REG - Fevertree Drinks PLC - Fever-Tree FY23 Interim Results
12/09/2023 07:00
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RNS Number : 0791M Fevertree Drinks PLC 12 September 2023
Fevertree Drinks plc
FY23 Interim Results to 30 June 2023
This announcement contains inside information
FY23 Interim Highlights
· Revenue growth of 9% year-on-year, with a standout performance in the
US of +40% growth (+32% constant currency) which is now the Group's largest
region by revenue contribution.
· Strong market share performance globally, achieving our highest ever
market share by value in the UK.
· 670 bps reduction in gross margin is in-line with our expectations,
driven by product cost headwinds, partially offset by efficiency projects.
· Adjusted EBITDA margin of 5.8% reflects the lower gross margin and
phasing of overheads, maintaining our strategy of investing for growth. We
therefore expect to drive an improvement in the second half of the year.
· £3.3m exceptional item relating to a production issue in the US. The
issue did not impact customer relationships or our ability to supply the
market.
· Recommending an interim dividend of 5.74 pence per share, an increase
of 2% year-on-year.
£m H1 FY23 H1 FY22 Change
Revenue
UK 53.8 53.5 1%
US 56.1 40.1 40%
Europe Fever-Tree brand revenue 50.5 46.5 9%
Europe total* 56.1 52.3 7%
ROW 9.6 15.0 (36)%
Total* 175.6 160.9 9%
Gross profit 53.8 60.1 (11)%
Gross margin 30.7% 37.4% (670)bps
Adjusted EBITDA 1 (#_ftn1) 10.2 22.0 (54)%
Adjusted EBITDA margin 5.8% 13.6% (780)bps
Diluted EPS (pence per share) 1.20 12.08 (90)%
Dividend (pence per share) 5.74 5.63 2%
Cash 75.8 100.0 (24)%
*includes GDP's portfolio brands
Strategic highlights
· Very strong revenue growth in the US across all categories, extending
our leadership position in Tonic Water and Ginger Beer, with continued
positive contribution from our product innovation.
· Fever-Tree extended its clear market leadership in the UK with its
highest ever value share and encouraging initial performance from our range of
cocktail mixers and adult soft drinks.
· Many of the Group's European markets performed well against strong
comparators, growing our leadership position to two thirds of the premium
mixer category across the region.
· First half revenue for ROW region reflects a one-off inventory
buy-back as part of the transition to our new subsidiary set-up in Australia,
positioning us to further drive the opportunity ahead in that market.
· Good progress on key operational initiatives and softening
inflationary headwinds underpins our confidence in significant year-on-year
margin recovery in 2024.
Outlook and guidance
Whilst we expect to deliver continued good growth in FY23, most notably in the
US, our sales performance since period-end has been impacted by the
unseasonably poor weather in the UK which has subdued the wider category over
the key summer trading period. Therefore, alongside the impact of the
inventory buyback in Australia, we now expect to deliver FY23 revenue of
between £380m to £390m.
We are making good progress with the mitigation of inflationary cost
challenges and are reiterating our gross margin guidance of 31% to 33% for
FY23. We remain committed to investing in the substantial future opportunity
for the brand across our regions and expect overheads to be in the range £88m
to £92m resulting in FY23 EBITDA guidance range of c.£30m to £36m.
Looking ahead to 2024, due to a combination of softening inflationary
headwinds and the benefit of the actions we are taking this year, we are
confident of delivering significant margin improvement, setting up the Group
for strong, profitable growth going forward. Reflecting the momentum in our
key growth regions, we are comfortable with current market revenue growth rate
expectations for 2024 and expect to deliver an improved FY24 EBITDA margin of
c.15%, which is ahead of current market expectations.
Tim Warrillow, CEO of Fever-Tree, commented:
"Fever-Tree delivered good revenue growth in the first half of 2023. We had a
standout performance in the US where the brand continues to go from strength
to strength, extending our leadership position in the Tonic and Ginger Beer
categories. This reflects how well established the brand is becoming in the
world's largest premium spirit market.
In the UK, despite the challenging macro-economic conditions, we ended the
first half with our highest ever value share of 45%, which is over 50% higher
than our nearest competitor. I have been hugely encouraged by the response to
our new innovation, specifically our range of cocktail mixers and adult soft
drinks, as shown by the significant and growing listings across both channels.
Our European business is growing in depth and breadth and the recent step
changes we have made in our route to market across Australia, Canada and Japan
reflect the growing potential we see in our Rest of World region.
