annual report 2011
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Britvic plc
Britvic House
Broomfield Road
Chelmsford
Essex
CM1 1TU
Tel: +44 (0)1245 261871
www.britvic.com
Britvic at a glance
Britvic is one of the leading branded soft drinks
businesses in Europe.
The company leverages its own leading brand portfolio
including Robinsons, Tango, drench, J2O and Fruit Shoot
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 also
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.
Its market capitalisation at 2 October 2011 was £760m.
Contents
Overview
01 Our performance
02 Where we operate
03 Our brand portfolio
04 Our people
07 Strategy for growth
Business review
10 Chairman’s statement
13 Chief executive’s review
19 Financial review
28 Corporate responsibility
29 Business resources
30 Risks and uncertainties
Governance
34 Board of directors
36 Directors’ report
40 Corporate governance report
45 Directors’ remuneration report
Financial statements
54 Independent auditors’ report
to the members of Britvic plc
55 Consolidated income statement
56 Consolidated statement of
comprehensive income
57 Consolidated balance sheet
58 Consolidated statement
of cash flows
59 Consolidated statement
of changes in equity
60 Notes to the consolidated
financial statements
103 Independent auditors’ report
to the members of Britvic plc
104 Company balance sheet
105 Notes to the company
financial statements
Shareholder information
112 Shareholder profile
and information
ibc Cautionary statement
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 company 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.
Definitions
1.
All numbers and comparisons are quoted on a 52 week basis, constant currency and before exceptional
and other items unless otherwise stated. 2010 was a 53 week reporting period. 2010, 52 week
comparatives have been derived by removing the impact of the 53 week of trading. 2011 Volume
and ARP (average realised price) are adjusted for the impact of double concentrate on Robinsons
and MiWadi to provide a meaningful comparison. Further information, including numbers not
adjusted for double concentrate and last year 53 week numbers are available at the Investor Centre
‘Results and Presentations’ section on the Britvic Investor Relations website at www.britvic.com
2. 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. France is included for the full twelve months this year versus only four months in the prior
period Britvic France was acquired on 28 May 2010.
4. EBITA is defined as operating profit before exceptional and other items and amortisation.
Only amortisation attributable to intangibles on acquisition is added back, in the period this
is £3.1m (2010: £2.2m). EBITA margin is the EBITA number as a proportion of group revenues.
5. 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 240.4m (2010: 224.9m). 2010 adjusted earnings per share is a 53 week number.
6. Underlying free cash flow is defined as net cash flow excluding movements in borrowings,
dividend payments, exceptional and other items.
7.
Group adjusted net debt is defined as group net debt, adding back the impact of derivatives
hedging the balance sheet debt.
8. Underlying return on invested capital (ROIC) - ROIC is defined as operating profit after applying the
tax rate for the period, stated before exceptional and other items, as a percentage of invested capital.
Invested capital is defined as non-current assets plus current assets less current liabilities, excluding
all balances relating to interest bearing liabilities and all other assets or liabilities associated with the
financing and capital structure of the group and excluding any deferred tax balances and effective
hedges relating to interest-bearing liabilities. The measure excludes the reduction in the asset base
following the impairments of intangible assets in Ireland in 2010 to reflect capital initially invested
and subsequent returns. To aid comparability year on year the results and asset base of Britvic France
have been excluded as 2010 would include only 4 months returns versus 12 months in 2011.
All numbers in this announcement other than where stated or included within the financial statements
are disclosed before exceptional and other items.
The auditors have reported on the 2010 and 2009 accounts. Their reports for both years were unqualified
and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
Britvic takes care of the environment by choosing pureprint ® environmental
print technology. All the electricity used in the production of this report was
generated from renewable sources and vegetable oil based inks were used
throughout. The printer is a CarbonNeutral ® company and certificated to
Environmental Management System, ISO 14001 and registered to EMAS,
the Eco Management and Audit Scheme.
The paper used in this production is made from 50% recycled waste
and 50% virgin fibre product with FSC certification.
Designed by sg design [sg-design.co.uk]
Photography by ben fisher [benfisherphotography.com]
overview
our performance at a glance
group revenue
group ebita
group ebita margin
2010
2011
£1,121.1m
£1,290.4m
2010
2011
£131.8m
£138.1m
2010
2011
11.8%
10.7%
+14.6%
+4.3%
(110)bps
underlying roic
adjusted earnings per share
dividend per share
2010
2011
22.4%
21.9%
2010
2011
36.5p
33.7p
2010
2011
16.7p
17.7p
(50)bps
(8.2)%
+6.0%
All numbers and comparisons are quoted on a 52 week basis, constant currency and before exceptional
and other items unless otherwise stated, with the exception of EPS and DPS, which are 53 week numbers.
Britvic plc Annual Report 2011
1
overview
someone, somewhere...
Britvic GB
Britvic Ireland
Britvic France
Distribution via Britvic International
Britvic-owned brand agreements
I R E L A N D
G R E A T
B R I T A IN
F R A N C E
2
Britvic plc Annual Report 2011
...is enjoying a Britvic brand
Britvic plc Annual Report 2011
3
overview
our people
Employees
Our people are critical to Britvic’s
success and we are fully committed to
making Britvic a great place to work.
Our emphasis is increasingly on
developing our own talent, combined
with proactive external recruitment
when we need to introduce new skills
or create positions that support our
growth plans. To maximise the
potential of our employees we
continue to strengthen our focus on
performance management and provide
multiple learning and development
programmes in GB and Ireland that
cover leadership, management skills
and functional excellence. We are early
in the integration process of Britvic
France, but we retain the same high
level of commitment to keeping our
new colleagues well informed and
engaged about Britvic’s future vision
and current group performance as this
is fundamental to our joint success.
We are extremely proud of the high
employee engagement scores we
achieve within Britvic and we conduct
an annual survey where we regularly
out-perform other external benchmark
companies. Overall employee
engagement across GB and Ireland for
2011 is 73, based on an extremely high
response rate from our employees.
Employee wellbeing
Throughout the past year, we have
focused in GB on making improvements
to work-life balance, improving our
safety record and supporting a healthier
workforce. We have continued to invest
in tools and systems that give our
employees the tools they need to do
their roles and provided technology
that supports more mobile ways of
working. This enables us to improve
communication and engagement and
gives employees the opportunity and
control to work flexibly in terms of both
location and hours. Additionally, to
further our commitment to providing
a safe working environment, we
established an on-line training
campaign targeting driver safety.
To support the health of employees
and their families we also provide
a benefits package which includes the
provision of private healthcare and
an employee assistance programme.
Other wellbeing benefits include
discounted gym membership and
a cycle to work scheme, which was
requested by employees and has seen
a good level of success so far. Our
employee wellbeing programme has
been successfully launched in 2011,
with a focus on healthy eating, exercise
and general health education.
4
Britvic plc Annual Report 2011
09:48 Kitchen, Glasgow
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11:25 City Quay, Dublin
6
overview
strategy for growth
Britvic has a strategy for growth through both
organic growth in its operating territories and
international expansion.
GB
Will continue to deliver growth by
four key building blocks
France
Will deliver growth through
• Delivery of the acquisition-case
• Market volume growth on average
€17m synergies
of 2-3% each year
• Innovation adding 1-2% revenue to
the top line in a full average year
• Driving on-the-go distribution
• Average Realised Price (ARP)
improvement of at least 1% in
an average year
Ireland
Has been restructured to take advantage
of the growth opportunities when market
conditions improve by
• Leveraging the new customer
engagement model
• Innovation adding 1-2% revenue to
the top line in a full average year
• Driving on-the-go distribution
• Revenue management improving ARP
• Innovation adding 1-2% revenue to
the top line in a full average year
• Launching into new sub-categories
• Leveraging group brands and capability
International expansion
By focusing on three key drivers
• Core operations growth in our mature
export and 3rd party distributor business
• European expansion by acquisition of
assets be it PepsiCo bottlers or primarily
stills drink businesses
• Non-European expansion by securing
distribution and franchising agreements
with local partners to extend the reach
of Britvic-owned brands in scale markets
Britvic plc Annual Report 2011
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10:28 Molière, France
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business review overview
chairman’s statement
2011 was a challenging year for Britvic following, as it did,
several years of strong profit growth. Indeed our operating
profit has increased by over eighty per cent in the six years
since we floated and became a public company.
In Ireland, trading conditions have continued
to be very difficult, although we did deliver
a number of operational successes. We
restructured the go-to-market model
which has reduced costs and positively
changed the way that we interact with
our customers. For the first time since
the acquisition in 2007, we launched new
brands in Juicy drench and Mountain
Dew, both of which have been successful;
additionally, we executed a price increase.
However the very tough macro trading
conditions have resulted in a 9.6%
revenue decline.
Sixteen months on since the acquisition,
and in its first full financial year, Britvic
France has delivered a very encouraging
high single digit revenue growth. Our key
syrup brands of Teisseire and Moulin de
Valdonne have both taken market share
and we have successfully introduced
Fruit Shoot into the market under the
Teisseire brand.
Our fourth operating division, Britvic
International, continued to grow. With
revenue up 12.8%, both the core business
and the more recent international franchise
agreements have performed well. The new
developments in our franchising activities,
particularly in the USA, are important steps
in leveraging the strong group-owned
brands to drive future revenue and
earnings growth.
Given the backdrop of rising raw material
costs we took action to cancel or defer
discretionary spend. As a result profit after
tax was up 0.9% but adjusted earnings
per share was down, due to the increased
number of shares resulting from the
equity-raising last year for the acquisition
of Britvic France.
Despite the raw material headwinds and
the difficult trading conditions we have
delivered a solid set of results. With
the board confident in the future cash
generation prospects of the business
we propose a final dividend of 12.6 pence
per share, leading to a full year increase of
6.0% on last year’s dividend. This will be
payable on 10 February 2012 to shareholders
on the register on 9 December 2011.
2012 looks likely to be another difficult
year in each of our operating territories.
Consumer confidence will continue to
be fragile as disposable incomes fall and
unemployment continues to rise. Our plans
are to take continued action on costs and
improve execution. We can do nothing to
change the general environment, but we
can and will continue to improve the
things we can control.
Our pricing growth ambition remains
unchanged as we look to mitigate the
impact of continued rises in raw materials.
Innovation remains a key part of our plans
and 2012 will see new innovation in all of
our operating territories as well as a focus
on continuing the momentum of last year’s
new launches. The international franchise
and distribution opportunities continue
to go from strength to strength and
offer significant growth prospects in the
medium-term.
Regardless of the uncertainty in our
markets, I believe that our great brands,
strong market positions, experienced
people and good record on innovation and
cost management will stand us in good
stead for the coming year. The business
is now more geographically spread and
the recent acquisition in France is going
well. The board would like to thank both
the management team and all of the
employees of Britvic for their commitment
to the business and their hard work at
this difficult time.
Gerald Corbett
Non-Executive Chairman
The financial year has seen both volume
and revenue growth in our GB, International
and French operating territories, with
overall group revenue growth combined
with cost control leading to group EBITA
up 4.3% to £138.1 million.
In total our group revenue was up 14.6%
year on year to just under £1.3 billion.
Underlying revenue was up 0.8%,
excluding the results from Britvic France
which we acquired in May 2010. This
performance was achieved against the
background of unprecedented increases
in raw material costs, an unhelpful summer
across Western Europe and the weaker
consumer environment.
GB revenue was up 2.7% in 2011 and over
the past two years has grown by 11.3%.
A strong carbonates performance saw
revenue growth of 7.3%, resulting in Britvic
growing its market value share against a
backdrop of increased competitor activity.
Our strategy of growing distribution in
the on-the-go channels and continued
innovation, whilst improving our supply
chain and business efficiency, is one
reason for our continued success in
this market.
10 Britvic plc Annual Report 2011
14:30 Heaton Park, Manchester
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17:45 The King’s Road, London
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business review overview
chief executive’s review
In spite of the challenging economic backdrop, Britvic
has increased group revenues by 14.6% and 0.8%
excluding France. Group EBITA of £138.1m was 4.3%
higher than last year.
The 2011 financial year was a challenging
period for the soft drinks markets. We
saw accelerated cost inflation in February,
which resulted in the company increasing
its raw material guidance from 5-6% to
9-11%. The timing of our GB pricing and
business plan negotiations was aligned
with the VAT increase in January and
consequently we were unable to offset
the increased costs in February. The
summer weather disappointed and
impacted soft drinks sales in each of
our markets. Furthermore the growing
economic challenges have altered the
spending power and behaviour of
consumers.
Nonetheless our GB, France and
International business units have all
delivered positive volume and revenue
growth. Britvic has benefited from the
diverse nature of its portfolio of great
brands and in GB saw strong growth
in carbonates which more than offset
declines in stills.
Our GB business delivered pricing growth,
with average realised price (ARP) up 1.9%,
reflecting our price discipline in the market.
We have also grown volumes by 0.8% in
the full year.
GB carbonates performance was strong
with revenue up 7.3% as we increased
our ARP by 4.2% and also increased
volumes by 3.0%. Our value share of the
GB carbonates market, as measured by
Nielsen, has increased by 20 basis points,
the result of our successful innovation,
including products such as Mountain Dew
Energy, execution of the on-the-go strategy
and holding our value share in the
competitive cola market place.
GB stills was impacted by consumers
choosing more affordable products given
the economic challenges that they face.
The poor summer impacted the number
of outdoor occasions, such as barbecues
and picnics at which drinks including
J20 and Fruit Shoot could be enjoyed.
Our stills performance was also impacted
by the transition from single to double
concentrate on the Robinsons brand.
We have great market leading stills
brands, all well positioned to take
advantage when the macro-economic
situation improves.
The economic challenges in Ireland,
combined with a poor summer, continued
to impact the Irish soft drinks market which
declined in volume and value, constraining
Britvic Ireland’s delivery at both revenue
and profit level. In the second half we
saw clear benefits from the significant
restructuring we have delivered in the Irish
business and we continue to review the
business. We remain fully committed to
the Irish business and firmly believe the
strength of our portfolio will deliver growth
when market recovery begins.
We have seen a strong year of performance
in Britvic France, delivering high single
digit revenue growth against a strong
comparative in the previous year which
benefited from stronger sales in the syrups
category during the hot summer. During
2011 we have seen the launch of Teisseire
Fruit Shoot and we are very encouraged
by its progress to date.
Britvic International saw double digit
revenue growth as we refocused our
resources behind the growing franchise
opportunities and away from the slower
growing Nordic region. We have seen
exciting results in our existing US and
Australian Fruit Shoot agreements and
we have announced further material
developments for the Fruit Shoot brand
in the US.
Britvic plc Annual Report 2011
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business review
chief executive’s review continued
The soft drinks market
Nielsen data reveals 2011 GB take-home
volume growth slowing down to 0.8%
versus its medium term average of 2-3%.
The soft drinks category was impacted
by poor weather across the summer,
lower spending and changing consumer
shopping decisions based on affordability,
which impacted the stills categories more
than carbonates. Despite this, the soft
drinks market remained resilient with
volume growing, whilst price went up.
The GB take-home soft drinks market
value increased by 5.8%, bolstered by
the increased VAT rate from 17.5% to
20.0% alongside manufacturers’ price
increases to offset increasing raw
material costs. All soft drinks categories
delivered value growth this year with the
exception of dairy and juice drinks.
Carbonates continued to grow ahead
of stills in both volume and value.
Carbonates volume growth was 3.6%
while value grew by an impressive 8.9%.
Within carbonates, cola which represents
50% of the category by volume, grew
volume by 3.4% and value by 6.9%.
The strongest performance was from
the glucose and stimulant category where
volume grew by an impressive 15.1% and
value by 15.9%, albeit it represents around
10% of the overall carbonates category
volume but more than double in value.
Stills volume declined by 1.8% and value
grew by 3.1%. Plain water, which is the
largest category, showed volume growth
of 1.0%, but the next three scale categories
all showed volume decline; pure juice down
5.1%, squash down 6.0% (impacted by
the move to double concentrate on the
number one squash brand Robinsons)
and juice drinks down 2.7%. These four
categories together make up over 80%
of the volume of the category and around
75% of the value.
Once again it was branded soft drinks
that drove GB market growth in 2011
and apart from June and July, soft
drinks have consistently been the best
performing major impulse category.
