TIDMBVIC
RNS Number : 2703H
Britvic plc
23 November 2022
Britvic plc Preliminary Results - 23 November 2022
For the year ended 30 September 2022
'A stronger, better Britvic'
Group Financial Headlines:
-- Revenue increased 15.5%(1) to GBP1,618.3m (statutory +15.2%), driven by both price and volume
-- Adjusted EBIT increased 16.0%(1) to GBP206.0m (statutory
+16.7%), statutory EBIT increased 26.2%
-- Adjusted EBIT margin increased 10bps(1) to 12.7% (statutory +10bps)
-- Profit after tax increased 45.3% to GBP140.2m
-- Adjusted earnings per share of 57.3p, up 29.3%
-- Free cash flow generation of GBP128.8m, enabling debt
reduction and GBP106m cash returned to shareholders through
dividends and share buyback
-- Strong balance sheet with a djusted net debt to EBITDA ratio down to 1.9x
-- Full year dividend +19.8% at 29p, reflecting the Board's
confidence in our prospects and strong balance sheet
Operational Highlights:
-- Revenue growth led by our portfolio of family favourite
brands, with growth in both retail and hospitality channels, which
benefited from the good summer weather and no lockdown restrictions
this year
-- Brands have demonstrated the strength to take price, while maintaining volume growth
-- Pricing activity, promotional strategy, management of our mix
and disciplined cost control has helped to mitigate the impact of
inflation
-- Margin growth while investing in our people, brands, and infrastructure
-- Supply chain resilience and capability a key enabler of growth
-- Continued investment in and progress against our strategic growth opportunities, including:
o Increased manufacturing capacity in GB, Brazil and France to
meet consumer demand
o 'Beyond the Bottle' growth through London Essence Freshly
Infused and Aqua Libra dispense innovation
o GBP108m revenue generated from innovation brands, +49% year on
year
o Further improvement in our sustainability metrics, as part of
our Healthier People, Healthier Planet programme, including
reducing our carbon emissions and calories per serve
-- Current trading remains robust and in line with our expectations
Year ended Year ended % change Underlying
30 September 30 September actual exchange % change
2022 2021(2) rate (AER) constant
GBPm GBPm exchange rate(1)
Revenue 1,618.3 1,405.1 15.2% 15.5%
Adjusted EBIT 206.0 176.5 16.7% 16.0%
Adjusted EBIT margin 12.7% 12.6% 10bps 10bps
Adjusting EBIT items (13.6) (24.1) 43.6%
(3)
Statutory EBIT 192.4 152.4 26.2%
Statutory EBIT margin 11.9% 10.8% 110bps
Profit after tax 140.2 96.5 45.3%
Basic EPS 52.6p 36.2p 45.5%
Adjusted EPS 57.3p 44.3p 29.3%
Full year dividend 29.0p 24.2p 19.8%
per share
Adjusted net debt/EBITDA 1.9x 2.1x 0.2x
ROIC 16.4% 15.0% 140bps
-------------- -------------- ----------------- ------------------
(1.) Adjusted for constant currency and the Ireland agency
brands which ceased trading in March 2021.
(2.) Please refer to note 11 of the financial statements for
details of SaaS arrangements restatement .
(3) (.) Adjusting EBIT items of GBP13.6m are detailed on page
33.
Simon Litherland, Chief Executive Officer commented:
"We have delivered excellent results, with strong growth in
volume, revenue and profit, in the face of significant headwinds.
Our strategy has momentum, delivering accelerated top-line growth
through consistent execution across our portfolio of trusted
brands. We recognise that there are significant inflationary
pressures on our consumers, customers and suppliers, and we remain
focused on mitigating costs in a responsible manner through
efficiency initiatives and revenue management, while continuing to
invest in our brands, people, sustainability and
infrastructure.
Looking forward, the uncertain environment makes it difficult to
forecast consumer demand in the near term. We draw confidence
however from the continued resilience and growth of our category,
our brands and our talented people. Our strategy is working, with
clear drivers to continue our consistent track record of growth and
delivery of superior returns for all our stakeholders."
For further information please contact:
Investors:
Joanne Wilson (Chief Financial Officer) +44 (0) 121 711 1102
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 webcast of the presentation given today at
09:00am by Simon Litherland (Chief Executive Officer) and Joanne
Wilson (Chief Financial Officer). The webcast will be available at
www.britvic.com/investors with a transcript available in due
course.
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 37 much-loved brands sold in over 100
countries. T he 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
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 such as the COVID-19
pandemic, which may cause the actual results, performance, or
achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Except as required by the Listing
Rules and applicable law, Britvic undertakes no obligation to
update or change any forward-looking statements to reflect events
occurring after the date such statements are published.
Market data
GB take-home market data referred to in this announcement is
supplied by Nielsen and runs to 24 September 2022. ROI take-home
market data referred to is supplied by Nielsen and runs to 24
September 2022. French market data is supplied by Nielsen and runs
to 11 September 2022. Brazil market data is supplied by Nielsen and
runs to 30 September 2022.
Next scheduled announcement
Britvic will publish its quarter one trading statement on 26
January 2023.
Chief Executive Officer's Review
Performance highlights
Today we report our results for the year ended 30 September
2022. Once again, I am incredibly proud of the entire Britvic team.
They have shown agility and resilience to deliver a strong
performance, progress our strategic priorities and support each
other and our communities in a challenging environment. I want to
thank them and their families for their continued commitment.
Despite the significant headwinds we have faced, I am delighted
with the performance we have delivered across our key metrics.
Underlying revenue grew 15.5% (statutory +15.2%), adjusted EBIT
increased 16.0% (statutory +16.7%) and margin increased 10bps
(statutory +10bps). Our focus and discipline on cash enabled us to
generate a free cash flow of GBP128.8 million, reducing our
leverage ratio to 1.9x, while continuing to invest in the business
and return cash to shareholders via both increasing dividends and
our first share buyback programme. Our Healthier People, Healthier
Planet programme is increasingly embedded in our business and
decision making, and we have made further progress against our
sustainability metrics. More detail is shared in the review of the
year below.
Our strategy is clear and has momentum
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 pandemic,
the strategy has served us well and this year, when we have all
faced the consequences of the tragic war in Ukraine, it 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-placed 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 M&A to accelerate growth
Review of the year
Our strategy has driven consistent revenue growth over the past
five years of 5.1% compound annual growth rate (CAGR), and this
year we have accelerated growth to 15.5%. This was in part due to
the soft comparable in the first half of 2021 when lockdown
restrictions impacted the hospitality channel and the good weather
this summer. We have demonstrated that our portfolio of trusted
brands has been able to take and hold significant price, in
response to the extensive cost inflation prevalent across our
markets. Although France was a particularly challenging environment
to recover the inflationary cost pressure we faced. We have
successfully executed our joint business plans with our customers,
which incorporate branded in-store execution, price and promotional
activity, and ensuring on-shelf availability. The strength of our
customer relationships has been demonstrated through the recent
Advantage Group survey, which measures customer feedback from
retailers, wholesalers and suppliers in the UK. We are delighted
that Britvic has been ranked in the top three across all of
grocery, convenience and wholesale, and first for e-commerce.
We have continued to invest in our business to unlock growth and
deliver a great customer, shopper, and consumer experience. The
A&P investment we have made behind our compelling physical and
digital marketing increased by 6.4%, with a greater proportion
directed towards fully consumer-facing activity. Across our
markets, we have delivered continued success with innovation, the
detail of which is covered in the market highlights below.
Our continued business capability investment in both supply
chain and technology makes us better equipped to deliver improved
efficiency, price pack architecture flexibility, supply chain
resilience and promotional effectiveness. In the supply chain, we
invested further in both capacity and capability. In Great Britain,
we added an additional can line in Rugby, in addition to the three
lines we installed as part of our Business Capability Programme
completed in 2019. We are also upgrading the National Distribution
Centre to ensure it is well placed for future growth and to deliver
improved efficiency. In Brazil, we have added two additional carton
lines and contracted a grape processing facility to meet expanding
demand. In France, we recently signed a strategic production
partnership to support global demand for Mathieu Teisseire, one of
our premium brands participating in the cocktail and coffee mixers
category.
Our Healthier People, Healthier Planet programme is integral to
our strategy. In the year we have continued to make strong progress
in most areas. Our employee engagement score has remained firmly
above benchmark at 77, and our average calories per serve now sits
at 24, well below our 30 calories target. We have continued to
improve our water ratio and made further progress on decarbonising
the business. On a cumulative basis, we have now delivered a 34%
reduction in our Scope 1 and 2 market-based carbon emissions since
our baseline year, 2017. We are also pleased with the progress we
are making with our suppliers and customers to reduce our Scope 3
carbon emissions.
