TIDMBVIC
RNS Number : 8352I
Britvic plc
29 November 2018
Britvic plc Preliminary Results - 29 November 2018
For the 52 weeks ended 30 September 2018.
"Another strong performance driven by the continued execution of
our strategy"
Group Financial Headlines:
-- Revenue increased 5.1% to GBP1,503.6m with organic revenue** up 2.7%
-- Adjusted EBIT increased 5.4% with organic adjusted EBIT* up 4.0% to GBP206.0m
-- Organic adjusted EBIT margin* increased 10bps
-- Profit after tax increased 4.9% to GBP117.1m
-- Adjusted earnings per share* increased 6.4% to 56.3p and the
full year dividend increased 6.4%
Strategic highlights:
-- Positive volume and price/mix delivering balanced revenue growth
-- Successfully navigating soft drinks levy, underpinned by strength of low/no sugar portfolio
-- GB stills revenue in growth and Pepsi, led by MAX, continued to gain share
-- Revenue from Britvic brand innovation at an all-time high
-- Successfully managed the carbon dioxide shortage in GB and
Ireland and market challenges in France
-- Robust performance in Brazil despite challenging
macro-economic conditions, Bela Ischia synergies delivered
-- Business Capability Programme on-track, contributing to continued margin expansion
52 weeks ended 30 52 weeks ended 1 % change Actual % change Organic
September 2018 GBPm October 2017 GBPm Exchange Rate Constant Exchange
Restated Rate (ex-SDIL/SSDT)
**
Revenue 1,503.6 1,430.5 5.1% 2.7%
Adjusted EBIT* 206.0 195.5 5.4% 4.0%
Adjusted EBIT margin* 13.7% 13.7% 0bps 10bps
Profit after tax 117.1 111.6 4.9%
Basic EPS 44.4p 42.4p 4.7%
Adjusted EPS* 56.3p 52.9p 6.4%
Full year dividend per share 28.2p 26.5p 6.4%
Adjusted net debt/EBITDA 2.2x 2.0x (0.2) x
-------------------- -------------------- -------------------- --------------------
In the current period acquisition related amortisation has been
included within adjusting items in order to simplify the Group's
financial reporting. This has resulted in adjusted EBIT replacing
adjusted EBITA as one of the Group's KPIs. This however in practice
has no impact on the amounts reported due to the reclassification
of acquisition related amortisation. Throughout this report, where
relevant, 2017 comparatives have been restated for IFRS15: Revenue
from contracts with customers. Full details of this restatement can
be found on pages 27 to 28. * Items marked with an asterisk
throughout this document are non-GAAP measures, definitions and
relevant reconciliations are provided in the Glossary on page 10
and pages 29 to 31. ** Organic constant exchange rate adjusts for
constant currency, the impact of Bela Ischia for the period to 2
March 2018 and excludes the Soft Drinks Industry Levy (SDIL) in GB
and the Sugar Sweetened Drinks Tax (SSDT) in Ireland. Detailed
adjustments are shown on page 30.
Simon Litherland, Chief Executive Officer commented:
"We have delivered a strong performance in a challenging
environment, with good revenue, margin and earnings growth. I am
delighted that we have grown our stills brands, demonstrating that
our investment in innovation and marketing is beginning to pay off.
The investment in the transformational business capability
programme is now nearing completion and is already delivering
significant efficiency and commercial benefits. Free cash flow will
increase materially in 2019 as capital spend falls back towards
normal levels.
Britvic has consistently demonstrated that we are a strong,
agile business, operating in a resilient category. In 2019 we have
exciting plans for our portfolio of leading brands across our
markets. Whilst political and economic uncertainty will undoubtedly
continue, we are confident we will continue our long-term track
record of growing earnings, dividends and shareholder value."
For further information please contact:
Investors:
Steve Nightingale (Director of Investor
Relations) +44 (0) 7808 097784
Media:
Victoria McKenzie-Gould (Director of Corporate
Relations)
Stephanie Macduff-Duncan (Senior Corporate +44 (0) 7885 828342
Communications Manager) +44 (0) 7808 097680
Stephen Malthouse (Headland) +44 (0) 203 805 4822
There will be a live webcast of the presentation given today at
09:30am by Simon Litherland (Chief Executive Officer) and Mathew
Dunn (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, 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 and Pressade and in Brazil
with Maguary 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 FTSE 250 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 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 29 September 2018. ROI take-home
market data referred to is supplied by Nielsen and runs to 9
September 2018. French market data is supplied by IRI and runs to
16 September 2018.
Next scheduled announcement
Britvic will publish its quarter one trading statement on 31
January 2019.
Chief Executive Officer's Strategic Review
This year we have delivered another strong financial performance
in a challenging environment and we have continued to progress our
long-term strategic goals. During the year we faced numerous
headwinds, including the introduction of the SDIL, disruption from
the temporary shortage of carbon dioxide (CO2) in GB and Ireland
during a period of prolonged hot weather, and the impact of
multiple business failures in our customer base. Against this
backdrop, our results are even more impressive and demonstrate the
resilience of the business, the strength of our broad portfolio,
the quality of our team and the strong relationships we have with
our customers and partners.
With balanced revenue growth and margin improvement, we have
grown adjusted EBIT 5.4% to GBP206m. Since launching the strategy
in 2013 we have delivered adjusted earnings per share CAGR of 9.8%,
a dividend per share CAGR of 8.9% and total shareholder returns
significantly ahead of both the FTSE100 and FTSE250.
Below I will headline our performance against our four strategic
pillars:
Generate profitable growth in our core markets
GB
In a turbulent market we have successfully executed our
commercial plans, growing our carbonates and stills portfolios and
gaining market value share. The GB soft drinks market (as measured
by Nielsen) has continued to grow this year, in both volume and
value, with the second half of the year particularly strong,
benefiting from the exceptional summer weather. As we anticipated,
the introduction of the SDIL and our transparent approach of
differential pricing has accelerated the consumer trend of
switching away from higher sugar drinks into low and no sugar
alternatives. This has benefited our broad portfolio of low and no
sugar brands, with Pepsi MAX, Robinsons, 7UP Free, J2O and Tango
all in revenue growth. We remain confident in our approach to the
levy and believe the continued evolution of consumer trends offer
us further opportunities for growth.
This year, we leveraged the strength of the Robinsons brand with
the introduction of new premium ranges, Creations and Cordials.
These have been a success, growing both the brand and the squash
category. We have also gained market share and expanded penetration
by increasing the number of households buying the brand. J2O has
benefited from an upweighted marketing campaign, increased feature
and display in store and growth in the sparkling Spritz variant.
Fruit Shoot declined this year, primarily due to continued
competitive pressure and a decision to focus on value by reducing
the number of price promotions. As part of our ongoing brand
rejuvenation plan, we have launched a new 50% juice variant, called
'Juiced', that is all natural and has school compliance
accreditation, and a sparkling water variant. We also maintained
our focus on increasing our presence in categories that are small
today but offer long-term growth potential, including the launch of
Aqua Libra, a sparkling unsweetened flavoured water, and we
continued to invest in Purdey's, our natural energy offering.
We highlighted in our third quarter trading statement that
performance in the second half of the year was disrupted by the
shortage of CO2 across Western Europe, which limited the production
of carbonated soft drinks. We were unable to capitalise fully on
the hot weather in July and August as we navigated the CO2
shortage, but have now successfully recovered, as evidenced by
Pepsi regaining significant market share in September.
France
It has been a challenging year in France. The soft drinks market
(as measured by IRI) declined, with poor weather having a
significant impact on the syrups category. The majority of our
revenue decline was in private label sales, while the revenue from
our branded syrups range and Fruit Shoot brand saw a more modest
reduction and a corresponding loss of market share, in the face of
intense competition. Pressade, our juice brand, continued to grow,
building on its organic credentials.
We continued to focus on growing margins and bringing to market
new ranges to meet evolving consumer needs. We recently launched a
premium Teisseire syrup range, 'Fraîcheur de Fruits', that has 85%
juice and less added sugar, to broaden the appeal of our syrups to
more consumers. In the kids' category, we have also launched Fruit
Shoot 'Au-Jus', a 50% juice variant that follows the launch of
'Juiced' in GB.
Ireland
Our strong market position and broad portfolio of low and no
sugar brands have delivered another strong financial performance,
despite a shortage of CO2 and the introduction of the Sugar
Sweetened Drinks Tax (SSDT). Successful revenue management and
positive pack mix has resulted in robust price realisation and has
also driven excellent market value share growth, led by our squash
brands and Ballygowan water. The incremental benefit of the East
Coast wholesale acquisition was fully realised in the first half of
the year. This acquisition has enabled us to accelerate the
distribution of Britvic brands in the growing Dublin on-trade
sector.
Realise global opportunities in kids, family and adult
categories
In Brazil we have continued to invest for the long term, against
a backdrop of macro uncertainty and a difficult consumer
environment, including the national truckers' strike in the third
quarter. The Bela Ischia acquisition is now integrated and
delivering synergies ahead of guidance, and it has enabled us to
expand both market and channel coverage. Our focus on the
longer-term opportunity is being realised by leveraging our group
capability and range. We continue to roll out Fruit Shoot into new
regions, and we have recently launched a new concentrate solution,
Maguary Uno, to broaden the brand's consumer base by increasing
ease of use and affordability.
In the USA we have focused on improving the visibility and
on-shelf position of Fruit Shoot multipack to drive rate of sale
and brand awareness, and we have also increased our distribution.