The GB pub and club soft drinks market,
as expected, continued to decline during
2011, with volume down 2.2% but value
up 1.3% (MAT to August). Managed pub
operators grew volume in soft drinks by
2.2% whilst the independent, leased and
tenanted pubs declined. In the latest
quarter to August, with the impact of
the poor summer, the GB pub and club
soft drinks market decline accelerated
with volume down 10.3% and value
down 6.3%.
In France market volume grew by 2.6%
and value grew by 4.3%. Britvic France
currently materially operates only in the
syrup and pure juice categories, which
were up by 2.0% and 4.9% in value
respectively. The fruit drinks category,
which we have just entered with Teisseire
Fruit Shoot, grew value by 9.5%.
Unsurprisingly given the difficult macro
economic background Irish consumers
continue to seek value and rein in overall
spending. The soft drinks market has
continued to decline with take-home
market volume down by 2.2% although
the value performance was slightly better
but down 1.6%. The pub and club channel
has been severely impacted with volume
down 8.7% and value down 9.5%.
Britvic’s strategy execution
Management has continued its focus
on developing the business in five
main areas:
1. Supporting and growing
our core GB brands
Brand creation and development are at
the heart of what we do at Britvic. Britvic
GB’s six core brands are Pepsi, 7UP,
Robinsons, Tango, Fruit Shoot and J2O.
They are the key profit drivers of our GB
business and therefore the brands to which
we allocate greatest resource. We continue
to invest in our strong portfolio of brands
through both innovation and marketing, to
ensure that they are preferred by consumers.
Examples of our successful core GB brand
performances are shown below:
Pepsi held its value share in the growing
cola category this year, building on
share gains in previous years; a strong
performance given the previously
documented competitive environment.
Pepsi Max has taken more share than
any sub brand within the cola category
in volume and value1. Our successful
marketing programmes continue to focus
on the Pepsi Max brand. This year we
successfully executed the ultimate test
of friendship – ‘are you the worlds best
mate?’ across a quarter of a billion packs.
Every hour consumers had the chance
to win either cash for themselves, or the
ultimate live music VIP experience for
them and their friends.
We continue to build on Pepsi’s long
heritage with music with the exclusive
three year partnership between Pepsi
and the world’s largest live music
promoter, Live Nation. In 2011 Pepsi
consumers enjoyed the chance to have
unrivalled access to the UK’s biggest
music festivals.
1 Source: Nielsen MAT value to October 2011
14 Britvic plc Annual Report 2011
Our on-the-go strategy continues to build
momentum as we leverage the strength
of Britvic’s broad carbonates and stills
portfolio, combined with strong consumer
engagement programmes such as
‘Reward Your Thirst’. These programmes
have proved to be especially successful
with both our impulse and foodservice
customers and entries into the on-pack
promotion have been 40% higher than
the next best campaign we have run.
Robinsons maintained its position as the
number one squash brand. Once again
we used the Wimbledon tennis association
with a major on-pack promotion giving
families street tennis kits to experience
the fun and excitement of Wimbledon in
the back garden or the local park.
The Fruit Shoot brand remains the number
one children’s drink brand1, with a choice
of variants and pack sizes to meet all
occasions. This year we launched Fruit
Shoot Hydro, designed to appeal to older
children. With a cooler image, a bigger
350ml bottle and a new formulation,
Hydro broadens the appeal of Fruit Shoot
beyond the younger age demographic.
The launch was supported by TV
advertising, a consumer engagement
programme called ‘champions of the
playground’ and great visibility in-store.
J2O was back on TV this year with the
‘Smile Tastebuds!’ campaign. Within the
take-home market, J2O continues to grow
volume share and hold value share but in
the current environment the premium juice
drinks category has been under pressure.
The heart of the brand is in the pub and
club channel, where despite the brand’s
premium price position and the consumer
looking for value, J2O remains the clear
number one juice drinks brand.
2. Innovation and product launches
2011 saw the introduction of new brands,
brand extensions and new pack formats
designed to deliver revenue and margin
accretion.
The North American brand Mountain
Dew was introduced in 2010 with a
new energy formulation, initially available
in 500ml for the on-the-go occasion.
Early success led us to launch new pack
formats in 2011 such as multi-pack PET
and a 440ml can, to allow the brand to
be available in new channels and meet
consumer demand. Mountain Dew
Energy has received numerous
accolades this year such as Product
Launch of the Year at the prestigious
Retail Industry Awards.
In 2010 across the low and no sugar
carbonates brands we introduced a bigger
600ml bottle offering better value across
Pepsi Max, Diet Pepsi, Tango and 7UP
Free. The momentum has continued into
2011 and has successfully contributed
in driving our carbonates ARP and
revenue growth. In September this year
we launched a major carbonates pack
initative with the launch of multipack cans
in a 250ml format, available in grocery
stores. Pepsi, Diet Pepsi and Pepsi Max
are available now and 7UP Free and
Tango will be available next spring.
Robinsons squash large packs went
through a substantial development by
moving from single to double concentrate.
This was supported by the ‘a lot from a
drop’ campaign on TV and digital media
across the summer. Our consistent
objective is to focus on driving value
and developing added value format
innovation that differentiates our
premium positioning. The Robinsons
brand continues to command a clear
number one position in the squash
market and for the third consecutive
year it was voted a ‘superbrand of the
year’ by the British public based on
quality, reliability and distinction.
We took the recently launched brand
of Lipton Ice Tea into new channels
with the introduction of a 250ml glass
bottle for the food service channel,
supplementing the 500ml on-the-go PET
bottle and 1.5 litre PET bottle for at-home
consumption. In take-home Lipton Ice Tea
has grown its market volume by 26.8%
versus a year ago and has a category
share of 64.5%.1
On the back of Mountain Dew Energy’s
success in the glucose category, we
have this year launched SoBe Pure Rush
which plays to the stimulant section
of the energy category. It is available in
an on-the-go 250ml can with two great
tasting flavours and contains no artificial
colours, flavours or preservatives. This
has driven SoBe Pure Rush to be an
early success in the forecourts and
high street channels.
To maximise the SoBe brand equity
to the full, we repositioned the PepsiCo
brand V Water to become part of the
SoBe family. The packaging has been
redesigned to improve visibility. New
flavours have been introduced and
reformulated to broaden its consumer
appeal with its focus on low-calorie
content. SoBe V Water has been the
fastest growing functional water this
year and has taken substantial share.
Finally in 2011 we pushed the
boundaries of soft drinks innovation
with Turbo Tango, the worlds first use
of a nitro-fuelled bottle, which provided
real fun and enjoyment for consumers
across the summer.
1 Source: Nielsen MAT value to October 2011
Britvic plc Annual Report 2011
15
business review
chief executive’s review continued
3. Britvic International
Britvic International is embarking on a
three-pronged growth strategy across
its core export and travel business,
European expansion through acquisition,
licensing and franchising.
In Australia Fruit Shoot was launched
with a concentrate model in November
2010. Under the agreement Bickford’s
manufacture, market and sell the brand,
with Britvic supplying key juice and
flavour ingredients. Specific formulations
and packaging solutions have been
designed for the Australian market
following extensive market research.
In its first year we have seen Fruit Shoot
achieve 17% market share1, making it the
number two children’s drink. As a measure
of its success and the confidence that both
Britvic and Bickford’s have in the brand
we are discussing how we may expand
the Fruit Shoot brand footprint in Australia.
In the US, Britvic began distributing
Fruit Shoot in 2008 with Buffalo Rock,
the fourth largest Pepsi bottler in the
States with an operational footprint in
Alabama. In 2009 Britvic signed a long
term distribution agreement with Buffalo
Rock to formalise the partnership and
capitalise on the early success of the
brand with US consumers. In our third
year in Alabama our growth is an
impressive 32%.
During 2011 Britvic commenced trials
with other US Pepsi bottlers and has
now concluded three further substantial
and material agreements for Fruit Shoot
in the US:
Gross & Jarson
We have signed an agreement with
Gross & Jarson, the third largest Pepsi
bottler in the US, to distribute Fruit Shoot
in Kentucky. Gross and Jarson currently
has the rights to distribute Pepsi as well
as Lipton, SoBe, Dole and the Starbucks-
branded iced coffee.
Pepsi Bottling Ventures (PBV)
We have signed a long-term agreement
for both the distribution and manufacture
of Fruit Shoot with PBV. The distribution
agreement cements the agreement
to distribute in both North and South
Carolina. The agreement to manufacture
in the US is an important next step in our
US development. During the second half
of 2012 Britvic will supply a proprietary
compound (concentrate) from our
facilities in Dublin. As well as producing
for the PBV territory it will also allow
Britvic to supply other US Fruit Shoot
bottlers, allowing us to move away from
shipping finished goods from the UK.
Pepsi Beverages Company (PBC)
We have reached agreement with Pepsi
Beverages Company (PBC) to distribute
Fruit Shoot in its Florida and Georgia
territories. PBC is the wholly-owned
manufacturing, sales and distribution
operating unit of PepsiCo and accounts
for approximately 75% of PepsiCo’s
North America volume.
We have also invested in our manufacturing
capability in Ireland to be able to supply
concentrate from a newly created company
in Ireland called Britvic Worldwide Brands
(BWB).
In the context of larger opportunities
that we believe exist within franchising
representing better utilisation of our
resources, we took the decision to
withdraw the Robinsons range from
the Nordics region during the period.
These new Fruit Shoot agreements,
coupled with the ongoing growth of our
existing agreements, represent a major
step forward in the development of our
international growth strategy. They build
on the success Fruit Shoot has achieved
in the UK where, since inception over
10 years ago, it has become a top-selling
children’s brand.1
4. Britvic Ireland
The economic challenges facing the
Irish consumer are well documented
and continue to have a negative impact
on the performance of Britvic Ireland.
Both volume and revenue have come
under pressure as the soft drinks market
has declined further. Despite these
challenges the business has stayed
focused. Firstly we implemented a
successful price increase for the first
time since acquisition. Secondly we
carried out the previously announced
restructuring, materially changing our
go-to-market model and enhancing our
execution efficiency. Lastly the business
launched innovation successfully.
Mountain Dew Energy and Juicy drench
were two new brands launched into the
Irish market with both delivering ahead
of expectations. MiWadi successfully
transitioned to double concentrate and
with our single serve pack innovation
on Pepsi we have moved our on-the-go
share in cola to its highest ever level.
5. Britvic France
Sixteen months on from the acquisition
of Britvic France, we are pleased with
the first full year of high single digit
revenue growth. The strong syrup brands
of Teisseire and Moulin de Valdonne have
both taken share gains this year as a
result of strong through the line execution
and innovation launched this year. Our
large private label juice business has also
performed well.
Teisseire Fruit Shoot was launched
successfully and supported by media and
sampling resulting in good distribution
levels and surpassing our expectations
in the first few months since launch.
The way in which the business has taken
Teisseire Fruit Shoot to market, combined
with the growing group capability, has
demonstrated we can develop our
business with new product introductions.
Paul Moody
Chief Executive
1 Nielsen grocery September 2011
16 Britvic plc Annual Report 2011
09:23 Cours Saleya, Nice
17
21:27 Bridge Street, Cardiff
18
business review
financial review
The following discussion is based on Britvic’s results
for the 52 weeks ended 2 October 2011, with all numbers
and comparisons quoted on a 52 week basis, before
exceptional and other items and on a constant
exchange rate basis.
Volumes and ARP are adjusted for the
impact of double concentrate on Robinsons
and MiWadi to provide meaningful
comparisons. France is included for the
full 12 month this year versus only four
months in the prior year.
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 – as previously
reported, from 2011, 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 this
number 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.
• Underlying return on invested capital
(ROIC) – ROIC is defined as operating
profit after applying the tax rate for the
period, stated before exceptional and
other items, as a percentage of invested
capital. Invested capital is defined as
non-current assets plus current assets
less current liabilities, excluding all
balances relating to interest bearing
liabilities and all other assets or liabilities
associated with the financing and capital
structure of the group and excluding any
deferred tax balances and effective
hedges relating to interest-bearing
liabilities. The measure excludes the
reduction in the asset base following
the impairments of intangible assets in
Ireland in 2010 to reflect capital initially
invested and subsequent returns. To aid
comparability year on year the results
and asset base of Britvic France have
been excluded as 2010 would include
only four months returns versus 12
months in 2011.
Overview
Britvic sold 2.1bn litres of soft drinks
in 2011 and grew revenues to almost
£1.3bn, 14.6% ahead of the previous
year. Underlying revenues excluding
France increased by 0.8% to over £1.0bn
and ARP was up by 1.9%. France had
a strong full year with revenues growing
in the high single digit.
Operating profit (EBITA) before exceptional
and other items for the period was up
4.3% to £138.1m. Adjusted EPS declined
by 8.2% versus last year’s 53 week
comparison with the weighted average
number of shares increase of 6.9% as
a result of the equity raised to fund the
acquisition of Britvic France in May 2010.
Britvic plc Annual Report 2011
19
business review
financial review continued
GB stills
Volume (million litres)
ARP per litre
Revenue
Brand contribution
Brand contribution margin
GB stills full year revenue declined by
3.2% to £351.2m with volumes down
by 4.1% and ARP up by 1.0%. During
the course of the year we experienced
volume and revenue loss as a result of:
i) The move from single to double
concentrate on the Robinsons brand
which saw some transitional volume
loss as a result of our execution in
some retailers, and from our decision
ahead of the switch to reduce
promotional activity on the scale
one litre single concentrate pack.
52 weeks ended
2 Oct 2011
£m
52 weeks ended
26 Sep 2010
£m
% change
actual
exchange rate
493.5
71.2p
351.2
150.1
42.7%
514.4
70.5p
362.7
169.0
46.6%
(4.1)
1.0
(3.2)
(11.2)
(390)bps
The impact of the higher raw material
inflation on stills, compared to carbonates,
combined with negative channel mix saw
brand contribution margin reduce by 390bps.
We have a powerful portfolio of brands
in the stills segment such as Robinsons,
the number one squash brand; J20, the
leading adult soft drink; and Fruit Shoot,
the number one children’s brand. This
means we are well positioned with our
portfolio to benefit when economic
conditions improve.
ii) The poor summer weather and in
particular the month of June where the
total soft drinks market as measured by
Nielsen contracted by 8.2%. This is
a key period for the Robinsons brand
given its strong association with the
Wimbledon tennis event, but also for
the other stills brands which typically
benefit from outdoor social events
associated with hot summer weather.
iii) The decline of the stills category as
a result of the weaker economy on
consumers both in take-home and in
the pub and club channel where the
latest quarter market data to August
shows soft drinks were down by
10.3% in volume. Britvic continues
to outperform in the pub and club
channel, but with carbonates taking
share from stills.
GB carbonates
Volume (million litres)
ARP per litre
Revenue
Brand contribution
Brand contribution margin
52 weeks ended
2 Oct 2011
£m
52 weeks ended
26 Sep 2010
£m
% change
actual
exchange rate
1,130.5
44.5p
502.6
189.1
37.6%
1,097.4
42.7p
468.4
183.5
39.2%
3.0
4.2
7.3
3.1
(160)bps
We delivered full year volume growth
of 3.0% against a very strong comparative
of 10.2% in the previous year. This year’s
performance is especially pleasing given
the strong ARP growth of 4.2%, reflecting
our price discipline against the backdrop
of a competitive market place. Revenue
grew by 7.3% taking the GB carbonates
segment to over £0.5bn revenue for the
first time.
Brand contribution of £189.1m
represented growth of 3.1% on the
previous year. Brand contribution margin
declined by 160bps as a result of the
increased raw materials cost, although we
have offset some of the impact through
the success of our innovation such as
Mountain Dew Energy and continued
growth in our on-the-go strategy.
Mountain Dew Energy is now the fastest
growing brand in the glucose category,
Pepsi Max continues to lead growth in
the cola segment and our overall share of
the on-the-go market has grown. We have
grown our take home value share of the
carbonates segment by 20bps and held
our value share in cola.
