TIDMBVIC
RNS Number : 5603G
Britvic plc
26 November 2020
Britvic plc Preliminary Results - 26 November 2020
"Disciplined management of the near-term challenges, confident
in future growth prospects"
For the year ended 30 September 2020
Group Financial Headlines:
-- Revenue decreased 6.8%* to GBP1,412.4m (reported -8.6%)
-- Adjusted EBIT decreased 21.9%* to GBP165.8m (reported -22.6%),
-- Adjusted EBIT margin -230bps* to 11.7% (reported -220bps)
-- Profit after tax increased 16.9% to GBP94.6m
-- Adjusted earnings per share decreased 27.8%* to 43.2p
-- Disciplined cash management enabling a GBP45.8m reduction in adjusted net debt
-- Full year dividend of 21.6p confirmed, maintaining a 50% pay-out ratio
Strategic Headlines:
-- Extended carbonates relationship with PepsiCo in GB to 2040
-- Increasing participation in the energy category, adding
PepsiCo's Rockstar to the portfolio alongside Purdey's
-- Announced intent to use 100% recycled PET (rPET) bottles
across the GB brand portfolio by end of 2022
-- Sale of juice factories and private label contracts in France completed
Operational Headlines:
-- Successfully delivered on our priorities through the pandemic
-- Revenue +7.4% in H2 for flavour concentrates portfolio as consumers turn to trusted brands
-- Revenue growth and market share gain in GB At-Home channel,
partly offsetting COVID-19 impact on Out-of-Home channel
-- Double digit revenue growth and market share gain in Brazil
driven by both core brands and innovation
-- Robust balance sheet and confident of liquidity position
Year ended 52 weeks ended % change % change
30 September 2020 29 September 2019 GBPm Actual Exchange Rate Constant
GBPm Exchange Rate *
Revenue 1,412.4 1,545.0 (8.6%) (6.8%)
Adjusted EBIT 165.8 214.1 (22.6%) (21.9%)
Adjusted EBIT margin 11.7% 13.9% (220) bps (230) bps
Adjusting EBIT Items** 35.5 84.1 57.8% -
Statutory EBIT 130.3 130.0 (0.2%) -
Profit after tax 94.6 80.9 16.9% -
Basic EPS 35.6p 30.6p 16.3% -
Adjusted EPS 43.2p 59.8p (27.8%) -
Final dividend per share 21.6p 30.0p (28.0%) -
Adjusted net debt/EBITDA 2.4x 2.1x 0.3x -
---------------------- ----------------------- ---------------------- -----------------
* Adjust ed for constant currency. ** Adjusting items are
defined on page 33 and include strategic restructuring costs of
GBP12.9m, acquisition related amortisation of GBP8.8m, acquisition
and disposal costs of GBP5.0m and an impairment charge relating to
the Counterpoint business of GBP8.4m (more detail provided on page
9). Total adjusting items includes GBP0.2m in finance costs
Simon Litherland, Chief Executive Officer commented:
"While none of us would have wished for the challenging
circumstances 2020 has brought, I am very proud of how we have
responded as a business and delivered on the priorities we set
ourselves at the start of the pandemic. Our determined and
dedicated people, portfolio of trusted brands, strong commercial
relationships and operational agility mean we have performed
strongly where we have been able to compete. We also continue to
navigate the changing landscape successfully. So, even though
out-of-home trading has inevitably been impacted, we have continued
to gain market share in our key growth markets of GB and Brazil,
and we have successfully protected cash and our overall financial
strength.
At the same time, we have also made considerable progress
executing our strategy and we are well positioned to drive future
growth and returns. We have extended our GB carbonates relationship
with PepsiCo to 2040 and expanded our presence in the energy
category through the addition of their Rockstar brand. We have
accelerated our sustainable business commitments and completed the
disposal of non-core assets in France, which will result in more
focus on growing our higher margin brands there. While 2021 will
bring continued uncertainty, it also presents real opportunity for
Britvic to capitalise on the trends which have accelerated as a
result of the pandemic. We are confident that we will continue to
react with agility and pace as events unfold. Soft drinks has
repeatedly proved itself to be a highly resilient category, and we
fully intend to be at the forefront of its recovery."
For further information please contact:
Investors:
Joanne Wilson (Chief Financial Officer)
Steve Nightingale (Director of Investor +44 (0) 7881 751550
Relations) +44 (0) 7808 097784
Media:
Stephanie Macduff-Duncan (Head of Corporate
Communications) +44 (0) 7808 097680
Stephen Malthouse (Headland) +44 (0) 7734 956201
There will be a webcast of the presentation given today at
09:30am by Simon Litherland (Chief Executive Officer) and Joanne
Wilson (Chief Financial Officer). The webcast will be available at
www.britvic.com/investors with a transcript available in due
course.
Notes to editors
About Britvic
Britvic is one of the leading branded soft drinks businesses in
Europe. The company combines its own leading brand portfolio
including Fruit Shoot, Robinsons, Tango, J2O, London Essence,
Teisseire and MiWadi with PepsiCo brands such as Pepsi, 7UP and
Lipton Ice Tea which Britvic produces and sells in GB and Ireland
under exclusive PepsiCo agreements.
Britvic is the largest supplier of branded still soft drinks in
Great Britain ("GB") and the number two supplier of branded
carbonated soft drinks in GB. Britvic is an industry leader in the
island of Ireland with brands such as MiWadi and Ballygowan, in
France with brands such as Teisseire, Pressade and Moulin de
Valdonne and in Brazil with Maguary, Bela Ischia and Dafruta.
Britvic is growing its reach into other territories through
franchising, export and licensing. Britvic's management team has
successfully developed the business through a clear strategy of
organic growth and international expansion based on creating and
building scale brands. Britvic is listed on the London Stock
Exchange under the code BVIC and is a constituent of the FTSE250
index.
Cautionary note regarding forward-looking statements
This announcement includes statements that are forward-looking
in nature. Forward-looking statements involve known and unknown
risks, uncertainties and other factors including as a consequence
of the COVID-19 pandemic, which may cause the actual results,
performance or achievements of the group to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Except as required by
the Listing Rules and applicable law, Britvic undertakes no
obligation to update or change any forward-looking statements to
reflect events occurring after the date such statements are
published.
Market data
GB take-home market data referred to in this announcement is
supplied by Nielsen and runs to 3 October 2020. ROI take-home
market data referred to is supplied by Nielsen and runs to 4
October 2020. French market data is supplied by Nielsen and runs to
4 October 2020.
Next scheduled announcement
Britvic will publish its quarter one trading statement on 28
January 2021.
Chief Executive Officer's Review
Response to COVID-19
Today we report our financial results for the full year,
however, before turning to these results, I would like to share my
reflections on how we have responded to the COVID-19 pandemic. The
last eight months have been unparalleled in terms of challenge and
change for us as individuals and for our families and friends, just
as it has been for businesses and governments around the world.
This period has without doubt been the most difficult I have
experienced in my working life. As the pandemic unfolded, we moved
quickly to establish our key priorities - safeguarding our people,
maintaining operational agility, supporting our communities and
retaining our financial strength. It has been our focus on these
priorities that has enabled Britvic not just to deliver a solid
performance against an exceptionally challenging backdrop, but more
importantly to continue to make progress against our longer-term
strategy, which is focused on creating value for all our
stakeholders.
We have come together across Britvic as a team and successfully
managed through this period. The courage, resilience, care and
commitment demonstrated has been incredible, and the collective
impact of us working together as a team has been both inspiring to
see and humbling to be part of. This is a very special company, and
I have no doubt that we will emerge from this crisis stronger than
before.
Safeguarding our people
Where possible, all our employees are working from home, using
enabling technology solutions and working flexibly around their
domestic circumstances. For those employees who wish to be in the
office and for our factory-based teams, we have implemented both
social distancing and elevated health measures, including
temperature checking and cleaning regimes, to ensure the safety of
our people. All employees classified as vulnerable, or with a
vulnerable family member, were identified early on and special
measures put in place to support and safeguard them. As you would
expect, we have adopted all government and public health authority
guidelines in each of our markets. We have also put additional
measures in place to support the health and wellbeing of all our
employees in these uncertain times.
Maintaining operational agility
Changing buying behaviours, restrictions placed on the
hospitality sector and reduced movement of people have impacted
each of our business units. Our supply chain teams have responded
with pace, optimising production schedules and operations to
mitigate some of the adverse impacts on our business. All factories
have remained operational across our markets, except for the water
factory in Ireland closing for a short period as demand dropped
early in the spring lockdown. The investment we made in the
Business Capability Programme has allowed us to operate with
increased flexibility and we have successfully collaborated with
suppliers and customers to prioritise key SKUs and ensure
continuity of supply and on-shelf availability, particularly during
the height of the pandemic. We also reviewed and reduced
discretionary spend across the entire business, including A&P
and overheads, to mitigate some of the profit and cash impacts from
COVID-19.
Supporting our customers, suppliers and communities
We were an early signatory to the C-19 business pledge, founded
by former UK cabinet minister Justine Greening and UK entrepreneur
David Harrison. It aims to harness the power of business as a force
for good in tackling the COVID-19 pandemic, through a focus on
employees, customers and the community.
We have been working highly collaboratively with both suppliers
and customers across our markets to ensure the continuity of supply
of raw materials, maintain high service levels, support
simplification to maximise availability, and to offer financial
support where needed. Across each of the markets in which we
operate, we have supported our local communities, including
supplying product to hospitals, food banks, schools and hospices.
In France, we have supplied PPE to local hospitals and in the UK,
chillers and product to the NHS Nightingale Hospitals, as well as
providing warehousing facilities in Norwich for the storage of PPE
and care packages.
Retaining our financial strength
We entered the pandemic in a robust position, with strong
trading momentum and a solid Balance Sheet, benefitting from the
refinancing earlier in the year of our Revolving Credit Facility
(RCF) and approximately GBP150m of private placement notes. We took
decisive action early in the pandemic to protect our cash position.
Capital spend was scaled back as we focused on business-critical
projects, marketing spend was reduced by GBP20m and we cancelled
non-essential discretionary spend. As a result of this disciplined
cash management, we have been able to reduce debt by GBP46m. We did
not seek to access furlough support or the COVID-19 Corporate
Financing Facility (CCFF) offered by the UK government.
Performance impact summary
We started the year with strong momentum, reporting Q1 revenue
2.6% ahead of last year. During the second quarter, the COVID-19
pandemic began to have an impact across our business units, most
significantly in the GB and Ireland markets, where we have a strong
presence in the Out-of-Home sector. Consequently, at the half-year,
the increase in revenue was 1.4%, while in Q3, which bore the full
impact of lockdown restrictions, revenue declined 16.3%. As
restrictions were lifted in the summer, we saw an improvement in
trading, with revenue in Q4 11.3% down on last year on a constant
currency basis. The performance in the At-Home channels has been
robust, with increased demand for our trusted portfolio of brands
in larger pack formats, and we have taken market share. The
Out-of-Home channels continue to be impacted by trading
restrictions and social distancing measures reducing capacity, and
people continuing to work from home for the foreseeable future. We
will continue to support affected customers through the current
challenges, to ensure both we and they are well-placed for the
recovery as it unfolds.
Progress towards our strategic priorities
Last year we took the opportunity to evolve our strategy,
ensuring we are best positioned to access growth opportunities in
the changing consumer and retail landscape across our markets. With
a portfolio of market-leading brands, multi-channel route to market
and collaborative customer relationships in all our geographies, we
believe we are well-placed to continue to deliver excellent returns
to shareholders and our other stakeholders. In the future, we will
focus on four key strategic priorities:
-- Build local favourites and global premium brands
-- Flavour billions of water occasions
-- Healthier People, Healthier Planet
-- Innovate to access new spaces
Each of our markets has a defined role to play delivering the
strategy:
-- GB - to lead market growth
-- Rest of World - to globalise premium brands & improve profitability in Western Europe
-- Brazil - to accelerate growth and expand our presence
Underpinning this strategy are three critical enablers:
-- Generate fuel for growth through efficiency
-- Transform organisational capability & culture
-- Selective M&A to accelerate growth
We are confident that our strategy will stand the test of time
and deliver excellent returns to shareholders and our other
stakeholders. Despite the pandemic, we have made significant
strategic progress this year, using our agility to adapt to ever
evolving market circumstances.