Great Britain highlights
We have continued to invest in our brands, with highly relevant
and effective marketing activation, alongside innovation to broaden
our consumer offering. Pepsi MAX was highly visible to consumers
through its continued sponsorship of the UEFA Champions League
earlier in the year. This summer saw the return of the taste
challenge for the first time in person since 2019. The eight-week
roadshow toured Great Britain and 70% of participants said they
preferred Pepsi MAX compared to the biggest selling full sugar
cola. Robinsons' Wimbledon association ended in 2021, and we took
our marketing in a new direction this year. The Big Fruit Hunt
digital competition ran across the summer, while Robinsons ready to
drink sponsored The Hundred cricket. Both campaigns allowed us to
engage with more consumers and enabled a more extended activation
period in store than before. We continued to extend our brands
through flavour innovation, with Berry Peachy for Tango, and
reformulated an old favourite, Apple, to be sugar free. We also
launched new flavours of Aqua Libra with Blood Orange & Mango
and Pepsi with Pepsi MAX Lime.
Alongside our core brands' growth momentum, we have continued to
invest in accessing future growth spaces. Following our acquisition
of Plenish in 2021, the brand has been able to leverage our strong
customer relationships and brand marketing expertise. Plenish was
relaunched in late Q2 with new packaging, highlighting its premium,
natural credentials. It also secured significant additional
distribution for the plant-based milks and shots ranges. Aqua Libra
Co, which we launched last year following the acquisition of The
Boiling Tap Company, has used our flavour concentrates expertise to
develop a unique tap proposition that offers flavoured water
alongside still, sparkling, and hot. It has been building a
pipeline of opportunities in both the workplace and retail
channels. Our premium tonics and sodas brand, London Essence, has
gained share in the retail channel and increased distribution in
pubs, bars, and restaurants of both packaged products and our
dispense offering, Freshly Infused. London Essence revenue grew
94.8% year on year, with over 1,000 Freshly Infused dispense fonts
installed and 11,000 points of retail distribution for the packaged
format across the retail and hospitality channels.
Everywhere in Britvic, our brand and business investment is
underpinned by our ESG agenda: Healthier People, Healthier Planet.
This programme ranges from employee wellbeing and healthier
consumer choices to community engagement and minimising our
packaging, water, and carbon footprint. Across our entire Great
Britain portfolio, we exited the year with an average of around 14
calories per serve and are continuing to fortify several of our
brands with added health benefits, for example the Robinsons Fruit
& Barley range and Robinsons Benefit Drops. Additionally, we
have continued in our mission to support young people by joining
forces with The Prince's Trust, through select Tango promotions,
with the aim of raising GBP100,000 for the charity in the first
year alone. On the planet side, we have continued our partnership
with The Rivers Trust, improving waterways close to our sites. We
have also made further progress towards our science-based targets
on carbon, and the Executive team has recently approved an
innovative solution to reduce carbon emissions at our Beckton site
using a heat recovery system. This system will decarbonise 70% of
the site's heat demand by shifting its heat source away from fossil
fuels.
Brazil highlights
We have continued to deliver strong growth in concentrates and
ready to drink juices, with Maguary, Dafruta and Bela Ischia
performing well in both categories. We have built on the core
ranges with recent innovations, such as Dafruta Tropical and Bela
Ischia syrups. Our grape juice has also been particularly
successful, offering quality products at a competitive price and
benefiting from our new grape processing facility to improve
margin. Fruit Shoot has also had a particularly successful year.
Since launching in Brazil, we have extended the flavour range and
launched new pack formats at different price points, specifically
to meet the needs of each region. This has included a 150ml carton,
which has performed especially strongly.
Coconut water has been more challenging this year, due to import
supply issues and rapidly escalating input costs. In response, we
have innovated to launch a new coconut nectar with lower raw
material content, facilitating more competitive pricing and
enabling us to meet value-based consumer demand amid continued high
inflation. We also continue to build recent innovations such as
Nuts, a non-dairy milk alternative, Natural Tea and Mathieu
Teisseire. We continue to expand and adapt our route to market and
channel presence to capture the growth opportunities in
wholesale/cash and carry and the on-trade.
In terms of Healthier Planet, the confluence of water
stewardship and biodiversity is of particular relevance to our
Brazil market. We have planted the Floresta Britvic, a
reforestation programme that so far covers two and a half acres in
Astolfo Dutra, Minas Gerais. Each tree represents one Brazilian
Britvic employee and is in an area located 5km from the company's
factory in the region. Separately, we have installed a biomass
boiler to replace a traditional gas boiler in Aracati, meaning we
now have biomass boilers at all four of our Brazilian sites, in
turn reducing our carbon emissions by 46% versus last year.
Other International highlights
In Ireland, we have continued to leverage the strength of our
brand portfolio with innovation. The Hint of Fruit flavoured water
from Ballygowan has been a huge success, achieving nearly 19%
market share of the flavoured water category only seven months
after launch. Revenue for our flavour concentrates brands,
Robinsons and MiWadi, was well ahead of last year. We also entered
the energy category with the launch of Club Loaded and the
extension of the Energise brand into the stimulant segment. Through
a combination of price, mix and promotional management and
simplifying the operating model with the closure of Counterpoint
last year, the Irish business has delivered a significant
improvement in operating margin, in line with our strategy.
In France, we have delivered growth across our entire brand
portfolio. We have continued to develop our Teisseire syrups range,
with the launch of Teisseire for Soda Machine and Fruits à Diluer
containing no added sugars. Teisseire Fruit Shoot has responded to
changing consumer preferences by moving to a transparent bottle to
broaden appeal and improve recycling rates, and the formulation now
contains fruit juice and water without preservatives. We have also
launched a range that includes 100% natural ingredients.
Mathieu Teisseire and London Essence have both had an excellent
year and I am delighted with their strong momentum. The pandemic
interrupted their growth, but we are now seeing great traction
globally. As the hospitality industry fully re-opened post-pandemic
this year, we have had our first real opportunity to deliver
against our growth strategy. Our consumer insight shows that demand
for premium, crafted, healthier soft drink experiences is growing,
and we are building considerable momentum.
London Essence is now available in the majority of the top 100
bars in the markets where we are distributed and 34 of the World's
Top 100 Bars and Restaurants, from Hong Kong to Barcelona. The
environmental benefits are compelling as our deliciously distilled
botanical flavours are served using micro-dosing technology without
the need for packaging or transportation of large volumes of
liquid, substantially reducing our packaging per serve and our
carbon emissions, in line with our Healthier Planet sustainability
strategy, and those of our customers.
Mathieu Teisseire is now available in 20 countries around the
world, including Brazil, served in a broad range of outlets from
coffee shops and bars to hotels and restaurants. We are growing
brand awareness and reputation through our own Mathieu Teisseire
studios, where our global brand ambassadors work in partnership
with our customers to co-create new drinks recipes using our unique
portfolio of syrup flavours, from Blackberry to Tiramisu and run
training events for their employees. So far, we have opened studios
in Belgium, Thailand, Vietnam, Paris, China, Holland, India, Oman,
Saudi Arabia, and the United Arab Emirates, unleashing creativity
across the globe.
Looking ahead
Economic forecasts suggest that 2023 will be another challenging
year, as inflationary pressures continue, and low consumer
confidence is anticipated to persist across our main markets. This
makes forecasting demand particularly challenging in the near
term.
However, we participate in a resilient and growing category,
which continues to outperform broader consumer goods, as it has for
many years. Consumption of non-alcoholic beverages continues to
increase and, even before the significant inflation of the past
couple of years, soft drinks have consistently increased their
value ahead of volume. The category is a regular staple and an
affordable treat, whose demand has proved resilient in previous
economic downturns, with limited down-trading to own label.
Britvic'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,
mutually beneficial partnership with Pepsi and the agility and
dedication of our fantastic 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.
Near term we have clear priorities to deliver in 2023. With
continued high inflation, we will seek to mitigate the impact on
our business through both cost efficiency and revenue management to
optimise our pricing and promotions. We demonstrated our ability to
deliver in this regard in 2022 and we are confident we will do so
again in 2023 and beyond. Across our markets we will continue to
engage consumers with compelling marketing, exciting innovation and
strong in-store feature and display. We will also continue to
invest, not only in our brands but also in our people,
sustainability and infrastructure.
All this, combined with the momentum we have from our excellent
2022 performance, gives us confidence that despite the considerable
headwinds, we will deliver further strategic progress in 2023 and
continue to offer superior shareholder returns.
Chief Financial Officer's Review
Overview
We have delivered an excellent performance in the year , despite
the headwind of significant cost inflation. All key financial
metrics are on a positive trajectory, reflecting the resilience and
agility of our business and the Britvic team. Underlying Group
revenue increased 15.5% (statutory +15.2%) year on year, with
double-digit revenue growth across all our business units.
Adjusted EBIT increased 16.0% (statutory +16.7%) to GBP206.0
million, resulting in an adjusted EBIT margin of 12.7%, a 10 basis
points (bps) improvement year on year. Profit performance reflects
improved operating leverage as volumes increased, an improvement in
mix and continued discipline on discretionary spend, all of which
enabled us to rebuild investment in the business. Adjusted EPS
increased 29.3% year on year reflecting the adverse impact in
financial year 2021 from the one-off, non-cash revaluation of
deferred tax following the enactment of the 6% increase in the UK
corporation tax rate .
Our cash performance was strong with free cash flow of GBP128.8
million, driven by a continued focus on day to day cash management.
As a result, we have delivered an adjusted net debt/EBITDA ratio of
1.9x, which is our lowest year end leverage since 2015. The full
year dividend equates to 29.0p per share, which represents a year
on year increase of 19.8%, maintaining our 50% pay-out ratio. In
addition, we launched our first share buyback programme partway
through the year with GBP37.7 million shares repurchased and
subsequently cancelled in our financial year 2022.
