting a 40% increase compared
to 2017, with adjusted EBITDA increasing to GBP78.6m (2017:
GBP58.7m). While the UK, our longest established market, once again
led the way in terms of revenue growth, the Group's other regions
all saw positive momentum in 2018.
Strategy
Fever-Tree pioneered the concept of the premium mixer to partner
the ongoing premiumisation of the spirits category and the
increasing focus on simple long mixed drinks. The Group's strategy
remains unchanged to this day and the year under review has seen
the Group continue to build an excellent platform for capturing the
global opportunity ahead. To this end, the establishment of
Fever-Tree USA was a significant milestone and I have greatly
enjoyed meeting the team in the US over the course of the year and
am impressed by their professionalism and appetite for the
opportunity ahead in that market. The Group also continues to make
great progress across multiple markets in Europe and we have
strengthened our European management team to reflect our growing
ambitions for that region. 2018 also saw the further development of
our Corporate Social Responsibility agenda, including increasing
the Group's support for the hugely important work being done by
Malaria No More.
Dividend
The Board is pleased to recommend a final dividend of 10.28
pence per share, bringing the total dividend for 2018 to 14.50
pence per share (2017: 10.65 pence per share). If approved by the
shareholders at the AGM on 24 May 2019, it will be paid on 31 May
2019 to shareholders on the register on 26 April 2019.
People
As Fever-Tree continues to grow, its people and culture remains
integral to our future success. I have been particularly encouraged
by the focus on and commitment to the development of our employees
throughout 2018. The passion and creativity that I have seen across
the business remains a source of inspiration and on behalf of the
Board I would like to thank all our employees for their hard work
and dedication.
During the year, it was my pleasure to welcome Kevin Havelock,
Jeff Popkin and Domenic De Lorenzo as non-executive Directors of
the Group. They each have highly impressive track records across
the beverages sector and a breadth of relevant international
experience that has already brought valuable insight and additional
perspective to the Group.
Outlook
Fever-Tree has the strategy, products, people and proposition to
deliver long term sustainable growth. I look forward to working
with my Board colleagues and the wider Fever-Tree team in the year
ahead.
Bill Ronald
Chairman
STRATEGIC REPORT
CHIEF EXECUTIVE'S REPORT
2018 has been one of the most significant years since Charles
and I founded Fever-Tree over 15 years ago. It has been a year
where, perhaps more than any other, we have seen how the advent of
the premium mixer, alongside the rise of premium spirits, is
reinvigorating and re-establishing the prominence of simple long
mixed drinks in the minds of the trade, retailers and most
importantly the consumer. Fever-Tree continues to drive this trend
through our product development, consumer engagement and the
strength of our relationships with customers as well as spirits
partners, not just in the UK but across many of our key markets in
mainland Europe and the USA with the move to premiumisation across
spirits categories and the evolution of drinking habits
underpinning the global opportunity.
2018 saw the Group deliver revenue of GBP237.4m, representing
growth of 40% on 2017. This revenue growth was underpinned by
strong margins, with a gross profit margin of 51.8% and adjusted
EBITDA margin of 33.1%, which translated to profit after tax for
the year of GBP61.8m, representing growth of 36% on 2017. We ended
the year with net cash of GBP83.6m, an increase of 64% on last
year.
Regional Review
We consider our global sales across four regions, being the UK,
USA, Continental Europe, and Rest of the World ("RoW").
UK
In the UK the Group delivered growth of 53% with revenue of
GBP134.2m (2017: GBP87.8m) and in doing so consolidated our
position as no. 1 mixer brand in UK retail with 42% market share
(IRI) in what remains one of the fastest growing categories in
carbonated soft drinks.
