REG - Britvic plc - Final Results
22/11/2023 07:15
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RNS Number : 2097U Britvic plc 22 November 2023
Britvic plc Preliminary Results - 22 November 2023
For the year ended 30 September 2023
'Excellent progress in a challenging market'
Group Financial Headlines:
· Revenue increased 6.6%(1) to £1,748.6 million (statutory increased
8.1%), driven by price/mix
· Adjusted EBIT increased 5.9% to £218.4 million (actual exchange rate
increased 6.0%), reported EBIT decreased 5.6%
· Adjusted EBIT margin decreased 10bps(1) to 12.5% (statutory decreased
20bps)
· Adjusting EBIT items(2) net charge of £36.9 million, of which £28.8m
was non-cash
o Including a £20.5 million non-cash pension adjustment related to a
mutually beneficial conclusion with the Trustees in respect of the rate of
future pension increases
· Profit after tax decreased 11.6% to £124.0 million, mainly driven by
the impact of adjusting items
· Adjusted earnings per share of 61.0p, increased 6.5%
· Free cash flow generation of £129.8 million, with adjusted net debt
to EBITDA at 1.9x
· Full year dividend increased 6.2% at 30.8p, reflecting the Board's
confidence in our prospects and strong balance sheet
Operational Highlights:
· Demand remained strong, modest volume decline due to tough Q4 comparable
of the hot summer in Europe in 2022 and poor weather in July and August 2023
· Successfully managing the inflationary environment
· Standout performances from Tango and Pepsi MAX
· Leveraging our brand building capability to scale Plenish, Aqua Libra
and our Global Premium brands
· Bolt-on acquisitions in Great Britain and Brazil to access
fast-growing categories
· Continued investment in growth capacity, with new lines operational in
Great Britain and Brazil
· Healthier consumer choices (total portfolio average 22 calories per
serve, 12.5 calories per serve in Great Britain), and Healthier Planet,
through investment in decarbonisation and water stewardship programmes
· Share buyback ongoing, £75 million repurchased over the last 12
months
Year ended Year ended % change Adjusted
30 September 30 September actual exchange % change
2023 2022 rate (statutory) constant
£m £m exchange rate(1)
Revenue 1,748.6 1,618.3 8.1% 6.6%
Adjusted EBIT 218.4 206.0 6.0% 5.9%
Adjusted EBIT margin 12.5% 12.7% (20)bps (10)bps
Adjusting EBIT items (2) (36.9) (13.6) (171.3)% (171.3)%
Reported EBIT 181.5 192.4 (5.7)% (5.6)%
Reported EBIT margin 10.4% 11.9% (150)bps (130)bps
Profit after tax 124.0 140.2 (11.6)% (11.4)%
Basic EPS 48.3p 52.6p (8.2)%
Adjusted basic EPS 61.0p 57.3p 6.5%
Full year dividend per share 30.8p 29.0p 6.2%
Adjusted net debt/EBITDA 1.9x 1.9x -
ROIC 17.9% 16.4% 150bps
See glossary on page 31 for definitions of performance measures and the
appendix of non-GAAP reconciliations on page 27 for the reconciliation of
alternative performance measures to IFRS measures.
1. Adjusted for constant currency.
2. Adjusting EBIT items of £36.9 million are detailed on page 27.
Total adjusting items totalled £38.4 million, of which £36.9 million are
EBIT-related (year ended 30 September 2022: £13.6 million).
Simon Litherland, Chief Executive Officer commented:
"We have delivered another set of excellent results, making strong progress
across our People, Planet and Performance measures. Our portfolio of family
favourite brands and focus on great tasting, healthier drinks offer both
quality and value at affordable prices. We have continued to invest across our
supply chain, adding capacity and upgrading technology, while also building
our brands and portfolio, including the acquisitions of Extra Power in Brazil
and Jimmy's Iced Coffee in Great Britain. Looking ahead, we have clear
strategic priorities for 2024 and an exciting programme of marketing and
innovation launches coming to market. With our fantastic portfolio and
talented, engaged team, I am confident Britvic will continue to make excellent
progress next year and beyond, delivering growth and creating value for all
our stakeholders."
For further information please contact:
Investors:
Rebecca Napier (Chief Financial Officer) +44 (0) 1442 284330
Steve Nightingale (Director of Investor Relations) +44 (0) 7808 097784
Media:
Steph Macduff-Duncan (Head of Corporate Communications) +44 (0) 7808 097680
Stephen Malthouse (Headland) +44 (0) 7734 956201
There will be a live webcast of the presentation today at 09:00am by Simon
Litherland (Chief Executive Officer) and Rebecca Napier (Chief Financial
Officer). The webcast will be available at www.britvic.com/investors with a
transcript available in due course.
About Britvic
Britvic is an international soft drinks business, rich in history and
heritage. Founded in England in the 1930s, it has grown into a global
organisation with 39 much-loved brands sold in over 100 countries. 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 Great
Britain and Ireland under exclusive PepsiCo agreements.
Britvic is the largest supplier of branded still soft drinks in Great Britain
and the number two supplier of branded carbonated soft drinks in Great
Britain. 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 its growth market, Brazil, with
Maguary, Bela Ischia and Dafruta. Britvic is growing its reach into other
territories through franchising, export, and licensing.
Britvic is a purpose-driven organisation with a clear vision and a clear set
of values. Our purpose, vision and values sit at the heart of our company,
driving us forward together to create a better tomorrow. We want to contribute
positively to the people and world around us. This means ensuring that our
sustainable business practices, which we call Healthier People, Healthier
Planet, are embedded in every element of our business strategy.
Britvic is listed on the London Stock Exchange under the code BVIC and is a
constituent of the FTSE 250 index. Find out more at Britvic.com
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.britvic.com%2F&data=05%7C01%7CKathryn.Partridge%40britvic.com%7Cd80758f9094d4c90b01208dac242188d%7C6b08ee1b6920497fa56375ca24281876%7C0%7C0%7C638035886369171992%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=nqRGQlU66p5N5j8Ou%2BW2CBJrSvqCHce2P1xlXzxMPPI%3D&reserved=0)
Cautionary note regarding forward-looking statements
This announcement includes statements that are forward-looking in nature.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance, or achievements
of the Group to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements.
Except as required by the Listing Rules and applicable law, Britvic undertakes
no obligation to update or change any forward-looking statements to reflect
events occurring after the date such statements are published.
Market data
Great Britain take-home market data referred to in this announcement is
supplied by Nielsen and runs to 23 September 2023. ROI take-home market data
referred to is supplied by Nielsen and runs to 10 September 2023. French
market data is supplied by Nielsen and runs to 10 September 2023. Brazil
market data is supplied by Nielsen and runs to 30 September 2023.
Next scheduled announcement
Britvic will publish its quarter one trading statement on 25 January 2024.
Chief Executive Officer's Review
Performance highlights
Today we report our results for the year ended 30 September 2023. The Britvic
team have continued to show resilience, agility, and dedication to deliver a
fantastic set of outcomes. I want to thank them and their families for their
unwavering commitment to Britvic.
Revenue is ahead of last year, at +6.6% (+8.1% on a statutory basis). Through
a combination of revenue growth management actions and cost discipline we have
been able to mitigate the substantial cost inflation pressures, with adjusted
EBIT margin only 10 basis points down on last year. Consequently, adjusted
EBIT increased 5.9% (actual exchange rate +6.0%). We have demonstrated that
our portfolio of trusted brands has been able to take and hold significant
price, with very limited volume impact. Strong customer relationships are
vital to our success, and we have successfully executed our joint business
plans, delivering engaging in-store execution, price and promotional activity,
innovation and high service levels to ensure availability.
Heading into the key summer trading period we faced a tough comparable due to
the exceptional weather in Europe in 2022 and while the conditions in June
were very good, the weather in July and August was wet and windy this year.
Despite this, demand for our brands has remained solid, with only a modest
volume decline in the full year.
We have continued to invest in our business to unlock growth and deliver a
great customer, shopper, and consumer experience. The Advertising and
Promotional (A&P) investment we have made behind our compelling physical
and digital marketing increased by nearly 9%, keeping our brands relevant and
in front of consumers. Across our markets, innovation continued to be a driver
of growth, the detail of which is covered in the market highlights below.
Our focus and discipline on cash enabled us to generate a free cash flow of
£129.8 million, with our leverage ratio remaining flat at 1.9x, while
continuing to invest in the business, complete an acquisition and return cash
to shareholders through both the dividend and the share buyback programme. Our
strategy has driven consistent revenue growth over the past five years, with a
like for like Compound Annual Growth Rate (CAGR) of 5.2%.
Our Healthier People, Healthier Planet programme is embedded in our business
and decision making and we have continued to make progress on our
sustainability journey. More detail is shared in the review of the year below.
A clear strategy underpinning superior returns for shareholders
We refreshed our strategy in 2019, to ensure the business was well-placed to
access growth opportunities in the changing consumer and retail landscape
across our markets. Throughout the external turbulence of the pandemic and the
subsequent high levels of inflation, the strategy has continued to drive our
performance. With a portfolio of market-leading brands, a multi-channel route
to market, well-invested supply chain and strong customer relationships, we
believe we are well-positioned to continue to deliver superior returns to
shareholders.
Our future focus remains on four key strategic priorities:
· Build local favourites and global premium brands
· Flavour billions of water occasions
· Healthier People, Healthier Planet
· Access new growth spaces
Each of our markets has a defined role to play delivering the strategy:
· Great Britain - to lead market growth
· Brazil - to accelerate growth and expand our presence
· Other International - to globalise premium brands and improve
profitability in Western Europe
Underpinning this strategy are three critical enablers:
· Generate fuel for growth through efficiency
· Transform organisational capability and culture
· Selective Mergers and Acquisitions (M&A) to accelerate growth
Market highlights
Great Britain
We have delivered a strong performance, growing revenue across both our own
brands and the PepsiCo portfolio. We took price earlier in 2023 than in 2022,
in quarter one, to offset double digit cost inflation and to minimise the lag
we experienced last year, when cost inflation impacted us from the start of
the financial year, but we were only able to respond in Q2. Importantly, we
have carefully managed promotional activity, pack architecture and mix,
ensuring that our brands continue to provide consumers with great quality and
value at affordable price points. Volumes have been resilient despite price
increases, growing in both quarter two and quarter three. Volumes declined in
quarter four, as the disappointing weather across July and August compounded
the tough comparable we faced from last summer; the soft drinks category, as
measured by Nielsen, experienced an 8.9% volume decline year on year over the
final quarter.