We expanded the range with the introduction of Hydro and Hydro
sparkling water, which has also helped secure additional shelf
space. Fruit Shoot also remains the number two brand in the single
serve kids' market. Progress this year has been encouraging and we
will continue to pursue the multi-pack opportunity, where scale is
essential to achieving sustainable profitability.
In the Benelux markets we have continued to focus on improving
the underlying profitability of the business, offering a stronger
platform to enable future growth. Teisseire distribution and share
has increased in Holland, and we continue to expand the portfolio
into adult soft drinks. In the travel sector we absorbed the loss
of Monarch Airlines, due to administration, exited unprofitable
contracts and secured new, higher margin listings for brands
including J2O and Purdey's.
Our portfolio of adult brands gives us a platform to drive
premiumisation in the category as well as enabling us to fully
participate in the demand for new soft drinks in traditional
alcohol-led occasions. It is still very early days in the
development of the broader premium adult socialising category, and
it will require long-term focus to build brands in this space,
especially in the on-trade channel.
Continue to step change our business capability
We are nearing the end of the capital investment phase of the
transformational business capability programme (BCP), which will
give us a strong platform for growth in the years ahead. Work at
the sites in London and Leeds is now finished. In 2019 we will
complete the investment in Rugby and close the Norwich site towards
the end of the year. This has been a difficult time for the Norwich
employees and I want to pay tribute to their continued dedication.
In Rugby, we have completed the installation of three new can lines
and made good progress with the on-site warehouse, aseptic and PET
lines. The dedication of the team enabled us to navigate a
challenging year. As well as the planned operational works, the
team overcame the temporary shortage of CO2 in GB and Ireland, at
the same time as both markets were enjoying exceptionally warm
weather. Upon completion, the GB production network will be
comprised of three sites located along the spine of the country in
London, Rugby and Leeds. This will increase efficiency, reduce road
miles, and help accelerate our ability to respond to changing
consumer trends with agility and pace by expanding our range of
liquids, pack sizes and configurations.
Build trust and respect in our communities
Building trust and respect in our communities continues to be a
key part of our strategy and we have made further progress in 2018
through our 'A Healthier Everyday' programme. We have reduced our
calories per 250ml serve by 16% this year with absolutely no
compromise on taste; a fantastic achievement of which everyone at
Britvic is rightly proud.
We continue to take steps to help our employees and our
communities thrive. We are proud to have just launched a three-year
strategic partnership with Diabetes UK (DUK), where we will
contribute to programmes to support children with Type 1 Diabetes
and their families through a combination of corporate support and
employee donations and volunteering. We are also working with DUK
to help our employees take care of their health and wellbeing.
We are delighted to have reduced our carbon emissions relating
to production by 14% this year. We also continue to take steps to
reduce the impact of our packaging. In 2018 we removed an
additional 600 tonnes of primary plastic packaging through
light-weighting; trialled the use of recycled PET; and invested in
UK recycling infrastructure through choosing to buy domestic
Packaging Recovery Notes. We also signed up to the UK Plastic
Pact's 2025 targets including achieving 30% recycled PET. We helped
engage consumers through our continued support of the 'Keep
Scotland Beautiful' anti-littering campaign and encouraged
recycling and re-use of plastic at the Wimbledon Championships
through our historic sponsorship with Robinsons.
In 2019 we will continue to play our part to increase recycling,
reduce littering and help create a circular economy in plastics. We
note the Chancellor's proposal to introduce a tax on the
manufacture and import of plastic packaging which contains less
than 30% recycled plastic in April 2022. We welcome that the
government will also consult on potential reform of producer
responsibility and the Resources and Waste Strategy and we will
engage constructively in their development of a holistic
solution.
Outlook
While political and economic uncertainty will undoubtedly
continue, we have consistently demonstrated that we are a strong,
agile business, operating in a resilient category. With exciting
plans for our portfolio of leading brands across our markets, we
are confident of continuing to make further progress in the coming
year.
Chief Financial Officer's Review
Overview
In the period, we sold over 2.4 billion litres of soft drinks,
an increase of 1.6% on the previous year. Average realised price
(ARP) of 60.5p increased by 3.2% on a reported basis and by 1.7% on
an organic basis (constant currency and excluding SDIL & SSDT).
Revenue was GBP1,503.6m, an increase of 5.1%, on a reported basis,
compared with last year and 2.7% on an organic basis. Adjusted
EBIT* increased 5.4%, on a reported basis, to GBP206.0m, whilst
organic adjusted EBIT increased 4.0% and organic adjusted margin**
increased by 10bps. Profit after tax increased 4.9% to GBP117.1m,
after GBP40.4m of planned adjusting items, primarily related to the
BCP. Adjusted earnings per share increased 6.4% to 56.3p and the
full year dividend increased 6.4% to 28.2p.
GB carbonates 52 weeks ended 52 weeks ended % change % change
30 September 1 October actual excluding
2018 GBPm 2017 GBPm SDIL
--------------- --------------- ---------- -----------
Volume (million
litres) 1,294.8 1,281.5 1.0 1.0
ARP* per litre 45.0p 43.3p 9.0 3.9
Revenue 610.6 555.3 10.0 4.9
Brand contribution* 251.7 234.4 7.4 7.4
Brand contribution
margin* 41.2% 42.2% (100) bps 100 bps
GB carbonates organic revenue increased 4.9% with both volume
and organic ARP in growth, resulting in a 7.4% increase in organic
brand contribution and a 100bps improvement in organic margin.
Pepsi, led by no sugar MAX, continued to grow revenue and gain
market share. R Whites, Tango and 7UP Free revenue also increased,
benefiting from the SDIL accelerating the trend towards low and no
sugar brands. Our natural energy brand Purdey's was in strong
growth, with volume increasing over 25%, benefiting from a
high-profile marketing campaign and the introduction of a 250ml can
format. The BCP investment has increased capacity and the range of
pack formats available, which has helped underpin the carbonates
performance this year. ARP and margin benefited from positive
price/mix, in part due to the implementation of new promotional
price points in the off-trade, as well as growth of higher margin
Britvic brands. Performance in the second half of the year was
disrupted by the temporary CO2 shortage, resulting in a scaling
back of supply and promotions in the grocery and convenience
channels. The supply of finished goods normalised towards the end
of the final quarter.
GB stills 52 weeks ended 52 weeks ended % change % change
30 September 1 October actual excluding
2018 GBPm 2017 GBPm SDIL
--------------- --------------- --------- -----------
Volume (million
litres) 370.1 359.5 2.9 2.9
ARP* per litre 75.8p 74.9p 1.2 1.2
Revenue 280.7 269.3 4.2 4.2
Brand contribution* 116.6 112.0 4.1 4.1
Brand contribution
margin* 41.5% 41.6% (10) bps 0 bps
GB stills generated a pleasing organic revenue increase of 4.2%
in the full year, with strong momentum in the second half. This was
due to a significantly improved performance for Robinsons and J2O
offsetting a decline in Fruit Shoot. Robinsons benefited from the
launch of the Creations and Cordials ranges. J2O revenue increased
as we launched a major marketing campaign, increased feature and
display in store, and optimised our promotional strategy in the
second half. GB stills benefited from consumer switching following
the introduction of the SDIL, and from the decision to reallocate
feature space and promotional activity in response to the temporary
CO2 shortage.
France 52 weeks ended 52 weeks ended % change % change
30 September 1 October actual exchange constant exchange
2018 GBPm 2017 GBPm rate rate
--------------- --------------- ----------------- -------------------
Volume (million
litres) 263.0 281.0 (6.4) (6.4)
ARP* per litre 102.4p 100.1p 2.3 0.8
Revenue 269.2 281.4 (4.3) (5.7)
Brand contribution* 81.4 81.9 (0.6) (2.2)
Brand contribution
margin* 30.2% 29.1% 110 bps 110 bps
Organic revenue declined 5.7%, driven by a 6.4% fall in volume.
The majority of the revenue decline was in private label sales, as
we continued to focus on managing the profitability of these
contracts, while branded revenue saw a modest decline. Our branded
syrups ranges were adversely affected by poor weather early in the
year, whilst Fruit Shoot performance was impacted by intense
competition. In the juice category we continued to see strong
growth for Pressade, with its range of formats for families and
kids. The organic brand contribution decline was limited to 2.2%,
with organic margin increasing a robust 110 bps, due to positive
mix, revenue management and a focus on cost efficiency.
Ireland 52 weeks ended 52 weeks ended % change % change
30 September 1 October actual exchange constant exchange
2018 GBPm 2017 GBPm rate rate excluding
SSDT
--------------- --------------- ----------------- -------------------
Volume (million
litres) 221.3 216.5 2.2 2.2
ARP* per litre 56.3p 51.4p 9.5 4.4
Revenue 174.0 154.7 12.5 8.3
Brand contribution* 57.1 49.6 15.1 13.3
Brand contribution
margin* 32.8% 32.1% 70 bps 150 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
Disciplined revenue management achieved a robust 4.4% organic
ARP increase (excluding the SSDT) across the portfolio which, when
combined with 2.2% volume growth, resulted in organic revenue
growth of 8.3% and organic brand contribution growth of 13.3%, with
organic margin expanding 150 bps. Both Ballygowan and MiWadi
generated strong revenue growth. There was further benefit from the
growth of the Counterpoint wholesale business and last year's
acquisition of East Coast.