The Group's performance over the summer was exceptional, aided
by the prolonged period of hot weather as well as a number of
significant national events including the Football World Cup and
Royal Wedding all of which contributed to the continued growth and
popularity of the gin category with more gin being sold during the
three months of the summer in 2018 than the summers of 2014 and
2015 combined with the category now worth GBP1.9bn in the UK. The
Group finished the year with a good performance over Christmas
which saw further gains in market share from our competitors in
December, illustrating once again Fever-Tree's ability to drive
growth in the mixer category.
We delivered another strong performance in the Off-Trade in
2018. While we remain well established across the main estate of
our major retailers, the Group continued to benefit from increased
presence on the shelf, with gains across our flavours and formats.
Our extended range of Refreshingly Light mixers were introduced in
the first half and gained significant incremental distribution
alongside our regular range in many of our retailers. We have been
pleased with how the range has performed and our decision to offer
choice between our regular and light ranges without comprising on
quality or taste, has clearly resonated with consumers and
retailers alike. The Group's underlying rate of sales growth
remained strong across our existing SKUs (stock keeping units) with
our flavoured tonics such as Mediterranean, Elderflower and
Aromatic all continuing to perform well, stimulating engagement and
interest whilst continuing to attract consumers into the category
for the first time.
The On-Trade remains a key focus for the Group and 2018 saw a
continuation of the positive performance from 2017. Our broad range
of high-quality mixers, brand strength, first mover advantage and
long-standing relationships we have with many of our On-Trade
partners means we are well positioned to continue to gain market
share in 2019 and beyond.
The move to simple long mixed drinks is gaining momentum in the
UK with spirits continuing to gain market share at the expense of
beer and wine reflecting the evolving drinking habits of
consumers.
Looking ahead to 2019, we are now clear market leader in the
Off-Trade and would naturally expect a moderation in growth rates
compared to those of 2018 but remain excited about the opportunity
ahead in the UK.
USA
In December 2017 we announced our intention to take direct
control of our operations in the USA. Following a six month
transition period, Fever-Tree USA took ownership of our sales,
marketing and distribution in the territory on 1(st) June 2018. We
now have a team of 35 people spanning sales, marketing, finance and
supply chain working across the USA, with a regional headquarters
in New York.
Notwithstanding the significant operational changes undertaken
in 2018, we are encouraged by the performance in the region with
sales growth of 21% (24% on a constant currency basis) to GBP35.8m.
Sales remained robust across both channels and the team did an
excellent job in managing the transition albeit, as would be
expected in any transition, there were some related distribution
losses. We stated at the time of our interim results that there was
"much transition-related work to do in the second half of 2018" and
therefore it was pleasing, despite these challenges, to see our
sales growth accelerate slightly in the second half.
As announced at our interim results, the Group signed an
exclusive on-trade national distribution agreement with Southern
Glazer's Wine and Spirits ("SGWS"), the largest wine and spirits
distribution company in North America. Commencing in August 2018
the agreement covers the 29 states in which SGWS and Fever-Tree can
operate side by side, with the remaining states covered by a
network of regional distributors. As well as providing a strong
national route to market, Fever-Tree is now the preferred mixer
partner for SGWS, sitting alongside their broad spirits portfolio,
which is a further endorsement of our brand's position and
potential in the US market. While the partnership is in its early
stages, with work ongoing in 2019 to continue to embed the
relationship, the progress to date has been encouraging.
While a lot of the focus in the second half of the year has been
on engaging directly with key national and local accounts for the
first time the period also saw the successful roll out of a number
of co-promotional campaigns with spirit partners. This has included
the launch of our Citrus Tonic Water in association with Patrón
Tequila, the largest premium tequila brand in the USA. We also
launched our Aromatic Tonic Water in the On and Off-Trade with an
exclusive listing with Target for an initial period.
Our ginger range remains a central focus and continues to lead
the sales mix in the US. Our commitment to the highest quality
ingredients, sourcing three different types of ginger from Africa
and Asia, gives us, we believe, a marked point of difference and an
excellent opportunity to promote our range further.
