Annual Report and Accounts 2018 MAKING LIFE’S EVERYDAY MOMENTS MORE ENJOYABLE ANNUAL REPORT AND ACCOUNTS 2018 STRATEGIC REPORT Britvic’s vision is to be the most dynamic, creative and trusted soft drinks company in the world, which we will achieve through our purpose of making life’s everyday moments more enjoyable. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 1 Highlights 48 Chairman’s introduction 88 Independent Auditor’s Report 149 Shareholder information 4 Our business at a glance 50 Board of Directors to the members of Britvic plc 151 Glossary 5 Our brands 52 Executive team 94 Consolidated income statement 152 Non-GAAP reconciliations 6 Stakeholder interests 54 Leadership 95 Consolidated statement of 155 Notes 8 Our business model 59 Accountability comprehensive income 10 Chairman’s statement 60 Board composition and diversity 96 Consolidated balance sheet 12 Chief Executive Officer’s 61 Effectiveness 97 Consolidated statement of strategic review 63 Nomination Committee report cash flows 16 Market drivers 64 Audit Committee report 98 Consolidated statement of 18 Our strategy at a glance 68 Directors’ remuneration report changes in equity 20 Strategy in action 74 Remuneration Committee report 99 Notes to the consolidated 28 Key performance indicators 84 Directors’ report financial statements 30 Risk management 87 Statement of directors’ 141 Company balance sheet 31 Principal risks and uncertainties responsibilities 142 Company statement of 35 Viability statement changes in equity 36 Sustainable business review 143 Notes to the company 44 Chief Financial Officer’s review financial statements Cautionary note regarding forward-looking statements This report 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. WWW.BRITVIC.COM STRATEGIC REPORT STRATEGIC HIGHLIGHTS REVENUE* ADJUSTED EBIT** (£ millions) (£ millions) 206.0 195.5 In 2018, we have 1,503.6 186.1 1,431.3 1,430.5 171.6 1,344.4 1,300.1 161.0 continued to innovate to meet consumer GOVERNANCECORPORATE FINANCIAL STATEMENTS ADDITIONAL INFORMATION needs, transform our supply chain and help consumers to make 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 healthier choices ADJUSTED EBIT MARGIN** PROFIT AFTER TAX (%) (£ millions) 114.5 117.1 13.2 13.0 13.7 13.7 111.6 12.0 103.8 89.7 16% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 reduction in average calories per 250ml serve across our global portfolio. ADJUSTED EARNINGS DIVIDEND PER SHARE PER SHARE** (pence) (pence) 56.3 28.2 52.9 26.5 41% 49.3 24.5 46.7 23.0 revenue generated outside of 41.8 20.9 Great Britain. 7.1% revenue generated from Britvic 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 innovation in 2018. * 2017 and 2018 are presented under IFRS 15, with 2014 to 2016 presented on a pre-IFRS 15 basis. Refer to note 33 for restatement detail. ** refer to definition in glossary BRITVIC ANNUAL REPORT AND ACCOUNTS 2018 1 STRATEGIC REPORT MAKING LIFE’S EVERYDAY MOMENTS MORE ENJOYABLE 2018 has been a transformative year; we’ve opened new super-fast production lines at our manufacturing sites, streamlined and integrated our Brazilian acquisitions into the business, led the industry on health, and welcomed new talent to our Board and our Executive team. Navigating the soft drink levies in the UK and Ireland This year both the UK and Irish governments introduced a levy on soft drinks containing more than 5g/100ml of added sugar. Britvic’s strategy and long- 4.2% term focus on health meant we entered the levy from a position of strength, revenue growth for GB stills. with 94% of our owned brands below or exempt from the levy in GB and 79% GB stills brands below or exempt in Ireland. Today, 99% of our GB owned brands are below/ return to growth exempt (90% in Ireland) and our strategy to encourage healthier choices is working; GB stills generated a robust revenue increase the trend towards low/no sugar has of 4.2% in the full year, with strong momentum accelerated, benefiting Robinsons in the second half of the year. This was due to a squash and Pepsi MAX in particular. significantly improved performance for Robinsons and J2O. Robinsons’ growth has been driven by Read more see page 38 the recent innovation in the range including the introduction of Cordials, Creations and Refresh’d, along with many consumers switching into squash following the introduction of the Soft Drinks Industry 99% Levy (SDIL) and the exceptionally warm weather over the summer. J2O’s major marketing campaign of Britvic’s owned brands in featuring a cockney alpaca called Mojo, along with GB are below or exempt from increased feature and display in store, as well as the the Soft Drinks Industry Levy benefit from the weather, resulted