International 52 weeks ended 52 weeks ended % change % change
30 September 1 October actual exchange constant exchange
2018 GBPm 2017 GBPm rate rate
--------------- --------------- ----------------- -------------------
Volume (million
litres) 43.8 41.5 5.5 5.5
ARP* per litre 111.9p 111.6 0.3 (0.5)
Revenue 49.0 46.3 5.8 4.9
Brand contribution* 10.2 6.9 47.8 29.5
Brand contribution
margin* 20.8% 14.9% 590 bps 390 bps
Note: Concentrate sales are included in both revenue and ARP but
do not have any associated volume.
Organic revenue increased a robust 14.6% in the second half of
the year, following a 6.5% decline in the first half. Consequently,
full year organic revenue increased 4.9%. Organic brand
contribution increased by 29.5% and organic margin increased by 390
bps due to disciplined revenue management, mix and A&P
efficiency. The growth was due to further expansion in the United
States, a strong performance in the export channel and improved
profitability in Benelux, partly offset by declines in Asia and the
Middle East. The United States remains in an investment phase;
Fruit Shoot multi-pack has increased distribution and shelf space,
as well as the number of variants available in store. Adjusted EBIT
losses were reduced due to the growth in brand contribution
combined with overhead cost efficiencies.
Brazil 52 weeks ended 52 weeks ended % change % change
30 September 1 October actual exchange organic constant
2018 GBPm 2017 GBPm rate exchange rate
--------------- --------------- ----------------- ------------------
Volume (million
litres) 210.6 186.3 13.0 0.6
ARP* per litre 57.0p 66.3p (14.0) 0.2
Revenue 120.1 123.5 (2.8) 0.8
Brand contribution* 24.8 23.2 6.9 11.4
Brand contribution
margin* 20.6% 18.8% 180 bps 200 bps
Organic volume returned to growth in the second half, increasing
0.6% for the full year following a decline in the first half. When
combined with a modest growth in ARP, organic revenue increased
0.8%. Organic brand contribution and margin increased 11.4% and 200
bps respectively. This was due to a combination of factors,
including lower raw material costs, lower A&P spend and
synergies from the Bela Ischia acquisition being realised in the
existing business.
52 weeks ended 52 weeks ended % change % change
Fixed costs - pre-adjusting 30 September 1 October 2017 actual exchange organic constant
items 2018 GBPm rate exchange
GBPm rate
--------------- ---------------- ----------------- ------------------
Non-brand A&P (11.2) (10.1) (10.9) (12.0)
Fixed supply chain* (113.7) (98.6) (15.3) (14.6)
Selling costs* (79.5) (80.4) 1.1 (0.1)
Overheads and other* (131.4) (123.4) (6.5) (6.9)
Total (335.8) (312.5) (7.5) (7.7)
------------------------------- --------------- ---------------- ----------------- ------------------
Total A&P investment (65.6) (66.4)
A&P as a % of own brand
revenue 4.6% 4.8%
Organic fixed supply chain costs increased 14.6%, largely due to
depreciation from our GB supply chain investment and additional
co-packing costs related to recent innovation launches and to aid
capacity post the temporary carbon dioxide shortage. Organic
overheads and other costs increased by 6.9%, which includes costs
related to the administration of Palmer & Harvey. Inflationary
cost pressures, such as wages and salaries, have also affected the
cost base this year. A&P spend was slightly down on last year.
Whilst spend in the second half of the year was ahead of last year,
there was a pro-active scaling back of planned spend in response to
the carbon dioxide disruption.
Interest
The adjusted net finance charge* for the 52-week period for the
Group was GBP19.8m, compared with GBP20.1m in the prior year; the
reduction was due to the impact of maturing debt being refinanced
at lower rates. The reported net finance charge was GBP20.3m (2017:
GBP24.2m).
Adjusting items - pre-tax
In the period, we accounted for a net charge of GBP40.4m (2017:
GBP36.6m) of pre-tax adjusting items. These include:
-- Strategic restructuring - BCP costs of GBP40.3m, which
include employee costs and asset impairments in respect of the
Norwich site closure, as well as other costs related to the total
programme;
-- Acquisition related amortisation of GBP11.0m;
-- The reversal of impairment of the Ballygowan brand in Ireland of GBP11.5m;
-- A fair value loss of GBP0.6m.
The cash cost of adjusting items pre-tax in the period was a
GBP24.8m outflow. Further detail on adjusting items can be found on
pages 29 to 31.
Taxation
The adjusted tax charge* was GBP37.8m, which equates to an
effective tax rate of 21.6% (2017: 22.0%). This primarily resulted
from a decrease in the UK tax rate to 19% (2017: 19.5%) offset by
the overseas profit mix. The reported net tax charge was GBP28.7m
(2017: GBP27.2m), which equates to an effective tax rate of 19.7%
(2017: 19.6%). There are two factors additionally influencing the
higher overall rate, permanent adjustments and corporate rate
reductions in France. A benefit arises from the reduction in
permanent adjustments of GBP3.3m in 2018 compared with GBP5.7m for
2017 resulting from property disposals in Ireland. This is offset
by an adverse comparable rate impact due to a lower benefit arising
in 2018 (GBP2.4m) compared with the 2017 benefit (GBP5.1m) on the
reduction of deferred tax liabilities as a result of the continuing
reduction in the French corporate tax rate.
Earnings per share (EPS)
Adjusted basic EPS* for the period was 56.3p, up 6.4% on the
same period last year. Basic EPS for the period was 44.4p, compared
with 42.4p for last year.
Dividends
The Board is recommending a final dividend of 20.3p per share,
an increase of 5.2% on the dividend declared last year, with a
total value of GBP53.7m. The final dividend for 2018 will be paid
on 4 February 2019 to shareholders on record as at 7 December 2018.
The ex-dividend date is 6 December 2018.
Cash flow and net debt
Adjusted free cash flow* was a GBP65.0m inflow, compared with a
GBP54.5m inflow the previous year. Working capital generated an
inflow of GBP15.5m (2017: GBP26.0m inflow), due to continued focus
on working capital management across the business. Capital
expenditure of GBP143.5m, (2017: GBP146.7m) remained high due to
the transformational BCP in GB.
Adjusted net debt* at 30 September 2018 of GBP575.5m increased
by GBP72.6m compared to adjusted net debt* of GBP502.9m at 1
October 2017, partly due to the payment of deferred consideration
in relation to the acquisitions of Ebba and East Coast. This has
generated adjusted net debt* leverage of 2.2x (2017: 2.0x).
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 interest rate and foreign currency exposures.
At 30 September 2018, the Group had GBP1,108.0m of committed
debt facilities, consisting of a GBP400.0m bank facility which
matures in 2021, and a series of private placement notes with
maturities between 2019 and 2033, providing the business with a
secure funding platform.
At 30 September 2018, the Group's unadjusted net debt of
GBP659.6m (excluding derivative hedges) consisted of GBP58.5m drawn
under the Group's committed bank facilities, GBP707.6m of private
placement notes, GBP3.3m of accrued interest and GBP1.6m of finance
leases, offset by net cash and cash equivalents of GBP109.5m and
unamortised loan issue costs of GBP1.9m. 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 GBP575.5m, which compares with GBP502.9m at 1 October
2017.
Pensions
At 1 October 2018, the Group had IAS 19 pension surpluses in
Great Britain and Northern Ireland totaling GBP96.3m and IAS 19
pension deficits in Ireland and France totaling GBP9.4m, resulting
in a net pension surplus of GBP86.9m (1 October 2017: net surplus
of GBP31.2m). The net surplus has increased primarily due to
changes in the financial and demographic assumptions, and
additional employer contributions made to the GB plan of GBP19.9m.
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. Following completion of the 31 March 2016 GB
plan actuarial valuation, agreement has been made with the Plan
Trustee on a number of key principles, including allowing a longer
period to fund the deficit and agreeing that no additional
contributions will be payable over and above those payments to 2019
agreed at the 2013 valuation. Future contributions beyond 2019 will
be on a contingent basis. The Ireland and Northern Ireland defined
benefit pension plans have an investment strategy journey plan 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, which
ruled that treatment of men and women be brought in line for
schemes with a guaranteed minimum pension, the vast majority of
UK-based DB schemes will need to recalculate member benefits. We
believe the potential impact for Britvic will be a 1%-3% increase
in pension liability, decreasing the surplus by GBP7m - GBP20m.
This is a non-adjusting post balance sheet event in 2018 and
further work will be performed in 2019 to quantify the impact of
the equalisation and whether it should be treated as a past service
cost in the P&L or an actuarial adjustment in other
comprehensive income.
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 company's
risk appetite. The Executive team performs a formal robust
assessment of the principal risks facing the company annually,
which is reviewed by the Board. Similarly, all business units and
functions perform formal annual risk assessments that consider the
company'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
company's risk appetite, and updates to risks and mitigation plans
are made as required. The principal risks that could potentially
have a significant impact on our business have not changed since
year end and are set out on pages 32 to 35 of the 2018 annual
report.
Implementation of IFRS 15: Revenue from Contracts with
Customers
Britvic is committed to continually improving both the quality
and transparency of its financial reporting and has adopted early
IFRS 15 (Revenue from Contracts with Customers) for the accounting
period starting 2 October 2017, with full retrospective
application.