Following the operational progress made in 2018 we will continue
to build our distribution footprint and key relationships as 2019
progresses. The premium mixer category remains relatively immature
in the US but the trend towards spirits premiumisation and the
increasing focus on simple long drink mixability gives us
confidence in the medium to longer term opportunity for Fever-Tree
in the region.
Continental Europe
Sales growth of 24% was achieved across Continental Europe in
2018 (23% on a constant currency basis), delivering revenue for the
full year of GBP55.5m. It remains our second largest region.
2018 saw the Group continue to make gains across the region in
both the On and Off-Trade as well as drive the category growth in
many of the key markets in the region.
Alongside our distributors, we have started to work increasingly
closely with our retail partners, gaining additional shelf space
alongside new national retail listings in markets such as Germany,
Denmark, Italy, Ireland and the Nordics. While our whole range has
performed well, reflecting the consumer's growing awareness of the
brand and the brand's impact on the wider category, our tonic range
has been at the forefront of this growth, reflecting the excitement
and momentum in the premium gin category. This momentum is being
seen across the region, as the move to simple long mixed drinks
being enjoyed across different occasions gathers pace and
importantly continues to be a focus for the spirits companies. As
we have seen in other major markets, this trend is attracting a
broader range of consumers into the category for the first time and
is gaining market share from beer.
Our investment into Continental Europe continued during the year
with a more than doubling of headcount in the region, with our
senior regional management team being complemented by additional
hires to work in-country. Not only has this enabled us to gain a
more in depth understanding and insight into the different markets
but working alongside our European marketing team, it provided us
with the opportunity to plan and execute tailored marketing
activations.
The Group is establishing an increasingly strong platform in
Europe. We have a committed network of distributors, with whom we
are working ever more closely. Our ability to activate
co-promotional campaigns with key spirits partners across the
region is unrivalled amongst our premium competitors and remains a
key focus in the year ahead. We are continuing to drive the value
and growth in the category for both On and Off-Trade partners and
our key European markets are continuing to show good momentum, all
of which provides us with confidence as we move into 2019.
ROW
The RoW region grew by 48% with revenue of GBP12.0m and
continues to represent plenty of interesting opportunities for the
Group. The brand's visibility and awareness amongst consumers
continues to increase with the key territories of Australia and
Canada as well as South Africa all performing strongly with a
growing presence in both the On and Off-Trade and across our
flavours.
Our distribution network continues to evolve as we ensure we
have the right partners in place in each region to reflect the
opportunities ahead with the same trends being seen in our more
established markets beginning to emerge in many of these
territories.
Operational review
The Group operates a largely outsourced business model which
allows for scalability and flexibility alongside the ability to
benefit from specific, focused expertise and experience in key
areas of the supply chain. This model enables the Group to grow and
maintain the highest standards of quality control without the
requirement for significant capital investment and allows
management to maintain its focus on realising the Group's strategic
growth opportunities.
Manufacturing and distribution are completely outsourced, with
the Group responsible for arranging for the delivery of key
ingredients, flavours, water, glass, cans and packaging to a
manufacturer who then bottles or cans the final product from these
component parts.
We currently have six bottling and canning partners across UK
and Europe and have made good progress in identifying a bottling
partner in the USA in line with our stated strategy to bottle
closer to our key regions and territories as appropriate over
time.
The Group is closely monitoring the potential impact and risks
of the UK's exit from the European Union, including leaving the EU
without a deal. The Group has a designated Committee who meet
regularly to assess preparedness against the different potential
scenarios. The Group's outsourced business model and increased
European bottling footprint provides a degree of operational
flexibility which leaves the Group well placed to respond to and
mitigate the potential impacts of the different scenarios
identified under which the UK's exit from the EU could occur.
The Fever-Tree Team
We had already assembled what I believe to be the very best team
of people across the mixed drinks industry, but this strengthened
and broadened enormously over 2018.