We continued to win with consumers in carbonates, with our focus on great
tasting low and no sugar brands. Pepsi MAX is the fastest growing cola brand,
has continued to gain value share and is the number one brand variant by
volume within soft drinks in GB retail. Flavour innovation has been a key part
of the Pepsi MAX success story, now accounting for over 30% of the brand's
retail sales value, and this year we added Mango to the range. Tango has also
been a huge success over recent years, and that has accelerated further in
2023, with revenue up 20.7%. We extended the brand flavour range, with the
launch of Paradise Punch, to build on the success of the Berry Peachy and Dark
Berry innovations. Tango is the fastest growing fruit flavoured carbonates
brand, tripling in size since 2018.
During the year, we installed a new, small bottle PET line at our London
factory, to support our growth ambitions in immediate consumption. This line
will be fully operational in 2024. We also commissioned another can line at
our Rugby factory to meet demand for our carbonates brands. Not only will this
support increasing consumer demand for our multi-pack cans, but it has also
enabled us to bring Rockstar production in-house. Since taking on the Rockstar
brand in 2021 under a co-pack model, we have suffered several issues that have
impacted our ability to supply customers and effectively activate marketing
campaigns. The energy category is a significant opportunity for us, and with
PepsiCo, we will continue building brand equity. This year we have increased
investment, resourcing a new regional field sales team to deliver outstanding
execution in outlet. We also announced a new global music platform 'Press
Play', with Stormzy leading an international roster of stars in an
electrifying digital concert series.
In 2020 we acquired The Boiling Tap Company. One of our long-standing core
areas of strength is dispense in pubs and dining, and this acquisition,
renamed as Aqua Libra Co, strengthens Britvic's offer Beyond the Bottle. We
have developed the Aqua Libra proposition in four distinct product areas -
packaged infused water, commercial taps, hospitality table water and the
flavour tap. Aqua Libra is unique in this combination, offering healthy
hydration and a solution that enables a 99% reduction in packaging materials.
In 2021, we acquired Plenish, to access the plant-based drinks category. This
offers a scale growth opportunity for the future and added to our brand
portfolio in an area where we had little in-house expertise. Since
acquisition, we have been leveraging our brand building capability to realise
the brand's full potential. We have step changed distribution points in
retail, with M*lks growing +72% and Shots +463% year on year. Our M*lks range
is now number four in the category, with significant further headroom to grow.
Our Shots range is growing at four times the rate of the number one brand and
has nearly doubled share year on year. In September, we launched our latest
innovation, a Barista m*lk range, giving us access to the hot drink category,
which is the largest driver of growth in plant-based milks. It has been
extremely technically challenging to create a Barista product which maintains
Plenish's unique positioning as the only brand on the market containing no
oils and no gums, so I am particularly proud that our technical teams have
achieved another industry first.
In July, we announced the acquisition of Jimmy's Iced Coffee, giving us
immediate access to the fast-growing UK ready-to-drink iced coffee category.
Jimmy's is the fastest growing brand in the segment, with a strong brand
positioning, lower calories per serve than category average, distinctive
recyclable packaging and fully compliant with legislation in relation to
products that are high in fat, salt, and sugar (HFSS). As with our other
recent acquisitions, we will leverage our strong customer relationships,
distribution network, procurement, and innovation capability to continue its
strong growth trajectory.
Everywhere at Britvic, our brand and business investment is underpinned by our
ESG agenda: Healthier People, Healthier Planet. This programme ranges from
employee and community wellbeing and healthier consumer choices to minimising
our environmental impact across packaging, water and carbon emissions.
Our corporate charity is Bounce Forward, whose aim is to support parents and
teachers in schools across the UK to develop young people's psychological
fitness, helping them lead happier, heathier lives. Our support is enabling
children and young people to be taught the mental resilience and emotional
wellbeing skills they need to flourish as adults in the future. Our brands
also support communities. For example, Tango has successfully partnered with
The Prince's Trust, pledging a further £120,000 as we enter the second year
of this association. The partnership enables the Trust to support young people
who face disadvantage with the skills and confidence they need to thrive.
We announced during the year that we are investing £8 million in an
industry-leading heat recovery system at our Beckton site in east London,
which will save 1,200 tonnes of carbon annually and decarbonise 50% of the
site's heat demand. We have also partnered with Atrato Onsite Energy, a
leading solar energy provider, to deliver clean energy to Britvic via an
innovative 10-year Power Purchase Agreement at a new solar installation in
Northamptonshire. This will generate energy exclusively for Britvic and will
be capable of producing clean energy, the equivalent of powering 11,500 homes
or planting 260,000 trees. The electricity generated will be enough to power
75% of Britvic's current operations in Great Britain.
Brazil
While Brazil is an identified growth market within our strategy and has
delivered double digit revenue growth over several years, the extreme
inflation experienced last year required a correction in margin. Brazil is
particularly reliant on juice pricing, especially our fruit processing
business Be Ingredient, which has been impacted by the extreme volatility in
agricultural commodities, driven primarily by poor crop yields.
Achieving the margin improvement required several levers to be pulled at the
same time, including several increases to headline price and flexing of our
recipe agility to manage cost of goods. We have also been proactively managing
our mix by building our higher margin categories such as flavour concentrates,
premium grape juice and Fruit Shoot. At the same time, we have maintained our
commercial and operational discipline, sharpening our focus on superior
in-store execution, and increasing production capacity on growth brands such
as Fruit Shoot. We have invested in sponsoring selected Carnival events, a
vast celebration that brings people out onto the streets. In addition, we have
activated our brands around sport, sponsoring events such as Circuito das
Estações (The Circuit of the Stations), which is synonymous with street
running across the major cities of Brazil.
In July we announced a further bolt-on acquisition, which completed on 2
October, and gives us access to the high growth and higher margin energy
category. The main brand we acquired was Extra Power, which has 42% market
share in its core region of Goias (in the Centre-West, near Brasilia), as well
as three additional brands: Flying Horse (a small but long-standing energy
drinks brand primarily in the Sao Paulo region), Juxx (a premium juice brand)
and Amazoo (an acai smoothie brand). The transaction also includes a modern,
efficient warehouse near Brasilia, which will enhance the efficiency of our
supply and the effectiveness of our route to market in the Centre-West region
for both the new brands and our existing portfolio, which has a smaller
presence in this region. The acquisition also offers substantial back-office
synergies as we bring the businesses together, and we anticipate it will be
accretive to growth, margin, and earnings.
Other International Markets
We had a strong year in Ireland, with growth across the portfolio and
successful revenue management activity. I am particularly pleased with the
success of Ballygowan's Hint of Fruit. Leveraging the strong brand equity of
Ireland's leading water brand, we innovated into the growing flavoured water
category. Sugar-free, and with fewer than three calories per serve, Ballygowan
Hint of Fruit is sourced locally and available in three great tasting
flavours. Just one year after launch, it has achieved a 24% share of the
flavoured water category.
As part of our healthier planet strategy, we have recently entered into an
agreement for Ballygowan production to be 100% wind powered, helping to reduce
our direct carbon emissions by 90%. This has been achieved through a new
Customer Corporate Power Purchase Agreement (CPPA) - the first of its kind
with a drinks brand in Ireland. It will allow us to fund electricity
generation and produce enough electricity annually to power our production
facility in Newcastle West. Every Ballygowan bottle is made from 100% recycled
plastic, as well as being fully recyclable. We also announced an investment
of €6 million in our Ballygowan facility in Newcastle West, to grow the
site's production capacity by over 20% to meet growing consumer demand,
creating 28 new jobs.
France trading has been more challenging, given the competitive retail market.
Pricing discussions have been difficult and concluded much later than in our
other markets, driven by the mandatory timetable. While we have executed price
increases, these have not been sufficient to cover the significant levels of
inflation and we have therefore experienced margin compression, which has been
exacerbated by a softening in demand for our brands, as the pricing
differential versus private label has increased. Strategically we continue to
build resilience, simplifying and harmonising the Teisseire range globally.
This will improve supply chain efficiency and flexibility, as well as support
customer negotiations. In addition, we continue to focus on innovation, with
lower sugar and natural ingredient ranges to better meet consumer needs.
Our global premium brands, London Essence and Mathieu Teisseire, have
continued to make great progress, with the combined portfolio growing
double-digit this year. Amongst many new account wins, London Essence secured
an exclusive pouring agreement with Ennismore Hotels, a premium global
hospitality brand majority-owned by Accor. The crafted soda range has expanded
with two new flavours - Aromatic Orange & Fig, and Raspberry & Rose.
Mathieu Teisseire won gold at the prestigious Monde selection awards 2023 for
four of our new flavours and new listings have been secured in Asia, Germany
and Oman. Recently, we announced that local production of Mathieu Teisseire
had started in China to support local growth. New pack formats have also been
launched to access new retail and hospitality channel opportunities.
Looking ahead
Our company's success is founded upon the breadth of our portfolio of strong,
family favourite brands, the depth of our customer relationships, our
well-invested infrastructure, our long-term partnership with Pepsi and the
agility and dedication of our workforce. Sustainability is embedded in our
business and our culture, informing our choices daily. Our strategy is
working, and we have well-established drivers to continue our consistent track
record of growth.
Soft drinks is a strong, resilient and growing category, which continues to
outperform broader consumer goods. Consumption of non-alcoholic beverages
continues to grow and, even before the significant inflation of the past
couple of years, soft drinks have consistently increased their retail sales
value ahead of volume. The category is a regular staple and an affordable
treat, with demand once again proving resilient, as it has in previous periods
of economic downturn and geopolitical volatility, with limited trading down to
own label.