IFRS 15 establishes a comprehensive framework for determining
and recognising revenue, as well as requiring entities to provide
users of financial statements with more informative and relevant
disclosures. The primary impact for Britvic on implementing IFRS 15
is a reclassification to revenue of certain rebates offered to
customers that had previously been recognised as selling and
distribution costs; and the reclassification of certain incentives
received, from revenue to cost of sales. Adoption of the standard
has no impact on profit before tax. Contract liabilities are now
disclosed as a separate line on the face of the balance sheet. Full
details on the IFRS 15 restatement for 2017 can be found on pages
27 to 28.
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.
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.
AER refers to Actual Exchange Rate where variances are
calculated on sterling values translated at actual exchange
rates
ARP is defined as average revenue per litre sold, excluding
factored brands and concentrate sales.
Revenue is defined as sales achieved by the group net of price
promotional investment and retailer discounts.
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.
EBITDA is earnings before interest, taxation, depreciation and
amortisation.
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.
Adjusted profit after tax is a non-GAAP measure and is defined
as profit after tax before adjusting items, with the exception of
acquisition related amortisation.
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 263.7m (2017: 263.0m).
Adjusted free cash flow is a non-GAAP measure and is defined as
net cash flow excluding movements in borrowings, dividend payments
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.
Organic is a non-GAAP measure and excludes the impact of the
acquisition of Bela Ischia and on a constant currency basis. In GB
and Ireland organic also excludes the Soft Drinks Industry Levy
(SDIL) and Sugar Sweetened Soft Drinks Tax (SSDT).
Innovation is defined as new launches over the last three years,
excluding new flavours and pack sizes of established brands.
Revenue management is a measure and 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 pf pack
size.
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.
A&P is a measure of marketing spend including marketing,
research and advertising.
Non-working A&P is a measure of marketing spend that is not
spent directly on consumer facing activity. It would include, but
not limited to, agency fees, research and production costs.
Constant exchange rate is a non-GAAP measure of performance in
the underlying currency to eliminate the impact of foreign exchange
movements.
Soft Drinks Industry Levy (SDIL) is a levy applied on soft
drinks manufacturers in the UK.
Sugar Sweetened Soft Drinks Tax (SSDT) is a levy applied on soft
drinks manufacturers in the Republic of Ireland.
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.
CAGR is compound annual growth rate.
CONSOLIDATED INCOME STATEMENT
52 weeks
52 weeks ended
ended 1 October
30 September 2017
2018 Restated
Note GBPm GBPm
------------------------------------------ ----- ------------- ----------
Revenue 3, 14 1,503.6 1,430.5
Cost of sales (702.0) (667.2)
------------------------------------------ ----- ------------- ----------
Gross profit 801.6 763.3
Selling and distribution costs (400.8) (393.1)
Administration expenses (246.2) (216.4)
Other income 14 11.5 9.2
------------------------------------------ ----- ------------- ----------
Operating profit 166.1 163.0
Finance income 1.0 2.1
Finance costs (21.3) (26.3)
------------------------------------------ ----- ------------- ----------
Profit before tax 145.8 138.8
Taxation 4 (28.7) (27.2)
------------------------------------------ ----- ------------- ----------
Profit for the period attributable to the
equity shareholders 117.1 111.6
------------------------------------------ ----- ------------- ----------
Earnings per share
Basic earnings per share 5 44.4p 42.4p
Diluted earnings per share 5 44.1p 42.2p
------------------------------------------ ----- ------------- ----------
All activities relate to continuing operations.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME/(EXPENSE)
52 weeks 52 weeks
ended ended
30 September 1 October
2018 2017
GBPm GBPm
------------------------------------------------------- ------------- ----------
Profit for the period attributable to the equity
shareholders 117.1 111.6
Other comprehensive income/(expense):
Items that will not be reclassified to profit
or loss
Remeasurement gains on defined benefit pension
schemes 33.3 26.7
Deferred tax on defined benefit pension schemes (5.5) (4.2)
Deferred tax on other temporary differences - 0.1
-------------------------------------------------------- ------------- ----------
27.8 22.6
------------------------------------------------------- ------------- ----------
Items that may be subsequently reclassified
to profit or loss
Losses in the period in respect of cash flow
hedges (2.6) (3.2)
Amounts recycled to the income statement in
respect of cash flow hedges (0.4) (7.0)
Deferred tax in respect of cash flow hedges
accounted for in the hedging reserve 0.5 1.7
Exchange differences on translation of foreign
operations (35.1) (1.3)
Tax on exchange differences accounted for in
the translation reserve - (6.1)
-------------------------------------------------------- ------------- ----------
(37.6) (15.9)
------------------------------------------------------- ------------- ----------
Other comprehensive income for the period, net
of tax (9.8) 6.7
-------------------------------------------------------- ------------- ----------
Total comprehensive income for the period attributable
to the equity shareholders 107.3 118.3
-------------------------------------------------------- ------------- ----------
CONSOLIDATED BALANCE SHEET
30 September
2018 1 October
2017 Restated
Note GBPm GBPm
--------------------------------------- ---- ------------ --------------
Assets
Non-current assets
Property, plant and equipment 7 519.8 461.6
Intangible assets 7 439.5 455.0
Other receivables 7.7 6.7
Derivative financial instruments 12 40.5 69.7
Deferred tax asset 5.6 7.5
Pension asset 11 96.3 40.5
--------------------------------------- ---- ------------ --------------
1,109.4 1,041.0
--------------------------------------- ---- ------------ --------------
Current assets
Inventories 144.5 146.7
Trade and other receivables 356.8 321.1
Current income tax receivables 2.3 4.5
Derivative financial instruments 12 37.9 17.2
Cash and cash equivalents 109.5 82.5
--------------------------------------- ---- ------------ --------------
651.0 572.0
Total assets 1,760.4 1,613.0
--------------------------------------- ---- ------------ --------------
Current liabilities
Trade and other payables (424.3) (384.9)
Contract liabilities - rebate accruals 14 (97.4) (87.7)
Interest bearing loans and borrowings 10 (171.4) (89.7)
Derivative financial instruments 12 (0.7) (2.7)
Current income tax payable (2.2) (12.4)
Provisions (2.6) (3.7)
Other current liabilities (0.2) (36.7)
--------------------------------------- ---- ------------ --------------
(698.8) (617.8)
--------------------------------------- ---- ------------ --------------
Non-current liabilities
Interest bearing loans and borrowings 10 (597.7) (582.7)
Deferred tax liabilities (62.5) (51.4)
Pension liability 11 (9.4) (9.3)
Derivative financial instruments 12 (4.2) (4.1)
Provisions (7.4) (5.0)
Other non-current liabilities (3.1) (3.4)
--------------------------------------- ---- ------------ --------------
(684.3) (655.9)
--------------------------------------- ---- ------------ --------------
Total liabilities (1,383.1) (1,273.7)
--------------------------------------- ---- ------------ --------------
Net assets 377.3 339.3
--------------------------------------- ---- ------------ --------------
Capital and reserves
Issued share capital 8 52.9 52.8
Share premium account 139.1 133.9
Own shares reserve (5.4) (3.7)
Other reserves 9 92.9 130.5
Retained earnings 97.8 25.8
--------------------------------------- ---- ------------ --------------
Total equity 377.3 339.3
--------------------------------------- ---- ------------ --------------
The financial statements were approved by the board of directors
and authorised for issue on 28 November 2018. They were signed on
its behalf by:
Simon Litherland Mathew Dunn
CONSOLIDATED STATEMENT OF CASH FLOWS
52 weeks 52 weeks
ended ended
30 September 1 October
2018 2017
Note GBPm GBPm
----------------------------------------------------- ---- ------------- ----------
Cash flows from operating activities
Profit before tax 145.8 138.8
Net finance costs 20.3 24.2
Other financial instruments 0.6 13.5
Impairment of property, plant and equipment 7 4.8 -
Reversal of impairment of intangible assets 7 (11.5) (2.6)
Depreciation 48.5 40.3
Amortisation 18.4 19.0
Share based payments 5.6 6.3
Net pension charge less contributions (22.1) (22.1)
Increase in inventory (3.3) (24.2)
(Increase)/decrease in trade and other receivables (44.9) 4.3
Increase in trade, other payables and contract
liabilities 66.4 41.2
Increase/(decrease) in provisions 4.5 (4.9)
Loss on disposal of property, plant and equipment
and intangible assets 4.5 1.6
Income tax paid (30.8) (37.4)
----------------------------------------------------- ---- ------------- ----------
Net cash flows from operating activities 206.8 198.0
----------------------------------------------------- ---- ------------- ----------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment - 17.7
Purchases of property, plant and equipment (136.3) (139.8)
Purchases of intangible assets (7.3) (6.9)
Interest received 0.9 0.8
Acquisition of subsidiaries, net of cash acquired (38.4) (60.3)
----------------------------------------------------- ---- ------------- ----------
Net cash flows used in investing activities (181.1) (188.5)
----------------------------------------------------- ---- ------------- ----------
Cash flows from financing activities
Interest paid, net of derivative financial
instruments (22.0) (20.8)
Net movement on revolving credit facility 10 35.3 (91.4)
Other loans repaid 10 (0.7) (0.6)
Repayment on finance leases 10 (1.1) (0.8)
Acquired debt repaid 10 - (2.4)
Partial repayment of private placement notes 10 (54.9) (119.6)
Drawdown of 2018/2017 private placement notes 10 120.3 175.0
Issue costs paid 10 (0.4) (0.7)
Issue of shares relating to incentive schemes
for employees 1.0 0.7
Purchase of own shares (3.1) (5.3)
Dividends paid to equity shareholders (71.7) (64.9)
----------------------------------------------------- ---- ------------- ----------
Net cash flows used in financing activities 2.7 (130.8)
----------------------------------------------------- ---- ------------- ----------
Net increase/(decrease) in cash and cash equivalents 28.4 (121.3)
Cash and cash equivalents at beginning of
period 82.5 205.9
Exchange rate differences (1.4) (2.1)
----------------------------------------------------- ---- ------------- ----------
Cash and cash equivalents at the end of the
period 109.5 82.5
----------------------------------------------------- ---- ------------- ----------
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Issued Share Own Other Retained
share premium shares reserves earnings/
capital account reserve (note 9) (losses) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- -------- -------- -------- --------- ---------- ------
At 2 October 2016 52.6 129.1 (3.3) 146.5 (43.9) 281.0
Profit for the period - - - - 111.6 111.6
Other comprehensive (expense)/income - - - (15.9) 22.6 6.7
------------------------------------- -------- -------- -------- --------- ---------- ------
Total comprehensive (expense)/income - - - (15.9) 134.2 118.3
------------------------------------- -------- -------- -------- --------- ---------- ------
Issue of shares relating
to incentive schemes for
employees 0.2 4.8 (4.4) - - 0.6
Own shares purchased for
share schemes - - (4.8) - - (4.8)
Own shares utilised for
share schemes - - 8.8 - (7.9) 0.9
Movement in share based
schemes - - - - 6.1 6.1
Current tax on share based
payments - - - - 0.1 0.1
Deferred tax on share
based payments - - - - 2.0 2.0
Movement in non-distributable
profit - - - (0.1) 0.1 -
Payment of dividend - - - - (64.9) (64.9)
------------------------------------- -------- -------- -------- --------- ---------- ------
At 1 October 2017 (audited) 52.8 133.9 (3.7) 130.5 25.8 339.3
Profit for the period - - - - 117.1 117.1
Other comprehensive (expense)/income - - - (37.6) 27.8 (9.8)
------------------------------------- -------- -------- -------- --------- ---------- ------
Total comprehensive (expense)/income - - - (37.6) 144.9 107.3
------------------------------------- -------- -------- -------- --------- ---------- ------
Issue of shares relating
to incentive schemes for
employees 0.1 5.2 (4.4) - - 0.9
Own shares purchased for
share schemes - - (5.2) - - (5.2)
Own shares utilised for
share schemes - - 7.9 - (7.1) 0.8
Movement in share based
schemes - - - - 5.5 5.5
Current tax on share based
payments - - - - 0.4 0.4
Payment of dividend - - - - (71.7) (71.7)
------------------------------------- -------- -------- -------- --------- ---------- ------
At 30 September 2018 52.9 139.1 (5.4) 92.9 97.8 377.3
------------------------------------- -------- -------- -------- --------- ---------- ------
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. General information
The preliminary consolidated financial information was approved
by the board on 28 November 2018.