20 Britvic plc Annual Report 2011
52 weeks ended
2 Oct 2011
£m
52 weeks ended
26 Sep 2010
£m
% change
actual
exchange rate
37.8
77.0p
29.1
10.9
37.5%
35.0
73.7p
25.8
9.0
34.9%
8.0
4.5
12.8
21.1
260bps
Fruit Shoot volume in Alabama, working
with our partner Buffalo Rock, has grown
by 32% in the latest year through rate
of sales improvements. In Australia,
our partner Bickford’s has made Fruit
Shoot the number two children’s drink
with a 17% market share1. More recently,
PBV (Pepsi Bottling Ventures) has been
distributing Fruit Shoot in the North and
South Carolinas where they have now
reached 2,200 outlets, up 30% since
May 2011.
The new announcements of agreements
with Gross & Jarson to distribute in
Kentucky, long term distribution and
importantly in-market production with
PBV and the distribution agreement
for Florida and Georgia with PBC (Pepsi
Beverage Company) will accelerate the
growth of our international plans over
the medium term.
1 Nielsen grocery September 2011
International
Volume (million litres)
ARP per litre
Revenue
Brand contribution
Brand contribution margin
2011 was another year of double-digit
revenue growth for Britvic International
with volumes and ARP all performing
strongly. Its performance in the year
enjoyed continued growth of Fruit Shoot
in the Netherlands, positive growth in
our scale travel business despite all the
challenges that this sector faces and good
growth in export. Additionally we launched
Fruit Shoot in Belgium towards the end of
our financial year. We made a strategic
investment decision to withdraw Robinsons
from the Nordics region which we entered
in 2006, as we reallocated resources to
the bigger opportunity in franchising. The
impact of this decision in the full year was
offset by the growth of existing franchise
and distribution agreements for Fruit Shoot.
Ireland
Volume (million litres)
ARP per litre
Revenue
Brand contribution
Brand contribution margin
52 weeks ended
30 Sep 2011
£m
52 weeks ended
30 Sep 2010
£m
% change
actual
exchange rate
% change
constant
exchange rate
210.8
58.7p
162.8
57.8
35.5%
229.1
58.4p
179.0
64.1
35.8%
(8.0)
0.5
(9.1)
(9.8)
(8.0)
0.0
(9.6)
(9.8)
(30)bps
(10bps)
Note: Volumes and ARP include own-brand soft drinks sales and do not include third party drink sales included within total revenue and brand contribution.
Britvic Ireland continues to face very
challenging macro economic conditions
and this, combined with disappointing
weather, has led to the total soft
drinks market continuing to decline.
As measured by Nielsen, the take-home
market performed better than pub and
clubs but nevertheless is in decline.
Soft drinks volume in the pub and club
channel has declined in the latest market
data by 8.7%.
Britvic Ireland revenues in the period were
down by 9.6% on a constant exchange
rate basis with volumes down by 8.0%.
ARP was flat, despite successful delivery
of the price increase and margin accretive
innovation launched this year, due to
negative channel mix. Mountain Dew
and Juicy drench were both launched
this year and have delivered ahead of our
expectations. MiWadi, Ireland’s number
one squash brand, transitioned from
single to double concentrate successfully
and has exceeded our expectations.
We have also successfully driven our
share of the cola on-the-go market with
single serve innovation launched on
Pepsi this year. The restructuring and new
go-to-market model has been embedded
well and in part has been a vehicle of
success for our innovation launches.
Despite these successes the market
challenges have meant that Britvic
Ireland’s performance has declined
year on year.
Britvic plc Annual Report 2011
21
business review
financial review continued
France
Volume (million litres)
ARP per litre
Revenue
Brand contribution
Brand contribution margin
This year is the first full financial year
incorporation of results from Britvic
France versus last year’s four months
inclusion from when we acquired the
business on 28 May 2010.
52 weeks ended
30 Sep 2011
£m
28 May 2010 to
30 Sep 2010
£m
286.0
85.6p
244.7
62.0
25.3%
104.5
81.5p
85.2
24.1
28.3%
Teisseire Fruit Shoot was successfully
launched this year and is performing
ahead of our expectations in both the
distribution and the rate of sale we
have achieved to date. The launch was
supported by a comprehensive through
the line marketing plan.
Britvic France had a strong year with full
year revenue showing high single digit
growth. This year’s brand contribution
margin of 25.3% is in line with expectation
and reflects the higher input cost inflation
that the business unit incurred compared
to the GB and Irish businesses, primarily
due to its greater exposure to ingredients
such as sugar and juice. Furthermore last
year’s margin was unusually high due to
the growth of syrups, which benefited
from the very hot summer in 2010. Both
Teisseire and Moulin de Valdonne have
gained market share year on year.
22 Britvic plc Annual Report 2011
52 weeks ended
2 Oct 2011
£m
52 weeks ended
26 Sep 2010
£m
% change
actual
exchange rate
8.0
111.1
121.7
94.1
334.9
62.8
5.0%
10.4
94.9
116.2
98.6
320.1
56.7
5.3%
23.1
(17.1)
(4.7)
4.6
(4.6)
(10.8)
(30)bps
Management took strong action to cancel
or defer discretionary expenditure where
it was appropriate to mitigate an element
of the raw material cost increase. Within
overheads and other there is a reduction
in the cost of performance incentives as
a result of the lower performance outturn
versus scheme targets.
The group A&P as a percentage of sales
has fallen by 30bps, however in absolute
spend we increased expenditure by 10.8%.
The first time full year inclusion of Britvic
France, which has a material proportion
of private label revenues has resulted in
the lower percentage. The GB A&P as
a percentage of sales was unchanged
versus last year.
Fixed costs
Non-brand A&P
Fixed supply chain
Selling costs
Overheads and other
Total
Total A&P investment
A&P as a % of net revenue*
(*excludes 3rd party revenue)
Fixed costs increased by 4.6% in the
period wholly down to first time inclusion
of France. Without France the underlying
fixed costs were lower than last year.
We have continued to invest in
below-the-line costs to support the
medium term growth in the top line and
margin. This year we have continued to
invest in customer management resource
and point-of-purchase spend to drive our
execution excellence. Additionally, as
previously communicated, we continued
to invest to build group capability in areas
such as franchising.
13:26 The Esplanade, Southend
23
business review
financial review continued
Exceptional and other items
In the period Britvic has accounted for
net £25.2m of pre-tax (£19.5m post tax)
exceptional and other costs, with cash
exceptional items comprising £18.2m.
These include:
• A curtailment gain of £17.7m arising
due to the closure to future accrual
of the GB defined benefit pension
scheme. Offsetting the gain is a one
off transitional payment of 10% of final
salary to pension members of £2.9m
and consultancy costs of £1.6m.
Therefore the net gain is £13.2m.
• Total restructuring costs of £25.0m,
relating to:
– Britvic Ireland restructuring costs,
principally redundancy costs.
– Redundancy and restructuring costs
relating to the separation of functional
support structures between group
and the GB business unit.
– Outsourcing of the group data centre
involving dual running and temporary
infrastructure costs.
– Costs of outsourcing our GB full
service vending operation. This
includes exit and redundancy costs
and a write down of the asset values
held on the balance sheet.
• Costs associated with the relocation
of the Britvic head office of £1.3m.
• Following the successful refinancing
of the group’s committed bank facility
in March 2011, the write off of £1.5m
of unamortised 2009 refinancing fees.
This is included within exceptional
and other finance costs.
• Within exceptional and other items
we include the fair value movement
of financial instruments where hedge
accounting cannot be applied. This
is principally made up of a number
of share swaps to satisfy employee
incentive share schemes and an
interest-rate swap. The value of the
non cash net movement is a loss of
£10.6m (£2.9m at interim 2011).The
fair value movement of the interest
rate swap is included within
exceptional and other finance costs.
The full year exceptional and other costs
are higher than the interim due to the
new exceptional items of the relocation
of the Britvic head office, separation of
functional support structures between
group and the GB business unit and the
increased non cash movement on financial
instruments, specifically the share hedge.
Interest
The net finance charge before exceptional
and other items for the 52 week period
for the group was £29.9m compared with
£25.0m in the same period in the prior
year. The higher interest charge is reflective
of the financing of the debt element of
the group’s acquisition of Britvic France
for a full year and higher commitment
fees reflecting the increased headroom
generated by the private placement
proceeds raised in December 2010 and
the completion of a larger £400m bank
facility in March 2011.
Taxation
The 52 week tax charge of £27.2m before
exceptional and other items represents an
effective tax rate of 25.9%, a decrease on
last year 52 week actual of 0.7% primarily
due to the lower current tax rate in the UK
and reduced future tax rate for deferred
tax purposes.
Earnings per share
Basic EPS (after exceptional and other
items) as defined by IFRS for the period
is 24.3p compared with the actual (21.4)p
for the 53 week period last year.
Adjusted earnings per share for the period,
before exceptional and other items and
adding back acquisition related amortisation,
was 33.7p, down 8.2% versus 36.7p for
2010 on a 53 week constant currency basis.
16:30 Cathedral Lanes, Coventry
24
Capital employed
Non-current assets remained broadly
flat in the period, £680.3m compared
to £680.1m in the prior period.
Depreciation increased in the period by
£2.7m to £35.6m. Current assets also
increased from £366.6m to £384.4m
driven principally by an increase in trade
and other receivables. Current liabilities
have increased from £366.8m to £390.0m
driven principally by an increase in trade
and other payables. Note some prior year
asset numbers have been restated
following the finalisation of the fair value
allocation of Britvic France.
Underlying ROIC has decreased to
21.9% from 22.4% and excludes the
impact of Britvic France as the business
was acquired part way through the year
in 2010. The measure will be rebased on
lapping a full year of returns in 2012.
Dividends
The board is recommending a final
dividend for 2011 of 12.6p per share.
Together with the interim dividend of
5.1p per share paid on 8 July 2011,
this gives a total dividend for the year
of 17.7p per share, an increase of 6.0%
on the dividend paid last year. Subject
to approval at the AGM, the total cash
outflow of the dividend for the financial
year is estimated to be £41.9m and the
final dividend will be paid on 10 February
2012 to shareholders on record as at
9 December 2011.
Cash flow and net debt
Underlying free cash flow, defined above,
was £59.3m in 2011 and £67.8m in 2010.
2010 was a 53 week trading year
compared to 52 week for 2011.
The difference in year on year cash flow
is due to an increased interest cost with
the first full year inclusion of debt used
to part finance the acquisition of Britvic
France, fees associated to the US private
placement and the new bank facility
arranged during the year. Additionally
capital expenditure has increased in
the period.
At 2 October 2011, the group’s non-
adjusted net debt was £530.2m compared
to £515.9m at 3 October 2010. The adjusted
net debt (taking into account the foreign
exchange movements on the derivatives
hedging our US private placement debt)
at 2 October 2011 is £452.0m.
Treasury management
The financial risks faced by the group
are identified and managed by a central
treasury department. The activities of
the treasury department are carried
out in accordance with board approved
policies and are subject to regular Audit
and Treasury Committee reviews. The
department does not operate as a
profit centre.
Key financial risks faced by the group
that are managed by treasury include
exposures to movements in interest
rates and foreign exchange. The treasury
department is responsible for the
management of 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 in line with policies
set by the treasury department and
approved by the board of directors. No
derivative is entered into for trading or
speculative purposes. The group has
a number of derivatives which are
economically effective, however do not
meet the requirements of IAS39 for hedge
accounting and movements in the fair
value of these derivatives are therefore
recorded in the profit and loss account.
At 2nd October 2011, the group’s
non-adjusted net debt of £530.2m
(excluding derivative hedges) consisted
of £2.2m drawn under the group’s
committed bank facilities, £574.4m of
private placement notes and £1.2m of
finance leases. This was netted off with
around £43.0m of surplus cash and
£4.6m of issue costs of loans.
Britvic plc Annual Report 2011
25
The BPP is a partner in Britvic SLP and
is entitled to a share of the profits of the
partnership over the next 15 years. At the
end of this period, the partnership capital
allocated to the BPP will be changed to an
amount equal to any funding deficit of the
BPP at that time, up to a maximum value
of £25m. At that point the group may be
required to transfer this amount in cash
to the BPP.
Both Britvic SLP and Britvic PP are
consolidated by the group. The investment
held by the BPP in Britvic SLP does not
represent a plan asset for accounting
purposes and is therefore not included
in the fair value of plan assets. The share
of profits of Britvic SLP received by the
BPP will be accounted for by the group as
contributions when paid. The properties
transferred to Britvic PP continue to be
included within the group’s property, plant
and equipment on the balance sheet and
the group retains operational flexibility
over the transferred properties, including
the ability to substitute the properties
held by Britvic PP.
In addition to the expected partnership
income of at least £5m per annum, the
group will make payments to the BPP
of £5m by 31 December 2011, £7.5m by
31 December 2012 and £15m per annum
by 31 December of each year from 2013
to 2017. In the event that further tranches
of the proposal do not proceed, the BPP
will instead receive total contributions of
£10m by 31 December 2011, £12.5m by
31 December 2012 and £20m per annum
by 31 December of each year from 2013
to 2022 inclusive.
The amount recognised as an expense
in relation to the BPP defined contribution
scheme in the income statement for 2011
was £5.8m (2010: £3.6m).
In Northern Ireland, the Britvic Northern
Ireland Pension Plan (BNIPP) was closed
to new members on 28 February 2006,
and since this date new employees have
been eligible to join a stakeholder plan with
Legal & General. Employees of C&C group
transferred out of BNIPP on 30 June 2008
with the bulk transfer of assets for the C&C
employees taking place in December 2009.
The latest formal actuarial valuation for
contribution purposes was carried out as
at 31 December 2008 and as a result
shortfall correction additional contributions
of £90,000 per month until 31 December
2010, and £125,000 per month from
1 January 2011 to 31 December 2019
are being paid in accordance with the
recovery plan dated December 2009.
In the Republic of Ireland, employees
continued to participate in a number of
C&C Group pension schemes following
the acquisition until transferring into two
newly formed pension plans called the
Britvic Ireland Defined Contribution
Pension Plan and the Britvic Ireland
Defined Benefit Pension Plan (BIPP) on
1 September 2008. Since 1 March 2006
new employees have been offered
membership of the defined contribution
plan in the first instance, with the ability
to transfer into the defined benefit plan
for future service benefits after a period
of five years. The first formal actuarial
valuation was carried out at 31 December
2009 and is still being finalised.
The amount recognised as an expense
in relation to the Irish defined contribution
schemes in the income statement for 2011
was £0.6m (2010: £0.4m).
business review
financial review continued
Pensions
The group principal pension scheme for
GB employees, the Britvic Pension Plan
(BPP), has both a defined benefit and
a defined contribution section. The defined
benefit section of the BPP was closed
to new members on 1 August 2002
and, following consultation with GB
employees, was closed to future accrual
for active members with effect from
10 April 2011, with members moving
into the defined contribution section for
future service benefits.
Contributions are paid into the plan in
accordance with the recommendations
of an independent actuary and as outlined
in the schedule of contributions. The latest
formal actuarial valuation for contribution
purposes was carried out as at 31 March
2010. Following the conclusion of the
previous triennial valuation, the final annual
payment of £10m contributions in respect
of the funding shortfall, outlined in the
recovery plan, was made by 31
December 2010. As a result of the latest
formal valuation, a proposal was set out
under which a monetary contribution or
contributions will be made to enable the
Trustee of the BPP to acquire an interest
in a limited partnership. This partnership
interest is intended to provide the Trustee
with an income of at least £5m per annum
in each year over a 15 year period together
with a final payment of up to a maximum
of £105m to the extent required under
funding conditions to be agreed to
the satisfaction of the Trustee and the
company, at the end of the 15 year period.
A first tranche of this proposal was
completed prior to the period end. Britvic
Scottish Limited Partnership (Britvic SLP)
and Britvic Property Partnership (Britvic PP)
were established by the group and
properties with a market value of £28.6m
were then transferred to Britvic PP and
leased back to Britvic Soft Drinks Limited.
Britvic SLP holds an investment in Britvic PP.
26 Britvic plc Annual Report 2011
14:59 Back garden, Bath
27
business review
corporate responsibility
Corporate Responsibility (CR) remains an important
part of the way that we do business at Britvic.
The past year has been focused on
embedding our new strategic vision:
‘to be a progressive, sustainable,
responsible company’. The table opposite
shows a snapshot of our performance
against the targets that we set ourselves
last year. While these targets were
specific to the GB business unit, we
are now focused on embedding CR
across the Britvic group.