Britvic's forward-looking growth drivers are clear and compelling:
* Continued growth forecast for the category, in both volume and value
* Leading market growth through our family favourite brands, especially in
targeted channels where we under-index
* Accelerated growth in Brazil
* Accessing new, fast-growing spaces
Near term, we have clear priorities to deliver in 2024. Despite continuing
macro uncertainty, we will continue to engage consumers with compelling
marketing, exciting innovation and strong in-store feature and display, and to
mitigate the impact of inflation across our markets. We will also continue to
invest, not only in our brands, but also in our people, planet, technology and
infrastructure. All this, combined with our ongoing performance momentum,
gives us confidence that we will once again navigate the external challenges
to deliver further strategic progress in 2024 and continue to offer superior
shareholder returns.
Chief Financial Officer's Review
Overview
I am delighted to present the 2023 Financial Review. Having joined Britvic in
early September, I have spent time getting to know the business, visiting
sites in Great Britain, France, and Ireland, with plans to visit Brazil early
in the new year. Britvic is a great business, with a unique portfolio of
family favourite brands, of which we are all very proud.
The company has delivered a strong financial performance this year, despite
another year of highly significant cost inflation. A modest volume decline of
2.2% was more than offset by strong price/mix, demonstrated by Average
Realised Price (ARP) growth of 9.1%. Consequently, Group revenue increased
6.6% (statutory +8.1%) year on year.
Adjusted EBIT increased 5.9% (actual exchange rate +6.0%) to £218.4 million
and delivered an adjusted EBIT margin of 12.5% (2022: 12.7%). Adjusted
Earnings Per Share (EPS) increased 6.5% year on year, reflecting the growth in
adjusted EBIT and the reduction of the number of shares in issuance due to the
share buyback programme. Basic EPS for the period was 48.3 pence, a decrease
of 8.2% on last year, while diluted EPS for the period was 47.9 pence, a
decrease of 8.8% on the same period last year. This was due to the impact of
adjusting items, which were primarily non-cash.
Statutory profit after tax reduced £16.2 million from £140.2 million to
£124.0 million. Adjusted profit growth was offset by a £24.8 million
increase in adjusting items. Adjusting items totalled £38.4 million, of which
£36.9 million are EBIT-related (year ended 30 September 2022: £13.6
million). The largest part of the non-cash items relates to the successful
settlement of a case with the trustees of the GB defined benefit pension
scheme. This means that pension increases for certain members will increase at
RPI. The related adjustment to liabilities, of £20.5 million, is recorded as
a one-off past service cost. We also completed a successful pension valuation,
which indicated that the scheme is fully funded on a technical provisions
basis and is expected to reach self-sufficiency by 31 March 2026, with no
additional cash contributions required. Overall, our pension scheme remains
very well-funded, and the Trustees and Company ensure high levels of matching
between the plan's assets and liabilities to limit funding volatility.
Our cash performance remained robust, with free cash flow of £129.8 million,
driven by a continued focus on cash management. Consequently, our adjusted net
debt/EBITDA ratio remained flat at 1.9x, the lowest year end leverage since
2015. The full year dividend equates to 30.8p per share, which represents a
year-on-year increase of 6.2%, maintaining our 50% pay-out ratio. In
addition, we continued the share buyback programme, with shares to the value
of £73.7 million repurchased and subsequently cancelled in our financial year
2023.
Below is a summary of the segmental performance and explanatory notes related
to items including taxation, interest and free cash flow generation.
Great Britain Year ended Year ended % change
30 September 30 September actual
2023 2022 exchange rate
£m £m
Volume (million litres) 1,750.2 1,790.8 (2.3)%
Average Realised Price (ARP) per litre 67.9p 61.4p 10.6%
Revenue 1,187.7 1,100.4 7.9%
Brand contribution 479.6 426.0 12.6%
Brand contribution margin 40.4% 38.7% 170bps
In Great Britain, revenue increased by 7.9%, with ARP growth of 10.6% partly
offset by a modest volume decline of 2.3%. The volume decline was primarily
driven by a softer fourth quarter performance, reflecting a tough comparable
from the hot summer last year and the disappointing weather across this year's
summer. The ARP growth resulted from the actions taken during the year to
mitigate cost inflation, including implementing price increases, optimising
promotional activity and brand/channel mix. Revenue increased across both the
retail and hospitality channels, up 7.2% and 8.9% respectively.
Consequently, brand contribution increased 12.6% and brand contribution
margin increased 170bps.
Both our owned-brand and PepsiCo portfolios were in growth. Pepsi, led by MAX,
and Tango were the major growth drivers, with revenue increasing 7.7% and
20.7% respectively. J2O, Fruit Shoot and Lipton also enjoyed strong growth and
we delivered significant acceleration in London Essence, Plenish and Aqua
Libra, where we are investing to realise the long-term future growth potential
in these fast-growing spaces. Robinsons growth was led by the ready to drink
pack format, while the flavour concentrates pack format was broadly flat. Up
to quarter three, Robinsons was in strong growth, before the poor summer
weather heavily impacted the category, which underperformed total soft drinks.
While Rockstar continued to be a drag on performance, we did deliver a
significant improvement in the second half of the year, following the
upweighting of marketing activity and field sales resource. Full year revenue
declined over 19%, compared to a 25% decline in the first half, with a
sequential improvement into quarter four.
Brazil Year ended Year ended % change Adjusted
30 September 30 September actual % change
2023 2022 exchange rate constant
£m £m exchange rate
Volume (million litres) 296.5 299.3 (0.9)% (0.9)%
Average Realised Price (ARP) per litre 52.7p 47.8p 10.3% 1.0%
Revenue 156.2 143.0 9.2% -
Brand contribution* 36.2 32.4 11.6% 2.2%
Brand contribution margin* 23.2% 22.7% 50bps 50bps
* Brand contribution for the year ended 30 September 2022 restated by £9.7
million from £22.7 million to £32.4 million to correctly present certain
costs that are fixed in nature (see fixed costs below). Brand contribution
margin for the year ended 30 September 2022 adjusted accordingly from 15.9% to
22.7%.
In Brazil, revenue was flat, on a constant currency basis, with volume down
0.9%. This was due to the weaker performance of the fruit processing business
known as 'Be Ingredient', where revenue was down over 60%, reflecting the
impact of poor weather on crop yields and a competitive trading environment.
The brand portfolio generated strong growth across our scale brands of
Maguary, Dafruta and Bela Ischia. Ready to drink pack format revenue increased
10.2% and flavour concentrates revenue increased 8.7%. Recent brand launches
now account for over 30% of total revenue, with Fruit Shoot increasing 56.8%
this year, Seleção grape juice +38.0% and Natural Tea +46.8%.
Other International Year ended Year ended % change Adjusted
30 September 30 September actual % change
2023 2022 exchange rate constant
£m £m exchange rate
Volume (million litres) 416.5 428.0 (2.7)% (2.7)%
Average Realised Price (ARP) per litre 97.2p 87.6p 11.0% 8.6%
Revenue 404.7 374.9 7.9% 5.7%
Brand contribution 99.6 107.0 (6.9)% (8.7)%
Brand contribution margin 24.6% 28.5% (390)bps (390)bps
Note: Other International consists of France, Ireland, and other international
markets. Volumes and ARP include own-brand soft drinks sales and third-party
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.
In Ireland, revenue increased 9.4%, driven by both volume and ARP growth.
Scale brands in revenue growth were Pepsi +18.2%, 7UP +9.4%, MiWadi +9.8% and
Ballygowan +14.8%. Last year's highly successful Ballygowan Hint of Fruit
innovation increased revenue by a further 88.3%. In France, revenue marginally
increased, by 0.5%. Trading continued to be challenging; although we realised
substantial price increases, they were still insufficient to fully offset
inflation, and were made worse by adverse mix, as the branded portfolio of
Teisseire, Moulin de Valdonne, Pressade and Fruit Shoot all declined, offset
by growth in private label syrups, which are materially lower margin than
their branded equivalents. In other markets, we delivered growth across
various sub-channels, including other European markets, the travel sector, and
Asia.
Fixed costs - pre-adjusting items Year ended Year ended % change % change
30 September 30 September actual like for like
2023 2022 exchange rate at constant
£m £m exchange rate
Non-brand A&P (11.8) (10.3) (14.6)% (13.5)%
Fixed supply chain* (145.5) (135.7) (7.2)% (5.6)%
Selling costs (96.7) (82.0) (17.9)% (16.2)%
Overheads and other (143.0) (131.4) (8.8)% (7.8)%
Total (397.0) (359.4) (10.4)% (9.0)%
Total A&P investment (67.0) (61.7)
A&P as a % of own brand revenue 3.8% 3.8%
* Fixed supply chain costs for the year ended 30 September 2022 restated by
£9.7 million from £126.0 million to £135.7 million to correctly present
Brazil costs that are fixed in nature.
Overall, our fixed cost base increased 9.0% on a like-for-like basis, due to
inflationary cost pressure and investment in our future growth drivers.
Total A&P was £5.3 million higher year on year, as we continued to
increase investment in our brands. Fixed supply chain investment during the
period included increased production capacity, adding a new can line in Great
Britain and additional capacity in Brazil. The additional capacity in Great
Britain enabled savings in third-party co-packing costs. These savings were
largely offset by increased spend on packaging recovery notes (PRNs),
certificates that provide evidence that waste packaging material has been
recycled.
Selling costs increased as we invested in additional field sales resource to
support our channel growth strategy. Overheads and other costs increased as we
invested in our people costs, reflecting investment in both additional
resources and remuneration, to retain and recruit the best talent. We adopted
a tiered approach to salary increases, ensuring that those on lower salaries
received a higher percentage increase, in recognition of the increased costs
of living.
Interest
The net finance charge for the year ended 30 September 2023 is £24.7 million,
compared with £17.3 million in the comparative year, primarily due to higher
cost of borrowing on floating rate debt.
Adjusting items - pre-tax
In the year, the Group incurred, and has separately disclosed, a net charge of
£38.4 million of pre-tax adjusting items, of which £36.9 million was
EBIT-related (2022: £13.6 million). Adjusting items comprise:
EBIT-related
* £20.5 million in relation to past pension service cost on the Great Britain
defined benefit scheme, resulting from an amendment to the scheme rules. This
amendment followed the settlement of the legal case between the Company and
trustees relating to inflationary pension increases;
* Strategic restructuring costs of £5.2 million, predominantly in relation to
redundancy costs from operating changes to provide additional production
capacity in Ireland;
* Strategic M&A costs of £2.4 million, in relation to the acquisition costs
of Jimmy's Iced Coffee, energy brand Extra Power in Brazil, and other M&A
in the year that did not complete;
* £0.5 million in relation to costs for the setup of the deposit return scheme
(DRS) in Ireland;
* Acquisition-related amortisation of £8.3 million.