Build local favourites and global premium brands
We have a broad portfolio across our markets of trusted, leading
brands, which are predominantly low or no sugar. We are focused on
stretching and growing our core brands to capture future growth
opportunities. In October, we announced we had signed a new
agreement in Great Britain with PepsiCo for a new and exclusive
20-year franchise bottling agreement for the production,
distribution, marketing and sales of its carbonated soft drink
brands, including Pepsi, 7UP and Mountain Dew. The new agreement
extends the relationship, which commenced in 1987, to 2040.
Importantly it also allows Britvic to broaden our portfolio further
by taking on the Rockstar energy brand, increasing our
participation in the large and growing energy category, from
natural energy with Purdey's to the mainstream energy segment -
leaving us even better positioned to achieve our aim of leading
market growth.
Performance this year on our core brands was strong in the
At-Home channel, where our already powerful plans benefited further
from people spending more time at and near home and turning to
known and trusted brands. In the GB At-Home channel, we gained
market share, with value growth of 11.3% compared to market growth
of 1.5%, led by our core brands of Pepsi, Robinsons, 7UP and Tango.
In Ireland, a weaker water category performance impacted
Ballygowan, whereas we delivered a strong performance in MiWadi and
Pepsi. In GB and Ireland this At Home outperformance was however,
more than offset by the impact COVID-19 had on the Out-of-Home
channel and on-the-go consumption. In Brazil, we achieved a record
performance across both concentrates and ready-to-drink juice,
becoming the number one supplier in this category. Pleasingly,
following a couple of years of performance pressure, France
returned to growth in Q4, led by Teisseire. This year we launched
new pack formats and variants into the market to optimise on-shelf
pricing and broaden appeal to more consumers. As with our other
markets, France also benefited from an increase in demand for
flavour concentrates as consumers spent more time at home.
The pandemic inevitably restricted our ability to drive the
levels of growth we were seeking in our predominately out-of-home
oriented global premium portfolio, though we successfully responded
by pivoting our portfolio more towards socialising At-Home, for
example, by increasing distribution of London Essence Company in
the grocery channel.
Flavour billions of water occasions
In response to consumers' desire for a healthier lifestyle and
greater protection for the planet, we know that tap water
consumption is in significant growth. As the world leader in liquid
concentrates, we are leaning into our unrivalled ability to provide
flavour for consumers wherever they may be, which we can offer at
great value and a very low average calories per serve, without
compromising on taste. Building on our investment and
prioritisation of this part of our strategy, and with people
spending more time at home, sales of our portfolio of flavour
concentrate brands, including Robinsons, MiWadi, Teisseire and
Maguary, accelerated in the second half of the year to +7.4%.
In GB, Robinsons continued to perform well, with Robinsons
retail market value, as measured by Nielsen, increasing 9.4% to
GBP204m. Robinsons achieved this growth despite the cancellation of
the Wimbledon tennis championships, which has traditionally been an
important marketing activation programme. During the peak of the
pandemic lockdown in the spring an additional 1.3m new shoppers
bought the brand. In Ireland, MiWadi built upon a very successful
first half, growing revenue and gaining market share. Growth was
driven by the Zero sugar and Minis ranges that were introduced to
broaden appeal and usage occasions and supported by marketing
campaigns such as the "Create Your Own" which will see the launch
of Fruit Explosion, created by 11-year old Ollie Smith.
In both France and Brazil our flavour concentrate brands also
benefited from consumers spending more time at home and seeking
healthy hydration. In both markets we continued to rejuvenate our
core brands with new liquids and new pack formats to broaden appeal
and increase affordability.
Healthier People, Healthier Planet
Healthier People and Healthier Planet sit at the core of our
strategy. Consumers' focus on their own health has increased during
the pandemic. Britvic continues to lead the soft drinks industry by
keeping our average calories per serve low across our entire
portfolio, achieving an average of 25.5 calories this year across
the world and with 93% of our GB portfolio outside of the sugar
levy. As well as our consumers, we also prioritise health,
wellbeing and belonging for our employees and local communities. In
a challenging year, on top of our significant response to the
COVID-19 crisis, we have delivered against our key non-financial
Healthier People performance targets, with a further reduction in
calories per serve and achieving our target of at least 40% of
women in leadership roles.
Under Healthier Planet, we were the first UK soft drinks company
to commit to carbon reduction measures based on the very highest
global standard of reducing climate change to less than 1.5
degrees. We also advocate for a well-designed, industry-run and
not-for-profit deposit and return scheme (DRS), to contribute in a
fair and meaningful way to a circular packaging economy. In October
2020, we announced our intent for all GB plastic bottles to be
manufactured from 100% rPET by 2022, surpassing our previous target
of 50% rPET by 2025. We now send zero product to landfill across
the world.
We have made good progress against our carbon intensity ratio,
following the conversion to bioenergy in Brazil and fewer line
change-overs due to COVID-19 SKU prioritisation, however, absolute
emissions increased due to the natural gas fuelled Combined Heat
and Power plant in the UK, which we continue to optimise. By
contrast, we have made good progress against our water intensity
target of 1.98m3/tonne produced for the full year, achieving 1.91.
In January, as a sign of our commitment to conducting business in
the right way, we refinanced our credit facility with a coupon rate
that varies according to the achievement of our Healthier People,
Healthier Planet goals.
Innovate to access new spaces
We will continue to innovate from our core brands or with new
ones to access new growth spaces, whether they be emerging consumer
needs, blurring retail channels or different drinking occasions.
Increasingly our focus is not merely on continuing our successful
track record in product innovation, but also in equipment and
technology.
Across our flavour concentrates portfolio, we have launched
innovation to both broaden appeal and affordability. Robinsons
extended the Cordials range with the launch of two superfruit
variants: Orange and Acerola Cherry, and Raspberry and Goji Berry.
In France, following the launch last year of the Teisseire
Fraîcheur de Fruits range which contains 85% concentrated fruit
juice, we launched new pack sizes to optimise on-shelf pricing and
the "Arômes Naturels" range, with no preservatives and new recipes
to appeal to consumers seeking healthy, more natural hydration.
In Brazil, our Puro Coco coconut water brand has now exceeded
15% market share and is the third biggest brand in the category.
This year we launched Dafruta Tropical, which uses the liquid
technology of Robinsons, and Maguary POP pouches - both new
variants providing simpler and more affordable liquid concentrate
options for consumers. Also, in Brazil, we introduced a new 150ml
Fruit Shoot pack format and a plant-based chocolate variant, as
well as launching Britvic Mixers and Mathieu Teisseire, as we seek
to expand our portfolio further beyond the core flavour
concentrates and juices categories.
In GB we brought to market at the start of the year a dispense
solution called London Essence Fresh Serve, allowing consumers to
choose a premium, freshly infused tonic on draught, using patented
micro-dosing technology. While also providing an elevated consumer
experience, it has significant sustainability benefits by reducing
packaging usage by up to 96% and offering much lower carbon
emissions. The rollout was temporarily interrupted by COVID-19, but
installations had restarted prior to the recent increase in
restrictions in GB.
This year we also accelerated our access to beyond the bottle
solutions through the small but strategic acquisition of The
Boiling Tap Company, which installs and services proprietary
integrated tap solutions for still, sparkling and hot water to a
wide range of primarily commercial customers in GB. Like Britvic,
this small company has innovation at its heart, offering industry
leading technology across a broad range of water solutions,
including touchless. It opens up a broader customer base with
equipment solutions beyond the bottle and we are excited by its
potential alongside our existing dispense solutions and packaged
portfolio.
The pandemic has triggered a step change in e-commerce growth.
This was already an area of major focus for Britvic, and we have
now reallocated even greater resources across our business units to
further accelerate our progress. We have continued to build our
presence online, both through the established home delivery routes
of the major grocers, pureplay operators and through wholesaler
platforms. We have outperformed online with retail value growth of
56% compared to category value growth of 48%, increasing our share
to over 22% of online grocery sales. In GB we launched the
Sensational Drinks portal last year to enable direct engagement
with the on-trade. The portal was repurposed to great effect during
the early stages of the pandemic to support the trade by pulling
together news, advice and training during the lockdown, and over
15,000 new outlets signed up in the year.
Generate fuel for growth through efficiency
It is essential that we continually drive improvement in our
operations to release funds for reinvestment behind our growth
drivers. While in recent years we have transformed our GB supply
chain capacity and flexibility, and we will continue to invest
where it makes financial sense to do so, our focus is firmly on
optimising our footprint in each of our markets. We are responding
to customers' drive for simpler ranges and more recession-oriented
value solutions through portfolio optimisation and continuing our
revenue management journey.
We are also pursuing a comprehensive technology roadmap which
will further enable our ability to execute all aspects of our
strategy as efficiently and effectively as possible.
Transform organisational capability & culture
At the outset of this strategic evolution, we recognised that in
order to achieve our future growth ambitions, we would need to
build on the organisational capabilities which have delivered such
a strong performance track record, with new ones which would ensure
the company can continue to thrive in the years ahead. This year we
have reallocated resources behind both the strategy and the
marketplace which has been reshaped by COVID-19, ensuring the
alignment of both people and investment to our growth drivers and
releasing some cost to fund them. We have invested in key areas
where we are seeking to shift capability, such as by creating a
centre of expertise in digital consumer experience.
While we had already invested in remote working technology prior
to the pandemic, like many organisations we have adopted home
working to a new level over the course of the year. Our future
working patterns will be quite different but equally effective,
embracing the learnings from this year in more flexible working
practices which still facilitate effective and agile collaboration
across the business, while increasing employee engagement and
effectiveness - a great example of a positive which has emerged
from the challenges of the pandemic.
Selective M&A to accelerate growth
While we can achieve much of our ambition organically, we do see
opportunities to accelerate the pursuit of our strategy through
disciplined inorganic expansion. This year we acquired The Boiling
Tap Company as outlined above, though much of our inorganic
activity was focused on executing the disposal in France of the
juice production facilities and associated private label business
to Refresco, which completed on September 30. In Western Europe we
are focused on improving our profitability, and this disposal works
towards this objective by simplifying our operations and enabling
the local management team to focus on the higher-margin branded
portfolio.
Outlook
Looking ahead, 2021 brings both continued uncertainty and an
opportunity to capitalise on the trends which have accelerated as a
result of COVID-19. We have started the new financial year with
some form of restrictions on either trading and/or the movement of
people in all our markets, and this will undoubtedly continue to
affect performance, especially in the first half of the financial
year. We have carefully planned our approach to the year ahead,
which gives us confidence that we can continue to respond
positively and with agility as events unfold. Soft drinks have
repeatedly proven to be a highly resilient category, and Britvic
fully intends to be at the forefront of its recovery .
Chief Financial Officer's Review
Overview
We saw positive trading momentum in the first half of our
financial year with revenue, adjusted EBIT and margin all
increasing. From March, however, the impact of trading restrictions
and social distancing measures in each of our markets adversely
impacted our financial performance in the second half of the year.
We took decisive and rapid action to reduce costs across our
business which helped to mitigate some of the profit and cash
impacts.
Full year revenue declined 6.8%, on a constant currency basis,
while adjusted EPS decreased 27.8% year-on-year, on an actual
basis. Adjusted EPS growth was also impacted by a higher effective
tax rate, due to the one-off revaluation of deferred tax following
the reversal of the planned 2% reduction in UK corporate tax as
well as our geographic mix of profits. Interest costs were down
year-on-year following our successful refinancing earlier in the
year. Profit after tax increased 16.9% due to significantly lower
adjusting items more than offsetting the decline in adjusted
EBIT.
The Board has proposed a final dividend of 21.6p, which equates
to a 50% pay-out ratio in line with our stated dividend policy. As
a result of tight cash management, we have been able to reduce our
net debt balance by GBP45.8m ending the year with an adjusted net
debt to EBITDA ratio of 2.4 times.
Below is a summary of the segmental performance and explanatory
notes related to items including taxation, interest and free cash
flow generation.
GB 12 months 52 weeks ended % change actual
ended 29 September* like-for-like
30 September 2019 GBPm
2020 GBPm
-------------- --------------- ----------------
Volume (million
litres) 1,621.0 1,656.8 (2.2%)
ARP per litre 54.6p 57.1p (4.4%)
Revenue 884.9 945.4 (6.4%)
Brand contribution 351.0 389.2 (9.8%)
Brand contribution
margin 39.7% 41.2% (150bps)
Volume and revenue declined, reflecting the significant impact
of restrictions placed upon the Out-of-Home channels and On-the-Go
consumption. At-Home channel revenue increased, as consumers stayed
home, benefiting family favourite brands Robinsons, Pepsi, Tango
and 7UP, resulting in market volume and value share gains. Margin
was adversely impacted by the shift to larger At-Home pack formats
but was partly offset by significant savings in A&P spend, as
the business took early and decisive action to manage both its
profitability and cashflow.
