TIDMBVIC
RNS Number : 3542W
Britvic plc
10 December 2019
Britvic plc ("Britvic", the "Company" or the "Group")
10 December 2019
2019 ANNUAL REPORT & NOTICE OF ANNUAL GENERAL MEETING
Following the release on 27 November 2019 of the Group's
Preliminary Results Announcement for the 52 weeks to 29 September
2019, and in compliance with Listing Rule 9.6.1, the Company has
today submitted the following documents to the UK Listing
Authority, and they will shortly be available for inspection at the
National Storage Mechanism which is located at
www.morningstar.co.uk/uk/NSM.
-- Annual Report and Accounts 2019.
-- Notice of the Annual General Meeting of the Company, to be
held on Friday 31 January 2020 at 11.00am at the offices of
Linklaters LLP, One Silk Street, London EC2Y 8HQ.
-- Proxy form for the 2020 AGM.
The Annual Report and Accounts 2019 is available to view or
download in pdf format from the Company's website at
www.britvic.com/annualreport.
The Notice of Meeting is available to view or download in pdf
format from the Company's website at www.britvic.com/agm.
A condensed set of Britvic plc financial statements and
information on important events that have occurred during the year
and their impact on the financial statements were included in the
Company's preliminary announcement on 27 November 2019. That
information, together with the information set out below which is
extracted from the Annual Report and Accounts 2019, constitute the
requirements of DTR 6.3.5 which are to be communicated via a RIS in
unedited full text. This announcement is not a substitute for
reading the full Annual Report and Financial Statements. Page and
note references in the text below refer to page numbers in the
Annual Report and Accounts 2019.
Jonathan Adelman
Company Secretary
Appendix A
Principal risks and uncertainties
The principal risks and uncertainties relating to the Company
are set out on pages 35 - 38 of the Britvic Annual Report and
Accounts 2019. The following is extracted in full and unedited text
from the Britvic Annual Report and Accounts 2019.
The table below sets out the principal risks faced by the
company, the link to the company's strategies, movement in the risk
score, examples of relevant controls, mitigating factors, and
recent developments. The company is exposed to a wide range of
other risks in addition to those listed.
Alignment to strategy key:
G: Generate profitable growth in our core markets
R: Realise global opportunities in kids, family and adult
categories
C: Continue to step-change our business capability
B: Build trust and respect in our communities
Consumer preference: Innovation
Principal risk
Failure to successfully evolve our portfolio to take advantage
of growth categories and/or reinvent our core brands to meet
consumer needs.
Risk score movement from the prior year: Decreased.
Alignment to strategy: G, R, B
Risk description
Consumer preferences, tastes and behaviours change over time and
differ between the markets in which we operate. As part of this,
the consumer's desire for healthier choices and premiumisation are
significant trends. Our ability to anticipate these trends,
innovate and ensure the relevance of our brands is critical to our
competitiveness in the market place and our performance.
Controls and mitigating activities
-- We have a broad portfolio of products across a number of
sub-categories and markets to increase coverage of consumer
trends
-- Continuous assessment of consumer/customer trends, insight
and behaviours in order to anticipate changes in preferences and
match our offering to these trends
-- Every period, the Category Board meets to oversee the overall
Marketing & Innovation pipeline. The Category Board has
visibility and oversight on project progress, resourcing and
spend
-- Ongoing prioritisation exercise underway to ensure that the
innovation pipeline is balanced between long-term and more
immediate opportunities
2019 developments
-- 92% of our innovation in GB and Ireland was in low or no added sugar drinks this year
-- We refreshed our Tango brand with three new sugar free
flavours, a new packaging design, supported by a marketing
campaign
-- Our premium adult mixer brand, LEC, grew its presence to nearly 80 cities in 29 countries
Health Concerns
Principal risk
Failure to respond to growing health concerns of key
stakeholders, from public health bodies and government
officials.
Risk score movement from the prior year: No change.
Alignment to strategy: G, R, B
Risk description
There is a high and ever increasing level of media and
government scrutiny on health and obesity in all of the markets we
operate in, highlighted in the UK by the potential introduction of
regulation over HFSS products. It is important that we continue to
take a leadership position on health issues.
