Interim Results for 28 Weeks ended 14 April 2013

RNS Number : 2724F

Britvic plc

22 May 2013

 



Britvic plc Interim Results - 22 May 2013

Britvic plc announces its interim results for the 28 weeks ended 14 April 2013⁽¹⁾⁽²⁾

Financial Highlights:

·      Strong profit growth with EBITA of £53.6m up 27.6% on prior year and EBITA margin up 180 basis points

·      Underlying EBITA up 17.9% when adjusted for one off and phasing items, demonstrating a materially improved financial performance 

·      Strong margin and pricing growth in every business unit. Group revenue up 0.4%

·      Significant progress in improving free cash flow conversion, resulting in reduction of group adjusted net debt by £30.7m

·      Adjusted earnings per share up 47.6% to 12.4p and dividend increase of 1.9% to 5.4p

Strategic Highlights:

·      Announcement of a new strategy which will accelerate growth of the core and international business

·      Major initiatives, underpinning the strategy, will deliver annual savings of £30m by 2016. These include proposals to close two factories in GB and a warehouse in Northern Ireland as well as the creation of a combined GB and Ireland business unit under a single leadership team

·      Increase in investment of £10m per annum by 2015 in the International business unit to accelerate the realisation of the increasing growth potential of our brands internationally

·      Agreement reached with Narang Group for the national sales & distribution of Fruit Shoot in India, commencing mid-2014

	28 weeks ended  14 April 2013 £m(1)		28 weeks ended 15 April 2012 £m (1)	% change actual exchange rate	% change constant(2) exchange rate
Group Revenue	639.2		641.1	(0.3)%	0.4%
Group EBITA(3)	53.6		41.9	27.9%	27.6%
EBITA Margin(3)	8.4%		6.5%	190bps	180bps
Group EBIT	52.0		40.4	28.7%	28.1%
Group Profit Before Tax	37.5		24.8	51.2%	50.0%
Group Profit After Tax	28.5		18.7	52.4%	50.8%
Group Profit After Tax, After Exceptional And Other Items	24.7		18.7	32.1%	31.4%
Adjusted Earnings Per Share(4)	12.4p		8.4p	47.6%	47.6%
Weighted Average No. of Shares	242.4		241.4	0.4%	n/a
Interim Dividend Per Share	5.4p		5.3p	1.9%	n/a
Underlying Free Cash flow (5)	(24.4)		(47.1)	48.2%	n/a
Group Adjusted Net Debt (6)	(503.7)		(534.4)	5.7%	n/a

The board is proposing an interim dividend per share of 5.4p ahead of last year by 1.9%. This reflects the board's confidence in the future prospects of the business, the stronger free cash flow generation and our stated dividend policy.

Simon Litherland, Chief Executive commented:

"Britvic has delivered strong first-half profit growth, a material improvement in cash flow and a reduction in net debt. This has been achieved by growing our average realised price, a continued focus on cost and the substantial progress we have made in improving the underlying strength of our business. 

Today we have announced a new strategy which will lead to a step change in performance and improved returns for shareholders. We intend to change our operating model to generate stronger performance in our core markets and accelerate the increasingly attractive international opportunities, underpinned by a reduction in the cost base of £30m per annum by 2016. 

Based on our strong interim results and the exciting marketing activity we will be executing in the second half of the year, we are confident that we will deliver full year EBIT towards the upper end of our previously communicated range of £125m - £131m."

Gerald Corbett, Chairman commented:

"The proposed merger with A.G. Barr lapsed on 13 February when the transaction was referred by the Office of Fair Trading to the Competition Commission. 

The Competition Commission is expected to announce its final decision by the end of July. The board will then decide, in light of the Competition Commission's decision, whether a transaction on the right terms with appropriate management and governance arrangements, can be consummated in the interests of shareholders.

In the meantime, as we approach our busiest time of year, the management team, under our new Chief Executive, is totally focused on executing its new strategy, continuing the momentum established in the first half and delivering on the vision of a growing, international and increasingly profitable Britvic."

For further information please contact:

Investors:
Rupen Shah / Steve Nightingale	[phone]
Media:
Susan Turner / Marisa Fitch	[phone] / [phone]
Mike Smith/Nick Cosgrove (Brunswick)	[phone]

There will be a live-webcast of the presentation given today at 9:30am by Simon Litherland (Chief Executive) and John Gibney (Group Finance Director). The webcast will be available at http://ir.britvic.com/, with a transcript available in due course. There will also be a conference call today at 2.00pm (9.00am Eastern Standard Time) for investors and analysts with an opportunity to ask questions.

UK Access Number	[phone]
UK Toll Free	0808 237 0030
US Access Number	[phone]
US Toll Free	[phone]
Participant PIN Code	23042765#

A recording of the call will be available for seven days.

UK Toll Access Number	[phone]
UK Toll Free Number	0808 237 0026
US Toll Free Number	[phone]
Conference Reference	639312#

Definitions

(1) All numbers are before exceptional and other items unless otherwise stated. As previously communicated, volume and ARP are no longer adjusted for the impact of double concentrate on Robinsons and MiWadi as we have a full year of prior history. Last year's non adjusted numbers were made available at the Investor Centre "Results and Presentations" section on the Britvic Investor Relations website at www.britvic.com 

(2) Where appropriate comparisons are quoted using constant exchange rates. Constant currency growth removes the impact of exchange rate movements during the period by retranslating prior year foreign currency denominated results of the group at current period exchange rates to aid comparability.

(3) EBITA is defined as operating profit before exceptional and other items and amortisation. Only amortisation attributable to intangibles related to acquisitions is added back, in the period this is £1.6m (2012: £1.5m as reported last year). EBITA margin is the EBITA as a proportion of group revenues.

(4) Adjusted earnings per share amounts are calculated by dividing adjusted earnings by the average number of shares during the period. Adjusted earnings is defined as the profit/(loss) attributable to ordinary equity shareholders before exceptional and other items adjusted for the adding back of acquisition related amortisation. Average number of shares during the period 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. The weighted average number of ordinary shares in issue for adjusted earnings per share for the period was 242.4m (2012: 241.4m).

(5) Underlying free cash flow is defined as net cash flow excluding movements in borrowings, dividend payments and exceptional and other items.

(6) Group adjusted net debt is defined as group net debt, adding back the impact of derivatives hedging the balance sheet debt.

Reconciliation from Actual Exchange Rate to Constant Exchange Rate

	H12012 actual exchange rate £m	Change £m	H12012 constant exchange rate £m
Group Revenue	641.1	(4.4)	636.7
Group EBIT	40.4	0.2	40.6
Group Profit Before Tax	24.8	0.2	25.0
Group Profit After Tax (PAT)	18.7	0.2	18.9
Group PAT, After Exceptional And Other Items	18.7	0.1	18.8
Group EBITA (3)	41.9	0.1	42.0
Adjusted  Earnings Per Share (4)	8.4p	0.0p	8.4p

The interims results announcement for the 28 week period ended 14 April 2013 has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. Interim results do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the registrar. The 52 weeks ended 30 September 2012 results have, however, been extracted from the statutory accounts for the 52 week period ended 30 September 2012 on which an unqualified report, which did not contain an emphasis of matter reference or a statement under section 498 (2) or (3) of Companies Act 2006, has been made by the company's auditors.

Notes to editors

About Britvic

Britvic is one of the leading branded soft drinks businesses in Europe. The company leverages its own leading brand portfolio including Robinsons, Tango, J₂O, Fruit Shoot, Teisseire and MiWadi as well as PepsiCo brands such as Pepsi, 7UP and Mountain Dew Energy which Britvic produces and sells in GB and Ireland under exclusive PepsiCo agreements.

Britvic is the largest supplier of branded still soft drinks in Great Britain ("GB") and the number two supplier of branded carbonated soft drinks in GB. Britvic is an industry leader in the island of Ireland with brands such as MiWadi and Ballygowan, and in France with brands such as Teisseire and Fruité. Britvic is growing its reach into other territories through export, licensing and franchising. Britvic's management team has successfully developed the business through a clear strategy of organic growth and international expansion based on creating and building scale brands. Britvic is listed on the London Stock Exchange under the code BVIC and is a constituent of the FTSE 250 index.

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.

Market Data

GB take-home market data referred to in this announcement is supplied by Nielsen and runs to 13 April 2013. Britvic GB pub & club market data referred to in this announcement is supplied by CGA and runs to 23 February 2013. ROI grocery market data referred to in this announcement is supplied by Nielsen and runs to 24 March 2013. ROI pub and club market data is also supplied by Nielsen and runs to the end of March 2013. French market data is supplied by IRI and runs to 10 March 2013.

Next Scheduled Announcement

Britvic will publish its quarter three interim management statement on 25 July 2013.