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
2022 2021 exchange
GBPm GBPm rate
--------------------------- -------------- -------------- ----------
Volume (million litres) 1,790.8 1,697.2 5.5%
ARP per litre 61.4p 56.3p 9.1%
Revenue 1,100.4 956.1 15.1%
Brand contribution 426.0 381.0 11.8%
Brand contribution margin 38.7% 39.8% (110)bps
--------------------------- -------------- -------------- ----------
In Great Britain, we have made strong progress with both volume
and revenue growing in each quarter of the year. and both the
retail and hospitality channels delivering good growth year on
year. Across both channels we continue to focus on growing our
immediate consumption pack formats. This year immediate consumption
revenue increased 20.4% benefitting from the end of COVID-19
restrictions in 2021. ARP was particularly strong, up 9.1%, due to
a combination of mix and price realisation. Margin declined due to
the lag effect from the timing of price increases in early calendar
2022 to offset the high level of inflation experienced across the
full year.
All our scale brands performed strongly. Pepsi, 7UP and Tango,
led by low/no sugar variants were all in double digit revenue
growth, with Tango +27.2% year on year as a result of increased
distribution and successful flavour innovation. J2O and Fruit Shoot
benefited from increased socialising compared to 2021, with revenue
growth of 32.3% and 15.1% respectively. Robinsons remained in
revenue growth, in both squash and ready to drink formats, despite
consumers spending less time at home compared to 2021. Rockstar had
a challenging year and while the supply issues we highlighted last
year have now been resolved, the brand continued to underperform
our expectations and revenue declined year on year.
Brazil % change
like for
Year ended Year ended % change like
30 September 30 September actual at constant
2022 2021 exchange exchange
GBPm GBPm rate rate
------------------------- -------------- -------------- ---------- -------------
Volume (million litres) 299.3 288.3 3.8% 3.8%
ARP per litre 47.8p 39.6p 20.7% 11.4%
Revenue 143.0 114.1 25.3% 15.7%
Brand contribution 22.7 21.1 7.5% (0.9)%
Brand contribution
margin 15.9% 18.5% (260)bps (260)bps
------------------------- -------------- -------------- ---------- -------------
In Brazil, we saw a continuation of strong growth, with revenue
at constant currency up 15.7%, which after adjusting for PIS/COFINS
tax benefits translates to underlying revenue growth of 17.2%. This
was driven by both volume and ARP growth. Our core categories of
concentrates and ready to drink juices were in growth, with
Maguary, Dafruta and Bela Ischia performing well in both
categories. The strongest performance was in Fruit Shoot, +93.0%
year on year, primarily due to the growth of the 150ml carton pack
format. Coconut water was more challenging, with revenue down
22.9%, due to the continued shortage and high cost of ingredients.
Other innovation brands, such as Nuts, Seleção and Natural Tea grew
strongly.
Price realisation and mix contributed to a margin improvement in
the second half of the year. While underlying margin (excluding
PIS/COFINS) in the first half declined 405bps, margin in the second
improved, limiting the full-year decline to 260bps.
Other International % change
like for
Year ended Year ended % change like
30 September 30 September actual at constant
2022 2021 exchange exchange
GBPm GBPm rate rate
------------------------- -------------- -------------- ---------- -------------
Volume (million litres) 428.0 389.9 9.8% 9.8%
ARP per litre 87.6p 85.9p 2.0% 6.1%
Revenue 374.9 334.9 11.9% 16.5%
Brand contribution 107.0 106.4 0.6% 3.0%
Brand contribution
margin 28.5% 31.8% (330)bps (370)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 18.7% driven by both volume and ARP
growth. All brands were in growth, including Pepsi +17.3%, MiWadi
+18.4% and Ballygowan +22.7%. In France revenue increased 12.3%,
led by Teisseire and Moulin de Valdonne. In other markets we
delivered growth across various sub-channels, including Benelux,
travel, export, and the Middle East. The decline in brand
contribution margin reflects the lag between inflation impacting
the P&L and the timing of our price increases landing with
customers, together with the particularly challenging retail
environment in France with respect to executing our planned price
increases in totality in that market.
Fixed costs - pre-adjusting % change
items like for
Year ended Year ended % change like
30 September 30 September actual at constant
2022 2021 exchange exchange
GBPm GBPm rate rate
----------------------------- -------------- -------------- ---------- -------------
Non-brand A&P (10.3) (8.3) (24.1)% (24.1)%
Fixed supply chain (126.0) (122.1) (3.2)% (3.7)%
Selling costs (82.0) (75.1) (9.2)% (9.0)%
Overheads and other (131.4) (126.5) (3.9)% (5.0)%
Total (349.7) (332.0) (5.3)% (5.9)%
----------------------------- -------------- -------------- ---------- -------------
Total A&P investment (61.7) (58.0)
A&P as a % of own brand
revenue 3.8% 4.1%
Total A&P was GBP3.7 million higher year on year, as we
continued to increase investment in our brands. Fixed supply chain
costs increased primarily due to higher energy and carbon dioxide
costs, partly offset by co-pack savings as production was brought
in-house. Selling costs increased due to the full-year effect of
vacancies filled in 2021 and further recruitment through 2022,
employee expenses as travel normalised, and wage and salary
inflation.
Interest
The net finance charge for the year ended 30 September 2022 is
GBP17.3 million, compared with GBP17.8 million in the comparative
year due to lower net debt levels through the year.
Adjusting items - pre-tax
In the year, the Group incurred, and has separately disclosed, a
net charge of GBP13.6 million (2021: GBP24.2 million) of pre-tax
adjusting items. Adjusting items comprises:
-- Implementation of an accounting policy change following an
IFRIC agenda decision in relation to customisation and
configuration costs of Software as a Service (SaaS) arrangements
which are now expensed as incurred, rather than capitalised. This
resulted in charges in the year of GBP7.5 million relating to IT
projects (see notes 2 and 11 of the financial statements for more
detail);
-- Strategic M&A credit of GBP1.0 million in relation to the
remeasurement and utilisation of historic provisions;
-- Strategic restructuring credit of GBP1.0 million from
historical provisions in relation to the closure of the
Counterpoint business, offset by costs for the closure of the
Norwich site; and
-- Acquisition-related amortisation of GBP8.4 million and other credits of GBP0.3 million.
Taxation
The adjusted tax charge was GBP36.1 million (2021: GBP40.7
million), which equates to an effective tax rate of 20.0% (2021:
27.0%). The statutory net tax charge was GBP34.9 million (2021:
GBP38.1 million), which equates to an effective tax rate of 19.9%
(2021: 28.3%).
Earnings per share (EPS)
Adjusted basic EPS for the year was 57.3p, an increase of 29.3%
(at actual exchange rates) on the prior year due to higher
operating profits and the adverse impact on the 2021 EPS from an
increase in deferred tax following the Government's enacted
increase in corporation tax effective from April 2023. Adjusted
diluted EPS improved 29.4%. Basic EPS for the year was 52.6p, an
increase of 45.5% on last year.
Dividends
The Board is declaring a final dividend of 21.2p per share with
a total value of GBP55.8 million, resulting in a full year dividend
of 29.0p (GBP76.5m). This is in line with our stated 50% pay-out.
The final dividend for 2022 will be paid on 8 February 2023 to
shareholders on record as of 23 December 2022. The ex-dividend date
is 22 December 2022.
Share buyback programme
As announced on 23 May 2022, the company has commenced an
initial share buyback programme to repurchase ordinary shares with
a market value of up to GBP75.0 million. The purpose of the
programme is to reduce share capital and, accordingly, the shares
repurchased are subsequently cancelled. Excluding transaction
costs, the company has returned GBP37.7 million to shareholders via
the buyback during the year ended 30 September 2022, with the
remaining GBP37.3 million to be completed during the first half of
financial year 2023. Adjusted net debt leverage at 30 September
2022 is 1.9x and within Britvic's long-term policy for leverage to
maintain a range of 1.5x to 2.5x.
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 its balance sheet on an annual basis to
assess the strength of the balance sheet, in the context of its
growth ambitions. The company's 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 GBP128.8m, compared with
GBP132.7 million in the previous year.
Net cash flow from operating activities was GBP239.6 million
compared to GBP225.3 million in the previous year as a result of
increased profit before tax and disciplined cash management during
the year.
There was a working capital outflow of GBP1.3 million (2021:
GBP17.4 million inflow), comprising an outflow from increases in
inventory of GBP26.0 million (2021: GBP15.4 million outflow), an
outflow from increases in trade and other receivables of GBP56.4m
(2021: GBP44.2m outflow), an inflow from increases in trade and
other payables of GBP84.3 million (2021: GBP75.5 million inflow),
an outflow from decreases in provisions of GBP3.2 million (2021:
GBP8.5 million outflow) and no change in other current assets
(2021: GBP10.0 million inflow).
The outflow in trade and other receivables and inflow in trade
and other payables were due to an increase in purchases as trade
increased following the removal of COVID-19 restrictions and a
strong quarter four which benefitted from a hot summer across
Europe.
