TIDMBVIC
RNS Number : 0002O
Britvic plc
27 May 2020
Britvic plc Interim Results - 27 May 2020
"Robust start to the year, well-placed to navigate the
challenges of Covid-19"
For the 26 weeks ended 31 March 2020 compared to 28 weeks ended
14 April 2019
Group Financial Headlines:
-- Reported comparisons to last year reflect 2 weeks less
trading in 2020 due to change to monthly reporting
-- Restated comparisons included to enable like-for-like performance comparison
-- Revenue increased 1.4%* to GBP698.8m (reported -9.1%)
-- Adjusted EBIT increased 9.4%* to GBP75.7m (reported -9.6%)
-- Adjusted EBIT margin +80bps* to 10.8% (reported -10bps)
-- Profit after tax increased 11.5% to GBP38.9m
-- Adjusted earnings per share increased 2.7%** to 19.0p (reported -14.8%).
-- While confident of liquidity, Board prudently defers dividend
decision to later in year, when impact of Covid-19 will be
clearer
Strategic Headlines:
-- Robust start to the year, with value share gains in GB, Ireland and Brazil
-- Revenue growth led by local favourites - Robinsons, MiWadi, Maguary, Pepsi, Tango and 7UP
-- Since mid-March, government restrictions on general people
movement and on trading activity in the hospitality industry have
significantly impacted Out-of-Home, including on-the-go
consumption. Packs for
At-Home consumption have increased in volume driving an adverse pack mix
-- Stress tests underpin confidence in liquidity position and
covenant compliance for the next 18 months
Covid-19 Response:
-- Entered this period from a position of strength with a solid
balance sheet and trading momentum
-- Clear set of priorities established - Safeguarding our
people; Maintaining operational agility;
Supporting our communities; and Retaining our financial strength
-- Estimated adjusted EBIT impact of Covid-19 modelling in FY20
unchanged at GBP12m to GBP18m per month
6 months ended 31 28 weeks ended 14 % change actual % change constant
March 2020 GBPm April 2019 GBPm exchange rate exchange rate and
prior year to 31
March *
Revenue 698.8 769.2 (9.1%) 1.4%
Adjusted EBIT 75.7 83.7 (9.6%) 9.4%
Adjusted EBIT margin 10.8% 10.9% (10) bps 80 bps
Adjusting EBIT Items 12.9 27.5 53.1%
Statutory EBIT 62.8 56.2 11.7%
Profit after tax 38.9 34.9 11.5%
Basic EPS 14.7p 13.2p 11.4%
Adjusted EPS 19.0p 22.3p (14.8%) 2.7%**
Interim dividend per share - 8.3p -
Adjusted net debt/EBITDA 2.5x 2.4x (0.1x)
-------------------- -------------------- --------------------- --------------------
* Adjust ed for constant currency and restatement of prior year
to 31 March 2019. Adjusting items includes acquisition related
amortisation of GBP 4.8m, impairment charge relating to the
Counterpoint business of GBP8.5m and other adjusting items of
GBP0.4m (more detail provided on page 31. ** Adjusted for
restatement of prior year to 31 March 2019 at actual exchange
rate.
Simon Litherland, Chief Executive Officer commented:
"The world is a very different place from the one it was a few
months ago and I am proud and humbled by the resilience and
dedication shown by the entire Britvic team. Our priorities
throughout the Covid-19 pandemic have been clear: protect our
employees, deliver for our customers, support our communities and
maintain our financial strength.
We entered the Covid-19 crisis with strong momentum, having
delivered a robust first half performance, which continues our
track record of consistent delivery since 2013. As a business and
as a team, we have repeatedly demonstrated our agility as well as
our ability to successfully navigate tough headwinds. While these
times are clearly unparalleled, soft drinks has proven itself to be
a resilient category time and time again. As consumers increasingly
turn to trusted brands, we are confident that our long-term
strategy will continue to create value for all our
stakeholders."
For further information please contact:
Investors:
Joanne Wilson (Chief Financial Officer)
Steve Nightingale (Director of Investor +44 (0) 7881 751550
Relations) +44 (0) 7808 097784
Media:
Stephanie Macduff-Duncan (Head of Corporate
Communications) +44 (0) 7808 097680
Stephen Malthouse (Headland) +44 (0) 7734 956201
There will be a webcast of the presentation given today at
09:00am by Simon Litherland (Chief Executive Officer) and Joanne
Wilson (Chief Financial Officer). The webcast will be available at
www.britvic.com/investors with a transcript available in due
course.
Notes to editors
About Britvic
Britvic is one of the leading branded soft drinks businesses in
Europe. The 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 GB and Ireland
under exclusive PepsiCo agreements.
Britvic is the largest supplier of branded still soft drinks in
Great Britain ("GB") and the number two supplier of branded
carbonated soft drinks in GB. 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 Brazil with Maguary, Bela Ischia and Dafruta.
Britvic is growing its reach into other territories through
franchising, export and licensing. Britvic's management team has
successfully developed the business through a clear strategy of
organic growth and international expansion based on creating and
building scale brands. Britvic is listed on the London Stock
Exchange under the code BVIC and is a constituent of the FTSE250
index.
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 including as a consequence
of the Covid-19 pandemic, 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
GB take-home market data referred to in this announcement is
supplied by Nielsen and runs to 28 March 2020. ROI take-home market
data referred to is supplied by Nielsen and runs to 22 March 2020.
French market data is supplied by Nielsen and runs to 22 March
2020.
Next scheduled announcement
Britvic will publish its quarter three trading statement on 22
July 2020.
Chief Executive Officer's Update
Response to Covid-19
Today we report our financial results for the first half. Before
turning to the detailed results, I would like to share my personal
reflections on how we are responding to the Covid-19 pandemic. Both
the scale and nature of this pandemic are extraordinary, and it
impacts all of us. Sadly, many thousands of people have lost their
lives, leaving behind families and friends. I offer my heartfelt
condolences to all those who have been affected. Many of us will
have vulnerable friends and relatives who we must protect and care
for, so we are all playing our personal part in overcoming this
pandemic. I offer my thanks and gratitude to all the key workers,
across all sectors, who have put their own lives at risk in service
of their communities.
Within our business, I am hugely proud of the resilience shown
by all our people to help us navigate the early stages of the
crisis. In particular, I would like to highlight our supply chain
and field sales teams, who cannot work from home and instead
continue to work industriously, but safely, to maintain
availability of our products across all our markets. Their
dedication and commitment are impressive and humbling in equal
measure.
In addition to the impact on our people, we have experienced
volatility across all our channels with Out-of-Home adversely
impacted by trading restrictions and our At-Home channels seeing
variability from changing consumption patterns. As the crisis
unfolded, Britvic moved quickly to establish our key priorities -
safeguarding our people, maintaining operational agility,
supporting our communities and retaining our financial
strength.
Safeguarding our people
Where possible all our employees are working from home, using
enabling technology solutions and working flexibly around their
domestic circumstances. For those employees unable to work from
home, primarily our factory-based teams, we have implemented both
social distancing and elevated health measures, including
temperature checking and additional cleaning regimes, to ensure the
safety of our people. All employees classified as vulnerable, or
with a vulnerable family member, were identified early on and
special measures put in place to support and safeguard them. As you
would expect we have adopted all government and public health
authority guidelines in each of our markets. We have also put
additional measures in place to support the health and wellbeing of
all our employees in these uncertain times.
Maintaining operational agility
Changing buying behaviours, closing the on-trade channel and
reduced movement of people have impacted each of our business
units. Our supply chain teams have responded with pace, optimising
production schedules and operations to mitigate some of the adverse
impacts on our business . All of our factories are operational,
with the exception of one factory in Ireland which we have chosen
to close temporarily. The investments that we have made over recent
years as part of our Business Capability Programme are allowing us
to operate with increased flexibility during these times and we
have been successfully collaborating with suppliers and customers
to prioritise key SKUs, ensure continuity of supply and protect
on-shelf availability. High service levels have been maintained
through the crisis. We have also reviewed and reduced spend across
the entire business, including A&P and overheads, to mitigate
some of the expected profit impact from Covid-19.
Supporting our customers, suppliers and communities
We were an early signatory to the C-19 business pledge, founded
by former UK cabinet minister Justine Greening and UK entrepreneur
David Harrison. It aims to harness the power of business as a force
for good in tackling the Covid-19 pandemic, through a focus on
employees, customers and the community.
We have been working highly collaboratively with both suppliers
and customers everywhere to ensure the continuity of supply of raw
materials, maintain availability of our products in -- store and to
offer financial support where it has been needed.
Across each of the markets in which we operate, we have
endeavoured to support our local communities. Examples include the
supply of product to hospitals, foodbanks, schools and hospices in
all markets. In France, we have supplied PPE to local hospitals and
in the UK chillers and product to the NHS Nightingale Hospitals as
well as warehousing facilities in Norwich for the NHS.
Retaining our financial strength
We entered this crisis from a position of strength with a solid
Balance Sheet, benefitting from the recent re-financing of our
Revolving Credit Facility (RCF) and approximately GBP150m of
private placement notes. We have taken further measures to protect
our cash, including reducing capital expenditure in the second
half, and are confident in our liquidity position for the next 18
months.
Strategy and business update
After being appointed CEO in 2013 we launched a new strategy for
the business that has since delivered superior returns to
shareholders, with total shareholder returns outperforming both the
FTSE100 and FTSE250. Last year we took the opportunity to evolve
the strategy to ensure it continued to be aligned to the changing
consumer and retail landscape. We will remain a purpose-driven,
consumer-centric business; and with a portfolio of market-leading
brands we believe we are well-placed to continue to deliver
excellent returns to shareholders. Going forward we will focus on
four key strategic priorities:
-- Build local favourites and global premium brands
-- Healthier people, healthier planet
-- Flavour billions of water occasions
-- Innovate to access new spaces
Each of our markets has a role to play delivering the strategy
and we have identified three key enablers to underpin and support
its successful execution:
-- Generate fuel for growth through efficiency
-- Transform organisation capabilities and culture
-- Selective M&A to accelerate growth
We are confident we have the right strategy, a growth strategy,
that will stand the test of time and deliver excellent returns in
the future, and we believe this strategy is even more relevant in
light of Covid-19.
We started the year with strong momentum, reporting on the 31
January that Q1 revenue was 2.6% ahead of last year. During the
second quarter the Covid-19 epidemic started to have an impact
across our business units, most significantly in the GB and Ireland
markets, where we have a strong presence in the Out-of-Home sector.
Despite this impact, we have reported a first half revenue increase
of 1.4% and adjusted EBIT growth of 9.4% to GBP75.7m with adjusted
EBIT margin increasing by 80bps.
Build local favourites and global premium brands
In GB and Ireland, we have a broad portfolio of brands, focusing
on low and no sugar variants. Pepsi achieved strong growth,
benefitting from our focus on no-sugar MAX and the "Maximum Taste,
no sugar" message and supported by marketing campaigns for
Champions League football and "Try a new tradition this Christmas".
In both markets, Pepsi gained share, with GB market value
increasing by GBP31m to break through and increase beyond GBP300m
of retail sales value. Last year we relaunched Tango with new
flavours, new pack design and a new TV campaign, and the brand has
continued to deliver strong growth this year. Revenue increased
nearly 18% and we gained further market share. Likewise, 7UP, led
by the sugar free variant, also grew revenue by over 11% and gained
market share.
Fruit Shoot performance in GB had improved before the Covid-19
crisis, supported by the "Fruit Shoot for the Moon" campaign and
the launch of the 'Merrylicious' variant at Christmas. Performance
in Brazil has been strong, with revenue increasing 128%,
benefitting from an expansion in distribution following the
introduction of a new 150ml pack format. The lockdown has had an
adverse impact on Fruit Shoot sales as it is widely consumed both
Out-of-Home and for At-Home socialising occasions, a trend which we
have seen in all our markets.
Both J2O and our premium brands, London Essence Company and
Mathieu Teisseire, which are also on-trade focused, have been
particularly disrupted by the impact of Covid-19. Across all
markets we have experienced the closure of hotels, bars and
restaurants and we anticipate that this will continue to hold back
growth for the foreseeable future. In GB, London Essence Company
revenue, while still relatively small to the group, doubled year on
year.
Healthier people, healthier planet
Across the whole of Britvic, we are committed to promoting
health, wellness and wellbeing, providing consumers with balanced
lifestyle choices and protecting our planet through the thoughtful
use of resources today to create a better tomorrow. Within this key
focus area, each of our markets has a distinct role to play,
informed by business and stakeholder insights on the ground,
materiality and the local regulatory environment.
To help promote healthier people, we lead the multi-sector soft
drinks industry by keeping our average calorie per serve low across
our entire portfolio - without ever compromising on taste. We also
prioritise health, wellbeing and belonging (D&I) across our
organisation, to enable our employees and our communities to thrive
and grow, as well as our business. Within our Healthier People
non-financial measures, we are on track to deliver against our
calorie reduction and D&I targets. Our wellbeing goals are
currently recorded annually and will be reported at the full year.
This is an area that we have dialled up even further through our
Covid-19 humanitarian response.