Chief Executive's Business and Strategy Review

In the 28 weeks ended 14 April 2013, Britvic grew group EBITA by 27.6% to £53.6m and EBITA margin was up by 180 basis points. Underlying EBITA for the first half was up by 17.9% after adjusting for the timing of our marketing programme and the one off cost of the recall of Fruit Shoot. A focus on cash has resulted in an improvement in free cash flow of 48.2% and a 5.7% reduction in adjusted net debt.

These strong results were due to an improved underlying performance across the business. We achieved strong pricing, revenue, brand contribution and margin growth in all areas of the business, with the exception of GB stills and Ireland. GB stills was impacted by the limited supply availability of Fruit Shoot and Ireland continued to be impacted by the performance of third-party brands in the wholesaling business. Some of the performance highlights were:

·      In GB stills, Robinsons continued to perform strongly, growing its market share with double concentrate playing a significant role. In the carbonates category we managed our approach in the market, which resulted in price growth and despite a small volume loss led to revenue growth ahead of the market. 

·      Fruit Shoot's recovery is now firmly established across each of our markets. In GB we have rebuilt distribution and market share is on track to achieve pre-recall levels in the near future. In the Netherlands and France, we have a stronger business today than pre-recall, with measures such as distribution and rate of sale above the levels of last July.

·      Britvic International and our franchising model, especially in the US, gained further momentum. The roll out to 30 US states has made excellent progress with distribution doubling to over 41,000 outlets in three months. We have also announced today a new partner, Pepsi Cola Bottling Company of Pittsburgh, to distribute Fruit Shoot in the states of Kansas and Missouri taking us to a total of 32 US states ahead of the summer.

·      We also announce today that we have reached agreement with the Narang Group for the national distribution of Fruit Shoot in India, commencing mid-2014. The Narang group has a strong national presence in consumer goods in India, including joint ventures with Suntory and Danone and through distribution rights for brands such as Monster, Twinings and Lindt.

However the market conditions in which we operate remained challenging. During the second quarter each of our markets experienced poor weather over March and Easter. The economic backdrop continued to be difficult with consumer discretionary spending remaining subdued. In the first six months of our financial year, the take-home market in GB saw volume down by 1.7% and in the last 12 weeks it declined by 2.6%, as measured by Nielsen.

Despite this we achieved a significant turnaround in business performance. Britvic has delivered an impressive first half performance and we have strong momentum as we move into the second half of the financial year with substantially increased levels of marketing investment.

Since joining Britvic and becoming CEO I have been able to consider the opportunities that we have, the challenges that we face and our future direction. I see the potential to create one of the most admired soft drinks businesses in the world by:

·      Becoming the benchmark integrated branded soft drinks business for both PepsiCo and our own brands in GB & Ireland

·      Fully exploiting global category opportunities in Kids, Family and Adult

·      Creating a simple focused operating model, empowering our people and matching resource and capability to the opportunities

·      Being a trusted and respected member of the communities in which we operate

To achieve this vision we have set out a new strategy to drive market leading profit growth underpinned by margin enhancing revenue. The strategy has two parts:

In our full portfolio markets of GB and Ireland we are proposing to combine both businesses,  leveraging our scale and common strategy across both markets in a more cost effective way. We offer a broad portfolio of brands and the relationship with Pepsi will continue to be an integral part of our success.  We will invest and innovate to exploit our brand leadership of the Kids, Family and Adult categories. Our objective is to establish a platform resulting in GB and Ireland delivering sustainable market leading value growth.

The international business and France will leverage our category leadership of Kids with Fruit Shoot, Family with Robinsons and Adult with Teisseire into new international markets. Our approach will be "asset-light", as we select local, in-market partners. The growth of the international business will deliver rapid revenue growth that will be margin accretive once established and deliver improvements to Britvic's return on capital employed.

Delivering this strategy successfully requires a lower cost organisation focused on the growth opportunities, based on three clear principles by which we will operate:

·      Simplicity: reduced complexity enabling faster decision making and a lower cost operating model

·      Focus: fewer strategic priorities, matching resource and capability to execute stronger

·      Accountability: ensuring we have clear ownership to deliver performance

As a consequence we intend to transition to a simplifed organisational structure.  Additionally we have identified a series of initiatives to achieve our strategy and step change the cost base and profitability of the business:

1.   Increase operational leverage through fewer manufacturing sites by redistributing capacity, reducing the cost base and improving our asset utilisation

·      Proposed closure of two manufacturing sites, Chelmsford and Huddersfield in calendar Q1 2014

·      Ballygowan will replace current GB water brands, sourced from Ireland

·      Some Fruit Shoot capacity will be transferred to France, to supply our growing European Markets

2.   Fundamentally change the Irish operating model

·      Create a combined GB and Ireland business unit with a single leadership team

·      Separate licensed wholesale from the core branded business

·      Proposed closure of Belfast warehouse in calendar Q4 2013

·      Improve factory utilisation by the transfer of capacity from GB to Ireland

3.   Transform our procurement and product optimisation initiatives

4.   Implement a commercial change programme to ensure our brands deliver strong and profitable revenue growth

As a result we will deliver £30m of annualised cost savings by 2016, of which £25m will be by 2015. The cash cost to deliver these savings, net of property disposal proceeds in 2016, is £40m.  The initiatives proposed above along with a simplified organisational structure will, subject to appropriate consultation, lead to an overall reduction in our headcount of between 10% and 15%.

We regret the potential loss of jobs caused by the change and are committed to supporting affected employees and we will of course be consulting with our employees prior to implementing these initiatives.

From the savings we will ramp up our incremental investment against the international business to £10m per annum by 2015, to realise the opportunties faster. We have not given any guidance today about the return on this international investment but the potential is becoming more tangible. The attractiveness of the franchise system is well understood, high margin, low capital investment with low risk.

I am confident that the execution of this strategy will build a more successful Britvic and lead to a much stronger financial performance.

Financial Review

The following is based on Britvic's results for the 28 weeks ended 14 April 2013.^{(1), (2)}

Key performance indicators

The principal key performance indicators that management use to assess the performance of the group are as follows:

·              Volume growth - increase in number of litres sold by the group relative to prior period.

·              Average Realised Price (ARP)- average revenue per litre sold.

·              Revenue growth - increase in sales achieved by the group relative to prior period.

·              Brand contribution margin- revenue less material costs and all other marginal costs that management considers to be directly attributable to the sale of a given product, divided by revenue.  Such costs include brand specific advertising and promotion costs, raw materials, and marginal production and distribution costs. Management uses the brand contribution margin to analyse Britvic's financial performance, because it provides a measure of contribution at brand level.

·              Operating profit margin- the group focuses on EBITA (earnings before interest, tax and acquisition related amortisation) before exceptional and other items as the key operating profit measure. Margin is calculated by dividing EBITA by revenue. Each business unit's performance is reported down to the brand contribution level.

·              Underlying free cash flow- is defined as net cash flow excluding movements in borrowings, dividend payments, exceptional and other items.

Overview

In the period, total group volumes (excluding factored products in Ireland) were 1,027.8m litres, ARP grew by 5.3% and revenue of £639.2m was ahead of last year by 0.4% on a constant currency basis.

The group focused on building sustainable profit and margin improvement. Significant progress was achieved against this objective, with EBITA up 27.6% to £53.6m and EBITA margin growth of 180bps.

These results include a number of one-offs and phasing items impacting the first half. Firstly, the vast majority of the £8m costs remaining from the recall of Fruit Shoot from last year. Secondly, although A&P as a % of revenue is expected to be 25 basis points higher for the full year, there was a reduction of 180 basis points in the first half reflecting the phasing of our marketing programmes this year compared to the previous one. Excluding these items, Britvic's underlying EBITA was up 17.9% demonstrating a substantial improvement in the performance of the business

We have focused on improving free cash flow generation and reducing the level of debt in the group.  This continued focus has led to an improvement in free cash flow of 48.2% versus the prior year, leading to a further reduction in debt of 5.7%.

The first half incorporates 28 weeks of fixed costs but represents less than half of our expected revenue and is a working capital high point for the business ahead of the summer months.

GB Stills	28 weeks ended 14 April 2013 £m	28 weeks ended  15 April 2012 £m	% change Actual Exchange Rate
Volume (millions litres)	192.9	211.4	(8.8)
ARP per litre	84.9p	79.8p	6.4
Revenue	163.7	168.8	(3.0)
Brand contribution	81.4	74.2	9.7
Brand contribution margin	49.7%	44.0%	570 bps

The Fruit Shoot return to market programme remains on track but has impacted the first half performance with supply only returning back to historical levels in January 2013. Robinsons continued its positive momentum of recent quarters, growing its share again versus last year. The contribution of increasing double concentrate sales accounted for about half of the growth of reported ARP.