Interest-related
· £1.5 million relating to hedge ineffectiveness on private placement
loan hedging.
Taxation
The adjusted tax charge was £38.5 million (2022: £36.1 million), which
equates to an effective tax rate of 20.6% (2022: 20.0%). The statutory net tax
charge was £32.8 million (2022: £34.9 million), which equates to an
effective tax rate of 20.9% (2022: 19.9%).
Earnings per share (EPS)
Adjusted basic EPS for the year was 61.0p, an increase of 6.5% on the prior
year, due to higher operating profits and the impact of a lower number of
shares in issue following the share buyback. Basic EPS for the period was 48.3
pence, a decrease of 8.2% on last year, while diluted EPS for the period was
47.9 pence, a decrease of 8.8% on the same period last year. This was due to
the impact of adjusting items, which were primarily non-cash.
Dividends
The Board is declaring a final dividend of 22.6p per share, with a total value
of £57.4 million, resulting in a full year dividend of 30.8p (£78.4
million). This is in line with our stated 50% pay-out ratio. The final
dividend for 2023 will be paid on 7 February 2024 to shareholders on record as
of 22 December 2023. The ex-dividend date is 21 December 2023.
Share buyback programme
In May 2022, the company started an initial share buyback programme to
repurchase ordinary shares with a market value of up to £75 million. The
purpose of the programme was to reduce share capital and, accordingly, the
shares repurchased are subsequently cancelled. During the year ended 30
September 2023, the company completed the initial share buyback.
In May 2023, the Board approved a second £75 million share buyback programme
to be executed over the period to 30 April 2024. Excluding transaction costs,
the company has returned £74.8 million to shareholders via the buyback
programmes during the year ended 30 September 2023. There remains £37.6
million of the second share buyback to be executed during the forthcoming
financial year.
In the context of Britvic's expected free cash flow and its capital
requirements over the next three years, the Board believes it is appropriate
to complete the current share buyback. Britvic will continue to review the
balance sheet on a regular basis, to assess its strength in the context of the
company's growth ambitions. The dividend policy remains unchanged.
Free cash flow
Free cash flow (defined as cash generated from operating activities, plus
proceeds from sale of property, plant and equipment, less capital expenditure,
interest and repayment of lease liabilities) was an inflow of £129.8 million,
compared with £128.8 million in the previous year.
Net cash flow from operating activities was broadly flat at £238.4 million,
compared to £239.6 million in the previous year. There was a working capital
outflow of £16.6 million (2022: £1.3 million outflow), comprising an outflow
from increases in inventory of £37.8 million (2022: £26.0 million outflow)
and an outflow from decreases in provisions of £0.9 million (2022: £3.2
million outflow), offset by an inflow from increases in trade and other
payables of £5.8 million (2022: £84.3 million inflow) and an inflow from
decreases in trade and other receivables of £16.3 million (2022: £56.4
million outflow).
The inflow in trade and other payables was due to continued disciplined cash
management throughout the year. The outflow in inventories, which were up year
on year, is due to inflation and an increased level of both raw materials and
finished goods stock, both to protect our customer service levels across the
Group and following softer quarter four volumes.
Net income taxes paid in the year were £21.9 million (12 months ended 30
September 2022: £18.4 million). Cash capital expenditure was £77.9 million
(2022: £84.6 million).
Impairment testing
Impairment reviews of goodwill and intangible assets with indefinite lives are
undertaken by management annually. Recoverable amounts are calculated in line
with accounting standards at the higher of value in use and fair value. During
the current year there has been no impairment to goodwill or intangible assets
with indefinite lives. Further details will be provided in the Annual Report
and Accounts.
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,
foreign exchange rates and commodities, while managing the Group's debt and
liquidity profile. The Group uses financial instruments to hedge against raw
materials, interest rate and foreign currency exposures.
On 30 September 2023, the Group had £932.5 million of committed debt
facilities, consisting of a £400.0 million bank facility, of which £44.7
million was drawn, and a series of private placement notes, with maturities
between February 2024 and May 2035. A one-year extension to the maturity of
the Group's £400.0 million bank facility was approved by six of the seven
lenders in February 2022, extending the maturity of £366.7 million of this
facility to February 2027. The remaining £33.3 million will mature in
February 2025. The next maturity for the company's private placement notes is
in February 2024, when notes with outstanding principal amounts of US$39.0
million and £15.0 million will be due for repayment.
On 30 September 2023, the Group's adjusted net debt, including the impact of
cross currency swaps hedging the private placement notes, was £538.1 million,
which compares with £474.8 million at 30 September 2023. Adjusted net debt to
EBITDA leverage at 30 September 2023 was 1.9x, maintaining the same level as
at 30 September 2022.
The Group uses derivative financial instruments to hedge its exposure to
movements in interest rates, foreign exchange rates and commodity prices. At
30 September 2023, the Group's balance sheet included derivatives with a net
fair value of £24.8 million (2022: £73.2 million), comprising cross currency
swaps of £22.3 million (2022: £41.9 million), forward currency contracts of
£0.2 million (2022: £3.1 million), interest rate swaps of £2.4 million
(2022: £3.4 million and commodity swaps liabilities of £0.1 million (2022:
£24.8 million). The decrease in fair value compared to 30 September 2022 is
driven by settlements during the year and fair value decreases linked to the
appreciation of sterling against the dollar and falling gas and power
commodity prices.
Acquisitions and disposals
The Group paid cash of £24.8 million (net of cash acquired) to acquire
Jimmy's Iced Coffee and consolidated this business in its financial statements
from 1 August 2023. The Group also announced an acquisition in Brazil, which
includes the Extra Power energy brand. This acquisition completed after the
year-end, resulting in a cash out flow equivalent to £24.0 million in October
2023 (net of derivatives hedging this transaction).
At 30 September 2023, the Norwich production site remains classified as held
for sale in the balance sheet at its historical cost of £16.8 million.
Contracts have been exchanged for the sale, however completion remains subject
to conditions precedent, including certain planning consents being obtained by
the buyer. The sale is expected to complete by October 2024.
Pensions
At 30 September 2023, the Group had IAS 19 defined benefit pension surpluses
in Great Britain, Ireland and Northern Ireland totalling £74.0 million and
IAS 19 pension deficits in France totalling £1.4 million, resulting in a net
pension surplus of £72.6 million (30 September 2022: net surplus of £137.5
million). The decrease in the net pension assets primarily relates to the
Great Britain scheme, where there has been a net remeasurement loss recognised
through the statement of comprehensive income of £48.9 million and a past
service cost recognised through the income statement of £20.5 million.
The Group has recognised a net defined benefit pension expense of £15.2
million in the income statement for the year ended 30 September 2023 (2022:
net income of £1.5 million). This includes a £20.5 million past service cost
for the Great Britain scheme, presented within adjusting items, which has
arisen following an amendment to the scheme rules in relation to pension
increases. The amendment has clarified that the Group does not have the power
to set alternative rates of pension increases and that certain annual
increases will be based on the RPI measure of inflation. The previous
valuation at 30 September 2022 was based on the assumption that that certain
members would receive pension increases based on the CPI measure of inflation,
which is lower than RPI. As a result, the IAS 19 surplus has decreased. This
amendment to the Great Britain pension scheme does not result in any cash
impact for the Group. The triennial valuation as of 31 March 2022 was
finalised in April 2023 and did not result in any change to the schedule of
contributions.
The defined benefit section of the Great Britain 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 ordinarily paid into the defined benefit section of the Plan
as determined by the Trustee, agreed by the company and certified by an
independent actuary in the Schedule of Contributions. No deficit funding
payments were paid during the year except for the £5.0 million pension
funding partnership payment which will continue annually until 2025.