The outflow in inventories, which were up year on year, is due
to inflation, an increased level of both raw materials and finished
goods stock to protect our customer service levels across the Group
and further vertical integration of fruit processing in Brazil.
Net tax paid in the year of GBP18.4 million is higher than the
GBP15.4 million net tax paid in the year to 30 September 2021 as
2021 benefited from a cash tax rebate in France of GBP7.0 million
following the disposal of the juice business.
Capital expenditure increased to GBP84.6 million (2021: GBP66.7
million) following deferral of investment during the COVID-19
restrictions.
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 2022, the Group had GBP962.4 million of
committed debt facilities, consisting of a GBP400.0 million bank
facility, undrawn, and a series of private placement notes, with
maturities between December 2022 and May 2035. A one-year extension
to the maturity of the Group's GBP400.0 million bank facility was
approved by six of the seven lenders in February 2022 extending the
maturity of GBP366.7 million of this facility to February 2027. The
remaining GBP33.3 million will mature in February 2025.
On 30 September 2022, the Group's adjusted net debt, including
the fair value of interest rate currency swaps hedging the balance
sheet value of the private placement notes, was GBP474.8 million,
which compares with GBP488.5 million at 30 September 2021.
Statutory net debt of GBP517.7 million (excluding derivative
hedges) comprised GBP604.4 million of private placement notes and
GBP3.5 million of accrued interest, offset by net cash and cash
equivalents of GBP87.6 million and unamortised debt issue costs of
GBP2.6 million.
Pensions
On 30 September 2022, the Group had IAS 19 pension surpluses in
Great Britain, Ireland and Northern Ireland totalling GBP138.9
million and IAS 19 pension deficits in France totalling GBP1.4
million, resulting in a net pension surplus of GBP137.5 million (30
September 2021: net surplus of GBP131.6 million).
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 GBP5.0 million annual partnership payment which
will continue until 2025. This is being reviewed as part of the
triennial valuation as of 31 March 2022, which remains in progress
as of the date of approving these financial statements.
Guaranteed Minimum Pension (GMP)
Following the Lloyds GMP equalisation case in October 2018,
which ruled that treatment of men and women be brought in line for
schemes with a guaranteed minimum pension, the Group recognised a
charge of GBP6.2 million in its 2019 financial statements to
provide for the impact of GMP equalisation. In November 2020, a
further ruling on the Lloyds case took place requiring that
individual transfer payments made since 17 May 1990 would also need
to be equalised for the effects of GMP. During the year ended 30
September 2021, the Group recorded a charge of GBP0.7 million as
part of adjusting items for the estimated cost of GMP equalisation
arising from this latest judgment and no additional charge was made
in 2022.
Glossary
A&P is a measure of marketing spend including marketing,
research and advertising.
Adjusted earnings per share is a non-GAAP measure calculated by
dividing adjusted earnings by the average number of shares during
the 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. EBIT margin is EBIT as a proportion
of Group 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 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 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.
Adjusted profit before tax and acquisition related amortisation
is a non-GAAP measure and is defined as profit before tax and
adjusting items, with the exception of acquisition related
amortisation.
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 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.
EBIT is earnings before interest and taxation.
EBITDA is earnings before interest, taxation, depreciation, and
amortisation.
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.
GMP is Guaranteed Minimum Pension.
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.
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.
rPET is recycled polyethylene terephthalate plastic.
SaaS is Software-as-a-Service.
Volume is defined as number of litres sold, excluding factored
brands sold by Counterpoint in Ireland. No volume is recorded in
respect of international concentrate sales.
CONSOLIDATED INCOME STATEMENT
Restated*
Year ended Year ended
30 September 30 September
2022 2021
Note GBPm GBPm
------------------------------------------------------------ ---- ------------- -------------
Revenue 4 1,618.3 1,405.1
Cost of sales (952.4) (822.1)
------------------------------------------------------------ ---- ------------- -------------
Gross profit 665.9 583.0
Selling and distribution expenses (266.8) (222.1)
Administration expenses (206.7) (208.5)
------------------------------------------------------------ ---- ------------- -------------
Operating profit 192.4 152.4
Finance income 0.9 0.9
Finance costs (18.2) (18.7)
------------------------------------------------------------ ---- ------------- -------------
Profit before tax 175.1 134.6
Income tax 5 (34.9) (38.1)
------------------------------------------------------------ ---- ------------- -------------
Profit for the year attributable to the equity shareholders 140.2 96.5
------------------------------------------------------------ ---- ------------- -------------
Earnings per share
Basic earnings per share 6 52.6p 36.2p
Diluted earnings per share 6 52.5p 36.1p
------------------------------------------------------------ ---- ------------- -------------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
All activities relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated*
Year ended Year ended
30 September 30 September
2022 2021
GBPm GBPm
-------------------------------------------------------------------------------------- ------------- -------------
Profit for the year attributable to the equity shareholders 140.2 96.5
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss
Remeasurement (losses)/gains on defined benefit pension plans (2.1) 34.1
Current tax on pension contributions 0.1 -
Deferred tax on defined benefit pension plans 2.3 (12.0)
-------------------------------------------------------------------------------------- ------------- -------------
0.3 22.1
-------------------------------------------------------------------------------------- ------------- -------------
Items that may be subsequently reclassified to profit or loss
Gains in respect of cash flow hedges 56.6 0.1
Amounts reclassified to the income statement in respect of cash flow hedges (23.8) 6.3
Current tax in respect of cash flow hedges accounted for in the hedging reserve 0.5 0.2
Deferred tax in respect of cash flow hedges accounted for in the hedging reserve (6.8) (1.1)
Exchange differences reclassified to profit or loss on disposal of foreign operations (0.8) -
Exchange differences on translation of foreign operations 28.9 (9.7)
Tax on exchange differences accounted for in the translation reserve 0.5 (0.6)
-------------------------------------------------------------------------------------- ------------- -------------
55.1 (4.8)
-------------------------------------------------------------------------------------- ------------- -------------
Other comprehensive income for the year, net of tax 55.4 17.3
-------------------------------------------------------------------------------------- ------------- -------------
Total comprehensive income for the year attributable to the equity shareholders 195.6 113.8
-------------------------------------------------------------------------------------- ------------- -------------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
CONSOLIDATED BALANCE SHEET
Restated* Restated*
30 September 30 September 1 October
2022 2021 2020
Note GBPm GBPm GBPm
--------------------------------- ---- ------------ ------------- ----------
Non-current assets
Property, plant and equipment 513.9 472.4 462.7
Right-of-use assets 68.7 71.7 78.1
Intangible assets 416.4 406.5 400.0
Other receivables 6.0 5.8 6.0
Derivative financial instruments 9 45.9 22.2 25.2
Deferred tax assets 4.4 4.0 4.8
Pension assets 138.9 141.2 101.8
--------------------------------- ---- ------------ ------------- ----------
1,194.2 1,123.8 1,078.6
--------------------------------- ---- ------------ ------------- ----------
Current assets
Inventories 172.0 135.0 118.5
Trade and other receivables 445.2 376.1 335.5
Current income tax receivables 10.9 7.2 13.1
Derivative financial instruments 9 38.9 4.0 12.1
Cash and cash equivalents 87.6 71.1 109.2
Other current assets 3.1 - 10.0
--------------------------------- ---- ------------ ------------- ----------
757.7 593.4 598.4
Assets held for sale 16.8 16.8 20.3
--------------------------------- ---- ------------ ------------- ----------
774.5 610.2 618.7
--------------------------------- ---- ------------ ------------- ----------
Total assets 1,968.7 1,734.0 1,697.3
--------------------------------- ---- ------------ ------------- ----------
Current liabilities
Trade and other payables (508.8) (417.8) (358.8)
Commercial rebate liabilities (137.0) (122.3) (107.3)
Lease liabilities (8.6) (8.9) (9.6)
Interest-bearing loans and borrowings 8 (42.2) (2.2) (78.7)
Derivative financial instruments 9 (11.2) (1.4) (2.2)
Current income tax payables (0.2) (1.4) (2.4)
Provisions (1.9) (5.3) (13.6)
Other current liabilities (11.1) (5.5) (10.2)
-------------------------------------------------------------- --------- --------- ---------
(721.0) (564.8) (582.8)
Liabilities directly associated with the assets held for sale - - (0.1)
-------------------------------------------------------------- --------- --------- ---------
(721.0) (564.8) (582.9)
-------------------------------------------------------------- --------- --------- ---------
Non-current liabilities
Interest-bearing loans and borrowings 8 (563.1) (576.9) (586.0)
Lease liabilities (65.3) (66.2) (70.2)
Deferred tax liabilities (123.1) (98.5) (68.1)
Pension liabilities (1.4) (9.6) (10.7)
Derivative financial instruments 9 (0.4) (0.6) (3.3)
Provisions (0.9) (0.5) (1.1)
Other non-current liabilities (5.5) (6.2) (2.4)
-------------------------------------------------------------- --------- --------- ---------
(759.7) (758.5) (741.8)
-------------------------------------------------------------- --------- --------- ---------
Total liabilities (1,480.7) (1,323.3) (1,324.7)
-------------------------------------------------------------- --------- --------- ---------
Net assets 488.0 410.7 372.6
-------------------------------------------------------------- --------- --------- ---------
Restated* Restated*
30 September 30 September 1 October
2022 2021 2020
Note GBPm GBPm GBPm
---------------------- ---- ------------ ------------- ----------
Capital and reserves
Issued share capital 10 52.7 53.5 53.4
Share premium account 157.2 156.2 154.1
Own shares reserve 10 (7.2) (1.5) (3.7)
Other reserves 106.0 53.7 59.8
Retained earnings 179.3 148.8 109.0
---------------------- ---- ------------ ------------- ----------
Total equity 488.0 410.7 372.6
---------------------- ---- ------------ ------------- ----------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