On healthier planet, we were the first soft drinks Company to
commit to carbon reduction measures based on the very highest
global standard of reducing climate change to less than 1.5
degrees. Together with our investment in Esterform, the UK's
largest independent converter of PET, for the supply of recycled
PET, we also advocate for a well-designed, industry run and
not-for-profit deposit and return scheme (DRS) to contribute in a
fair and meaningful way to a circular packaging economy.
In January as a sign of our commitment to conducting business in
the right way, we refinanced our credit facility with a coupon rate
that varies according to the successful achievement of our
Healthier People, Healthier Planet goals.
Within our Healthier Planet non-financial performance measures
the progress towards our carbon targets has been mixed. We have
made good progress against our market-based emission targets,
however the conversion to bio energy in Brazil was fully offset by
an increase in our UK location-based emissions as we continue to
optimise the CHP plant in Rugby. In contrast we have made good
progress against our water target and are on track to deliver our
water intensity ratio target of 1.98m3/tonne produced for the full
year. As a result of cash management measures taken during the
Covid-19 crisis we have temporarily delayed implementation of our
recycled PET programme, but the current intention is to catch this
up in 2021.
Flavour billions of water occasions
In each of our markets we offer market-leading flavour
concentrate brands, including Robinsons, MiWadi, Teisseire and
Maguary. The Flavoured Concentrates category has experienced a
surge in sales in all our key markets since the Covid-19
restrictions have been introduced.
In GB, Robinsons has continued to perform well, continuing the
growth delivered last year. The "everyday" range volume declined
modestly as we focused on disciplined revenue management, which
resulted in strong revenue and brand contribution growth. The
premium Creations and Cordials variants generated solid volume and
revenue growth this year, generating GBP15m of retail sales value.
MiWadi had a very successful first half In Ireland, growing revenue
and gaining market share, led by the Zero sugar and Minis ranges
that were introduced to broaden appeal and usage occasions.
In France, both Teisseire and Moulin De Valdonne were down on
last year, as the EGalim law continued to impact the broader
category. Work is ongoing to address some of the consequences of
the law and since the introduction of Covid-19 restrictions in
France we have seen our Teisseire brand return to growth. In
Brazil, targeted price discounting has been necessary to protect
market share in response to lower pricing from regional
competitors. We have continued to lead the long-term rejuvenation
of the category through innovation. Recent launches include Dafruta
Tropical and Maguary POP, formats that are designed to make liquid
concentrates easier to use and more affordable. Brazil has now
delivered eight consecutive quarters of revenue growth.
Innovate to access new spaces
Brand-led innovation has continued to grow revenue this year,
either by expanding existing brands' usage or launching new brands.
As an example, we expanded our category presence in Brazil last
year with the launch of ready-to-drink tea and coconut water with
the Puro Coco and Natural Tea brands. In the first half of the year
revenue increased by 70.0% and 46.5% respectively.
Innovation is also important in our equipment technology. In GB
for example, we have a strong presence in the Out-of-Home channels
with our range of dispense equipment, typically found in pubs, bars
and restaurants. Late last year we developed a dispense solution
called London Essence Fresh Serve, allowing consumers to choose a
premium, freshly infused tonic on draught, using patented
micro-dosing technology. While also providing an elevated consumer
experience it has significant sustainability benefits by reducing
packaging usage by up to 96% and offering much lower carbon
emissions. Rollout has been temporarily interrupted by
Covid-19.
E-commerce growth is accelerating further, as consumers stay
home during lockdown. We have continued to build our presence
online, both through the established home delivery routes of the
major grocers and also online direct to trade. In GB we launched
the Sensational Drinks portal last year to enable direct engagement
with the on-trade. This allows our on-trade customers to order
glassware and point-of-sale equipment directly, as well as
accessing ideas and tips on how to grow their business. Currently
the portal has been repurposed to support the trade by pulling
together news, advice and training during the crisis.
Right now, we are all facing changes to our lives that could not
have been foreseen, even just a few months ago. At Britvic we will
continue to protect our people, operate safely and support our
communities in the best ways we can. While the current outlook is
uncertain, we believe we are well-placed to navigate through this,
respond effectively and emerge strongly to execute our strategy
successfully in the longer-term.
Chief Financial Officer's Review
Covid-19 update
In light of the scale and impact of the global pandemic on the
economy and consumer behaviour, there is a high degree of
uncertainty in predicting the potential outlook on Britvic's
revenue, profit and cash. Our priority has been to take actions and
prepare our business, so we are able to respond with pace to all
plausible outcomes.
Government restrictions on trading activity in the Out-of-Home
channel and on the movement of people in our markets have had a
significant impact on our business since early March. The largest
impacts have been seen in GB and Ireland, where exposure to the
Out-of-Home channel is greater than in France or Brazil. Actions
have been taken to partly mitigate the adverse impact we are seeing
on profit and cashflows as a result of these restrictions. These
actions have included reduced discretionary spend, within which the
most significant lever is A&P; stopping all non-essential and
non-committed capex in the remainder of this financial year; and
tightly managing our working capital.
In our Covid-19 update on March 23 we shared a sensitivity
analysis, attempting to quantify the mitigated monthly profit
impact on our business of a full lockdown in all our markets, which
we estimated to be in the range of GBP12m-GBP18m. The situation
continues to be fluid, but nothing in our subsequent analysis would
cause us to modify this estimate.
We have analysed a range of possible scenarios, which model
different levels of impact on revenue, profit and cash, and the
offsetting effect of the mitigating actions over the course of the
next 18 months. These include a range of estimated impacts
primarily based on length of time various levels of restrictions
are in place and the severity of the consequent impact of those
restrictions on our At-Home and Out-of-Home channels.
For each of our markets we have sensitised the revenue, profit
and cash flow impact of reduced trading activity in our Out-of-Home
channel and changes in product mix for the At-Home channel. In line
with the impacts noted above, the scenarios are most sensitive to
the assumptions made for GB and Ireland. France and Brazil are
predominantly At-Home markets and therefore drive less sensitivity.
We have not assumed any uplift in the At-Home channel in any
market, under any level of restrictions, for the purpose of the
scenario modelling.
The scenarios include an assumption that a level of restrictions
on movement and social distancing will remain in place until March
2021, our next half year reporting date. The assumptions modelled
in this conservative view assume only a small proportion of
Out-of-Home outlets re-open during this time. Our Covid-19 impact
range of GBP12m-GBP18m per month was based on assumptions for
lockdown impacting the busiest trading period in 2020. As the level
of these trading restrictions reduces, so should the monthly
adjusted EBIT impact, and as we exit both lockdown and our busiest
trading periods, the forecast Covid-19 impact should also
reduce.
Under each scenario, mitigating actions are all within
management control, can be initiated as they relate to
discretionary spend, and do not impact our ability to meet demand.
These actions include reduced A&P and stopping all
non-essential and non-committed capex in the next 12-18 months. We
believe that the risk of enforced factory closure is low and have
implemented additional health and safety measures in each of our
factories to reduce the risk of a major supply disruption. We have
assumed no significant structural changes to the business will be
needed in any of the scenarios modelled.
In all the scenarios we have modelled, there remains significant
liquidity headroom under on our existing debt facilities at each
month end. At the half year, the net debt position was GBP664.5m
and our covenant net debt to EBITDA ratio was 2.5x with a covenant
net interest EBITDA ratio of 15.0x. Undrawn facilities were GBP162m
with GBP47.6m of cash holdings as at 31 March 2020. Since the half
year date, we have received approximately GBP150m from the recent
refinancing of private placement notes, increasing undrawn
facilities to approximately GBP300m. This returns our total access
to private placement notes to approximately GBP625m, with
maturities out to 2035. Earlier this year we also re-financed our
GBP400m RCF up to 2025, with the potential to extend maturity to
2027 with lender consent. The RCF also offers an accordion facility
of GBP200m, again with lender consent. Covenants are set at 3.5x
Net Debt to EBITDA and 3.0x EBITDA to Net Interest Expense in all
of our lending agreements.
As part of our EBITDA and cashflow modelling, we tested the
possibility of the debt covenants being breached in September 2020,
March 2021, and September 2021. March 2021 is the most sensitive
test point as the EBITDA modelling assumes a full 12 months of
reduced trading due to the impact of restrictions and a working
capital peak ahead of summer trading. Under all the scenarios
modelled, after taking mitigating actions as required, our
forecasts did not indicate breach on any of those dates.
Comparisons to prior year
The first half of 2020 accounts for the 26 weeks ended 31 March
2020, compared to 2019 when we reported on performance for the 28
weeks ended 14 April 2019. The primary impact of this is to report
2 weeks' less sales and associated profits and cash. Alongside the
statutory reporting requirement, we have included year-on-year
movements compared to the 26 weeks ended 31 March 2019 and focused
the operational commentary on these like-for-like movements, to
enable a better understanding of underlying performance. The full
year will now always end on the 30 September.
Segmental analysis
It is our intention to revise the segmental disclosure in the
2020 preliminary results to align performance reporting more
closely to our updated strategic priorities. We have clearly
defined the role of each business unit as part of our strategy
refresh and will change the way in which performance is monitored
which will be reflected in our future disclosure. From the full
year results we anticipate that, subject to review, we will
disclose our performance as GB, Brazil and Rest of World (including
France and Ireland).
GB carbonates 6 months ended 28 weeks ended % change % change
31 March 2020 14 April 2019 actual like-for-like
GBPm GBPm
--------------- --------------- ---------- ---------------
Volume (million
litres) 636.8 646.7 (1.5%) 7.9%
ARP per litre 48.6p 50.5p (3.8%) (3.0%)
Revenue 309.8 326.7 (5.2%) 4.6%
Brand contribution 109.8 122.4 (10.4%) (3.6%)
Brand contribution
margin 35.5% 37.5% (200) bps (300) bps
Revenue increased 4.6%, driven by strong volume growth of 7.9%,
primarily in large At-Home pack formats most notably multi-pack
cans. ARP declined 3.0% driven by the mix impact from larger packs
and, to an extent, the sharp drop in out-of-home volumes, including
small PET and dispense, following recent restrictions. Revenue
growth was led by Pepsi, 7UP and Tango with all three brands
growing value share. Brand contribution declined 3.6%, primarily
due to the pack mix as well as a higher cost of goods and increased
A&P spend.
GB stills 6 months ended 28 weeks ended % change % change
31 March 2020 14 April 2019 actual like-for-like
GBPm GBPm
--------------- --------------- --------- ---------------
Volume (million
litres) 158.0 174.0 (9.2%) (1.0%)
ARP per litre 78.6p 78.4p 0.3% 0.5%
Revenue 124.2 136.5 (9.0%) (0.4%)
Brand contribution 58.5 57.9 1.1% 11.4%
Brand contribution
margin 47.1% 42.4% 470 bps 500 bps
Revenue declined 0.4%. Robinsons was in revenue growth, due to
higher ARP in the Everyday range and continued growth in the
Creations range. Fruit Shoot Core grew market share although growth
was offset by a decline in Juiced and Hydro sub brands, while both
maintained market share. Drench was the main driver of the
year-on-year revenue decline. Lipton Ice Tea was in strong growth,
although there was a slow-down in growth in March with on-the-go
consumption affected by the lockdown. Brand contribution was
significantly ahead of last year due to disciplined revenue
management, as well as cost of goods and lower A&P.
France 6 months ended 28 weeks ended % change % change
31 March 2020 14 April 2019 actual exchange like-for-like
GBPm GBPm rate &
constant exchange
rate
--------------- --------------- ----------------- -------------------
Volume (million
litres) 102.0 125.1 (18.5%) (9.7%)
ARP per litre 97.9p 100.2p (2.3%) 0.7%
Revenue 99.9 125.3 (20.3%) (8.9%)
Brand contribution 33.9 39.8 (14.8%) (2.6%)
Brand contribution
margin 33.9% 31.8% 210 bps 220 bps
Revenue and volume declined 8.9% and 9.7% respectively, with
both brands and private label in decline. As we anticipated, the
EGalim law has continued to adversely impact our pricing and
promotional strategy. However in March volumes grew year-on-year
benefitting from changing consumption patterns during the Covid-19
pandemic. The brand contribution decline was limited to 2.6% due to
favourable cost of goods and lower A&P spend. The proposed
disposal of assets to Refresco has been delayed as timelines for
the clearance from the French competition authorities have been
extended due to Covid-19. Our current expectation is that the sale
will complete later this year.
Ireland 6 months ended 28 weeks ended % change % change
31 March 2020 14 April 2019 actual exchange like-for-like
GBPm GBPm rate &
constant exchange
rate
--------------- --------------- ----------------- -------------------
Volume (million
litres) 107.1 110.2 (2.8%) 6.4%
ARP per litre 57.2p 60.0p (4.7%) (2.2%)
Revenue 79.3 90.6 (12.5%) (1.9%)
Brand contribution 23.1 25.7 (10.1%) (1.3%)
Brand contribution
margin 29.1% 28.4% 70 bps 10 bps
Note: Volumes and ARP include own brand soft drinks sales and do
not include factored product sales included within total revenue
and brand contribution.
Revenue declined 1.9% due to a significant decline in sales
through the Counterpoint licensed wholesale business. The branded
business in grocery and convenience performed strongly with volume
and revenue ahead of last year. Pepsi and MiWadi were the main
drivers of growth, partly offset by Club mixers and Fruit Shoot.