CONSOLIDATED INCOME STATEMENT
Note Year ended Year ended
30 September 30 September
2023 2022
£m £m
Revenue 4 1,748.6 1,618.3
Cost of sales (1,049.1) (952.4)
Gross profit 699.5 665.9
Selling and distribution expenses (271.1) (266.8)
Administration expenses (246.9) (206.7)
Operating profit 181.5 192.4
Finance income 1.1 0.9
Finance costs (25.8) (18.2)
Profit before tax 156.8 175.1
Income tax expense 5 (32.8) (34.9)
Profit for the year attributable to the equity shareholders 124.0 140.2
Earnings per share
Basic earnings per share 6 48.3p 52.6p
Diluted earnings per share 6 47.9p 52.5p
All activities relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 September 30 September
2023 2022
£m £m
Profit for the year attributable to the equity shareholders 124.0 140.2
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
Remeasurement losses on defined benefit pension plans (55.5) (2.1)
Current tax on pension contributions - 0.1
Deferred tax on defined benefit pension plans 13.4 2.3
(42.1) 0.3
Items that may be subsequently reclassified to profit or loss
(Losses)/gains in respect of cash flow hedges (34.3) 56.6
Amounts reclassified to the income statement in respect of cash flow hedges (4.6) (23.8)
Current tax in respect of cash flow hedges accounted for in the hedging (0.2) 0.5
reserve
Deferred tax in respect of cash flow hedges accounted for in the hedging 7.3 (6.8)
reserve
Exchange differences reclassified to profit or loss on disposal of foreign (0.3) (0.8)
operations
Exchange differences on translation of foreign operations (3.4) 28.9
Tax on exchange differences accounted for in the translation reserve (0.6) 0.5
(36.1) 55.1
Other comprehensive (loss)/income for the year, net of tax (78.2) 55.4
Total comprehensive income for the year attributable to the equity 45.8 195.6
shareholders
CONSOLIDATED BALANCE SHEET
Note 30 September Restated* Restated*
2023 30 September 1 October
£m 2022 2021
£m £m
Non-current assets
Property, plant and equipment 535.3 513.9 472.4
Right-of-use assets 61.1 68.7 71.7
Goodwill and intangible assets 434.3 416.4 406.5
Other receivables 8.1 6.0 5.8
Derivative financial instruments 9 16.0 45.9 22.2
Deferred tax assets 4.2 4.4 4.0
Retirement benefit assets 74.0 138.9 141.2
1,133.0 1,194.2 1,123.8
Current assets
Inventories 209.8 172.0 135.0
Trade and other receivables 425.6 445.2 376.1
Current income tax receivables 5.3 10.9 7.2
Derivative financial instruments 9 17.4 38.9 4.0
Interest-bearing deposits 10.9 11.5 -
Cash and cash equivalents 79.2 85.9 97.1
Other current assets - 3.1 -
748.2 767.5 619.4
Assets held for sale 16.8 16.8 16.8
765.0 784.3 636.2
Total assets 1,898.0 1,978.5 1,760.0
Current liabilities
Trade and other payables (533.6) (508.8) (417.8)
Commercial rebate liabilities (123.3) (137.0) (122.3)
Lease liabilities (7.5) (8.6) (8.9)
Interest-bearing loans and borrowings 8 (50.9) (42.2) (2.2)
Derivative financial instruments 9 (8.3) (11.2) (1.4)
Current income tax liabilities (0.1) (0.2) (1.4)
Overdrafts (48.9) (9.8) (26.0)
Provisions (0.7) (1.9) (5.3)
Other current liabilities (8.4) (11.1) (5.5)
(781.7) (730.8) (590.8)
Non-current liabilities
Lease liabilities (59.8) (65.3) (66.2)
Interest-bearing loans and deposits 8 (551.0) (563.1) (576.9)
Deferred tax liabilities (111.1) (123.1) (98.5)
Retirement benefit obligations (1.4) (1.4) (9.6)
Derivative financial instruments 9 (0.3) (0.4) (0.6)
Provisions (1.0) (0.9) (0.5)
Other non-current liabilities - (5.5) (6.2)
(724.6) (759.7) (758.5)
Total liabilities (1,506.3) (1,490.5) (1,349.3)
Net assets 391.7 488.0 410.7
Note 30 September Restated* Restated*
2023 30 September 1 October
£m 2022 2021
£m £m
Equity
Issued share capital 10 50.9 52.7 53.5
Share premium account 157.2 157.2 156.2
Own shares reserve 10 (21.4) (7.2) (1.5)
Other reserves 78.8 106.0 53.7
Retained earnings 126.2 179.3 148.8
Total equity 391.7 488.0 410.7
* Comparative figures for interest-bearing deposits, overdrafts and cash and
cash equivalents have been restated as set out in Note 2.
The financial statements were approved by the Board of Directors and
authorised for issue on 21 November 2023. They were signed on its behalf by:
Simon Litherland Rebecca Napier
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
Note Year ended Restated*
30 September Year ended
2023 30 September
£m 2022
£m
Cash flows from operating activities
Profit before tax 156.8 175.1
Net finance costs 24.7 17.3
Other financial instruments (0.6) 0.8
Depreciation of property, plant and equipment 44.8 40.9
Depreciation of right-of-use assets 10.1 10.9
Amortisation 15.6 15.6
Loss on disposal of property, plant and equipment and intangible assets 3.2 0.9
Impairment of property, plant and equipment 3.8 -
Share-based payments charge 9.3 4.2
Net pension charge less contributions 9.4 (7.6)
Net foreign exchange differences 0.1 2.0
Exchange differences reclassified to profit or loss from other comprehensive (0.3) (0.8)
income
Increase in inventories (37.8) (26.0)
Decrease/(increase) in trade and other receivables 16.3 (56.4)
Increase in trade, other payables and commercial rebate liabilities 5.8 84.3
Decrease in provisions (0.9) (3.2)
Income tax paid (21.9) (18.4)
Net cash flows from operating activities 238.4 239.6
Cash flows from investing activities
Purchases of property, plant and equipment (69.8) (72.9)
Government grants towards purchase of equipment 1.3 -
Purchases of intangible assets (8.1) (11.7)
Investments in interest-bearing deposits (11.2) (11.8)
Proceeds from interest-bearing deposits 11.8 0.3
Interest received 0.5 0.2
Acquisition of subsidiaries, net of cash acquired (24.8) -
Net cash flows used in investing activities (100.3) (95.9)
Cash flows from financing activities
Interest paid, net of related derivative financial instruments (21.1) (14.8)
Net movement on revolving credit facility 45.5 -
Repayment of other loans 8 (1.9) -
Payment of principal portion of lease liabilities (9.0) (9.3)
Payment of interest portion of lease liabilities (1.9) (2.1)
Repayment of private placement notes, net of related derivative financial 8
instruments
(27.8) -
Other net derivative cashflows (0.2) (0.8)
Issue costs paid 8 - (0.3)
Proceeds from employee share incentive schemes 2.3 1.0
Purchase of own shares related to share schemes (20.3) (9.0)
Share buyback programme (73.7) (36.7)
Dividends paid to equity shareholders (75.5) (67.9)
Net cash flows used in financing activities (183.6) (139.9)
Net (decrease)/increase in cash and cash equivalents (45.5) 3.8
Cash and cash equivalents at the beginning of the year 76.1 71.1
Net foreign exchange differences on cash and cash equivalents (0.3) 1.2
Cash and cash equivalents at the end of the year 30.3 76.1
* Comparative figures restated for reclassification of interest-bearing
deposits separate from cash and cash equivalents see note 2.
Presented in the balance sheet as:
Cash and cash equivalents((1)) 79.2 85.9
Overdrafts((1)(2)) (48.9) (9.8)
Cash and cash equivalents at the end of the year 30.3 76.1
(1) Comparative figures for overdrafts and cash and cash equivalents
have been restated as set out in Note 2.
(2) Bank overdrafts are included in the cash and cash equivalents
presented in the statement of cash flows because they form an integral part of
the Group's cash management.
CONSOLIDATED STATEMENt OF CHANGES IN EQUITY
Other reserves
Issued Share Own Capital redemption reserve Hedging Translation Merger Retained Total
share premium shares £m reserve reserve reserve earnings £m
capital account reserve £m £m £m £m
£m £m £m
At 1 October 2021 53.5 156.2 (1.5) - 4.5 (38.1) 87.3 148.8 410.7
Profit for the year - - - - - - - 140.2 140.2
Other comprehensive income - - - - 26.5 28.6 - 0.3 55.4
Total comprehensive income - - - - 26.5 28.6 - 140.5 195.6
Issue of shares 0.1 1.0 (1.1) - - - - - -
Share buyback programme (0.9) - (1.1) 0.9 - - - (36.7) (37.8)
Own shares purchased for share schemes - - (9.0) - - - - 3.2 (5.8)
Own shares utilised for share schemes - - 5.5 - - - - (12.5) (7.0)
Movement in share-based schemes - - - - - - - 4.1 4.1
Current tax on share options exercised - - - - - - - 0.3 0.3
Deferred tax on share options granted to employees - - - - - - - (0.5) (0.5)
Transfer of cash flow hedge reserve to inventories - - - - (3.7) - - - (3.7)
Payment of dividend - - - - - - - (67.9) (67.9)
At 30 September 2022 52.7 157.2 (7.2) 0.9 27.3 (9.5) 87.3 179.3 488.0
Other reserves
Issued Share Own Capital redemption reserve Hedging Translation Merger Retained Total
share premium shares £m reserve reserve reserve earnings £m
capital account reserve £m £m £m £m
£m £m £m
At 1 October 2022 52.7 157.2 (7.2) 0.9 27.3 (9.5) 87.3 179.3 488.0
Profit for the year - - - - - - - 124.0 124.0
Other comprehensive loss - - - - (31.8) (4.3) - (42.1) (78.2)
Total comprehensive income/ (loss) - - - - (31.8) (4.3) - 81.9 45.8
Share buyback programme (1.8) - (1.7) 1.8 - - - (73.7) (75.4)
Own shares purchased for share schemes - - (20.1) - - - - 9.8 (10.3)
Own shares utilised for share schemes - - 7.6 - - - - (5.3) 2.3
Movement in share-based schemes - - - - - - - 9.3 9.3
Current tax on share-based payments - - - - - - - 0.2 0.2
Deferred tax on share-based payments - - - - - - - 0.2 0.2
Transfer of cash flow hedge reserve to inventories - - - - 7.1 - - - 7.1
Payment of dividend - - - - - - - (75.5) (75.5)
At 30 September 2023 50.9 157.2 (21.4) 2.7 2.6 (13.8) 87.3 126.2 391.7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The preliminary consolidated financial information was authorised for issue by
the Board of Directors on 21 November 2023.
The preliminary consolidated financial information for the year ended 30
September 2023 has been prepared in accordance with the Companies Act 2006 and
UK-adopted international accounting standards. 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 Accounts for the year ended 30 September 2023 was
approved by the board on 21 November 2023. The report of the auditor on those
accounts 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 Accounts for 2023 will be filed with the Registrar of
Companies in due course.
The Annual Report and Accounts for the year ended 30 September 2022 was
approved by the board on 22 November 2022 and has been delivered to the
Registrar of Companies. The report of the auditor on those accounts 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 applied by the Group for the year ended 30 September
2023 are consistent with those applied by the Group in its financial
statements for the year ended 30 September 2022. There were no new amendments,
standards or interpretations that had a material effect on the financial
position or performance of the Group in the period.
The Group has not identified any changes to its key sources of accounting
judgements or estimations of uncertainty compared with those disclosed in the
2022 Annual Report and Accounts.
Restatement of overdrafts and cash and cash equivalents
The Group has identified that the balance sheet presentation of its notional
cash pooling arrangements did not comply with the requirements of IAS 32
'Financial Instruments: Presentation'. The Group has previously presented cash
and overdraft balances subject to notional cash pooling arrangements on a net
basis within cash and cash equivalents. However, following a review of this
facility and guidance issued by the IFRS Interpretations Committee, it was
determined that the balances did not meet all of the criteria in IAS 32 for
offset. The prior period balance sheets have therefore been restated to show
cash and overdraft balances on a gross basis. The impact is to increase both
cash and cash equivalents and overdrafts by £9.8m at 30 September 2022 and by
£26.0m at 30 September 2021. There is no impact to the Group's net debt
position, income statement or earnings per share for the affected periods.