Whilst the vagaries of the British summer weather have impacted sales since
period end, contributing to our revised guidance for the full year, the Group
still expects to deliver good growth in the reminder of 2023. Looking ahead to
2024, with a stronger global market position than ever before, a broader
product portfolio and our confidence in delivering significant margin
improvement, the Group is well set up for strong, profitable growth going
forward."
There will be live audio webcast on Tuesday 12(th) September 2023 at 10:00am
BST. The webcast can be accessed via:
Fever-Tree FY23 Interim Results webcast
(https://www.investis-live.com/fever-tree/64c287c52be9e413003c4ba2/efwf)
For more information please contact:
Investor queries
Ann Hyams, Director of Investor Relations I ann.hyams@fever-tree.com
(mailto:ann.hyams@fever-tree.com) I +44 (0)7435 828 138
Media queries
Oliver Winters, Director of Communications I oliver.winters@fever-tree.com
(mailto:oliver.winters@fever-tree.com) I +44 (0)770 332 9024
Nominated Advisor and Broker - Investec Bank plc
David Flin I Alex Wright I +44 (0)20 7597 5970
Corporate Broker - Morgan Stanley & Co, International plc
Andrew Foster I Jessica Pauley I +44 (0)20 7425 8000
Financial PR advisers - FGS Global
Faeth Birch +44 (0)7768 943 171; Anjali Unnikrishnan +44 (0) 7826 534 233
This announcement contains inside information. The person responsible for
arranging the release of this announcement on behalf of the Company is Andy
Branchflower, CFO
Strategic update
£m H1 FY23 H1 FY22 change constant currency change
Revenue
UK 53.8 53.5 1%
US 56.1 40.1 40% 32%
Europe Fever-Tree brand revenue 50.5 46.5 9% 5%
Europe total* 56.1 52.3 7% 4%
ROW 9.6 15.0 (36)% (35)%
Total* 175.6 160.9 9% 6%
Fever-Tree delivered revenue of £175.6m, an increase of 9% year-on-year, with
particularly strong growth in the US driven by continued distribution gains
and innovation. Whilst our UK sales have been impacted since period end by the
effects of the unseasonably poor weather on the wider category, the first half
saw the brand continue to grow its market share and deliver very encouraging
early signs from the launch of our range of cocktail mixers as well as
increasing distribution of our adult soft drinks. Good momentum continues in
Europe, and whilst the Rest of World revenue was impacted by the one-off
inventory buyback as part of the change in distribution model in Australia,
this is not reflective of underlying performance or the confidence we have in
the region moving forward.
As well as our focus on topline growth, we are continuing to take proactive
steps to mitigate cost headwinds and drive efficiencies. As previously
announced, whilst we are experiencing significant margin dilution in the
current year, most notably due to materially elevated glass costs, we are
confident that we will see margin improvement in the second half and are
reiterating our gross margin guidance for the full year. Furthermore, the
steps we are taking this year, alongside softening inflationary headwinds,
will ensure that we drive material margin improvement in 2024.
We have recognised a £3.3 million exceptional cost in the first half results
which relates to issues during US production which arose towards the end of
the first half. This was ring-fenced to specific production batches and has
not impacted customer relationships or our ability to supply the market. Going
forward, we are confident that our US supply chain strategy is robust with
appropriate flexibility and contingencies in place.
We are very pleased with our underlying strategic performance. Innovation
remains the cornerstone of the brand and is driving growth across all our
regions. Adult soft drinks are gaining distribution and starting to contribute
to total growth in the UK, cocktail mixers are showing positive signs
following their launch in the UK and US earlier this year, and Blood Orange
Ginger Beer has been our fastest growing new product since its US launch in
Autumn 2022, extending the category into exciting new flavours. We continue to
evolve our route to market to capture current and future growth markets. Over
the past twelve months we have announced the set-up of our own subsidiary
operation in Australia and new distribution partnerships in Japan and Canada.
The Group has continued to make good progress across its sustainability
initiatives in the first six months of 2023. We have finalised our UK product
carbon footprint for 2022 which has shown a reduction in both absolute and per
litre emissions, reflecting our on-going focus on reducing the impact our
products have on the environment throughout our supply chain.
2023 also marks the tenth year of our partnership with Malaria No More UK. The
fight against malaria remains at the very heart of the Fever-Tree brand given
the role quinine plays in anti-malaria medication and the fact many of the
communities where Fever-Tree sources its ingredients also experience the
devastating effects of malaria. We are proud to have supported the incredible
work undertaken by Malaria No More UK for a decade and are focused on
sponsoring initiatives that are making a difference to those communities most
impacted by the disease.