During the second quarter the stills segment has been impacted by poor weather that has reduced consumption occasions, especially in the pub and club channel where J₂O and Fruit Shoot have a strong presence.

Brand contribution margin was up by 570 basis points in the period with underlying growth of 350 basis points when we adjust for the year on year phasing impact of our marketing programmes. The growth in underlying margin was due to a combination of our focussed growth in ARP, a lower raw material cost inflation and the product value optimisation benefits from initiatives that we carried out last year on J₂O and Fruit Shoot.

GB Carbonates	28 weeks ended 14 April 2013 £m	28 weeks ended  15 April 2012 £m	% change Actual Exchange Rate
Volume (millions litres)	580.9	595.0	(2.4)
ARP per litre	45.9p	44.1p	4.1
Revenue	266.6	262.1	1.7
Brand contribution	100.2	91.1	10.0
Brand contribution margin	37.6%	34.8%	280 bps

We delivered a further strong revenue performance from our GB carbonates brands, with revenue up 1.7% following a prior year comparative of 6.7%. Following a strong Q1 carbonates performance in which we grew both volume and price with revenue up 9.2%, Q2 has seen a more promotionally competitive carbonates market. Our strategy to focus on market value share and drive margin was successfully implemented and resulted in ARP growth of 4.1% leading to both revenue and impressive margin growth.

Our carbonates marketing programme was intentionally lighter in the first half of this year compared to last year, reflected in the brand contribution margin being up by 280 basis points in the period. Adjusting for this timing benefit, the underlying improvement was around 170 basis points.

International	28 weeks ended 14 April 2013 £m	28 weeks ended  15 April 2012 £m	% change Actual Exchange Rate
Volume (millions litres)	18.6	19.2	(3.1)
ARP per litre	96.8p	75.0p	29.1
Revenue	18.0	14.4	25.0
Brand contribution	6.9	3.7	86.5
Brand contribution margin	38.3%	25.7%	1,260bps

International enjoyed a strong first half performance with revenue up 25.0%, compared to growth of 10.8% last year.  Following the growth in Q1 which was driven by the reintroduction of Fruit Shoot to the Netherlands and Belgium we have seen further strong growth from our emerging US franchise business during Q2.

The volume reduction reflects the US Fruit Shoot business transitioning to a concentrate model whereas in the first half of last year we were still exporting finished product from the UK. Furthermore we chose to raise prices in some non-strategic, high volume, low margin areas of our export business. This resulted in a reduction of volume in the period and is likely to affect the volumes for the full year, albeit with minimal impact to profits.

We are on track to complete the previously announced roll-out of Fruit Shoot to 30 US states by the summer of 2013 and we have more than doubled the number of distribution outlets to over 41,000 in the past three months. We have achieved listings in key retailers such as Hess, Dollar, and Walmart as a result of our broader geographic coverage and strong sales proposition. Today, we have also announced that we have reached agreement with a new partner in the US, Pepsi Cola Bottling Company of Pittsburgh, to distribute Fruit Shoot in the states of Kansas and Missouri. This increases our distribution to a total of 32 US states.

Brand contribution and margin have shown significant growth, reflecting the growing contribution of the concentrate model to the business unit and the strong margin orientated trading focus that the export management team has adopted.

Ireland	28 weeks ended 14 April 2013 £m	28 weeks ended 15 April 2012 £m	% change Actual Exchange Rate	% change Constant Exchange Rate
Volume (millions litres)	98.7	104.5	(5.6)	(5.6)
ARP per litre	55.7p	54.4p	2.4	4.7
Revenue	67.2	72.7	(7.6)	(5.5)
Brand contribution	24.2	22.1	9.5	12.0
Brand contribution margin	36.0%	30.4%	560bps	560bps

Note: Volumes and ARP include own-brand soft drinks sales and do not include factored product sales included within total revenue and brand contribution. 

The Irish market remains challenging; however our own brands continued the recent quarter's improved performance by outperforming the market again. Whilst our overall volumes declined 5.6% we successfully grew value share and held volume share in the take-home market as measured by Nielsen. This was as a result of the execution of a disciplined promotional strategy which grew ARP by 4.7%.

Factored brands, which we sell through our wholesaling business continued to account for the majority of the revenue decline.

The improved brand contribution was a result of the robust ARP growth and the financial benefits of the on-going cost saving programme we announced last year. The underlying brand contribution margin, net of timing differences on A&P, was 310 basis points higher this year.

France	28 weeks ended 14 April 2013 £m	28 weeks ended 15 April 2012 £m	% change Actual Exchange Rate	% change Constant Exchange Rate
Volume (millions litres)	136.7	142.3	(3.9)	(3.9)
ARP per litre	90.5p	86.5p	4.6	7.0
Revenue	123.7	123.1	0.5	2.7
Brand contribution	28.9	27.1	6.6	9.1
Brand contribution margin	23.4%	22.0%	140bps	140bps

In France volume was down 3.9% in the first half whilst revenues grew 2.7% and brand contribution increased by 9.1%, driven by continued strong pricing growth. We outperformed the take-home soft drinks market in France, as measured by IRI, which grew value by 1.1%.

In syrups we outgrew the take-home market, taking value market share with both the Teisseire and Moulin de Valdonne brands. Teisseire Fruit Shoot grew strongly, building distribution beyond pre-recall levels and in Q2 the brand grew sales at more than twice the rate of the previous year. Growth of Teisseire Fruit Shoot was also driven by increasing rate of sale on the brand, led by the new multivitamin variant that we launched last year. Building on the success of Teisseire Fruit Shoot we extended the brand franchise into syrups with the launch of Fruit Shoot Syrups during late Q2.

Fixed Costs	28 weeks ended 14 April 2013 £m	28 weeks ended 15 April 2012 £m	% change Actual Exchange Rate
Non-brand A&P	(4.3)	(5.2)	17.3
Fixed supply chain	(59.6)	(59.5)	(0.2)
Selling costs	(64.5)	(63.3)	(1.9)
Overheads and other	(61.2)	(49.8)	(22.9)
Total	(189.6)	(177.8)	(6.6)
Total A&P investment	(22.0)	(33.0)	33.3
A&P as a % of revenue*	3.5%	5.3%	180 bps

* excludes 3^rd Party Revenue

Fixed costs include the majority of the £8m remaining costs associated with the recall of Fruit Shoot and the cost of the expanded in-market team supporting our US Fruit Shoot business communicated last year. 

The reduction in total A&P as a percentage of revenue of 180bps versus the prior year was due to the timing of our marketing programmes. Our 2013 summer marketing programme is substantially increased on the previous year and as a result our full year guidance has been increased to be ahead of last year by an estimated 25 basis point of the expected full year revenue.

Exceptional and Other Items 

In the period Britvic has accounted for a net charge of £4.7m of pre-tax (£3.8m post tax) exceptional and other costs. These include:

·      Corporate exceptional items of £8.1m cost, mainly relating to advisory fees regarding the potential merger with A.G. Barr.

·    Other fair value movements gain of £3.4m. Within exceptional and other items we include the fair value movement of financial instruments where hedge accounting cannot be applied. This is made up of two items, a number of share swaps to satisfy our employee incentive share schemes and interest-rate swaps. 

Interest

The net finance charge before exceptional and other items for the 28 week period for the group was £14.5m compared with £15.6m in the same period in the prior year reflecting the lower debt profile of the group and the continued low interest rate environment.

Taxation

The tax charge before exceptional items is £9.0m which equates to an effective tax rate of 24.0% (28 weeks ended 15 April 2012: 24.6% and 52 weeks ending 30 September 2012: 25.5%).

The tax rate before exceptional items, as indicated by the interim financial statements, does not include the impact of the proposed reduction in the UK Corporation Tax rate to 21% from 1 April 2014 and to 20% from 1 April 2015 as these rate changes were not substantively enacted prior to the interim balance sheet date.

Earnings Per Share

Adjusted basic EPS for the period, excluding exceptional and other items and acquisition related amortisation, is 12.4p, up 47.6% on the same period last year of 8.4p.

Basic EPS (after exceptional and other items of £3.8m charge post-tax) for the period was 10.2p compared with the 7.7p for the same period last year (after exceptional and other items charge of £nil post-tax).

Dividends

The board is recommending an interim dividend of 5.4p per share an increase of 1.9% on the dividend paid last year, with a total value of £12.9m. The interim dividend will be paid on 12 July 2013 to shareholders on record as at 31 May 2013. The ex-dividend date is 29 May 2013.

Cash Flow and Net Debt

Underlying free cash flow was a £24.4m outflow, a 48.2% improvement compared to a £47.1m outflow the previous year.

