REG - Fevertree Drinks PLC - Interim Results <Origin Href="QuoteRef">FEVR.L</Origin>

Fevertree DrinksAnnouncement

25/07/2017 07:05

RNS Number : 9444L
Fevertree Drinks PLC
25 July 2017
25th July 2017
Fevertree Drinks plc ("Fever-Tree")
Interim Results
Fever-Tree, the world's leading supplier of premium carbonated mixers today announces its Interim Results for the period ended 30 June 2017.
Financial Highlights:
 Revenue up 77% to 71.9m (H1 2016: 40.6m)
 Gross margin of 54.5% (H1 2016: 54.8%)
 Adjusted EBITDA1 up 102% to 25.2m (H1 2016: 12.4m)
 Strong balance sheet with net cash at period end of 40.5m (H1 2016: 18.6m) 
 Diluted EPS up 106% to 16.72 pence (H1 2016: 8.12 pence)
 Interim dividend up 95%% to 3.01 pence per share (H1 2016: 1.54 pence)
Operational Highlights:
 Strong growth across all regions, channels and flavours
 Exceptional growth of 113% in the UK as distribution gains continue to drive performance
 Fever-Tree has driven 99% of the value growth in the entire UK mixer category within retail in the last 12 months and now holds a 30% value share (IRI)
 Expanded distribution of our 150ml can format continues to drive significant incremental growth at UK retail, with new flavours introduced and a listing across the Virgin Atlantic fleet from July 2017
 Continued new retail distribution wins globally; new listings, and increased stores and product ranging within existing retail customers;
 New bottling partner established in Spain to service Southern European markets initially
Tim Warrillow, CEO of Fever-Tree said: 
"We are delighted to report another strong performance in the first half of 2017, continuing the momentum seen in 2016. We achieved growth in all our regions, driven by further distribution gains and underlying rate of sales growth as the two key trends of premiumisation and mixability continue to gather pace globally. 
"We continue to invest and improve our infrastructure, relationships with key suppliers and customers as well as adding to our senior team. The strength of our brand and first mover advantage means we are well positioned as the opportunity for premium mixers continues to gather momentum across our key markets."
Given the strong performance in the first half of the year, the Board anticipates that the outcome for the full year will be materially ahead of its expectations."
1 Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, share based payment charges and finance costs
For further information:
Fevertree Drinks plc
c/o FTI +44 (0)20 3727 1000
Tim Warrillow, Co-founder and CEO

Andy Branchflower, Finance Director



FTI Consulting - Financial PR
+44 (0)20 3727 1000
Jonathon Brill
fever-tree@fticonsulting.com
Oliver Winters

Georgina Goodhew



Investec Bank plc - Nominated Adviser and Broker
+44 (0)20 7597 4000
Garry Levin

Matt Lewis

Alex Wright

David Anderson



Updated Imagery:
Updated Company imagery can be accessed here - http://www.fever-tree.com/corporate/image-library. 
Notes to Editors:
Fever-Tree is the world's leading supplier of premium carbonated mixers for alcoholic spirits by retail sales value, with distribution to over 50 countries worldwide. Based in the UK, the brand was launched in 2005 to provide high quality mixers which could cater to the growing demand for premium spirits, in particular gin, but also increasingly for vodka, rum and whisky. The Company now sells a range of carbonated mixers to hotels, restaurants, bars and cafes ("On-Trade") as well as selected retail outlets ("Off-Trade"). Approximately 56 per cent of the Group's sales were derived from outside of the UK in financial year 2016, with key overseas markets in the US and Europe. 
Chief Executive's report
I am delighted to report that the Group's strong performance in 2016 has continued in the first half of 2017. During the period we achieved revenue of 71.9m, representing growth of 77% on the first half of 2016. 
Whilst gross margin of 54.5% represents a slight retraction from the 54.8% achieved in the first half of 2016, the Group achieved an adjusted EBITDA of 25.2m in the first half of the year (H1 2016: 12.4m) at an improved adjusted EBITDA margin of 35.0% (H1 2016: 30.7%). This performance resulted in diluted earnings per share in the six month period of 16.72p (H1 2016: 8.12p), growth of 106% on the prior period. We begin the second half of 2017 with a strong balance sheet and net cash of 40.5m (H1 2016: 18.6m).
Results