A comprehensive overview of our
CR achievements 2010-2011 will be
published in our 2011 Corporate
Responsibility Report which will be
available in January 2012 from the
company or on our website:
www.britvic.com.
Progressive
We are committed to harnessing the
power of our brands to help address
relevant social and environmental issues.
Health remains high on the national agenda
and in the UK, we pledged our support to
the government’s Responsibility Deal which
was launched in March, signing up to a
number of collective pledges. As a result
of this, we launched an employee health
and wellbeing programme ‘wellness@
work’ this year, reviewed our catering
provision to encourage healthier choices,
and ran a series of physical activity
challenges for our employees.
We also continued to support the
government’s Change4Life programme,
in particular its Great Swapathon and
Really Big Summer Adventure, and
continued to promote healthy and active
lifestyles through our own marketing
programmes, including Robinson’s Street
Tennis and Fruit Shoot Champion of the
Playground. In line with our targets, we
also launched two new low sugar products
– Mountain Dew Sugar Free and Fruit Shoot
Hydro for children.
28 Britvic plc Annual Report 2011
We recognise that packaging waste
is a social and environmental issue and
while we were unable to deliver the
pilot recycling scheme we had planned,
we are actively exploring other options.
Sustainable
In order to ensure a sustainable future
for our business we need to invest and
innovate to minimise our impacts. This
year we put in place a new sustainability
committee to look at longer term targets
and programmes. In 2011 we continued
to make good progress and achieved
reductions in our GB water use of 4%
absolute and in CO2 emissions of 2.5%,
although we narrowly missed our liquid
effluent waste ratio target. Two more of
our GB factories achieved zero waste to
landfill and we also contributed to WRAP’s
targets around ‘reduce, reuse and recycle’.
Responsible
As a responsible employer we are
committed to having a positive impact
on both our employees and our
communities. In the past year we have
grown our employee volunteering
participation by 5% and will continue
to support this important activity. Our
‘enterprise training days’ for teachers
are now running across Britvic Learning
Zones at three of our factory sites –
Beckton, Leeds and Norwich - and
we were awarded a prestigious IEBE
(Institute for Education Business
Excellence) award for the scheme.
Additionally, by promoting payroll giving
as an effective tax free way to support
charities and communities, we increased
our donations in this way and were
awarded the National Payroll Giving
Silver Mark award.
Introduce at least two new low sugar
products as part of a balanced portfolio
Promote healthier behaviours by
launching at least two marketing
initiatives encouraging active lifestyles
Work with the Department of Health
to participate in a large scale
Change4Life initiative
Support the delivery of the PepsiCo
health and wellbeing manifesto pledges
relating to Britvic’s PepsiCo portfolio
Contribute to WRAP’s Courtauld II
industry wide targets to reduce, reuse,
recycle by end 2012 versus 2009
Commit to two more factories
sending zero to landfill
Continue to roll out our new
more efficient chiller equipment
Continue to support our charitable
partners on relevant health,
social and environmental issues
Launch an employee health and
wellbeing programme, improving
work/life balance throughout
the business
Encourage personal growth through
continued support for employee
volunteering by increasing the
number of those who participate
Support disadvantaged children
by increasing our fundraising
for Barnardo’s
Work with the AIM-Progress group
to ethically audit our suppliers and
create appropriate action plans
Contribute to an absolute target to
reduce water use by 20% by 2020
compared to 2007, with water ratio
reduction of 4% targeted versus 09/10
Aim to reduce CO2 emissions by
30% by 2020 compared to 1990
per tonne of product, with a 2.5%
reduction targeted versus 09/10
Deliver at least 18 teacher, school
and NEETs programmes across
our three Britvic Learning Zones
Reduce liquid (effluent) waste
ratio by 2.5% versus 09/10
Encourage on-the-go recycling
by piloting a branded reverse
vending machine project
business review
business resources
• 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.
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 Great Britain 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 Great Britain and Ireland, access
to all new carbonated drinks developed
by PepsiCo for distribution in Great Britain
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.
Britvic plc Annual Report 2011
29
business review
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 here
represent the principal uncertainties that
may impact on our ability to effectively
deliver our strategy in the future.
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. 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.
11:40 The Golden Mile, Blackpool
30
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.
4. 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.
5. 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 well as possible. New
employees of the company are enrolled
into a defined contribution scheme that
limits future liabilities. The GB defined
benefit scheme for existing members
was closed to future accrual in April 2011.
6. 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.
7. Failure to deliver the proposed
synergies in France.
Risk – Failure to deliver the cost and
revenue synergies from the acquisition
of Britvic France.
Mitigation – An integration plan has
been adopted with dedicated resources
to oversee the integration, reporting
regularly to the board.
8. Restrictions on business as a result
of the increased Olympic legislation
for the London 2012 games.
Risk – Restricted ability to advertise Britvic
products in designated Olympic zones.
Mitigation – The group has undertaken
a comprehensive exercise to fully
understand the restrictions in place and
has developed plans to maximise the
opportunities available, whilst complying
with the legislative restrictions in place.
B) Risks relating to the market
1. A change in consumer preferences
and spending on soft drinks.
Risk – Consumers may decide to switch
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.
2. 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 through
a number of organisations such as the
British Soft Drinks Association (BSDA)
and the Food and Drink Federation (FDF)
in the UK, to ensure it can fully participate
in the future development of legislation.
3. 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 offsetting
as much of the cost as possible through
increasing prices to customers.
C) Risks relating to the ordinary
shares
There are risks arising out of an investment
in ordinary shares because of:
1. Actions by the group’s competitors.
Risk – Competitors outperform Britvic in
the market and so grow their business at
the expense of Britvic.
Mitigation – Britvic benchmarks its
operations and processes against
recognised best practice and invests
in its people resources, processes and
assets to maximise performance.
2. US holders potentially not being
able to exercise pre-emptive rights.
Risk – Under certain circumstances US
shareholders may not be able to take part
in equity rights issues.
Mitigation – Britvic Investor Relations
actively markets the Britvic investment
case across both European and North
American markets in order to promote
diversification of where shares are held,
thereby reducing the concentration in
any one country.
Britvic plc Annual Report 2011
31
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Britvic plc Annual Report 2011
33
governance
board of directors
2
5
3
6
1
4
7
34 Britvic plc Annual Report 2011
1 Gerald Corbett
3 John Gibney
6 Michael Shallow
Independent Non-Executive Director
Michael Shallow was appointed a
Non-Executive Director on 24 November
2005 and chairs the Audit Committee.
He is also a member of the Nomination
and Remuneration Committees. In
addition, he is a Non-Executive Director
of Domino’s Pizza UK & IRL plc and
served as Non-Executive Director of
Spice plc from 2006 until its acquisition
by Cinven in December 2010. Michael
was Finance Director of Greene King plc
from 1991 to 2005 and, prior to that, he
was an associate partner with Accenture.
7 Bob Ivell
Senior Independent
Non-Executive Director
Bob Ivell was appointed a Non-Executive
Director on 24 November 2005 and is the
company’s Senior Independent Director.
He chairs the Remuneration Committee
and is a member of the Audit and
Nomination Committees. He is also
currently the Chairman of David Lloyd
Leisure and Executive Chairman
of Mitchells and Butlers plc.
During the 1980s, Bob was the
Managing Director of Beefeater and
was also on the board of Scottish &
Newcastle plc as Chairman of the Retail
Division between 1999 and 2004 and
was Executive Chairman of Regent Inns
PLC between 2004 and 2008.
Group Finance Director
John Gibney was appointed Finance
Director in 1999 and is responsible for
finance, legal, estates, risk management
and business transformation.
Prior to joining Britvic, he was Senior
Corporate Finance & Planning Manager
for Bass PLC, and prior to that role,
Finance Director and subsequently
Deputy Managing Director of Gala Clubs.
4 Ben Gordon
Independent Non-Executive Director
Ben Gordon was appointed a Non-
Executive Director on 15 April 2008.
He is also a member of the Audit,
Nomination and Remuneration
Committees. He is the former Chief
Executive of Mothercare plc and former
Senior Vice President and Managing
Director, Disney Store, Europe and
Asia Pacific. Ben has also held senior
management positions with WHSmith
group in the UK and the USA and L’Oreal
S.A. in France and the UK. He has
an MBA from INSEAD.
5 Joanne Averiss
Non-Executive Director
Joanne Averiss was appointed a
Non-Executive Director on 18 November
2005 and is the PepsiCo Nominee Director.
She has been a member of the PepsiCo
legal department since 1990, holding
a series of positions in the UK and the
US and most recently acting as the Head
of Legal (UK and Europe) for PepsiCo
International’s food and snack beverages
division. Joanne is also a Trustee and
Chair of the Mesen Educational Trust.
Independent Non-Executive Chairman
Gerald Corbett has been Non-Executive
Chairman of the company since
24 November 2005. He chairs the
Nomination Committee and is a member
of the Remuneration Committee. Gerald
is also Chairman of Moneysupermarket.
com and of the Royal National Institute
of the Deaf. He is also a Non-Executive
Director of the investment and stock
broking business, Numis Securities and of
Towry Holdings Limited.
Gerald was a Non-Executive Director
of Greencore Group plc from 2004 until
February 2010, the Chairman of SSL
International plc from 2005 until October
2010 and of the Woolworths Group plc
from 2001 to 2007, Chief Executive of
Railtrack plc from 1997 to 2000, Group
Finance Director of Grand Metropolitan
plc from 1994 to 1997 and Group
Finance Director of Redland plc between
1987 and 1994. He was a Non-Executive
Director of the property group MEPC plc
from 1995 to 1998 and Burmah Castrol
plc from 1998 to 2000 and the High
Sheriff of Hertfordshire between April
2010-11.
2 Paul Moody
Chief Executive
Paul Moody became Chief Executive
upon the company’s flotation in
December 2005 and is responsible
for the day-to-day running of the business.
Prior to that he had held a number of
senior roles including Managing Director
and Chief Operating Officer. He joined
Britvic in 1996 as Director of Sales for
grocery multiples (supermarkets) having
previously worked for Golden Wonder
and Pedigree Pet Foods. Paul is also
currently a Non-Executive Director of
Johnson Service Group PLC, Chairman
of business4Life, and Immediate Past
President and a Director of The British
Soft Drinks Association Limited.
Britvic plc Annual Report 2011
35
governance
directors’ report
For the 52 weeks ended 2 October 2011
The directors are pleased to present their report and the consolidated financial statements of the company and its subsidiaries
for the 52 weeks ended 2 October 2011.
Principal activities
The group trades principally as a manufacturer and distributor of soft drinks.
Business review
A detailed review of the group’s activities and of future plans is contained within the Chairman’s Statement on page 10 and the
Chief Executive’s Review and Business Review on pages 13 to 31. The information contained in those sections fulfils the requirements
of the Business Review, as required by Section 417 of the Companies Act 2006 and should be treated as forming part of this report.
Results and dividends
The group’s profit for the 52 weeks ended 2 October 2011 before taxation attributable to the equity shareholders amounted
to £79.9 million (2010: loss of £28.8 million) and the profit after taxation amounted to £58.4 million (2010: loss of £48.2 million).
An interim dividend of 5.1 pence (2010: 4.7 pence) per ordinary share was paid on 8 July 2011.
The directors are proposing a final dividend for the 52 weeks ended 2 October 2011 of 12.6 pence (2010: 12.0 pence) per ordinary share.
This will be paid on 10 February 2012 to shareholders on the register at close of business on 9 December 2011, subject to shareholder
approval.
Directors
The following were directors of the company during the 52 weeks ended 2 October 2011: Gerald Corbett, Paul Moody, Joanne Averiss,
John Gibney, Ben Gordon, Bob Ivell and Michael Shallow.
Subject to company law and the company’s articles of association (the ‘articles’), the directors may exercise all of the powers of the
company and may delegate their power and discretion to committees. The Executive Committee is responsible for the day-to-day
management of the group.
The articles give the directors power to appoint and replace directors. Under the terms of reference of the Nomination Committee,
any appointment must be recommended by the Nomination Committee for approval by the board. The articles also require directors
to retire and submit themselves for election to the first annual general meeting following appointment and to retire at the annual
general meeting held in the third calendar year after election or last re-election, but to comply with provision B.7.1 of the UK Corporate
Governance Code published by the FRC in June 2010 all of the directors will submit themselves for re-election at the forthcoming
annual general meeting (AGM). Their biographical details are set out on page 35 of this report.
Directors’ interests
The directors’ interests in ordinary shares of the company are shown within the Directors’ Remuneration Report on pages 45 to 53.
No director has any other interest in any shares or loan stock of any group company.
Other than Joanne Averiss, who is a director of a number of PepsiCo’s subsidiaries, no director was or is materially interested in
any contract other than his service contract, subsisting during or existing at the end of the 52 weeks ended 2 October 2011, which
was significant in relation to the group’s business. Further details of Joanne Averiss’ appointment are set out on page 40 in the
Corporate Governance section of the Annual Report.
Directors’ liabilities
As at the date of this report, indemnities are in force under which the company has agreed, to the extent permitted by law
and the company’s articles, to indemnify:
• The directors, in respect of all losses arising out of, or in connection with, the execution of their powers, duties and responsibilities
as directors of the company or any of its subsidiaries; and
• Directors of companies which are corporate trustees of the group’s pension schemes against liability incurred in connection
with those companies’ activities as trustees of such schemes.
Directors’ remuneration
The Remuneration Committee, on behalf of the board, has adopted a policy that aims to attract and retain the directors needed
to run the group successfully. The directors’ remuneration report is shown on pages 45 to 53.
Annual general meeting
Details of the company’s forthcoming AGM are set out in a separate circular which has been sent to all shareholders with this report.
36 Britvic plc Annual Report 2011
Employee involvement
The group uses a number of ways to engage employees on matters that impact them and the performance of the group. These
include annual roadshows at key sites by members of the Executive Committee, regular team meetings, the publication of a
bi-monthly internal newsletter, ‘Britvic Life’, together with the ‘b.link+’ intranet site providing easy access to the latest company
information as well as company policies and vacancies. The company organises quarterly formal business performance updates for
employees, which are cascaded by line managers. An Employee Involvement Forum was established in 2004 through which nominated
representatives ensure that employees’ views are taken into account regarding issues that are likely to affect them. In addition, where
the group has entered into a recognition agreement with a trade union, it fulfils its obligations to consult and negotiate accordingly.
The group approaches these relationships from a partnership perspective. A robust employee opinion survey process is also in place
to ensure that employees are given a voice in the organisation and that the group can take action based on employee feedback. This
covers a variety of topics including leadership and line management, employee wellbeing, career development, training, communications
and corporate responsibility commitments.
All eligible employees are able to participate in the Britvic Share Incentive Plan which gives them the opportunity to purchase ordinary
shares in the company using money deducted from their pre-tax salary, and to receive matching shares from the company, up to a
maximum of £75 per four week pay period until 8 December 2011 and £50 per four week pay period from 9 December 2011.
Equal opportunities
The group is committed to providing equality of opportunity to all employees without discrimination and applies fair and equitable
employment policies which ensure entry into and progression within the group. Appointments are determined solely by application
of job criteria and competency.
Disabled persons
Disabled persons, whether registered or not, are accorded equal opportunities when applying for vacancies, with due regard to their
aptitudes and abilities. In addition to complying with legislative requirements, procedures ensure that disabled employees are fairly
treated in respect of training and career development. For those employees who become disabled during the course of their employment,
the group is supportive, whether through retraining or redeployment, so as to provide an opportunity for them to remain with the group,
wherever reasonably practicable.
In the opinion of the directors, all employee policies are deemed to be effective and in accordance with their intended aims.
Supplier payment policy
It is group policy to agree terms and conditions for its business transactions with all suppliers. Payment is made in accordance
with these terms provided the supplier meets its obligations. The average number of days of payments outstanding for the group
at 2 October 2011 was 48 (2010: 48).
Political contributions
During the 52 weeks ended 2 October 2011, the group and its subsidiaries made no political contributions (2010: Nil).
Charitable donations
During the 52 weeks ended 2 October 2011, the group and its subsidiaries donated £581,297 for charitable purposes (2010: £310,421).