Our first half always generates a cash outflow reflecting the working capital high. The improvement is driven by the growth in profitability, the benefit of the pension funding partnership shown in other costs more than offsetting the increased pension contribution payment increase. Additionally there was no requirement this year to satisfy employee reward schemes with share purchases.

The adjusted net debt (taking into account the foreign exchange movements on the derivatives hedging our US Private Placement debt) at 14 April 2013 is £503.7m.

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 and foreign exchange whilst managing the group's debt and liquidity, currency risk, interest rate risk and cash management.  The group uses financial instruments to hedge against interest rate and foreign currency exposures.

The group has £891m of committed debt facilities consisting of a £400m bank facility which matures in 2016 and a series of private placement notes with maturities between 2014 and 2022; providing the business with a secure funding platform.

At 14 April 2013, the group's unadjusted net debt of £593.9m (excluding derivative hedges) consisted of £13.0m drawn under the group's committed bank facilities, £581.4m of private placement notes, £4.9m of accrued interest and £0.7m of finance leases, offset by net cash and cash equivalents of £2.9m and unamortised loan issue costs of £3.2m.

After taking into account the element of the fair value of interest rate currency swaps hedging the balance sheet value of the private placement notes, the group's adjusted net debt is £503.7m.

Pensions

At 14 April 2013, the IAS 19 pension net deficit in respect of the group defined benefit pension schemes was £40.2m (30 September 2012: net deficit of £3.7m). The increase in the overall deficit is driven primarily by changes to the underlying market conditions on which the valuation assumptions are based for the GB plan, including the increase in the RPI from 2.90% at the 30 September 2012 to 3.65% at 14 April 2013 and increase in CPI from 2.10% to 2.65% over the same period.

On retirement as CEO on 28 February 2013, Paul Moody, chose to receive the BETUS portion of his benefits through the payment of a cash lump sum in April 2013. As a result of this, a £0.5m profit has been recognised in exceptional and other items in the income statement for the period.

Business Resources

The main resources the group uses to achieve its results are:

·              An extensive portfolio of stills and carbonates brands, including Robinsons, Pepsi, 7UP, Tango, J₂O and Fruit Shoot. The breadth and depth of Britvic's portfolio enables it to target consumer demand across a wide range of consumption occasions, in all the major soft drinks categories and across all relevant routes to market. Britvic Ireland owns a number of leading brands in the Republic of Ireland and Northern Ireland, including Club, Ballygowan and MiWadi as well as the rights to the Pepsi, 7UP and Mountain Dew brands. In France the portfolio includes the leading syrup brand Teisseire as well as Moulin de Valdonne, Pressade and Fruit Shoot.

·              A successful long-standing relationship with PepsiCo that resulted in the exclusive bottling agreement (EBA) being renewed in GB in 2003 for a further 15 years, with an extension to 2023 on admission to the London Stock Exchange. The EBA for Ireland lasts until 2015. This relationship gives Britvic the exclusive right to distribute the Pepsi and 7UP brands in GB and Ireland, access to all new carbonated drinks developed by PepsiCo for distribution in GB and Ireland and, to support the development of its carbonates offering, access to PepsiCo's consumer and customer insight, competitor intelligence, marketing best practice, brand and product development expertise and technological know-how. Britvic has added to its portfolio with Mountain Dew Energy in GB and Ireland and has also been appointed in recent years as the exclusive GB bottler of Gatorade, Lipton Ice Tea and SoBe.

·              A strong customer base. For example, in the GB take-home market, Britvic's customers include the "Big 4" supermarkets (Tesco, J Sainsbury's, Asda and Wm Morrisons) together with a number of other important grocery retailers. The group has significant supply arrangements with a number of key players in the GB pubs and clubs sector and leisure and catering channels. Through Britvic International, the group has built on the success of the Robinsons and Fruit Shoot brands by introducing these products into markets outside GB.

·           Britvic also has a well-invested and flexible group production capability and distribution network that enables its soft drinks to be made available to consumers across all of its operating territories.

Risks and Uncertainties

Risk Management Process

Britvic's risk management process has been adapted to support its growth strategy, focusing on growing the business through both acquisition and organic growth opportunities. Risk is an inherent part of doing business. The intention of the risk management process is not to avoid all risk as success comes from managing risk through the assessment of the balance of risk versus reward set against Britvic's risk appetite. The system of internal controls and risk management used to identify and manage the principal risks the group faces is described in the Corporate Governance Report. In assessing risk both the financial and reputational impact are considered, as Britvic is a brand-led business. The principal risks and corresponding mitigation set out below represent the principal uncertainties that may impact on our ability to effectively deliver our strategy in the future (note - this is not intended to be a complete list of all of the risks that could impact Britvic, there may be other risks, that should they materialise, could have a material impact on the group).

(A)        Risks Relating To The Group

1.   An over-reliance on any specific customer or brand.

Risk - A major retailer, in the take-home or pubs and clubs channel, may decide to remove our products from its range and stock alternative products instead.

Mitigation - Britvic sells its products through a wide-range of channels and retailers. This broad mix of customers reduces our dependency on any one of these relationships. Likewise our portfolio and innovation launches further diversify our range thereby reducing the dependency on any one brand.

2.   A termination or variation of the bottling and distribution arrangements with PepsiCo or an adverse development in the PepsiCo relationship.

Risk - At the end of the bottling agreements or earlier in specific circumstances PepsiCo may terminate our right to sell their brands.

Mitigation - Britvic reduces this risk in two ways. Firstly, the majority of its revenues are generated by its wholly-owned brands. Its brand marketing focus and innovation pipeline are balanced between its wholly-owned brands and the PepsiCo franchised brands. Secondly, Britvic places significant emphasis on developing its relationship with PepsiCo through both extending bottling agreements and maintaining an appropriate level of communication between the two businesses to deal with on-going operational issues.

3.   Inability to protect the intellectual property rights associated with its current and future brands.

Risk - Failure to maintain these rights could result in the value of our brands being eroded by copycat products.

Mitigation - Through our legal team we proactively look to protect these rights by registering the relevant trademarks and enforcing these in court when a resolution cannot be reached with other parties.

4.   Increase in the group's funding needs or obligations in respect of its pension scheme.

Risk - The required revaluations of the pension schemes may highlight a worsening deficit position that requires the company to provide additional cash contributions to meet future needs.

Mitigation - The group pensions function works closely with the pension Trustees to ensure an appropriate portfolio is in place to fund pension requirements and spread risk as best as possible. New employees of the company are enrolled into a defined contribution scheme that limits future liabilities. The largest of Britvic's defined benefit schemes, for GB employees, was closed to future accrual in April 2011 (closed to new members in 2002).  This scheme is now partially funded by a Pension Funding Partnership and funding requirements have been agreed to 2017.  

5.   Inadequate IT disaster recovery plans.

Risk - As Britvic has grown, both through acquisition and organically, so has its reliance on IT systems to function, a failure of which could halt production or the ability to deliver goods.

Mitigation - Britvic has out-sourced the management of its data centre to a professional provider with both robust disaster recovery and business continuity plans capable of meeting both its current and future needs.

6.   Contaminated or faulty products.

Risk - A faulty or contaminated product is supplied to the market.

Mitigation - Britvic has robust quality control measures and processes in place to maintain the high quality of its products supplied at all times.  These have been further strengthened in response to the Fruit Shoot recall required during 2012. 

7.   Loss of use of a key manufacturing or distribution site.

Risk - A severe event leads to the loss of use of a key site.

Mitigation - Britvic seeks to maintain multiple sources of supply for its products, wherever possible. 

(B)        Risks Relating To The Market

1.   The macro-economic environment.

Risk - Continued economic downturn, government regulatory changes and uncertainty in the economy impacts consumer confidence resulting in reduced spend on soft drinks.  In addition, wider economic factors could have an impact on Britvic, including increasing counterparty credit risk and currency fluctuations.

Mitigation - The soft drinks category is reasonably resilient and Britvic offers a range of everyday value products to meet the consumer need for reduced spending.  Britvic monitors consumer spending trends and develops products designed to meet the spending requirements of its consumers.  Britvic closely monitors and manages its exposure to wider economic factors to the extent that it is possible or beneficial to do so, including through hedging.

2.   Increasing commodity prices.

Risk - Prices for commodities used in the production of our products may fluctuate widely and have increased significantly over the last year mainly due to poor crops and scarcity. Therefore, the risk is two-fold, one of not being able to source enough, and one of having to pay more than expected.

Mitigation - Britvic sources much of its planned requirements through forward contracts and hedging arrangements and is developing new sources of supply. Through this process it aims to minimise the impact of price fluctuations.