The financial statements were approved by the Board of Directors
and authorised for issue on 22 November 2022. They were signed on
its behalf by:
Simon Litherland Joanne Wilson
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
Restated*
Year ended Year ended
30 September 30 September
2022 2021
Note GBPm GBPm
------------------------------------------------------------------------------- ---- ---------------- -------------
Cash flows from operating activities
Profit before tax 175.1 134.6
Net finance costs 17.3 17.8
Other financial instruments 0.8 0.6
Depreciation of property, plant and equipment 40.9 42.7
Depreciation of right-of-use assets 10.9 10.5
Amortisation 15.6 14.8
Loss on disposal of property, plant and equipment and intangible assets 0.9 2.8
Share-based payments charge, net of cash settlements 4.2 3.8
Net pension charge less contributions (7.6) (5.4)
Net foreign exchange differences 2.0 0.7
Exchange differences reclassified to profit or loss from other comprehensive
income (0.8) -
Increase in inventories (26.0) (15.4)
Increase in trade and other receivables (56.4) (44.2)
Decrease in other current assets - 10.0
Increase in trade, other payables and commercial rebate liabilities 84.3 75.5
Decrease in provisions (3.2) (8.5)
Other adjustments for which cash effects are investing cash flows - 0.4
Income tax paid (18.4) (15.4)
------------------------------------------------------------------------------- ---- ---------------- -------------
Net cash flows from operating activities 239.6 225.3
------------------------------------------------------------------------------- ---- ---------------- -------------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - 0.1
Purchases of property, plant and equipment (72.9) (56.4)
Purchases of intangible assets (11.7) (10.3)
Interest received 0.2 0.6
Acquisition of subsidiaries, net of cash acquired - (31.2)
------------------------------------------------------------------------------- ---- ---------------- -------------
Net cash flows used in investing activities (84.4) (97.2)
------------------------------------------------------------------------------- ---- ---------------- -------------
Cash flows from financing activities
Interest paid, net of derivative financial instruments (14.8) (15.4)
Other loans repaid 8 - (0.1)
Payment of principal portion of lease liabilities (9.3) (8.7)
Payment of interest portion of lease liabilities (2.1) (1.9)
Repayment of private placement notes, net of derivative financial instruments 8 - (65.4)
Other derivative cash (payments)/receipts (0.8) 1.3
Issue costs paid 8 (0.3) (0.3)
Issue of shares relating to incentive schemes for employees 1.0 2.2
Purchase of own shares related to share schemes (9.0) -
Share buyback programme (36.7) -
Dividends paid to equity shareholders (67.9) (74.8)
------------------------------------------------------------------------------- ---- ---------------- -------------
Net cash flows used in financing activities (139.9) (163.1)
------------------------------------------------------------------------------- ---- ---------------- -------------
Net increase/(decrease) in cash and cash equivalents 15.3 (35.0)
Cash and cash equivalents at the beginning of the year 71.1 109.2
Net foreign exchange differences on cash and cash equivalents 1.2 (3.1)
------------------------------------------------------------------------------- ---- ---------------- -------------
Cash and cash equivalents at the end of the year 87.6 71.1
------------------------------------------------------------------------------- ---- ---------------- -------------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
CONSOLIDATED STATEMENt OF CHANGES IN EQUITY
Other reserves
--------------------------------
Issued Share Own
share premium shares Hedging Translation Merger Retained
capital account reserve reserve reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- -------- -------- -------- --------- ----------- -------- --------- --------
At 1 October 2020 (as
previously reported) 53.4 154.1 (3.7) 0.3 (27.8) 87.3 111.9 375.5
Adjustment on change of
accounting policy* - - - - - - (2.9) (2.9)
----------------------------- -------- -------- -------- --------- ----------- -------- --------- --------
At 1 October 2020 (restated*) 53.4 154.1 (3.7) 0.3 (27.8) 87.3 109.0 372.6
Profit for the year
(restated*) - - - - - - 96.5 96.5
Other comprehensive
income/(expense) - - - 5.5 (10.3) - 22.1 17.3
----------------------------- -------- -------- -------- --------- ----------- -------- --------- --------
Total comprehensive
income/(expense) - - - 5.5 (10.3) - 118.6 113.8
----------------------------- -------- -------- -------- --------- ----------- -------- --------- --------
Issue of shares 0.1 2.1 (1.5) - - - - 0.7
Own shares utilised for share
schemes - - 3.7 - - - (7.6) (3.9)
Movement in share-based
schemes - - - - - - 3.1 3.1
Current tax on share options
exercised - - - - - - 0.3 0.3
Deferred tax on share options
granted to employees - - - - - - 0.2 0.2
Transfer of cash flow hedge
reserve to inventories - - - (1.3) - - - (1.3)
Payment of dividend - - - - - - (74.8) (74.8)
----------------------------- -------- -------- -------- --------- ----------- -------- --------- --------
At 30 September 2021
(restated*) 53.5 156.2 (1.5) 4.5 (38.1) 87.3 148.8 410.7
----------------------------- -------- -------- -------- --------- ----------- -------- --------- --------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11)
Other reserves
--------------------------------------------------
Issued Share Own Capital
share premium shares redemption Hedging Translation Merger Retained
capital account reserve reserve reserve reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
At 1 October 2021
(restated*) 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
----------------- -------- -------- -------- ----------------- -------- ----------- -------- --------- ------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The preliminary consolidated financial information was
authorised for issue by the Board of Directors on 22 November
2022.
The preliminary consolidated financial information for the year
ended 30 September 2022 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
2022 was approved by the board on 22 November 2022. 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 2022 will be filed with the Registrar of Companies in
due course.
The Annual Report and Accounts for the year ended 30 September
2021 was approved by the board on 23 November 2021 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 preliminary consolidated financial information for the year
ended 30 September 2022 has been prepared in accordance with the
accounting policies described in the company's Annual Report and
Accounts for the year ended 30 September 2021, except for the
changes arising on the adoption of new accounting standards and
amendments explained further below.
New standards, amendments and interpretations adopted in the
current year
With effect from 1 October 2021, the Group applied for the first
time the standards and amendments as set out below. These amended
standards and interpretations have not had a significant impact on
the Group's financial statements.
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16
---------------------------------------------------------------------
Covid-19-Related Rent Concessions beyond 30 June 2021 - Amendments to
IFRS 16
---------------------------------------------------------------------
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Change in accounting policy - Software-as-a-Service (SaaS)
arrangements
During the year, the Group revised its accounting policy in
relation to upfront configuration and customisation costs incurred
in implementing Software-as-a-Service (SaaS) arrangements in
response to the IFRIC agenda decision clarifying its interpretation
of how current accounting standards apply to these types of
arrangements.
The Group's accounting policy has historically been to
capitalise costs directly attributable to the configuration and
customisation of SaaS arrangements as intangible assets in the
balance sheet, irrespective of whether the services were performed
by the SaaS supplier or a third party. The Group has reviewed its
SaaS arrangements and has applied the guidance in the agenda
decision to determine whether the configuration and customisation
expenditure gives rise to an asset, including whether the Group has
control of the software that is being configured or customised or
whether the configuration or customisation activities create a
resource controlled by the Group that is separate from the
software. Where these recognition criteria are not met, the Group
recognises configuration and customisation costs, along with the
ongoing fees to obtain access to the SaaS provider's application
software, as operating expenses as the services are received. The
new software costs accounting policy is presented in the policies
below.
Historical financial information has been restated to account
for the impact of the change, refer to note 11. This change in
accounting policy has resulted in costs of GBP7.5m being expensed
to administration expenses during the year ended 30 September 2022
that would previously have been capitalised as intangible assets
under the former policy (2021: GBP8.3m). Intangible assets
recognised in the balance sheet at 30 September 2021 reduced by
GBP11.8m (1 October 2020: GBP3.5m). In the statement of cash flows
for the 30 September 2022, GBP9.3m has been presented within net
cash flows from operating activities that would previously have
been presented within net cash flows used in investing activities
under the former policy (2021: GBP7.0m).
New accounting policy for Software-as-a-Service (SaaS)
arrangements
SaaS arrangements are service contracts providing the company
with the right to access the cloud provider's application software
over the contract period. Costs incurred to configure or customise,
and the ongoing fees to obtain access to the cloud provider's
application software, are recognised as operating expenses when the
services are received. In a contract where the cloud provider
provides both the SaaS configuration and customisation, and the
SaaS access over the contract term, the company determines whether
these services are distinct from each other or not, and therefore,
whether configuration and customisations incurred are expensed as
the software is configured or customised (i.e. upfront), or over
the SaaS contract term. Specifically, where the configuration and
customisation activities significantly modify or customise the
cloud software, these activities will not be distinct from the
access to the cloud software and are therefore expensed over the
SaaS contract term. When implementing SaaS arrangements, costs
incurred may include those that relate to the development of
software code
that enhances or modifies, or creates additional capability to,
existing on-premise systems and meet the definition of and
recognition criteria for an intangible asset. These costs are
recognised as intangible software assets and amortised over the
useful life of the software on a straight-line basis. The useful
lives of these assets are reviewed at least annually and any change
accounted for prospectively as a change in accounting estimate.