Brazil 12 months 52 weeks ended % change % change
ended 29 September Actual like-for-like
30 September 2019 GBPm like-for-like at constant
2020 GBPm exchange
rate
-------------- --------------- --------------- ---------------
Volume (million
litres) 251.0 222.2 13.0% 13.0%
ARP per litre 45.1p 56.2p (19.8%) (0.4%)
Revenue 113.1 124.8 (9.4%) 12.4%
Brand contribution 24.6 28.3 (13.1%) 7.9%
Brand contribution
margin 21.8% 22.7% (90bps) (90bps)
Revenue increased 12.4%, due to strong sales of ready-to-drink
juices, Puro Coco and Fruit Shoot, which benefited from new pack
formats broadening appeal and affordability. While flavour
concentrates performance was weak in the first half of the year,
due to increased competition from local brands, it grew strongly in
the second half, as revenue increased 14.5% and our portfolio
increased market share - reflecting our focus on rejuvenating the
category, specific regional targeting, and the consumer switch to
At-Home consumption. Revenue and brand contribution benefited from
a PIS/COFINS tax rebate relating to historic balances. Excluding
this tax benefit, brand contribution was 19.3%, with the
year-on-year decline driven by the sales mix.
Rest of World 12 months 52 weeks ended % change % change
ended 29 September* Actual like-for-like
30 September 2019 GBPm like-for-like at
2020 GBPm constant
exchange rate
-------------- --------------- --------------- ---------------
Volume (million
litres) 469.8 501.9 (6.4%) (6.4%)
ARP per litre 27.6p 28.6p (3.5%) (2.5%)
Revenue 414.4 474.8 (12.7%) (11.8%)
Brand contribution 129.6 146.0 (11.2%) (10.4%)
Brand contribution
margin 31.3% 30.7% 60bps 50bps
Note: Rest of World consists of France, Ireland and other
international markets. Volumes and ARP include own-brand soft
drinks sales and do not include factored product sales included
within total revenue and brand contribution. Concentrate sales are
included in both revenue and ARP but do not have any associated
volume
Revenue in France returned to growth in the final quarter due to
increased sales of Teisseire. Performance in the Ireland At-Home
channel was robust; however, it was more than offset by Out-of-Home
declines and the extended closures in the licensed channel
impacting Counterpoint sales. Revenue declined across all the main
markets, reflecting the impact of restrictions on Out-of-Home
consumption and the Travel and Export channels, as well as the exit
from Fruit Shoot multi-pack in the United States in 2019. A&P
savings partially offset the decline in revenue and contributed to
margin improving by 50 basis points.
Fixed costs - pre-adjusting 12 months ended 52 weeks ended % change % change
items 30 September 29 September* Actual like-for-like
2020 GBPm 2019 GBPm like-for-like constant
exchange
rate
---------------- --------------- --------------- ---------------
Non-brand A&P (10.2) (10.5) 2.9% 2.9%
Fixed supply chain (131.8) (120.4) (9.5%) (10.4%)
Selling costs (77.4) (83.0) 6.7% 4.0%
Overheads and other (120.0) (135.5) 11.4% 10.2%
Total (339.4) (349.4) 2.9% 1.4%
----------------------------- ---------------- --------------- --------------- ---------------
Total A&P investment (46.0) (65.9)
A&P as a % of own brand
revenue 3.3% 4.4%
A&P spend declined by GBP19.9m as marketing activity was
scaled back in response to the impact of pandemic restrictions.
Fixed supply chain costs increased by 10.4%, due to an increase in
depreciation, sustainability-related costs, including the purchase
of producer responsibility notes, and COVID-19 related spend,
including stock write-offs. Overheads and other decreased by 10.2%,
due to lower variable reward and discretionary spend.
* Reclassification of certain FY19 costs in GB (GBP9.7m) and
Ireland (GBP2.7m) from variable to fixed costs to allow
like-for-like comparison with FY20
Interest
The net adjusted finance charge for the 12 months to 30
September for the Group was GBP18.9m, including interest on leases
under IFRS16, compared with GBP19.2m in the prior year.
Adjusting items - pre-tax
In the period we incurred, and have separately disclosed, a net
charge of GBP35.7m (2019: GBP84.6m) of pre-tax adjusting items. The
most significant of these include:
-- Charges of GBP12.9m relating to a restructure undertaken in
the final quarter of the year and costs relating to the Norwich
site closure;
-- M&A-related costs of GBP5.0m which includes charges
relating to the disposal of our French private label juice business
and the acquisition of The Boiling Tap Company;
-- An GBP8.4m impairment charge related to Counterpoint; and
-- Acquisition-related amortisation of GBP8.8m
Taxation
The adjusted tax charge was GBP32.1m, which equates to an
effective tax rate of 23.2% (2019: 19.9%). The increase primarily
resulted from a one-off revaluation of deferred tax balances
following the government decision to reverse the planned reduction
in UK corporation tax rate from 19% to 17%. The reported net tax
charge was GBP16.6m (2019: GBP29.4m), which equates to an effective
tax rate of 14.9% (2019: 26.7%).
Earnings per share (EPS)
Adjusted EPS for the period was 43.2 pence, a decrease of 27.8%
(at actual exchange rates) on the same period last year. Basic EPS
for the period was 35.6 pence, an increase of 16.3% on last
year.
Dividends
Since Britvic floated in 2005, we have consistently returned
capital to shareholders through our progressive dividend policy,
which is a core part of our capital allocation. Following the
prudent position taken at interims to defer the decision on the
dividend until later in the year, the Board is recommending a final
dividend of 21.6 pence per share, with a total value of GBP57.7m,
maintaining our 50% pay-out policy. The final dividend for 2020
will be paid on 3 February 2021 to shareholders on record as at 18
December 2020. The ex-dividend date is 17 December 2020.
Free cash flow
Free cash flow (defined as cash generated from operating
activities, less capex, interest and repayment of lease
liabilities) was an inflow of GBP90.0m, compared with GBP88.4m in
the previous year.
There was a working capital outflow of GBP3.0m ( 2019 : GBP25.6m
outflow) driven by a reduction in Creditors of GBP45.3m ( 2019 :
increase of GBP4.5m) following the significant year-on-year drop in
Q4 trading due to COVID-19, which resulted in lower raw materials
and packaging purchases, and lower indirect tax. Furthermore, there
was a reduction of overdue payables as we tightened our
processes.
This reduction in creditors was offset by increased provisions
of GBP8.0m (2019: decrease of GBP1.6m) along with reduced inventory
of GBP11.9m (2019: increase of GBP7.8m) and reduced receivables of
GBP22.4m (2019: increase of GBP20.7m), both also reflecting lower
trading in Q4 and rigorous cash collection processes.
Free cash flow also benefited from reduced capital expenditure
of GBP50.0m (2019: GBP74.8m), with non-essential investment
delayed.
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, while managing the
Group's debt and liquidity, currency and commodity risk, interest
rate risk, and cash position. The Group uses financial instruments
to hedge against raw materials, interest rate and foreign currency
exposures.
On 30 September 2020, the Group had GBP1,030m of committed debt
facilities, consisting of a GBP400m undrawn bank facility which
matures in 2025, and a series of private placement notes with
maturities between December 2020 and May 2035.
At 30 September 2020, the Group's net debt of GBP555.5m
(excluding derivative hedges) mainly comprised of GBP664.4m of
private placement notes and GBP3.4m of accrued interest, offset by
net cash and cash equivalents of GBP109.2m and unamortized loan
issue costs of GBP3.2m. 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
GBP520.4m, which compares with GBP566.2m at 29 September 2019.
Pensions
At 30 September 2020, the Group had IAS 19 pension surpluses in
Great Britain and Northern Ireland totaling GBP101.8m and IAS 19
pension deficits in Ireland and France totaling GBP10.7m, resulting
in a net pension surplus of GBP91.1m (29 September 2019: net
surplus of GBP127.5m).
The defined benefit section of the GB plan was closed to new
members on 1 August 2002 and closed to future accrual for active
members from 1 April 2011, with new employees being invited to join
the defined contribution scheme. The Northern Ireland scheme was
closed to new members on 28 February 2006 and future accrual from
31 December 2018, and new employees are eligible to join the
defined contribution scheme. All new employees in Ireland join the
defined contribution plan.
Contributions are paid into the defined benefit section of the
GB plan as determined by the Trustee, agreed by the company and
certified by an independent actuary in the Schedule of
Contributions. In addition to expected partnership income of at
least GBP5m per annum, the Group was expected to make a payment of
GBP15m by 31 December 2019. However, the Group is seeking clarity
through the courts as to the construction of the wording in the
Plan rules on the employer's ability to unilaterally set an
alternative rate of pension increase. The original judgment in
January 2020 was not in the Group's favour and it has now been
granted leave to appeal that judgment. This appeal is expected to
be heard in 2021.
Pending the outcome of the appeal hearing, the Trustee agreed
that the Schedule of Contributions be amended to the effect that
GBP10m be paid into a blocked account by 30 September 2020 and
GBP5m by 2 October 2020. Future deficit funding payments of GBP5m
per annum will also be paid into the blocked account. Subject to
the outcome of the legal appeal and actuarial certification on
funding requirements, the monies in the blocked account will return
to the Group and/or be paid to the pension plan as a contribution,
taking into account any change in future pension increases.
The latest triennial valuation as of 31 March 2019 was completed
in June 2020 and has resulted in future deficit funding payments
reducing from GBP20m to GBP10m per annum. The Ireland and Northern
Ireland defined benefit pension plans have an investment strategy
focused on managing the risks as the funding position improves. The
GB pension plan mainly has credit-type investments and the Trustees
have developed proposals to manage the investment risks.
EU Withdrawal
Following the UK's referendum decision to leave the EU in 2016,
Britvic established a steering committee, which includes
representatives from each relevant business unit and function to
ensure that we are prepared for the end of the transition period on
31 December. The Steering Committee is responsible for putting in
place post withdrawal processes to ensure the continuation of
uninterrupted trade and for assessing the potential impact of a
no-deal withdrawal on our business. We are well prepared for the
practical changes associated with a smooth exit, including movement
of goods, regulatory and people impacts. Britvic manufactures most
of its goods locally and there is relatively little Group
cross-border trading between the UK and the EU, reducing our
exposure.
We have taken steps to mitigate possible impacts of the
transitional period ending without a negotiated free trade
agreement. The key risks identified, and the actions taken are as
follows:
-- Imports to the UK. The UK government has indicated the
potential tariffs on imports in the absence of a free trade
agreement. We expect these to have a modest impact on the Group due
to the level of raw material purchases from the EU.
-- Disruption to EU-UK logistics. Where appropriate, we have
plans to increase inventory levels to partially mitigate the
risk.
COVID-19 update
With the impact of the global pandemic and resulting social and
commercial restrictions continuing in 2021, we have developed a
flexible plan based on the learnings of 2020, that will enable
Britvic to respond to severe but plausible scenarios and their
potential impact on revenue, profit and cash. During the year,
government restrictions on trading activity in the Out-of-Home
channel and on the movement of people in each of our markets had a
significant impact on our business. As expected, the largest
impacts have been seen in our markets with significant exposure to
Out-of-Home, namely GB and Ireland. The actions planned to mitigate
the adverse impact, which included reduced A&P spend, variable
reward and discretionary spend as well as stopping all
non-essential and non-committed capex, have been successfully
implemented in 2020.
In March 2020, we shared sensitivity analysis that quantified
the expected impact on our business of a full lockdown in all our
markets of GBP12m-18m per month for the second half of 2020,
reflecting peak seasonal trading. This estimate has proved to be
reasonable during the period of the most widespread restrictions in
2020, and in assessing the impact of any future restrictions we now
have a greater level of clarity on the trends we would expect to
see in each of our markets and the mitigating actions we can take.
In 2021 the possibility of continued and potentially increased
restrictions means there is a high degree of uncertainty in
predicting the potential outlook for our business.