UK I Broadening the portfolio and extending our leadership of the mixer category
Fever-Tree delivered UK revenue of £53.8m in the first half of the year, an
increase of 1% year-on-year, driven by a slight increase in On-Trade revenue
and flat Off-Trade revenue. Despite the challenging macro-economic
environment, crucially, we have extended our clear leadership position of the
UK mixer category, with c.45% value share across the On- and Off-Trade
combined, over twenty times the nearest premium mixer brand, and over 50%
higher than Schweppes 2 (#_ftn2) .
Fever-Tree is outperforming the mixer market in the On-Trade, growing value
share by more than 5% since 2019 to over 53% 3 (#_ftn3) of the total On-Trade
mixer value, our highest ever share. As the number one mixer brand in the UK,
Fever-Tree is best placed to capitalise on continued spirit category growth
and premiumisation, and we are increasingly engaging with spirits companies
through co-promotions across a greater number of spirit and mixer occasions,
with our broad, diversifying portfolio.
In the Off-Trade, Fever-Tree's sales were flat year-on-year as we lapped tough
comparators during the first quarter. The brand has maintained its number one
value share position, c.1% ahead of Schweppes and significantly ahead of the
next largest premium brand 4 (#_ftn4) . In fact, Fever-Tree now accounts for
over 90% of total premium mixer sales in the Off-Trade(5), highlighting our
strong position in this category.
Over the last year we have extended into two exciting adjacent categories.
Firstly, adult soft drinks, where we have established over 9,000 points of
distribution at UK retail, delivering value growth of 55% in the first half of
the year 5 (#_ftn5) as we outperform established brands to grow our share
within the category.
The first half of the year also saw the launch of our range of cocktail
mixers. The initial response has been highly encouraging and we have already
secured over 3,000 points of distribution across Tesco, Sainsbury's, Waitrose,
as well as a good presence on Ocado, and a significant number of listings with
some of our largest On-Trade customers, including Mitchells & Butlers and
Young's.
US I Innovation and distribution gains driving growth
Fever-Tree's revenue for the first half of the year increased by 40% to
£56.1m (+32% at constant currency). The brand's strong growth has been driven
by gains across all categories and we have extended our number one position in
the Tonic Water and Ginger Beer categories in the first half of the year.
Fever-Tree is seeing strong growth in the On-Trade, which is now back,
post-COVID, to almost 20% of total US sales. The brand continues to win new
mandates and distribution across hotels, dining, sports and nightlife venues,
contributing to a 21% increase in our number of On-Trade accounts as we extend
our position as the premium mixer of choice in this channel.
Fever-Tree also performed well in the Off-Trade during the first half of the
year. Our retail sales increased by 23% year-on-year and by 200% over the last
four years, compared to 2019 6 (#_ftn6) . Value growth is being driven by
Tonic and Ginger Beer in absolute terms, as we outpace these two categories,
as well as being the fastest growing Grapefruit and Club Soda brand.
Consequently, we continue to gain share of the total mixer category, extending
our position as the clear premium market leader and driving category growth.
Our multiple drinks strategy has driven our innovation agenda and this remains
a critical part of our US growth as we leverage our consumer insights to
ensure we are creating mixers to elevate everyday drinking experiences with
fast-growing, premiumising spirits. The launches of both our Sparkling
Sicilian Lemonade, aimed at Bourbon and Vodka occasions, as well as our Blood
Orange Ginger Beer to extend this popular mixer category, have demonstrated
the power of our unique approach to innovation.
To further expand our drinks strategy, we have also extended our range into
the non-carbonated mixer category, launching Fever-Tree Margarita and Bloody
Mary in the first quarter of the year. We have already seen the positive
impacts of this, with very positive sell-in of Margarita and Bloody Mary,
leading to promising conversations with retailers about further distribution
opportunities. The non-carbonated mixer category is a significant long-term
opportunity for the brand due to its size, level of premiumisation, brand
fragmentation, and similar consumer profile to carbonated mixers.
Alongside innovation and distribution gains, the business is focused on
expanding our consumer brand awareness. In the On-Trade, we have focused on
making the brand more visible on menus, and creating our own perfect serve
menus, in addition to sponsoring five Fever-Tree bars across the country. At
retail, we have become Category Captain at multiple national retail chains,
enabling enhanced displays, better activations and thus supporting our many
spirit partnerships.