3.   A change in consumer preferences and spending on soft drinks.

Risk - Consumers may decide to switch away from Britvic products or spend less on soft drinks.

Mitigation - By offering a range of everyday value to premium products across a range of sub-categories, Britvic is not dependant on any single brand. The range has been developed to offer consumers choice in terms of flavour, cost and formulation.  Britvic closely monitors consumer trends in order to anticipate changes in preferences and match its offerings to these trends.

4.   Potential impact of regulatory developments.

Risk - Legislation may impact our ability to market or sell certain products or engage with specific consumers.

Mitigation - Britvic proactively engages with the relevant authorities both directly and through a number of trade organisations to ensure it can fully participate in the future development of legislation.  Britvic seeks to develop its existing product portfolio and new products in anticipation of likely regulatory requirements.

5.   Potential impact of taxation changes.

Risk - Potential legislation to introduce a tax on manufacturers of soft drinks.

Mitigation - Britvic will look to remain commercially competitive whilst seeking to offset as much of the cost as possible through increasing prices to customers.

6.   Increasing energy costs.

Risk - Energy costs fluctuation results in unforeseen increases in costs.

Mitigation - Britvic has contracts for some of its energy supply with pre-agreed prices, and price increase mechanisms in line with market, partially mitigating this risk.  In addition, Britvic has taken steps to improve its energy efficiency to reduce its energy requirements.

7.   Changes in competitor behaviour or a new entrant.

Risk - A significant change in the competitor landscape from a new or existing competitor may impact on the demand for Britvic products.

Mitigation - Britvic maintains a strong programme of activity to maintain and grow demand for its products.

BRITVIC PLC

INTERIM FINANCIAL STATEMENTS

For the 28 weeKS ENDED 14 april 2013

Company number:  5604923

RESPONSIBILITY AND CAUTIONARY STATEMENTS

RESPONSIBILITY STATEMENTS

The directors confirm that to the best of their knowledge, this unaudited condensed set of consolidated interim financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

CAUTIONARY STATEMENT

This report is addressed to the shareholders of Britvic plc and has been prepared solely to provide information to them.

This report is intended to inform the shareholders of the group's performance during the 28 weeks to 14 April 2013. This report contains forward looking statements based on knowledge and information available to the directors at the date the report was prepared. These statements should be treated with caution due to the inherent uncertainties underlying any such forward looking information and any statements about the future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

DIRECTORS

The directors of Britvic plc are:

Gerald Corbett

Paul Moody (resigned 26 February 2013)

Simon Litherland (appointed 13 February 2013)

John Gibney

Joanne Averiss

Ben Gordon

Bob Ivell

Michael Shallow

By order of the Board

Simon Litherland

Chief Executive

John Gibney

Finance Director

BRITVIC PLC

INDEPENDENT REVIEW REPORT TO BRITVIC PLC

Introduction

We have been engaged by Britvic plc (the 'company') to review the condensed set of financial statements in the interim results for the 28 weeks ended 14 April 2013 which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of cash flows, consolidated statement of changes in equity and the related notes 1 to 16. We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The interim results are the responsibility of, and have been approved by, the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim results based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim results for the 28 week period ended 14 April 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

Birmingham

21 May 2013

BRITVIC PLC

consolidated income statement

For the 28 weeks ended 14 April 2013

		(Unaudited) 28 Weeks Ended 14 April 2013			(Unaudited) 28 Weeks Ended 15 April 2012			(Audited) 52 Weeks Ended 30 September 2012
		Before exceptional and other items	Exceptional and other items*	Total	Before exceptional and other items	Exceptional and other items*	Total	Before exceptional and other items	Exceptional and other items*	Total
	Note	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue		639.2	-	639.2	641.1	-	641.1	1,256.4	-	1,256.4
Cost of sales		(311.7)	-	(311.7)	(324.9)	-	(324.9)	(624.6)	-	(624.6)
Gross profit		327.5	-	327.5	316.2	-	316.2	631.8	-	631.8
Selling and distribution costs		(192.3)	-	(192.3)	(192.6)	-	(192.6)	(353.3)	-	(353.3)
Administration expenses		(83.2)	(4.8)	(88.0)	(83.2)	0.4	(82.8)	(165.8)	(4.8)	(170.6)
Operating profit/(loss)		52.0	(4.8)	47.2	40.4	0.4	40.8	112.7	(4.8)	107.9
Finance costs		(14.5)	0.1	(14.4)	(15.6)	(1.1)	(16.7)	(28.3)	(2.1)	(30.4)
Profit/(loss) before tax		37.5	(4.7)	32.8	24.8	(0.7)	24.1	84.4	(6.9)	77.5
Taxation	7	(9.0)	0.9	(8.1)	(6.1)	0.7	(5.4)	(21.5)	1.4	(20.1)
Profit/(loss) for the period attributable to the equity shareholders		28.5	(3.8)	24.7	18.7	-	18.7	62.9	(5.5)	57.4
Earnings per share
Basic earnings per share	8			10.2p			7.7p			23.8p
Diluted earnings per share	8			10.1p			7.3p			22.4p
Adjusted basic earnings per share**	8			12.4p			8.4p			27.2p
Adjusted diluted earnings per share**	8			12.2p			8.1p			26.5p
* See note 6. ** Adjusted basic and diluted earnings per share measures have been adjusted by adding back exceptional and other items (see note 6) and amortisation of acquisition related intangible assets. This reconciliation is shown in note 8. All activities relate to continuing operations.

BRITVIC PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 28 weeks ended 14 April 2013

			(Unaudited)	(Unaudited)	(Audited)
			28 Weeks Ended	28 Weeks Ended	52 Weeks Ended
			14 April 2013	15 April 2012	30 September 2012
		Note	£m	£m	£m
Profit for the period attributable to the equity shareholders			24.7	18.7	57.4
Actuarial (losses)/gains on defined benefit pension schemes			(52.4)	(4.1)	9.2
Deferred tax on actuarial (losses)/gains on defined benefit pension schemes			9.6	(20.3)	(7.9)
Current tax on additional pension contributions			2.4	21.1	4.6
Gains/(losses) in the period in respect of cash flow hedges		13	19.3	(11.3)	(17.0)
Amounts recycled to the income statement in respect of cash flow hedges		13	(16.9)	5.7	9.5
Deferred tax in respect of cash flow hedges accounted for in the hedging reserve			(0.6)	(1.1)	2.1
Exchange differences on translation of foreign operations		13	3.9	(3.9)	(3.9)
Tax on exchange differences accounted for in the translation reserve			(0.7)	2.5	4.0
Other comprehensive income for the period net of tax			(35.4)	(11.4)	0.6
Total comprehensive income for the period attributable to the equity shareholders			(10.7)	7.3	58.0

BRITVIC PLC

CONSOLIDATED BALANCE SHEET

As at 14 April 2013

				(Unaudited)		(Unaudited)		(Audited)
				14 April 2013		15 April 2012		30 September 2012
		Note		£m		£m		£m
Assets
Non-current assets
Property, plant and equipment		9		232.6		236.8		236.6
Intangible assets		9		318.7		316.2		305.2
Other receivables				4.6		5.0		3.6
Other financial assets		13		88.3		90.6		92.1
Pension asset				-		-		7.5
				644.2		648.6		645.0
Current assets
Inventories				86.2		90.3		73.8
Trade and other receivables				294.3		282.0		257.4
Current income tax receivable				-		13.3		-
Other financial assets		13		16.5		0.8		0.1
Cash and cash equivalents				7.4		2.9		49.5
				404.4		389.3		380.8
Non-current assets held for sale				-		0.4		-
Total assets				1,048.6		1,038.3		1,025.8
Current liabilities
Trade and other payables				(361.7)		(356.9)		(357.2)
Bank overdrafts				(4.5)		(8.8)		(1.9)
Interest-bearing loans and borrowings		10		(92.1)		-		(0.6)
Other financial liabilities		13		(1.7)		(4.3)		(4.4)
Current income tax payable				(8.5)		-		(7.8)
				(468.5)		(370.0)		(371.9)
Non-current liabilities
Interest-bearing loans and borrowings		10		(504.7)		(600.4)		(558.7)
Deferred tax liabilities				(26.1)		(42.5)		(34.1)
Pension liability		14		(40.2)		(16.7)		(11.2)
Other financial liabilities		13		(6.6)		(7.7)		(10.9)
Other non-current liabilities				(1.9)		(1.9)		(1.9)
				(579.5)		(669.2)		(616.8)
Total liabilities				(1,048.0)		(1,039.2)		(988.7)
Net assets/(liabilities)				0.6		(0.9)		37.1
Capital and reserves
Issued share capital		11		48.7		48.4		48.5
Share premium account				20.9		16.8		17.7
Own shares reserve				(1.9)		(1.1)		(0.8)
Share scheme reserve				5.9		7.0		4.2
Hedging reserve				5.4		2.3		3.6
Translation reserve				25.7		21.0		22.5
Merger reserve				87.3		87.3		87.3
Retained losses				(191.4)		(182.6)		(145.9)
Total equity				0.6		(0.9)		37.1