Taking into account the learnings from this year, we have
continued to analyse a range of possible scenarios to model
different levels of impact on revenue, profit and cash, and the
offsetting effect of the controllable mitigating actions over the
course of the next 12 months. We have tested the possibility of the
debt covenants being breached in March 2021. This is the most
sensitive test point, as the EBITDA modelling assumes a full 12
months of reduced trading due to the impact of restrictions, on top
of our usual working capital peak ahead of summer trading. Under
all the scenarios modelled, and after taking mitigating actions
available in the first half of the year including the phasing of
A&P and capital spend into the second half of the year, our
forecasts do not indicate breach. This is also the case for the
forecast covenant test at the end of September 2021.
These scenarios include a range of estimated impacts, primarily
based on the length of time various levels of restrictions are in
place, and the severity of the consequent impact of those
restrictions on our At-Home and Out-of-Home channels. For each of
our markets we have sensitised the revenue, profit and cash flow
impact of reduced trading activity in our Out-of-Home channel and
changes in product mix, including lower on-the-go volumes, for the
key At-Home channels. The assumptions used reflect the trends we
have seen in 2020. The scenarios are most sensitive to the
assumptions made for GB and Ireland, where we have more significant
exposure to Out-of-Home channels. France and Brazil are
predominantly At-Home markets and therefore drive less sensitivity.
The scenarios include an assumption that a level of restrictions on
movement and social distancing will remain at current or increased
levels during the first half of 2021, with Out-of-Home volumes
gradually improving during the second half of 2021.
Under each scenario, mitigating actions are all within
management control, can be initiated as they relate to
discretionary spend, and do not impact our ability to meet demand.
We continue to believe that the risk of enforced factory closure is
low and during 2020 implemented additional health and safety
measures in each of our factories to reduce the risk of a major
supply disruption. We have also put contingency supply arrangements
in place for key raw materials should they be required.
In all the scenarios we have modelled, there remains significant
liquidity headroom under our existing debt facilities at each month
end. On 30 September, the adjusted net debt position was GBP520.4m
and our covenant net debt to EBITDA ratio was 2.4x, with a covenant
EBITDA to Net Interest Expense ratio of 11.0x. The RCF of GBP400m
was undrawn, with an additional GBP109.2m of cash holdings. In
addition, we have access to private placement notes totalling
approximately GBP625m, with maturities out to 2035. GBP65m of the
USPP notes are due to be repaid before February 2021. No further
USPP notes mature until December 2022. During 2020 we also
re-financed our GBP400m RCF up to 2025, with the potential to
extend maturity to 2027 with lender consent. The RCF also offers an
accordion facility of GBP200m, again with lender consent. Covenants
are set at a maximum of 3.5x Net Debt to EBITDA and a minimum of
3.0x EBITDA to Net Interest Expense in all our lending
agreements.
Risk management process
As with any business, we face risks and uncertainties. We
believe that effective risk management supports the successful
delivery of our strategic objectives. The management of these risks
is based on a balance of risk and reward, determined through
assessment of the likelihood and impact, as well as the Group's
risk appetite. The Executive team performs a formal robust
assessment of the principal risks facing the Group bi-annually,
which is reviewed by the Board. Similarly, all business units and
functions perform formal risk assessments that consider the Group's
principal risks and specific local risks relevant to the market in
which they operate.
Risks are monitored throughout the year with consideration given
to internal and external factors and the Group's risk appetite.
Updates to risks and mitigation plans are made as required. In
response to the COVID-19 pandemic, the risk team has supported each
of our markets and functions to identify the actions required to
ensure business continuity.
We have also reassessed our principal risks in light of the
pandemic and have identified a specific risk that considers reduced
demand in the Out-of-Home channel, volatility in the At-Home
channel, cancellation of key marketing events and the potential
impact on liquidity and debt covenants. It also considers the
impact of new ways of working on employees, our ability to meet
statutory deadlines and risks associated with supply of products
across our various markets.
A number of controls and mitigations have been put in place at a
Group level in response to this risk, including frequent monitoring
of cash, financial scenario planning and cost mitigation actions,
as well as additional health and safety procedures in each of our
factories.
Our supply chain teams have responded with pace, optimising
production schedules and operations to mitigate some of the adverse
impacts on our business. All our plants are operational and
operating with increased agility during these times. We have been
successfully collaborating with suppliers and customers to
prioritise key SKUs and ensure continuity of supply and protect
on-shelf availability. This has enabled us to limit the impact on
our customer service levels.
We have increased the likelihood of our Legal & Regulatory
Principal Risk given the level of change in regulation, both new
and modifications to existing laws. A new Principal Risk was added
in reference to Brexit.
CONSOLIDATED INCOME STATEMENT
Restated*
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
Note GBPm GBPm
------------------------------------------ ---- -------------- -------------
Revenue 2,3 1,412.4 1,545.0
Cost of sales (851.6) (898.1)
------------------------------------------ ---- -------------- -------------
Gross profit 560.8 646.9
Selling and distribution expenses (229.0) (229.6)
Administration expenses (201.1) (256.1)
Assets held for sale - impairment charge (0.4) (31.2)
------------------------------------------ ---- -------------- -------------
Operating profit 130.3 130.0
Finance income 2.4 1.0
Finance costs (21.5) (20.7)
------------------------------------------ ---- -------------- -------------
Profit before tax 111.2 110.3
Taxation 4 (16.6) (29.4)
------------------------------------------ ---- -------------- -------------
Profit for the period attributable to the
equity shareholders 94.6 80.9
------------------------------------------ ---- -------------- -------------
Earnings per share
Basic earnings per share 5 35.6p 30.6p
Diluted earnings per share 5 35.4p 30.3p
------------------------------------------ ---- -------------- -------------
All activities relate to continuing operations.
* Please refer to note 2 for details of reclassification restatement.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME/(EXPENSE)
Restated*
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
GBPm GBPm
------------------------------------------------------- ------------- -------------
Profit for the period attributable to the equity
shareholders 94.6 80.9
Other comprehensive income/(expense):
Items that will not be reclassified to profit
or loss
Remeasurement (losses)/gains on defined benefit
pension plans (43.3) 22.1
Current tax on additional pension contributions - 0.2
Deferred tax on defined benefit pension plans 6.4 (4.2)
Deferred tax on other temporary differences (0.1) 0.2
-------------------------------------------------------- ------------- -------------
(37.0) 18.3
------------------------------------------------------- ------------- -------------
Items that may be subsequently reclassified
to profit or loss
(Losses)/gains in in respect of cash flow hedges (4.9) 15.0
Amounts recycled to the income statement in
respect of cash flow hedges 6.6 (7.5)
Current tax on cash flow hedges accounted for
in the hedging reserve - (0.2)
Deferred tax in respect of cash flow hedges
accounted for in the hedging reserve (0.2) (1.3)
Exchange differences reclassified to profit
or loss on disposal of foreign operations (2.3)
Exchange differences on translation of foreign
operations (38.2) 0.7
Tax on exchange differences accounted for in
the translation reserve (0.6) (0.2)
-------------------------------------------------------- ------------- -------------
(39.6) 6.5
------------------------------------------------------- ------------- -------------
Other comprehensive income for the period, net
of tax (76.6) 24.8
-------------------------------------------------------- ------------- -------------
Total comprehensive income for the period attributable
to the equity shareholders 18.0 105.7
-------------------------------------------------------- ------------- -------------
* Please refer to note 2 for details of restatement.
CONSOLIDATED BALANCE SHEET
Restated*
30 September 29 September
2020 2019
Note GBPm GBPm
-------------------------------------- ---- -------------- -------------
Assets
Non-current assets
Property, plant and equipment 462.7 494.0
Right-of-use assets 8 78.1 -
Intangible assets 409.4 427.8
Other receivables 6.0 6.5
Derivative financial instruments 9 25.2 39.5
Deferred tax asset 4.8 5.6
Pension asset 101.8 142.4
-------------------------------------- ---- -------------- -------------
1,088.0 1,115.8
-------------------------------------- ---- -------------- -------------
Current assets
Inventories 118.5 141.0
Trade and other receivables 335.5 358.0
Current income tax receivables 13.1 5.6
Derivative financial instruments 9 12.1 29.9
Cash and cash equivalents 109.2 49.0
Other current assets 10.0 -
-------------------------------------- ---- -------------- -------------
598.4 583.5
Assets held for sale 20.3 42.1
-------------------------------------- ---- -------------- -------------
618.7 625.6
-------------------------------------- ---- -------------- -------------
Total assets 1,706.7 1,741.4
-------------------------------------- ---- -------------- -------------
Current liabilities
Trade and other payables (358.8) (412.4)
Contract rebate liabilities (107.3) (98.7)
Lease liabilities 8 (9.6) -
Interest bearing loans and borrowings 7 (78.7) (166.3)
Derivative financial instruments 9 (2.2) (0.7)
Current income tax payable (2.4) (4.6)
Provisions (13.6) (4.1)
Other current liabilities (10.2) (2.5)
-------------------------------------- ---- -------------- -------------
(582.8) (689.3)
Liabilities held for sale (0.1) (28.4)
-------------------------------------- ---- -------------- -------------
(582.9) (717.7)
-------------------------------------- ---- -------------- -------------
Non-current liabilities
Interest bearing loans and borrowings 7 (586.0) (517.2)
Lease liabilities 8 (70.2) -
Deferred tax liabilities (69.4) (69.8)
Pension liability (10.7) (14.9)
Derivative financial instruments 9 (3.3) (3.1)
Provisions (1.1) (3.2)
Other non-current liabilities (7.6) (0.1)
-------------------------------------- ---- -------------- -------------
(748.3) (608.3)
-------------------------------------- ---- -------------- -------------
Total liabilities (1,331.2) (1,326.0)
-------------------------------------- ---- -------------- -------------
Net assets 375.5 415.4
-------------------------------------- ---- -------------- -------------
Capital and reserves
Issued share capital 53.4 53.1
Share premium account 154.1 145.5
Own shares reserve (3.7) (10.3)
Other reserves 59.8 99.4
Retained earnings 111.9 127.7
-------------------------------------- ---- -------------- -------------
Total equity 375.5 415.4
-------------------------------------- ---- -------------- ---------------
* Please refer to note 2 for details of restatement.