Brand contribution declined 1.3% while margin increased 10 bps, in
part due to lower A&P spend. The licensed wholesale channel has
been closed since early March, due to the trading restrictions
imposed on the on-trade in Ireland. This has significantly impacted
the Counterpoint business and a GBP8.5m non-cash impairment charge
has been recognised to write-off the intangible assets, goodwill
and PPE relating to Counterpoint. The water cooler business, which
supplies Ballygowan to offices, has also been significantly
impacted by the footfall restrictions in place and people working
from home.
International 6 months ended 28 weeks ended % change % change
31 March 2020 14 April 2019 actual exchange like-for-like
GBPm GBPm rate &
constant exchange
rate
--------------- --------------- ----------------- -------------------
Volume (million
litres) 18.4 22.5 (18.2%) (8.0%)
ARP per litre 106.0p 106.7p (0.7%) (0.5%)
Revenue 19.5 24.0 (18.8%) (8.5%)
Brand contribution 5.0 4.4 13.6% 47.1%
Brand contribution
margin 25.6% 18.3% 730 bps 960 bps
Note: Concentrate sales are included in both revenue and ARP but
do not have any associated volume .
Revenue decreased 8.5% due to the exit of Fruit Shoot multi-pack
sales in the United States last September. Our travel and export
business also declined as Covid-19 restrictions started to impact
in the second quarter. This was offset by increased sales in the
Middle East. Brand contribution increased 47.1% and margin
increased by 960 bps due to lower A&P spend and tight cost
management more than offsetting the impact of the revenue
decline.
Brazil 6 months ended 28 weeks ended % change % change
31 March 2020 14 April 2019 actual exchange like-for-like
GBPm GBPm rate &
constant exchange
rate
--------------- --------------- ----------------- -------------------
Volume (million
litres) 128.6 116.2 10.7% 17.3%
ARP per litre 51.4p 56.9p (9.7%) (0.4%)
Revenue 66.1 66.1 - 17.0%
Brand contribution 16.1 13.8 16.7% 36.4%
Brand contribution
margin 24.4% 20.9% 350 bps 350 bps
Revenue increased 17.3%, with strong growth in both quarters,
contributing to eight consecutive quarters of growth. This was due
to strong performances from ready-to-drink pack formats, Fruit
Shoot and innovation such as Puro Coco. Despite gaining value
share, the concentrates category saw weaker performance as we
responded to increasing competition from regional brands with an
elevated level of promotional activity. The "Be Ingredient" fruit
processing business was also in growth. Revenue, brand contribution
and margin benefited from a PIS/COFINS tax rebate relating to
historic balances during the first half.
6 months ended 28 weeks ended % change % change
Fixed costs - pre-adjusting 31 March 2020 14 April 2019 actual exchange like-for-like
items GBPm GBPm rate & constant
exchange
rate
--------------- --------------- ----------------- ---------------
Non-brand A&P (6.0) (6.8) 11.8% 3.2%
Fixed supply chain (61.1) (55.9) (9.4%) (6.6%)
Selling costs (40.3) (44.4) 9.2% 0.3%
Overheads and other (63.3) (73.2) 13.4% 5.0%
Total (170.7) (180.3) 5.3% -
------------------------------- --------------- --------------- ----------------- ---------------
Total A&P investment (23.8) (32.6)
A&P as a % of own brand
revenue 3.5% 4.6%
A&P spend of GBP23.8m was GBP5.8m less than last year on a
comparable basis with lower spend in all business units. This was
primarily driven by activity phasing skewed to the second half of
the financial year and reduced spend on Fruit Shoot in the USA.
Fixed supply chain costs of GBP61.1m were 6.6% higher than last
year on a comparable basis. This was primarily due to increases in
the cost of producer responsibility notes purchased to meet UK
government obligations related to waste packaging recycling and
recovery responsibilities and higher depreciation costs. Overheads
decreased 5.0% to GBP63.3m with lower costs in GB, International
and Head Office partly offset by increases in Brazil and
France.
Interest
The net finance charge for the 26-week period for the Group was
GBP9.2m, compared with GBP11.0m in the prior year. The reduction
was due in part to reporting 26 weeks in 2020 compared to 28 weeks
in 2019, along with maturing debt being refinanced at lower
rates.
Adjusting items - pre-tax
In the period, we incurred, and have separately disclosed, a net
charge of GBP12.9m (28 weeks ended 14 April 2019: GBP27.5m) of
pre-tax adjusting items, which are included within Admin expenses
in the income statement. These include:
-- Costs relating to the Norwich site closure include legal,
advisory and exit costs of GBP1.1m along with reversal of
previously impaired asset, a credit of GBP1.0m
-- A charge in Ireland relating to the impairment of goodwill
and intangible assets held in the Counterpoint business of
GBP8.5m
-- Transaction-related costs of GBP0.6m as a result of the
ongoing disposal of the private label Juice business in France
-- Acquisition-related amortisation of GBP4.8m
-- Credits of GBP1.1m relating to the release of acquisition-related provisions
The pre-tax cash cost of adjusting items in the period was
GBP2.7m.
Taxation
The adjusted tax charge was GBP16.2m, which equates to an
effective tax rate of 26.1% (28 weeks ended 14 April 2019: 20.8%).
The increase primarily resulted from a one-off revaluation of
deferred tax balances following the government decision to reverse
the planned reduction in UK corporation tax rate from 19% to 17%.
The reported net tax charge was GBP14.7m (28 weeks ended 14 April
2019: GBP10.3m), which equates to an effective tax rate of 27.4%
(28 weeks ended 14 April 2019: 22.8%).
Earnings per share (EPS)
Adjusted basic EPS for the period was 19.0 pence, an increase of
2.7% (at actual exchange rates) on the same period last year.
Reported adjusted EPS declined 14.8%. Basic EPS for the period was
14.7 pence, an increase of 11.4% on last year.
Dividends
Since Britvic floated in 2005, we have consistently returned
capital to shareholders through our progressive dividend policy,
which is a core part of our capital allocation. We are confident of
our liquidity position even under our Covid-19 stress test
modelling scenario. But given the uncertain environment we find
ourselves in the board has decided to take a very prudent position
and defer the decision on the dividend until later in the year,
when there will be more visibility of the full impact of Covid-19
on the business.
Cash flow
Adjusted free cash flow was a GBP37.3m outflow, compared with a
GBP12.7m outflow the previous year. There was a working capital
outflow of GBP91.0m ( 28 weeks ended 14 April 2019 : GBP59.7m
outflow) driven by a reduction in Creditors of GBP111.9m ( 28 weeks
ended 14 April 2019 : GBP43.5m). This reduction was primarily
driven by higher indirect tax payments with three payments in 2020
vs two payments in 2019 and the timing of other cash payments
following the move from period to calendar monthly reporting.
Debtors reduced by GBP14.7m ( 28 weeks ended 14 April 2019 :
GBP3.0m increase) despite a c.GBP12m impact on collections due to
the Covid-19 pandemic as a result of adjusted payment terms for
heavily impacted customers to support them through this period.
Debtors also saw a favourable impact from the change to monthly
reporting.
Adjusted free cash flow benefited from reduced capital
expenditure of GBP25.8m (28 weeks ended 14 April 2019: GBP33.1m)
following completion of the business capability programme.
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 and foreign exchange rates, whilst managing the
Group's debt and liquidity, currency risk, interest rate risk, and
cash position. The Group uses financial instruments to hedge
against raw materials, interest rate and foreign currency
exposures
At 31 March 2020, the Group had GBP874m of committed debt
facilities, consisting of a GBP400m bank facility which matures in
2025, and a series of private placement notes with maturities
between 2020 and 2033. On 14 May 2020, the Group successfully
concluded a new GBP150m private placement which increased its
committed facilities to just over GBP1bn with maturities between
2020 and 2035.
At 31 March 2020, the Group's unadjusted net debt of GBP754.3m
(excluding derivative hedges) mainly comprised GBP238.0m drawn
under the Group's committed bank facilities, GBP516.5m of private
placement notes and GBP2.8m of accrued interest, offset by net cash
and cash equivalents of GBP47.6m and unamortised loan issue costs
of GBP3.0m. Including the element of the fair value of interest
rate currency swaps hedging the balance sheet value of the private
placement notes, the Group's adjusted net debt was GBP664.5m, which
compares with GBP654.0m at 14 April 2019.
Pensions
At 31 March 2020, the Group had IAS 19 pension surpluses in
Great Britain and Northern Ireland totaling GBP217.0m and IAS 19
pension deficits in Ireland and France totaling GBP3.2m (net of
assets held for sale pension deficit in France of GBP1.3m),
resulting in a net pension surplus of GBP212.6m (29 September 2019:
net surplus of GBP127.5m).
The defined benefit section of the GB 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 paid into the defined benefit section of the
GB plan as determined by the Trustee, agreed by the Company and
certified by an independent actuary in the Schedule of
Contributions. In addition to expected partnership income of at
least GBP5m per annum, the Group is currently expected to make a
payment to the plan of GBP10m by 30 June 2020 with a further
payment of GBP5m in October 2020 in respect of the year to 31
December 2019 in line with previously agreed deficit contribution
payments. We are currently in the process of completing the
triennial valuation as at 31 March 2019, the outcome of which will
include a new schedule of contributions. This will be completed by
30 June 2020.
The Ireland and Northern Ireland defined benefit pension plans
have an investment strategy focused on managing the risks as the
funding position improves. The GB pension plan mainly has
credit-type investments and the Trustees have developed proposals
to manage the investment risks.
Risk management process
As with any business, we face risks and uncertainties. We
believe that effective risk management supports the successful
delivery of our strategic objectives. The management of these risks
is based on a balance of risk and reward, determined through
assessment of the likelihood and impact as well as the Group's risk
appetite. The Executive team performs a formal robust assessment of
the principal risks facing the Group bi-annually, which is reviewed
by the Board. Similarly, all business units and functions perform
formal risk assessments that consider the Group's principal risks
and specific local risks relevant to the market in which they
operate.
Risks are monitored throughout the year with consideration to
internal and external factors and the Group's risk appetite, and
updates to risks and mitigation plans are made as required. In
response to the Covid-19 pandemic we have performed an operational
risk assessment exercise across each of our markets and functions
to identify the actions required to ensure business continuity in
different severity and length of impact scenarios. The actions
implemented as a result of this activity have supported the
business to continue to operate and supply our customers.
We have also reassessed the principle risks set out on pages 35
to 38 of the 2019 annual report in light of the pandemic. We have
identified a specific risk that considers reduced demand in the
Out-of-Home channel, volatility in the At-Home channel,
cancellation of key marketing events and the potential impact on
liquidity and debt covenants. It also considers the impact of new
ways of working on employees and our ability to meet statutory
deadlines.
A number of controls and mitigations have been put in place in
response to this risk, including frequent monitoring of cash and
supply performance, financial scenario planning and cost mitigation
actions, and additional health and safety procedures in each of our
factories. We have also increased the likelihood of our Legal &
Regulatory Principle Risk given the level of change in regulation,
both new and modifications to existing laws. All other principle
risks remain unchanged.
Glossary
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.
A&P is a measure of marketing spend including marketing,
research and advertising.
Adjusted earnings per share is a non-GAAP measure calculated by
dividing adjusted earnings by the average number of shares during
the period. Adjusted earnings is defined as the profit/(loss)
attributable to ordinary equity shareholders before adjusting
items. Average number of shares during the period 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. The
weighted average number of ordinary shares in issue for adjusted
earnings per share for the period was 265.3m (14 April 2019:
264.4m).
Adjusted EBIT is a non-GAAP measure and is defined as operating
profit before adjusting items. EBIT margin is EBIT as a proportion
of Group revenue. The measure is presented on a constant currency
basis.
Adjusted free cash flow is a non-GAAP measure and is defined as
net cash flow excluding movements in borrowings, dividend payments,
impact of IFRS 16 and adjusting items.
Adjusted net debt is a non-GAAP measure and is defined as Group
net debt, adding back the impact of derivatives hedging the balance
sheet debt.
Adjusted profit after tax is a non-GAAP measure and is defined
as profit after tax before adjusting items.
Adjusted profit before tax and acquisition related amortisation
is a non-GAAP measure and is defined as profit before tax before
and adjusting items, with the exception of acquisition related
amortisation.
ARP is defined as average revenue per litre sold, excluding
factored brands and concentrate sales.
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 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.
Business Capability Programme (BCP) relates to a restructuring
of supply chain and operating model to enhance commercial
capabilities in GB and Ireland, including the closure of the
Norwich site.
Constant exchange rate is a non-GAAP measure of performance in
the underlying currency to eliminate the impact of foreign exchange
movements.
EBITDA is earnings before interest, taxation, depreciation and
amortisation.
EGalim Law refers to legislation introduced in France with the
objective to ay fair prices to producers, allowing them to earn a
decent living from their work, reinforce the health, environmental
and nutritional quality of products and promote healthy, safe and
sustainable food for all. Impacts include regulation of promotions,
price renegotiations and threshold pricing.
Innovation is defined as new launches over the last three years,
excluding new flavours and pack sizes of established brands.
PPE is Property, Plant and Equipment.
Retail market value and volume is a measure of the recorded
sales at the retail point of purchase. This data is typically
collated by independent organisations such as Nielsen and IRI from
data supplied by retailers.