BRITVIC PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the 28 weeks ended 14 April 2013

		(Unaudited) 28 Weeks Ended 14 April 2013		(Unaudited) 28 Weeks Ended 15 April 2012		(Audited) 52 Weeks Ended 30 September 2012
	Note	£m		£m		£m
Cash flows from operating activities
Profit before tax		32.8		24.1		77.5
Finance costs		14.4		16.7		30.4
Other financial instruments		(3.3)		(2.4)		(1.4)
Impairment of property, plant and equipment and intangible assets	6, 9	-		14.2		14.9
Depreciation		18.4		17.8		34.4
Amortisation		5.1		5.0		9.5
Share-based payments		2.5		3.5		3.0
Net pension charge less contributions		(16.4)		(32.1)		(31.1)
(Increase)/decrease in inventory		(9.5)		(3.8)		10.9
(Increase)/decrease in trade and other receivables		(32.2)		(33.4)		(2.0)
(Decrease)/increase in trade and other payables		(6.2)		(8.6)		(2.8)
Loss on disposal of tangible and intangible assets		1.9		0.5		1.5
Income tax paid		(5.2)		(11.3)		(12.5)
Net cash flows from operating activities		2.3		(9.8)		132.3
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		0.1		1.4		2.2
Purchase of property, plant and equipment		(15.1)		(19.1)		(43.9)
Purchase of intangible assets		(2.0)		(3.0)		(5.4)
Net cash flows used in investing activities		(17.0)		(20.7)		(47.1)
Cash flows from financing activities
Finance costs		-		(0.1)		(0.1)
Interest paid		(13.8)		(14.8)		(28.5)
Interest-bearing loans drawn down/(repaid)	10	11.2		34.8		(1.0)
Issue of shares		2.1		1.2		2.0
Purchase of own shares		-		(9.3)		(9.3)
Dividends paid to equity shareholders	12	(29.6)		(29.9)		(42.5)
Net cash flows used in financing activities		(30.1)		(18.1)		(79.4)
Net (decrease)/increase in cash and cash equivalents		(44.8)		(48.6)		5.8
Cash and cash equivalents at beginning of period		47.6		43.0		43.0
Exchange rate differences		0.1		(0.3)		(1.2)
Cash and cash equivalents at the end of the period		2.9		(5.9)		47.6
By balance sheet category:
Cash and cash equivalents		7.4		2.9		49.5
Bank overdrafts		(4.5)		(8.8)		(1.9)
		2.9		(5.9)		47.6

BRITVIC PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 28 weeks ended 14 April 2013

	Issued share capital	Share premium account	Own shares reserve	Share scheme reserve		Hedging reserve		Translation reserve		Merger reserve		Retained losses		Total
	£m	£m	£m	£m		£m		£m		£m		£m		£m
At 30 September 2012 (audited)	48.5	17.7	(0.8)	4.2		3.6		22.5		87.3		(145.9)		37.1
Profit for the period	-	-	-	-		-		-		-		24.7		24.7
Other comprehensive income	-	-	-	-		1.8		3.2		-		(40.4)		(35.4)
Total comprehensive income	-	-	-	-		1.8		3.2		-		(15.7)		(10.7)
Issue of shares	0.2	3.2	(2.1)	-		-		-		-		-		1.3
Own shares utilised for share schemes	-	-	1.0	(0.7)		-		-		-		0.4		0.7
Movement in share-based schemes	-	-	-	2.4		-		-		-		-		2.4
Deferred tax on share-based payments	-	-	-	-		-		-		-		(0.6)		(0.6)
Payment of dividend	-	-	-	-		-		-		-		(29.6)		(29.6)
At 14 April 2013 (unaudited)	48.7	20.9	(1.9)	5.9		5.4		25.7		87.3		(191.4)		0.6

	Issued share capital	Share premium account	Own shares reserve	Share scheme reserve		Hedging reserve		Translation reserve		Merger reserve		Retained losses		Total
	£m	£m	£m	£m		£m		£m		£m		£m		£m
At 2 October 2011 (audited)	48.3	15.0	(1.0)	7.8		9.0		22.4		87.3		(166.3)		22.5
Profit for the period	-	-	-	-		-		-		-		18.7		18.7
Other comprehensive income	-	-	-	-		(6.7)		(1.4)		-		(3.3)		(11.4)
Total comprehensive income	-	-	-	-		(6.7)		(1.4)		-		15.4		7.3
Issue of shares	0.1	1.8	(1.6)	-		-		-		-		-		0.3
Own shares purchased for share schemes	-	-	(6.6)	-		-		-		-		-		(6.6)
Own shares utilised for share schemes	-	-	8.1	(4.3)		-		-		-		(3.1)		0.7
Movement in share-based schemes	-	-	-	3.5		-		-		-		-		3.5
Current tax on share-based payments	-	-	-	-		-		-		-		0.7		0.7
Deferred tax on share-based payments	-	-	-	-		-		-		-		0.6		0.6
Payment of dividend	-	-	-	-		-		-		-		(29.9)		(29.9)
At 15 April 2012 (unaudited)	48.4	16.8	(1.1)	7.0		2.3		21.0		87.3		(182.6)		(0.9)

BRITVIC PLC

notes to the financial information

For the 28 weeks ended 14 April 2013

1.             General Information

Britvic plc (the 'company', the 'group') is a public limited company, incorporated and domiciled in the United Kingdom. The address of the registered office is: Britvic plc, Breakspear Park, Breakspear Way, Hemel Hempstead, Hertfordshire, HP2 4TZ.

The company is listed on the London Stock Exchange.

These interim financial statements do not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. They have been reviewed but not audited by the group's auditor. The statutory accounts for Britvic plc for the 52 weeks ended 30 September 2012, which were prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union, have been delivered to the Registrar of Companies. The auditor's opinion on those accounts was unqualified and did not contain a statement made under section 498 (2) or (3) of the Companies Act 2006.

The interim financial statements were authorised for issue by the board of directors on 21 May 2013.

2.             Basis of preparation

These interim financial statements comprise the consolidated balance sheet as at 14 April 2013 and related consolidated income statement, consolidated statement of cash flows, consolidated statement of comprehensive income, consolidated statement of changes in equity and the related notes 1 to 16 for the 28 weeks then ended of Britvic plc ('financial information'). This financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with the International Accounting Standard (IAS) 34 'Interim Financial Reporting' as adopted by the European Union.

3.             Accounting policies

This financial information has been prepared using the accounting policies as set out in pages 50 - 56 of the group's 2012 Annual report.

During the period, the group adopted a number of interpretations and amendments to standards which had an immaterial impact on the consolidated financial statements of the group.

4.                     Seasonality of operations

Due to the seasonal nature of the business, higher revenues and operating profits are usually expected in the second half of the year than in the first 28 weeks.

5.                     Segmental reporting

For management purposes, the group is organised into business units and has five reportable segments as follows:

·      GB Stills - United Kingdom excluding Northern Ireland

·      GB Carbs - United Kingdom excluding Northern Ireland

·      International

·      Ireland - including Northern Ireland

·      France

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. However, group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to reportable segments.

Transfer prices between reportable segments are on an arm's length basis in a manner similar to transactions with third parties.