Controls and mitigating activities
-- We have a wide range of soft drinks, many of which are low or
no sugar which means we are well placed to take advantage of the
consumer's increased demand for healthier products
-- Ongoing evaluation and development of the brand portfolio and
innovation pipeline; our innovation pipeline is weighted towards
lower sugar or nutritionally enhanced brands
-- We work closely with non-government organisations and trade
associations in our markets to fully participate in the debate and
help shape solutions
2019 developments
-- We exceeded our 2020 calorie reduction goal a year early,
achieving a 22% reduction in average calories per 250ml serve vs
2013
-- This year saw the start of a strategic partnership with
Diabetes UK, through which we supported the delivery of over 1,400
'Make the Grade' packs to help schools better care for children
with diabetes
-- Commercial assessment of the impact of the potential
introduction of regulation on advertising and sales of HFSS
products
-- 92% of Britvic's total GB portfolio by volume and 84% of
Britvic's volume in Ireland is now exempt/below the levy/tax
threshold (including PepsiCo)
Retailer landscape and customer relationships
Principal risk
We may not be able to maintain strong relationships with our key
customers or respond to changes in the retailer landscape (e.g.
consolidation).
Risk score movement from the prior year: No change.
Alignment to strategy: G, R, C
Risk description
Maintaining strong relationships with our existing customers and
building relationships with new customers and technology-enabled
channels is critical for our brands to be readily available and
well presented to our consumers. A failure to do this may impact
our ability to obtain competitive pricing and trade terms and/or
the availability and presentation of our brands.
Controls and mitigating activities
-- We operate across many different customer channels and
markets and continuously monitor customer performance and
trends
-- We develop joint business plans with customers that include investment and activation plans
-- We have capabilities in the soft drinks category which enable
us to find new ways to improve customer performance and enhance our
relationships
2019 developments
-- Continued to strengthen our position in the licensed and
leisure channel, including extending our relationship with
Mitchells & Butlers
-- Continued to prepare as necessary where consolidation may
occur, for example ahead of the now unsuccessful Asda/Sainsbury's
merger
-- Implementation of the SDIL in GB and SSDT in Ireland
successfully embedded in 'business-as-usual' processes
Third party relationships
Principal risk
Partnerships may not be renewed or are renewed on less
favourable terms.
Risk score movement from the prior year: No change.
Alignment to strategy: G, R, C
Risk description
We currently bottle and co-market a number of PepsiCo products
in GB and Ireland, including 7UP and Pepsi. Additionally we have a
relationship with a number of partners to grow our family, adult
and kids brands outside of our core markets. Our partnership with
PepsiCo and distributors and franchisees is an important part of
our business and delivery of our strategy going forward.
Controls and mitigating activities
-- Robust governance and management of relationship with PepsiCo and other partners
2019 developments
-- Pepsi and Pepsi MAX have gained more share of the cola market
in 2019 in GB. This continues our strong performance, which we have
been driving for well over a decade
-- Continued success with the Pepsi MAX Taste Challenge which
saw 65% of responses choose Pepsi MAX over its rivals
-- ARTO LifeWTR was jointly launched in the UK by PepsiCo and
Britvic in May 2019. This premium water showcases the work of
emerging local artists
Supply chain
Principal risk
Supplier failure, market shortage or an adverse event in our
supply chain impacts sourcing of raw materials or the cost of our
products is significantly affected by commodity price
movements.
Risk score movement from the prior year: Decreased.
Alignment to strategy: G, R, C, B
Risk description
Our business depends on purchasing a wide variety of products
and services, efficient manufacturing and distribution processes.
Brexit presents a specific risk which is explored in further detail
in the 2019 developments below.
Controls and mitigating activities
-- Flexibility in being able to manufacture key products at
multiple sites and strong relationships with contract packers to
support business interruption
-- We have robust supplier strategy, selection, monitoring and management processes
-- We monitor market conditions for commodities and, where
appropriate, hedge our contractual positions
-- Externally certified management systems across the supply chain
2019 developments
-- The GB supply chain investment programme has improved the
flexibility and resilience of our supply chain. Over the past year,
this programme has moved from the build phase through commissioning
new lines and has now moved into business as usual
-- At Rugby we have opened a new fully automated warehouse and
are installing a combined heat and power plant to increase
capacity
-- We have worked closely with our suppliers to understand their
level of preparedness, reviewed supply alternatives, explored
tariff mitigation opportunities and increased the level of raw
materials held in the run up to the key Brexit deadlines in both
March and October 2019. We will continue to manage any changes as a
result of Brexit through the Brexit Steering Committee
Sustainability and environment
Principal risk
Climate change presents a risk to our ability to source,
manufacture and market our drinks. The increased focus from all
stakeholders (governments, customers and consumers) on
sustainability means there is increased risk of regulation on our
packaging, and increased requirements to source sustainably and
appropriately report on the impact of a changing climate.
Risk score movement from the prior year: No change.
Alignment to strategy: G, R, C, B
Risk description
Increasing regulatory requirements and growing societal pressure
with regards to packaging (plastics in particular) may present a
financial and/or reputational risk to our existing packaging
portfolio and impact upon our ability to market our products. In
addition, climate change presents risks, operationally, financially
and reputationally, across the business from reduced stock
availability to supply interruption.