Half year ended 30 June 2017
Half year ended 30 June 2016
Reported Movement
Constant Currency Movement

m
m
%
%





Revenue
71.9
40.6
77%
70%





Gross Profit
39.2
22.3
76%
66%
Gross Profit margin
54.5%
54.8%







Adjusted EBITDA
25.2
12.4
102%
85%
Adjusted EBITDA margin
35.0%
30.7%







Diluted EPS
16.72p
8.12p
106%

Interim Dividend
3.01p
1.54p
95%






Territory review
Revenue by territory

Half year ended 30 June 2017
Half year ended 30 June 2016
Movement
Share of revenue

m
m
%
%





UK
33.6
15.8
113%
47%
Continental Europe
22.0
13.4
64%
31%
USA
13.2
9.2
43%
18%
RoW
3.1
2.2
45%
4%





Total
71.9
40.6
77%
100%





UK
The UK remains the Group's largest market, contributing 47% of Group sales in the period, with revenue growth of 113% compared to the first half of 2016.
Sales growth was strong across both On-Trade and Off-Trade channels and across flavours and formats. The performance in the Off-Trade channel in particular, where 50% of UK sales are now made, was exceptional in the first half of 2017. This was helped by momentum from the distribution gains made through 2016, the continued strong performance of our 150ml can format, as well as new distribution gains made in the first half of 2017. The Off-Trade sales growth was also assisted by very strong June sales in advance of July promotions at key retailers. Notwithstanding the period performance, we are mindful that stronger comparators will be lapped as we progress through the second half of 2017, especially with respect to the exceptionally strong Christmas trading achieved in 2016.
We have seen the continued success of our 150ml can format, launched in June 2015, which now represents 40% of the UK Off-Trade sales mix with a strong underlying rate of sale growth and an increasing distribution footprint. The 150ml range includes four tonic flavours and has recently been extended to include ginger ale and premium lemonade cans specifically for the July 2017 listing across Virgin Atlantic's entire fleet.
Fever-Tree drove 99% of the value growth in the entire UK mixer category within retail in the 12 months to June 2017 and now holds a 30% value share (IRI). This increasing level of premium penetration continues to outstrip the 16.5% proposed as the target value share at maturity for the premium segment of the mixer category (EY, September 2014) and again illustrates the extent to which Fever-Tree is rapidly transforming the UK mixer category. 
In the On-Trade channel, continued strong revenue growth was achieved, driven by underlying rate of sale growth as well as an expanding distribution footprint. The Group works increasingly closely with key wholesale and managed group partners, strengthening relationships that help us to drive our first mover advantage in the market. 
We have continued to build on our partnerships with both the established premium gin brands and the increasing number of local craft gin brands, enabling Fever-Tree to play a key role alongside these brands in driving the premium gin and tonic trend across the UK. We also have begun to seed our new expanded range of dark spirits mixers across a small number of high end On-Trade bars this summer and have seen increased distribution of our Cola at retail in the first half of 2017. We are increasingly optimistic about the significant opportunity in premium dark spirits mixers, both within the UK and across our International markets.
Continental Europe
Revenue growth of 64% was achieved in the period, which represented growth of 53% on a constant currency basis. Sales growth was achieved across all territories; however, the acceleration in the period reflects a notably strong performance across a number of key Western European territories. Tonic flavours continue to play a dominant role in these markets, with our Aromatic Tonic performing well since its introduction in the first half of the year, reflecting the gin and tonic trend that is increasing in momentum across Western Europe. It is also notable that Ginger Beer is increasing in prominence in the sales mix, particularly in Italy where just as we have seen in the USA, the Moscow Mule is increasing in popularity. 
The strong sales performance in the first half of the year was assisted by the phasing of pre-summer sell-in to our importers in key territories, which resulted in an exceptional sales performance in June 2017 and means certain territories begin the second half of 2017 well stocked. Therefore, we expect reported growth rates will not be as strong in the second half of 2017. However, with an expanding retail footprint across the region and an increasingly strong position in many key territories the Group remains very well positioned to capture the significant premium mixer opportunity in Continental Europe.
USA
Revenue growth of 43% in the period represented growth of 29% on a constant currency basis. Off-Trade listings achieved in the second half of 2016 are performing well and we are seeing consistent strong growth in both Tonic and Ginger Beer flavours as the premium gin and tonic and Moscow Mule continue to increase in popularity. The US premium mixer opportunity is still at a relatively early stage and as the first mover and number one premium mixer brand the Group remains well positioned for future growth.
RoW
Sales growth of 45% was achieved within the RoW region which continues to represent strong potential for the Group in the medium to longer term. Alongside Australia and Canada we are also seeing increasing scale and a platform for growth in South Africa and Colombia.
Financial and Operational
Gross margin and operating expenses
Gross margin of 54.5% represents a slight retraction from the 54.8% achieved in the first half of 2016, where as expected, the investment in our new bespoke glass bottle introduced the second half of 2016 had an impact on underlying glass costs. The impact of this investment has been largely offset by the net benefit to the Group of the stronger US dollar and Euro during the first half of 2017 compared to the first half of 2016.
Underlying operating expenses1 reduced as a proportion of revenue to 19.6% during the period (H1 2016: 24.1%), and as a result, EBITDA margin achieved in the period improved notably to 35.0% (H1 2016: 30.7%). It should be noted that the prior period contained a 1.4m unrealised loss made on outstanding forward exchange contracts which skewed the level of underlying operating spend. Therefore disregarding foreign exchange-related gains and losses recognised in operating expenditure, the level of underlying spend is more comparable in both periods at 20.0% of revenue (H1 2016: 21.5%). Due to phasing of spend during the year it is expected that underlying operating expenditure in the second half of 2017 will be more in line with the budgeted level of 22% of revenue.
Cash position and working capital
The Group had net cash of 40.5m at period end (H1 2016: 18.6m), with 46.6m of cash at the bank offset by 6.1m of bank loans. Adjusted operating cash flow in the period was strong at 92% of adjusted EBITDA (H1 2016: 95%). As in prior years, this conversion rate is influenced by seasonality and is expected to return to levels seen historically as we progress through the second half of 2017.
Operational
The Group has contracted with and begun bottling with a new European bottling partner, based in Spain. It is expected that initially this site will bottle for territories in the Southern European region. This development increases our bottling footprint to five partners across the UK and Europe, further improving the Group's bottling capacity and contingency and is in line with our stated strategy to bottle closer to our key regions and territories as appropriate over time.
We continue to add to the senior management team with a Global Strategy Director, a Commercial Strategy Director and an Innovation Director scheduled to begin in the second half of the year with a remit to focus on deepening both distribution and product range within our existing territories.
Dividend
Reflecting the Board's continued confidence in the outlook, the Directors are pleased to declare an interim dividend of 3.01 pence per share (H1 2016: 1.54 pence per share). The dividend will be paid on 8 September 2017, to shareholders on the register on 11 August 2017.