The financial statements were approved by the board of directors
and authorised for issue on 26 November 2020. They were signed on
its behalf by:
Simon Litherland Joanne Wilson
CONSOLIDATED STATEMENT OF CASH FLOWS
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
Note GBPm GBPm
------------------------------------------------------- ------------------ ------------- -------------
Cash flows from operating activities
Profit before tax 111.2 110.3
Net finance costs 19.1 19.7
Other financial instruments (0.2) -
Net impairment/(reversal of impairment) of property,
plant and equipment (0.7) (3.8)
Impairment of right-of-use assets 0.2 -
Impairment of assets held for sale 0.4 31.2
Impairment of intangible assets 8.1 -
Depreciation of property, plant and equipment 43.0 51.7
Depreciation of right of use assets 8 11.0 -
Loss on disposal of property, plant and equipment
and intangible assets 4.3 11.9
Amortisation 15.9 18.5
Share-based payments charge net of cash settlements 0.1 11.3
Net pension charge less contributions (6.9) (16.4)
Foreign exchange gains (2.9) -
Non-cash loss on disposal of assets held for sale 10 0.9 -
Decrease/(increase) in inventory 11.9 (7.8)
Decrease/(increase) in trade and other receivables 22.4 (20.7)
Increase in other current assets (10.0) -
(Decrease)/increase in trade, other payables and
contract liabilities (45.3) 4.5
Increase/(decrease) in provisions 8.0 (1.6)
Income tax paid (21.7) (23.7)
------------------------------------------------------- ------------------ ------------- -------------
Net cash flows from operating activities 168.8 185.1
------------------------------------------------------- ------------------ ------------- -------------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - 0.3
Purchases of property, plant and equipment (43.7) (67.4)
Purchases of intangible assets (6.3) (7.4)
Interest received 0.7 0.9
Divestment of subsidiary 10 13.2 -
Acquisition of subsidiaries, net of cash acquired 10 (2.2) -
------------------------------------------------------- ------------------ ------------- -------------
Net cash flows used in investing activities (38.3) (73.6)
------------------------------------------------------- ------------------ ------------- -------------
Cash flows from financing activities
Interest paid, net of derivative financial instruments (16.5) (21.0)
Net movement on revolving credit facility 7 (64.9) 8.7
Other loans repaid 7 (0.1) (0.3)
Payment of principal portion of lease liabilities 8 (10.2) -
Payment of interest element of lease liabilities 8 (2.1) -
Repayment of finance leases 7 - (0.9)
Partial repayment of 2007 private placement notes 7 - (77.0)
Repayment of 2009 private placement notes 7 (68.4) -
Draw down of 2020 private placement notes 7 152.2 -
Other derivative cash payments (2.5) -
Issue costs paid 7 (2.6) -
Issue of shares relating to incentive schemes
for employees 6.7 2.2
Purchase of own shares (2.8) (8.4)
Dividends paid to equity shareholders (57.6) (75.6)
------------------------------------------------------- ------------------ ------------- -------------
Net cash flows used in financing activities (68.8) (172.3)
------------------------------------------------------- ------------------ ------------- -------------
Net increase/(decrease) in cash and cash equivalents 61.7 (60.8)
Cash and cash equivalents at beginning of period 49.0 109.5
Exchange rate differences (1.5) 0.3
------------------------------------------------------- ------------------ ------------- -------------
Cash and cash equivalents at the end of the period 109.2 49.0
------------------------------------------------------- ------------------ ------------- -------------
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Other Reserves
-------------------------------
Issued Share Own
share premium shares Hedging Translation Merger Retained
capital account reserve reserve reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
At 1 October 2018 (as previously
reported) 52.9 139.1 (5.4) (7.2) 12.8 87.3 97.8 377.3
Adjustment on correction
of error* - - - - - - 3.4 3.4
At 1 October 2018 (restated) 52.9 139.1 (5.4) (7.2) 12.8 87.3 101.2 380.7
Profit for the period - - - - - - 80.9 80.9
Other comprehensive income - - - 6.0 0.5 - 18.3 24.8
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
Total comprehensive income - - - 6.0 0.5 - 99.2 105.7
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
Issue of shares 0.2 6.4 (4.3) - - - - 2.3
Own shares purchased for
share schemes - - (9.0) - - - - (9.0)
Own shares utilised for
share schemes - - 8.4 - - - (7.5) 0.9
Movement in share-based
schemes - - - - - - 9.4 9.4
Current tax on share options
exercised - - - - - - 0.3 0.3
Deferred tax on share options
granted to employees - - - - - - 0.7 0.7
Payment of dividend - - - - - - (75.6) (75.6)
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
At 29 September 2019 (restated) 53.1 145.5 (10.3) (1.2) 13.3 87.3 127.7 415.4
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
Profit for the period - - - - - - 94.6 94.6
Other comprehensive income/(expense) - - - 1.5 (41.1) - (37.0) (76.6)
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
Total comprehensive income/(expense) - - - 1.5 (41.1) - 57.6 18.0
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
Issue of shares 0.3 8.6 (3.7) - - - - 5.2
Own shares purchased for
share schemes - - (2.8) - - - - (2.8)
Own shares utilised for
share schemes - - 13.1 - - - (17.1) (4.0)
Movement in share-based
schemes - - - - - - 1.3 1.3
Current tax on share options
exercised - - - - - - 1.4 1.4
Deferred tax on share options
granted to employees - - - - - - (1.4) (1.4)
Payment of dividend - - - - - - (57.6) (57.6)
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
At 30 September 2020 53.4 154.1 (3.7) 0.3 (27.8) 87.3 111.9 375.5
------------------------------------ -------- -------- -------- -------- ----------- -------- --------- ------
* Please refer to note 2 for details of restatement.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. General information
The preliminary consolidated financial information were
authorised for issue by the Board of Directors on 26 November
2020.
The preliminary consolidated financial information for the 12
months ended 30 September 2020, 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 12
months ended 30 September 2020 were approved by the board on 26
November 2020. 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 2020 will be filed with the Registrar of Companies
in due course.
The Annual Report and Group financial statements for the 52 week
period ended 29 September 2019 were approved by the board on 27
November 2019. 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.
2. Accounting policies
The accounting policies are consistent with those described in
the Annual Report and Group financial statements 2020.
Going concern
As part of the directors' consideration of the appropriateness
of adopting the going concern basis in preparing the Annual Report
and financial statements, a range of scenarios including a view of
severe but plausible levels of COVID-19 restrictions across our
markets have been reviewed. The assumptions modelled are based on
the estimated potential impact of further COVID-19 restrictions to
March 2022, along with an assessment of the impact of key risks
defined in the viability statement, including Brexit, that could
reasonably arise in the period, and our proposed responses.
In particular, we have tested the possibility of the debt
covenants being breached at the six monthly measurement dates,
which are aligned to our reporting dates, to March 2022 with March
2021 being the most sensitive test point as the EBITDA modelling
assumes a full 12 months of reduced trading due to the impact of
restrictions and a working capital peak ahead of summer trading.
Under all the severe but plausible scenarios modelled, and after
taking mitigating actions available in H1 including the phasing of
certain A&P and Capex into H2 our forecasts did not indicate a
breach at any point. This is also the case for September 2021.
The estimated impacts of COVID-19 restrictions are primarily
based on the length of time various levels of restrictions are in
place, and the severity of the consequent impact of those
restrictions on our At-Home and Out-of-Home channels in each
market.
For each of our markets we have sensitised the revenue, profit
and cash flow impact of reduced trading activity in our Out-of-Home
channel and a negative impact of changes in product mix, including
lower on-the-go volumes, for the At-Home channel. The scenarios are
most sensitive to the assumptions made for GB and Ireland where
exposure to the Out-of-Home channel is greater. France and Brazil
are predominantly At-Home markets and therefore drive less
sensitivity.
A key judgement applied is the likely time period of
restrictions on trading activity in the Out-of-Home channel, and
the possibility that restrictions will persist throughout 2021. The
most severe scenario includes an assumption that a level of
restrictions will remain in place until October 2021 with
Out-of-Home outlets only gradually returning towards pre-COVID
levels at the beginning of FY22.
Under each scenario, mitigating actions are all within
management control and can be initiated as they relate to
discretionary spend, and do not impact the ability to meet demand.
These actions include some of the savings from strategic
restructuring completed during FY20 and the rephasing of A&P
and non-essential capex into the second half of FY21.
As part of the Going Concern assessment COVID-19 scenarios have
been combined with the potential impact of key risks that could
reasonably arise in the period, to assess the extent to which
further mitigating actions would be required, and confirm that they
are within management control.
As at 30 September 2020, the consolidated balance sheet reflects
a net asset position of GBP375.5m. In 2020 we re-financed our
GBP400m bank facility with a maturity date of November 2025 and
approximately GBP625m of private placement notes, at contracted
rates, with maturity dates between 2020 and 2035. GBP65m of the
private placement notes have a maturity date before February 2021.
Undrawn facilities as at 30 September were approximately GBP400m
and the RCF also offers an accordion facility of GBP200m, with
lender consent. In all scenarios modelled our liquidity
requirements are within the GBP400m RCF facility.
Debt covenant limits are set at a ratio of 3.5x (rolling
12-month EBITDA/ Adjusted Net Debt) and 3.0x (rolling 12-month
EBITDA/ Net Interest Expenses) in all of our lending agreements. At
30 September 2020, the net debt position was GBP520.4m, our
covenant net debt EBITDA ratio was 2.4x and our covenant net
interest EBITDA ratio was 11x.
On the basis of these reviews, the directors consider it is
appropriate for the going concern basis to be adopted in preparing
the Annual Report and financial statements.
Impact of COVID-19 on financial statements at 30 September
2020
Management has considered the impact on accounting policies,
judgements and estimates in light of the impact of COVID-19
restrictions - in particular we have considered, expected credit
loss for the Group's trade debtors where customers have been
assessed for potential risk, and a provision made for potential
future debt which is not considered material to the Group's
receivables. The net realisable value of inventory for the
Out-of-Home channel has also been assessed and a provision made
which is not considered material to the inventory balance at 30
September 2020.
Impairment reviews of goodwill and intangible assets have been
performed for each cash-generating unit using cash flow projections
and sensitised based on the severe scenarios reviewed for the going
concern review. Please refer to note 15 of the Annual Report for
the outcome of these considerations.
New standards adopted in the current period
Initial adoption of IFRS 16 - 'Leases'
IFRS 16, the new financial reporting standard on accounting for
leases replacing IAS 17, was adopted on 30 September 2019 using the
'modified retrospective' transition approach, meaning that
comparative financial information at 29 September 2019, including
disclosures, has not been restated. IFRS 16 eliminated the
classification of leases as either operating leases or finance
leases for the lessee and, instead, introduced a single lessee
accounting model. Lessor accounting under IFRS 16 is substantially
unchanged from IAS 17.
Impact on lessee accounting
Applying IFRS 16, the Group:
a) Recognises right-of-use assets and lease liabilities in the
consolidated balance sheet, on transition at the present value of
the future lease payments, with the right-of-use asset adjusted by
the amount of any prepaid or accrued lease payments.
b) Recognises depreciation of right-of-use assets and interest
on lease liabilities in the consolidated income statement;
c) Separates the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within financing activities) in the consolidated
statement of cash flows.
Under IFRS 16, right-of-use assets are tested for impairment in
accordance with IAS 36.
For short-term leases (lease term of 12 months or less) and
leases of low-value assets (leases less than GBP3,600) the Group
recognises lease expense on a straight-line basis as permitted by
IFRS 16.
The Group has used the following practical expedients when
applying the modified retrospective to leases previously classified
as operating leases under IAS 17:
-- The Group has applied a single discount rate to a portfolio
of leases with reasonably similar characteristics.
-- The Group has elected not to recognise right-of-use assets
and lease liabilities for certain leases for which the lease term
ends within 12 months of the date of initial application.
The Group did not change the initial carrying amounts of
recognised assets and liabilities at the date of initial
application for leases previously classified as finance leases
(i.e. the right-of-use assets and lease liabilities equal the lease
assets and liabilities recognised under IAS 17).
The most significant IFRS 16 judgements and estimations involve
the selection of an appropriate incremental borrowing rate to
calculate the lease liability. Where possible, lease payments are
discounted using the interest rate implicit in the contract.
Alternatively, the Group's incremental borrowing rate is used.
Further judgement was needed in determining the commencement date
and duration of leases, these have been based on the dates within
the lease contract, or in the case of the Rugby Combined Heat and
Power (CHP) plant asset, when management assessed that the leased
asset was available for use for its intended purpose.
Impact on lessor accounting
IFRS 16 does not change substantially how a lessor accounts for
leases. Under IFRS 16, a lessor continues to classify leases as
either finance leases or operating leases and account for those two
types of leases differently.
Under IFRS 16, an intermediate lessor accounts for the head
lease and the sublease as two separate contracts. The intermediate
lessor is required to classify the sublease as a finance or
operating lease by reference to the right-of-use asset arising from
the head lease (and not by reference to the underlying asset as was
the case under IAS 17).
Financial impact of initial application of IFRS 16
The effect of adopting IFRS 16 on the statement of financial
position at 30 September 2019 was as follows:
Total
GBPm
Assets
Property, plant and equipment (0.8)
Right-of-use assets 43.1
Other receivables (1.3)
Assets held for sale 6.5
-------------------------------------- ------
47.5
-------------------------------------- ------
Liabilities
Lease liabilities (42.6)
Interest bearing loans and borrowings 1.0
Provisions 0.6
Liabilities held for sale (6.5)
-------------------------------------- ------
(47.5)
-------------------------------------- ------
Net assets -
-------------------------------------- ------
As at 29 September 2019, the Group had non-cancellable operating
lease commitments of GBP51.9m. See below for a reconciliation
between operating leases recognised as at 29 September 2019 and
leases recognised under IFRS 16 as at 30 September 2019.
Total
GBPm
Operating lease commitments at 29 September 2019
Within one year 7.9
After one year but not more than five years 15.8
After more than five years 28.2
--------------------------------------------------------------------- -----
Total 51.9
--------------------------------------------------------------------- -----
Additional lease commitments identified at 29 September 2019 8.1
Lease payments relating to renewal periods not included in operating
lease commitments at 29 September 2019 5.8
Undiscounted operating lease commitments 65.8
Discounted operating lease commitments* 48.1
Less lease liabilities recognised within disposal Groups held
for sale (6.5)
Add finance leases reclassified from interest bearing loans and
borrowings 1.0
--------------------------------------------------------------------- -----
Lease liability at 30 September 2019 42.6
--------------------------------------------------------------------- -----
* The weighted average incremental borrowing rate applied on
transition was 2.4%.
IFRIC 23 Uncertainty over income tax treatments
The new interpretation is effective for the Group for the period
commencing 30 September 2019. The Interpretation clarifies
application of recognition and measurement requirements in IAS 12
'Income Taxes'. There was no material impact on the Group's
financial statements.