28 weeks ended 14 April 2013	GB Stills	GB Carbs	International	Ireland	France	Adjustments	Total
	£m	£m	£m	£m	£m	£m	£m
Revenue
- External	163.7	266.6	18.0	67.2	123.7	-	639.2
- Inter-segment*	9.7	4.2	-	6.5	0.6	(21.0)	-
	173.4	270.8	18.0	73.7	124.3	(21.0)	639.2
Brand contribution	81.4	100.2	6.9	24.2	28.9	-	241.6
Non-brand advertising & promotion **							(4.3)
Fixed supply chain***							(59.6)
Selling costs***							(64.5)
Overheads and other costs**							(61.2)
Operating profit before exceptional and other items							52.0
Finance costs							(14.5)
Exceptional and other items							(4.7)
Profit before tax							32.8

28 weeks ended 15 April 2012	GB Stills	GB Carbs	International	Ireland	France	Adjustments	Total
	£m	£m	£m	£m	£m	£m	£m
Revenue
- External	168.8	262.1	14.4	72.7	123.1	-	641.1
- Inter-segment*	7.0	6.0	-	3.2	0.3	(16.5)	-
	175.8	268.1	14.4	75.9	123.4	(16.5)	641.1
Brand contribution	74.2	91.1	3.7	22.1	27.1	-	218.2
Non-brand advertising & promotion **							(5.2)
Fixed supply chain***							(59.5)
Selling costs***							(63.3)
Overheads and other costs**							(49.8)
Operating profit before exceptional and other items							40.4
Finance costs							(15.6)
Exceptional and other items							(0.7)
Profit before tax							24.1

52 weeks ended 30 September 2012	GB Stills	GB Carbs	International	Ireland	France	Adjustments	Total
	£m	£m	£m	£m	£m	£m	£m
Revenue
- External	321.7	517.9	29.3	138.7	248.8	-	1,256.4
- Inter-segment*	15.0	9.6	-	8.0	0.8	(33.4)	-
	336.7	527.5	29.3	146.7	249.6	(33.4)	1,256.4
Brand contribution	141.2	188.7	8.3	44.6	59.2	-	442.0
Non-brand advertising & promotion **							(7.8)
Fixed supply chain***							(100.3)
Selling costs***							(118.0)
Overheads and other costs**							(103.2)
Operating profit before exceptional and other items							112.7
Finance costs							(28.3)
Exceptional and other items							(6.9)
Profit before tax							77.5

* Inter-segment revenues are eliminated on consolidation.

** Included within 'Administration expenses' in the Consolidated Income Statement. 'Overheads and other costs' relate to central expenses including salaries, IT maintenance, depreciation and amortisation.

*** Included within 'Selling and distribution costs' in the Consolidated Income Statement.

6.                     Exceptional and other items

Exceptional and other items are those items of financial performance that management believe should be separately disclosed by virtue of the nature and infrequency of the events giving rise to them to allow shareholders to better understand the elements of financial performance in the period so as to facilitate comparison with prior periods and to assess trends in financial performance more readily. 

Unless otherwise stated, exceptional and other items are included within administration expenses in the consolidated income statement.

		28 Weeks Ended		28 Weeks Ended		52 Weeks Ended
		14 April 2013		15 April 2012		30 September 2012
	Note	£m		£m		£m
Net pension gain	(a)	-		21.3		21.1
Asset impairments	(b)	-		(14.2)		(14.9)
Restructuring  and advisory costs	(c)	(8.1)		(9.1)		(11.0)
Property and relocation costs	(d)	-		(1.1)		(1.3)
Other fair value movements *	(e)	3.4		2.4		(0.8)
Total exceptional and other items before tax		(4.7)		(0.7)		(6.9)

*     For the 28 weeks ended 14 April 2013, a £3.3m gain is included within administration expenses (28 weeks ended 15 April 2012: £3.5m gain) and a £0.1m gain is included within finance costs (28 weeks ended 15 April 2012: £1.1m loss) in the consolidated income statement.

a)   In 2012, the net pension gain related to an Ireland pension curtailment gain.

b)   In 2012, asset impairments related to the impairment of SAP implementation costs in Ireland.

c)   In 2013, restructuring and advisory costs relate to the proposed merger of Britvic plc and A.G.Barr plc, and includes a £0.5m pension gain following the retirement of a senior executive on 28 February 2013. See note 14 for further details.

In the 28 weeks ended 15 April 2012, restructuring costs included GB-related restructuring costs of £2.7m, Ireland restructuring costs of £4.3m and corporate acquisition due diligence costs of £2.1m.

d)   In 2012, property and relocation costs related to the transfer of the Britvic plc head office from Chelmsford to Hemel Hempstead and a credit against an onerous lease provision relating to rental income received from a sublet during that year.

e)   Other fair value movements relate to the fair value movement of derivative financial instruments where hedge accounting cannot be applied.

Details of tax implications of exceptional items are given in note 7.

7.                     Taxation

The tax charge not including tax on exceptional and other items is £9.0m (28 weeks ended 15 April 2012: £6.1m) which equates to an effective tax rate 24.0% (28 weeks ended 15 April 2012: 24.6%).

Included in the total tax charge for the 28 weeks ended 14 April 2013 is a tax credit on exceptional and other items of £0.9m (28 weeks ended 15 April 2012: £0.7m credit).

Changes to the main rate of UK corporation tax are proposed, to reduce the rate by 2% to 21% by 1 April 2014 and by a further 1% to 20% by 1 April 2015. These changes had not been substantively enacted at the balance sheet date and consequently were not included in these financial statements.  The effect of these proposed reductions would be to reduce the UK net deferred tax liability by £2.1m.

Tax charge by region

		28 Weeks Ended		28 Weeks Ended		52 Weeks Ended
		14 April 2013		15 April 2012		30 September 2012
		£m		£m		£m
UK		8.1		6.4		20.4
Foreign		-		(1.0)		(0.3)
Total		8.1		5.4		20.1

Analysis of tax charge		28 Weeks Ended		28 Weeks Ended		52 Weeks Ended
		14 April 2013		15 April 2012		30 September 2012
		£m		£m		£m
Current income tax charge		9.2		5.1		12.2
Deferred income tax		(1.1)		0.3		7.9
Total tax charge in the consolidated income statement		8.1		5.4		20.1

8.                     Earnings per share

Basic earnings per share amounts are calculated by dividing the net profit for the period attributable to the equity shareholders of the parent by the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to the equity shareholders of the parent by the weighted average number of ordinary shares outstanding during the period 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:

		28 Weeks Ended		28 Weeks Ended		52 Weeks Ended
		14 April 2013		15 April 2012		30 September 2012
		£m		£m		£m
Basic earnings per share
Profit for the period attributable to the equity shareholders		24.7		18.7		57.4
Weighted average number of ordinary shares in issue for basic earnings per share		242.4		241.4		241.6
Basic earnings per share		10.2p		7.7p		23.8p
Diluted earnings per share
Profit for the period attributable to the equity shareholders		24.7		18.7		57.4
Weighted average number of ordinary shares in issue for diluted earnings per share		245.2		256.8		256.6
Diluted earnings per share		10.1p		7.3p		22.4p
The group presents as exceptional and other items on the face of the Consolidated Income Statement, those significant items of income and expense which, because of the nature and infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the period, so as to facilitate comparison with prior periods and to assess trends in financial performance more readily. To this end, basic and diluted earnings per share are also presented on this basis with the amortisation of acquisition related intangible assets also added back using the weighted average number of ordinary shares for both basic and diluted amounts as per the tables below. In addition, adjusted diluted earnings per share have been modified to exclude the impact of share options that have been granted but not yet vested.
		28 Weeks Ended		28 Weeks Ended		52 Weeks Ended
		14 April 2013		15 April 2012		30 September 2012
		£m		£m		£m
Adjusted basic earnings per share
Profit for the period attributable to equity shareholders		24.7		18.7		57.4
Add: Net impact of exceptional and other items		3.8		-		5.5
Add: Intangible assets amortisation (acquisition related)		1.6		1.5		2.9
		30.1		20.2		65.8
Weighted average number of ordinary shares in issue for adjusted basic earnings per share		242.4		241.4		241.6
Adjusted basic earnings per share		12.4p		8.4p		27.2p
Adjusted diluted earnings per share
Profit for the period attributable to equity shareholders before exceptional and other items and acquisition related intangible assets amortisation		30.1		20.2		65.8
Weighted average number of ordinary shares in issue for adjusted diluted earnings per share		246.8		249.0		248.8
Adjusted diluted earnings per share		12.2p		8.1p		26.5p

9.             Property, plant and equipment and Intangible assets

Property, plant and equipment

During the 28 weeks ended 14 April 2013, the group purchased assets with a cost of £11.7m (28 weeks ended 15 April 2012: £19.5m).

Assets with a net book value of £2.0m were disposed of by the group during the 28 weeks ended 14 April 2013 (28 weeks ended 15 April 2012: £1.9m) resulting in a loss on disposal of £1.9m (28 weeks ended 15 April 2012: loss on disposal £0.5m).

There were no impairments during the 28 weeks ended 14 April 2013. During the 28 weeks ended 15 April 2012, 'fixtures, fittings, tools and equipment' assets with a net book value of £4.3m were impaired. The impairment charge was included within exceptional and other items. Further details are provided in note 6.

Intangible assets

There were no impairments during the 28 weeks ended 14 April 2013. During the 28 weeks ended 15 April 2012, 'software costs' with a net book value of £9.9m were impaired. The impairment charge was included within exceptional and other items. Further details are provided in note 6.