We are now double the size of this time last year and have a
growing band of Fever-Tree employees not just in the UK but also
across Europe and further afield, and of course now our very own
Team USA.
Innovation
Innovation continues to be at the heart of the Group's strategy.
We are proud of our position as pioneers of the premium mixer and
our commitment to providing consumers and customers alike with the
highest quality products remains undimmed.
Refreshingly Light
The first half of the year saw the successful launch of the
Group's extended Refreshingly Light range of low-calorie mixers. We
have always believed in the appeal of a premium, superior tasting
low calorie tonic which doesn't compromise on quality and which
doesn't include artificial sweeteners. When we first launched our
light tonic with these very credentials over 10 years ago it was
the first of its kind, and that pioneering approach has proved to
be very successful, with it firmly established as our bestselling
SKU at retail in the UK. We are pleased that retailers are
recognising this performance and opening their shelf space to this
kind of product, hence our ability to offer consumers both our
Regular and Refreshingly Light range across our key retailers.
Co-Promotions
Our co-promotional activity with spirits partners, both large
and small, continued to deepen and develop across different spirits
categories as simple long mixed drinks become central to the serve
strategies of spirit companies around the world. In September we
took our collaboration one step further by developing a product
alongside a spirit partner, Patrón Tequila, the leading US premium
tequila brand with Fever-Tree Citrus Tonic Water launched in the
USA, Spain, Australia, Mexico and the UK. This partnership was born
out of our shared values around taste, provenance and versatility.
We worked very closely with the team at Patrón to develop the tonic
- I myself joined their Master Distiller, Francisco Alcaraz, in
Mexico to source the key ingredients of Mexican limes, tangerine
and bitter orange, selected to complement the sweet citrus and
peppery notes of Patrón.
Limited Editions
We continue to develop limited edition variants; our Cucumber
Tonic launched to great success in the summer, whilst the run up to
Christmas saw the relaunch of our seasonal favourite Clementine
Tonic Water in the UK. Our limited editions continue to drive
interest and engagement in the category and our Cucumber variant
proved so popular that it has now been added to our permanent range
and will be introduced into the on-trade in 2019.
Formats
The Group's core formats remain un-changed but we are conscious
of ensuring we have the correct flavours and formats for the
markets we operate in. To this end, 2018 saw the launch of 250ml
cans in Spain as well as the roll-out of 4x200ml variety packs
across a number of key markets
Gifting
We continued to develop our gifting range in 2018 with
Fever-Tree crackers and advent calendars launched in the run up to
Christmas. Sold through John Lewis and Waitrose respectively in the
UK, they both proved incredibly popular, demonstrating the strength
and appeal of the brand beyond the mixer aisle.
Due to the success of "The Art of Mixing" our cocktail book,
with over 125 recipes created and mixed by bartenders around the
world, which once again finished the year as the leading drinks
book in the UK, it has now been made available to purchase in eight
international markets as well as being published in three foreign
language editions: German, Spanish and Dutch, with a French edition
to follow in 2019.
Fever-Tree Championships
2018 saw the inaugural staging of the Fever-Tree Championships,
the prestigious grass tennis tournament held in June at The Queen's
Club, London. This was our first title sponsorship of a major
sporting event and was covered widely across BBC television, radio
and online and by Amazon Prime Video with a total television
audience of over 20 million across 142 markets, with a peak
audience of over two million on BBC watching the return of Andy
Murray.
It was a fantastic week and the tournament provided the ideal
platform to not only showcase the brand but also to engage with
consumers and we are already looking forward to the 2019
Championships. The feedback from the first year of the event from
players, spectators and officials alike has been extremely positive
with the tournament being voted ATP World Tour Tournament of the
Year in its category at the ATP's annual awards as well as recently
being shortlisted for event of the year at the forthcoming
prestigious BT Sport industry awards.