Restatement of expenses in the income statement
The Group has reclassified certain marginal expenses between
selling and distribution and cost of sales to provide a more
accurate split of costs in line with income statement
categories.
Costs identified were more aligned to cost of sales in nature,
for example, marginal production costs, certain employee costs and
utility costs.
As reported Restated
2019 Reclassification 2019
GBPm GBPm GBPm
----------------------------------------- ----------- ---------------- --------
Revenue 1,545.0 - 1,545.0
Cost of sales (734.0) (164.1) (898.1)
----------------------------------------- ----------- ---------------- --------
Gross profit 811.0 (164.1) 646.9
----------------------------------------- ----------- ---------------- --------
Selling and distribution expenses (393.7) 164.1 (229.6)
Administration expenses (256.1) - (256.1)
Assets held for sale - impairment charge (31.2) - (31.2)
----------------------------------------- ----------- ---------------- --------
Operating profit 130.0 - 130.0
----------------------------------------- ----------- ---------------- --------
Restatement of tax balances
As part of continuous control improvements being undertaken, a
detailed review of historical tax balance sheet positions was
carried out. This highlighted that errors had arisen in calculating
the tax charge predominantly due to incorrect recognition of
historical prior year adjustments from 2015-2018. As a result, the
current income tax receivable at 29 September 2019 was understated
by a total GBP4.2m. The affected line items are Current Income tax
receivables, deferred tax liabilities and retained earnings.
Given the errors date back to years prior to 2019 the opening
2019 balance sheet has been corrected by restating each of the
affected financial statement lines items as follows:
As reported Restated
29 September 29 September
2019 Correction 2019
GBPm GBPm GBPm
------------------------------- ------------- ---------- -------------
Current income tax receivables 1.4 4.2 5.6
Deferred tax liabilities (69.0) (0.8) (69.8)
Capital and reserve
Retained earnings 124.3 3.4 127.7
As reported Restated
1 October 1 October
2018 Correction 2018
GBPm GBPm GBPm
------------------------------- ----------- ---------- ----------
Current income tax receivables 2.3 4.2 6.5
Deferred tax liabilities (62.5) (0.8) (63.3)
Capital and reserve
Retained earnings 97.8 3.4 101.2
New internal controls have subsequently been implemented to
prevent or detect future errors occurring.
Restatement of 2019 consolidated statement of comprehensive
income
The Group has restated the 2019 consolidated statement of
comprehensive income to correct a disclosure error related to the
2007 cross currency interest rate swaps. There is no impact of the
restatement on the total other comprehensive income reported for
2019. The previously reported amounts are reconciled to the
restated amounts as follows:
As previously
reported Correction Restated
Consolidated statement of comprehensive income GBPm GBPm GBPm
---------------------------------------------------- ------------- ---------- --------
Amounts recycled to the income statement in respect
of cash flow hedges
Forward currency contracts 1.5 - 1.5
2007 cross currency interest rate swaps 32.7 (33.7) (1.0)
2010 cross currency interest rate swaps (2.7) - (2.7)
2014 cross currency interest rate swaps (5.3) - (5.3)
---------------------------------------------------- ------------- ---------- --------
26.2 (33.7) (7.5)
---------------------------------------------------- ------------- ---------- --------
(Losses)/gains in the period in respect of cash
flow hedges
Forward currency contracts (1.0) - (1.0)
2007 cross currency interest rate swaps (32.6) 33.7 1.1
2010 cross currency interest rate swaps 4.5 - 4.5
2014 cross currency interest rate swaps 10.4 - 10.4
---------------------------------------------------- ------------- ---------- --------
(18.7) 33.7 15.0
---------------------------------------------------- ------------- ---------- --------
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 plc Executive team and Board
of Directors of the company.
For management purposes, the Group is organised into business
units and has five reportable segments. GB Carbs and GB Stills
segments have been aggregated and are presented as GB for 2020
following a review of operating segments as follows:
-- GB - United Kingdom excluding Northern Ireland.
-- Brazil
-- Ireland - Republic of Ireland and Northern Ireland
-- France
-- 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.
Rest of world
------------------------------
12 months ended GB Brazil Ireland France International RoW Total
30 September 2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ----- ------ ------- ------ ------------- ----- ---------
Revenue from external customers 884.9 113.1 146.6 228.3 39.5 414.4 1,412.4
-------------------------------- ----- ------ ------- ------ ------------- ----- -------
Brand contribution 351.0 24.6 46.4 76.5 6.7 129.6 505.2
-------------------------------- ----- ------ ------- ------ ------------- ----- -------
Non-brand advertising &
promotion* (10.2)
Fixed supply chain** (131.8)
Selling costs** (77.4)
Overheads and other costs* (120.0)
-------------------------------- ----- ------ ------- ------ ------------- ----- -------
Adjusted operating profit*** 165.8
-------------------------------- ----- ------ ------- ------ ------------- ----- -------
Net finance costs (18.9)
Adjusting items*** (35.7)
-------------------------------- ----- ------ ------- ------ ------------- ----- -------
Profit before tax 111.2
-------------------------------- ----- ------ ------- ------ ------------- ----- -------
* 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.
The 'ROW' subtotal includes Ireland, France & International.
The 2019 comparative table below has been updated to reflect this
subtotal.
GB Brazil Rest of world
Total
52 weeks ended GB stills GB carbs GB Brazil Ireland France International RoW Total
29 September 2019 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- --------- -------- ----- ------ ------- ------ ------------- ----- -------
Revenue from external
customers 281.8 663.6 945.4 124.8 175.8 244.9 54.1 474.8 1,545.0
---------------------- --------- -------- ----- ------ ------- ------ ------------- ----- -------
Brand contribution 120.5 259.0 379.5 28.3 52.0 80.0 11.3 143.3 551.1
---------------------- --------- -------- ----- ------ ------- ------ ------------- ----- -------
Non-brand advertising
& promotion* (10.5)
Fixed supply chain** (108.0)
Selling costs** (83.0)
Overheads and other
costs* (135.5)
---------------------- --------- -------- ----- ------ ------- ------ ------------- ----- -------
Adjusted operating
profit*** 214.1
---------------------- --------- -------- ----- ------ ------- ------ ------------- ----- -------
Net finance costs (19.2)
Adjusting items*** (84.6)
---------------------- --------- -------- ----- ------ ------- ------ ------------- ----- -------
Profit before tax 110.3
---------------------- --------- -------- ----- ------ ------- ------ ------------- ----- -------
* Included within 'administration expenses' in the consolidated
income statement. 'Overheads and other costs' relate to central
expenses including salaries, IT maintenance, depreciation and
amortisation, and have been restated to exclude acquisition related
amortisation.
** Included within 'selling and distribution costs' in the consolidated income statement.
*** See Non-GAAP reconciliations for further details on adjusting items.
4. Taxation
2020 2019
GBPm GBPm
--------------------------------------------------- ------ ------
Income statement
Current income tax
Current income tax charge (17.7) (28.4)
Amounts over provided in previous years 2.2 0.9
--------------------------------------------------- ------ ------
Total current income tax charge (15.5) (27.5)
--------------------------------------------------- ------ ------
Deferred income tax
Origination and reversal of temporary differences (2.6) (3.2)
Amounts over provided in previous years 1.5 1.3
--------------------------------------------------- ------ ------
Total deferred tax charge (1.1) (1.9)
--------------------------------------------------- ------ ------
Total tax charge in the income statement (16.6) (29.4)
--------------------------------------------------- ------ ------
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:
2020 2019
GBPm GBPm
---------------------------------------------------------- ----- -----
Basic earnings per share
Profit for the period attributable to equity shareholders 94.6 80.9
---------------------------------------------------------- ----- -----
Weighted average number of ordinary shares in issue
for basic earnings per share 265.9 264.5
---------------------------------------------------------- ----- -----
Basic earnings per share 35.6p 30.6p
---------------------------------------------------------- ----- -----
Diluted earnings per share
Profit for the period attributable to equity shareholders 94.6 80.9
---------------------------------------------------------- ----- -----
Effect of dilutive potential ordinary shares - share
schemes 1.3 2.4
---------------------------------------------------------- ----- -----
Weighted average number of ordinary shares in issue
for diluted earnings per share 267.2 266.9
---------------------------------------------------------- ----- -----
Diluted earnings per share 35.4p 30.3p
---------------------------------------------------------- ----- -----
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
2020 2019
GBPm GBPm
------------------------------------------------------- ----- -----
Declared and paid during the period
Equity dividends on ordinary shares
Final dividend for 2019: 21.7p per share (2018: 20.3p
per share) 57.6 53.6
Interim dividend for 2020: nil per share (2019: 8.3p
per share) - 22.0
------------------------------------------------------- ----- -----
Dividends paid 57.6 75.6
------------------------------------------------------- ----- -----
Proposed
------------------------------------------------------- ----- -----
Final dividend for 2020: 21.6p per share (2019: 21.7p
per share) 57.7 57.6
------------------------------------------------------- ----- -----
7. Interest bearing loans and borrowings
2020 2019
GBPm GBPm
------------------------------ ------ -------
Current
Finance leases - (0.7)
Bank loans (0.1) (66.9)
Private placement notes (79.2) (99.2)
Less: unamortised issue costs 0.6 0.5
------------------------------ ------ -------
Total current (78.7) (166.3)
------------------------------ ------ -------
2020 2019
GBPm GBPm
-------------------------------------------- ------- -------
Non-current
Finance leases - (0.3)
Bank loans - (0.1)
Private placement notes (588.6) (518.0)
Less: unamortised issue costs 2.6 1.2
-------------------------------------------- ------- -------
Total non-current (586.0) (517.2)
-------------------------------------------- ------- -------
Total interest bearing loans and borrowings (664.7) (683.5)
-------------------------------------------- ------- -------
Total interest bearing loans and borrowings comprise the
following:
2020 2019
GBPm GBPm
------------------------ ------- -------
Finance leases - (1.0)
2009 Notes - (96.5)
2010 Notes (90.5) (94.7)
2014 Notes (123.3) (127.7)
2017 Notes (175.0) (175.0)
2018 Notes (121.3) (120.6)
2020 Notes (154.3) -
Accrued interest (3.4) (2.7)
Bank loans (0.1) (67.0)
Capitalised issue costs 3.2 1.7
------------------------ ------- -------
(664.7) (683.5)
------------------------ ------- ---------
Analysis of changes in interest-bearing loans and borrowings
2020 2019
GBPm GBPm
------------------------------------------------------- ------- -------
At the beginning of the period (683.5) (769.1)
Net movement on revolving credit facility 64.9 (8.7)
Other loans repaid 0.1 0.3
Partial repayment of private placement notes* 90.3 77.0
Drawdown of 2020 private placement notes (152.2) -
Issue costs 2.6 -
Reclass of finance leases on adoption of IFRS 16 (note
2) 1.0 -
Repayment of finance leases - 0.9
Amortisation of issue costs and write-off of financing
fees (1.1) (0.3)
Net translation gain and fair value adjustment 13.9 15.8
Accrued interest (0.7) 0.6
------------------------------------------------------- ------- -------
At the end of the period (664.7) (683.5)
Derivatives hedging balance sheet debt** 35.1 68.3
------------------------------------------------------- ------- -------
Debt translated at contracted rate (629.6) (615.2)
------------------------------------------------------- ------- -------
* During the year ended 30 September 2020, the 2009 USPP Notes
were repaid and the associated derivatives and firm commitment
liability were settled, resulting in a net cash outflow of
GBP68.4m. This comprised a payment of GBP92.7m in respect of the
outstanding loans and borrowings of GBP90.3m and firm commitment of
GBP2.4m and net cash proceeds received of GBP24.3m on maturity of
the related cross currency interest rate swaps.
** 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.
8. Leases
The Group has lease contracts for properties, plant and
machinery and vehicles. Leases of property have lease terms between
5 and 75 years, plant and machinery generally have lease terms
between 5 and 10 years, while motor vehicles generally have lease
terms between 2 and 4 years. There are several lease contracts that
include extension and termination options. These options are
negotiated by management to provide flexibility in managing the
leased-asset portfolio and align with the Group's business needs.
Where a lease contract contains an extension or termination option,
management use judgement to determine the lease term when measuring
lease liabilities. At 30 September 2020, the undiscounted potential
future rental payments relating to periods following the exercise
date of extension and termination options that are not included in
the lease term are not material.
