TIDMBVIC
RNS Number : 3938K
Britvic plc
13 December 2018
Britvic plc ("Britvic", the "Company" or the "Group")
13 December 2018
2018 ANNUAL REPORT & NOTICE OF ANNUAL GENERAL MEETING
Following the release on 29 November 2018 of the Group's
Preliminary Results Announcement for the 52 weeks to 30 September
2018, 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
http://www.morningstar.co.uk/uk/NSM.
-- Annual Report and Accounts 2018.
-- Notice of the Annual General Meeting of the Company, to be
held on Thursday 31 January 2019 at 11.00am at the offices of
Linklaters LLP, One Silk Street, London EC2Y 8HQ.
-- Proxy form for the 2019 AGM.
The Annual Report and Accounts 2018 are 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 29 November 2018. That
information, together with the information set out below which is
extracted from the Annual Report and Accounts 2018, 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 2018.
Jonathan Adelman
Company Secretary
Appendix A
Principal risks and uncertainties
The principal risks and uncertainties relating to the Company
are set out on pages 31 - 34 of the Britvic Annual Report and
Accounts 2018. The following is extracted in full and unedited text
from the Britvic Annual Report and Accounts 2018.
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 and mitigating factors and
recent developments. The company is exposed to a wide range of
risks in addition to those listed.
Alignment to strategy key:
G: Generate profitable growth in our core markets
E: Exploit 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
Principal risk
Failure to deliver brand propositions which respond to changing
consumer preferences.
Risk score movement from the prior year: No change.
Alignment to strategy: G, E, B
Risk description
Consumer preferences, tastes and behaviours change over time and
differ between the different markets in which we operate. As part
of this, the consumer's desire for healthier choices (including
some beginning to want 'all natural, clean label' products in
addition to low sugar drinks) and premiumisation are significant
trends. Our ability to anticipate these trends and ensure the
relevance of our brands and communication messages 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.
-- We monitor market trends to identify consumer, customer and
shopper insights in order to develop category and brand
strategies.
-- Our brand communication strategies are designed to optimise
digital and traditional channel opportunities.
-- Our innovation process is informed by our category strategies
and uses tools, processes and resources to develop new products and
brand communication.
2018 developments
-- We continue to invest in innovation and marketing
programmes.
-- Britvic has recently launched innovations and brand
extensions, such as Purdey's natural energy multi-vitamin drink and
super-premium and naturally light London Essence Company tonics and
sodas in order to capitalise on consumer trends towards healthier
choices and
premium products.
-- In 2018, Robinsons extended its squash portfolio with the
launch of Robinsons Fruit Cordials, targeted at adults, and
Robinsons Creations, a premium alternative to the everyday range.
Together they are worth GBP25m of retail sales value and have
helped to deliver Robinsons and category value growth in 2018.
-- The Pressade Bonjour range of organic juices was launched in
2017 and continues to deliver strong growth in the French juice
market.
-- The investment in the company's supply chain will increase
our ability to create natural/ 'clean label' products through the
introduction of new aseptic lines.
HEALTH AND OBESITY CONCERNS
Principal risk
Failure to respond to growing health concerns of consumers and
expectations from public health bodies and government officials on
the soft drinks industry role in tackling health issues (such as
obesity).
Risk score movement from the prior year: No change.
Alignment to strategy: G, E, B
Risk description
There is a continued high level of media and government scrutiny
on health and obesity in all of the markets we operate in, with a
soft drinks levy introduced in the UK, a soft drinks tax in Ireland
and revisions to the French soda tax in 2018. 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. In Ireland, Britvic leads the 'No added sugar' ('NAS')
market and in GB Britvic has a significantly higher market share in
NAS than the total soft drinks market.
-- Ongoing evaluation and development of the brand portfolio and
innovation pipeline; our innovation pipeline is weighted towards
lower sugar or nutritionally enhanced brands.
-- Reformulation of products where we can, to help consumers
make healthier choices.
-- We market our brands responsibly and don't directly target
under 12s and have a focus on low or no sugar variants, as well as
encouraging consumers to lead active lifestyles.
-- We work closely with non-government organisations and trade
associations in our markets to fully participate in the debate and
help shape solutions.
2018 developments
-- 3.5 billion calories have been removed from the GB portfolio
in 2018 through new reformulations.
-- 90% of Britvic's total GB portfolio by volume and 83% of
Britvic's volume in Ireland is now exempt/below the levy/tax
threshold (including PepsiCo).
-- In GB & Ireland we benefited from the introduction of the
sugar levy in the UK and the sugar tax in Ireland as a result of
our strong portfolio of leading low and no sugar brands.