Market developments
There is clear evidence that drinking habits are evolving, not
just in the UK but across many of the markets we operate in, driven
by an acceleration in the macro trends that Charles and I
identified at the outset of Fever-Tree. Premium spirit consumption
is growing ahead of mainstream spirits while consumer interest in
quality and craft is prevalent across the beverage sector. Nowhere
is this more starkly illustrated than the explosion in craft
distilleries. In 2003 there were about 30 such distilleries in the
UK and there are now ten times that. The figures for the USA are
even more illuminating with the numbers increasing from fewer than
50 when Fever-Tree was established to nearly 2,000 today.
This interest in and desire for quality and provenance sits
alongside a growing interest in health and wellbeing which, when
applied to the beverage sector, means consumers are drinking less
but also drinking better. Not only this, they are also changing the
way in which they want to consume their spirits both in terms of
serve and occasion. Consumers are turning away from wanting to
drink them neat or over ice; it is no longer compatible with modern
lifestyles or the evolution of drinking occasions with late night
drinking being replaced by more casual occasions throughout the day
which are not suited to drinking neat spirits.
Previously, the much talked about cocktail/mixology culture was
seen as a way to satisfy the changing demands of consumers.
However, by its very nature it is complex to execute and cannot
scale. In the On-trade there are challenges in training,
consistency of serve and the ability to make great tasting drinks
quickly. In the Off-trade it is even more of a challenge. As
research shows, as the complexity of a drink increases the
likelihood of people habitually making the drink at home declines
rapidly which, simply means, bottles sit undrunk, gathering dust in
the cupboard never to be repurchased.
So the alternative, which suffers from none of these
limitations, is the simple long mixed drink - the G&T, the
Moscow Mule, the Whiskey and Ginger and the Highball, to name a
few. The advent of Fever-Tree and the premium mixer has
reinvigorated and re-established the quality and enjoyment of these
drinks as well as importantly introducing choice and margin back
into a category that had been long overlooked and ignored.
By simply combining a premium spirit and a premium mixer
together enables the On-Trade to deliver an easy to make yet great
tasting drink that can be enjoyed throughout the day, supporting a
premium price point and in addition a drink that consumers can
easily replicate at home thus driving volume in the Off-Trade
It is becoming evident that spirits companies, both big and
small, are increasingly focused on their long serve strategy for
their premium portfolios and Fever-Tree's broad range of high
quality mixers, global footprint and brand strength means we are
increasingly well positioned to work closely with our spirits
partners to drive premium spirits consumption and as a result
provide a genuine alternative to the beer and wine occasion.
Outlook
2018 was a significant year for Fever-Tree. In the UK, we
strengthened our position as the leading mixer brand in the
Off-Trade. In the US, we successfully established our own
operations and the business made real progress in deepening and
widening its presence in multiple European regions. As the world's
leading premium mixer brand with a strengthening global
distribution network we are well set to drive the international
opportunity as the move towards the premium long mixed drink
continues to gather momentum around the world.
At this early stage in the year, the Group is trading in line
with Board expectations and we remain excited about the size of the
opportunity that lies ahead.
Tim Warrillow
Chief Executive
FINANCIAL REVIEW
REVENUE
Revenue grew by 40% from GBP170.2m in 2017 to GBP237.4m, with
the Group enjoying growth consistently across flavours, formats,
regions and channels, as outlined in the Chief Executive's
report.
GROSS MARGIN AND OPERATING EXPENSES
In 2018, gross margin remained robust but decreased to 51.8%
(2017: 53.5%). As expected, the decrease in percentage gross margin
was largely an effect of the implementation of the Soft Drinks
Industry Levy in the UK. From April 2018 the levy was charged to
the Group on our regular range of products sold in the UK (our
Refreshingly Light range is exempt) and in turn this cost was
passed directly through to our UK customers, hence the levy had no
impact on the amount of gross profit made by the Group. The
incremental revenue created by the recharge of the levy, generated
at nil margin, did, however, have the effect of diluting the
overall percentage gross margin made by the Group. Otherwise,
underlying cost increases, most notably glass, also had a
corresponding impact on gross margin. Meanwhile a marginally
stronger Euro was offset by a slightly weaker US Dollar, and so
foreign exchange movements combined to have minimal impact on gross
margin in the year.
