BRITVIC Annual Report 2014 V1.Indb
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annual report 2014 making life’s everyday moments more enjoyable Welcome to Britvic’s 2014 Annual Report for the financial year ended 28 September 2014. In this report you can read about our business and what we do, find information on our strategy and how we deliver it, how we have performed in the financial year and how we govern our business. 01 Strategic report 01 Performance at a glance 03 Chairman’s introduction 04 Our business 06 Our business model 07 Our strategy 07 Risk management 08 Our people 12 Chief Executive Officer’s review 15 Chief Financial Officer’s review 20 Glossary 22 Our sustainability performance 28 Our risks 02 Governance 33 Corporate governance report 34 Board of directors 43 Audit Committee 46 Nomination Committee 50 Remuneration Committee 51 Directors’ remuneration report 63 Annual report on remuneration 74 Directors’ report 76 Statement of directors’ responsibilities 03 Financial statements 78 Independent auditors report to the members of Britvic plc 81 Consolidated income statement 82 Consolidated statement of comprehensive income/(expense) 83 Consolidated balance sheet 84 Consolidated statement of cash flows 85 Consolidated statement of changes in equity 86 Notes to the consolidated financial statements 135 Company balance sheet 136 Notes to the company financial statements 04 Other information 143 Shareholder information Cautionary note regarding forward-looking statements This announcement includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Except as required by the Listing Rules and applicable law, Britvic undertakes no obligation to update or change any forward-looking statements to reflect events occurring after the date such statements are published. 01 Performance at a glance Strategic report GROUP REVENUE GROUP EBITA EBITA MARGIN Strategic report Overview 20132010 £1,321.9m 20132010 £137.9m 20132010 10.4% 2014 £1,344.4m 2014 £161.0m 2014 12.0% +2.4% +17.3% +150bps Governance UNDERLYING ROIC ADJUSTED EARNINGS DIVIDEND PER SHARE PER SHARE 20132010 21.3% 20132010 35.2p 20132010 18.4p Financial statements 2014 24.9% 2014 41.8p 2014 20.9p +360bps +18.8% +13.6% FREE CASH FLOW Other information 20132010 £103.5m 2014 £88.9m -14.1% All numbers, other than where stated or included within the fi nancial statements, are disclosed before exceptional and other items and are presented on a constant currency basis. A list of defi nitions can be found on page 20 of the annual report. RECONCILIATION FROM ACTUAL EXCHANGE RATE TO CONSTANT EXCHANGE RATE 2013 actual Change 2013 constant exchange rate £m £m exchange rate £m Group revenue 1,321.9 (9.4) 1,312.5 Group EBIT 135.0 (0.6) 134.4 Group profi t before tax 108.1 (0.5) 107.6 Group profi t after tax (PAT) 82.6 - 82.6 Group PAT, after exceptional and other items 61.9 - 61.9 Group EBITA 137.9 (0.6) 137.3 Adjusted earnings per share 35.2p - 35.2p making life’s everyday moments more enjoyable a spot of lunch Strategic report Strategic report 03 Introduction from the Chairman Strategic report The future for our company is bright. We have a more efficient operating Strategic report platform in the UK for our brands, which will support us in meeting the Overview trading challenges presented by all the changes that are happening to our supermarket customer base. There are finally signs of some green shoots in Ireland and we are confident of continued growth in France, where Fruit Shoot is now well established. Our core markets provide a cash flow and profit base to fund our brand’s growth internationally, where again further growth in the USA is a top priority. Our people Governance Our employees are our key asset and their passion and commitment is pivotal to the success of Britvic. We have seen a number of people leave the business as a result of the infrastructure changes that we have made. During this period of uncertainty their commitment has been unwavering and I thank each and every one of them for this. In recognition of the key role that they play we have continued to encourage employees to participate, where possible, in the share incentive schemes available. These offer significant rewards for much appreciated hard work and allow our people to share in the success of the business. Financial statements The last year has been a year of record profits for Britvic, up 17.6% The board to £158.1m, and earnings per share Last year I highlighted the board’s desire to support the company in up 18.8% to 41.8p. The board has executing the new