Additionally stills brands such as Robinsons, MiWadi and Ballygowan
delivered strong market value share growth.
-- We continued to support health programmes and charities
through our brands, including the Fruit Shoot partnership with
Public Health England's Change4Life campaign and MiWadi supporting
Diabetes Ireland.
RETAILER LANDSCAPE AND CUSTOMER RELATIONSHIPS
Principal risk
We may not be able to maintain strong relationships or respond
to changes in the retailer landscape.
Risk score movement from the prior year: No change.
Alignment to strategy: G, E, 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 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.
-- Continuous monitoring of 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 and customer
outlet design, which enable us to find new ways to improve customer
performance and enhance our relationships.
2018 developments
-- The GB supply chain investment programme is enabling us to
respond to customer and consumer needs through improved capability
to produce different products and pack sizes.
-- Strengthened position in the licensed and leisure channel
with the successful retention of Marston's and win of Cineworld in
GB.
-- Successfully integrated East Coast into our Irish wholesale
business, enabling it to accelerate the distribution of Britvic
brands in the Dublin on-trade sector.
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, E, 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.
2018 developments
-- Pepsi and Pepsi MAX achieved record share in 2018 in GB
continuing the upward trajectory in performance we have been
driving for well over a decade.
SUPPLY CHAIN
Principal risk
Supplier failure, market shortage or an adverse event in our
supply chain impacts sourcing of our products and/or that the cost
of our products is significantly affected by commodity price
movements.
Risk score movement from the prior year: Increased.
Alignment to strategy: G, E, 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 2018 developments.
Controls and mitigating activities
-- 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.
-- Business continuity planning processes.
2018 developments
-- The GB supply chain investment programme will further improve
the flexibility and therefore resilience of our supply chain.
-- We maintain multiple sources of supply for our products
wherever possible. During the summer, the industry-wide CO(2)
shortage impacted a number of companies including Britvic. The
company reduced the level of promotional activity to help manage
demand during the shortage.
-- Unlike some other businesses, leaving the European Union of
itself, does not present specific challenges to the company as we
manufacture the vast majority of finished goods in the same market
as our selling market. Nonetheless, Brexit could result in higher
cost of goods for the company, as a result of the introduction of
trade tariffs for imports to the UK from the EU which would impact
the raw materials that we purchase from the EU. Additionally, in
the event of a 'no-deal' Brexit, there is a risk of disruption at
borders, which could impact the supply of some raw materials
sourced from the EU. We are working closely with suppliers to
understand their plans, reviewing all supply alternatives and
increasing
the level of raw materials that we hold in the run-up to 29
March 2019.
SUSTAINABILITY AND ENVIRONMENT
Principal risk
Natural capital depletion, climate change and environmental
pollution all present a risk to our ability to source, manufacture
and market our drinks.
Risk score movement from the prior year: Increased.
Alignment to strategy: G, E, C, B
Risk description
The impact of extreme and longer-term shifts in weather
patterns, natural resource depletion and other ecological effects
of climate change could impact the business in a number of ways,
financially and reputationally. It could lead to reduced
availability (for example of agricultural material) which in turn
could result in price rises or interruptions to supply. Further
regulatory action to manage climate change and environmental
pollution impacts could see restrictions imposed and/or taxes
introduced.
Additionally, it is important that we continually look to reduce
the company's direct environmental impact by managing our resource
consumption efficiently and sourcing sustainably.
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.
Controls and mitigating activities
-- Environmental considerations including impacts associated
with sourcing, production and end-of-life stages are embedded
within our innovation pipeline.
-- We work closely with our suppliers to understand the
environmental impact of key ingredients and, through our
responsible sourcing programme, promote environmental protection
and pollution prevention.
-- 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.
-- Our sustainable packaging strategy focuses on: system changes
that are needed to support a more circular economy; changes we can
make as a business to reduce the environmental impact of our
packaging; and how we can encourage consumer change in support of
recycling and anti-littering.
2018 developments
-- The investment in the GB supply chain will enable the company
to be more efficient, reduce energy consumption and the number of
road miles travelled by finished product. For example the
manufacturing carbon intensity ratio has reduced from 30.2 to 26.0
kg CO(2) e per tonne production in 2018.
-- The GB supply chain investment programme is enabling us to
access the latest in packaging technology, allowing us to further
light-weight bottles and cans. Nearly 600 tonnes of primary plastic
removed and 2,825 tonnes of can material saved in 2018.
-- Through our trade associations and directly, we continue to
proactively engage with government on the feasibility of a Deposit
Return Scheme (DRS) system and other actions to increase recycling
and reduce littering.