Revenue is defined as sales achieved by the Group net of price
promotional investment and retailer discounts.
Revenue management is used to define a range of actions to
affect ARP. It includes, but is not limited to, price increases,
changes to price promotions and variation of pack size.
Volume is defined as number of litres sold, excluding factored
brands sold by Counterpoint in Ireland. No volume is recorded in
respect of international concentrate sales.
BRITVIC PLC
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE 26 WEEKSED 31 March 2020
Company number: 5604923
RESPONSIBILITY AND CAUTIONARY STATEMENTS
RESPONSIBILITY STATEMENTS
The directors confirm that to the best of their knowledge, this
unaudited condensed set of consolidated interim financial
statements has been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union, and that the
interim management report herein includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R.
CAUTIONARY STATEMENT
This report is addressed to the shareholders of Britvic plc and
has been prepared solely to provide information to them.
This report is intended to inform the shareholders of the
Group's performance during the 26 weeks to 31 March 2020. This
report contains forward-looking statements based on knowledge and
information available to the directors at the date the report was
prepared. These statements should be treated with caution due to
the inherent uncertainties underlying any such forward-looking
information, including as a consequence of the Covid-19 pandemic,
and any statements about the future outlook may be influenced by
factors that could cause actual outcomes and results to be
materially different.
DIRECTORS
The directors of Britvic plc are:
John Daly
Simon Litherland
Joanne Wilson
Ian McHoul
Sue Clark
Euan Sutherland
Suniti Chauhan
William Eccleshare
By order of the board
Simon Litherland
Chief Executive Officer
Date: 26 May 2020
Joanne Wilson
Chief Financial Officer
Date: 26 May 2020
INDEPENT REVIEW REPORT TO BRITVIC PLC
Introduction
We have been engaged by Britvic plc (the 'Company') to review
the condensed set of financial statements in the interim financial
report for the 26 weeks ended 31 March 2020 which comprises the
condensed consolidated income statement, condensed consolidated
statement of comprehensive income/(expense), condensed consolidated
balance sheet, condensed consolidated statement of cash flows,
condensed consolidated statement of changes in equity and the
related notes 1 to 20. We have read the other information contained
in the half yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the interim financial
report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the 26 weeks ended 31 March
2020 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Leeds
26 May 2020
BRITVIC PLC
CONDENSED consolidated income statement
For the 26 weeks ended 31 March 2020
26 weeks 28 weeks 52 weeks
ended ended ended
31 March 14 April 29 September
2020 2019 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
------------- ------------- --------------
Revenue 6 698.8 769.2 1,545.0
Cost of sales (341.4) (373.2) (734.0)
------------- ------------- --------------
Gross profit 357.4 396.0 811.0
Selling and
distribution
costs (194.7) (207.0) (393.7)
Administration
expenses (99.9) (132.8) (256.1)
Assets held for
sale -
impairment
charge - - (31.2)
Operating
profit 62.8 56.2 130.0
Finance income 1.7 0.6 1.0
Finance costs (10.9) (11.6) (20.7)
Profit before
tax 53.6 45.2 110.3
Taxation 7 (14.7) (10.3) (29.4)
------------- ------------- --------------
Profit for the
period
attributable
to the equity
shareholders 38.9 34.9 80.9
------------- ------------- --------------
Earnings per
share
Basic earnings
per share 8 14.7p 13.2p 30.6p
------------- ------------- --------------
Diluted
earnings per
share 8 14.6p 13.1p 30.3p
------------- ------------- --------------
All activities relate to continuing operations.
BRITVIC PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME/(EXPENSE)
For the 26 weeks ended 31 March 2020
26 weeks 28 weeks 52 weeks
ended ended ended
31 March 14 April 29 September
2020 2019 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
------------------------------------------------- ----- ------------ ------------ -------------
Profit for the period attributable to the
equity shareholders 38.9 34.9 80.9
Other comprehensive (expense)/income:
Items that will not be reclassified to
profit or loss
Remeasurement gains/ (losses) on defined
benefit pension schemes 15 79.2 (23.1) 22.1
Current tax on additional pension contributions - - 0.2
Deferred tax on defined benefit pension
schemes (16.5) 4.1 (4.2)
Deferred tax on other temporary differences (0.1) - 0.2
62.6 (19.0) 18.3
------------------------------------------------- ----- ------------ ------------ -------------
Items that may be subsequently reclassified
to profit or loss
Losses in the period in respect of cash
flow hedges 13 (5.6) (0.1) (18.7)
Amounts recycled to the income statement
in respect of cash flow hedges 13 5.2 1.3 26.2
Current tax on cashflow hedges accounted
for in the hedging reserve - - (0.2)
Deferred tax in respect of cash flow hedges
accounted for in the hedging reserve 0.1 (0.3) (1.3)
Exchange differences on translation of
foreign operations 13 (22.0) 0.4 0.7
Tax on exchange differences accounted for
in the translation reserve (0.5) (0.6) (0.2)
(22.8) 0.7 6.5
------------------------------------------------- ----- ------------ ------------ -------------
Other comprehensive income/(expense) for
the period, net of tax 39.8 (18.3) 24.8
------------------------------------------------- ----- ------------ ------------ -------------
Total comprehensive income for the period
attributable to the equity shareholders 78.7 16.6 105.7
------------------------------------------------- ----- ------------ ------------ -------------
BRITVIC PLC
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 March 2020
31 March 2020 *Restated *Restated
14 April 2019 29 September
2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
-------------------------------- ----- -------------- --------------- --------------
Assets
Non-current assets
Property, plant and equipment 9 499.1 524.1 494.0
Right of use assets 9 87.2 - -
Intangible assets 9 399.6 424.8 427.8
Other receivables 10.0 8.0 6.5
Derivative financial
instruments 13 31.2 24.6 39.5
Deferred tax asset 4.3 5.4 5.6
Pension asset 15 217.0 89.9 142.4
1,248.4 1,076.8 1,115.8
-------------------------------- ----- -------------- --------------- --------------
Current assets
Inventories 132.3 156.9 141.0
Trade and other receivables 329.6 366.4 358.0
Current income tax receivables 12.2 9.7 5.6
Derivative financial
instruments 13 14.5 25.1 29.9
Cash and cash equivalents 47.6 6.4 49.0
--------------
536.2 564.5 583.5
-------------------------------- ----- -------------- --------------- --------------
Assets held for sale 42.0 - 42.1
-------------------------------- ----- -------------- --------------- --------------
Total assets 1,826.6 1,641.3 1,741.4
-------------------------------- ----- -------------- --------------- --------------
Current liabilities
Trade and other payables (319.4) (414.8) (412.4)
Bank overdraft - (0.3) -
Contract liabilities
- rebate accruals (82.1) (78.3) (98.7)
Lease liabilities 9 (14.9) - -
Interest bearing loans
and borrowings 10 (315.4) (206.3) (166.3)
Derivative financial
instruments 13 (6.8) (2.1) (0.7)
Current income tax payable (4.4) (3.4) (4.6)
Provisions 16 (1.4) (3.8) (4.1)
Other current liabilities (3.8) (3.1) (2.5)
-------------------------------- ----- -------------- --------------- --------------
(748.2) (712.1) (689.3)
-------------------------------- ----- -------------- --------------- --------------
Liabilities associated
with assets held for
sale (28.3) - (28.4)
-------------------------------- ----- -------------- --------------- --------------
(776.5) (712.1) (717.7)
--------------
Non-current liabilities
Interest bearing loans
and borrowings 10 (438.9) (504.9) (517.2)
Lease liabilities 9 (72.9) - -
Deferred tax liabilities (95.1) (60.4) (69.8)
Pension liability 15 (4.4) (9.9) (14.9)
Derivative financial
instruments 13 (2.0) (2.4) (3.1)
Provisions 16 (1.8) (3.7) (3.2)
Other non-current liabilities (2.2) (0.1) (0.1)
-------------------------------- ----- -------------- --------------- --------------
(617.3) (581.4) (608.3)
-------------------------------- ----- -------------- --------------- --------------
Total liabilities (1,393.8) (1,293.5) (1,326.0)
-------------------------------- ----- -------------- --------------- --------------
Net assets 432.8 347.8 415.4
-------------------------------- ----- -------------- --------------- --------------
Capital and reserves
Issued share capital 11 53.4 53.1 53.1
Share premium account 153.1 144.1 145.5
Own shares reserve (4.9) (5.4) (10.3)
Other reserves 18 76.6 93.6 99.4
Retained earnings 154.6 62.4 127.7
-------------------------------- ----- -------------- --------------- --------------
Total equity 432.8 347.8 415.4
-------------------------------- ----- -------------- --------------- --------------
*Please refer to Note 4 for details of restatement.
BRITVIC PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 26 weeks ended 31 March 2020
26 weeks 28 weeks 52 weeks
ended ended ended
31 March 14 April 29 September
2019
2020 2019 (audited)
(unaudited) (unaudited)
Note GBPm GBPm GBPm
------------------------------------------- ----- ------------- ------------- --------------
Cash flows from operating activities
Profit before tax 53.6 45.2 110.3
Net finance costs 9.2 11.0 19.7
Other financial instruments - (0.2) -
Impairment of property, plant and 0.4 - -
equipment
Impairment of intangibles 8.1 - -
Reversal of impairment of property,
plant and equipment (1.0) (3.8) (3.8)
Impairment of assets held for sale - - 31.2
Depreciation 27.1 35.9 51.7
Amortisation 8.1 9.5 18.5
Share-based payments (1.6) 5.8 11.3
Net pension charge less contributions (5.7) (16.2) (16.4)
Increase in inventory 0.1 (13.3) (7.8)
Decrease/ (Increase) in trade and
other receivables 14.7 (2.6) (20.7)
(Decrease)/increase in trade and
other payables and contract liabilities (105.8) (46.9) 4.5
(Decrease)/increase in provisions (3.6) (1.6) (1.6)
Loss on disposal of property, plant
& equipment and intangible assets 0.4 2.5 11.9
Income tax paid (12.1) (9.8) (23.7)
------------------------------------------- ----- ------------- ------------- --------------
Net cash flows from operating activities (8.1) 15.5 185.1
------------------------------------------- ----- ------------- ------------- --------------
Cash flows from investing activities
Purchase of property, plant and equipment (23.5) (31.5) (67.4)
Proceeds from sale of property, plant
and equipment - 0.1 0.3
Purchase of intangible assets (2.3) (1.7) (7.4)
Interest received 1.5 0.5 0.9
Unhedged forward currency contracts 1.8 - -
Net cash flows used in investing
activities (22.5) (32.6) (73.6)
------------------------------------------- ----- ------------- ------------- --------------
Cash flows from financing activities
Interest paid, net of derivative
financial instruments (11.1) (10.6) (21.0)
Net movement on revolving credit
facility 10 173.0 55.3 8.7
Other loans repaid 10 - (0.2) (0.3)
Principal element of lease payments (5.9) - -
Interest element of lease payments (0.9) - -
Repayment of lease liabilities 10 - (0.3) (0.9)
Partial repayment of 2007 USPP 10 - (77.0) (77.0)
Repayment of 2009 USPP 10 (67.8) - -
Issue costs paid 10 (2.1) - -
Issue of shares relating to incentive
schemes for employees 5.7 1.5 2.2
Purchase of own shares (2.8) (1.3) (8.4)
Dividends paid to equity shareholders 12 (57.6) (53.6) (75.6)
Net cash flows from financing activities 30.5 (86.2) (172.3)
------------------------------------------- ----- ------------- ------------- --------------
Net (decrease)/increase in cash and
cash equivalents (0.1) (103.3) (60.8)
Cash and cash equivalents at beginning
of period 49.0 109.5 109.5
Exchange rate differences (1.3) (0.1) 0.3
------------------------------------------- ----- ------------- ------------- --------------
Cash and cash equivalents at the
end of the period 47.6 6.1 49.0
------------------------------------------- ----- ------------- ------------- --------------
By balance sheet category:
Cash and cash equivalents 47.6 6.4 49.0
Bank overdraft - (0.3) -
47.6 6.1 49.0
------------------------------------------- ----- ------------- ------------- --------------
BRITVIC PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 26 weeks ended 31 March 2020
Issued Share Own Other *Restated *Restated
Share Premium Shares Reserves Retained Total
capital account reserve (note 18) earnings
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ --------- --------- --------- ----------- ---------- -----------
At 29 September 2019
(audited) 53.1 145.5 (10.3) 99.4 127.7 415.4
Profit for the period - - - - 38.9 38.9
Other comprehensive
income / (expense) - - - (22.8) 62.6 39.8
------------------------------ --------- --------- --------- ----------- ---------- -----------
Total comprehensive
income - - - (22.8) 101.5 78.7
------------------------------ --------- --------- --------- ----------- ---------- -----------
Issue of shares 0.3 7.6 (2.9) - - 5.0
Own shares purchased
for share schemes - - (2.8) - - (2.8)
Own shares utilised
for share schemes - - 11.1 - (15.6) (4.5)
Movement in share-based
schemes - - - - (0.6) (0.6)
Current tax on share-based
payments - - - - 1.4 1.4
Deferred tax on share-based
payments - - - - (2.2) (2.2)
Payment of dividend - - - - (57.6) (57.6)
At 31 March 2020 (unaudited) 53.4 153.1 (4.9) 76.6 154.6 432.8
------------------------------ --------- --------- --------- ----------- ---------- -----------
Issued Share Own Other *Restated *Restated
Share Premium Shares Reserves Retained Total
capital account reserve (note 18) earnings
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- --------- --------- ----------- ---------- ----------
At 30 September 2018
(audited) 52.9 139.1 (5.4) 92.9 101.2 380.7
Profit for the period - - - - 34.9 34.9
Other comprehensive
income / (expense) - - - 0.7 (19.0) (18.3)
------------------------------- ----- --------- --------- ----------- ---------- ----------
Total comprehensive
income - - - 0.7 15.9 16.6
------------------------------- ----- --------- --------- ----------- ---------- ----------
Issue of shares 0.2 5.0 (3.6) - - 1.6
Own shares purchased
for share schemes - - (3.0) - - (3.0)
Own shares utilised
for share schemes - - 6.6 - (5.8) 0.8
Movement in share-based
schemes - - - - 4.0 4.0
Current tax on share-based
payments - - - - 0.4 0.4
Deferred tax on share-based
payments - - - - 0.3 0.3
Payment of dividend - - - - (53.6) (53.6)
At 14 April 2019 (unaudited) 53.1 144.1 (5.4) 93.6 62.4 347.8
------------------------------- ----- --------- --------- ----------- ---------- ----------
*Please refer to Note 4 for details of restatement.