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 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 31 March 2024. Further
details of the Directors' assessment are set out below.
Following the outbreak of COVID-19 in early 2020, the subsequent
global pandemic and implementation of government restrictions on
commercial activity and social movement, Britvic implemented a wide
range of measures to ensure the ongoing stability and going concern
status of the company.
Britvic has proven resilient with volume and revenue now ahead
of pre-COVID-19 levels. During the first half of the financial
year, almost all COVID-19 restrictions were lifted in the countries
that Britvic operates, and the Group's strategy has been built on
the plan of living with COVID-19 and no restrictions going
forward.
Since the pandemic, the investments the business has made have
resulted in more agile and resilient procurement, production and
sales capability and we are more able to respond to changed buying
and selling patterns as required. Moreover, the business has been
able to offset inflationary pressures in 2022 by successfully
implementing revenue growth management actions, including price
increases and promo optimisation. Inflationary pressures are
expected to persist in financial years 2023 and 2024, which will
require further price increases and other actions. This has been
reflected in Britvic's strategic plan and stress test
sensitivities.
As part of the going concern assessment, inflation scenarios
have been combined with the potential impact of key risks that
could reasonably arise in the period, including supply constraints
and increased regulation. These have been modelled to assess the
extent to which further mitigating actions would be required, and
are all within management control. Mitigating actions can be
initiated as they relate to discretionary and investment spend,
without significantly impacting the ability to meet demand.
As of 30 September 2022, the consolidated balance sheet reflects
a net asset position of GBP488.0m and the liquidity of the Group
remains strong. In the first half of 2022, the Group successfully
secured a one-year extension of its GBP400.0m revolving credit
facility with six of the seven participating banks. As a result,
GBP366.7m of this facility now matures in February 2027, with the
remaining GBP33.3m maturing in February 2025. The revolving credit
facility remains committed and undrawn at 30 September 2022. The
Group's next debt maturity is in December 2022 when $43m of private
placement notes mature (GBP27.8m, 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 the full year adjusted net
debt of GBP474.8m and adjusted EBITDA of GBP254.5m, the net
debt/EBITDA ratio 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:
-- GB (United Kingdom excluding Northern Ireland)
-- Brazil
-- Ireland (Republic of Ireland and Northern Ireland)
-- France
-- International
These business units sell soft drinks into their respective
markets. Management monitors the operating results of its business
units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on brand contribution. This is defined as revenue
less material costs and all other marginal costs that management
considers to be directly attributable to the sale of a given
product. Such costs include brand specific advertising and
promotion costs, raw materials and marginal production and
distribution costs. 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 2022 GB Brazil Ireland France International Subtotal Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Revenue from external customers 1,100.4 143.0 143.9 179.4 51.6 374.9 1,618.3
---------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Brand contribution 426.0 22.7 49.6 45.9 11.5 107.0 555.7
Non-brand advertising and promotion(ii) (10.3)
Fixed supply chain(iii) (126.0)
Selling costs(iii) (82.0)
Overheads and other costs(ii) (131.4)
---------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Adjusted EBIT(iv) 206.0
Net finance costs pre-adjusting items (17.3)
Adjusting items(iv) (13.6)
---------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Profit before tax 175.1
---------------------------------------- ------- ------ ------- ------ ------------- -------- -------
Other International
----------------------------------------
Year ended 30 September 2021 GB Brazil Ireland France International Subtotal Restated(i)
GBPm GBPm GBPm GBPm GBPm GBPm Total
GBPm
-------------------------------------- ------ ------ ------- ------ ------------- -------- -----------
Revenue from external customers 956.1 114.1 128.3 164.9 41.7 334.9 1,405.1
-------------------------------------- ------ ------ ------- ------ ------------- -------- -----------
Brand contribution 381.0 21.1 46.2 49.7 10.5 106.4 508.5
Non-brand advertising & promotion(ii) (8.3)
Fixed supply chain(iii) (122.1)
Selling costs(iii) (75.1)
Overheads and other costs(ii) (126.5)
-------------------------------------- ------ ------ ------- ------ ------------- -------- -----------
Adjusted EBIT(iv) 176.5
Net finance costs pre-adjusting items (17.7)
Adjusting items(iv) (24.2)
-------------------------------------- ------ ------ ------- ------ ------------- -------- -----------
Profit before tax 134.6
-------------------------------------- ------ ------ ------- ------ ------------- -------- -----------
(i) Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11)
(ii) 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).
(iii) Included within 'selling and distribution costs' in the consolidated income statement.
(iv) See non-GAAP reconciliations at the end of this
announcement for further details on adjusting items.
5. Income tax
Restated*
2022 2021
GBPm GBPm
------------------------------------------------------ ------ ---------
Current income tax
Current tax charge (20.0) (22.6)
Amounts over provided in previous years 4.7 2.3
------------------------------------------------------ ------ ---------
Total current tax charge (15.3) (20.3)
------------------------------------------------------ ------ ---------
Deferred income tax
Origination and reversal of temporary differences (16.7) (6.0)
Impact of change in tax rates (1.3) (11.2)
Amounts under provided in previous years (1.6) (0.6)
------------------------------------------------------ ------ ---------
Total deferred tax charge (19.6) (17.8)
------------------------------------------------------ ------ ---------
Total tax charge in the income statement (34.9) (38.1)
------------------------------------------------------ ------ ---------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
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:
Restated*
2022 2021
----------------------------------------------------------------------------------- ----- ---------
Basic earnings per share
Profit for the year attributable to equity shareholders (GBPm) 140.2 96.5
Weighted average number of ordinary shares in issue for basic earnings per share 266.5 266.8
Basic earnings per share (pence) 52.6p 36.2p
----------------------------------------------------------------------------------- ----- ---------
Diluted earnings per share
Profit for the year attributable to equity shareholders (GBPm) 140.2 96.5
Effect of dilutive potential ordinary shares - share schemes 0.5 0.6
Weighted average number of ordinary shares in issue for diluted earnings per share 267.0 267.4
Diluted earnings per share (pence) 52.5p 36.1p
----------------------------------------------------------------------------------- ----- ---------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
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
2022 2021
GBPm GBPm
--------------------------------------------------------------------- ----- -----
Declared and paid during the year
Equity dividends on ordinary shares
Final dividend for 2021: 17.7p per share (2020: 21.6p per share) 47.2 57.5
Interim dividend for 2022: 7.8p per share (2021: 6.5p per share) 20 .7 17 .3
--------------------------------------------------------------------- ----- -----
Dividends paid 67.9 74.8
--------------------------------------------------------------------- ----- -----
Proposed
Final dividend for 2022: 21.2p per share (2021: 17.7p per share) 55.8 47.3
--------------------------------------------------------------------- ----- -----
8. Interest-bearing loans and borrowings
2022 2021
GBPm GBPm
-------------------------------------------- ------- -------
Current
Private placement notes (42.9) (2.8)
Less: unamortised issue costs 0. 7 0.6
-------------------------------------------- ------- -------
Total current (42.2) (2.2)
-------------------------------------------- ------- -------
Non-current
Private placement notes (565.0) (579.2)
Less: unamortised issue costs 1.9 2.3
-------------------------------------------- ------- -------
Total non-current (563.1) (576.9)
-------------------------------------------- ------- -------
Total interest-bearing loans and borrowings (605.3) (579.1)
-------------------------------------------- ------- -------
Total interest-bearing loans and borrowings comprise the
following:
2022 2021
GBPm GBPm
-------------------------------------------- ------- -------
2010 notes (39.4) (33.5)
2014 notes (117.2) (99.6)
2017 notes (175.0) (175.0)
2018 notes (120.1) (119.4)
2020 notes (152.7) (151.7)
Accrued interest (3.5) (2.8)
Unamortised issue costs 2.6 2.9
-------------------------------------------- ------- -------
Total interest-bearing loans and borrowings (605.3) (579.1)
-------------------------------------------- ------- -------
Analysis of changes in interest-bearing loans and
borrowings:
2022 2021
GBPm GBPm
------------------------------------------------------------ ------- -------
At the beginning of the year (579.1) (664.7)
Other loans repaid - 0.1
Repayment of private placement notes* - 74.1
Issue costs 0.3 0.3
Amortisation of issue costs and write-off of financing fees (0.6) (0.6)
Net translation gain and fair value adjustment (25.2) 11.1
Accrued interest (0.7) 0.6
------------------------------------------------------------ ------- -------
At the end of the year (605.3) (579.1)
Derivatives hedging balance sheet debt** 42.9 19.5
------------------------------------------------------------ ------- -------
Debt translated at contracted rate (562.4) (559.6)
------------------------------------------------------------ ------- -------
* During the year ended 30 September 2021, the Group repaid
GBP74.1m of private placement notes, comprising GBP54.1m related to
the 2010 notes and GBP20.0m related to the 2014 notes. GBP7.1m was
also received on maturity of derivatives hedging the 2010 notes and
GBP1.6m 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 GBP65.4m.