-- This year we committed to only purchasing Packaging Recovery
Notes (PRN) from the UK, investing in the UK recycling industry in
support of the circular economy.
INTERNATIONAL EXPANSION
Principal risk
Our plan to grow our international business is limited by lack
of brand momentum, local geo-political or economic risks, the risks
associated with start-up profitability or substandard processes and
systems.
Risk score movement from the prior year: No change.
Alignment to strategy: G, E, 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
-- We have a strategy of a mix of 'asset light' franchise and
business acquisitions, which reduces our exposure to this risk.
-- We carry out extensive due diligence prior to entering into a
new market.
-- We closely monitor current and forecast performance of our
business units and, where required, rebalance investment
priorities.
2018 developments
-- In Brazil we continue to invest for the long term against a
backdrop of macro uncertainty. The Bela Ischia acquisition is
enabling us to expand market and channel coverage, and delivering
cost synergies ahead of guidance. We continue to focus on longer
term opportunities to grow through brand development and
innovation, leveraging local and
group brands.
-- Continued focus on quality of distribution and in-store
presence to drive the rate of sale of Fruit Shoot in the United
States and ongoing focus on growing the London Essence Company in
major cities across the world.
-- Teisseire distribution and share increased in both Belgium
and Holland.
SAFE AND HIGH-QUALITY PRODUCTS
Principal risk
A faulty or contaminated product, either through malicious
contamination, human error or equipment failure, is supplied to the
market.
Risk score movement from the prior year: No change.
Alignment to strategy: G, E, 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.
-- We have supplier assurance and management processes.
-- We have dedicated central teams to oversee quality and
supplier assurance, working closely with the business units.
2018 developments
-- Continued focus on improving the management standards
framework and the monitoring and oversight processes used across
the company.
-- Evolve and amend management systems and quality processes to
reflect the new technology in the GB supply chain.
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: No change.
Alignment to strategy: G, E, 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 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 code of conduct and key global policies are trained
and rolled out to new joiners and the workforce at regular
intervals.
-- We operate a programme of e-learning training for key global
policies.
-- 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.
-- Whistleblowing processes are in place.
2018 developments
-- Creation of a dedicated compliance function led by the
company's Global Head of Compliance.
-- A programme was put in place to achieve readiness for the
introduction of General Data Protection Regulation (GDPR) in the EU
on 25 May 2018. Ongoing data protection processes and compliance
will be overseen by the Data Privacy Committee, which will be led
by the company's Global Head of Compliance.
-- Continue to monitor changes in law and regulation and
compliance with company's policies.
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: G, E, C
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, cashflows and
profits. Additionally, and in common with many businesses, cyber
security breaches could lead to unauthorised access to, or loss of,
sensitive information.
Controls and mitigating activities
-- Disaster recovery plans tested every year.
-- Central governance and decision-making processes for system
changes.
-- Information and IT policies are in place and are regularly
reviewed.
-- IT security standards are closely monitored to protect
systems and information.
-- Incident response plans are in place, recognising that whilst
this risk can be managed it cannot be eliminated.
2018 developments
-- We continue to see an increasing frequency in cyber-attacks
(including phishing and ransomware) in the marketplace. We carry
out regular auditing and benchmarking to ensure that our approach
to managing this risk is consistent with industry practice.
-- We have increased investment to improve information and cyber
security controls and cyber risk awareness.
-- The Chief Information, Transformation and Digital Officer was
appointed to the Executive team in 2018.
TREASURY AND PENSION
Principal risk
Changes to exchange rates and interest rates can have an impact
on profits and cashflows.
Risk score movement from the prior year: Increased.
Alignment to strategy: C
Risk description
Britvic is exposed to a variety of external financial risks
relating to treasury 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, whilst 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.
-- Pension interest rate hedging strategies in place and
regularly reviewed.
-- Monitoring of investment and funding strategies for pension
fund.
2018 developments
-- The recent depreciation of sterling has led to higher input
costs across a number of our key commodities. Further 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.
Appendix B
Responsibility statement of the Directors in respect of the
Annual Report
The Annual Report and Accounts 2018 contain a responsibility
statement in compliance with DTR 4.1.12. This statement is set out
on page 87 of the Annual Report and Accounts 2018, and is set out
below in full and unedited text. This statement relates solely to
the Britvic Annual Report and Accounts 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; and
-- 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
Mathew Dunn, Chief Financial Officer
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
ACSMMMMZGFDGRZM
(END) Dow Jones Newswires
December 13, 2018 05:16 ET (10:16 GMT)
Britvic (LSE:BVIC)
Historical Stock Chart
From Apr 2024 to May 2024
Britvic (LSE:BVIC)
Historical Stock Chart
From May 2023 to May 2024