10.                  Interest-bearing loans and borrowings

Components of current and non-current interest-bearing loans and borrowings:

	14 April 2013	15 April 2012	30 September 2012
	£m	£m	£m
Finance leases	(0.7)	(1.1)	(0.8)
2007 Notes	(282.4)	(274.6)	(269.9)
2009 Notes	(179.4)	(173.1)	(171.8)
2010 Notes	(119.6)	(115.4)	(114.5)
Accrued interest	(4.9)	(5.3)	(4.6)
Bank loans	(13.0)	(35.1)	(1.4)
Capitalised issue costs	3.2	4.2	3.7
Total interest-bearing loans and borrowings	(596.8)	(600.4)	(559.3)
Current	(92.1)	-	(0.6)
Non-current	(504.7)	(600.4)	(558.7)
Total interest-bearing loans and borrowings	(596.8)	(600.4)	(559.3)

Analysis of changes in interest-bearing loans and borrowings:

	28 Weeks Ended	28 Weeks Ended	52 Weeks Ended
	14 April 2013	15 April 2012	30 September 2012
	£m	£m	£m
At the beginning of the period	(559.3)	(573.2)	(573.2)
Net loans (drawn down)/repaid	(11.3)	(34.8)	0.7
Issue costs	-	0.1	-
Repayment of finance leases	0.1	-	0.3
Amortisation and write off of issue costs	(0.5)	(0.5)	(0.9)
Net translation (loss)/gain / fair value adjustment	(25.5)	8.3	13.5
Net movement in accrued interest	(0.3)	(0.3)	0.3
At the end of the period	(596.8)	(600.4)	(559.3)
Derivatives hedging balance sheet debt*	90.2	71.9	65.0
Debt translated at contracted rate	(506.6)	(528.5)	(494.3)

* Represents the element of the fair value of interest rate currency swaps hedging the balance sheet value of the Notes. This amount has been disclosed separately to demonstrate the impact of foreign exchange movements which are included in interest bearing loans and borrowings.

11.                  Issued share capital

The issued share capital as at 14 April 2013 comprised 243,316,658 ordinary shares of £0.20 each (30 September 2012: 242,344,551 ordinary shares), totalling £48,663,332 (30 September 2012: £48,468,910).

The ordinary shares carry voting rights of one vote per share. There are no restrictions placed on the distribution of dividends, or the return of capital on a winding up or otherwise.

	28 Weeks Ended 14 April 2013	52 Weeks Ended 30 September 2012
	£m	£m
Called up, issued and fully paid ordinary shares
243,316,658 (30 September 2012: 242,344,551) ordinary shares of £0.20 each	48.7	48.5

Share issues in the period relating to incentive schemes for employees are detailed below:

28 weeks ended 14 April 2013	No of shares issued	Value £
15 November 2012	116,409	23,282
2 January 2013	123,749	24,750
25 January 2013	53,471	10,694
8 February 2013	89,429	17,886
5 March 2013	89,049	17,810
7 March 2013	500,000	100,000
	972,107	194,422

Of the issued and fully paid ordinary shares, 431,749 shares (30 September 2012: 217,994 shares) are treasury shares. This equates to £86,350 (30 September 2012: £43,599) at £0.20 par value of each ordinary share. These shares are held for the purpose of satisfying the Britvic plc share schemes.

12.           Dividends paid and proposed

				28 Weeks Ended 14 April 2013			28 Weeks Ended 15 April 2012			52 Weeks Ended 30 September 2012
Declared and paid in the period
Dividends per share (pence)				12.4			12.6			17.9
Total dividend (£m)				29.6			29.9			42.5
Proposed after the balance sheet date
Dividend per share (pence)				5.4			5.3			12.4
Total dividend (£m)				12.9			12.6			30.1

13.                  Derivatives and hedge relationships

The group has a number of derivative contracts which are designated as part of effective hedge relationships. These are included in other financial assets and liabilities as follows:

		14 April 2013	15 April 2012	30 September 2012
		£m	£m	£m
Consolidated balance sheet
Non-current assets: Other financial assets
Fair value of the 2007 USD GBP cross currency fixed interest rate swaps¹		47.2	55.9	49.9
Fair value of the 2009 USD GBP cross currency floating interest rate swaps³		34.8	28.5	27.1
Fair value of the 2009 GBP euro cross currency floating interest rate swaps²		3.2	5.0	11.1
Fair value of the 2010 USD GBP cross currency floating interest rate swaps³		3.1	1.2	1.6
Fair value of the 2010 GBP euro cross currency fixed interest rate swaps2		-	-	2.4
		88.3	90.6	92.1
Current assets: Other financial assets
Fair value of the 2007 USD GBP cross currency fixed interest rate swaps¹		14.8	-	-
Fair value of forward currency contracts¹		1.7	0.8	0.1
		16.5	0.8	0.1
Current liabilities: Other financial liabilities
Fair value of forward currency contracts¹		(0.2)	(2.7)	(1.9)
Fair value of share swaps		(1.3)	(1.5)	(2.3)
Fair value of forward rate agreements		-	(0.1)	-
Fair value of foreign exchange swaps		(0.2)	-	(0.2)
		(1.7)	(4.3)	(4.4)
Non-current liabilities: Other financial liabilities
Fair value of the 2010 USD GBP cross currency fixed interest rate swaps¹		(2.0)	(2.9)	(5.0)
Fair value of the 2010 GBP euro cross currency fixed interest rate swaps2		(1.2)	-	-
Fair value of share swaps		-	(2.3)	(2.4)
Fair value of interest rate swaps		(3.4)	(2.5)	(3.5)
		(6.6)	(7.7)	(10.9)
¹ Instruments designated as part of a cash flow hedge relationship
² Instruments designated as part of a net investment hedge relationship
³ Instruments designated as part of a fair value hedge relationship

There have been no significant changes to derivative contracts designated as part of effective hedge relationships in the period.  The derivatives and the hedge relationships are described in more detail on pages 83 to 87 in the group's Annual Report for the 52 weeks ended 30 September 2012.

The impact on the consolidated statement of comprehensive income of the derivatives and hedge relationships described above is summarised in the tables below.

		28 Weeks Ended	28 Weeks Ended	52 Weeks Ended
		14 April 2013	15 April 2012	30 September 2012
		£m	£m	£m
Consolidated statement of comprehensive income
Amounts recycled to the income statement in respect of cash flow hedges
Forward currency contracts*		(0.8)	0.5	(1.7)
2007 cross currency interest rate swaps**		(12.5)	4.0	8.7
2010 cross currency interest rate swaps**		(3.6)	1.2	2.5
		(16.9)	5.7	9.5
Gains/(losses) in the period in respect of cash flow hedges
Forward currency contracts		4.1	(4.0)	(1.6)
2007 cross currency interest rate swaps		12.1	(5.7)	(11.7)
2010 cross currency interest rate swaps		3.1	(1.6)	(3.7)
		19.3	(11.3)	(17.0)
Exchange differences on translation of foreign operations
Movement on 2009 GBP euro cross currency interest rate swaps		(7.9)	4.4	10.5
Movement on 2010 GBP euro cross currency interest rate swaps		(3.6)	1.1	3.5
Exchange movements on translation of foreign operations		15.4	(9.4)	(17.9)
		3.9	(3.9)	(3.9)
*   Offsetting amounts recorded in cost of sales
**  Offsetting amounts recorded in finance costs

14.                  Pensions

At 14 April 2013, the IAS 19 pension deficit in respect of the group defined benefit pension schemes was £40.2m (30 September 2012: net deficit of £3.7m). The increase in the overall deficit is driven primarily by changes to the underlying market conditions on which the valuation assumptions are based for the GB plan, including the increase in the RPI from 2.90% at the 30 September 2012 to 3.65% at 14 April 2013 and increase in CPI from 2.10% to 2.65% over the same period.

The retirement of a senior executive on 28 February 2013 resulted in an agreement with the company that the member would settle the BETUS portion of his benefits through the payment of a cash lump sum in April 2013. As a result of this settlement, a £0.5m gain has been recognised within restructuring costs in exceptional and other items in the income statement for the period.

15.           Going concern

The directors are confident that it is appropriate for the going concern basis to be adopted in preparing the interim report and financial statements. As at 14 April 2013, the consolidated balance sheet is showing a net assets position of £0.6m. Group reserves are low due to the capital restructuring undertaken at the time of flotation. This does not impact on Britvic plc's ability to meet payments as they fall due or to make dividend payments.

The liquidity of the group remains strong in particular with £491.0m of long term Private Placement Notes with maturity dates between 2014 and 2022 and a £400.0m bank facility maturing in March 2016. Details are provided in note 22 of the group's 2012 Annual report.

As part of ongoing processes, goodwill and intangible assets with indefinite lives have been reviewed for indications of impairment. This review has taken into consideration the current economic climate.

16.           Events after the reporting period

Non-adjusting event

Subsequent to the balance sheet date, on 22 May 2013 the Group announced significant future restructuring plans. These are referred to in the Interim Announcement.

 

END

 

 

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