** 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
2022 2021
GBPm GBPm
---------------------------------------------------------- ------ -----
Non-current assets: derivative financial instruments
USD GBP cross currency fixed interest rate swaps* 31.1 17.7
USD GBP cross currency floating interest rate swaps*** - 1.9
Forward currency contracts* 0.4 0.1
Commodity contracts* 11.0 2.4
Interest rate swaps* 3.4 0.1
---------------------------------------------------------- ------ -----
45.9 22.2
---------------------------------------------------------- ------ -----
Current assets: derivative financial instruments
USD GBP cross currency fixed interest rate swaps* 7.4 0.6
USD GBP cross currency floating interest rate swaps*** 4.4 0.3
Forward currency contracts** 0.5 -
Forward currency contracts* 3.3 0.4
Forward currency contracts 0.2 -
Commodity contracts* 11.6 2.7
Commodity contracts**** 11.5 -
---------------------------------------------------------- ------ -----
38.9 4.0
---------------------------------------------------------- ------ -----
Current liabilities: derivative financial instruments
Forward currency contracts* - (1.1)
Forward currency contracts (1.3) (0.2)
GBP euro cross currency floating interest rate swaps** (1.0) -
Commodity contracts* (8.2) (0.1)
Commodity contracts**** (0.7) -
---------------------------------------------------------- ------ -----
(11.2) (1.4)
---------------------------------------------------------- ------ -----
Non-current liabilities: derivative financial instruments
GBP euro cross currency fixed interest rate swaps** - (0.6)
Commodity contracts* (0.4) -
(0.4) (0.6)
---------------------------------------------------------- ------ -----
Net derivative financial assets 73.2 24.2
---------------------------------------------------------- ------ -----
* Instruments designated as part of a cash flow hedge relationship.
** Instruments designated as part of a net investment hedge
relationship.
*** Instruments designated as part of a fair value hedge relationship.
**** 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:
Nominal value
Issued, called up and fully paid ordinary shares No. of shares GBPm
---------------------------------------------------------- ------------- -------------
At 1 October 2020 266,916,062 53.4
Shares issued relating to incentive schemes for employees 398,575 0.1
---------------------------------------------------------- ------------- -------------
At 30 September 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
---------------------------------------------------------- ------------- -------------
The issued share capital is wholly comprised of ordinary shares
carrying one voting right each.
The nominal value of each ordinary share is GBP0.20. 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
GBPm
-------------------------------------------- -------
At 1 October 2020 3.7
Shares issued/purchased for share schemes 1.5
Shares used to satisfy share schemes (3.7)
--------------------------------------------- -------
At 30 September 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
--------------------------------------------- -------
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
(the Programme) to repurchase ordinary shares with a market value
of up to GBP75.0m. The purpose of the Programme is to reduce the
company's share capital and therefore the shares purchased pursuant
to the Programme are subsequently cancelled. The Programme takes
place within the limitations of the authority granted to the Board
at the company's last Annual General Meeting, held on 27 January
2022, pursuant to which the maximum number of shares that can be
bought back by the company is 26,736,653.
During the year ended 30 September 2022, the company purchased
4,612,302 ordinary shares under the Programme at an average price
of 816.4p per share and an aggregate cost of GBP37.8m (including
GBP0.1m of transaction costs). A financial liability of GBP1.1m in
respect of shares to be delivered under a share repurchase
agreement with an external bank is included in other current
liabilities. During the year ended 30 September 2022, the company
cancelled 4,459,302 ordinary shares that had been purchased
pursuant to the buyback.
11. Restatement - Software as a Service (SaaS) arrangements
As disclosed in note 2, the Group revised its accounting policy
in relation to upfront configuration and customisation costs
incurred in implementing SaaS arrangements. This is in response to
the IFRS Interpretations Committee (IFRIC) agenda decision
clarifying its interpretation of how current accounting standards
apply to these types of arrangements.
The Group's accounting policy has historically been to
capitalise costs directly attributable to the configuration and
customisation of SaaS arrangements as intangible assets in the
balance sheet, irrespective of whether the services were performed
by the SaaS supplier or a third party. The Group has reviewed its
SaaS arrangements and has applied the guidance in the agenda
decision to determine whether the configuration and customisation
expenditure gives rise to an asset, including whether the Group has
control of the software that is being configured or customised or
whether the configuration or customisation activities create a
resource controlled by the Group that is separate from the
software. Where these recognition criteria are not met, the Group
recognises configuration and customisation costs, along with the
ongoing fees to obtain access to the SaaS provider's application
software, as operating expenses as the services are received.
The implementation of the updated accounting policy gave rise to
a restatement of historical financial information in accordance
with IAS 8 as set out below. This change led to an GBP11.8m
reduction in intangible assets at 30 September 2021 (GBP3.5m at 1
October 2020) and an GBP8.3m reduction in profit before tax in the
year ended 30 September 2021. Substantially all of the SaaS
implementation costs that have been expensed relate to systems that
were in the process of being implemented at the comparative balance
sheet dates and therefore the impact of reversing amortisation has
not been material to the comparative income statements. The
taxation charge and associated deferred tax balances have also been
restated by the amounts shown below. Total net assets and retained
earnings at 30 September 2021 decreased by GBP9.6m (GBP2.9m at 1
October 2020).
Impact of restatement on the income statement and statement of
comprehensive income
Year ended 30 September 2021
---------------------------------------
As reported Adjustment As restated
Income statement and statement of comprehensive GBPm GBPm GBPm
income (extract)
------------------------------------------------- ------------ ----------- ------------
Administration expenses (200.2) (8.3) (208.5)
Operating profit 160.7 (8.3) 152.4
Profit before tax 142.9 (8.3) 134.6
Income tax (39.7) 1.6 (38.1)
Profit for the year attributable to equity
shareholders 103.2 (6.7) 96.5
Total comprehensive income for the year
attributable to the equity shareholders 120.5 (6.7) 113.8
Basic earnings per share 38.7p (2.5)p 36.2p
Diluted earnings per share 38.6p (2.5)p 36.1p
------------------------------------------------- ------------ ----------- ------------
Impact of restatement on the balance sheet
30 September 2021
---------------------------------------
As reported Adjustment As restated
Balance sheet (extract) GBPm GBPm GBPm
-------------------------- ------------ ----------- ------------
Intangible assets 418.3 (11.8) 406.5
Total assets 1,745.8 (11.8) 1,734.0
Deferred tax liabilities (100.7) 2.2 (98.5)
Total liabilities (1,325.5) 2.2 (1,323.3)
Net assets 420.3 ( 9.6 ) 410.7
Retained earnings 158.4 (9.6) 148.8
Total equity 420.3 (9.6) 410.7
-------------------------- ------------ ----------- ------------
1 October 2020
---------------------------------------
As reported Adjustment As restated
Balance sheet (extract) GBPm GBPm GBPm
-------------------------- ------------ ----------- ------------
Intangible assets 403.5 (3.5) 400.0
Total assets 1,700.8 (3.5) 1,697.3
Deferred tax liabilities (68.7) 0.6 (68.1)
Total liabilities (1,325.3) 0.6 (1,324.7)
Net assets 375.5 (2.9) 372.6
Retained earnings 111.9 (2.9) 109.0
Total equity 375.5 (2.9) 372.6
-------------------------- ------------ ----------- ------------
Impact of restatement on the statement of cash flows
Year ended 30 September 2021
---------------------------------------
As reported Adjustment As restated
Statement of cash flows (extract) GBPm GBPm GBPm
-------------------------------------------------- ------------ ----------- ------------
Cash flows from operating activities
Profit before tax 142.9 (8.3) 134.6
Increase in trade, other payables and commercial
rebate liabilities 74.2 1.3 75.5
Net cash flows from operating activities 232.3 (7.0) 225.3
Cash flows from investing activities
Purchases of intangible assets (17.3) 7.0 (10.3)
Net cash flows used in investing activities (104.2) 7.0 (97.2)
Net increase/(decrease) in cash and cash
equivalents (35.0) - (35.0)
-------------------------------------------------- ------------ ----------- ------------
NON-GAAP RECONCILIATIONS
Adjusting items
The Group excludes adjusting items from its non-GAAP measures
because of their size, frequency and nature to allow shareholders
to understand better the elements of financial performance in the
year, so as to facilitate comparison with prior years and to assess
trends in financial performance more readily.
These items primarily relate to strategic restructuring,
impairment of assets, acquisitions and disposals. In addition, the
amortisation of acquisition-related intangibles and the expense
associated with the change in accounting policy for SaaS
arrangements are considered to be adjusting items.
Adjusted KPIs are used to measure the underlying profitability
of the Group and enable comparison of performance against peers.
They are also used in the calculation of short and long-term reward
schemes.
In prior years adjusting items included fair value movements on
financial instruments where hedge accounting cannot be applied on
future transactions and also where hedge ineffectiveness is
recognised. Consideration is made each year as to whether fair
value movements on derivative financial instruments where hedge
accounting cannot be applied to future transactions or where there
is ineffectiveness in the hedge relationship, are recorded within
adjusting items.