Europe I Growing value share and diversifying the portfolio
The Fever-Tree brand delivered 9% revenue growth across our European markets,
slightly ahead of our total European growth of 7%, which includes GDP
portfolio brands (4% at constant currency). Italy and France continue to
outperform, with good growth also coming from the Nordics during the first
half of the year as we extend our distribution and increase our brand
awareness.
Fever-Tree continues to drive premiumisation across Europe. In the Off-Trade,
Fever-Tree now has over two-thirds value share of premium mixers and continues
to gain share from other premium brands 7 (#_ftn7) . We are also increasing
our share of the total mixer category, with a good performance in France,
Norway and Italy, where we have delivered absolute growth of over 20% and
gained between one and four percentage points of value share in these
markets(7).
The On-Trade started the year well as the market annualised the first quarter
of 2022, which had some restrictions still in place. Both channels have seen
good growth compared to pre-Covid levels, contributing to a total sales growth
of over 50% since 2019.
Fever-Tree is growing its leadership of the Ginger Beer category, which is
popular as a mixer for the Mule serve, pairing well with Vodka, as well as
dark spirits. The brand now has more than a third of the value share of Ginger
Beer across European retail, almost 10% more than the next largest brand(7)
and we see more opportunity to grow this in the coming years.
We also continue to invest across a range of marketing activities, from
traditional above-the-line campaigns to On-Trade activations, social media
campaigns, and television adverts, as well as through partnerships and
co-promotions at retail to drive incremental distribution, visibility and
sales. We have now produced television campaigns in Italy, Spain, The
Netherlands and Switzerland and launched a prominent out-of-home campaign in
Paris which included promotions of our Ginger Beer and Mediterranean Tonic
across four thousand billboards around the city.
RoW I Upgrading our route-to-market
Despite making good progress in our Rest of the World Region, revenue of
£9.6m is a 36% decrease year-on-year (35% at constant currency). Our reported
sales were impacted by a one-off inventory buy-back in Australia, as we
established our own subsidiary and transitioned to a new distribution partner
in that market, a move which sets us up strongly for the future.
In terms of the brand's trading performance, in Australia Fever-Tree remains
the number one premium mixer in this market by a significant margin, with more
than 80% value share of the premium mixer category at Australian retail 8
(#_ftn8) . We continue to win new shelf space, with four new products launched
in Woolworths, including 500ml Sparkling Pink Grapefruit, and four new SKUs
planned to go on-shelf in Coles following our double-digit growth in the
second quarter of the year, along with consistent share gains.
Our new subsidiary set-up in Australia will allow us to take greater control
of our sales, marketing and distribution, working alongside a new distribution
partner with complimentary ambitions and skillsets. We have already secured a
local warehouse and aim to start production with a local bottler during 2024,
giving us even more confidence in where we can take the brand in this market.
In Canada, we also made a significant step-change in our route-to-market,
transitioning to a new, larger, more experienced distributor last year. Their
sales team have already started to support our significant growth ambitions
and we look forward to seeing how our partnership will drive further growth
for the brand in this market.
In Japan, we started to work with Asahi Breweries as our new distributor and
see real potential to expand in this large market over the next few years in
both the premium mixer and adult soft drink category. Beyond Japan, we
continue to grow our presence across a number of Asian markets, supported by
On-Trade activations, prominent retail displays and new product launches.
Operational review
Towards the end of the first half, the Group were made aware that issues
during production had potentially impacted certain US inventory batches.
Following completion of a programme of testing we subsequently made the
decision to permanently quarantine the affected inventory, resulting in a
£3.3m stock provision recognised in the first half results. The issue was
ring-fenced to specific production batches and did not impact customer
relationships or our ability to supply the market.
The Group has made good progress with regards to 2024 glass supply and is at
the contracting phase of a UK/European glass tender. Alongside this, we are
well advanced in discussions with a local Australian production partner and
are also progressing well with the implementation of our wide-ranging
programme to embed technology across our global operations.
All of these actions further improve supply chain resilience and efficiency,
and we look forward to combining continued revenue growth with material margin
improvement in 2024 and beyond.
Financial review
Revenue of £175.6m (H1 2022: £160.9m), with growth of 9% (6% at constant
currency) included particularly strong growth in the US, where we grew by 40%
year-on-year (32% on a constant currency basis).
The Group generated an adjusted EBITDA of £10.2m (H1 2022: £22.0m), a 53.5%
decrease year-on-year. As anticipated, gross margins have been impacted by
inflationary cost pressures most notably the effect of materially elevated
glass pricing in 2023. These headwinds were partially offset by mitigating
actions, including pricing actions across regions.