There is also no impact on the previously presented statement of cash flows,
as the overdrafts are repayable on demand and form an integral part of the
Group's cash management and are therefore included in the cash and cash
equivalents presented in the statement of cash flows.
The above prior period misstatement came to the company's attention when
responding to an enquiry from the Corporate Reporting Review team at the
Financial Reporting Council (the FRC). The FRC carried out a review of the
Britvic Annual Report and Accounts 2022 in accordance with Part 2 of the FRC
Corporate Reporting Review Operating Procedures. The FRC requests that in
disclosing this engagement we note the limitations of their review, namely
that it was based solely on their reading of the annual report and accounts
and did not benefit from a detailed knowledge of our business or an
understanding of the underlying transactions entered into. They also noted
that their review provided no assurance that the annual report and accounts
are correct in all material respects and that the FRC's role is not to verify
the information provided but to consider compliance with reporting
requirements.
The Group places surplus cash on deposit with banks to earn a fixed rate of
interest over the maturity period, and these deposits have historically been
presented within cash and cash equivalents. Following a review of deposit
terms, the Group has identified that £11.5m of deposits held at 30 September
2022 did not meet the definition of cash and cash equivalents in IAS 7
'Statement of Cash Flows', as the deposits were not held for the purpose of
meeting short-term cash commitments and had contractual maturities in excess
of three months. The prior period balance sheet has therefore been restated to
show such interest-bearing deposits separately within current assets. There is
no impact to the Group's net debt position. The value of cash and cash
equivalents shown in the statement of cash flows at 30 September 2022 has been
restated to exclude the £11.5m of deposits held, and new lines for
"investments in interest-bearing deposits" and "proceeds from interest-bearing
deposits" have been included within net cash flows used in investing
activities.
The below table reconciles the restated balances to those previously reported.
30 September 2022 As reported Overdrafts subject to pooling arrangements Deposits previously included in cash and cash equivalents Restated
£m £m £m £m
Interest-bearing deposits - - 11.5 11.5
Cash and cash equivalents 87.6 9.8 (11.5) 85.9
Current assets 774.5 9.8 - 784.3
Total assets 1,968.7 9.8 - 1,978.5
Overdrafts - (9.8) - (9.8)
Current liabilities (721.0) (9.8) - (730.8)
Total liabilities (1,480.7) (9.8) - (1,490.5)
Net assets 488.0 - - 488.0
30 September 2021 As reported Overdrafts subject to pooling arrangements Deposits previously included in cash and cash equivalents Restated
£m £m £m £m
Interest-bearing deposits - - - -
Cash and cash equivalents 71.1 26.0 - 97.1
Current assets 610.2 26.0 - 636.2
Total assets 1,734.0 26.0 - 1,760.0
Overdrafts - (26.0) - (26.0)
Current liabilities (564.8) (26.0) - (590.8)
Total liabilities (1,323.3) (26.0) - (1,349.3)
Net assets 410.7 - - 410.7
3. Going concern
The Directors are satisfied that the Group has adequate resources to continue
to operate as a going concern for the foreseeable future and that no material
uncertainties exist which could cause significant doubt with respect to this
assessment. In making this assessment, the Directors have considered the
Group's balance sheet position and forecast earnings and cash flows for the
period from the date of approval of these financial statements to 30 September
2025. Further details of the Directors' assessment are set out below.
The business has faced the challenges posed by a prolonged period of high
inflation and has been able to successfully respond by implementing revenue
growth management actions, including price increases, and optimising
promotions. As inflation rates stabilise, the level of uncertainty in the cost
base of the business has reduced, however the lasting impact of inflation and
the ongoing cost of living crisis pose a risk to demand for the Group's
products.
As part of the going concern assessment, volume demand scenarios have been
combined with the potential impact of key risks that could reasonably arise in
the period. The Group has modelled both a base case scenario and a severe but
plausible downside scenario, to assess the extent to which mitigating actions
would be required, all of which are within management's control. Mitigating
actions can be initiated as they relate to discretionary and investment spend,
without significantly impacting the ability to meet demand.
At 30 September 2023, the Group was operating within the banking covenants
related to its revolving credit facility and private placement notes. The
consolidated balance sheet reflects a net asset position of £391.7m and the
liquidity of the Group remains strong. In 2022, the Group successfully secured
a one-year extension of its £400.0m revolving credit facility with six of the
seven participating banks. As a result, £366.7m of this facility now matures
in February 2027, with the remaining £33.3m maturing in February 2025. As of
30 September 2023, £44.7m was drawn on the revolving credit facility. The
Group's next debt maturity is in February 2024 when £39.2m of private
placement notes mature, net of derivative financial instruments. Both the
Group's revolving credit facility and private placement notes have a net
debt/EBITDA covenant limit of 3.5x, excluding IFRS 16 impact. Based on
adjusted net debt of £538.1m and adjusted EBITDA of £276.7m for the
preceding 12 months, the adjusted net debt/adjusted EBITDA ratio at 30
September 2023 was 1.9x and well within the covenant limit.
Under all the scenarios modelled, including the impact of the share buyback
programme, and after taking available mitigating actions, our forecasts did
not indicate a covenant breach or any liquidity shortages.
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
Accounts.
4. 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:
· Great Britain (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. All other costs,
including net finance costs and income taxes, are managed on a centralised
basis and are not allocated to reportable segments.
The 'Other International' subtotal comprising the Ireland, France and
International reportable segments has been presented to provide linkage to the
Chief Financial Officer's Review section of this preliminary results
announcement.
Other International
Year ended 30 September 2023 GB Brazil Ireland France International Subtotal Total
£m £m £m £m £m £m £m
Revenue from external customers 1,187.7 156.2 160.3 185.0 59.4 404.7 1,748.6
Brand contribution 479.6 36.2 52.3 35.7 11.6 99.6 615.4
Non-brand advertising and promotion((i)) (11.8)
Fixed supply chain((ii)) (145.5)
Selling costs((ii)) (96.7)
Overheads and other costs((i)) (143.0)
Adjusted EBIT((iii)) 218.4
Net finance costs pre-adjusting items (23.2)
Adjusting items((iii)) (38.4)
Profit before tax 156.8
Other International
Year ended 30 September 2022 GB Brazil Ireland France International Subtotal Total
(restated ((iv))) £m £m £m £m £m £m £m
Revenue from external customers 1,100.4 143.0 143.9 179.4 51.6 374.9 1,618.3
Brand contribution((iv)) 426.0 32.4 49.6 45.9 11.5 107.0 565.4
Non-brand advertising and promotion((i)) (10.3)
Fixed supply chain((ii)) (135.7)
Selling costs((ii)) (82.0)
Overheads and other costs((i)) (131.4)
Adjusted EBIT((iii)) 206.0
Net finance costs pre-adjusting items (17.3)
Adjusting items((iii)) (13.6)
Profit before tax 175.1
(i) Included within 'administration expenses' in the
consolidated income statement. 'Overheads and other costs' relate to central
expenses including salaries, IT maintenance, depreciation and amortisation
(excluding acquisition-related amortisation).
(ii) Included within 'selling and distribution costs' in the
consolidated income statement.
(iii) See non-GAAP reconciliations at the end of this announcement
for further details on adjusting items.
(iv) The Group has restated the classification of certain prior
period costs in Brazil within the segmental reporting note. For the year ended
30 September 2022, £9.7m of costs that are fixed in nature previously
included within brand contribution have been reclassified to fixed supply
chain. There has been no impact of this disclosure change on the consolidated
income statement.
5. Income tax
2023 2022
£m £m
Current income tax
Current tax charge (31.1) (20.0)
Amounts over provided in previous years 2.5 4.7
Total current tax charge (28.6) (15.3)
Deferred income tax
Origination and reversal of temporary differences (3.3) (16.7)
Impact of change in tax rates (0.1) (1.3)
Amounts under provided in previous years (0.8) (1.6)
Total deferred tax charge (4.2) (19.6)
Total tax charge in the income statement (32.8) (34.9)
6. Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for
the year attributable to the equity shareholders of the parent by the weighted
average number of ordinary shares outstanding during the year.
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 year 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:
2023 2022
Basic earnings per share
Profit for the year attributable to equity shareholders (£m) 124.0 140.2
Weighted average number of ordinary shares in issue for basic earnings per 256.9 266.5
share
Basic earnings per share (pence) 48.3p 52.6p
Diluted earnings per share
Profit for the year attributable to equity shareholders (£m) 124.0 140.2
Effect of dilutive potential ordinary shares - share schemes 1.9 0.5
Weighted average number of ordinary shares in issue for diluted earnings per 258.8 267.0
share
Diluted earnings per share (pence) 47.9p 52.5p
The Group has granted share options to employees which have the potential to
dilute basic earnings per share in the future which have not been included in
the calculation of diluted earnings per share as they are anti-dilutive for
the year presented.
7. Dividends paid and proposed
2023 2022
£m £m
Declared and paid during the year
Equity dividends on ordinary shares
Final dividend for 2022: 21.2p per share (2021: 17.7p per share) 54.5 47.2
Interim dividend for 2023: 8.2p per share (2022: 7.8p per share) 21.0 20.7
Dividends paid 75.5 67.9
Proposed
Final dividend for 2023: 22.6p per share (2022: 21.2p per share) 57.4 55.8
8. Interest-bearing loans and borrowings
2023 2022
£m £m
Current
Private placement notes (51.1) (42.9)
Less: unamortised issue costs 0.2 0.7
Total current (50.9) (42.2)
Non-current
Bank loans (44.7) -
Private placement notes (508.1) (565.0)
Less: unamortised issue costs 1.8 1.9
Total non-current (551.0) (563.1)
Total interest-bearing loans and borrowings (601.9) (605.3)
Total interest-bearing loans and borrowings comprise the following:
2023 2022
£m £m
2010 notes - (39.4)
2014 notes (108.5) (117.2)
2017 notes (175.0) (175.0)
2018 notes (119.7) (120.1)
2020 notes (151.9) (152.7)
Bank loans (44.7) -
Accrued interest (4.1) (3.5)
Unamortised issue costs 2.0 2.6
Total interest-bearing loans and borrowings (601.9) (605.3)
Analysis of changes in interest-bearing loans and borrowings:
2023 2022
£m £m
At the beginning of the year (605.3) (579.1)
Net drawdown on revolving credit facility (45.5) -
Other loans acquired (1.9) -
Other loans repaid 1.9 -
Repayment of private placement notes* 36.6 -
Issue costs - 0.3
Amortisation of issue costs and write-off of financing fees (0.6) (0.6)
Net translation gain and fair value adjustment 13.5 (25.2)
Accrued interest (0.6) (0.7)
At the end of the year (601.9) (605.3)
Derivatives hedging balance sheet debt** 22.6 42.9
Debt translated at contracted rate (579.3) (562.4)
* During the year ended 30 September 2023, the Group repaid £36.6m of
the 2010 private placement notes. £7.8m was also received on maturity of
derivatives hedging the 2010 notes and £1.0m was received in respect of the
firm commitment for the 2010 notes, resulting in net cash outflows presented
in the consolidated statement of cash flows of £27.8m.