Controls and mitigating activities
-- Within our A Healthier Everyday sustainability programme we
make environmental commitments, including carbon emission
reductions, water savings and reducing the environmental impact of
our packaging
-- We have externally certified management systems in place to
monitor and reduce the environmental impact of our operations and
ensure compliance with environmental legislation
-- We were a founding signatory to the UK Plastics Pact and 100%
of our cans, glass and PET bottles are recyclable in the UK
-- Through our trade associations and directly, we continue to
proactively engage with government on the feasibility of a deposit
return scheme and other actions to increase recycling and reduce
littering
2019 developments
-- In 2019 we switched our grid-sourced manufacturing
electricity in GB to 100% renewable, joining Ireland and Brazil
which are already sourcing green electricity
-- We committed to setting a 1.5degC-aligned science-based carbon reduction target
-- We removed nearly 646 tonnes of primary plastic in 2019
-- Established the ESG Committee, with key representatives from
HR, Risk, Supply Chain, Corporate Relations and Health and Safety
teams to govern our response to this risk
-- Working on packaging alternatives so we can adhere to
impending regulation, across our markets, for example on plastic
straws (outside of GB&I) and recycled plastic requirements
International expansion
Principal risk
Failure to grow our business internationally in line with
strategic aims due to the risks associated with start-up
profitability (new markets and new brands) and regulations.
Risk score movement from the prior year: No change.
Alignment to strategy: R, C, B
Risk description
To achieve our strategy of growing internationally, it is
important that we have the appropriate governance, systems and
processes in place and that our brand propositions respond
appropriately to local consumer preferences.
Controls and mitigating activities
-- Strategic plan in place for international business unit built
on Global Premium Adult and foundation channels
-- We carry out extensive due diligence prior to entering a new market
-- Monitoring of regulations (current and proposed or future changes)
2019 developments
-- In Brazil we continue to look for growth in core and new
brands against a backdrop of improving macro conditions
-- We have closed our multi-pack Fruit Shoot business in the US
to focus on growth opportunities, such as with LEC in the US and
Teisseire in Benelux
Quality of our products and the health and safety of our
people
Principal risk
Risk that a faulty or contaminated product, either through
malicious contamination, human error or equipment failure, is
supplied to the market.
Risk associated with the safe management of employees,
contractors and visitors when working on Britvic sites and when
working or travelling on behalf of Britvic or on customer
premises.
Risk score movement from the prior year: No change.
Alignment to strategy: G, R, C, B
Risk description
The quality of our products is of the utmost importance to us
and it is essential that we manage product quality and
integrity.
Controls and mitigating activities
-- We have robust quality management standards applied and rigorously monitored
-- Where incidents do occur, we have a clear Incident Management
Policy and conduct annual scenario testing across all markets
-- We have supplier assurance and management processes
-- We have dedicated central teams to oversee quality and
supplier assurance, working closely with the business units
-- External compliance and system audits performed regularly through accredited bodies
2019 developments
-- Rolled out a new reporting tool to help monitor and maintain
quality, safety and environmental standards across all our
sites
-- Evolved management systems and quality processes to reflect
the new technology in the GB supply chain
-- Ongoing support to sites from Quality and Health and Safety teams involved in the BCP
-- Conducted incident management training with the Brazilian senior management team
Legal and Regulatory
Principal risk
Non-compliance with local laws or regulations or breach of our
internal policies and standards.
Risk score movement from the prior year: Increased.
Alignment to strategy: G, R, C, B
Risk description
Britvic is subject to a wide range of legislation, regulation,
guidance and codes of practice in areas such as labelling,
packaging, marketing, advertising, safety, environment,
competition, data privacy, ethical business, anti-bribery and
corruption, and tax. Failure to comply with such requirements could
have a significant impact on our reputation and/or incur financial
penalties.
Controls and mitigating activities
-- Britvic's key global policies, including our Code of Conduct,
are rolled out to new joiners and training is performed at regular
intervals, such as competition law training for commercial
teams
-- A Speak-Up Code operates across the business enabling
reporting of breaches of regulation and company policy via an
independent third party
-- We monitor processes to ensure compliance with all relevant legislation and regulations
-- We work closely with our external advisors and the
regulators, government bodies and trade associations regarding
current and future legislation which would impact upon the
company
2019 developments
-- Building a strategy to deal with non-compliance in a clear
and consistent manner, supported by a new compliance intranet
site
-- Ongoing data protection processes and compliance will be
overseen by the Data Privacy Committee, which is led by the
company's Global Head of Compliance
-- External providers in place to support horizon scanning
processes to help monitor changes in law and regulation
-- A Brazil compliance committee has been formed to drive progress in this area
Technology and information security
Principal risk
We experience a major failure of IT infrastructure or breach in
system or information security.