Continued investment behind the brand, our team and our operations, alongside
some phasing effects have increased operating expenditure to 24.9% of Group
revenue (H1 2022: 23.7%) and as a result, the impacts on gross margin have
translated to a reduction in adjusted EBITDA margin to 5.8% (H1 2022: 13.6%).
We expect improving gross margin and overhead phasing to drive an improvement
in adjusted EBITDA margin in the second half of the year and are confident of
further recovery in 2024 due to a combination of softening inflationary
headwinds and the benefit of the actions we are taking this year, setting up
the Group for strong, profitable growth going forward.
Working capital remains elevated due to inventory holdings, which alongside
the reduction in adjusted EBITDA margin drove negative operating cash flow
conversion in the first half and a reduction in cash to £75.8m. We expect
improving working capital and adjusted EBITDA margins to combine to drive a
return to positive operating cash flow conversion as the year progresses. The
balance sheet remains strong and the Board is recommending an interim of
dividend of 5.74 pence per share, an increase of 2% year-on-year.
£m H1 FY23 H1 FY22 Change
Revenue 175.6 160.9 9.1%
Gross profit 53.8 60.1 (11)%
Gross margin 30.7% 37.4% (670)bps
Adjusted EBITDA 10.2 22.0 (54%)
Adjusted EBITDA margin 5.8% 13.6% (780)bps
Operating profit 0.6 17.4 (96%
Profit before tax 1.4 17.9 (92)%
Cash 75.8 100.0 (24)%
Gross margin
Gross margin of 30.7% represents a reduction from the 37.4% gross margin
reported in the first half of 2022. This was in line with expectations, with
significant inflationary cost increases across categories, most notably glass
costs, impacting underlying product costs across regions. The Group has taken
mitigating actions, including increased pricing across regions, delivering
logistics efficiencies and increased US local production, however, this was
not sufficient to offset the impact of the inflationary headwinds in the first
half.
We expect an improvement in gross margin in the second half of the year,
reflecting the full benefit of pricing actions across the period and reducing
Trans-Atlantic freight rates.
As outlined in the operational review, we are taking significant steps in 2023
to underpin gross margin improvements in 2024 and beyond, including:
· Concluding a tender for UK and Europe glass requirements, which,
subject to contracting, will realise significant year-on-year improvements in
glass costs in 2024, greater co-operation and transparency on energy cost
hedging and will underpin security of glass supply.
· Trans-Atlantic freight rates have materially recalibrated towards
historic levels following several years of significantly elevated rates. This
will provide the flexibility to supply the US from our UK production network
as required, whilst still driving margin improvement.
· We are in the implementation phase of our wide-ranging programme to
embed technology across our global operations, setting us up for 2024 with
best-in-class ways of working, data and insights to improve supply chain
efficiency and underpin our future growth.
Operating expenditure
Underlying operating expenses increased by 14.3% in the first half of the year
to £43.6m (H1 2022: £38.2m) increasing to 24.9% of Group revenue (H1 2022:
23.7%).
Our marketing spend in the first half of the year was 9.9% of Fever-Tree brand
revenue (H1 2022: 10.2%) as we continue to invest behind the brand. Activities
in the first half included a national UK radio campaign, television
advertising in European markets including Italy, Switzerland and The
Netherlands, alongside continued execution of retail displays, On-Trade
activations and co-promotions with spirits brands across markets globally.
Staff costs and other overheads increased by 20.1%, largely driven by the
staff cost line as 2022 hires annualised alongside inflationary wage
increases, whilst we built head count in Australia ahead of the transition to
a subsidiary set-up in that market. As a result of the investments we have
made in our team and technology, we do not anticipate having to increase
headcount notably in 2024.
The dilution in gross margin, due to inflationary cost pressures, coupled with
increased levels of underlying operating expenditure as a proportion of
revenue, has resulted in a retraction in adjusted EBITDA margin to 5.8% (H1
2022: 13.6%). As a result, the Group generated an adjusted EBITDA of £10.2m,
a 53.5% decrease on the first half of 2022 (H1 2022: £22.0m).
Depreciation increased to £3.3m (H1 2021: £1.6m) due to the impact of
right-of-use assets capitalised under IFRS 16 in relation to US warehousing.
Amortisation remained flat at £0.8m (H1 2022: £0.8m) alongside share-based
payments of £2.2m (H1 2022: £2.2m).
Exceptional items include a £3.3m provision made against quarantined US
inventory as set out in the Operational Review. The Group considers this issue
to be a one-off, non-recurring item and is considering all recourse available
relating to this issue.