Outlook
Given the strong performance in the first half of the year, the Board anticipates that the outcome for the full year will be materially ahead of its expectations.
Tim Warrillow
Chief Executive
Consolidated statement of comprehensive income
For the six months ended 30 June 2017 


Six months ended
Six months ended
Year ended

30 June
30 June
31 December


2017
2016
2016

Note





Revenue
2
71,941,208
40,582,364
102,237,354





Cost of sales

(32,718,694)
(18,328,176)
(45,815,263)










Gross profit

39,222,514
22,254,188
56,422,091 





Administrative expenses

(15,155,700)
(10,383,071)
(22,049,714)





Adjusted EBITDA*

25,150,252
12,441,007
35,838,989
Depreciation

(182,857)
(105,288)
(249,318)
Amortisation

(360,000)
(360,000)
(720,000)
Share based payment charges

(540,581)
(104,602)
(497,294)





Operating profit

24,066,814
11,871,117
34,372,377





Finance costs




Finance income

35,845
37,299
79,821
Finance expense

(27,027)
(111,794)
(150,318)










Profit before tax

24,075,632
11,796,622
34,301,880





Tax expense

(4,631,859)
(2,366,492)
(6,804,222)





Profit for the year/period and comprehensive income attributable to equity holders of the parent company

19,443,773
9,430,130
27,497,658










Earnings per share for profit attributable to the owners of the parent during the year




Basic (pence)
4
16.87
8.18
23.86
Diluted (pence) 
4
16.72
8.12
23.70





* Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, share based payment charges and finance costs 
Consolidated statement of financial position
30 June 2017