Right-of-use assets
Set out below are the carrying amounts of right-of-use assets
recognised and the movements during the period:
Leasehold
Leased plant and Leased
property machinery vehicles Total
GBPm GBPm GBPm GBPm
---------------------------------------- --------- ---------- --------- ------
At 30 September 2019 net of accumulated
depreciation* 30.3 7.3 5.5 43.1
Exchange differences (0.1) (0.1) (0.1) (0.3)
Acquisitions 0.2 - 0.2 0.4
Additions 43.7 1.7 0.7 46.1
Depreciation charge for the period (5.3) (3.1) (2.6) (11.0)
Impairment charge (0.2) - - (0.2)
---------------------------------------- --------- ---------- --------- ------
At 30 September 2020 net of accumulated
depreciation 68.6 5.8 3.7 78.1
---------------------------------------- --------- ---------- --------- ------
* Right-of-use asset recognised on adoption of IFRS 16, see note 2
Lease liabilities
Set out below are the carrying amounts of lease liabilities and
the movements during the period:
Total
GBPm
------------------------------------------------- -----
At 30 September 2019, on adoption of IFRS16
(note 2) 42.6
Exchange differences (0.3)
Acquisitions (note 10) 0.3
Additions* 46.1
Accretion of interest 2.0
Payment of principal element of lease
liabilities (8.9)
Payment of interest element of lease liabilities (2.0)
---------------------------------------------------- -----
At 30 September 2020 79.8
---------------------------------------------------- -----
Current 9.6
Non-current 70.2
---------------------------------------------------- -----
At 30 September 2020 79.8
---------------------------------------------------- -----
* Additions include GBP42.1m in relation to the combined heating
and power plant at Rugby, which was made available and brought into
use on 1 December 2019. The undiscounted cash flows for this asset
were previously included within the capital commitments disclosed
at 29 September 2019.
The maturity analysis of lease liabilities is disclosed in the
liquidity risk section of note 25 in the Annual Report and Group
financial statements for the 12 months ended 30 September 2020.
The following are the amounts recognised in the Income
Statement:
2020
GBPm
------------------------------------------ -----
Depreciation of right-of-use assets 11.0
Impairment of right-of-use assets 0.2
Interest expense on lease liabilities 2.1
------------------------------------------ -----
Total amount recognised in profit or loss 13.3
------------------------------------------ -----
* Lease liabilities interest expense includes GBP0.1m in respect
of lease liabilities classified within disposal Groups held for
sale.
The Group had total cash outflows for leases of GBP12.3 million
during the year ended 30 September 2020, including GBP1.4m related
to leases classified within disposal Groups held for sale.
Comparative disclosures required by IAS 17
On 30 September 2019 the Group adopted IFRS 16 Leases using the
modified retrospective approach. Accordingly, prior year financial
statements and disclosures have not been restated. Lease
disclosures required by IFRS 16 for the year ended 30 September
2020 are presented above and the lease disclosures required by the
predecessor standard, IAS 17, are presented below.
Operating lease commitments
Future minimum lease payments under non-cancellable operating
leases were as follows:
2019
------------------------
Land and
buildings Other Total
GBPm GBPm GBPm
-------------------------------------------- ---------- ----- -----
Within one year 4.0 3.9 7.9
After one year but not more than five years 10.5 5.3 15.8
After more than five years 28.1 0.1 28.2
-------------------------------------------- ---------- ----- -----
42.6 9.3 51.9
-------------------------------------------- ---------- ----- -----
Finance lease commitments
Future minimum lease payments under finance leases were as
follows:
2019
GBPm
--------------------------------------------- ------
Within one year 0.7
After one year but not more than five years 0.3
--------------------------------------------- ------
1.0
--------------------------------------------- ------
Due to the timing of the expiry of the finance lease
commitments, there was no material difference between the total
future minimum lease payments and their fair value.
9. Derivatives and hedge relationships
As at 30 September 2020 the Group had entered into the following
derivative contracts.
2020 2019
GBPm GBPm
------------------------------------------------------------ ----- -----
Consolidated balance sheet
Non-current assets: derivative financial instruments
Fair value of the USD GBP cross currency fixed interest
rate swaps* 22.3 30.1
Fair value of the USD GBP cross currency floating interest
rate swaps*** 2.9 9.3
Fair value of forward currency contracts - 0.1
------------------------------------------------------------ ----- -----
25.2 39.5
------------------------------------------------------------ ----- -----
Current assets: derivative financial instruments
Fair value of the USD GBP cross currency fixed interest
rate swaps* 5.1 0.6
Fair value of the USD GBP cross currency floating interest
rate swaps*** 5.2 26.9
Fair value of the GBP euro cross currency floating interest
rate swaps** - 0.3
Fair value of forward currency contracts* 1.6 2.1
Fair value of forward currency contracts 0.2 -
------------------------------------------------------------ ----- -----
12.1 29.9
------------------------------------------------------------ ----- -----
Current liabilities: derivative financial instruments
Fair value of forward currency contracts* (0.2) (0.4)
Fair value of forward currency contracts (0.6) (0.2)
Fair value of the GBP euro cross currency floating interest
rate swaps** (1.4) (0.1)
------------------------------------------------------------ ----- -----
(2.2) (0.7)
------------------------------------------------------------ ----- -----
Non-current liabilities: derivative financial instruments
Fair value of the GBP euro cross currency fixed interest
rate swaps** (1.7) (3.1)
Fair value of forward currency contracts* (0.1) -
Fair value of euro interest rate swaps* (0.1) -
Fair value of GBP interest rate swaps* (1.4) -
------------------------------------------------------------ ----- -----
(3.3) (3.1)
------------------------------------------------------------ ----- -----
* Instruments designated as part of a cash flow hedge relationship.
** Instruments designated as part of a net investment hedge
relationship.
*** Instruments designated as part of a fair value hedge
relationship.
10. Acquisitions & Disposals
Acqusitions
On 6 June 2020, the Group acquired 100% of the issued share
capital of The Boiling Tap Company Ltd (TBTC), an Integrated Tap
System (ITS) business that supplies high quality taps to commercial
customers across GB offering hot, cold and sparkling water. The
acquisition provides Britvic access to the rapidly growing ITS
filtered water dispense market, transforms Britvic's capabilities
in ITS and enables Britvic to rapidly accelerate the development
and roll out of flavoured tap station solutions. The acquisition is
a key contributor towards Britvic's strategic objectives to
'breakthrough solutions beyond the bottle' and 'flavour billions of
water occasions'.
The initial accounting for the acquisition is provisional at the
end of the reporting period due to the significant uncertainties
posed by COVID-19 on the valuation of intangible assets and
contingent consideration. The acquisition accounting may be subject
to revision during the 12 months following the acquisition
date.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of
TBTC at the date of acquisition were as follows:
2020
GBPm
-------------------------------------------- -----
Assets
Intangible assets; technology 3.8
Intangible assets; customer relationships 4.8
Property, plant and equipment 0.1
Right-of-use assets (note 8) 0.4
Inventories 0.6
Trade and other receivables 0.6
Cash and cash equivalents 0.4
-------------------------------------------- -----
Total 10.7
-------------------------------------------- -----
Liabilities
Trade and other payables (0.6)
Lease liabilities (note 8) (0.1)
Current income tax payable (0.2)
Other liabilities (0.2)
Non- current deferred tax liability (1.6)
Non-current lease liabilities (note 8) (0.2)
-------------------------------------------- -----
Total (2.9)
-------------------------------------------- -----
Total identifiable net assets at fair value 7.8
-------------------------------------------- -----
Goodwill arising on acquisition 6.6
-------------------------------------------- -----
Purchase consideration 14.4
-------------------------------------------- -----
The goodwill arising on acquisition of GBP6.6m has been
allocated entirely to the GB operating segment given the current
business operations are GB focused.
The key constituent parts of goodwill comprise mainly future
customer relationships and technological developments through which
TBTC will generate revenue and the replacement cost of TBTC's
assembled workforce. Workforce is not separately capitalised on the
balance sheet under IFRS but is a component of goodwill.
None of the goodwill recognised is expected to be deductible for
income tax purposes.
Intangible assets identified separately from goodwill are
technology of GBP3.8m and customer relationships of GBP4.8m, which
have each been allocated a useful economic life of 14 years.
Purchase consideration
Purchase consideration is analysed as follows:
2020
GBPm
----------------------------------- -----
Cash 2.3
Deferred consideration liability 6.9
Contingent consideration liability 5.2
----------------------------------- -----
Total consideration 14.4
----------------------------------- -----
2020
GBPm
----------------------------------------------------------------- -----
Analysis of cash flows on acquisition
Transaction costs of the acquisition (included in cash flows
from operating activities) 0.3
Net cash acquired with the subsidiary (included in cash flows
from investing activities) (0.4)
Net cash paid to acquire subsidiary (included in cash flows from
investing activities) 2.3
----------------------------------------------------------------- -----
Net cash outflow on acquisition 2.2
----------------------------------------------------------------- -----
Deferred and contingent consideration
Deferred consideration of GBP7.1m (fair value GBP6.9m) will be
paid, subject to two financial stress tests which management expect
to be met, to the previous owners in May 2021.
As part of the purchase agreement there is an element of
contingent consideration which comprises additional cash payments
to the previous owners of TBTC of the following amounts if
operating profit targets are achieved during an earn-out
period:
-- GBP3.0m (fair value GBP2.7m) in the first year
-- A further GBP3.0m (fair value GBP2.5m) in the second year
The earn-out period will commence when normal trading conditions
have resumed post COVID-19, with the timeframe to be agreed between
Britvic and the former shareholders of TBTC, but is expected to
span FY21 - FY23. As at 30 September 2020, management anticipate
the commencement of the earn-out period to begin during 2021.
In addition, on acquisition, an employee incentive scheme was
created with a scheme duration of three years. During the year
ended 30 September 2020 an associated charge of GBP0.5m has been
incurred. Additional costs of up to GBP4.0m are expected to be
incurred between FY21-FY23 if performance criteria are
achieved.
As at the acquisition date, the fair value of the deferred and
contingent consideration was estimated to be GBP12.1m. The
acquisition date fair value reflects management's expectation that
achievement of the performance targets is highly probable, and the
fair value has been determined using a discounted cash flow method.
The fair value of the deferred and contingent consideration at 30
September 2020 reflects the unwinding of an element of the discount
due to the passage of time.
A reconciliation of the fair value measurement of the deferred
and contingent consideration liability is provided below:
GBPm
---------------------- ----
At 6 June 2020 12.1
Unwinding of discount 0.2
---------------------- ----
At 30 September 2020 12.3
---------------------- ----
Deferred and contingent consideration are recorded within other
liabilities and other non-current liabilities on the Groups balance
sheet.
From the date of the acquisition, TBTC contributed GBP0.6m of
revenue to the Group, and a loss before interest and tax of
GBP0.2m, relating to intangible asset amortisation as included as
part of adjusting items. If the combination had taken place at the
beginning of the year, revenue would have been GBP2.0m, with a loss
before interest and tax of GBP0.2m.
Disposals
On the 30 September 2020 the Group completed the transaction
with Refresco to dispose its three juice manufacturing sites in
France, its private label juice business, and the Fruité brand.
During the year ended 30 September 2020, an Income Statement charge
of GBP5.3m was incurred relating to the finalised purchase price,
legal and professional fees associated with the disposal and other
costs, including a credit of GBP2.3m relating to foreign exchange
gain on the disposed business recycled through the Income
Statement. The costs associated with the disposal have been
included within adjusting items.
2020
GBPm
------------------------------------------------------------ --------
Assets
Intangible assets -
Property, plant and equipment 15.1
Inventories 8.5
Trade and other receivables 10.6
------------------------------------------------------------ --------
Total assets 34.2
------------------------------------------------------------ --------
Liabilities
Trade and other payables (15.6)
Pension liability (1.5)
Deferred tax liability (0.7)
------------------------------------------------------------ --------
Total liabilities (17.8)
------------------------------------------------------------ --------
Net assets disposed of 16.4
------------------------------------------------------------ --------
Cash proceeds arising from transaction (13.2)
------------------------------------------------------------ --------
Loss on disposal 3.2
------------------------------------------------------------ --------
Foreign exchange gain recycled through the Income Statement (2.3)
------------------------------------------------------------ --------
Loss on disposal including foreign exchange gain 0.9
------------------------------------------------------------ --------
Additional costs on disposal 4.4
------------------------------------------------------------ --------
Income statement charge 5.3
------------------------------------------------------------ --------
11. Post balance sheet events
In October 2020 Britvic signed a new and exclusive 20 year
franchise bottling agreement with Pepsi for the production,
distribution, marketing and sales of its soft drink brands in GB,
which provides access to a portfolio of global brands, including
Pepsi MAX, 7UP and now Rockstar. The GB agreement runs to December
2040.