** 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.
9. Derivatives and hedge relationships
2023 2022
£m £m
Non-current assets: derivative financial instruments
USD GBP cross currency fixed interest rate swaps* 14.0 31.1
Forward currency contracts* 0.1 0.4
Commodity contracts* 1.2 11.0
Interest rate swaps* 0.7 3.4
16.0 45.9
Current assets: derivative financial instruments
USD GBP cross currency fixed interest rate swaps* 8.3 7.4
USD GBP cross currency floating interest rate swaps** - 4.4
Forward currency contracts*** - 0.5
Forward currency contracts* 1.1 3.3
Forward currency contracts 0.2 0.2
Commodity contracts* 6.1 11.6
Commodity contracts**** - 11.5
Interest rate swaps* 1.7 -
17.4 38.9
Current liabilities: derivative financial instruments
Forward currency contracts* (1.2) -
Forward currency contracts - (1.3)
GBP euro cross currency floating interest rate swaps*** - (1.0)
Commodity contracts* (7.1) (8.2)
Commodity contracts**** - (0.7)
(8.3) (11.2)
Non-current liabilities: derivative financial instruments
Commodity contracts* (0.3) (0.4)
(0.3) (0.4)
Net derivative financial assets 24.8 73.2
* Instruments designated as part of a cash flow
hedge relationship.
** Instruments designated as part of a fair value hedge
relationship.
*** Instruments designated as part of a net investment
hedge relationship.
**** Instruments for which cash flow hedge accounting has
been discontinued.
10. Share capital and own shares reserve
The movements in the company's issued share capital were as follows:
Issued, called up and fully paid ordinary shares No. of shares Nominal value
£m
At 1 October 2021 267,314,637 53.5
Shares issued relating to incentive schemes for employees 445,546 0.1
Shares cancelled pursuant to share buyback (4,459,302) (0.9)
At 30 September 2022 263,300,881 52.7
Shares cancelled pursuant to share buyback (9,032,384) (1.8)
At 30 September 2023 254,268,497 50.9
The issued share capital is wholly comprised of ordinary shares carrying one
voting right each.
The nominal value of each ordinary share is £0.20. There are no restrictions
placed on the distribution of dividends, or the return of capital on a winding
up or otherwise.
The movements in the company's own shares reserve were as follows:
Value
£m
At 1 October 2021 1.5
Shares issued/purchased for share schemes 10.1
Shares used to satisfy share schemes (5.5)
Shares purchased pursuant to share buyback 37.7
Shares cancelled pursuant to share buyback (36.6)
At 30 September 2022 7.2
Shares issued/purchased for share schemes 20.1
Shares used to satisfy share schemes (7.6)
Shares purchased pursuant to share buyback 74.8
Shares cancelled pursuant to share buyback (73.1)
At 30 September 2023 21.4
The own shares reserve represents shares in the company purchased from the
market and held by an employee benefit trust to satisfy share awards under the
Group's share schemes as well as shares purchased for cancellation as part of
the share buyback programme (see below). Shares purchased for cancellation are
included in the own shares reserve until cancellation, at which point the
consideration paid is transferred to retained earnings and the nominal value
of the shares is transferred from share capital to the capital redemption
reserve.
Share buyback programme
On 23 May 2022, the company commenced a share buyback programme to repurchase
ordinary shares with a market value of up to £75.0m. The purpose of the
programme was to reduce the company's share capital and therefore the shares
purchased pursuant to the programme were subsequently cancelled. The programme
took place within the limitations of the authority granted to the Board at the
company's Annual General Meeting held on 27 January 2022, pursuant to which
the maximum number of shares that could be bought back by the company is
26,736,653. During the year ended 30 September 2023, the company purchased
5,015,350 ordinary shares under the programme (2022: 4,612,302) at an average
price of 769.0p per share (2022: 816.4p) and an aggregate cost of £37.6m
including £0.2m of transaction costs (2022: £37.8m including £0.1m of
transaction costs).
On 24 May 2023, the Company commenced a second share buyback programme to
repurchase ordinary shares with a market value of up to £75.0m. The programme
takes place within the limitations of the authority granted to the Board at
the Company's last annual general meeting, held on 26 January 2023, pursuant
to which the maximum number of shares that can be bought back by the Company
is 26,081,857. During the year ended 30 September 2023, the company purchased
4,327,964 ordinary shares under the programme at an average price of 865.0p
per share and an aggregate cost of £37.5m (including £0.1m of transaction
costs).
11. Acquisitions
Acquisition of Jimmy's Iced Coffee Limited
On 1 August 2023, the Group acquired 100% of the issued share capital of
Jimmy's Iced Coffee Limited (Jimmy's), obtaining control of the entity.
Jimmy's was founded in 2011 and is a small but established ready to drink
(RTD) iced coffee business based on the south coast of England. Jimmy's is the
fastest growing RTD iced coffee brand in the UK. The Jimmy's brand gives
Britvic access to a fast-growing category and is directly aligned to the
Group's strategic priorities of Accessing New Spaces and Healthier People,
Healthier Planet.
Jimmy's contributed £2.2m of net revenue and a loss of £0.3m to the Group's
profit after tax for the period between the date of acquisition and the
balance sheet date.
If the acquisition of Jimmy's had been completed on the first day of the
financial year, Group revenues for the year would have been £1,757.5m and the
Group profit after tax would have been £122.4m.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Jimmy's at the
date of acquisition were as follows:
Assets £m
Intangible assets: trademark 19.6
Property, plant and equipment 0.1
Leased assets 0.1
Inventories 1.4
Trade and other receivables 2.8
Cash and cash equivalents 0.1
Total assets 24.1
Liabilities
Trade and other payables (2.2)
Lease liabilities - current -
Lease liabilities - non current (0.1)
Interest-bearing loans and borrowings (1.9)
Deferred tax liabilities (4.9)
Total liabilities (9.1)
Total identifiable net assets at fair value 15.0
Goodwill arising on acquisition 9.9
Purchase consideration 24.9
The goodwill arising on acquisition of £9.9m has been allocated entirely to
the GB operating segment given the current business operations are GB
focussed.
The key constituent parts of goodwill comprise mainly the potential for
further strategic growth relating to new products/categories, international
expansion, and efficiency gains; and the replacement cost of Jimmy's
workforce. Jimmy's workforce is not separately capitalised on the balance
sheet under IFRS but is a component of goodwill.
The trademark for the Jimmy's brand, recognised within intangible assets, has
been allocated a useful economic life of 10 years.
The fair value of the financial assets includes trade receivables with a fair
value of £2.5m and a gross contractual value of £2.5m. The best estimate at
acquisition date of the contractual cash flows not expected to be collected is
£nil.
Purchase consideration
The fair value of the purchase consideration at the acquisition date comprised
the following:
1 August
2023
£m
Cash 24.9
Purchase consideration 24.9
The net cash outflow on acquisition was £24.8m, comprising the above purchase
consideration of £24.9m less £0.1m of cash acquired.
12. Events after the reporting period
Acquisition in Brazil
On 2 October 2023, the Group acquired 100% of the issued share capital of
GlobalBev Comércio de Bebidas Ltda. This comprised of all the voting equity
interests and resulted in the Group obtaining control of the entity. The
acquired entity owns the Extra Power energy drink brand as well as the energy
brand Flying Horse, the juice brand Juxx and the acai smoothie brand Amazoo.
Collectively, this acquisition in Brazil enables the Group to expand its brand
portfolio and regional footprint. The acquisition marks an important extension
of Britvic's Brazilian operations, consistent with the Group's strategy to
accelerate and expand its presence across Brazil. The Group expects to
disclose the fair value of the net assets acquired, the fair value of the
consideration payable and the goodwill arising on the acquisition in its
financial statements for the 2024 financial year.
NON-GAAP RECONCILIATIONS
Adjusting items
In addition to statutory financial measures, the Group uses certain
alternative performance measures (APMs) which are not defined by adopted IFRS
to assess the operating performance and financial position of the Group. These
APMs exclude certain items, referred to as adjusting items, which are not
incurred in the ordinary course of business due to their size, frequency and
nature. These APMs are intended to provide additional useful information on
trading performance to the users of the Financial Statements and are not
intended to be a substitute for IFRS measures.
For the year ended 30 September 2023 these items primarily relate to pension
past service costs, amortisation of acquisition related intangibles, strategic
M&A activity and hedge ineffectiveness on private placement loan hedging.
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.
Notes Year ended Year ended
30 September 2023 30 September
£m 2022
£m
Implementation of SaaS accounting guidance (a) - (7.5)
Strategic restructuring - business capability programme (b) (0.9) (0.5)
Strategic restructuring - organisational capability transformation (c) (4.3) 1.5
Credits in relation to the acquisition and integration of subsidiaries (d) - 0.3
Strategic M&A activity (e) (2.4) 1.0
Deposit and Return Scheme set-up costs in Ireland (f) (0.5) -
Pension scheme costs (g) (20.5) -
Acquisition-related amortisation (h) (8.3) (8.4)
Total included in operating profit (36.9) (13.6)
Ineffectiveness on cash flow hedges related to debt (i) (1.5) -
Total included in finance costs (1.5) -
Total adjusting items pre-tax (38.4) (13.6)
Tax on adjusting items included in profit before tax 5.7 1.2
Net adjusting items (32.7) (12.4)
(a) In FY22, a change in accounting policy was implemented in relation to
customisation and configuration costs of SaaS: due to the change in policy,
these costs were presented as adjusting items. In FY23 the costs have been
recorded in underlying performance as the costs now form part of normal
business activity.