30 June
30 June
31 December


2017
2016
2016


Non-current assets




Property, plant and equipment

1,252,708
770,496
1,163,103
Intangible assets

42,770,655
43,490,655
43,130,655
Total non-current assets

44,023,363
44,261,151
44,293,758





Current assets




Inventories

10,078,203
5,905,188
10,523,754
Trade and other receivables

38,892,367
20,684,370
30,392,649
Cash and cash equivalents

46,579,833
24,705,172
32,963,225
Total current assets

95,550,403
51,294,729
73,879,628





Total assets

139,573,766
95,555,880
118,173,386





Current liabilities




Trade and other payables

23,052,900
10,674,805
16,128,246
Derivative financial instruments

152,901
1,680,564
981,071
Corporation tax liability

4,593,637
2,284,925
3,761,308
Total current liabilities

27,799,438
14,640,294
20,870,625





Non-current liabilities




Loans and borrowings

6,068,993
6,089,369
6,081,932
Deferred tax liability

2,156,081
2,518,959
2,228,081
Total non-current liabilities

8,225,074
8,608,328
8,310,013





Total liabilities

36,024,512
23,248,622
29,180,638





Net assets

103,549,254
72,307,258
88,992,748





Equity attributable to equity holders of the company




Share capital

288,102
288,102
288,102
Share premium

53,521,386
53,521,386
53,521,386
Capital Redemption Reserve

93,189
93,189
93,189
Retained earnings

49,646,577
18,404,581
35,090,071





Total equity

103,549,254
72,307,258
88,992,748
Consolidated statement of cash flows
For the six months ended 30 June 2017

Period ended
Period ended
Year ended
30 June
30 June
31 December

2017
2016
2016

Operating activities



Profit before tax
24,075,632
11,796,622
34,301,880 
Finance expense
27,027
111,794
150,318
Finance income
(35,845)
(37,299)
(79,821)
Depreciation of property, plant and equipment
182,857
105,288
249,318
Amortisation of intangible assets
360,000
360,000
720,000
Share based payments
540,581
104,602
497,294

25,150,252
12,441,007
35,838,989




(Increase)/Decrease in trade and other receivables
(8,499,718)
(3,888,215)
(13,596,495)
(Increase)/Decrease in inventories
445,551
471,485
(4,147,081)
Increase/(Decrease) in trade and other payables
6,096,484
2,831,140
7,585,088

(1,957,683)
(585,590)
(10,158,488)




Cash generated from operations
23,192,569
11,855,417
25,680,501




Income taxes paid
(3,884,473)
(1,787,986)
(5,047,888)




Net cash flows from operating activities
19,308,096 
10,067,431
20,632,613




Investing activities



Purchase of property, plant and equipment
(272,460) 
(286,372)
(823,011)




Net cash used in investing activities
(272,460)
(286,372)
(823,011)




Financing activities



Interest (paid)
(27,027)
(103,669)
(141,972)
Interest received
35,845
37,299
79,821
Dividends paid
(5,427,846)
(2,650,541)
(4,425,250)




Net cash used in financing activities
(5,419,028)
(2,716,911)
(4,487,401)




Net increase in cash and cash equivalents
13,616,608 
7,064,148
15,322,201




Cash and cash equivalents at beginning of period
32,963,225
17,641,024
17,641,024




Cash and cash equivalents at end of period
46,579,833
24,705,172
32,963,225








Notes to the consolidated financial information
For the six months ended 30 June 2017
1. Basis for preparation
The interim financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union.
The accounts have been prepared in accordance with accounting policies that are consistent with the December 2016 Report and Accounts and that are expected to be applied in the Report and Accounts of the year ended 31 December 2017. There are new or revised standards or interpretations that apply to the period beginning 1 January 2017 but they do not have a material effect on the financial statements for the period ended 30 June 2017.
This report is not prepared in accordance with IAS 34, which is not mandatory. 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 2016 have been delivered to the Registrar of Companies. The auditors' 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.
2. Revenue
An analysis of turnover by geographical market is given below:

Six months ended
Six months ended
Year ended
30 June
30 June
31 December

2017
2016
2016





United Kingdom
33,632,291
15,797,208
44,685,328
Continental Europe
21,964,265
13,367,379
31,114,109
United States of America
13,180,960
9,237,070
21,273,333
Rest of the World
3,163,692
2,180,707
5,164,584

71,941,208
40,582,364
102,237,354
3. Dividends
The interim dividend of 3.01 pence per share will be paid on 8 September 2017 to shareholders on the register on 11 August 2017.
4. Earnings Per Share

Six months ended
Six months ended
Year ended
30 June
30 June
31 December

2017
2016
2016

Profit



Profit used in calculating basic and diluted EPS
19,443,773
9,430,130
27,497,658




Number of shares



Weighted average number of shares for the purpose of
basic earnings per share
115,240,896
115,240,896
115,240,896
Weighted average number of employee share options outstanding
1,023,539
938,112
793,673
Weighted average number of shares for the purpose of 
diluted earnings per share
116,264,435
116,179,008
116,034,569




Basic earnings per share (pence)
16.87
8.18
23.86




Diluted earnings per share (pence)
16.72
8.12
23.70

1Underlying operating expenses are defined as administrative expenses less depreciation, amortisation and share based payment charges

This information is provided by RNS
The company news service from the London Stock Exchange
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