strategy and possible changes to the composition of the board, as a result of tenures as an independent Non-Executive proposed an increase in the final Director coming to an end. This year we bid farewell to Michael Shallow dividend of 13.8%, to 14.8p per who has been with us since flotation in 2005. His commitment to the business has been unwavering and on behalf of the rest of the board share, making a full year dividend I wish him well for the future. Other information of 20.9p per share, up 13.6% on the This year we have appointed two new Non-Executive Directors to previous year. We remain committed the board. Ian McHoul has joined us and chairs the Audit committee. Ian is currently Chief Financial Officer of Amec Foster Wheeler plc, a to a progressive dividend policy and FTSE100-listed company, and brings with him a wealth of knowledge plan to pay out 50% of earnings in and experience. Silvia Lagnado has also joined the board. Silvia’s career dividends in the coming years. is one of international marketing where she has been a senior executive at companies such as Unilever and Bacardi. Ian and Silvia strengthen the board and bring to Britvic invaluable insight and experience to Performance review support the strategy and in particular the international expansion of the business. The year was our Chief Executive’s, Simon Litherland, first full year in charge. He, and his new team, have re-invigorated the company and I am confident that the strategy being executed by the Executive Team significantly enhanced the organisation’s capability to execute. We will deliver sustainable profit growth and long-term value for our had identified the degree of change proposed in Simon’s plan as a shareholders. challenge for the company to manage. They swept through in fine The AGM will be held at 11am on Tuesday 27 January 2015 at the style, delivering on the cost savings and supply chain rationalisation offices of Nomura, 1 Angel Lane, London EC4R 3AB and I look ahead of target. You only realise how far you have gone and what you forward to seeing you there. have achieved when you look back. The new Irish team delivered an improved result, and France, in spite of a tough summer, posted record profits. The Fruit Shoot expansion in the USA, a key part of our growth strategy going forwards, remains on track and our new Indian operation has begun trading. Innovation has always been a key part of Britvic’s success. The last Gerald Corbett year saw the launch of Robinsons ‘Squash’d’, a pocket size version Chairman of the concentrate. We also launched a new pack for Teisseire, with a pump, and the new Club Zero no sugar range in Ireland. Each of these innovations has started well and we are confident of their future success. 04 Strategic report Our business Our purpose is to make life’s everyday moments more enjoyable. We offer a wide range of soft drinks to meet the many and varied needs of our consumers; at home or out and about, there is a great tasting, high quality Britvic brand for every occasion. The Britvic of today has come a long way from its mid-19th century origins in a chemist’s shop in Essex. The British Vitamin Product Company set the standard in the 1930s when it started bottling fruit juice to provide an easy and affordable source of vitamins to the local community. Today Britvic is a leading international soft drinks company, with a strong heritage. We have operations in GB, Ireland and France and have been taking our brands around the world, exporting to over 50 countries and working with carefully chosen partners to franchise our brands, including the USA and India. We have an enviable portfolio of leading brands and strong market positions. In GB and Ireland, we are the number one supplier of still soft drinks and the number two supplier of carbonates. Robinsons has long been the UK’s number one squash brand and J20 is the number one premium juice brand. Other brands like Tango, R Whites Lemonade as well as Britvic juices and mixers, are staples in UK shopping baskets or on a trip to the pub. Fruit Shoot is the number one kids’ soft drinks brand in the UK and is at the heart of our international expansion. In France we have the leading syrup brand, Teisseire, and Teisseire Fruit Shoot is now the number one kids’ juice drink. In Ireland, Ballygowan is the number one water brand, while MiWadi squash and the Club range are leaders in their categories. We are proud of our partnership with PepsiCo, which began in 1987, and we make and sell a number of their brands, including Pepsi and 7UP in GB and Ireland.