The preliminary consolidated financial information for the 52
week period ended 30 September 2018, has been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union. The preliminary consolidated
financial information does not constitute statutory consolidated
financial statements as defined by section 434 of the Companies Act
2006.
The annual report and group financial statements for the 52 week
period ended 30 September 2018 were approved by the board on 28
November 2018. The report of the auditor on those group financial
statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of
the Companies Act 2006. The annual report and group financial
statements for 2018 will be filed with the Registrar of Companies
in due course.
The annual report and group financial statements for the 52 week
period ended 1 October 2017 were approved by the board on 28
November 2017. The report of the auditor on those group financial
statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of
the Companies Act 2006.
The directors consider that the group has, at the time of
approving the group financial statements, adequate resources to
remain in operation for the foreseeable future and have therefore
continued to adopt the going concern basis in preparing the
preliminary consolidated information.
2. Accounting policies
The accounting policies are consistent with those described in
the annual report and group financial statements 2017, with the
exception of the early adoption of IFRS 15: Revenue from Contracts
with Customers.
Initial adoption of IFRS 15: Revenue from Contracts with
Customers
The standard has an effective date of 1 January 2018, but the
group has decided to early adopt this standard with a date of
initial application to the group of 2 October 2017.
IFRS 15 replaces all existing revenue requirements in IFRS and
applies to all revenue arising from contracts with customers unless
the contracts are within the scope of other standards.
The group has applied IFRS 15 fully retrospectively in
accordance with paragraph C3 (a) of the standard, restating the
prior period's comparatives. The main impact of adopting the
standard is a reclassification of certain rebates offered to
customers that had previously been recognised as selling and
distribution costs to revenue and the reclassification of certain
incentives received, from revenue, to cost of sales. There is no
impact on the timing of transfer of control and therefore there is
no impact on the timing of recognition of revenue and therefore
profit before tax is not impacted. Additionally, the group is
required to separately disclose balances that meet the definition
of contract liabilities under IFRS 15 on the consolidated balance
sheet. The details of the group's revised accounting policy in
respect of revenue recognition is shown below and the impact of the
adoption of IFRS 15 is set out in note 14.
Revenue recognition
The group recognises revenue from the sale of soft drinks to the
wholesale market. Revenue is recognised when control of the goods
has transferred, being when the goods have been shipped to the
customer. Following delivery, which is determined to be the time of
shipment, the customer has full discretion over the manner of
distribution and price to sell the goods, has the primary
responsibility when onselling the goods and bears the risks of
obsolescence and loss in relation to the goods. A receivable is
recognised by the group when the goods are delivered to the
customer as this represents the point in time at which the right to
consideration becomes unconditional, as only the passage of time is
required before payment is due.
Revenue is the value of sales, excluding transactions with or
between subsidiaries, after the deduction of sales related
discounts and rebates, value added tax and other sales related
taxes. Rebates to customers are deducted from revenue where the
amounts paid are sales related or in relation to a good or service
which results in an increase in sales in the customer's outlet and
therefore is not distinct from the sale of soft drinks to the
customer and comprise:
Long term discounts and rebates
These discounts are typically for months rather than weeks and
are usually part of the trading terms agreed with the customer.
Long term discounts fall into three main categories:
-- Fixed - a defined amount over a period of time
-- Pence per litre / case - a pence per litre / case rebate, based upon volumes sold
-- % of Net Revenue - a percentage of Net Revenue, which may have associated hurdle rates
Short term promotional discounts
Promotional discounts consist of many individual rebates across
numerous customers and represents the cost to the group of short
term deal mechanics. The common deals typically include BOGOFs, 3
For 2, and Half Price deals.
Account development fund
Account development fund represents customer promotional
activity which promotes Britvic's products in the customer's
outlets. The group agrees to pay the customer various amounts as
part of the trading investment. Where these amounts are payable in
relation to a good or service which result in an increase in sales
in the customer's store only, e.g. in-store promotional activity,
management has concluded that this is not distinct, and it is
accounted for as a reduction in revenue. Where these amounts are
payable in relation to a good or service which result in an
increase in group sales more broadly, e.g. participation in
tradeshows or market research, management has concluded that the
payment is for a distinct good or service. Where amounts paid to
customers are deemed to be for a distinct service these are
included as selling and distribution costs in the income
statement.
Variable consideration
The group agrees to pay customers various amounts either in the
form of sales related rebates and discounts earned or as part of
the trading investment (e.g. sales driving investment, growth
over-rider investment, incentives for purchasing full loads,
payment for new store openings, payment for listing new
products).
Where the consideration, the group is entitled to, will vary
because of a rebate, refund incentive or price concession or
similar item; or is contingent on the occurrence or non-occurrence
of a future event, e.g. the customer meeting certain agreed
criteria, the amount payable is deemed to be variable
consideration.
The group uses the most likely method to reflect the
consideration that the group is entitled to. Variable consideration
is then only included to the extent that it is highly probably that
the inclusion will not result in a significant revenue reversal in
the future. Accruals are made for each individual promotion or
rebate based on the specific terms and conditions of the customer
agreement. Management make estimates on an ongoing basis to assess
customer performance and sales volume to calculate total amounts
earned to be recorded as deductions from revenue.
Contract liabilities
Contract liabilities are recognised where, as part of a contract
with a customer, the group has received consideration where the
group will either need to return that consideration or deliver
future services and goods in respect of this consideration.
New standards not applied
IFRS 9: Financial Instruments; The group will adopt this
standard for the period starting 1 October 2018. The new standard
will impact the way the group accounts for certain financial assets
and liabilities. The standard introduces an expected credit loss
model when assessing impairment on financial assets. The group
intends to apply the simplified model to recognise expected
lifetime losses on its trade receivables. The group has reviewed
the impact on the financial statements as at 1 October 2018 and
assessed that none of these changes are material based on the
nature of the financial instruments held by the group and the low
level of historic losses on trade receivables.
IFRS 9 also introduces a new hedging requirement to align hedge
accounting more closely with the group's risk management processes.
There is currently an option to defer the transition of hedge
accounting IFRS 9. The group has therefore decided to continue to
account for hedging relationships under IAS 39 'Financial
instruments: recognition and measurement' and will review when to
adopt the hedge accounting for IFRS 9 at a future date. On adoption
there is not expected to be any material change in hedge accounting
for the group.
IFRS 16: Leases; The new standard provides a single lessee
accounting model, requiring lessees to recognise right of use
assets and lease liabilities on the balance sheet for all
applicable leases. The group has assessed the impact of the
standard which, based on the leases held at 30 September 2018, will
result in a material increase in depreciation and an increase in
finance costs offset by a decrease in rental costs resulting in no
material impact on profit before tax. In addition there will be a
material increase in property, plant and equipment with a
corresponding increase in loans and borrowings as applicable leases
are brought onto the balance sheet. The group is in the process of
finalising this work and setting out related accounting policies.