This included cash and product donations directly to charitable organisations and other investment in support of community
programmes (employee volunteering).
Major shareholders
At 29 November 2011 the company has been notified, pursuant to DTR5 of the Financial Services Authority’s Disclosure and
Transparency Rules, of the following notifiable voting rights in its ordinary share capital:
Black Rock Investment Management (UK) Limited1
Route One Investment Company, LLP
PepsiCo, Inc.
Legal & General Group Plc
Number of
ordinary shares
Percentage
of voting rights
18,736,229
15,082,580
10,739,120
8,633,246
7.79%
6.25%
4.97%
3.99%
Nature of
holding
Indirect
Direct
Direct
Direct
1 Holding includes 15,042,586 ordinary shares (representing 6.26% of the 7.79% of total voting rights shown in the above table) which would be held by Black Rock
Investment Management (UK) Limited, if all financial instruments notifiable under DTR 5.3.1(1)(b) were triggered in full.
Britvic plc Annual Report 2011
37
governance
directors’ report continued
Share capital
As at 2 October 2011, the company’s issued share capital comprised a single class of shares referred to as ordinary shares.
1,284,343 ordinary shares were allotted and issued to the Trustee of the Britvic Share Incentive Plan at par value during the 52 weeks
ended 2 October 2011 to enable the Trustee to meet its obligations under the Britvic Share Incentive Plan. Full details of the ordinary
share capital can be found in note 13 to the parent company financial statements which should be treated as forming part of this report.
On a show of hands at a general meeting of the company every holder of ordinary shares present in person and entitled to vote shall
have one vote and on a poll, every member present in person or by proxy and entitled to vote shall have one vote for every ordinary
share held. The Notice of AGM specifies deadlines for exercising voting rights and appointing a proxy or proxies to vote in relation to
resolutions to be passed at the AGM. All proxy votes are counted and the numbers for, against or withheld in relation to each resolution
are announced at the AGM and published on the company’s website after the meeting.
There are no restrictions on the transfer of ordinary shares in the company other than:
• Certain restrictions may from time to time be imposed by laws and regulations (for example, insider trading laws).
• Pursuant to the Listing Rules of the Financial Services Authority whereby certain employees of the company require the approval
of the company to deal in its ordinary shares.
Resolution 16, which will be proposed as a Special Resolution at the 2012 annual general meeting, will give the company authority
to use its available cash resources to acquire up to 24,140,000 of its own shares in the market for either cancellation or to hold them
as treasury shares. The directors will only use this power after careful consideration, taking into account market conditions prevailing
at the time, other investment opportunities, appropriate gearing levels, and the overall position of the company. The directors will only
purchase such shares after taking into account the effects on earnings per share and the benefits for shareholders.
IFG Trust (Jersey) Limited, as trustee of the Britvic Employee Benefit Trust (the ‘Trustee’), holds 0.005% of the issued share capital of
the company, as at 29 November 2011, on trust for the benefit of the executive directors, senior executives and managers of the group.
A dividend waiver is in place in respect of the Trustee’s holding. The Trustee is not permitted to vote on any unvested shares held in the
trust unless expressly directed to do so by the company.
Under the rules of the Plan eligible employees are entitled to acquire shares in the company. Plan shares are held in trust for participants
by Equiniti Share Plan Trustees Limited (the ‘Trustees’). Voting rights are exercised by the Trustees on receipt of participants’ instructions.
If a participant does not submit an instruction to the Trustees no vote is registered. In addition, the Trustees do not vote on any unawarded
shares held under the Plan as surplus assets. As at 29 November 2011, Trustees held 0.43% of the issued share capital of the company.
The company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and / or
voting rights.
There are no agreements between the company and its directors or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid. The company’s
banking arrangements are terminable upon a change of control of the company. Certain other indebtedness becomes repayable if a
change of control leads to a downgrade in the credit rating of the company. The company’s agreements with PepsiCo are terminable
upon a change of control.
The company’s articles may only be amended by a special resolution at a general meeting of shareholders. No amendments are
proposed to be made to the existing articles at the 2012 AGM.
Financial risk management
It is the group’s objective to manage its financial risk so as to minimise the adverse fluctuations in the financial markets on the group’s
reported profitability and cash flows. The specific policies for managing each of the group’s main financial risk areas are detailed in the
Treasury Management section of the Business Review on page 25.
38 Britvic plc Annual Report 2011
Directors’ statement as to disclosure of information to auditors
So far as each director is aware, there is no relevant audit information (as defined by the Companies Act 2006) of which the auditors
are unaware. Each director has taken all steps that ought to be taken by a director to make himself aware of and to establish that the
auditors are aware of any relevant audit information.
A copy of the financial statements is placed on the company’s website. The maintenance and integrity of this website is the responsibility of
the directors. The work carried out by the auditors does not involve consideration of these matters and accordingly, the auditors accept
no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
Going concern
In presenting the financial statements on a going concern basis, the directors have considered both the business activities and principal
risks and uncertainties as set out in the Business Overview and Business Review on pages 1 to 31. In addition, the directors have
considered the following factors: the group’s ability to generate cash flows, the financial resources available to it, headroom under bank
covenants, and exposure to credit risk. Based on the group’s cash flow forecasts and projections, the board is satisfied that the group
will be able to operate within the level of its facilities for the foreseeable future. For this reason the group continues to apply the going
concern basis in preparing its financial statements.
Auditors
Ernst & Young LLP have indicated their willingness to accept reappointment as auditors of the company and a resolution proposing
their reappointment is contained in the Notice of AGM and will be put to the shareholders at the AGM.
By order of the board
Emma Thomas
Company Secretary
29 November 2011
Britvic plc Annual Report 2011
39
governance
corporate governance report
UK corporate governance code compliance
The company is committed to high standards of corporate governance and supports the principles laid down in the UK Corporate
Governance Code published by the FRC in June 2010 (the ‘Code’). This statement describes how the principles of the Code are
applied and reports on the company’s compliance with the Code’s provisions.
The directors consider that the company has been in compliance with the provisions of the Code throughout the 52 weeks ended
2 October 2011.
The board
The board of directors (‘the board’) currently has seven members, comprising the Non-Executive Chairman, Chief Executive, Finance
Director, three further independent Non-Executive Directors and the PepsiCo nominated Non-Executive Director. All of the directors
bring strong judgement to the board’s deliberations. The board is of sufficient size and diversity that the balance of skills and experience
is considered to be appropriate for the requirements of the business. With the exception of the PepsiCo nominated Non-Executive
Director, Joanne Averiss, the Non-Executive Directors are all independent of management and free from any business or other
relationship, including those relationships and circumstances referred to in provision B.1.1 of the Code that could materially interfere
with the exercise of independent and objective judgement. In addition to her fiduciary obligations to act in the best interests of
the company, Joanne Averiss is required under her letter of appointment to discharge her duties in the interests of the company
notwithstanding her connection with PepsiCo. The company considers that, on appointment, the Chairman was independent for the
purposes of provision A.3.1 of the Code. The Non-Executive Directors were all appointed for an initial three-year term and, thereafter,
subject to satisfactory performance, may serve one or two additional three-year terms, with a thorough review of their continued
independence and suitability to continue as directors if they are to remain on the board for more than six years.
The Chairman and Chief Executive
The different roles of the Chairman and Chief Executive are acknowledged. A responsibility statement for each of those roles has been
agreed with the Chairman and Chief Executive, respectively, and adopted by the board. The Chairman is primarily responsible for the
workings of the board and ensuring that its strategic and supervisory role is achieved and for ensuring effective communication with
shareholders. The board has delegated appropriate responsibilities to the Executive Committee (which comprises in addition to the
Executive Directors, the Marketing Director, Customer Management Director, Supply Chain Director, Strategy Director, Human Resources
Director, and the Managing Director of Britvic GB) who are responsible for the day-to-day running of the business, carrying out agreed
strategy and implementing specific board decisions relating to the operation of the group.
Senior Independent Non-Executive Director
The Senior Independent Non-Executive Director, Bob Ivell, is available to shareholders if they have concerns which are not resolved
through the normal channels of Chairman, Chief Executive or Finance Director; or for which such contact is inappropriate.
The directors
The biographical details of the board members are set out on page 35. The directors have all occupied, or occupy, senior positions in
UK and/or non-UK listed companies and have substantial experience in business. The Non-Executive Directors do not participate in any
of the group’s pension schemes or in any of the group’s bonus, share option or other incentive schemes. At all times there has been
a majority of Non-Executive Independent Directors on the board, in compliance with Code provision B.1.2. The company’s articles of
association (the ‘articles’) provide that all directors will stand for re-election at least every three years but to comply with provision B.7.1
of the Code, all of the directors now submit themselves for re-election at each AGM of the company.
Role of the board
The board is collectively responsible for the proper management of the company. The board normally meets ten times each financial year
and has a formal schedule of matters reserved to it for decision making, including responsibility for the overall management and
performance of the group and the approval of its long-term objectives and commercial strategy, approval of annual and interim results,
annual budgets, material acquisitions and disposals, material agreements and major capital commitments, approval of treasury policies,
and assessment of its going concern position.
Board members are given appropriate documentation in advance of each board or committee meeting. This normally includes a detailed
report on current trading and comprehensive briefing papers on matters where the board will be required to reach a decision. Senior
executives below board level attend board meetings where appropriate to present business updates.
There is an established procedure for the preparation and review, at least annually, by the board of medium-term plans and the annual
budget. The business reports monthly on its performance against its agreed budget. The board receives a monthly update on performance
and reviews any significant variances at each of its meetings. All major investment decisions are subject to post-completion reviews.
At least one of the board’s regular meetings every year is devoted to reviewing and agreeing the company’s long-term strategy.
The Company Secretary maintains a record of attendance at board meetings and committee meetings, further details of which are set
out on page 42. During the year the Chairman met with the Non-Executive Directors without the Executive Directors present and the
Non-Executive Directors met without the Chairman present, to evaluate his performance.
Directors’ and officers’ insurance cover is provided by the company in line with normal market practice, for the benefit of directors in
respect of claims arising in the performance of their duties.
40 Britvic plc Annual Report 2011
Board performance evaluation
The formal annual evaluation of the performance of the board, its committees and individual directors was undertaken during the year.
This consisted of an internally run exercise led by the Chairman with the assistance of the Company Secretary. The appraisal questionnaire
used in connection with the process was wide-ranging and based on questions outlined in the Code, covering both board and committee
performance. The board considered that an internally run exercise was most appropriate in the current year but agreed annually to give
consideration to whether an externally facilitated evaluation may be appropriate.
The appraisal output is used to identify strengths and development areas and confirmed that the board and its committees were
operating effectively. Individual performance was also appraised, based on one-to-one interviews with the Chairman, or in the case
of the Chairman, with the Senior Independent Director following consultation with each of the other directors.
Independent professional advice
The board has approved a procedure for directors to take independent professional advice at the company’s expense if necessary.
No such advice was sought by any director during the year. In addition, the directors have direct access to the advice and services
of the Company Secretary, who is responsible for ensuring that board procedures are followed.
Training and development
The Company Secretary is responsible for preparing and co-ordinating an induction programme for newly appointed directors, including
presentations from senior management on different aspects of the business, as well as guidance on their duties, responsibilities and
liabilities as a director of a listed company. Business familiarisation involves directors visiting sites in the UK, Ireland and France. The
Non-Executive Directors are encouraged to visit group manufacturing sites to enable them to gain a greater understanding of the group’s
activities and to meet senior managers throughout the business. Every director has access to appropriate training as required
subsequent to his appointment and is encouraged to develop his understanding of the company.
Conflicts of interest
The company’s articles were amended at the 2008 AGM, in line with the Companies Act 2006, to allow the board to authorise potential
conflicts of interest that may arise and to impose limits or conditions, as appropriate. Any decision of the board to authorise a conflict
of interest is only effective if it is agreed without the participation of the conflicted directors, and in making such a decision, as always,
the directors must act in a way they consider in good faith will be most likely to promote the success of the company. The company
has established a procedure whereby actual or potential conflicts of interest are regularly reviewed and for the appropriate authorisation
to be sought prior to the appointment of any new director or if a new conflict arises. During the year under review this procedure was
adhered to and operated effectively.
Board committees
There are a number of standing committees of the board to which various matters are delegated. Each has formal terms of reference
that have been approved by the board which are available on the group’s website (www.britvic.com). Details are set out below:
The Nomination Committee
The Nomination Committee comprises Ben Gordon, Bob Ivell, Michael Shallow and Gerald Corbett, who acts as its Chairman. The
committee meets as necessary and is responsible for considering and recommending to the board persons who are appropriate for
appointment as Executive and Non-Executive Directors. There is a formal, rigorous and transparent procedure for the appointment
of new directors to the board under which the Nomination Committee interviews suitable candidates who are proposed either by
existing board members or by an external search firm. Careful consideration is given to ensure proposed appointees have enough time
available to devote to the role and that the balance of skills, knowledge and experience on the board is maintained. When dealing with
the appointment of a successor to the Chairman, the Senior Independent Director will chair the committee instead of the Chairman.
When the committee has found a suitable candidate, the Chairman of the committee will make a proposal to the whole board, which
has retained responsibility for all such appointments. During the year, the Nomination Committee met to consider matters relating to
succession planning and to consider the continued independence of the Non-Executive Directors prior to their reappointment. The
Chairman reports the outcome of its meetings to the board.
The Remuneration Committee
The Remuneration Committee comprises Gerald Corbett, Ben Gordon, Michael Shallow and Bob Ivell, who acts as its Chairman. It is
responsible for: (i) making recommendations to the board on the group’s policy on the remuneration of the company’s Chief Executive,
Chairman, the Executive Directors, the Company Secretary and other members of the Executive Committee; (ii) the determination,
within agreed terms of reference, of the remuneration of the Chairman and of specific remuneration packages for each of the Executive
Directors and other members of the Executive Committee, including pension rights, any compensation payments and benefits; and
(iii) the determination of awards under the company’s employee share plans to the Executive Directors, the Company Secretary and
other members of the Executive Committee. It meets at least three times a year and during the year met four times. Full details of
its activities and of directors’ remuneration are set out in the Directors’ Remuneration Report on pages 45 to 53. Those pages detail
compliance with the legal requirements with regard to remuneration matters. The Chairman of the Committee reports the outcome
of its meetings to the board.
Britvic plc Annual Report 2011
41
governance
corporate governance report continued
The Audit Committee
The Audit Committee comprises Ben Gordon, Bob Ivell and Michael Shallow, who acts as its Chairman. The board is satisfied that
Michael Shallow, who is a chartered accountant and was formerly Finance Director of Greene King plc, has recent and relevant financial
experience as required by the Code.
The role of the Audit Committee is to monitor the financial reporting process, the integrity of the group’s interim and annual financial
statements prior to their submission to the board and the statutory audit of the annual and consolidated accounts. It is also responsible
for reviewing the group’s internal financial control and risk management systems, advising the board on the appointment of external
auditors, overseeing the relationship with the external auditors, approving auditor remuneration, reviewing the group’s whistle-blowing
procedures, reviewing accounting policies, compliance and monitoring and reviewing the effectiveness of the group’s internal audit function.
The committee met three times during the year, including immediately prior to the publication of the company’s interim and preliminary
results statements. On each occasion the Group Finance Director, the Head of Internal Audit and Risk and the company’s external
auditors attended by invitation. Other senior executives of the company are invited to attend by the committee as appropriate.
Significant areas of review during the year included the continued embedding of Britvic’s real-time risk management solution across the
group. The committee also reviewed the group’s refreshed business continuity plans, which are managed on-line and were the subject
of a number of workshops. The committee also received comprehensive reports from the Head of Internal Audit and Risk on the outputs
and progress of the internal audit plan.
The Audit Committee regularly monitors the relationship with the auditors and assesses their performance, cost-effectiveness, objectivity
and independence. It agrees the scope of the audit work and discusses the results of the full year audit and interim review each year.
At each Audit Committee meeting the external auditors meet with the committee without management being present.
The Audit Committee is responsible for ensuring that an appropriate relationship is maintained between the group and its auditors. The
group has a policy of controlling the provision of non-audit services by the external auditors in order to maintain their independence and
ensure that their objectivity and independence are safeguarded. This control is exercised by ensuring non-audit projects, where fees are
expected to exceed £50,000, are subject to the prior approval of the Chairman of the Audit Committee and the Group Finance Director.