Underlying operating expenses are defined as all operating
expenditure exclusive of depreciation, amortisation and share based
payment charges and the proportion of this expenditure relative to
revenue is seen as an effective indicator of changes in underlying
operating activity year on year. In 2018 underlying operating
expenses as a proportion of revenue reduced marginally to 18.7%
(2017: 19.1%). Within this, efficiencies gained in central
overheads were reinvested in staffing and marketing spend and
therefore, in absolute terms, the Group significantly increased
investment in staff and marketing expenditure in 2018, especially
in the US. A new Enterprise Resource Planning system was also
successfully implemented early in the year, providing the platform
to underpin our increasingly global operating base as well as
allowing real-time data analytics to help drive operational
efficiencies going forward.
Therefore, the reduction in percentage gross margin, which was
largely a factor of the recharge of the UK Soft Drinks Industry
Levy, was only marginally offset by efficiencies in underlying
operating expense and hence the adjusted EBITDA margin for the
group reduced to 33.1% (2017: 34.5%), with adjusted EBITDA growing
by 34% to GBP78.6m (2017: GBP58.7m). Operating profit increased by
34% to GBP75.4m (2017: GBP56.4m) following an increase in share
based payment charges to GBP1.8m (2017: GBP1.1m) and an increase in
depreciation.
TAX
The effective tax rate in 2018 was 18.26% (2017: 19.35%).
EARNINGS PER SHARE AND DIVIDS
The basic earnings per share for the year are 53.38 pence (2017:
39.48 pence) and the diluted earnings per share for the year are
53.19 pence (2017: 39.15 pence).
In order to compare earnings per share year on year, earnings
have been adjusted to exclude amortisation and the UK statutory tax
rates have been applied (disregarding other tax adjusting items).
On this basis, normalised earnings per share for 2018 were 53.40
pence per share and for 2017 were 40.04 pence per share, an
increase of 33.4%.
The Board is recommending a final dividend of 10.28 pence per
share in respect of 2018 (2017: 7.64 pence per share), which brings
the total dividend for 2018 to 14.50 pence per share (2017: 10.65
pence per share). If approved by shareholders at the AGM on 24 May
2019, it will be paid on 31 May 2019 to shareholders on the
register on 26 April 2019.
CASH POSITION
The Group had net cash of GBP83.6m at year end, with GBP89.7m of
cash and cash equivalents at the bank offset by GBP6.1m of bank
loans (2017: net cash of GBP50.9m). The Group had access to a
GBP10m 3-year revolving credit facility provided by Lloyds Bank
plc, which expired in January 2019 and was not renewed, resulting
in the repayment of the GBP6.1m bank loan post year end.
WORKING CAPITAL
Working capital increased by GBP18.8m during 2018 to GBP57.9m.
The increase in working capital resulted from an elevation in
inventory levels at year end (which allowed for increased
flexibility in the early part of 2019 ahead of the UK's potential
exit from the EU in 2019). This increase in inventory levels was
partially offset by a significant improvement in the collection of
trade debtors in the second half of the year and working capital
management will remain an area of focus in 2019. Operating cash
flow remains strong, and consistent with the prior year at 74% of
adjusted EBITDA.
CAPITAL EXPITURE
Due to the Group's outsourced business model, capital
expenditure requirements remain low. The only area of notable
capital expenditure in 2018 continued to be investment in crates
used to transport reusable bottles within Germany of GBP0.8m (2017:
GBP0.5m), reflecting the on-going strong growth in that territory.
Additional spend of GBP0.6m was also made towards leasehold
improvements in 2018 as part of the head office relocation.