As a result of these movements, adjusted EBITDA of £10.2m translates to
operating profit of £0.6m (H1 2022: £17.4m).
Tax
The effective tax rate in the first half of 2023 was 22.0% (H1 2022: 19.8%)
and was in line with expectations.
Earnings per share
The basic earnings per share for the period are 1.20 pence (H1 2022: 12.10
pence) and the diluted earnings per share for the period are 1.20 pence (H1
2022: 12.08 pence), a decrease of 90.1%.
In order to compare earnings per share period on period, earnings have been
adjusted to exclude amortisation, exceptional items and the UK statutory tax
rates have been applied (disregarding other tax adjusting items). On this
basis, normalised basic earnings per share for the first half of
2023 are 3.52 pence (H1 2022: 12.85 pence), a decrease of 74.2%.
Balance sheet and working capital
Working capital increased to £89.4m (H1 2022: £76.3m), rising to 24.9% of
last twelve months' revenue (H1 2022: 23.1%). Whilst period end receivables
reduced marginally year-on-year, reflecting continued strong recoverability,
the increase in working capital was driven by a 41% uplift in inventory
levels. This reflects the higher levels of US inventory held at period end to
ensure we are well positioned to service the strong momentum in that market,
whilst lapping inventory pinch points in the US market in June 2022. We expect
inventory levels to recalibrate over the remainder of the year, which will
drive improvements in working capital profile.
The increase in working capital, combined with the reduction in adjusted
EBITDA generated in the first half of the year has temporarily resulted in
negative cash generated from operations of £5.6m, -54% of adjusted EBITDA (H1
2022: £1.5m, +6% of adjusted EBITDA). An improving working capital profile,
alongside an improving adjusted EBITDA margin will drive a return to positive
operating cash flow conversion in the second half of the year.
Cash and Dividend
The Group's cash position reduced in the first half of the year as a result of
the retraction in operating cash flow conversion, alongside the payment of the
2022 final dividend. The Group continues to retain a strong cash position of
£75.8m and this allows us to continue to focus on making the correct
strategic choices for the long-term health of the Fever-Tree brand and success
of the business.
As a reflection of our continued confidence in the financial strength of the
Group the Directors are pleased to declare an interim dividend of 5.74 pence
per share, 2% ahead of the 2022 interim dividend. The dividend will be paid on
20 October 2023, to shareholders on the register on 29 September 2023.
Consolidated statement of comprehensive income
For the six months ended 30 June 2023
Notes Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Audited year to 31 December 2022
£m £m £m
Revenue 2 175.6 160.9 344.3
Cost of sales (121.8) (100.8) (225.5)
Gross profit 53.8 60.1 118.8
Administrative expenses (49.9) (42.7) (88.2)
Adjusted EBITDA 1 10.2 22.0 39.7
Depreciation (3.3) (1.6) (4.3)
Amortisation (0.8) (0.8) (1.5)
Share based payment charges (2.2) (2.2) (3.3)
Operating profit before exceptional items 3.9 17.4 30.6
Exceptional items 4 (3.3) - -
Operating profit after exceptional items 0.6 - -
Finance costs
Finance income 1.1 0.3 0.8
Finance expense (0.3) (0.1) (0.4)
Profit before tax 1.4 17.6 31.0
Tax expense (0.3) (3.5) (6.1)
Profit for the period / year 1.1 14.1 24.9
Items that may be reclassified to profit or loss
Foreign currency translation difference of foreign operations (1.2) (0.1) (0.1)
Effective portion of cash flow hedges 1.1 (1.6) (0.3)
Related Tax - 0.3 -
(0.1) (1.4) (0.4)
Comprehensive income attributable to equity holders of the parent company 1.0 12.7 24.5
Consolidated statement of comprehensive income (continued)
For the six months ended 30 June 2023
Earnings per share for profit attributable to the owners of the parent during
the year
Basic (pence) 5 1.20 12.10 21.36
Diluted (pence) 5 1.20 12.08 21.32
Consolidated statement of financial position
As at 30 June 2023
Unaudited Unaudited Audited
30 June 2023 30 June 2022 31 December 2022
£m £m £m
Non-current assets
Property, plant & equipment 24.0 9.2 25.6
Intangible assets 54.1 48.4 53.2
Deferred tax asset 1.6 3.0 1.9
Other financial assets - - 1.8
Total non-current assets 79.7 60.6 82.5
Current assets