Restated*
Year ended
Year ended 30 September
30 September 2022 2021
Notes GBPm GBPm
----------------------------------------------------------------------- ------ ------------------ -------------
Implementation of SaaS accounting guidance (a) (7.5) (8.3)
Strategic restructuring - business capability programme (b) (0.5) (1.0)
Strategic restructuring - organisational capability transformation (c) 1.5 (5.7)
Credits in relation to the acquisition and integration of subsidiaries (d) 0.3 0.7
Strategic M&A activity (e) 1.0 (0.9)
Past service cost on pension schemes (f) - (0.7)
Acquisition-related amortisation (g) (8.4) (8.2)
----------------------------------------------------------------------- ------ ------------------ -------------
Total included in operating profit (13.6) (24.1)
------------------------------------------------------------------------------- ------------------ -------------
Unwind of discount on consideration payable for acquisitions (h) - (0.1)
----------------------------------------------------------------------- ------ ------------------ -------------
Total included in finance costs - (0.1)
------------------------------------------------------------------------------- ------------------ -------------
Total adjusting items pre-tax (13.6) (24.2)
------------------------------------------------------------------------------- ------------------ -------------
Tax on adjusting items included in profit before tax 1.2 2.6
------------------------------------------------------------------------------- ------------------ -------------
Total included in taxation 1.2 2.6
------------------------------------------------------------------------------- ------------------ -------------
Net adjusting items (12.4) (21.6)
------------------------------------------------------------------------------- ------------------ -------------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11)
a) Implementation of change in accounting policy in relation to
customisation and configuration costs of SaaS has resulted in
certain expenditure expensed as incurred (see note 11) - this has
been presented as an adjusting item in the current and prior
financial year. From 1 October 2022, all SaaS expenditure that does
not meet the criteria for recognition as an intangible asset and
that will be expensed as incurred, will ordinarily be presented
within underlying earnings and not be presented as an adjusting
item.
b) 'Strategic restructuring - business capability programme'
charges relate to the restructuring of supply chain and the
operating model across the Group, initiated in 2016. Costs in the
year of GBP0.5m relate to the closure of the Norwich site and are
primarily site services, advisory and exit costs. Costs in the year
ended 30 September 2021 were of a similar nature.
c) 'Strategic restructuring - organisational capability
transformation' charges in the current year mainly relate to the
release of historic provisions in relation to the closure of the
Counterpoint business, including the reclassification of cumulative
translation gains of GBP0.8m from other comprehensive income to
profit or loss upon liquidation. Costs in the prior year primarily
related to contract termination costs, consultation fees and
employee termination benefits.
d) Relates to the release of purchase price allocation
provisions for Bela Ischia Alimentos Ltda (Bela Ischia) and Empresa
Brasileira de Bebidas e Alimentos SA (Ebba).
e) Strategic M&A credit of GBP1.0m in relation to
remeasurement and utilisation of historic provisions. Activity
costs in the prior year relates to professional fees, stamp duty
and long-term incentive schemes in relation to the acquisition of
Plenish.
f) During the 12 months ended 30 September 2021, a charge of
GBP0.7m for past service costs was recognised resulting from the
equalisation of Guaranteed Minimum Pensions (GMP) for the GB
defined benefit scheme.
g) Acquisition-related amortisation relates to the amortisation
of intangibles recognised on acquisitions in GB, Ireland, France
and Brazil.
h) The unwind of discount on consideration payable for
acquisitions relates to the change in fair value of the deferred
consideration payable for Aqua Libra Co.
Adjusted profit
Restated*
Year ended Year ended
30 September 30 September
2022 2021
GBPm GBPm
---------------------------------------------------------------- ------------- -------------
Operating profit as reported 192.4 152.4
Add back: adjusting items in operating profit 13.6 24.1
---------------------------------------------------------------- ------------- -------------
Adjusted EBIT 206.0 176.5
Net finance costs (17.3) (17.8)
Add back: adjusting net finance costs - 0.1
---------------------------------------------------------------- ------------- -------------
Adjusted profit before tax and acquisition-related amortisation 188.7 158.8
Acquisition-related amortisation (8.4) (8.2)
---------------------------------------------------------------- ------------- -------------
Adjusted profit before tax 180.3 150.6
---------------------------------------------------------------- ------------- -------------
Taxation (34.9) (38.1)
Less: adjusting tax credit (1.2) (2.6)
---------------------------------------------------------------- ------------- -------------
Adjusted tax (36.1) (40.7)
---------------------------------------------------------------- ------------- -------------
Adjusted profit after tax 144.2 109.9
---------------------------------------------------------------- ------------- -------------
Adjusted effective tax rate 20.0% 27.0%
---------------------------------------------------------------- ------------- -------------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
Adjusted earnings per share
Restated*
2022 2021
----------------------------------------------------------------------------------- ------ ---------
Adjusted earnings per share
Profit for the year attributable to equity shareholders (GBPm) 140.2 96.5
Add: net impact of adjusting items (GBPm) 12.4 21.6
----------------------------------------------------------------------------------- ------ ---------
Adjusted earnings (GBPm) 152.6 118.1
----------------------------------------------------------------------------------- ------ ---------
Weighted average number of ordinary shares in issue for basic earnings per share 266.5 266.8
Adjusted earnings per share (pence) 57.3p 44.3p
----------------------------------------------------------------------------------- ------ ---------
Adjusted diluted earnings per share
Adjusted earnings (GBPm) 152.6 118.1
Weighted average number of ordinary shares in issue for diluted earnings per share 267.0 267.4
Adjusted diluted earnings per share (pence) 57.2p 44.2p
----------------------------------------------------------------------------------- ------ ---------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
Free cash flow
Restated*
Year ended Year ended
30 September 30 September
202 2 2 021
GBPm GBPm
------------------------------------------------------- ------------- -------------
Net cash flows from operating activities 239.6 225.3
Purchases of property, plant and equipment (72.9) ( 56.4)
Purchases of intangible assets (11.7) (10.3)
Proceeds from sale of property, plant and equipment - 0.1
Interest paid, net of derivative financial instruments (14.8) ( 15.4)
Repayment of principal portion of lease liabilities (9.3) (8 .7)
Repayment of interest portion of lease liabilities (2.1) (1.9)
------------------------------------------------------- ------------- -------------
Free cash flow 128.8 132.7
------------------------------------------------------- ------------- -------------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
Adjusted net debt/EBITDA and EBITDA/net interest ratios
Restated*
Year ended Year ended
30 September 30 September
2022 2021
GBPm GBPm
------------------------------------------------------------------------------ ------------- -------------
Operating profit as reported 192.4 152.4
Add back adjusting items in operating profit 13.6 24.1
------------------------------------------------------------------------------ ------------- -------------
Adjusted EBIT 206.0 176.5
Depreciation of property, plant and equipment 40.9 42.7
------------------------------------------------------------------------------ ------------- -------------
Depreciation of right-of-use assets 10.9 10.5
------------------------------------------------------------------------------ ------------- -------------
Amortisation (excluding acquisition-related amortisation) 7.2 6.6
------------------------------------------------------------------------------ ------------- -------------
Loss on disposal of property, plant and equipment and intangible assets 0.9 2.8
----------------------------------------------------------------------------- ------------- -------------
Adjusted EBITDA pre-IFRS 16 rental charges 265.9 239.1
Less: payment of lease liabilities as estimate for pre-IFRS16 rental charges (11.4) (10.6)
----------------------------------------------------------------------------- ------------- -------------
Adjusted EBITDA 254.5 228.5
----------------------------------------------------------------------------- ------------- -------------
Adjusted net debt 474.8 488.5
Adjusted EBITDA 254.5 228.5
----------------------------------------------------------------------------- ------------- -------------
Net debt/EBITDA ratio 1.9x 2.1x
----------------------------------------------------------------------------- ------------- -------------
Net interest as reported (17.3) (17.8)
----------------------------------------------------------------------------- ------------- -------------
Add back hedge ineffectiveness (0.2) 1.0
----------------------------------------------------------------------------- ------------- -------------
Add back IFRS 16 interest on lease liabilities 2.1 1.9
----------------------------------------------------------------------------- ------------- -------------
Adjusted net interest (15.4) (14.9)
----------------------------------------------------------------------------- ------------- -------------
EBITDA/net interest ratio 16.5x 15.3x
----------------------------------------------------------------------------- ------------- -------------
* Restated for new accounting policy relating to
Software-as-a-Service arrangements (see note 11).
Adjusted net debt
30 September 30 September
2022 2021
GBPm GBPm
--------------------------------------- ------------ ------------
Cash and cash equivalents (87.6) (71.1)
--------------------------------------- ------------ ------------
Derivatives hedging balance sheet debt (42.9) (19.5)
--------------------------------------- ------------ ------------
Interest-bearing loans and borrowings 605.3 579.1
--------------------------------------- ------------ ------------
Adjusted net debt 474.8 488.5
--------------------------------------- ------------ ------------
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END
FR FLFVDLILFFIF
(END) Dow Jones Newswires
November 23, 2022 02:00 ET (07:00 GMT)
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