If non-audit project fees are expected to exceed £150,000 the prior approval of the Audit Committee is required. The committee has
scrutinised the internal procedures of the company’s auditors, Ernst & Young LLP, and satisfied itself that the independence and objectivity
of the auditors are not affected by the non-audit work undertaken.
Attendance at meetings
The attendance of directors at board and committee meetings during the 52 weeks ended 2 October 2011 was as follows:
Gerald Corbett
Paul Moody
Joanne Averiss
John Gibney
Bob Ivell
Michael Shallow
Ben Gordon
Total number of meetings
Board
Nomination
Committee
Remuneration
Committee
Audit
Committee
10
10
10
10
9
10
9
10
1
-
-
-
1
1
1
1
4
-
-
-
4
4
4
4
-
-
-
-
3
3
3
3
42 Britvic plc Annual Report 2011
Shareholder relations
The company is committed to maintaining good communications with shareholders. Senior executives, including the Chairman,
Chief Executive and Group Finance Director, have dialogue with individual institutional shareholders in order to develop an understanding
of their views which is discussed with the board. All directors are offered the opportunity to meet with major shareholders to listen to
their views and, in addition to a monthly report prepared by the Group Finance Director, receive regular reports prepared by an independent
capital markets advisory firm which provides comprehensive information relating to the company’s major shareholders.
Presentations are made to analysts, investors and prospective investors covering the annual and interim results and the company
seeks to maintain a dialogue with the various bodies which monitor the company’s governance policies and procedures. The Business
Review set out on pages 10 to 31 details the financial performance of the company as well as setting out the risks it faces and plans
for the future. The Company Secretary generally deals with questions from individual shareholders. All shareholders will have the
opportunity to ask questions at the company’s AGM on 25 January 2012. At the AGM, the Chairman will give a statement on current
trading conditions and the chairmen of the Nomination, Remuneration and Audit Committees will be available to answer questions.
The Chairman will advise shareholders on proxy voting details. In addition, the group’s website containing published information
and press releases can be found at www.britvic.com
Internal control
The board has overall responsibility for the group’s system of internal control and risk management and for reviewing its effectiveness.
In discharging that responsibility, the board confirms that it has established the procedures necessary to apply the Code, including clear
operating procedures, lines of responsibility and delegated authority. These procedures have been in place since the company listed
and are regularly reviewed by the board.
Business performance is managed closely and the board and the Executive Committee have established processes, as part of the
normal good management of the business, to monitor:
• Strategic plan achievement, through a regular review of progress towards strategic objectives;
• Financial performance, within a comprehensive financial planning and accounting framework, including budgeting and forecasting,
financial reporting, analysing variances against plan and taking appropriate management action;
• Capital investment and asset management performance, with detailed appraisal, authorisation and post investment reviews; and
• Principal risks and risk management processes, which accords with the Turnbull guidance published by the FRC in October 2005
and is supported by reports from the Head of Internal Audit and Risk that the significant risks faced by the group are being identified,
evaluated and appropriately managed, having regard to the balance of risk, cost and opportunity. The board has delegated the
management of risk to the Group Risk Committee, chaired by the Company Secretary, which reviews the group risk register on
a quarterly basis, and reports to the Audit Committee at least twice a year.
Management, with the assistance of the finance function, is responsible for ensuring the appropriate maintenance of financial records
and processes that ensure all financial information is relevant, reliable, in accordance with the applicable laws and regulations, and
distributed both internally and externally in a timely manner. A review of the consolidation and financial statements is completed by
management to ensure that the financial position and results of the group are appropriately recorded, circulated to members of the
board and published where appropriate. All financial information published by the group is subject to the approval of the board, on the
recommendation of the Audit Committee.
Risk management process
There is in place an ongoing process for identifying, evaluating and managing the significant risks faced by the group, which has
operated throughout the year. This process involves a quarterly assessment of functional and business unit risk registers, which is
reviewed and signed off by the Group Risk Committee. The group’s risk management framework is designed to support this process
and is the responsibility of the Group Risk Committee, chaired by the Company Secretary. The risk framework governs the management
and control of both financial and non-financial risks. The adoption of this policy throughout the group enables a consistent approach to
the management of risk at both regional and business unit level. The internal audit function holds regular workshops across the group
to ensure a consistent deployment of the framework and test compliance with the policy.
In addition, during the year, the Audit Committee received:
• Reports from the Head of Internal Audit and Risk on the work carried out under the annual internal audit plan;
• Risk management reports, including the status of actions to mitigate major risks and the quantification of selected risks; and,
• Reports from the external auditors.
Through the monitoring processes set out above, the board has conducted a review of the effectiveness of the system of internal
control during the year. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve
business objectives and it must be recognised that it can only provide reasonable and not absolute assurance against material
misstatement or loss. In that context, the review, in the opinion of the board, did not indicate that the system was ineffective or
unsatisfactory and the board is not aware of any change to this status up to the date of approval of this report.
Britvic plc Annual Report 2011
43
governance
corporate governance report continued
Statement of directors’ responsibilities in relation to the financial statements
The directors have prepared the financial statements for the group in accordance with International Financial Reporting Standards
(‘IFRS’) as adopted by the European Union, and for the company in accordance with United Kingdom Generally Accepted Accounting
Practice (‘UK GAAP’).
In the case of UK GAAP financial statements, under English company law it is the directors’ responsibility to prepare financial statements
for each financial period, which give a true and fair view of the state of affairs of the company as at the end of the financial period and
of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable;
• State whether applicable accounting standards have been followed; and
• Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the company will continue in business.
In the case of IFRS financial statements, IAS1 requires that the financial statements present fairly for each financial period the group’s
financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other
events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in
the International Accounting Standards Board’s ‘framework for the preparation and presentation of financial statements’. In virtually
all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS. Directors are also required to:
• Properly select and apply accounting policies consistently;
• Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information;
• Provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on the group’s financial position and financial performance; and
• State that the group has complied with IFRS.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the group and to enable them to ensure that the financial statements comply with the Companies Act and Article 4 of the
IAS Regulation. They are also responsible for the system of internal controls, for safeguarding the assets of the group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclosure and transparency rules
The directors confirm that, to the best of their knowledge:
(a) The financial statements, which are prepared in accordance with IFRS as adopted by the European Union, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation as a
whole; and
(b) The business review includes a fair review of the development and performance of the business and the position of the company
and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties
that they face.
Neither the company nor the directors accept any liability to any person in relation to the annual report and financial statements except
to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any
untrue or misleading statement or omission shall be determined in accordance with section 90A of the Financial Services and Markets
Act 2000.
44 Britvic plc Annual Report 2011
governance
directors’ remuneration report
For the 52 weeks ended 2 October 2011
The following is a report by the Remuneration Committee (the ‘committee’), which has been approved by the board of Britvic plc for
submission to shareholders. This report has been prepared in accordance with the Companies Act 2006 and Schedule 8 of The Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. In addition, the committee has followed the
principles of good governance set out in the UK Corporate Governance Code (the ‘Code’) and has complied with the requirements
of the UKLA Listing Rules. It provides the company’s statement of how it has applied the principles of good governance relating to
directors’ remuneration and is intended to communicate the company’s policies and practices on executive remuneration.
In accordance with the Companies Act 2006, a resolution will be submitted to the AGM to approve the Directors’ Remuneration Report.
Membership of Remuneration Committee
During the year, the committee consisted wholly of independent Non-Executive Directors:
Bob Ivell (Chairman)
Michael Shallow
Ben Gordon
Gerald Corbett
At the invitation of the Chairman of the Committee, the Chief Executive and Human Resources Director attend the meetings of the
committee except when their own remuneration is under consideration. Details of the attendance by committee members at committee
meetings are shown in the Corporate Governance Report on page 42.
Composition and terms of reference
The committee’s composition and terms of reference are in line with the Code and are available on the company’s website or on
request from the Company Secretary. While the Chairman of the board is a member of the committee, he is not present when his own
remuneration is under discussion.
The committee meets not less than three times a year and has responsibility for:
• Looking at executives’ remuneration in terms of the pay policy of the company as a whole, pay and conditions elsewhere in the group,
and the overall cost to the shareholders;
• Making recommendations to the board on the group’s policy on the remuneration of the company’s Chief Executive, Chairman,
the Executive Directors and other members of the Executive Committee;
• Determining, within agreed terms of reference, and taking into account corporate performance on environmental, social and
governance issues, the remuneration of the Chairman and specific remuneration packages for each of the Executive Directors
and other members of the Executive Committee, including pension rights, any compensation payments and benefits;
• Determining the level and extent to which awards should be made to the Executive Directors and other members of the Executive
Committee under the company’s employee share plans. The committee also ensures compliance with the Code in this respect and
takes into consideration the wider pay and employment conditions of the employees across the company.
Advisors
The committee has appointed an external consultant, Towers Watson, to provide advice on executive compensation issues
and performance-related remuneration. The company is also advised by Towers Watson on other remuneration-related issues.
The following individuals also provided material advice or services to the committee during the year:
Paul Moody (Chief Executive);
John Gibney (Group Finance Director);
Doug Frost (Group Human Resources Director); and
Julie Withnall (Group Head of Reward)
Remuneration objectives
The principal objective of the remuneration policy is to provide market competitive levels of remuneration for the company’s senior
executives, including incentive arrangements that will reward successful execution of the company’s short- and long-term strategy.
The committee believes that this requires:
• The provision of mid-market base salaries and incentive levels for the sector, with appropriate leverage to reward sustained
exceptional performance and support the future growth plans of the company;
• A reward structure that places appropriate emphasis on short-term operating performance and sustained longer-term performance; and
• Competitive incentive arrangements that are underpinned by a balance of operational and long-term performance metrics to provide
both a focus on business performance and alignment with returns to the company’s shareholders.
Britvic plc Annual Report 2011
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governance
directors’ remuneration report continued
Remuneration policy and components of remuneration
The remuneration policy has been designed to provide market competitive remuneration relative to appropriate peer groups for
base salary and incentive opportunity. The table below outlines the purpose for and performance measures attaching to each
element of the package.
Base salary
Short-term
incentive plan
Executive share
option plan
Purpose
• Positions the role and the individual fairly within
a competitive market range derived from a peer
group of similar-sized UK-listed companies.
Performance Measure
• Individual contribution.
• Sustained value in the business.
• Provides focus on the delivery of the financial
• Profit Before Tax (PBT) (50%).
targets set out in the annual budget.
• Net revenue (25%).
• Free cash flow (25%).
• Provides focus on longer-term share price growth.
• EPS growth during the three year
• Reflects sustained delivery of earnings growth.
• Alignment to shareholder interests.
performance period.
Performance
share plan
• Provides focus on sustained growth and
• Relative TSR positioning against a peer group
long-term returns to shareholders.
of similar sector companies (50%).
• Average Return on Invested Capital (‘ROIC’)
during the three year performance period (50%).
The committee believes that the remuneration of Executive Directors should be appropriately balanced between base salary
and performance-related pay elements with the predominant proportion of potential reward being linked to performance.
The table below shows the current pay mix in place for Executive Directors under both target and maximum performance scenarios.
Executive Director reward elements
Chief
Executive
Maximum
Target
Maximum
Target
Group
Finance
Director
0
10
20
30
40
50
60
70
80
90
100
Percentage of total
Base Bonus ESOP PSP
46 Britvic plc Annual Report 2011
The committee regularly reviews the remuneration policy to ensure that it is sufficiently flexible to take account of future changes
in the company’s business operations and environment, provides alignment to shareholder interests and that it recognises key
developments in remuneration practice. The committee believes the remuneration policy described above remains appropriate and that
the incentive structure does not raise environmental, social or governance risks by inadvertently motivating irresponsible behaviour.
Remuneration in practice
Base salary
Salaries are reviewed annually to take account of:
• The individual performance and contribution of each Executive Director;
• The annual salary review budget for the rest of the group;
• Business performance;
• Mid-market data for a peer group of UK-listed companies of similar revenue size and scope to the company; and
• Mid-market data for the few relevant companies in the UK food and beverage sector.
When determining directors’ remuneration, the committee considers market data provided by Towers Watson in June 2011
and the overall GB salary review budget which was 2% in 2011/12 with increases of 2.5% for on target performance.
Taking into account the above factors, the committee has decided that salaries will increase as shown in the table below.
Chief Executive
Group Finance Director
Base salary as at
31 January 2011
£500,000
£318,990
Base salary as at
31 January 2012
£510,000
£325,370
% increase
2%
2%
Incentive plans
In setting incentive levels, the committee considers mid-market data on short- and long-term incentive opportunity from a peer group
of consumer goods and retail sector companies.
The committee seeks to ensure that variable pay is determined by relevant and stretching measures of performance that are consistent
with the strategic objectives and risk profile of the company, in order to appropriately align directors’ interests with those of shareholders
and to engender appropriate risk-based behaviour.
Short-term incentive plan
In 2010/11, targets were approved by the committee at the beginning of the year and were aligned to internal targets and strategic
business objectives.
Target
Maximum
Performance metrics
Chief Executive
70%
140%
Group Finance Director
60%
120%
Target bonus is payable for achievement of target PBT, net revenue growth
and free cash flow performance.
Maximum bonus is payable for the achievement of exceptional performance
targets.
For 2010/11, a bonus of 0% of salary for the Chief Executive and 0% of salary for the Group Finance Director was earned for below
threshold performance against our stretching internal targets.
The committee has decided to maintain the same target and maximum bonus opportunity for executive directors in 2011/12 as
applied in 2010/11.
The committee has also decided that the key short-term operational drivers of the business for 2011/12 remain appropriate and therefore
the same bonus structure as applied in 2010/11 should continue. Therefore bonuses will be paid for achievement of performance targets
based on PBT, net revenue growth and free cash flow and will be set at appropriately stretching levels.
Britvic plc Annual Report 2011
47
17
governance
directors’ remuneration report continued
Long-term incentives – executive share option plan
Annual grants of options are made to senior executives, at the discretion of the board, over shares in Britvic plc at the market price
at date of grant. The level of option grant and the performance conditions are determined and reviewed by the committee annually.
Options are normally exercisable between three and ten years from the date of grant to the extent that the performance conditions
have been satisfied.
For 2011/12, the committee has decided to maintain the same focus on long-term EPS growth as applied in 2010/11 and believes the
performance range remains sufficiently stretching in the context of the current business outlook and growth strategy of the company.
Face
value1
300%
250%
Chief Executive
Group Finance
Director
1 Based on market price at grant
Performance conditions
in 2011/12
EPS growth over the three-year performance period
Threshold vesting
25% of the grant vests for EPS growth equivalent to RPI +3% per annum. No awards will vest below
this level of performance.
Maximum vesting
100% of the grant vests for EPS growth equivalent to RPI +7% per annum.
Vesting is on a straight line between threshold and maximum. Options lapse to the extent that the
performance condition is not achieved.
Long-term incentives – performance share plan
Annual grants of performance shares are made at the discretion of the board to senior executives and managers. The awards normally
vest at the end of the three-year performance period, to the extent that the performance conditions are achieved.
Face
value1
Performance conditions
in 2011/12
Chief Executive 100%
50% of the award was subject to a performance condition of TSR relative to a peer group of
20 companies2.
Group Finance
Director
100%
Threshold vesting
25% of the TSR element of the award vests at median performance.
Maximum vesting
100% of the TSR element of the award vests at upper quartile.
Vesting is on a straight line between threshold and maximum.
50% of the award was subject to a ROIC performance condition.
Threshold vesting
25% of the ROIC element of the award vests at three-year average ROIC of 21.5%.
Maximum vesting
For the ROIC element of the award to vest in full, three-year average ROIC of 22.3%
must be achieved or exceeded.
Vesting is on a straight line between threshold and maximum.
1 Based on market price at grant
2 The comparator companies are: AG BARR, Associated British Foods, C&C Group, Dairy Crest, Diageo, Fuller Smith & Turner, Glanbia, Greencore, Greene King,
Marston’s, Nichols, Northern Foods, Origin Enterprises, Premier Foods, Reckitt Benckiser, SABMiller, Smith & Nephew, Tate and Lyle, Uniq, Wetherspoon.