Until this work has been carried out it is not practical to provide
a reasonable estimate of the financial effect of IFRS 16.
3. Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the board of directors of the
company.
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 - Republic of Ireland and 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.
Total
52 weeks ended GB stills GB carbs GB Ireland France International Brazil Total
30 September 2018 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Revenue from external
customers 280.7 610.6 891.3 174.0 269.2 49.0 120.1 1,503.6
---------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Brand contribution 116.6 251.7 368.3 57.1 81.4 10.2 24.8 541.8
---------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Non-brand advertising
& promotion* (11.2)
Fixed supply chain** (113.7)
Selling costs** (79.5)
Overheads and other
costs* (131.4)
---------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Adjusted operating
profit 206.0
---------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Finance costs (19.8)
Adjusting items*** (40.4)
---------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Profit before tax 145.8
---------------------- --------- -------- ----- -------- ------ ------------- ------ -------
* Included within 'administration expenses' in the consolidated
income statement. 'Overheads and other costs' relate to central
expenses including salaries, IT maintenance, depreciation and
amortisation.
** Included within 'selling and distribution costs' in the consolidated income statement.
*** See Non-GAAP reconciliations for further details on adjusting items.
Total
52 weeks ended GB stills GB carbs GB Ireland France International Brazil Total
1 October 2017 Restated GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Revenue from external
customers 269.3 555.3 824.6 154.7 281.4 46.3 123.5 1,430.5
------------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Brand contribution 112.0 234.4 346.4 49.6 81.9 6.9 23.2 508.0
------------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Non-brand advertising
& promotion* (10.1)
Fixed supply chain** (105.1)
Selling costs** (81.7)
Overheads and other
costs* (115.6)
------------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Adjusted operating
profit 195.5
------------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Finance costs (20.1)
Adjusting items*** (36.6)
------------------------- --------- -------- ----- -------- ------ ------------- ------ -------
Profit before tax 138.8
------------------------- --------- -------- ----- -------- ------ ------------- ------ -------
* Included within 'administration expenses' in the consolidated
income statement. 'Overheads and other costs' relate to central
expenses including salaries, IT maintenance, depreciation and
amortisation.
These costs have been restated to exclude acquisition related
amortisation for 2017.
** Included within 'selling and distribution costs' in the consolidated income statement.
*** See Non-GAAP reconciliations for further details on
adjusting items. These items have been restated to include
acquisition related amortisation for 2017.
4. Taxation
2018 2017
GBPm GBPm
--------------------------------------------------- ------ ------
Income statement
Current income tax
Current income tax charge (23.0) (30.3)
Amounts over/(under) provided in previous years 0.4 (2.1)
--------------------------------------------------- ------ ------
Total current income tax charge (22.6) (32.4)
--------------------------------------------------- ------ ------
Deferred income tax
Origination and reversal of temporary differences (6.1) 3.8
Amounts over provided in previous years - 1.4
--------------------------------------------------- ------ ------
Total deferred tax (charge)/credit (6.1) 5.2
--------------------------------------------------- ------ ------
Total tax charge in the income statement (28.7) (27.2)
--------------------------------------------------- ------ ------
5. 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
outstanding during the period.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to the ordinary equity shareholders of
the parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of
ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in
the basic and diluted earnings per share computations:
2018 2017
GBPm GBPm
---------------------------------------------------------- ----- -----
Basic earnings per share
Profit for the period attributable to equity shareholders 117.1 111.6
---------------------------------------------------------- ----- -----
Weighted average number of ordinary shares in issue
for basic earnings per share 263.7 263.0
---------------------------------------------------------- ----- -----
Basic earnings per share 44.4p 42.4p
---------------------------------------------------------- ----- -----
Diluted earnings per share
Profit for the period attributable to equity shareholders 117.1 111.6
---------------------------------------------------------- ----- -----
Effect of dilutive potential ordinary shares - share
schemes 1.7 1.3
---------------------------------------------------------- ----- -----
Weighted average number of ordinary shares in issue
for diluted earnings per share 265.4 264.3
---------------------------------------------------------- ----- -----
Diluted earnings per share 44.1p 42.2p
---------------------------------------------------------- ----- -----
The group has granted share options to employees which have the
potential to dilute basic EPS in the future which have not been
included in the calculation of diluted EPS as they are antidilutive
for the periods presented.
6. Dividends paid and proposed
2018 2017
GBPm GBPm
------------------------------------------------------- ----- -----
Declared and paid during the period
Equity dividends on ordinary shares
Final dividend for 2017: 19.3p per share (2016: 17.5p
per share) 50.8 45.9
Interim dividend for 2018: 7.9p per share (2017: 7.2p
per share) 20.9 19.0
------------------------------------------------------- ----- -----
Dividends paid 71.7 64.9
------------------------------------------------------- ----- -----
Proposed
------------------------------------------------------- ----- -----
Final dividend for 2018: 20.3p per share (2017: 19.3p
per share) 53.7 50.9
------------------------------------------------------- ----- -----
7. Property, plant and equipment and intangible assets
During the 52 weeks ended 30 September 2018, the group purchased
property, plant and equipment with a cost of GBP122.9m (52 weeks
ended 1 October 2017: GBP124.6m) and intangible assets with a cost
of GBP7.8m (52 weeks ended 1 October 2017: GBP6.8m).
Property plant and equipment worth a net book value of GBP4.5m
was disposed of by the group during the 52 weeks ended 30 September
2018 (52 weeks ended 1 October 2017 GBP19.5m) resulting in a loss
on disposal of GBP4.5m (52 weeks ended 1 October 2017 loss on
disposal of GBP1.6m) and as part of the business capability
programme an impairment of GBP4.8m (52 weeks ended 1 October 2017
GBPnil) has been recognised on land and buildings.
Reversal of impairments of brand intangibles resulted in a gain
of GBP11.5m during the 52 weeks ended 30 September 2018 (52 weeks
ended 1 October 2017 GBP9.2m). There were no brand impairments
recognised during the 52 weeks ended 30 September 2018 (52 weeks
ended 1 October 2017 GBP6.6m).
8. Share capital
No. Value
Issued, called up and fully paid ordinary shares of shares GBP
----------------------------------------------------------- ----------- ----------
At 2 October 2016 262,871,256 52,574,251
Shares issued relating to incentive schemes for employees 925,744 185,149
----------------------------------------------------------- ----------- ----------
At 1 October 2017 263,797,000 52,759,400
Shares issued relating to incentive schemes for employees 809,911 161,982
----------------------------------------------------------- ----------- ----------
At 30 September 2018 264,606,911 52,921,382
----------------------------------------------------------- ----------- ----------
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.
Of the issued and fully paid ordinary shares, 724,335 shares
(2017: 585,025 shares) are own shares held by an employee benefit
trust. This equates to GBP144,867 (2017: GBP117,005) at GBP0.20 par
value of each ordinary share. These shares are held for the purpose
of satisfying the share schemes.
9. Other reserves
Hedging Translation Capital Merger
reserve reserve reserve reserve Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- ----------- -------- -------- ------
At 2 October 2016 3.8 55.3 0.1 87.3 146.5
Losses in the period in respect
of cash flow hedges (3.2) - - - (3.2)
Amounts recycled to the income
statement
in respect of cash flow hedges (7.0) - - - (7.0)
Deferred tax in respect of cash
flow hedges 1.7 - - - 1.7
Exchange differences on
translation of foreign operations - (1.3) - - (1.3)
Tax on exchange differences - (6.1) - - (6.1)
Movement in non-distributable
profit - - (0.1) - (0.1)
------------------------------------ -------- ----------- -------- -------- ------
At 1 October 2017 (4.7) 47.9 - 87.3 130.5
Losses in the period in respect
of cash flow hedges (2.6) - - - (2.6)
Amounts recycled to the income
statement
in respect of cash flow hedges (0.4) - - - (0.4)
Deferred tax in respect of cash
flow hedges 0.5 - - - 0.5
Exchange differences on translation
of foreign operations - (35.1) - - (35.1)
------------------------------------ -------- ----------- -------- -------- ------
At 30 September 2018 (7.2) 12.8 - 87.3 92.9
------------------------------------ -------- ----------- -------- -------- ------
Share premium account
The share premium account is used to record the excess of
proceeds over the nominal value on the issue of shares.
Own shares reserve
The own shares reserve is used to record purchases and issues by
the group of its own shares, which will be distributed to employees
as and when share awards made under the Britvic employee share
plans vest.
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.