Risk score movement from the prior year: No change.
Alignment to strategy: R, C, B
Risk description
We interact electronically with customers, suppliers and
consumers, and our supply chain operations are dependent on
reliable IT systems and infrastructure. Disruption to our IT
systems could have a significant impact on our sales, cash flows
and profits. Additionally, cyber security breaches could lead to
unauthorised access to, or loss of, sensitive information.
Controls and mitigating activities
-- Disaster recovery plans tested every year with annual penetration testing also performed
-- Central governance and decision-making processes for system changes
-- Information and IT policies are in place and are regularly reviewed
-- Incident response plans are in place, recognising that while
this risk can be managed it cannot be eliminated
2019 developments
-- We continue to see an increasing frequency in cyber-attacks
(including phishing and ransomware) in the market place
-- We have increased investment to improve information and cyber
security controls and cyber risk awareness
-- Continued to deliver cyber awareness programmes including phishing tests
-- Began the preparatory steps to implement cyber insurance
Treasury, tax and pension
Principal risk
Changes to exchange, interest or tax rates can have an impact on
profits and cash flows. Business changes also present a risk as to
how we are financed or taxed.
Risk score movement from the prior year: Decreased
Alignment to strategy: R, C, B
Risk description
Britvic is exposed to a variety of external financial risks
relating to treasury, tax and pensions. Changes to exchange rates
and interest rates can have an impact on business results and the
cost of interest on our debt.
Additionally, the GB and Ireland businesses have defined benefit
pension plans which, while closed to new employees, are exposed to
movements in interest and inflation rates, values of assets and
increased life expectancy.
Controls and mitigating activities
-- Robust monitoring of exchange rates and interest rates
-- Active risk management and hedging strategies are in place to
manage exchange and interest fluctuations, overseen by the Treasury
Committee
-- Monitoring of investment and funding strategies for the pension fund
-- Strong relationships with external stakeholders (such as HMRC
and tax specialists) to ensure that a high standard of advice is
provided to the business
2019 developments
-- The recent depreciation of sterling has led to higher input
costs across a number of our key commodities. The risk of a
'no-deal' Brexit could elevate this risk further. We closely
monitor and manage this risk through a rolling 18 month hedging
policy which is governed by the Treasury Committee
-- Triennial pension valuation discussions have kicked off ahead of completion in 2020
Talent
Principal risk
Limited capacity and/or capability impacts our ability to
deliver our business plans for growth. In addition, our ability to
retain and attract talent can impact our ability to achieve our
objectives.
Risk score movement from the prior year: No change.
Alignment to strategy: G, R, C, B
Risk description
We rely on key individuals to contribute to the success of
Britvic. We need our people to continue to develop and be fit for
the future and ensure we continue to attract top talent to the
business.
Controls and mitigating activities
-- Talent and succession planning processes in place
-- Annual GPTW survey takes place across the company to obtain
employee feedback on a wide range of topics
-- Annual performance management processes in place
2019 developments
-- In this year's GPTW survey, GB's overall Trust Index scores
increased this year by 4% to 77%, our highest ever score, and our
overall engagement scores also increased by 4% to 84%
-- Activities in place to launch a new Learning and Development tool for employees
-- We have launched a new D&I Strategy and a new offering to
enhance the wellbeing of our employees including establishing
employee network groups and updated our Wellbeing and Resilience
Policy
Appendix B
Responsibility statement of the Directors in respect of the
Annual Report
The Annual Report and Accounts 2019 contains a responsibility
statement in compliance with DTR 4.1.12. This statement is set out
on page 79 of the Annual Report and Accounts 2019, and is set out
below in full and unedited text. This statement relates solely to
the Britvic Annual Report and Accounts 2019 and is not connected to
the extracted information set out in this announcement or the
Preliminary Announcement.
The Directors confirm that to the best of their knowledge:
-- The consolidated financial statements prepared in accordance
with IFRSs as adopted by the European Union give a true and fair
view of the assets, liabilities, financial position and profit of
the company and undertakings included in the consolidation taken as
a whole
-- the Annual Report, including the Strategic Report, includes a
fair review of the development and performance of the business and
the position of the company and undertakings included in the
consolidation as a whole, together with a description of the
principal risks and uncertainties that they face
-- having taken into account all matters considered by the Board
and brought to the attention of the Board during the year, the
Directors consider that the Annual Report, taken as a whole, is
fair, balanced and understandable. The Directors believe that the
disclosures set out in this Annual Report provide the information
necessary for shareholders to assess the company's performance,
business model and strategy
On behalf of the Board
Simon Litherland, Chief Executive Officer
Joanne Wilson, Chief Financial Officer
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contact rns@lseg.com or visit www.rns.com.
END
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