NON-GAAP RECONCILIATIONS
Adjusting items
The Group excludes adjusting items from its Non-GAAP measures
because of their size, frequency and nature to allow shareholders
to understand better the elements of financial performance in the
year, so as to facilitate comparison with prior periods and to
assess trends in financial performance more readily.
These items primarily relate to the loss on disposal of the
French juices business, impairment of intangible assets, goodwill
and property, plant and equipment in the Counterpoint business,
restructuring costs associated with the divestment of part of the
French business, employee restructuring costs and other one-off
items that are not considered part of business operations as
detailed in the notes below. In addition, acquisition related costs
such as amortisation of acquired intangibles and the impairment of
assets held for sale as part of a disposal are also considered
adjusting items.
Adjusted KPIs are used to measure the underlying profitability
of the Group and enable comparison of performance against peers.
They are also used in the calculation of short and long term reward
schemes.
In prior years adjusting items included fair value movements on
financial instruments where hedge accounting cannot be applied on
future transactions and also where hedge ineffectiveness is
recognised. Consideration is made each year as to whether fair
value movements on derivative financial instruments where hedge
accounting cannot be applied to future transactions or where there
is ineffectiveness in the hedge relationship, are recorded within
adjusting items.
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
Notes GBPm GBPm
------------------------------------------------------- ------ ------------- -------------
Strategic restructuring - business capability
programme (a) (1.6) (33.0)
Strategic restructuring - organisational capability
transformation (b) (11.3) -
Credits in relation to the acquisition and integration
of subsidiaries (c) 1.3 1.3
Strategic M&A activity (d) (6.3) (2.5)
Closure of Fruit Shoot multi-pack operations in
the USA (e) - (2.1)
Impairment of assets held for sale (f) (0.4) (31.2)
Pension scheme costs (g) - (6.2)
Impairment of Counterpoint assets (h) (8.4) -
Acquisition related amortisation (i) (8.8) (10.4)
------------------------------------------------------- ------ ------------- -------------
Total included in operating profit (35.5) (84.1)
--------------------------------------------------------------- ------------- -------------
Fair value movements (j) - (0.5)
Unwind of discount on deferred consideration (k) (0.2) --
------------------------------------------------------- ------ ------------- -------------
Total included in finance costs (0.2) (0.5)
--------------------------------------------------------------- ------------- -------------
Tax on adjusting items - merger of Brazil entities (l) 1.6 -
Tax on adjusting items included in profit before
tax 13.9 7.4
--------------------------------------------------------------- ------------- -------------
Total included in taxation 15.5 7.4
--------------------------------------------------------------- ------------- -------------
Net adjusting items (20.2) (77.2)
--------------------------------------------------------------- ------------- -------------
a) Strategic restructuring - business capability programme'
relates to the restructuring of supply chain and the operating
model across the Group, initiated in 2016. Of the GBP1.6m costs in
the current year, GBP2.6m relates to the closure of the Norwich
site for site services, advisory and exit costs, offset by a
GBP1.0m credit for the part reversal of a previous impairment
charge in relation to the Norwich land and buildings.
b) Strategic restructuring - organisational capability
transformation primarily relates to contract termination costs,
consultation fees and employee termination benefits following the
implementation of a Group wide strategic restructure announced
during the year.
c) Relates to the release of purchase price allocation
provisions for Bela Ischia Alimentos Ltda (Bela Ischia) and Empresa
Brasileira de Bebidas e Alimentos SA (Ebba).
d) Strategic M&A activity in the current year primarily
relates to charges incurred as part of the disposal of our French
private label juice business (refer to note 34) and the acquisition
of TBTC (refer to note 34). On acquisition of TBTC, an employee
incentive scheme was created with a scheme duration of three years.
Associated employee incentive payments are expected to be reflected
within adjusting items over the associated performance period.
e) Closure of Fruit Shoot multi-pack operations in the USA costs
incurred in the prior year related to assets and inventory
write-offs and employee costs.
f) The current year charge of GBP0.4m relate to an impairment of
Norwich and Counterpoint as a result of moving the assets into held
for sale. The prior year charge of GBP31.2m related to the French
disposal.
g) Pension scheme costs in the prior year relate to a charge
resulting from the equalisation of Guaranteed Minimum Pension (GMP)
in the GB and Northern Ireland pension schemes and associated
pension advisory costs.
h) During 2020 intangible assets, goodwill and PPE relating to
the Counterpoint business were impaired.
i) Acquisition related amortisation relates to the amortisation
of intangibles recognised on acquisitions in GB, Ireland, France
and Brazil.
j) 'Fair value movements' in the prior year relates 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.
k) 'Unwind of discount on deferred consideration' relates to TBTC acquisition (note 10).
l) Following the merger of Brazil entities during the year, a
deferred tax asset on intangibles has been recognised within the
Group.
Adjusted profit
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
GBPm GBPm
---------------------------------------------------------------- ------------- -------------
Operating profit as reported 130.3 130.0
Add back adjusting items in operating profit 35.5 84.1
---------------------------------------------------------------- ------------- -------------
Adjusted EBIT 165.8 214.1
---------------------------------------------------------------- ------------- -------------
Net finance costs (19.1) (19.7)
Add back adjusting net finance costs 0.2 0.5
---------------------------------------------------------------- ------------- -------------
Adjusted profit before tax and acquisition related amortisation 146.9 194.9
---------------------------------------------------------------- ------------- -------------
Acquisition related amortisation (8.8) (10.4)
---------------------------------------------------------------- ------------- -------------
Adjusted profit before tax 138.1 184.5
---------------------------------------------------------------- ------------- -------------
Taxation (16.6) (29.4)
Less adjusting tax credit (15.5) (7.4)
---------------------------------------------------------------- ------------- -------------
Adjusted profit after tax 106.0 147.7
---------------------------------------------------------------- ------------- -------------
Adjusted effective tax rate 23.2% 19.9%
---------------------------------------------------------------- ------------- -------------
Earnings per share
2020 2019
GBPm GBPm
----------------------------------------------------------- ----- -----
Adjusted earnings per share
Profit for the period attributable to equity shareholders 94.6 80.9
Add: Net impact of adjusting items 20.2 77.2
----------------------------------------------------------- ----- -----
114.8 158.1
----------------------------------------------------------- ----- -----
Weighted average number of ordinary shares in issue
for basic earnings per share 265.9 264.5
----------------------------------------------------------- ----- -----
Adjusted earnings per share 43.2p 59.8p
----------------------------------------------------------- ----- -----
Adjusted diluted earnings per share
Profit for the period attributable to equity shareholders
before adjusting items and acquisition related intangible
assets amortisation 114.8 158.1
Weighted average number of ordinary shares in issue
for diluted earnings per share 267.2 266.9
----------------------------------------------------------- ----- -----
Adjusted diluted earnings per share 43.0p 59.2p
----------------------------------------------------------- ----- -----
Constant currency and like-for-like movements
Adjusted
Revenue Brand Contribution EBIT
GBPm GBPm GBPm
--------------------------------------------------- ------- ------------------ --------
2019
52-week period ended 29 September 2019 as reported 1,545.0 551.1 214.1
Like-for-like cost reclassification* - 12.4 -
Adjustment for FX (29.1) (6.9) (1.8)
--------------------------------------------------- ------- ------------------ --------
2019 like-for-like at constant currency 1,515.9 556.6 212.3
--------------------------------------------------- ------- ------------------ --------
* Reclassification of certain prior year costs in GB (GBP9.7m)
and Ireland (GBP2.7m) from variable to fixed costs to allow
like-for-like comparison with the current year.
Free cash flow
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
GBPm GBPm
-------------------------------------------------------- ------------- -------------
Net cash flows from operating activities 168.8 185.1
Purchases of property, plant & equipment (43.7) (67.4)
Purchases of intangible assets (6.3) (7.4)
Interest paid, net of derivative financial instruments (16.5) (21.0)
Repayment of principal portion of lease liabilities (10.2) -
Repayment of interest element of lease liabilities (2.1) -
Repayment of finance leases - (0.9)
-------------------------------------------------------- ------------- -------------
Free cash flow 90.0 88.4
-------------------------------------------------------- ------------- -------------
Adjusted net debt/EBITDA ratio
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
GBPm GBPm
------------------------------------------------------------- ------------- -------------
EBITA 165.8 214.1
------------------------------------------------------------- ------------- -------------
Depreciation of Assets 43.0 45.7
Depreciation of Right of Use Assets 11.0 -
Amortisation excl. acquisition related 7.1 8.0
Loss on disposal of property, plant & equipment & intangible
assets 4.3 2.3
------------------------------------------------------------- ------------- -------------
Reported EBITDA 231.2 270.1
------------------------------------------------------------- ------------- -------------
Less payment of lease liabilities as estimate for pre-IFRS16
rental charges (12.3) -
------------------------------------------------------------- ------------- -------------
EBITDA 218.9 270.1
------------------------------------------------------------- ------------- -------------
Adjusted Net Debt 520.4 566.2
12 Month EBITDA (pre IFRS16) 218.9 270.1
------------------------------------------------------------- ------------- -------------
Net Debt/EBITDA ratio 2.4x 2.1x
------------------------------------------------------------- ------------- -------------
Net interest (19.1) (19.7)
------------------------------------------------------------- ------------- -------------
EBITDA/Net Interest ratio 11x 14x
------------------------------------------------------------- ------------- -------------
Adjusted net debt
12 months 52 weeks
ended ended
30 September 29 September
2020 2019
GBPm GBPm
--------------------------------------- ------------- -------------
Cash and cash equivalents (109.2) (49.0)
Derivatives hedging balance sheet debt (35.1) (68.3)
Interest bearing loans and borrowings 664.7 683.5
--------------------------------------- ------------- -------------
Adjusted net debt 520.4 566.2
--------------------------------------- ------------- -------------
Glossary
A&P is Advertising and Promotion and is a measure of
marketing spend including marketing, research and advertising.
Adjusted earnings per share is a non-GAAP measure calculated by
dividing adjusted earnings by the average number of shares during
the period. Adjusted earnings is defined as the profit/(loss)
attributable to ordinary equity shareholders before adjusting
items.
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 net debt is a non-GAAP measure and is defined as Group
net debt, adding back the impact of derivatives hedging the balance
sheet debt.
Adjusted EBITDA is a non-GAAP measure calculated by taking Group
EBITA; adding back depreciation; amortisation; loss on disposal of
Property, Plant and Equipment; payment of lease liabilities as
estimate for pre-IFRS16 rental charges.
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.
ARP is Average Realised Price and is defined as average price
per litre sold, excluding factored brands and concentrate
sales.
BPS is basis points and is a measure used to describe the
percentage change in a value. One basis point is equivalent to
0.01%.
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.
CAGR is Compound Annual Growth Rate.
CGU is Cash Generating Unit.
CHP is the Combined Heat and Power plant located at the Rugby
site and used to generate power.
Constant exchange rate is a non-GAAP measure of performance in
the underlying currency to eliminate the impact of foreign exchange
movements.
EBITDA is Earnings Before Interest, Taxation, Depreciation and
Amortisation.
EPS is Earnings Per Share.
FMCG is Fast Moving Consumer Goods.
Free cash flow is defined as cash generated from operating
activities, less capex, interest and repayment of lease
liabilities.
Innovation is defined as new launches over the last three years,
excluding new flavours and pack sizes of established brands.
M&A is Mergers and Acquisitions.
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.
Organic is a non-GAAP measure which excludes the impact of the
acquisition of The Boiling Tap Company and presented on a constant
currency basis.
PBTA is Profit Before Tax and Amortisation.
PET is polyethylene terephthalate plastic.
PPE is Personal Protective Equipment.
Revenue is defined as sales achieved by the group net of price
promotional investment and retailer discounts.
Revenue management is used to define a range of actions to
affect ARP. It includes, but is not limited to, price increases,
changes to price promotions and variation of pack size.
rPET is recycled polyethylene terephthalate plastic.
SKU is Stock-Keeping Units.
TBTC is The Boiling Tap Company.
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
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END
FR FIFVLLVLRFII
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November 26, 2020 02:00 ET (07:00 GMT)
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