10. Interest bearing loans and borrowings
2018 2017
GBPm GBPm
------------------------------ ------- ------
Current
Finance leases (0.7) (1.0)
Bank loans (58.4) (23.1)
Private placement notes (112.9) (66.3)
Less: unamortised issue costs 0.6 0.7
------------------------------ ------- ------
Total current (171.4) (89.7)
------------------------------ ------- ------
2018 2017
GBPm GBPm
-------------------------------------------- ------- -------
Non-current
Finance leases (0.9) (2.0)
Bank loans (0.1) (0.6)
Private placement notes (598.0) (581.7)
Less: unamortised issue costs 1.3 1.6
-------------------------------------------- ------- -------
Total non-current (597.7) (582.7)
-------------------------------------------- ------- -------
Total interest bearing loans and borrowings (769.1) (672.4)
-------------------------------------------- ------- -------
Total interest bearing loans and borrowings comprise the
following:
2018 2017
GBPm GBPm
------------------------ ------- -------
Finance leases (1.6) (3.0)
2007 Notes (109.6) (107.0)
2009 Notes (91.3) (109.8)
2010 Notes (88.6) (133.1)
2014 Notes (122.5) (120.1)
2017 Notes (175.0) (175.0)
2018 Notes (120.6) -
Accrued interest (3.3) (3.0)
Bank loans (58.5) (23.7)
Capitalised issue costs 1.9 2.3
------------------------ ------- -------
(769.1) (672.4)
------------------------ ------- -------
Analysis of changes in interest-bearing loans and borrowings
2018 2017
GBPm GBPm
------------------------------------------------------- ------- -------
At the beginning of the period (672.4) (779.8)
Acquisition of subsidiary - (3.3)
Acquired debt repaid - 2.4
Net movement on revolving credit facility (35.3) 91.4
Other loans repaid 0.7 0.6
Partial repayment of private placement notes 54.9 119.6
Drawdown of 2018/2017 private placement notes (120.3) (175.0)
Issue costs 0.4 0.7
Repayment of finance leases 1.1 0.8
Amortisation of issue costs and write off of financing
fees (0.6) (0.6)
Net translation gain/(loss) and fair value adjustment 2.7 70.5
Accrued interest (0.3) 0.3
------------------------------------------------------- ------- -------
At the end of the period (769.1) (672.4)
Derivatives hedging balance sheet debt* 84.1 87.0
------------------------------------------------------- ------- -------
Debt translated at contracted rate (685.0) (585.4)
------------------------------------------------------- ------- -------
* Represents the element of the fair value of interest rate
currency swaps hedging the balance sheet value of the private
placement notes. This amount has been disclosed separately to
demonstrate the impact of foreign exchange movements which are
included in interest bearing loans and borrowings.
11. Pensions
Net asset/(liability) by scheme
2018
GB ROI NI France Total
GBPm GBPm GBPm GBPm GBPm
------- ------ ------ ------ -------
Present value of benefit obligation (658.2) (87.6) (30.2) (4.0) (780.0)
Fair value of plan assets 739.2 82.2 45.5 - 866.9
------------------------------------ ------- ------ ------ ------ -------
Net asset/(liability) 81.0 (5.4) 15.3 (4.0) 86.9
------------------------------------ ------- ------ ------ ------ -------
2017
----------------------------------------
GB ROI NI France Total
GBPm GBPm GBPm GBPm GBPm
------- ------ ------ ------ -------
Present value of benefit obligation (726.1) (83.5) (35.3) (3.9) (848.8)
Fair value of plan assets 759.2 78.1 42.7 - 880.0
------------------------------------ ------- ------ ------ ------ -------
Net (liability)/asset 33.1 (5.4) 7.4 (3.9) 31.2
------------------------------------ ------- ------ ------ ------ -------
GB Schemes
The group's principal pension scheme for GB employees, the
Britvic Pension Plan ('BPP') has both a final salary defined
benefit section and defined contribution section. The defined
benefit section was closed to new members from 1 August 2002 and
closed to future accrual for active members from 1 April 2011, with
active members moving to the defined contribution section for
future service benefits.
Republic of Ireland scheme
The Britvic Ireland Pension Plan ('BIPP') is a defined benefit
pension plan. The scheme remains open to future accrual for current
members.
Northern Ireland scheme
The Britvic Northern Ireland Pension Plan ('BNIPP') is a defined
benefit pension plan which was closed to new members on 28 February
2006. The scheme remains open to future accrual for current members
though the group are currently consulting with members and trustees
on closing the scheme for future accruals.
France schemes
Britvic France operates two defined benefit schemes: in the
first, employees receive long-service cash payments at various
stages throughout their careers. For the second, employees receive
a lump sum at retirement. Payment amounts are dependent upon salary
and service with the company. The schemes are unfunded therefore
these benefits are paid directly as they fall due.
All group pension schemes are administered by trustees who are
independent of the group's finances, except for the Britvic France
schemes which are operated directly by the company.
12. Derivatives and hedge relationships
As at 30 September 2018 the group had entered into the following
derivative contracts.
2018 2017
GBPm GBPm
----------------------------------------------------------- ----- -----
Consolidated balance sheet
Non-current assets: derivative financial instruments
Fair value of the USD GBP cross currency fixed interest
rate swaps(1) 15.2 43.5
Fair value of the USD GBP cross currency floating interest
rate swaps(3) 25.1 25.6
Fair value of the GBP euro cross currency floating
interest rate swaps(2) - 0.5
Fair value of forward currency contracts 0.2 0.1
----------------------------------------------------------- ----- -----
40.5 69.7
----------------------------------------------------------- ----- -----
Current assets: derivative financial instruments
Fair value of the USD GBP cross currency fixed interest
rate swaps(1) 33.0 7.1
Fair value of the USD GBP cross currency floating interest
rate swaps(3) 2.9 6.8
Fair value of the GBP euro cross currency floating
interest rate swaps(2) 0.4 0.5
Fair value of forward currency contracts(1) 1.6 2.8
37.9 17.2
----------------------------------------------------------- ----- -----
Current liabilities: derivative financial instruments
Fair value of forward currency contracts(1) (0.4) (1.5)
Fair value of forward currency contracts (0.3) -
Fair value of the GBP euro cross currency floating
interest rate swaps(2) - (1.0)
Fair value of foreign exchange swaps - (0.2)
----------------------------------------------------------- ----- -----
(0.7) (2.7)
----------------------------------------------------------- ----- -----
Non-current liabilities: derivative financial instruments
Fair value of the GBP euro cross currency fixed interest
rate swaps(2) (4.1) (3.9)
Fair value of forward currency contracts(1) (0.1) (0.2)
(4.2) (4.1)
----------------------------------------------------------- ----- -----
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.
13. Post balance sheet events
On 26 October 2018, the High Court ruled that Lloyds Banking
Group must equalise the guaranteed minimum pensions (GMP) for men
and women. The judgement is likely to have an impact on the
liabilities of both GB and Northern Ireland schemes. The group has
started to work through the impact of this judgement with the
schemes' actuaries. Based on the approach used in recent buy-outs
of pension schemes the expected impact for all UK schemes affected
would be in the region of 1-3% of scheme liabilities depending on
the individual characteristics of the pension scheme. There is
therefore a risk that the schemes liabilities for the group could
increase by c.GBP7m - GBP20m. Due to the timing of the ruling this
has been considered a non-adjusting post balance sheet event and
the impact of the GMP equalisation will be quantified and accounted
for during the accounting period starting 1 October 2018.
14. Financial statements restatements
IFRS 15 restatements
The Group early adopted IFRS 15: Revenue from Contracts with
Customers ("IFRS 15") on 2 October 2017 using the full
retrospective method. This note details the impact of the adoption
of IFRS 15 on the Group's primary financial statements and
KPIs.
IFRS 15 establishes a comprehensive framework for determining
and recognising revenue. The main impact of adopting the standard
for the Group is:
-- a reclassification of certain rebates offered to customers
that had previously been recognised as selling and distribution
costs to revenue, that are now considered to be a reduction in the
transaction price under IFRS 15 (GBP57.6m).
-- The reclassification of certain incentives received from
revenue, to cost of sales, which do not now meet the definition of
revenue under IFRS 15 (GBP52.7m).
There is no impact on profit before tax. The areas that have
been impacted and restated for 2017 are the following: revenue,
cost of sales, gross profit, selling and distribution costs,
administration expenses, segmental brand contribution, trade and
other payables and contract liabilities.
Other restatements
The Group has restated the reversal of impairments on intangible
assets from administration expenses to other income to better
reflect the nature of these credits.
Consolidated Income Statement restated
52 weeks
52 weeks ended
ended 1 October
1 October 2017
2017 (audited) IFRS 15 (audited)
As reported Adjustments Other Adjustments Restated
GBPm GBPm GBPm GBPm
----------------------------------- ----------------- -------------- ------------------- ------------
Revenue 1,540.8 (110.3) - 1,430.5
Cost of sales (724.3) 57.1 - (667.2)
----------------------------------- ----------------- -------------- ------------------- ------------
Gross profit 816.5 (53.2) - 763.3
Selling and distribution costs (443.8) 50.7 - (393.1)
Administration expenses (209.7) 2.5 (9.2) (216.4)
Other income - - 9.2 9.2
----------------------------------- ----------------- -------------- ------------------- ------------
Operating profit 163.0 - - 163.0
Finance income 2.1 - - 2.1
Finance costs (26.3) - - (26.3)
----------------------------------- ----------------- -------------- ------------------- ------------
Profit before tax 138.8 - - 138.8
Taxation (27.2) - - (27.2)
----------------------------------- ----------------- -------------- ------------------- ------------
Profit for the period attributable
to the equity shareholders 111.6 - - 111.6
----------------------------------- ----------------- -------------- ------------------- ------------
Other Primary Statement restatements for IFRS 15
The only adjustment to the consolidated balance sheet is in
respect of contract liabilities. The group has identified balances
with customers that should be recorded separately as contract
liabilities under IFRS 15.