BRITVIC PLC
notes to the financial information
For the 26 weeks ended 31 March 2020
1. General Information
Britvic plc (the 'Company', the 'Group') is a public limited
Company, incorporated and domiciled in the United Kingdom. The
address of the registered office is Britvic plc, Breakspear Park,
Breakspear Way, Hemel Hempstead, Hertfordshire, HP2 4TZ.
The Company is listed on the London Stock Exchange.
These interim condensed financial statements do not constitute
statutory accounts as defined by Section 434 of the Companies Act
2006. They have been reviewed but not audited by the Group's
auditor. The statutory accounts for Britvic plc for the 52 weeks
ended 29 September 2019, which were prepared under International
Financial Reporting Standards (IFRS) as adopted by the European
Union, have been delivered to the Registrar of Companies. The
auditor's opinion on those accounts was unqualified and did not
contain a statement made under section 498 (2) or (3) of the
Companies Act 2006.
The interim financial statements were authorised for issue by
the board of directors on 26 May 2020.
2. Basis of preparation
These interim condensed financial statements comprise the
condensed consolidated balance sheet as at 31 March 2020 and
related condensed consolidated income statement, condensed
consolidated statement of cash flows, condensed consolidated
statement of comprehensive income/(expense), condensed consolidated
statement of changes in equity and the related notes 1 to 20 for
the 26 weeks then ended of Britvic plc ('financial information').
This financial information has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Services
Authority and with the International Accounting Standard (IAS) 34
'Interim Financial Reporting' as adopted by the European Union.
From 30 September 2019, the Group has transitioned its reporting
cycle from 13 four-week periods to 12 calendar months. As a result,
the Company's 2020 interim financial statements cover the 26 weeks
ended 31 March 2020 compared to the 2019 interim financial
statements which covered the 28 weeks ended 14 April 2019. A
reconciliation of the impact of this change on segmental results
for the period to 31 March 2019 has been included within the
Appendix.
3. Going concern
As part of the directors' consideration of the appropriateness
of adopting the going concern basis in preparing the interim report
and financial statements, a range of severe scenarios have been
reviewed. The assumptions modelled are based on the estimated
potential impact of Covid-19 restrictions and regulations, along
with our proposed responses over the course of the next 18 months.
These include a range of estimated impacts primarily based on
length of time various levels of restrictions are in place and the
severity of the consequent impact of those restrictions on our
At-Home and Out-of-Home channels
For each of our markets we have sensitised the revenue, profit
and cash flow impact of reduced trading activity in our Out-of-Home
channel and a negative impact of changes in product mix for the
At-Home channel. The scenarios are most sensitive to the
assumptions made for GB and Ireland where exposure to the
Out-of-Home channel is greater. France and Brazil are predominantly
At-Home markets and therefore drive less sensitivity. We have not
assumed any uplift in the At-Home channel in any market, under any
level of restrictions, for the purpose of the scenario
modelling.
A key judgement applied is the likely time period of
restrictions on trading activity in the Out-of-Home channel,
movement of people and social distancing. The severe scenarios
include an assumption that such restrictions will remain in place
until March 2021 with only a small proportion of Out-of-Home
outlets re-opening during this time. Our Covid-19 impact range of
GBP12m-GBP18m per month is based on assumptions for lockdown
impacting the busiest trading period in 2020. As the level of
trading restrictions reduce, and as we exit both lockdown and our
busiest trading periods, the Covid-19 impact should also
reduce.
Under each scenario, mitigating actions are all within
management control, can be initiated as they relate to
discretionary spend, and do not impact the ability to meet demand.
These actions include reduced A&P and stopping all
non-essential and non-committed capex in the next 12-18 months. We
believe that the risk of enforced plant closure is low and have
implemented additional health and safety measures in each of our
factories to reduce the risk of a major supply disruption. We have
assumed no significant structural changes to the business will be
needed in any of the scenarios modelled.
As at 31 March 2020, the condensed consolidated balance sheet
reflects a net asset position of GBP432.8m and the liquidity of the
Group remains strong. We have a recently re-financed GBP400m bank
facility with a maturity date of November 2025 and approximately
GBP625m of private placement notes, at contracted rates, with
maturity dates between 2020 and 2035. Since the half year date, we
have received approximately GBP150m from the recent refinancing of
private placement notes, increasing undrawn facilities to
approximately GBP300m and the RCF also offers an accordion facility
of GBP200m, with lender consent. In all scenarios modelled our
liquidity requirements are within the GBP400m RCF facility.
Further, whilst we are confident of our liquidity position even
under our Covid-19 stress test modelling scenario, given the
uncertain environment we find ourselves in, and to give increased
financial flexibility, we have deferred the decision on the
dividend until later in the financial year.
Debt covenant limits are set at a ratio of 3.5x (rolling
12-month EBITDA/ Adjusted Net Debt) and 3.0x (rolling 12-month
EBITDA/ Net Interest Expenses) in all of our lending agreements. At
the half year, the net debt position was GBP664.5m , our covenant
net debt EBITDA ratio was 2.5x and our covenant net interest EBITDA
ratio was 15.0x. As part of our EBITDA and cashflow modelling, we
tested the possibility of the debt covenants being breached in
September 2020, March 2021, and September 2021. March 2021 is the
most sensitive test point as the EBITDA modelling assumes a full 12
months of reduced trading due to the impact of restrictions and a
working capital peak ahead of summer trading. Under all the
scenarios modelled, after taking mitigating actions as needed, our
forecasts did not indicate breach on any of those dates.
On the basis of these reviews, the directors consider it is
appropriate for the going concern basis to be adopted in preparing
the interim report and financial statements.
Impact of Covid-19 on financial statements at 31 March 2020
Management have considered the impact on accounting policies
judgements and estimates in light of the impact of Covid-19
restrictions. In particular, expected credit loss for the Groups
trade debtors where customers have been assessed for potential
risk, and a provision made for potential future debt which is not
considered material to the Group's receivables. The net realisable
value of inventory for the Out-of-Home channel has also been
assessed and a provision made within is not considered material to
the inventory balance at 31 March 2020.
Impairment reviews of goodwill and intangible assets are
ordinarily undertaken by senior management annually. Value in use
calculations are performed for each cash-generating unit using cash
flow projections and are based on the latest annual financial
budgets prepared by senior management and approved by the board of
directors. Senior management expectations are formed in line with
performance to date and experience, as well as available external
market data. Given the unprecedented uncertainty created by
Covid-19 management have taken the decision to review all goodwill
and intangible assets for impairment at the half year. Please refer
to note 9 for the outcome of these considerations
4. Accounting policies, judgements and estimates
Except as described below, the accounting policies applied by
the Group in these interim financial statements are consistent with
those applied by the Group in its financial statements as at, and
for the year ended, 29 September 2019.
IFRS 16 Leases
IFRS 16, the new financial reporting standard on accounting for
leases replacing IAS 17, was adopted on 30 September 2019 using the
'modified retrospective' transition approach, meaning that
comparative financial information at 29 September 2019 has not been
restated. IFRS 16 eliminated the classification of leases as either
operating leases or finance leases for the lessee and, instead,
introduced a single lessee accounting model. Lessor accounting
under IFRS 16 is substantially unchanged from IAS 17.
In summary, IFRS 16 seeks to align the presentation of leased
assets more closely to owned assets. In doing so, a right of use
asset and lease liability are brought on to the balance sheet, with
the lease liability discounted using the incremental borrowing rate
at the date of initial application (30 September 2019), recognised
at the present value of future lease payments.
On transition, right of use assets have been recorded at an
amount that equals the lease liability on transition adjusted by
the amount of any prepayment or accrued lease payments in relation
to that lease. The Group does not recognise right of use assets or
lease liabilities for low value leases (less than GBP3,600).
The Group has used the practical expedients in the following
ways:
-- in respect of leases of less than 12 months from commencement
or from initial application of IFRS 16,
-- the use of a single discount rate that has been applied to a portfolio of leases; and
-- taking the onerous leases already on the balance sheet to adjust the right of use asset.
The Group did not change the initial carrying amounts of
recognised assets and liabilities at the date of initial
application for leases previously classified as finance leases
(i.e. the right-of-use assets and lease liabilities equal the lease
assets and liabilities recognised under IAS 17).
From an income statement perspective, the IAS 17 operating lease
charge is replaced by depreciation and interest. The adoption of
IFRS 16 has resulted in an immaterial impact to operating profit,
which is reported prior to interest being deducted. Whilst
depreciation reduces on a straight-line basis, interest is charged
on outstanding lease liabilities and therefore for any given lease,
interest is higher in the earlier years and decreases over time. As
a result, the impact on the income statement below operating profit
is dependent on average lease maturity.
The most significant IFRS 16 judgements and estimation involve
the selection of an appropriate incremental borrowing rate to
calculate the lease liability. Where possible, lease payments are
discounted using the interest rate implicit in the contract.
Alternatively, the Group's incremental borrowing rate is used.
Further judgement was needed in determining the commencement date
and duration of leases, these have been based on the dates within
the lease contract or in the case of the CHP asset, when management
assess that the leased asset was available for use for its intended
purpose.
IFRS 16 had a significant impact on the reported assets and
liabilities in the balance sheet, as well as the statement of cash
flows (as depreciation and repayment of lease liabilities will
increase). However, the impact on profit before tax is approx.
GBP0.1m.
As at 29 September 2019, the Group had non-cancellable operating
leases commitment of GBP51.9m. See below for a reconciliation
between operating leases recognised as at 29 September 2019 and
leases recognised under IFRS 16 as at 30 September 2019.
Total
GBPm
----------------------------------------------------------------------------
Operating lease commitments at
29 September 2019
Within one year 7.9
After one year but not
more than five years 15.8
After more than five
years 28.2
-------------------------------------------- ------------------------ ------
Total 51.9
Additional lease commitments identified
at 29 September 2019 8.1
Lease payments relating to renewal periods not included
in operating lease commitments at 29 September 2019 5.8
---------------------------------------------------------------------- ------
Undiscounted operating lease commitments 65.8
Discounted operating lease commitments* 48.1
Leases considered to be short
term (0.1)
Liability for operating leases
recognised at 30 September 2019 48.0
Reclassification from finance
leases 1.0
-------------------------------------------- ------------------------ ------
Lease liability at 30 September
2019 49.0
-------------------------------------------- ------------------------ ------
* The weighted average incremental borrowing rate applied on
transition was 2.4%
The effects of adopting IFRS 16 at 30 September 2019 were as
follows:
-- Lease liabilities of GBP49.0m were recognised and presented
separately in the balance sheet. This includes the lease
liabilities recognised previously under finance leases of GBP1.0m
that were reclassified from interest bearing loans and
borrowings.
-- Right of use assets of GBP48.5m were recognised and presented
separately in the balance sheet. This includes the lease assets
recognised previously under finance leases of GBP0.9m that were
reclassified from property, plant and equipment and operating lease
prepayments of GBP0.1m that were derecognised from trade and other
receivables.
-- Onerous lease provisions of GBP0.5m were derecognised.
Set out below are the new accounting policies of the Group upon
adoption of IFRS 16:
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset
at the end of the lease term, the recognised right-of-use assets
are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Right-of-use assets are
subject to impairment reviews.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a lease, if the
lease term reflects the Group exercising the option to terminate.
The variable lease payments that do not depend on an index or a
rate are recognised as expense in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered of low value (i.e.,
below GBP3,600). Lease payments on short-term leases and leases of
low-value assets are recognised as expense on a straight-line basis
over the lease term.
IFRIC 23 Uncertainty over income tax treatments
The new interpretation is effective for the Group for the period
commencing 30 September 2019. The Interpretation clarifies
application of recognition and measurement requirements in IAS 12
Income Taxes. There was no material impact on the Group's financial
statements.