PERFORMANCE INDICATORS
The Group monitors its performance through a number of key
indicators. These are formulated at Board meetings and reviewed at
both an operational and Board level.
Revenue growth %
Group revenue growth was 40% in 2018 which was ahead of Board
expectations (2017: 66%).
Gross margin %
The Group achieved a gross margin of 51.8% in 2018 which was
ahead of Board expectations (2017: 53.5%).
Adjusted EBITDA margin %
The Group achieved an adjusted EBITDA margin of 33.1% which was
ahead of Board expectations (2017: 34.5%).
Andrew Branchflower
Finance Director
Fevertree Drinks plc
Consolidated statement of profit or loss and other comprehensive
income
For the year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Revenue 237,449.3 170,171.7
Cost of sales (114,489.2) (79,073.0)
Gross profit 122,960.1 91,098.7
Administrative expenses (47,602.9) (34,694.9)
Adjusted EBITDA* 78,637.6 58,665.1
Depreciation (738.6) (405.5)
Amortisation (720.0) (720.0)
Share based payment charges (1,821.8) (1,135.8)
Operating profit 75,357.2 56,403.8
Finance costs
Finance income 327.2 94.9
Finance expense (107.0) (71.9)
Profit before tax 75,577.4 56,426.8
Tax expense (13,801.6) (10,917.8)
Profit for the year 61,775.8 45,509.0
Items that may be reclassified
to profit or loss
Foreign currency translation
difference of foreign operations (110.3) -
------------ -----------
Comprehensive income attributable
to equity holders of the parent
company 61,665.5 45,509.0
------------ -----------
Earnings per share for profit
attributable to the owners of
the parent during the year
Basic (pence) 53.38 39.48
Diluted (pence) 53.19 39.15
* Adjusted EBITDA is earnings before interest, tax,
depreciation, amortisation, share based payment charges and finance
costs.
Fevertree Drinks plc
Consolidated statement of financial position
At 31 December 2018
2018 2017
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 2,734.3 1,995.6
Intangible assets 41,690.7 42,410.7
Deferred tax asset - 1,371.0
Total non-current assets 44,425.0 45,777.3
----------- -----------
Current assets
Inventories 28,322.2 13,235.8
Trade and other receivables 62,916.1 55,587.0
Derivative financial instruments - 229.8
Cash and cash equivalents 89,721.1 56,959.5
Total current assets 180,959.4 126,012.1
----------- -----------
Total assets 225,384.4 171,789.4
----------- -----------
Current liabilities
Trade and other payables (33,033.2) (29,948.9)
Loans and borrowings (6,075.0) -
Corporation tax liability (2,607.7) (5,695.1)
Derivative financial instruments (309.4) -
----------- -----------
Total current liabilities (42,025.3) (35,644.0)
----------- -----------
Non-current liabilities
Loans and borrowings - (6,061.3)
Deferred tax liability (193.6) -
Total non-current liabilities (193.6) (6,061.3)
----------- -----------
Total liabilities (42,218.9) (41,705.3)
----------- -----------
Net assets 183,165.5 130,084.1
----------- -----------
Equity attributable to equity
holders of the company
Share capital 290.3 288.4
Share premium 54,769.5 53,689.2
Capital redemption reserve 93.2 93.2
Translation reserve (110.3) -
Retained earnings 128,122.8 76,013.3
Total equity 183,165.5 130,084.1
----------- -----------
Fevertree Drinks plc
Consolidated statement of cash flows
For the year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Operating activities
Profit before tax 75,577.4 56,426.8
Finance expense 107.0 71.9
Finance income (327.2) (94.9)
Depreciation of property, plant and equipment 738.6 405.4
Amortisation of intangible assets 720.0 720.0
Share based payments 1,821.8 1,135.9
78,637.6 58,665.1
(Increase) in trade and other receivables (7,301.0) (26,405.2)
(Increase) in inventories (16,414.0) (2,712.0)
Increase in trade and other payables 3,461.9 13,820.5
----------- -----------
(20,253.1) (15,296.7)
----------- -----------
Cash generated from operations 58,384.5 43,368.4
----------- -----------
Income taxes paid (12,744.1) (9,408.0)
----------- -----------
Net cash flows from operating activities 45,640.4 33,960.4