Inventories 75.6 53.3 60.1
Trade and other receivables 75.7 77.5 72.4
Derivative financial instruments 1.4 - -
Corporation tax asset 0.8 3.1 1.3
Cash and cash equivalents 75.8 100.0 95.3
Total current assets 229.3 233.9 229.1
Total assets 309.0 294.5 311.6
Current liabilities
Trade and other payables (61.8) (54.4) (51.3)
Loans and other borrowing - (0.1) (1.8)
Derivative financial instruments - (1.1) -
Corporation tax liability - - (0.8)
Lease liabilities (3.4) (0.7) (3.4)
Total current liabilities (65.2) (56.3) (57.3)
Non-current liabilities
Deferred tax liability (1.5) (1.6) (1.6)
Lease liabilities (12.7) (1.9) (13.5)
Total non-current liabilities (14.2) (3.5) (15.1)
Total liabilities (79.4) (59.8) (72.4)
Net assets 229.6 234.7 239.2
Equity attributable to equity holders of the company
Share capital 0.3 0.3 0.3
Share premium 54.8 54.8 54.8
Capital Redemption Reserve 0.1 0.1 0.1
Cash Flow Hedge Reserve - (1.1) (0.5)
Translation Reserve (1.5) (0.3) (0.3)
Retained earnings 175.9 180.9 184.8
Total equity 229.6 234.7 239.2
Consolidated statement of cash flows
For the six months ended 30 June 2023
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Audited year to 31 December 2022
£m £m £m
Operating activities
Profit before tax 1.4 17.6 31.0
Finance expense 0.3 0.1 0.4
Finance income (1.1) (0.3) (0.8)
Depreciation of property, plant & equipment 3.3 1.6 4.3
Amortisation of intangible assets 0.8 0.8 1.5
Share based payments 2.2 2.2 3.3
Non-cash movements on working capital 3.5 0.1 (3.1)
Gain on disposal of fixed asset - - -
Exceptional items 3.3 - -
13.7 22.1 36.6
(Increase)/ Decrease in trade and other receivables (2.4) (10.2) (1.6)
(Increase)/ Decrease in inventories (25.9) (19.6) (23.5)
Increase/ (Decrease) in trade and other payables 11.7 6.0 0.5
(Decrease)/ Increase in derivative asset/liability (2.7) 3.2 2.4
(19.3) (20.6) (22.2)
Cash generated from operations (5.6) 1.5 14.4
Income tax paid (0.6) (5.5) (5.9)
Net cash flows from operating activities (6.2) (4.0) 8.5
Investing activities
Purchase of property, plant and equipment (1.1) (1.1) (4.6)
Interest received 1.1 0.3 0.8
Investment in intangible assets (1.8) (1.2) (2.5)
Acquisition of subsidiary, net of cash acquired - - (3.7)
Net cash used in investing activities (1.8) (2.0) (10.0)
Financing activities
Interest paid (0.1) (0.1) (0.1)
Dividends paid (12.4) (62.2) (68.8)
Repayment of loan - - -
Payment of lease liabilities (1.7) (0.4) (1.8)
Net cash used in financing activities (14.2) (62.7) (70.7)
Net increase/ (decrease) in cash and cash equivalents (22.2) (68.7) (72.2)
Cash and cash equivalents at beginning of period 95.3 166.2 166.2
Effect of movement in exchange rates on cash held 2.7 2.5 1.3
Cash and cash equivalents at end of period 75.8 100.0 95.3
Notes to the consolidated financial information
For the six months ended 30 June 2023
1. Basis of preparation and accounting policies
The principal accounting policies adopted in the preparation of the interim
financial information are unchanged from those applied in the Group's
financial statements for the year ended 31 December 2022 which had been
prepared in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006. The accounting policies
applied herein are consistent with those expected to be applied in the
financial statements for the year ended 31 December 2023.
This report is not prepared in accordance with IAS 34. The financial
information does not constitute statutory accounts within the meaning of
section 435 of the Companies Act 2006. Statutory accounts for Fevertree Drinks
plc for the year ended 31 December 2022 have been delivered to the Registrar
of Companies. The auditor's report on those accounts was unqualified, did not
draw attention to any matters by way of emphasis and did not contain a
statement under Section 498 (2) or (3) of the Companies Act 2006.
Adjusted EBITDA has been used throughout the interim financial information.
The Group believes adjusted EBITDA to be a key indicator of underlying
operational performance, adjusting operating profit for several non-cash
items. As a consequence of these adjustments, the Group believes that adjusted
EBITDA represents normalised corporate profits. Adjusted EBITDA for the period
is operating profit before exceptional items of £3.9m before depreciation of
£3.3m, amortisation of £0.8m and share based payment charges of £2.2m.