in J2O delivering (SDIL). a strong second half performance. Read more see page 45 2 WWW.BRITVIC.COM STRATEGIC REPORT STRATEGIC #1 Brazil is the largest liquid concentrates market in the world. CORPORATE GOVERNANCE CORPORATE Investing in GB manufacturing We have invested close to £240m in our business Integrating Brazil into capability programme in GB over three years to be completed in 2019. In 2018, this included £100m the Britvic family in our Rugby site to deliver three new PET bottling lines; a new on-site warehouse; an aseptic line to Britvic acquired EBBA (Empresa Brasileira de Bebidas e manufacture preservative-free drinks; and three new Alimentos SA) in 2015 and Bela Ischia in 2017. As a result, can lines which are amongst the fastest in Europe, we are now the number one supplier of concentrated dilutable drinks in Brazil, and the number two supplier of collectively producing up to 6,000 cans per minute. FINANCIAL STATEMENTS The investment is designed to step-change the ready-to-drink juice drinks in Brazil. In 2018, the team in speed and flexibility of our production lines whilst Brazil completed the incorporation of Britvic’s ways of delivering environmental benefits through greater working, quality standards and health and safety practices efficiencies. The investment has created around into day-to-day operations, helping to integrate the Brazil 80 new jobs at the site this year, which includes business into the Britvic family. technical operators, engineers and team leaders. Read more see pages 22-23 Read more see pages 24-25 £100m invested in our Rugby site as part of our business capability programme. ADDITIONAL INFORMATION Welcoming new Board members We were delighted to welcome Suniti Chauhan and William Eccleshare to the Board this year as Non- Executive Directors and as members of the Britvic Audit Committee and Remuneration Committee respectively. Suniti brings mergers and acquisitions, strategy and corporate finance experience whilst William has a strong background in marketing and innovation. They are excellent additions to the Board as we look to continue to develop our business in the UK and internationally. Read more see pages 50-51 BRITVIC ANNUAL REPORT AND ACCOUNTS 2018 3 STRATEGIC REPORT OUR BUSINESS AT A GLANCE OUR GEOGRAPHIES Britvic sets itself apart from its competitors 2% VOLUME 9% through our unrivalled (million litres) 69% combination of Great Britain 1,664.9 9% France 263.0 market-leading brands Brazil 210.6 Ireland 221.3 and track record International 43.8 in innovation, our 11% Volume expert knowledge % share by region of the soft drinks market, long-standing and sustainable relationships with our partners, including PepsiCo, and a REVENUE 3% highly talented and (£m) 12% committed workforce. Great Britain 891.3 France 269.2 Brazil 120.1 8% 59% Ireland 174.0 International 49.0 Revenue % share by region 18% 2% BRAND 10% CONTRIBUTION (£m) Great Britain 368.3 5% France 81.4 68% Brazil 24.8 Ireland 57.1 Brand International 10.2 contribution % share by region 15% 4 WWW.BRITVIC.COM STRATEGIC REPORT STRATEGIC OUR BRANDS Kids Adult CORPORATE GOVERNANCE CORPORATE From left to right From left to right Fruit Shoot Hydro Teisseire Fruit Shoot Aqua Libra Robinsons Fruit Cordial Ballygowan Fruit Shoot Hydro Sparkling Teisseire Fruit Shoot Au Jus Monte Rosso Thomas & Evans Sparkling Fruity FINANCIAL STATEMENTS Fruit Shoot Juiced Robinsons Fruit Shoot Purdey’s Teisseire Gourmet Drops Ballygowan Still Maguary Fruit Shoot R Whites Energise Sport Ballygowan Sparkling Club Mixers J2O Spritz London Essence Co. Café Spark J2O Drench Mathieu Teisseire Britvic Mixers Robinsons Refresh’d Family Portfolio ADDITIONAL INFORMATION From left to right From left to right Tango Pressade Robinsons Squash’d 7UP Free Pepsi MAX Ginger Mountain Dew Robinsons Teisseire Ballygowan 7UP Pepsi No Sugar Fruit Creations Robinsons Refresh’d Club Pepsi MAX Gatorade Lipton Green Ice Tea Robinsons Squash Teisseire Max Club Zero Pepsi MAX Cherry Mountain Dew Lipton Ice Tea MiWadi Maguary MiWadi Mini Diet Pepsi TK Da Fruta C&C Robinsons Fruit Cordials BRITVIC ANNUAL REPORT AND ACCOUNTS 2018 5 STRATEGIC REPORT STAKEHOLDER INTERESTS Responding to changing needs £ SHAREHOLDERS CUSTOMERS EMPLOYEES As the owners of our business, ensuring Customers are key to our business. Our business is nothing without its that shareholders understand our They are our route to market and we people, and attracting and retaining high- purpose, vision, strategy and performance work with them as partners on joint quality talent is critical to our success. in a clear and transparent way is business plans to create shared value fundamental to our future prospects.