----------- -----------
Investing activities
Purchase of property, plant and equipment (1,477.3) (1,238.0)
Interest received 327.2 74.3
Net cash used in investing activities (1,150.1) (1,163.7)
----------- -----------
Financing activities
Interest paid (107.0) (71.9)
Issue of shares 1,082.2 168.1
Dividends paid (13,725.2) (8,896.6)
----------- -----------
Net cash used in financing activities (12,750.0) (8,800.4)
----------- -----------
Net increase in cash and cash equivalents 31,740.3 23,996.3
Cash and cash equivalents at beginning
of period 56,959.5 32,963.2
----------- -----------
Effect of movements in exchange rates 1,021.3 -
on cash held
Cash and cash equivalents at end of period 89,721.1 56,959.5
----------- -----------
NOTES TO THE CONSOLIDATED PRELIMINARY FINANCIAL STATEMENTS
1. Basis of preparation
The financial information presented in this preliminary
announcement has been prepared in accordance with the recognition
and measurement requirements of International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB") and as adopted by the EU and those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS. The principal accounting policies adopted in the preparation
of the financial information in this preliminary announcement are
unchanged from those used in the company's financial statements for
the year ended 31 December 2017 except for those relating to IFRS
15 Revenue from Contracts with Customers and IFRS 9 Financial
Instruments and are consistent with those that the company has
applied in its financial statements for the year ended 31 December
2018.
The financial information set out above does not constitute the
company's statutory accounts for 2018 or 2017. Statutory accounts
for the years ended 31 December 2018 and 31 December 2017 have been
reported on by the Independent Auditor. The Independent Auditor's
Report on the Annual Report and Financial Statements for 2018 and
2017 was unqualified, did not draw attention to any matters by way
of emphasis, and did not contain a statement under 498(2) or 498(3)
of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2017 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2018 will be delivered to the Registrar
in due course.
2. Revenue
An analysis of turnover by geographical
market is given below:
2018 2017
GBP'000 GBP'000
United Kingdom 134,172.9 87,778.2
United States of America 35,769.1 29,539.5
Europe 55,516.2 44,741.0
Rest of the World 11,991.1 8,113.0
237,449.3 170,171.7
========== ==========
3. Dividends
The final dividend of 10.28 pence per share, bringing the total
dividend to 14.50 pence per share, will be paid on 31 May 2018 to
the shareholders on the register on 26 April 2019 if approved by
the shareholders at the AGM on 24 May 2019.
4. Earnings per share
Basic earnings per ordinary share are calculated using the
weighted average number of ordinary shares in issue during the
financial year of 115,734,845 (2017: 115,256,374). Diluted earnings
per ordinary share are calculated with reference to 116,131,195
(2017: 116,236,486) ordinary shares. The effect of the exercise of
options on the weighted average number of ordinary shares in issue
is 396,350 (2017: 980,112).
2018 2017
GBP'000 GBP'000
Profit
Profit used in calculating basic and diluted
EPS 61,775.8 45,509.0
Number of shares
Weighted average number of shares for the
purpose of
basic earnings per share 115,734,845 115,256,374
Weighted average number of dilutive employee
share options outstanding 396,350 980,112
------------ ------------
Weighted average number of shares for the
purpose of
diluted earnings per share 116,131,195 116,236,486
------------ ------------
Basic earnings per share (pence) 53.38 39.48
------------ ------------
Diluted earnings per share (pence) 53.19 39.15
------------ ------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAEDSAANNEAF
(END) Dow Jones Newswires
March 26, 2019 03:00 ET (07:00 GMT)
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