Restatement of certain tax balances
As part of continuous control improvements being undertaken, a
detailed review of historical tax balance sheet positions was
carried out. This highlighted that errors had arisen in calculating
the tax charge predominantly due to incorrect recognition of
historical prior year adjustments from 2015-2018. As a result, the
current income tax receivable at 29 September 2019 was understated
by a total GBP4.2m. The affected line items are Current Income Tax
Receivables, Deferred Tax Liabilities and Retained Earnings.
Given the errors date back to years prior to 2019 the opening
2019 balance sheet has been corrected by restating each of the
affected financial statement lines items as follows:
Restated Correction As reported
14 April 14 April
2019 2019
GBPm GBPm GBPm
---------- ----------- ------------
Current Income Tax Receivables 9.7 4.2 5.5
---------- ----------- ------------
Deferred Tax Liabilities (60.4) (0.8) (59.6)
---------- ----------- ------------
Capital and reserve
---------- ----------- ------------
Retained earnings 62.4 3.4 59.0
---------- ----------- ------------
Restated Correction As reported
29 September 29 September
2019 2019
GBPm GBPm GBPm
-------------- ----------- --------------
Current Income Tax Receivables 5.6 4.2 1.4
-------------- ----------- --------------
Deferred Tax Liabilities (69.8) (0.8) (69.0)
-------------- ----------- --------------
Capital and reserve
-------------- ----------- --------------
Retained earnings 127.7 3.4 124.3
-------------- ----------- --------------
Restated Correction As reported
1 October 1 October
2018 2018
GBPm GBPm
----------- ----------- ------------------
Current Income Tax Receivables 6.5 4.2 2.3
----------- ----------- ------------------
Deferred Tax Liabilities (63.3) (0.8) (62.5)
----------- ----------- ------------------
Capital and reserve
----------- ----------- ------------------
Retained earnings 101.2 3.4 97.8
----------- ----------- ------------------
New internal controls have subsequently been implemented to
prevent or detect future errors occurring.
5. Seasonality of operations
Due to the seasonal nature of the business, higher operating
profits are usually expected in the second half of the year than in
the first 26 weeks.
6. Segmental reporting
For management purposes, the Group is organised into business
units and has six reportable segments as follows:
-- GB Stills - United Kingdom excluding Northern Ireland
-- GB Carbs - United Kingdom excluding Northern Ireland
-- Ireland - including Northern Ireland
-- France
-- Brazil
-- 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. However, Group financing (including finance
costs) and income taxes are managed on a Group basis and are not
allocated to reportable segments.
Transfer prices between reportable segments are on an arm's
length basis in a manner similar to transactions with third
parties.
26 weeks ended GB Stills GB Carbs Total Ireland France Brazil International Total
31 March 2020 GBPm GBPm GB GBPm GBPm GBPm GBPm GBPm
GBPm
Revenue from external
customers 124.2 309.8 434.0 79.3 99.9 66.1 19.5 698.8
Brand contribution 58.5 109.8 168.3 23.1 33.9 16.1 5.0 246.4
---------- --------- ------ -------- ------- ------- -------------- -------
Non-brand advertising
& promotion * (6.0)
---------- --------- ------ -------- ------- ------- -------------- -------
Fixed supply chain** (61.1)
---------- --------- ------ -------- ------- ------- -------------- -------
Selling costs** (40.3)
---------- --------- ------ -------- ------- ------- -------------- -------
Overheads and other
costs* (63.3)
---------- --------- ------ -------- ------- ------- -------------- -------
Adjusted operating
profit 75.7
---------- --------- ------ -------- ------- ------- -------------- -------
Finance costs (9.2)
---------- --------- ------ -------- ------- ------- -------------- -------
Adjusting items*** (12.9)
---------- --------- ------ -------- ------- ------- -------------- -------
53.
Profit before tax 6
---------- --------- ------ -------- ------- ------- -------------- -------
28 weeks ended GB Stills GB Carbs Total Ireland France Brazil International Total
14 April 2019 GBPm GBPm GB GBPm GBPm GBPm GBPm GBPm
GBPm
Revenue from external
customers 136.5 326.7 463.2 90.6 125.3 66.1 24.0 769.2
Brand contribution 57.9 122.4 180.3 25.7 39.8 13.8 4.4 264.0
---------- --------- ------ -------- ------- ------- -------------- -------
Non-brand advertising
& promotion * (6.8)
---------- --------- ------ -------- ------- ------- -------------- -------
Fixed supply chain** (55.9)
---------- --------- ------ -------- ------- ------- -------------- -------
Selling costs** (44.4)
---------- --------- ------ -------- ------- ------- -------------- -------
Overheads and other
costs* (73.2)
---------- --------- ------ -------- ------- ------- -------------- -------
Adjusted operating
profit 83.7
---------- --------- ------ -------- ------- ------- -------------- -------
Finance costs (10.7)
---------- --------- ------ -------- ------- ------- -------------- -------
Adjusting items*** (27.8)
---------- --------- ------ -------- ------- ------- -------------- -------
Profit before tax 45.2
---------- --------- ------ -------- ------- ------- -------------- -------
52 weeks ended GB Stills GB Carbs Total Ireland France Brazil International Total
29 September 2019 GBPm GBPm GB GBPm GBPm GBPm GBPm GBPm
GBPm
Revenue from external
customers 281.8 663.6 945.4 175.8 244.9 124.8 54.1 1,545.0
Brand contribution 120.5 259.0 379.5 52.0 80.0 28.3 11.3 551.1
---------- --------- ------ -------- ------- ------- -------------- --------
Non-brand advertising
& promotion * (10.5)
---------- --------- ------ -------- ------- ------- -------------- --------
Fixed supply chain** (108.0)
---------- --------- ------ -------- ------- ------- -------------- --------
Selling costs** (83.0)
---------- --------- ------ -------- ------- ------- -------------- --------
Overheads and other
costs* (135.5)
---------- --------- ------ -------- ------- ------- -------------- --------
Adjusted operating
profit 214.1
---------- --------- ------ -------- ------- ------- -------------- --------
Net finance costs (19.2)
---------- --------- ------ -------- ------- ------- -------------- --------
Adjusting items*** (84.6)
---------- --------- ------ -------- ------- ------- -------------- --------
Profit before tax 110.3
---------- --------- ------ -------- ------- ------- -------------- --------
* Included within 'Administration expenses' in the condensed
consolidated income statement. 'Overheads and other costs' relate
to central expenses including salaries, IT maintenance,
depreciation and non-acquisition amortisation.
** Included within 'Selling and distribution costs' in the
condensed consolidated income statement.
*** See appendix 1 for further details on adjusting items.
7. Taxation
The total tax charge is GBP14.7m (28 weeks ended 14 April 2019:
GBP10.3m) which equates to an effective tax rate of 27.4% (28 weeks
ended 14 April 2019: 22.8%).
Tax charge by region
26 weeks 28 weeks 52 weeks ended
ended ended
31 March 14 April 29 September
2020 2019 2019
GBPm GBPm GBPm
----------------------------------- --------- --------------------------- ---------------
UK 12.5 5.9 23.2
Foreign 2.2 4.4 6.2
Total tax charge in the condensed
consolidated income statement 14.7 10.3 29.4
----------------------------------- --------- --------------------------- ---------------
Analysis of tax charge
26 weeks 28 weeks 52 weeks ended
ended ended
31 March 14 April 29 September
2020 2019 2019
GBPm GBPm GBPm
----------------------------------- --------- --------- ---------------
Current income tax charge 7.7 7.6 27.5
Deferred income tax charge 7.0 2.7 1.9
Total tax charge in the condensed
consolidated income statement 14.7 10.3 29.4
----------------------------------- --------- --------- ---------------
The effective tax rate in the current year has increased as a
result of the re-measurement of deferred tax balances in the UK. In
March 2020, the UK government announced that the corporation tax
rate would remain at 19% effective from 1 April 2020 (previously
17%) which was substantively enacted on 17 March 2020. The impact
was a one-off increase in the deferred tax charge of GBP3.2m.
8. Earnings per share
Basic earnings per share amounts are calculated by dividing the
net profit for the period attributable to the equity shareholders
of the parent by the weighted average number of ordinary shares in
issue during the period.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to the equity shareholders of the
parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of
ordinary shares that are potentially issuable in connection with
employee share-based payment plans.
The following table reflects the income and share data used in
the basic and diluted earnings per share computations:
26 weeks ended 28 weeks ended 52 weeks
ended
31 March 2020 14 April 2019 29 September
2019
GBPm GBPm GBPm
------------------------------------ --------------- --------------- -------------
Basic earnings per share
Profit for the period attributable
to the equity shareholders 38.9 34.9 80.9
------------------------------------ --------------- --------------- -------------
Weighted average number of
ordinary shares in issue for
basic earnings per share 265.3 264.4 264.5
------------------------------------ --------------- --------------- -------------
Basic earnings per share 14.7p 13.2p 30.6p
------------------------------------ --------------- --------------- -------------
Diluted earnings per share
Profit for the period attributable
to the equity shareholders 38.9 34.9 80.9
------------------------------------ --------------- --------------- -------------
Effect of dilutive potential
ordinary shares - share schemes 1.3 1.8 2.4
------------------------------------ --------------- --------------- -------------
Weighted average number of
ordinary shares in issue for
diluted earnings per share 266.6 266.2 266.9
------------------------------------ --------------- --------------- -------------
Diluted earnings per share 14.6p 13.1p 30.3p
------------------------------------ --------------- --------------- -------------
9. Property, plant and equipment, intangible assets, right of
use assets & lease liabilities
Property, plant and equipment
During the 26 weeks ended 31 March 2020, the Group purchased
property, plant and equipment at a cost of GBP24.2m (28 weeks ended
14 April 2019: GBP34.0m). Property, plant and equipment with a net
book value of GBP0.4m was disposed of by the Group during the 26
weeks ended 31 March 2020 (28 weeks ended 14 April 2019: GBP2.6m)
resulting in a loss on disposal of GBP0.4m (28 weeks ended 14 April
2019: loss on disposal GBP2.5m).
During the 26 weeks ended 31 March 2020 an amount of GBP1.0m (28
weeks ended 14 April 2019: GBP3.8m) was recognised as a reversal of
impairment on Norwich land and buildings based on updated external
information which is now available.
See note 17 for capital commitments.
Intangible assets
During the 26 weeks ended 31 March 2020, the Group purchased
intangible assets at a cost of GBP2.3m (28 weeks ended 14 April
2019: GBP1.9m).
During the 26 weeks ended 31 March 2020 an impairment charge of
GBP8.5m was made to write-off the intangible assets, goodwill and
PPE relating to the Counterpoint business which was previously part
of the Irish GCU. During the period there has been a reallocation
of the Britvic Ireland goodwill, with the portion allocated to
Counterpoint impaired during the year. Management have specifically
assessed the carrying value of these assets due to the ongoing
monitoring of business performance.
In light of Covid-19 a full impairment review exercise has been
completed on all CGUs, including sensitivity analysis and stress
testing. Discount rates and long-term growth rates are key
assumptions on which management has based its cash flow projections
to undertake impairment testing of goodwill. Up to the 31 March
2020 these assumptions have moved in line with recent market
trends.
Other than the goodwill held in Britvic Brazil and Britvic
Stills (the intangibles brand name for Britvic Mixers) in Ireland
the directors do not consider that a reasonable possible change in
the assumptions used to calculate the value in use of remaining
goodwill and intangible assets could result in any impairment.
Britvic Brazil is seen as a growth market where maturity is not
expected for a number of years, as such a management forecast
growth projection was used until 2024. Management will closely
review the Britvic Stills brand in the second half of the year as
the Out-of-Home channel in Ireland restarts.
After considering the impact of COVID-19 on the near term
performance a sensitivity analysis was performed to assess the
impact of reasonable possible changes in key assumptions (the
impairment models are based on detailed 5-year approved budgets and
extrapolated into perpetuity):
-- In Brazil, an 80% reduction in forecast operating profit
across FY20-FY24 would result in a GBP0.4m impairment charge.
-- In Britvic Stills Ireland, a 70% reduction in forecast
operating profit across FY20-FY24, with zero volume or revenue
growth for FY20- FY24, and long term growth rate reduced to zero
would result in a GBP0.1m impairment charge.
Right of use assets and lease liabilities
In accordance with IFRS 16 the Group's Balance Sheet currently
recognises a right of use asset of GBP87.2m and a lease liability
of GBP87.8m as of 31 March 2020.
Leased Leasehold Leased Total
Vehicles Property Plant
and
machinery
GBPm GBPm GBPm GBPm
---- ------------------------------ ---------- ----------- ------
At 30 September 2019
net of accumulated
depreciation* 10.5 29.4 8.6 48.5
Additions 0.3 43.5 1.1 44.9
Depreciation charge (1.5) (2.5) (2.0) (6.0)
Exchange differences (0.1) - (0.1) (0.2)
At 31 March 2020 9.2 70.4 7.6 87.2
---------------------------- ------ ---------- ----------- ------
* Right of use asset recognised on adoption of IFRS 16, see Note
4.
Lease liabilities are split between current and non-current
31 March
2020
GBPm
Current 14.9
Non-current 72.9
Net carrying amount 87.8
----------------------- ---------
On 1 December 2019 the CHP plant at Rugby was made available and
brought into use and as such GBP42.4m was included as a right of
use asset and corresponding liability on the Balance Sheet in
accordance with IFRS 16. This item was previously included as a
capital commitment in the 2019 Annual Report.