48 Britvic plc Annual Report 2011
Other share plans
Executive Directors participate in the Britvic Share Incentive Plan (the ‘SIP’), which is an all-employee tax approved share scheme
open to employees based in Great Britain. The SIP has three parts, all of which the directors participate in:
• Free share awards are made annually at the discretion of the committee. The value of the award is discretionary and the maximum
is 3% of reckonable earnings, capped at £3,000. In light of our 2010/11 performance against internal targets, the committee has
determined that no award of free shares will be made in April 2012.
• Partnership shares are purchased by employees through payroll deductions between £5 and £115 per pay period.
• Matching shares are provided by the employer to individual purchasing partnership shares on a one for one basis up to a maximum
of £50 per pay period from 9 December 2011 onwards (previously £75 per pay period).
Share ownership guidelines
To align the interests of Executive Directors and shareholders, share ownership guidelines are in place that require Executive Directors
to acquire a shareholding equal to their annual salary within five years from IPO (calculated at the IPO share price) or from the point of
joining Britvic (calculated at the share price on the date of joining). Until this holding is acquired, the Executive Directors may not sell any
shares other than to finance the cost of exercising options and any tax liabilities arising from the vesting of long-term incentive plans,
unless approved by the committee, for example, in cases of financial hardship.
Retirement benefits
The Executive Directors ceased participation in the defined benefit section of the Britvic Pension Plan (the ‘Plan’) on 10 April 2011
following the closure of the Plan to future accrual. Both Executive Directors now receive a cash allowance in replacement of pension.
The cash allowance payable:
• Reflects contributions Britvic would have made to the defined contribution section of the Plan had these individuals elected to join,
less a deduction to ensure the cash allowance is cost neutral to the company from a National Insurance perspective.
• Is paid at a rate of 24.6% of pensionable pay to the Chief Executive and 22.0% of pensionable pay to the Group Finance Director.
Both Executive Directors continue to have a deferred pension in the defined benefit section of the Plan and also the Britvic executive
top-up scheme (the ‘Scheme’), the company’s unfunded retirement benefits scheme which also closed to future accrual on 10 April
2011. The normal retirement age for Executive Directors is 60.
Other benefits
Executive Directors receive an annual car benefit or allowance and membership of the company’s private medical healthcare plan.
Service contracts
The current policy is for the notice period in the Executive Directors’ service contracts to be normally no longer than 12 months.
The service contracts of the current Executive Directors include the following terms:
Effective date
of contract
Unexpired term
(approx. months)
Notice period from
director (months)
Notice period from
company (months)
Paul Moody
John Gibney
14 December 2005
14 December 2005
121
121
6
6
12
12
1 Executive Directors are appointed on 12-month rolling contracts.
There are no special provisions for Executive or Non-Executive Directors with regard to compensation in the event of loss of office.
In the event of the employment of an Executive Director being terminated, the committee would pay due regard to best practice
and take account of the individual’s duty to mitigate their loss.
Britvic plc Annual Report 2011
49
governance
directors’ remuneration report continued
Other appointments
The Executive Directors are not permitted to have any engagement with any other company during the term of their appointment
without the prior written consent of the board.
The Chief Executive’s current external appointments are:
• Non-Executive Director of Johnson Service Group plc
• Director of The British Soft Drinks Association Limited
• Chairman of business4Life
The Group Finance Director has no such external appointments.
Chairman’s letter of appointment and benefits
Under his letter of appointment, Gerald Corbett was appointed Chairman of the company for an initial three-year term to 14 December
2008. This has been extended until 14 December 2014 subject to annual re-election by the company’s shareholders in accordance with
the Code.
The Chairman’s fees were adjusted from £183,750 to £223,750 in January 2011 to reflect the fact that Britvic no longer provides the
Chairman with a chauffeur. On the chauffeur’s appointment, the Chairman’s fees were reduced by £40,000. The increase made in 2011
was the same amount.
Following a review of market data for Chairman’s fees and taking into account the Chairman’s workload, as well as increases elsewhere
in Britvic, the Chairman’s fee from January 2012 will be increased by 2% to £228,225 per annum.
Non-Executive Directors
The Non-Executive Directors do not have service contracts but instead have Letters of Appointment for a three-year term, subject to
annual re-election by the company’s shareholders in accordance with the Code.
Effective date
of contract
Unexpired term
(approx. months)
Notice period from
director (months)
Notice period from
company (months)
Non-Executive Directors:
Gerald Corbett
Joanne Averiss
Ben Gordon
Bob Ivell
Michael Shallow
14 December 20111
14 December 20111
15 April 20111
14 December 20111
14 December 20111
36
36
28
36
36
12
3
3
3
3
12
3
3
3
3
1 The Non-Executive Directors’ letters of appointment have been extended for a further three-year term to 14 December 2014 with the exception of Ben
Gordon whose letter of appointment has been extended for a further three-year term to 14 April 2014.
Remuneration of Non-Executive Directors consists solely of fees. Non-Executive Directors’ fees are reviewed by the board annually and
they do not participate in any of the group’s pension schemes or in any of the group’s bonus, share option or other incentive schemes.
The basic fee for Non-Executive Directors from 1 January 2012 will be increased by 2% to £48,960 per annum. The additional fees of
£8,000 per annum payable to the Senior Independent Director and to the Chairmen of the board committees will remain unchanged for 2012.
50 Britvic plc Annual Report 2011
Performance graph – total shareholder return
The committee considers the FTSE 250 excluding Investment Trusts Index is a relevant index for total shareholder return
and comparison disclosure as it represents a broad equity market index in which the company is a constituent member.
Historical TSR performance
Growth in the value of a hypothetical £100 holding over five years
FTSE 250 excluding Investment Trusts comparison based on spot values
250
200
150
100
50
0
FSTE 250 Excluding Investment Trusts Britvic
1 Oct 2006
30 Sept 2007
28 Sept 2008
27 Sept 2009
3 Oct 2010
30 Sept 2011
Audited information
Directors’ remuneration
Executive Directors:
Paul Moody
John Gibney
Non-Executive Directors:
Gerald Corbett
Joanne Averiss
Ben Gordon
Bob Ivell
Michael Shallow
Basic Salary
and Fees
£’000
Taxable
Benefits1
£’000
Performance
Related Bonuses2
£’000
Total
2010/11
£’000
495
316
212
47
47
63
55
22
23
60
-
-
-
-
0
0
-
-
-
-
-
517
339
272
47
47
63
55
Total
2009/10
£’000
1,150
692
263
46
46
62
54
1
Benefits for Paul Moody and John Gibney incorporate all taxable benefits and expense allowances arising from employment, which relate mainly to
the provision of an annual car benefit or allowance and membership of the company’s private medical healthcare plan. Benefits for Gerald Corbett relate
to the provision of a chauffeur assigned to him until January 2011; the figure shown being the total gross amount before mitigation for business use.
2 For 2010/11 no bonus is payable for either Executive Director.
Britvic plc Annual Report 2011
51
governance
directors’ remuneration report continued
Directors’ interests in share options
The Executive Directors participate in the Britvic Executive Share Option Plan (on the terms and subject to the EPS growth performance
condition as described on page 98).
Date of
grant
At start of
year/date of
appointment
Granted
during year
Exercised
during year
Lapsed
during year
At end of
year/date of
cessation
Option
exercise
price (pence)
Date
from which
exerciseable
Expiry
date
Paul Moody
Total
John Gibney
15/12/051
06/12/061
05/12/071
05/12/082
07/12/092
07/12/102
15/12/051
06/12/061
05/12/071
05/12/082
07/12/092
07/12/102
273,005
338,776
246,369
615,068
372,326
-
1,845,544
124,366
162,245
119,135
330,486
200,065
-
-
-
-
-
-
310,111
310,111
-
-
-
-
-
166,634
Total
936,297
166,634
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
273,005
338,776
246,369
615,068
372,326
310,111
2,155,655
124,366
162,245
119,135
330,486
200,065
166,634
1,102,931
245.0
245.0
347.0
221.0
387.0
465.0
245.0
245.0
347.0
221.0
387.0
465.0
15/12/08
06/12/09
05/12/10
05/12/11
07/12/12
07/12/13
15/12/08
06/12/09
05/12/10
05/12/11
07/12/12
07/12/13
15/12/15
06/12/16
05/12/17
05/12/18
07/12/19
07/12/20
15/12/15
06/12/16
05/12/17
05/12/18
07/12/19
07/12/20
1 Awards of share options from 2005 to 2007 vested at 40% threshold (EPS growth equal to RPI + 3% compound over three years) and 100% at maximum
(EPS growth equal to RPI + 7% compound over three years).
2 Awards of share options from 2008 onwards vest 25% at threshold with the EPS performance condition calibrated as detailed above.
The market price of the company’s shares on 2 October 2011 was 315.0p and the range of closing prices during the year was
289.9p to 503.5p.
Directors’ interests in the performance share plan
The Executive Directors participate in the Britvic Performance Share Plan (as described on page 99).
Date of award
At start of
year/date of
appointment
Awarded
during year
Vested
Lapsed
during year
during year
At end of
year/date of
cessation
Market price
at date of
award (pence)
05/12/071
05/12/082
05/12/093
07/12/104
05/12/071
05/12/082
05/12/093
07/12/104
61,592
205,024
124,110
-
390,726
39,712
132,196
80,026
-
251,934
-
-
-
103,370
103,370
-
-
-
66,654
66,654
61,592
-
-
-
61,592
39,712
-
-
-
39,712
-
-
-
-
-
-
-
-
-
-
-
205,024
124,110
103,370
432,504
-
132,196
80,026
66,654
278,876
339.0
224.0
380.1
475.4
339.0
224.0
380.1
475.4
Vesting
date
05/12/10
05/12/11
07/12/12
07/12/13
05/12/10
05/12/11
07/12/12
07/12/13
Paul Moody
Total
John Gibney
Total
1 Awards of performance shares in 2006 and 2007 vest 40% at threshold (TSR performance at median of comparator group of similar companies)
and 100% at maximum (TSR at upper quartile of comparator group).
2 Awards of performance shares in 2008 vest 25% at threshold and 100% at maximum (with 50% of the award subject to the TSR performance condition
detailed above and 50% of the award subject to threshold ROIC of 16.5% and maximum ROIC condition of 17.8%).
3 Awards of performance shares in 2009 vest 25% at threshold and 100% at maximum (with 50% of the award subject to the TSR performance condition
detailed above and 50% of the award subject to threshold ROIC of 20.7% and maximum ROIC condition of 21.5%).
4 Awards of performance shares in 2010 vest 25% at threshold and 100% at maximum (with 50% of the award subject to the TSR performance condition
detailed above and 50% of the award subject to threshold ROIC of 21.9% and maximum ROIC condition of 22.7%).
52 Britvic plc Annual Report 2011
Directors’ interests in shares
Britvic plc ordinary shares of 20p each
Executive Directors:
Paul Moody
John Gibney
Non-Executive Directors:
Gerald Corbett
Joanne Averiss
Ben Gordon
Bob Ivell
Michael Shallow
2 October 2011
354,846
315,051
3 October 2010
323,294
294,220
103,695
8,696
11,393
10,870
21,739
103,695
8,696
11,393
10,870
21,739
The above shareholdings are all beneficial interests and include shares held on behalf of the Executive Directors by the Trustee of the
Britvic Share Incentive Plan which is detailed on page 97.
In the period 2 October 2011 to 30 November 2011 there has been no change in the directors’ interests, other than through the monthly
purchases in October and November of partnership and matching shares under the share incentive plan, resulting in an increase in the
interests held by Paul Moody and John Gibney of 113 shares each.
Pensions
The table below shows, amongst other items, as at the year end, the accrued pension should the director leave employment; the
increase in the accrued pension during the year; the increase excluding inflation and member contributions; the transfer value of
accrued pension; and any increase / (decrease) in this value assessed on the transfer value basis as under the Britvic Pension Plan
(the ‘Plan’). This disclosure is in compliance with both the London Stock Exchange Listing Rules and the Companies Act 2006.
Directors’ disclosures as at 2 October 2011
Age (last
birthday) at
02/10/11
Accrued
pension at
02/10/11 p.a.
Increase
in accrued
pension1 p.a.
Increase
in accrued
pension2,4 p.a.
Transfer
value of
increase
in accrued
pension3,4
Transfer
value of accrued
benefits -
02/10/11
Transfer
value of accrued
benefits -
03/10/10
Increase in
transfer value
over accounting
period less
directors’
contributions4
54
51
£210,100
£186,100
£12,300
£9,000
£1,200
£-900
£7,400
£-21,000
£3,528,100
£2,641,000
£3,355,500
£2,652,200
£159,800
£-19,400
Name of Director
Paul Moody
John Gibney
1 Absolute increase during accounting period.
2
Increase in accrued pension during the accounting period, net of inflation (measured using the Retail Prices Index).
3 Net of inflation (measured using the Retail Prices Index) and contributions.
4 The figures for John Gibney are negative because the impact of changes in market conditions on the transfer value calculations outweighs the nominal
increase in accrued pension over the year.
The defined benefit section of the Plan and the Britvic Executive Top-Up Scheme (the ‘Scheme’) were closed to future accrual on 10
April 2011. Most active members transferred to the defined contribution section of the Plan, but the two directors listed above opted to
cease tax-relievable pension provision at the point of closure and instead now receive a cash sum in lieu of pension contributions. The
cash sum received by Paul Moody equates to 24.6% of basic salary and that received by John Gibney equates to 22% of basic salary.
The accrued pensions and transfer values listed above are calculated on the basis of entitlements accrued to 10 April 2011, but
calculated where relevant in line with market conditions at 2 October 2011. The entitlements shown also include increases to accrued
pensions for deferred members which are required under the rules of the Plan and the Scheme, the aim of which is to increase the
benefits in line with price inflation between the date of leaving pensionable service in the Plan and the Scheme and the date when
benefits are drawn.
On behalf of the board
Bob Ivell
Chairman of the Remuneration Committee
29 November 2011
Britvic plc Annual Report 2011
53
17
financial statements
independent auditors’ report
to the members of Britvic plc
We have audited the group financial statements of Britvic plc for the 52 week period ended 2 October 2011, which comprise the
consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated
statement of cash flows, the consolidated statement of changes in equity and the related notes 1 to 33. The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors’ Responsibilities in relation to the financial statements set out on page 44, the directors
are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the group financial statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation
of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material
inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
Opinion on financial statements
In our opinion the group financial statements:
• Give a true and fair view of the state of the group’s affairs as at 2 October 2011 and of its profit for the period then ended;
• Have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• Have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
Opinion on other matters prescribed by The Companies Act 2006
In our opinion:
• The information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent
with the financial statements; and
• The information given in the Corporate Governance Statement set out on pages 40 to 44 with respect to internal control and risk management
systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• Certain disclosures of directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit; or
• A Corporate Governance Statement has not been prepared by the company.
Under the Listing Rules we are required to review:
• The Directors’ Statement, set out on page 39, in relation to going concern; and
• The part of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the UK Corporate
Governance Code specified for our review; and
• Certain elements of the report to shareholders by the board on directors’ remuneration.
Other matter
We have reported separately on the parent company financial statements of Britvic plc for the 52 week period ended 2 October 2011
and on the information in the directors’ remuneration report that is described as having been audited.
Nigel Meredith
Senior statutory auditor
for and on behalf of Ernst & Young LLP,
Statutory Auditor
Birmingham
29 November 2011
54 Britvic plc Annual Report 2011
financial statements
consolidated income statement
For the 52 weeks ended 2 October 2011
52 weeks ended 2 October 2011
53 weeks ended 3 October 2010
Before
exceptional &
other items
£m
Exceptional
& other
items*
£m
Note
1,290.4
(627.3)
663.1
(371.4)
(156.7)
135.0
(29.9)
105.1
(27.2)
-
-
-
-
(23.1)
(23.1)
(2.1)
(25.2)
5.7
Before
exceptional &
other items
£m
Exceptional
& other
items*
£m
1,138.6
(509.2)
629.4
(338.2)
(156.6)
134.6
(25.5)
109.1
(29.1)
-
(2.4)
(2.4)
-
(134.7)
(137.1)
(0.8)
(137.9)
9.7
Total
£m
1,290.4
(627.3)
663.1
(371.4)
(179.8)
111.9
(32.0)
79.9
(21.5)
Total
£m
1,138.6
(511.6)
627.0
(338.2)
(291.3)
(2.5)
(26.3)
(28.8)
(19.4)
77.9
(19.5)
58.4
80.0
(128.2)
(48.2)
24.3p
23.7p
33.7p
32.9p
(21.4p)
(21.4p)
36.5p
35.5p
Revenue
Cost of sales
Gross profit
Selling and distribution
costs
Administration expenses
Operating profit / (loss)
Finance costs
Profit / (loss) before tax
Taxation
Profit / (loss) for the
period attributable to the
equity shareholders
Earnings per share
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per
share**
Adjusted diluted earnings
per share**
* See note 5.