1 October 1 October
2017 IFRS 15 2017
As reported Adjustments Restated
GBPm GBPm GBPm
------------------------- ------------ ------------ ---------
Current liabilities
Trade and other payables (472.6) 87.7 (384.9)
Contract liabilities - (87.7) (87.7)
------------------------- ------------ ------------ ---------
2 October 3 October
2016 IFRS 15 2016
As reported Adjustments Restated
GBPm GBPm GBPm
------------------------- ------------ ------------ ---------
Current liabilities
Trade and other payables (437.2) 95.0 (342.2)
Contract liabilities - (95.0) (95.0)
------------------------- ------------ ------------ ---------
There is no impact on the adoption of IFRS 15 on the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Cash Flows and the Consolidated Statement of Changes
in Equity.
Segmental Information
52 weeks
ended 52 weeks
1 October ended
2017 IFRS 15 1 October
As reported Adjustments 2017 Restated
GBPm GBPm GBPm
------------------------- ------------ ------------ --------------
Revenue
GB Stills 285.2 (15.9) 269.3
GB Carbs 617.8 (62.5) 555.3
------------------------- ------------ ------------ --------------
Total GB 903.0 (78.4) 824.6
Ireland 164.7 (10.0) 154.7
France 282.7 (1.3) 281.4
Brazil 133.1 (9.6) 123.5
International 57.3 (11.0) 46.3
------------------------- ------------ ------------ --------------
Group revenue 1,540.8 (110.3) 1,430.5
Brand contribution
GB Stills 125.4 (13.4) 112.0
GB Carbs 246.6 (12.2) 234.4
------------------------- ------------ ------------ --------------
Total GB 372.0 (25.6) 346.4
Ireland 56.7 (7.1) 49.6
France 84.9 (3.0) 81.9
Brazil 28.2 (5.0) 23.2
International 17.8 (10.9) 6.9
------------------------- ------------ ------------ --------------
Group brand contribution 559.6 (51.6) 508.0
------------------------- ------------ ------------ --------------
NON-GAAP RECONCILIATIONS
Adjusting items
The group includes adjusting items which are charges and credits
included in the financial statements that are disclosed separately
because it considers such disclosures 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.
The adjusting items include those items of income and expense
which, because of the size, nature or infrequency of the events
giving rise to them, merit separate presentation.
Adjusting items include acquisition related amortisation and
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 been included
within adjusting items because they are non-cash and do not form
part of how management assess performance.
In the current period acquisition related amortisation has been
included within adjusting items in order to simplify the Group's
financial reporting. This has resulted in adjusted EBIT replacing
adjusted EBITA as one of the Group's KPIs. This however in practice
has no impact on the amounts reported due to the reclassification
of acquisition related amortisation.
52-week 52-week
period ended period ended
Notes 30 September 1 October
2018 2017
GBPm GBPm
======================================================= ============= =============
Strategic restructuring - business
capability programme (a) (40.3) (24.7)
Reversal of impairments of trademarks (b) 11.5 9.2
Impairments of trademarks (b) - (6.6)
Costs in relation to the acquisition
and integration of subsidiaries (c) - (3.7)
Net gain on sale of properties (d) - 0.3
Costs in relation to the closure
of operations - (0.2)
Fair value movements (e) (0.1) 3.9
Acquisition related amortisation (f) (11.0) (10.7)
================================================= ==== ============= =============
Total included in operating profit (39.9) (32.5)
======================================================= ============= =============
Fair value movements (e) - 1.1
================================================= ==== ============= =============
Total included in finance income - 1.1
======================================================= ============= =============
Fair value movements (e) (0.5) -
Unwind of discount on deferred
consideration (g) - (4.9)
Finance costs in relation to the
acquisition and integration of
subsidiaries (h) - (0.3)
================================================= ==== ============= =============
Total included in finance costs (0.5) (5.2)
======================================================= ============= =============
Total included in net finance costs (0.5) (4.1)
======================================================= ============= =============
Tax on adjusting items included in profit before
tax 6.9 4.1
Impact of change on France tax rate on deferred
tax relating to acquisition fair value adjustments 2.2 5.0
======================================================= ============= =============
Total included in taxation 9.1 9.1
======================================================= ============= =============
Net adjusting items (31.3) (27.5)
======================================================= ============= =============
a) Strategic restructuring - business capability programme
relates to a restructuring of supply chain and operating model to
enhance commercial capabilities in Britvic GB, Ireland, France and
Brazil including the closure of the Norwich site. Primarily these
costs relate to employee costs, advisors fees and dual running
supply chain costs.
b) Net reversal of impairments of trademarks -In the current
year this relates to a further reversal of impairment in the
Ballygowan trademark. In the prior year these comprised of a
reversal of impairment in the Ballygowan trademark of GBP9.2m
offset by an impairment in the Britvic brand in Ireland of GBP2.2m
and an impairment in the Fruite brand in France of GBP4.4m.
c) Costs primarily relating to the acquisition and integration
of Bela Ischia Alimentos Ltda (Bela Ischia) offset by the release
of provisions for Empresa Brasileira de Bebidas e Alimentos SA
(Ebba).
d) The net gain on sale of properties relates to various
properties sold during the prior period in Britvic Ireland and
Britvic 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 including gains on FX
forwards taken out as part of cash management for expected future
payments in relation to the deferred consideration of the purchase
of Ebba.
f) Acquisition related amortisation - relates to the
amortisation of intangibles recognised on the acquisitions in
Ireland, France and Brazil.
g) The final tranche of deferred consideration for Ebba was paid
on 2 October 2017. This amount had been included on acquisition
discounted to net present value. This represents the unwind of this
discount until October 2017.
h) These costs relate to tax on funds injected into Brazil in the prior year.
Adjusted profit
52-week period 52-week
ended 30 period ended
September 1 October
2018 2017
GBPm GBPm
============================================== ================= =================
Operating profit as reported 166.1 163.0
Add back adjusting items in operating profit 39.9 32.5
---------------------------------------------- ----------------- -----------------
Adjusted EBIT 206.0 195.5
Acquisition related amortisation (11.0) (10.7)
Net finance costs (20.3) (24.2)
Add back adjusting net finance costs 0.5 4.1
============================================== ================= =================
Adjusted profit before tax 175.2 164.7
Taxation (28.7) (27.2)
Less adjusting tax credit (9.1) (9.1)
============================================== ================= =================
Adjusted profit after tax 137.4 128.4
============================================== ================= =================
Adjusted effective tax rate 21.6% 22.0%
============================================== ================= =================
Earnings per share
2018 2017
GBPm GBPm
============================================================ ======= =======
Adjusted basic earnings per share
Profit for the period attributable to equity shareholders 117.1 111.6
Add: Net impact of adjusting items 31.3 27.5
============================================================ ======= =======
148.4 139.1
============================================================ ======= =======
Weighted average number of ordinary shares in issue
for basic earnings per share 263.7 263.0
============================================================ ======= =======
Adjusted basic earnings per share 56.3p 52.9p
============================================================ ======= =======
Adjusted diluted earnings per share
Profit for the period attributable to equity shareholders
before adjusting items and acquisition related
intangible assets amortisation 148.4 139.1
============================================================ ======= =======
Weighted average number of ordinary shares in issue
for diluted earnings per share 265.4 264.3
============================================================ ======= =======
Adjusted diluted earnings per share 55.9p 52.6p
============================================================ ======= =======
Like-for-like
Revenue Adjusted
GBPm EBIT
GBPm
======================================================== ======== ========
2017
52-week period ended 1 October 2017, as reported 1,430.5 195.5
and restated
Adjust for FX (10.2) 1.3
======================================================== ======== ========
52-week period ended 1 October 2017 @ constant currency 1,420.3 196.8
======================================================== ======== ========
2018
52-week period ended 30 September 2018, as reported 1,503.6 206.0
Bela Ischia to 2 March 2018 (anniversary of acquisition) (12.2) (1.4)
Soft Drinks Levy (33.2) -
======================================================== ======== ========
2018 "like for like" with 2017 1,458.2 204.6
======================================================== ======== ========
Other costs
52-week Expense 52-week
period ended reclass* period ended
1 October 1 October
2017 2017
IFRS 15 restated Adjusted
GBPm GBPm GBPm
--------------------------- ----------------- ---------- --------------
Non-brand advertising
& promotion (10.1) - (10.1)
Fixed supply chain (105.1) 6.5 (98.6)
Selling costs (81.7) 1.3 (80.4)
Overheads and other costs (115.6) (7.8) (123.4)
---------------------------- ----------------- ---------- --------------
Total (312.5) - (312.5)
---------------------------- ----------------- ---------- --------------
* Certain expenses have been reclassed for reporting purposes to
better reflect the nature of these costs following a group
restructuring
Free cash flow
52-week 52-week
period ended period ended
30 September 1 October
2018 2017
GBPm GBPm
============================================ ================= ================
Adjusted EBIT 206.0 195.5
============================================ ================= ================
Depreciation 44.8 40.3
Amortisation (non-acquisition related) 7.4 8.3
Adjusted loss on disposal of PPE 1.4 2.0
============================================ ================= ================
Adjusted EBITDA 259.6 246.1
Adjusted working capital movements 15.5 26.0
Purchases of intangible and tangible assets (143.5) (146.7)
Net pension charge less contributions (22.1) (22.1)
Net Interest and finance costs (19.0) (19.5)
Adjusted income tax paid (28.1) (31.7)
Share based payments 5.6 6.3
Issue of shares 1.0 0.7
Purchase of own shares (3.1) (5.3)
Other (0.9) 0.7
============================================ ================= ================
Adjusted free cash flow 65.0 54.5
============================================ ================= ================
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LFFVLLVLTFIT
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November 29, 2018 02:01 ET (07:01 GMT)
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