10. Interest-bearing loans and borrowings
Components of current and non-current interest-bearing loans and
borrowings:
31 March 14 April 29 September
2020 2019 2019
GBPm GBPm GBPm
------------------------------ --------- --------- -------------
Finance leases * - (1.3) (1.0)
2009 Notes - (90.9) (96.5)
2010 Notes (94.0) (88.7) (94.7)
2014 Notes (126.6) (122.1) (127.7)
2017 Notes (175.0) (175.0) (175.0)
2018 Notes (120.9) (119.6) (120.6)
Accrued interest (2.8) (3.3) (2.7)
Bank loans*** (238.0) (112.0) (67.0)
Capitalised issue costs 3.0 1.7 1.7
------------------------------ --------- --------- -------------
Total interest-bearing loans
and borrowings (754.3) (711.2) (683.5)
------------------------------ --------- --------- -------------
Current *** (315.4) (206.3) (166.3)
Non-current (438.9) (504.9) (517.2)
------------------------------ --------- --------- -------------
Total interest-bearing loans
and borrowings (754.3) (711.2) (683.5)
------------------------------ --------- --------- -------------
Analysis of changes in interest-bearing loans and
borrowings:
26 weeks ended 28 weeks 52 weeks
ended ended
31 March 14 April 29 September
2020 2019 2019
GBPm GBPm GBPm
------------------------------------------ --------------- --------- -------------
At the beginning of the period (683.5) (769.1) (769.1)
Net movement on revolving credit
facility (173.1) (55.3) (8.7)
Other loans repaid - 0.2 0.3
Partial repayment of private placement
notes - 77.0 77.0
Repayment of 2009 USPP net of derivative 67.8 - -
instruments
Issue costs*** 2.1 - -
Net repayment of finance leases
* - 0.3 0.9
Reclassification of finance leases 0.9 - -
*
Amortisation of issue costs and
write off of financing fees (0.8) (0.2) (0.3)
Net translation gain and fair value
adjustment 32.4 36.1 15.8
Accrued interest (0.1) (0.2) 0.6
------------------------------------------ --------------- --------- -------------
At the end of the period (754.3) (711.2) (683.5)
Derivatives hedging balance sheet
debt** 42.2 51.1 68.3
------------------------------------------ --------------- --------- -------------
Debt translated at contracted
rate (712.1) (660.1) (615.2)
------------------------------------------ --------------- --------- -------------
*No finance leases have been included within this note in 2020
as all leases are now accounted for under IFRS 16. In HY20 GBP0.9m
has been reclassified from Interest bearing loans and borrowings to
lease liabilities as per IFRS 16. Please refer to note 4.
**Represents the element of the fair value of interest rate
currency swaps hedging the balance sheet value of the notes. This
amount has been disclosed separately to demonstrate the impact of
foreign exchange movements which are included in interest bearing
loans and borrowings.
***An amount of GBP238m (out of an available facility of
GBP400m) was borrowed at interest rates ranging between 0.8% to
1.5% as part of a 5-year revolving credit facility, all of which is
repayable within 12 months or less. The amounts and rates at which
future borrowings are drawn down will vary according to business
requirements. A number of banks are party to this facility and an
amount of GBP2.1m of issue costs related to this new facility were
incurred and capitalised.
11. Issued share capital
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.
Issued, called up and fully paid ordinary No. of shares Value
shares GBP
------------------------------------------- -------------- -----------
At 30 September 2018 264,606,911 52,921,382
Shares issued 903,826 180,765
At 29 September 2019 265,510,737 53,102,147
Shares issued 1,282,293 256,459
At 31 March 2020 266,793,030 53,358,606
------------------------------------------- -------------- -----------
Of the issued and fully paid ordinary shares, 516,640 shares (29
September 2019: 1,180,721 shares) are own shares held by an
employee benefit trust. This equates to GBP103,328 (29 September
2019: GBP236,144) at GBP0.20 par value of each ordinary share.
These shares are held for the purpose of satisfying the share
schemes.
12. Dividends paid and proposed
26 weeks ended 28 weeks ended 52 weeks ended
31 March 2020 14 April 2019 29 September
2019
----------------------------- --------------- --------------- ---------------
Declared and paid in the
period
Dividends per share (pence) 21.7 20.3 28.6
--------------- --------------- ---------------
Total dividend (GBPm) 57.6 53.6 75.6
--------------- --------------- ---------------
Proposed after the balance
sheet date
Dividend per share (pence) - 8.3p 21.7
--------------- --------------- ---------------
Total dividend (GBPm) - 22.0 57.6
--------------- --------------- ---------------
13. Derivatives and hedge relationships
As at 31 March 2020, the Group had entered into the following
derivative contracts.
31 March 14 April 29 September
2020 2019 2019
GBPm GBPm GBPm
--------------------------------------------- --------- --------- -------------
Consolidated balance sheet
Non-current assets: Derivative financial
instruments
Fair value of USD GBP cross currency
fixed interest rate swaps (1) 27.2 18.2 30.1
Fair value of USD GBP cross currency
floating interest rate swaps (3) 3.5 6.3 9.3
Fair value of forward currency contracts(1) 0.4 0.1 0.1
Fair value of euro cross currency 0.1 - -
floating interest rate swaps(1)
--------------------------------------------- --------- --------- -------------
31.2 24.6 39.5
--------------------------------------------- --------- --------- -------------
Current assets: Derivative financial
instruments
Fair value of USD GBP cross currency
fixed interest rate swaps (1) 6.1 0.4 0.6
Fair value of GBP euro cross currency
floating interest rate swaps (2) - 2.3 0.3
Fair value of USD GBP cross currency
floating interest rate swaps (3) 6.5 21.4 26.9
Fair value of forward currency contracts(1) 1.4 1.0 2.1
Fair value of foreign exchange swaps 0.5 - -
14.5 25.1 29.9
--------------------------------------------- --------- --------- -------------
Current liabilities: Derivative
financial instruments
Fair value of forward currency contracts(1) (3.5) (2.0) (0.4)
Fair value of forward currency contracts (1.4) (0.1) (0.2)
Fair value of GBP euro cross currency
floating interest rate swaps (2) (1.0) - (0.1)
Fair value of sugar forwards(1) (0.9) - -
(6.8) (2.1) (0.7)
--------------------------------------------- --------- --------- -------------
Non-current liabilities: Derivative
financial instruments
Fair value of GBP euro cross currency
fixed interest rate swaps (2) (1.4) (2.2) (3.1)
Fair value of GBP cross currency
floating interest rate swaps(1) (0.6) (0.2) -
(2.0) (2.4) (3.1)
--------------------------------------------- --------- --------- -------------
(1) Instruments designated as part
of a cash flow hedge relationship
(2) Instruments designated as part
of a net investment hedge relationship
(3) Instruments designated as part
of a fair value hedge relationship
Changes to derivative contracts
In December 2019, EUR80.3m of EUR cross currency swaps
associated with the 2009 USPP issuance matured and were repaid.
These cross-currency swaps were designated as a net investment
hedge of EUR80.3m of assets in Ireland and France. The
cross-currency swaps have subsequently been replaced with FX swaps
for EUR80.3m that are designated as net investment hedges of assets
in Ireland and France.
The derivatives and the hedge relationships are described in
further detail on pages 124 to 126 in the Group's annual report for
the 52 weeks ended 29 September 2019.
Impact of derivatives and hedge relationships on the condensed
consolidated statement of comprehensive income/(expense)
26 weeks 28 weeks 52 weeks ended
ended ended
31 March 14 April 29 September
2020 2019 2019
GBPm GBPm GBPm
-------------------------------------------- --------- --------- ---------------
Consolidated statement of comprehensive
income/(expense)
Amounts recycled to the income statement
in respect of cash flow hedges
Forward currency contracts * 3.7 0.7 1.5
Cross currency interest rate swaps
** 1.5 0.6 24.7
5.2 1.3 26.2
-------------------------------------------- --------- --------- ---------------
(Losses)/gains in the period in respect
of cash flow hedges
Forward currency contracts (8.2) (3.1) (1.0)
Cross currency interest rate swaps 2.6 3.0 (17.7)
-------------------------------------------- --------- --------- ---------------
(5.6) (0.1) (18.7)
-------------------------------------------- --------- --------- ---------------
Exchange differences on translation
of foreign operations
Movement on financial items designated
as a net investment hedge 5.2 4.8 (0.8)
Exchange movements on translation
of foreign operations*** (27.2) (4.4) 1.5
-------------------------------------------- --------- --------- ---------------
(22.0) 0.4 0.7
-------------------------------------------- --------- --------- ---------------
* Offsetting amounts recorded in cost
of sales
** Offsetting amounts recorded in
finance costs
***
*** The primary reason for the exchange loss is due to the movement
in the Brazilian Real during the period.
14. Fair value
Hierarchy
The Group uses the following valuation hierarchy to determine
the carrying value of financial instruments that are measured at
fair value:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
Unless otherwise stated, the valuation basis used to calculate
fair value is level 2.
Fair values of financial assets and financial liabilities
All derivatives are valued using valuation techniques with
market observable inputs; this covers cross currency interest rate
swaps, interest rate swaps, FX forwards, FX swaps and commodity
forwards. The most frequently applied valuation techniques include
forward pricing and swap models using present value calculations.
In assessing the fair value of derivatives, the non-performance
risk of both Britvic and its derivative trading counterparties has
been taken into consideration. Default credit risk has been
measured and the potential impact on derivatives valuations
quantified. As at 30 March 2020, the potential impact from
non-performance risk on the fair value of the derivatives portfolio
is not material.
As in the prior year, the carrying value of financial assets and
liabilities (trade and other receivables, cash and cash
equivalents, interest bearing loans and borrowings, trade and other
payables and derivatives) are considered to be reasonable
approximations of their fair values, except for fixed rate
borrowings which, at 31 March 2020 have a book value of GBP402.9m
and a fair value of GBP429.5m (29 September 2019: GBP503.9m book
value compared to a fair value GBP524m).
The fair value of the Group's fixed rate interest-bearing
borrowings and loans are determined by using discounted cash flow
methods using discount rates that reflect the Group's borrowing
rate as at the end of the reporting period. The own non-performance
risk as at 31 March 2020 was assessed to be insignificant.
15. Pensions
At 31 March 2020, Britvic plc has IAS 19 pension surpluses in GB
and NI totalling GBP217.0m and IAS 19 pension deficits in ROI and
France totalling GBP4.4m (made up of a deficit of GBP1.2m in the
ROI scheme and GBP3.1m in France. The France deficit has been
adjusted to remove GBP1.3m relating to pension assets held for
sale) resulting in a net pension surplus of GBP212.6m (29 September
2019: GBP127.5m) which is an increase of GBP79.2m due to
remeasurement gains. This increase is attributable to a net
remeasurement gain of GBP72.3m in the GB scheme (which was driven
by an increase in the discount rate assumption in measuring the
scheme liabilities) a GBP10.2m gain in ROI scheme (caused by an
increase in the discount rate assumption in measuring the scheme
liabilities) a gain of GBP0.6m in the French scheme and a loss of
GBP3.9m in the NI scheme.
The defined benefit section of the GB 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 is
only open to future accrual for members who joined before 28
February 2006, and new employees are eligible to join the defined
contribution scheme. All new employees in Ireland join the defined
contribution plan. Contributions are paid into the defined benefit
section of the GB plan as determined by the Trustee, agreed by the
Company and certified by an independent actuary in the Schedule of
Contributions. In addition to expected partnership income of at
least GBP5m per annum, the Group is currently expected to make a
payment to the plan of GBP10m by 30 June 2020 with a further
payment of GBP5m in October 2020 in respect of the year to 31
December 2019. The triennial valuation is currently in the process
of being updated as at 31 March 2019, the outcome of which will
include a new schedule of contributions and is expected to be
complete by 30 June 2020.
The Ireland and Northern Ireland defined benefit pension plans
have an investment strategy to manage the risks as the funding
position improves. The GB pension plan mainly has credit-type
investments and the Trustees have developed proposals to manage the
investment risks.
Following the Lloyds GMP equalisation case in October 2018,
which ruled that treatment of men and women be brought in line for
schemes with a guaranteed minimum pension, the majority of UK-based
Defined Benefit schemes will need to recalculate member benefits.
The impact of the GMP equalisation was estimated at GBP6.0m which
was recognised as a past service cost as part of adjusting items in
FY19, there has been no further impact on the current period
results.
Changes to IFRIC 14 have been proposed which may change the
assessment of how this interpretation is applied and may result in
a cap being placed on the amount of surplus that can be recognised
in the balance sheet. The Group will consider the impact of these
changes once they have been finalised and a revised IFRIC
issued.