(b) 'Strategic restructuring - business capability programme' relates to a
restructuring of supply chain and the operating model across the Group,
initiated in 2016. Costs in the period of £0.9m relate to the closure of the
Norwich site and are primarily site running costs. FY22 costs were a similar
nature.
(c) 'Strategic restructuring - organisational capability transformation' in
the year primarily relates to redundancy costs in relation to additional
production capacity within Kylemore in Ireland. The prior year relates to the
release of contract termination costs in relation to the closure of the
Counterpoint business.
(d) FY22 included the release of provisions for Bela Ischia Alimentos Ltda
(Bela Ischia) and Empresa Brasileira de Bebidas e Alimentos SA (Ebba) which
have been fully utilised.
(e) Costs associated with acquiring Jimmy's Iced Coffee Ltd and GlobalBev
Comércio de Bebidas Ltda (Extra Power) as well as aborted M&A costs. FY22
related to remeasurement and utilisation of historic provisions.
(f) Costs for the setup of the deposit return scheme (DRS) in Ireland.
(g) Pension scheme costs of £20.5m comprise past service costs on the GB
defined benefit pension scheme resulting from an amendment to the scheme rules
related to pension increases.
(h) Acquisition-related amortisation relates to the amortisation of
intangibles recognised on acquisitions in Britvic Ireland, Britvic France,
Britvic Brazil, Aqua Libra Co, Plenish and Jimmy's Iced Coffee.
(i) Ineffectiveness on cash flow hedges relate to hedge ineffectiveness on
private placement loan hedging.
Adjusted profit
Year ended Year ended
30 September 30 September
2023 2022
£m £m
Operating profit as reported 181.5 192.4
Add back: adjusting items in operating profit 36.9 13.6
Adjusted EBIT 218.4 206.0
Net finance costs (24.7) (17.3)
Add back: adjusting net finance costs 1.5 -
Adjusted profit before tax and acquisition-related amortisation 195.2 188.7
Acquisition-related amortisation (8.3) (8.4)
Adjusted profit before tax 186.9 180.3
Taxation (32.8) (34.9)
Less: adjusting tax credit (5.7) (1.2)
Adjusted tax (38.5) (36.1)
Adjusted profit after tax 148.4 144.2
Adjusted effective tax rate 20.6% 20.0%
Adjusted earnings per share
2023 2022
Adjusted earnings per share
Profit for the year attributable to equity shareholders (£m) 124.0 140.2
Add: net impact of adjusting items (£m) 32.7 12.4
Adjusted earnings (£m) 156.7 152.6
Weighted average number of ordinary shares in issue for basic earnings per 256.9 266.5
share
Adjusted earnings per share (pence) 61.0p 57.3p
Adjusted diluted earnings per share
Adjusted earnings (£m) 156.7 152.6
Effect of dilutive potential ordinary shares - share schemes (m) 1.9 0.5
Weighted average number of ordinary shares in issue for diluted earnings per 258.8 267.0
share
Adjusted diluted earnings per share (pence) 60.5p 57.2p
Free cash flow
Year ended Year ended
30 September 30 September
2023 2022
£m £m
Net cash flows from operating activities 238.4 239.6
Purchases of property, plant and equipment (net of government grants) (68.5) (72.9)
Purchases of intangible assets (8.1) (11.7)
Interest paid, net of derivative financial instruments (21.1) (14.8)
Repayment of principal portion of lease liabilities (9.0) (9.3)
Repayment of interest portion of lease liabilities (1.9) (2.1)
Free cash flow 129.8 128.8
Adjusted net debt/EBITDA and EBITDA/net interest ratios
Year ended Year ended
30 September 30 September
2023 2022
£m £m
Operating profit as reported 181.5 192.4
Add back adjusting items in operating profit 36.9 13.6
Adjusted EBIT 218.4 206.0
Depreciation of property, plant and equipment 44.8 40.9
Depreciation of right-of-use assets 10.1 10.9
Amortisation (excluding acquisition-related amortisation) 7.3 7.2
Impairment of property, plant and equipment 3.8 -
Loss on disposal of property, plant and equipment and intangible assets 3.2 0.9
Adjusted EBITDA pre-IFRS 16 rental charges 287.6 265.9
Less: payment of lease liabilities as estimate for pre-IFRS16 rental charges (10.9) (11.4)
Adjusted EBITDA 276.7 254.5
Adjusted net debt 538.1 474.8
Adjusted EBITDA 276.7 254.5
Net debt/EBITDA ratio 1.9x 1.9x
Net interest as reported (24.7) (17.3)
Add back hedge ineffectiveness 1.5 (0.2)
Add back IFRS 16 interest on lease liabilities 1.9 2.1
Adjusted net interest (21.3) (15.4)
EBITDA/net interest ratio 13.0x 16.5x
Adjusted net debt
30 September Restated*
2023 30 September
£m 2022
£m
Interest-bearing deposits (10.9) (11.5)
Cash and cash equivalents (79.2) (85.9)
Overdrafts 48.9 9.8
Derivatives hedging balance sheet debt (22.6) (42.9)
Interest-bearing loans and borrowings 601.9 605.3
Adjusted net debt 538.1 474.8
* Comparative figures for interest-bearing deposits, overdrafts and cash and
cash equivalents have been restated as set out in Note 2.
Return On Invested Capital (ROIC)
ROIC is a performance ratio that shows how efficiently a company is using
investors' funds to generate profits. It is calculated by dividing the Group's
adjusted net operating profit after tax by total invested capital:
30 September 30 September
2023 2022
£m £m
Equity 391.7 488.0
Adjusted net debt 538.1 474.8
Total invested capital 929.8 962.8
Adjusted EBIT 218.4 206.0
Less acquisition related amortisation (8.3) (8.4)
Adjusted net operating profit before tax 210.1 197.6
Adjusted effective tax rate 20.6% 20.0%
Tax (43.3) (39.5)
Adjusted net operating profit after tax 166.8 158.1
Adjusted ROIC 17.9% 16.4%
Glossary
A&P (Advertising and Promotions) is a measure of marketing spend including
marketing, research and advertising.
Acquisition-related amortisation is the amortisation of intangibles recognised
as part of a business combination.
Adjusted earnings per share (Adjusted EPS) is a non-GAAP measure calculated by
dividing adjusted earnings by the average number of shares during the year.
Adjusted earnings is defined as the profit/(loss) attributable to ordinary
equity shareholders before adjusting items. Average number of shares during
the year is defined as the weighted average number of ordinary shares
outstanding during the period excluding any own shares held by Britvic that
are used to satisfy various employee share-based incentive programmes.
Adjusted EBIT is a non-GAAP measure and is defined as operating profit before
adjusting items.
Adjusted EBIT margin is a non-GAAP measure and is defined as Adjusted EBIT as
a proportion of Revenue.
Adjusted EBITDA is a non-GAAP measure calculated by taking Adjusted EBIT and
adding back depreciation, amortisation and loss on disposal of property, plant
and equipment and deducting payments of lease liabilities as an estimate for
pre-IFRS16 rental charges.
Adjusted effective tax rate is a non-GAAP measure and defined as the income
tax charge(credit), excluding the tax effect of Adjusting items, as a
proportion of the Adjusted profit before tax.Adjusted net debt is a non-GAAP
measure and is defined as net debt, adding back the impact of derivatives
hedging the balance sheet debt.
Adjusted net debt/EBITDA is a is a non-GAAP measure and is defined as the
ratio of Adjusted net debt to Adjusted EBITDA (calculated for the preceding 12
months).
Adjusted profit before tax is a non-GAAP measure and is defined as profit
before tax, excluding Adjusting items, with the exception of
acquisition-related amortisation.
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.
Adjusting items are those items of income and expense set out in the non-GAAP
reconciliations section that have been identified because of their size,
frequency and nature to provide shareholders with management's view of the
underlying financial performance in the period.
Aqua Libra Co is the Britvic Aqua Libra Co Limited, previously known as The
Boiling Tap Company Limited (TBTC).
ARP is defined as average revenue 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 is reconciled to profit
before tax in note 4 of the financial statements.
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.
Constant exchange rate is a non-GAAP measure of performance in the underlying
currency to eliminate the impact of foreign exchange movements.
DRS is Deposit Return Scheme. Deposit return schemes are used to encourage
more people to recycle packaging. The schemes work by charging anyone who buys
a drink a small deposit per container. They get this money back when they
return the container to a collection point to be recycled.
EBIT is earnings before interest and taxation.
EBIT margin is operating profit as a proportion of revenue, both as reported
in the consolidated income statement.
EPS is Earnings Per Share.
Free cash flow is defined as cash generated from operating activities, plus
proceeds from the sale of property, plant and equipment, less capital
expenditure, interest and repayment of lease liabilities.
GB is Great Britain.
Group is Britvic plc, together with its subsidiaries.
Immediate Consumption is defined as pack formats to be consumed on purchase,
rather than deferred packs which are purchased and consumed later.
Innovation is defined as new launches over the last five years, excluding new
flavours and pack sizes of established brands.
M&A is mergers and acquisitions.
Net debt is the sum of interest-bearing loans and borrowings, overdrafts, cash
and cash equivalents and interest-bearing deposits.
NI is Northern Ireland.
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.
Plenish is Plenish Cleanse Ltd, a company acquired on 1 May 2021.
RCF is revolving credit facility.
Revenue is defined as sales achieved by the Group net of price promotional
investment and retailer discounts.
ROI is Republic of Ireland.
ROIC is Return On Invested Capital, a performance ratio that shows how
efficiently a company is using investors' funds to generate profits. It is
calculated as set out in the non-GAAP reconciliations section.
Volume is defined as number of litres sold. No volume is recorded in respect
of international concentrate sales or Brazil fruit pulp sales.
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