Adjusted EBITDA is an appropriate measure since it represents to users a
normalised, comparable operating profit, excluding the effects of the
accounting estimates and non-cash items mentioned above. The definition for
adjusted EBITDA as defined above is consistent with the definition applied in
previous years. This measure is not defined in the International Financial
Reporting Standards. Since this is an indicator specific to the Group's
operational structure, it may not be comparable to adjusted metrics used by
other companies. The determination of exceptional items is also not defined
in the International Financial Reporting Standards, and has been used
throughout this financial information as it provides users with specific
information on a once-off event which will not recur in future periods. As
such it allows for improved comparability of results across financial periods.
The impact of the ongoing conflict in Ukraine and the inflationary
macro-economic environment has been reflected in the Directors' assessment of
the going concern basis of preparation. This has been considered by modelling
the impact on the Group's cashflow for the period to the end of June 2024. In
completing this exercise, the Directors established there were no plausible
scenarios that would result in the Group no longer continuing as a going
concern.
The Directors have therefore concluded that the Group has adequate resources
to continue in operational existence for at least the 12 months following the
publication of the interim financial statements, that it is appropriate to
continue to adopt the going concern basis of preparation in the financial
statements, that there is not a material uncertainty in relation to going
concern and that there is no significant judgement involved in making that
assessment. This strong financial position has underpinned the Directors'
decision to pay an interim dividend of 5.74 pence per share.
Notes to the consolidated financial information (continued)
For the six months ended 30 June 2023
2. Revenue by region
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Audited year to 31 December 2022
£m £m £m
United Kingdom 53.7 53.5 116.2
United States of America 56.1 40.1 95.6
Europe 56.2 52.3 101.0
Rest of the World 9.6 15.0 31.5
Group 175.6 160.9 344.4
3. Dividend
The interim dividend of 5.74 pence per share will be paid on 20(th) October
2023 to shareholders on the register on 29(th) September 2023.
4. Exceptional items
A provision of £3.3m has been recognised relating to a quantity of stock on
hand in the US at period end. This relates to issues during production which
arose towards the end of this interim period. The issue has been
investigated and linked to specific production batches and subsequently the
decision has been made to not sell the affected inventory, therefore a full
provision has been made against this inventory. This cost has been
recognised as an exceptional item on account of its material quantum and
one-off nature.
5. Earnings per share
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Audited year to 31 December 2022
£m £m £m
Profit
Profit used to calculate basic and diluted EPS 1.4 14.1 24.9
Number of shares
Weighted average number of shares for the purpose of basic earnings per share 116,605,028 116,551,449 116,556,818
Weighted average number of employee share options outstanding 192,288 214,120 222,486
Weighted average number of shares for the purpose of diluted earnings per 116,797,316 116,765,569 116,779,304
share
Basic earnings per share (pence) 1.20 12.10 21.36
Diluted earnings per share (pence) 1.20 12.08 21.32
Notes to the consolidated financial information
For the six months ended 30 June 2023
4. Earnings per share (continued)
Normalised EPS Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Audited year to 31 December 2022
£m £m £m
Profit
Reported profit before tax 1.4 17.6 31.0
Add back:
Amortisation 0.8 0.8 1.5
Exceptional items 3.3 - -
Adjusted profit before tax 5.5 18.4 32.5
Tax - assume standard rate (25% (2022: 19%)) (1.4) (3.5) (6.2)
Normalised earnings 4.1 15.0 26.3
Number of shares 116,605,028 116,551,449 116,556,818
Normalised earnings per share (pence) 3.52 12.87 22.59
Normalised EPS is an Alternative Performance Measure in which earnings have
been adjusted to exclude amortisation, exceptional items and the UK statutory
tax rates have been applied to these adjusting items (disregarding other tax
adjusting items).
1 (#_ftnref1) Adjusted EBITDA is earnings before interest, tax,
depreciation, amortisation, share based payment charges, exceptional items and
finance costs
2 (#_ftnref2) IRI 52 Wks to 09/07/2023; CGA MAT to 17/06/2023
3 (#_ftnref3) CGA
4 (#_ftnref4) IRI 13 weeks to 09/07/2023
5 (#_ftnref5) IRI YTD to 09/07/2023
6 (#_ftnref6) Nielsen 26 weeks to 17 June 2023
7 (#_ftnref7) Nielsen H1 2023 top 12 European markets
8 (#_ftnref8) Woolworth & Coles scan data
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