16. Provisions
Restructuring Other Total
GBPm GBPm GBPm
------------------------------------- -------------- ------ ------
At 29 September 2019 4.2 3.1 7.3
Provisions derecognised on adoption
of IFRS 16 - (0.5) (0.5)
Provisions utilised during the year (2.4) - (2.4)
Unused amounts reversed - (0.7) (0.7)
Reclassifications (0.4) 0.4 -
Exchange differences - (0.5) (0.5)
------------------------------------- -------------- ------ ------
At 31 March 2020 1.4 1.8 3.2
------------------------------------- -------------- ------ ------
Restructuring Other Total
GBPm GBPm GBPm
------------------ -------------- ------ ------
Current 1.4 - 1.4
Non-Current - 1.8 1.8
At 31 March 2020 1.4 1.8 3.2
------------------ -------------- ------ ------
At 31 March 2020, Britvic plc has provisions totalling GBP3.2m
(29 September 2019: GBP7.3m). The closing provisions as at 31 March
2020 comprise restructuring provisions of GBP1.4m (29 September
2019: GBP4.2m) which primarily relate to the closure of our Norwich
factory. Other provisions of GBP1.8m (29 September 2019: GBP3.1m)
relate to certain legal and regulatory claims in Brazil.
17. Capital commitments
At 31 March 2020, the Group has capital commitments of GBP7.9m
(29 September 2019: GBP58.5m) relating to the acquisition of
property, plant and equipment.
The material reduction in capital commitments primarily relates
to the combined heat and power plant at the Rugby site, which was
brought into use on 1 December 2019. The contract for this plant
has been accounted for as a lease in accordance with IFRS 16, with
a right of use asset and associated lease liability recognised in
the Balance Sheet.
18. Other reserves
Hedging Translation Merger Total
reserve reserve reserve
GBPm GBPm GBPm GBPm
At 29 September 2019 (1.2) 13.3 87.3 99.4
Losses in the period
in respect of cash flow
hedges (5.6) - - (5.6)
Amounts recycled to the
income statement in respect
of cash flow hedges 5.2 - - 5.2
Deferred tax in respect
of cash flow hedges 0.1 - - 0.1
Exchange differences
on translation of foreign
operations - (22.0) - (22.0)
Tax on exchange differences - (0.5) - (0.5)
At 31 March 2020 (1.5) (9.2) 87.3 76.6
------------------------------ ----------------- ------------------- ------------------ ----------------
Hedging Translation Merger Total
reserve reserve reserve
GBPm GBPm GBPm GBPm
At 30 September 2018 (7.2) 12.8 87.3 92.9
Losses in the period
in respect of cash flow
hedges (0.1) - - (0.1)
Amounts recycled to the
income statement in respect
of cash flow hedges 1.3 - - 1.3
Deferred tax in respect
of cash flow hedges (0.3) - - (0.3)
Exchange differences
on translation of foreign
operations - 0.4 - 0.4
Tax on exchange differences - (0.6) - (0.6)
At 14 April 2019 (6.3) 12.6 87.3 93.6
------------------------------ --------- ------------ --------- ------
Hedging reserve
The hedging reserve records the effective portion of movements
in the fair value of forward exchange contracts, interest rate and
cross currency swaps that have been designated as part of a cash
flow hedge relationship.
Translation reserve
The translation reserve includes cumulative net exchange
differences on translation into the presentational currency of
items recorded in Group entities with a non-sterling functional
currency net of amounts recognised in respect of net investment
hedges.
Merger reserve
The merger reserve arose as a result of the non pre-emptive
share placement which took place on 21 May 2010. It was executed
using a structure which created a merger reserve under Section
612-3 of the Companies Act 2006.
19. Assets held for sale
As previously reported, on 12 November 2019 we announced the
decision to enter into exclusive discussions with Refresco over the
potential sale by Britvic of its three juice manufacturing sites in
France, its private label juice business, and the Fruité brand. As
part of the transaction, Pressade and Fruit Shoot would be supplied
by Refresco under a long-term manufacturing agreement, creating a
smaller but higher margin business in France, enabling the local
management team to focus on growing our profitable brand
portfolio.
In accordance with IFRS 5, the assets and associated liabilities
that will be disposed of as a result of this transaction were
classified as held for sale at 29 September 2019. Since the
previously reported date we have signed a sale and purchase
agreement and the transaction is currently being reviewed by the
Competition Commission.
There have been no material changes to the transaction valuation
since that date and no change to the impairment charge of GBP31.2m
previously recognised in the period ended 29 September 2019. The
proposed transaction is expected to complete in September 2020.
Please refer to note 31 of the Company's 2019 Annual Report and
Accounts for further details.
20. Post balance sheet events
On 14 May 2020, the Group received GBP100m and EUR60m of US
private placement funds at interest rates ranging from 1.15% to
2.19% fixed; and 1.15% and 1.45% spread over EURIBOR and LIBOR
respectively. The maturities range from May 2030 to May 2035. This
transaction was priced in February 2020 and signed in March
2020.
Appendix 1
NON-GAAP RECONCILIATIONS
Adjusting items
The Group includes adjusting items, which are income and
expenses included in the financial statements that are disclosed
separately because of their size, nature or infrequency to allow
shareholders to understand better the elements of financial
performance in the year, so as to facilitate comparison with prior
periods and to assess trends in financial performance more
readily.
These items primarily relate to the impairment of intangible
assets, goodwill and PPE in the Counterpoint business,
restructuring costs associated with the divestment of part of the
French business and one-off items that are not considered part of
business operations. In addition, acquisition-related costs such as
amortisation of acquired intangibles and the impairment of assets
held for sale as part of a disposal are also considered adjusting
items.
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.
In prior years Adjusting items included fair value movements on
financial instruments where hedge accounting cannot be applied on
future transactions and also where hedge ineffectiveness is
recognised. These items have not been included within adjusting
items in the current year.
26 weeks 28 weeks 52 weeks
ended ended ended
Notes 31 March 14 April 29 September
2020 2019 2019
GBPm
GBPm GBPm
============================================= ============================ ========= =============
Strategic restructuring - business
capability programme (a) (0.1) (15.7) (33.0)
Pension scheme costs (b) - (6.0) (6.2)
Costs in relation to the acquisition
and integration of subsidiaries (c) 1.1 - 1.3
Strategic M&A activity (d) (0.6) - (2.5)
Closure of Fruit Shoot multi-pack
operations in USA (g) - - (2.1)
Impairment of assets (h) (8.5) - (31.2)
Acquisition-related amortisation (f) (4.8) (5.8) (10.4)
======================================= ==== ============================ ========= =============
Total included in operating profit (12.9) (27.5) (84.1)
============================================= ============================ ========= =============
Fair value movements (e) - (0.3) (0.5)
Total included in finance costs - (0.3) (0.5)
============================================= ============================ ========= =============
Tax adjusting item - Merger of Brazil
entities (i) 1.1 - -
Tax on adjusting items included in profit
before tax 0.3 3.7 7.4
Total included in taxation 1.4 3.7 7.4
============================================= ============================ ========= =============
Net adjusting items (11.5) (24.1) (77.2)
============================================= ============================ ========= =============
a. Strategic restructuring - Relates to the business capability
programme which was a restructuring of supply chain and the
operating model across the Group, initiated in 2016. Costs in 2020
relate to the closure of the Norwich site, and are primarily site
services, advisory and exit costs. It also includes the reversal of
previous impairment on the Norwich land and buildings.
b. Pension scheme costs relate to past service cost as
recognised in the previous half year relating to the equalisation
of Guaranteed Minimum Pension (GMP) in GB & Northern Ireland
pension schemes and pension advisory costs.
c. Relates to the release of provisions for Bela Ischia
Alimentos Ltda (Bela Ischia) and Empresa Brasileira de Bebidas e
Alimentos SA (Ebba).
d. Strategic M&A activity relates to the sale of the juice business in France.
e. Fair value movements relate to the fair value movement of
derivative financial instruments where either hedge accounting
cannot be applied to future transactions or where there is
ineffectiveness in the hedge relationship. The 2020 fair value
movement has been included in operating profit and is not deemed
part of adjusting items.
f. Acquisition-related amortisation relates to the amortisation
of intangibles recognised on the acquisitions in Ireland, France
and Brazil.
g. Costs primarily relating to asset write-offs, stock write-offs and employee costs.
h. Part of the French business was been designated as held for
sale in 2019. The fair value calculation resulted in an impairment
charge of GBP31.2m. In accordance with IFRS 5 the assets and
liabilities held for sale are remeasured at the lower of the
carrying amount and fair value less costs to sell. During 2020
intangible assets, goodwill and PPE relating to the Counterpoint
business were impaired.
i. During 2020 there was a merger in the Brazilian Group. This
has led to recognition of a deferred tax asset on intangibles.
Adjusted profit
26 weeks 28 weeks 52 weeks ended
ended ended 29 September
31 March 14 April 2019
2020 2019 GBPm
GBPm GBPm
=========================================== ========== ========== ===============
Operating profit as reported 62.8 56.2 130.0
Add back adjusting items in operating 12.9 27.5 84.1
profit
------------------------------------------- ---------- ---------- ---------------
Adjusted EBIT 75.7 83.7 214.1
Net finance costs (9.2) (11.0) (19.7)
Add back adjusting net finance costs - 0.3 0.5
=========================================== ========== ========== ===============
Adjusted profit before tax and acquisition
related amortisation 66.5 73.0 194.9
Acquisition related amortisation (4.8) (5.8) (10.4)
------------------------------------------- ---------- ---------- ---------------
Adjusted profit before tax 61.7 67.2 184.5
Taxation (14.7) (10.3) (29.4)
Less adjusting tax credit (1.4) (3.7) (7.4)
=========================================== ========== ========== ===============
Adjusted profit after tax 45.6 53.2 147.7
=========================================== ========== ========== ===============
Adjusted effective tax rate 26.1% 20.8% 19.9%
=========================================== ========== ========== ===============
Earnings per share
26 weeks 28 weeks 52 weeks ended
ended ended 29 September
31 March 14 April 2019
2020 2019 GBPm
GBPm GBPm
=========================================== ========= ========= ==============
Adjusted basic earnings per share
Profit for the period attributable to 38. 9 34.9 80.9
equity shareholders Add: Net impact of
adjusting items
11.5 24.1 77.2
=========================================== ========= ========= ==============
50.4 59.0 158.1
=========================================== ========= ========= ==============
Weighted average number of ordinary shares
in issue for basic earnings per share 265.3 264.4 264.5
=========================================== ========= ========= ==============
Adjusted basic earnings per share 19.0p 22.3p 59.8p
=========================================== ========= ========= ==============
Adjusted diluted earnings per share
Profit for the period attributable to
equity shareholders before adjusting
items and acquisition related intangible
assets amortisation 50.4 59.0 158.1
=========================================== ========= ========= ==============
Weighted average number of ordinary shares
in issue for diluted earnings per share 266.6 266.2 266.9
=========================================== ========= ========= ==============
Adjusted diluted earnings per share 18.9p 22.2p 59.2p
=========================================== ========= ========= ==============
Segmental analysis for the period to 31 March 2019
From 30 September 2019, the Group has transitioned its reporting
cycle from 13 four-week periods to 12 calendar months. As a result,
the Company's 2020 interim financial statements cover the 26 weeks
ended 31 March 2020 compared to the 2019 interim financial
statements which covered the 28 weeks ended 14 April 2019. The
below analysis shows the segmental analysis to the 31 March
2019:
GB Stills GB Carbs Total Ireland France Brazil International Total
GBPm GBPm GB GBPm GBPm GBPm GBPm GBPm
GBPm
Revenue from external
customers 125.0 295.9 420.9 82.9 113.1 62.4 21.6 700.9
Brand contribution 53.0 108.7 161.7 22.8 35.9 13.0 3.5 236.9
---------- --------- ------ -------- ------- ------- -------------- -------
Non-brand advertising
& promotion (6.2)
---------- --------- ------ -------- ------- ------- -------------- -------
Fixed supply chain (52.1)
---------- --------- ------ -------- ------- ------- -------------- -------
Selling costs (41.2)
---------- --------- ------ -------- ------- ------- -------------- -------
Overheads and other
costs (67.5)
---------- --------- ------ -------- ------- ------- -------------- -------
Adjusted operating
profit 69.9
---------- --------- ------ -------- ------- ------- -------------- -------
Adjusted free cash flow
26 weeks ended 28 weeks ended 52 weeks ended
31 March 2020 14 April 2019 29 September
GBPm GBPm 2019
GBPm
====================================== ============== ============== ==============
Adjusted EBIT 75.7 83.7 214.1
====================================== ============== ============== ==============
Depreciation 27.1 29.1 45.7
Amortisation (non-acquisition
related) 3.3 3.8 8.0
Adjusted loss on disposal of
PPE 0.4 0.9 2.3
====================================== ============== ============== ==============
Adjusted EBITDA 106.5 117.5 270.1
Adjusted working capital movements (91.0) (59.7) (20.2)
Purchases of intangible and
tangible assets (25.8) (33.1) (74.8)
Net pension charge less contributions (5.7) (22.2) (22.3)
Net Interest and finance costs (9.6) (10.1) (19.1)
Income tax paid (12.1) (9.8) (23.7)
Share based payments (1.6) 5.8 11.3
Issue of shares 5.7 1.5 2.2
Purchase of own shares (2.8) (1.3) (8.4)
Interest charge on lease liabilities (0.9)
Other - (1.3) 0.9
====================================== ============== ============== ==============
Adjusted free cash flow (37.3) (12.7) 116.0
====================================== ============== ============== ==============
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END
IR PPUQCAUPUPUQ
(END) Dow Jones Newswires
May 27, 2020 02:00 ET (06:00 GMT)
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