6
9
10
11
11
11
11
**
Adjusted basic and diluted earnings per share measures have been adjusted by adding back exceptional & other items (see note 5) and amortisation relating
to acquired intangible assets (see note 14). This reconciliation is shown in note 11.
All activities relate to continuing operations
Britvic plc Annual Report 2011
55
financial statements
consolidated statement of
comprehensive income
For the 52 weeks ended 2 October 2011
52 weeks ended
2 October 2011
£m
53 weeks ended
3 October 2010
£m
Note
Profit / (loss) for the period attributable to the equity shareholders
Actuarial gains / (losses) on defined benefit pension schemes
Deferred tax on actuarial (gains) / losses on defined benefit pension schemes
Current tax on additional pension contributions
Gains in the period in respect of cash flow hedges
Amounts reclassified to the income statement in respect of cash flow hedges
Deferred tax in respect of cash flow hedges accounted for in the hedging reserve
Exchange differences on translation of foreign operations
Tax on exchange differences accounted for in the translation reserve
Other comprehensive income for the period net of tax
24
27
27
27
Total comprehensive income for the period attributable to the equity shareholders
58.4
45.1
(16.7)
4.3
5.8
(3.7)
(0.5)
(1.6)
1.5
34.2
92.6
(48.2)
(49.0)
8.3
2.8
4.5
(3.0)
(0.3)
(13.7)
1.9
(48.5)
(96.7)
56 Britvic plc Annual Report 2011
fi nancial statements
consolidated balance sheet
As at 2 October 2011
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Other receivables
Other fi nancial assets
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Other fi nancial assets
Cash and cash equivalents
Non-current assets held for sale
Total assets
Current liabilities
Trade and other payables
Other fi nancial liabilities
Current income tax payable
Non-current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
Pension liability
Other fi nancial liabilities
Other non-current liabilities
Total liabilities
Net assets / (liabilities)
Capital and reserves
Issued share capital
Share premium account
Own shares reserve
Share scheme reserve
Hedging reserve
Translation reserve
Merger reserve
Retained losses
Total equity
Note
13
14
17
27
10e
18
19
27
20
21
25
27
23
10e
24
27
28
22
2011
£m
243.8
337.9
5.6
93.0
-
680.3
88.5
250.0
2.9
43.0
384.4
2010
Restated*
£m
247.7
342.5
2.3
81.4
6.2
680.1
83.6
228.0
1.0
54.0
366.6
0.7
1,065.4
-
1,046.7
(370.1)
(4.3)
(15.6)
(390.0)
(573.2)
(23.0)
(45.1)
(9.7)
(1.9)
(652.9)
(348.4)
(1.4)
(17.0)
(366.8)
(569.9)
(14.3)
(118.3)
(3.9)
(4.2)
(710.6)
(1,042.9)
22.5
(1,077.4)
(30.7)
48.3
15.0
(1.0)
7.8
9.0
22.4
87.3
(166.3)
22.5
48.0
10.6
(1.9)
9.7
7.4
22.5
87.3
(214.3)
(30.7)
* Restated following the fi nalisation of the fair value allocation of Britvic France, acquired on 28 May 2010 (see note 15).
The fi nancial statements were approved by the board of directors and authorised for issue on 29 November 2011.
They were signed on its behalf by:
Paul Moody
Chief Executive
John Gibney
Finance Director
Britvic plc Annual Report 2011
57
financial statements
consolidated statement of cash flows
For the 52 weeks ended 2 October 2011
Cash flows from operating activities
Profit / (loss) before tax
Finance costs
Other financial instruments
Impairment of property, plant and equipment and intangible assets
Depreciation
Amortisation
Share-based payments
Net pension charge less contributions
(Increase) / decrease in inventory
(Increase) / decrease in trade and other receivables
Increase / (decrease) in trade and other payables
Loss on disposal of tangible and intangible assets
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Acquisition of subsidiary net of cash acquired
Net cash flows used in investing activities
Cash flows from financing activities
Finance costs
Interest paid
Issue of US$ notes
Interest- bearing loans repaid
Issue of shares
Purchase of own shares
Dividends paid to equity shareholders
Net cash flows (used) / from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Exchange rate differences
Cash and cash equivalents at the end of the period
Note
9
13
14
24
15
12
20
2011
£m
79.9
32.0
10.2
0.5
35.6
12.9
3.8
(27.9)
(4.4)
(24.1)
22.8
4.6
(20.9)
125.0
0.6
(37.7)
(11.9)
(4.5)
(53.5)
(3.9)
(27.2)
113.9
(123.4)
2.3
(3.3)
(40.3)
(81.9)
(10.4)
54.0
(0.6)
43.0
2010
£m
(28.8)
26.3
1.5
116.7
32.9
9.5
7.8
(16.0)
1.3
10.4
(16.6)
1.3
(21.8)
124.5
4.7
(40.2)
(9.8)
(151.9)
(197.2)
(1.8)
(23.1)
149.8
(95.0)
93.4
(0.9)
(34.9)
87.5
14.8
39.7
(0.5)
54.0
58 Britvic plc Annual Report 2011
financial statements
consolidated statement of changes in equity
For the 52 weeks ended 2 October 2011
Issued
share
capital
£m
Share
premium
account
£m
Own
shares
reserve
£m
Share
scheme
reserve
£m
Hedging
reserve
£m
Translation
reserve
£m
Merger
reserve
£m
Retained
losses
£m
At 27 September 2009
43.4
5.0
(4.6)
7.3
6.2
34.3
(94.1)
Loss for the period
Other comprehensive income
Issue of shares
Transaction costs relating to placement of ordinary shares
Own shares purchased for share schemes
Own shares utilised for share schemes
Movement in share-based schemes
Current tax on share-based payments
Deferred tax on share-based payments
Payment of dividend
-
-
-
4.6
-
-
-
-
-
-
-
-
-
-
5.6
-
-
-
-
-
-
-
At 3 October 2010
48.0
10.6
Profit for the period
Other comprehensive income
Issue of shares
Own shares purchased for share schemes
Own shares utilised for share schemes
Movement in share-based schemes
Current tax on share-based payments
Deferred tax on share-based payments
Payment of dividend
-
-
-
0.3
-
-
-
-
-
-
-
-
-
4.4
-
-
-
-
-
-
At 2 October 2011
48.3
15.0
-
-
-
(4.1)
-
(0.9)
7.7
-
-
-
-
(1.9)
-
-
-
(4.1)
(3.3)
8.3
-
-
-
-
(1.0)
-
-
-
-
-
-
(5.3)
7.7
-
-
-
9.7
-
-
-
-
-
(5.6)
3.7
-
-
-
7.8
-
1.2
1.2
-
(11.8)
(11.8)
Total
£m
(2.5)
(48.2)
(37.9)
(48.2)
(48.5)
(86.1)
(96.7)
-
-
-
(2.4)
-
1.0
2.2
(34.9)
95.4
(2.0)
(0.9)
-
7.7
1.0
2.2
(34.9)
-
-
-
-
89.3
(2.0)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22.5
87.3 (214.3)
(30.7)
-
(0.1)
(0.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58.4
32.7
91.1
-
-
(1.0)
-
0.7
(2.5)
(40.3)
58.4
34.2
92.6
0.6
(3.3)
1.7
3.7
0.7
(2.5)
(40.3)
-
-
-
-
-
-
-
-
7.4
-
1.6
1.6
-
-
-
-
-
-
-
9.0
22.4
87.3 (166.3)
22.5
Britvic plc Annual Report 2011
59
financial statements
financial statements
notes to the consolidated
financial statements
1. General information
Britvic plc (the ‘company’) is a company incorporated in the United Kingdom under the Companies Act 2006. It is a public limited
company domiciled in England and Wales and its ordinary shares are traded on the London Stock Exchange. Britvic plc and its
subsidiaries (together the ‘group’) operate in the soft drinks manufacturing and distribution industry, principally in the United
Kingdom, Republic of Ireland and France.
The operating companies of the group are disclosed within note 32.
The financial statements were authorised for issue by the board of directors on 29 November 2011.
2. Statement of compliance
The financial information has been prepared on the basis of applicable International Financial Reporting Standards as adopted by the
European Union (IFRS), as they apply to the financial statements of the group.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on a going concern basis. For further detail, please refer to note 33.
The consolidated financial statements have been prepared on a historical cost basis except where measurement of balances at fair
value is required as explained below. The consolidated financial statements of the group are presented in pounds sterling, which is
also the functional currency of the company, and all values are rounded to the nearest 0.1 million except where otherwise indicated.
Basis of consolidation
The consolidated financial statements of the group incorporate the financial information of the company and the entities controlled
by the company (its subsidiaries) in accordance with IAS 27 ‘Consolidated and Separate Financial Statements’. The financial
statements of subsidiaries are prepared for the same reporting period as the company, using consistent accounting policies.
All intra-group transactions, balances, income and expenses are eliminated on consolidation. The results of subsidiary undertakings
acquired or disposed of in the year are included in the Consolidated Income Statement from the date the group gains control or
up to the date control ceases respectively. Control comprises the power to govern the financial and operating policies of the investee
so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable
or convertible potential voting rights; or by way of contractual agreement.
While the original acquisition of Britannia Soft Drinks Limited was accounted for under the merger method, in subsequent financial
periods the acquisition method of accounting has been used. Under the acquisition method, the assets, liabilities and contingent
liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair
values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values
of the identifiable net assets acquired (discount on acquisition) is credited to the income statement in the period of acquisition.
Revenue recognition
Revenue is the value of sales, excluding transactions with or between subsidiaries, and after deduction of sales related discounts
and rebates, value added tax and other sales related taxes. Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer and the amount can be measured reliably.
Sales-related discounts are calculated based on the expected amounts necessary to meet claims by the group’s customers
in respect of these discounts and rebates.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost comprises the
aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable
to making the asset capable of operating as intended. Depreciation is calculated so as to write off the cost of an asset, less its
estimated residual value, on a straight-line basis, over the useful economic life of that asset as follows:
Plant and machinery
Vehicles (included in plant and machinery)
Equipment in retail outlets (included in fixtures, fittings, tools and equipment)
Other fixtures and fittings (included in fixtures, fittings, tools and equipment)
3 to 20 years
5 to 7 years
5 to 10 years
3 to 10 years
Land is not depreciated.
Freehold properties are depreciated over 50 years.
Leasehold properties are depreciated over 50 years, or over the unexpired lease term when this is less than 50 years.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Gains and losses on disposals are determined by comparing proceeds with carrying amount,
and are included in the income statement in the period of derecognition.
60 Britvic plc Annual Report 2011
3. Accounting policies continued
Property, plant and equipment continued
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate
the carrying value may not be recoverable and are written down immediately to their recoverable amount. Useful lives and residual
amounts are reviewed annually and where adjustments are required these are made prospectively.
Goodwill
Business combinations on or after 4 October 2004 have been accounted for under IFRS 3 ‘Business Combinations’ using the
acquisition method. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at
the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised
as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (discount on
acquisition) is credited to the income statement in the period of acquisition.
Following initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised.
Goodwill is reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying
value may be impaired. As at the acquisition date, any goodwill acquired is allocated to the group of cash-generating units expected
to benefit from the combination’s synergies by management. Impairment is determined by assessing the recoverable amount of the
group of cash-generating units to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than
the carrying amount, an impairment loss is recognised immediately in the income statement.
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Intangible assets
Trademarks, franchise rights and customer lists
Intangible assets acquired separately are measured on initial recognition at the fair value of consideration paid. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation or impairment losses. An intangible asset
acquired as part of a business combination is recognised outside goodwill, at fair value at the date of acquisition, if the asset is
separable or arises from contractual or other legal rights and its fair value can be measured reliably.
The useful lives of intangible assets are assessed to be either finite or indefinite. Amortisation is charged on assets with finite lives
on a straight-line basis over a period appropriate to the asset’s useful life.
The carrying values of intangible assets with finite and indefinite lives are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
Intangible assets with indefinite useful lives are also tested for impairment annually either individually or, if the intangible asset does
not generate cash flows that are largely independent of those from other assets or groups of assets, as part of the cash generating
unit to which it belongs. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed
annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life
assessment from indefinite to finite is made on a prospective basis.
Software Costs
Software expenditure is recognised as an intangible asset only after its technical feasibility and commercial viability can be
demonstrated. Acquired computer software licences and software developed in-house are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of three to
seven years.
Impairment of assets
The group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups
of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects senior management’s estimate of the cost of capital. Impairment losses of continuing
operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously
recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Goodwill impairment losses cannot subsequently
be reversed.
Britvic plc Annual Report 2011
61
financial statements
notes to the consolidated financial statements continued
3. Accounting policies continued
Inventories and work in progress
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct
labour costs and those overheads that have been incurred in bringing inventories to their present location and condition. Cost is
determined using the weighted average cost method. Net realisable value represents the estimated selling price less all estimated
costs of completion and costs to be incurred in marketing, selling and distribution.
Financial assets
The group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially,
they are measured at fair value, which is normally the transaction price, plus directly attributable transaction costs for those financial
assets not subsequently measured at fair value through profit or loss. The group assesses at each balance sheet date whether a
financial asset or group of financial assets is impaired.
Loans and receivables
The group has financial assets that are classified as loans and receivables. Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an active market, do not qualify as trading assets and have not been
designated as either fair value through profit or loss or available for sale. Such assets are carried at amortised cost using the effective
interest method if the time value of money is significant. Gains and losses are recognised in the income statement when loans and
receivables are derecognised or impaired, as well as through the amortisation process.
Derivative financial instruments and hedging
The group uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its risks
associated with foreign currency and interest rate fluctuations. All derivative financial instruments are initially recognised and
subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when
the fair value is negative.
The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar
maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.
For those derivatives designated as hedges and for which hedge accounting is appropriate, the hedging relationship is documented
at its inception. This documentation identifies the hedging instrument, the hedged item or transaction, the nature of the risk being
hedged and how effectiveness will be measured throughout its duration. Such hedges are expected at inception to be highly effective.
Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken to the
income statement. The treatment of gains and losses arising from revaluing derivatives designated as hedging instruments depends
on the nature of the hedging relationship, as follows:
Cash flow hedges
Hedges are classified as cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a
particular risk associated with a recognised asset or liability or a highly probable forecast transaction. For cash flow hedges, the
effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income, while the ineffective
portion is recognised in the income statement. Amounts previously recognised in other comprehensive income are transferred to
the income statement in the period in which the hedged item affects profit or loss, such as when a forecast sale occurs. However,
when the forecast transaction results in the recognition of a non-financial asset or liability, the amounts previously recognised in
other comprehensive income are included in the initial carrying amount of the asset or liability.
If a forecast transaction is no longer expected to occur, amounts previously recognised in other comprehensive income are
transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or
rollover, or if its designation as a hedge is revoked, amounts previously recognised in other comprehensive income remain in equity
until the forecast transaction occurs and are then transferred to the income statement or included in the initial carrying amount of
a non-financial asset or liability as above.
Net investment hedges
Financial instruments are classified as net investment hedges when they hedge the group’s net investment in foreign operations.
Some of the group’s foreign currency borrowings qualify as hedging instruments that hedge foreign currency net investment
balances. The effective portion of gains or losses on translation of borrowings designated as net investment hedges is recognised
in other comprehensive income. Any ineffective portion is recognised immediately in the income statement. Upon disposal of the
associated investment in foreign operations any cumulative gain or loss previously recognised in other comprehensive income is
recycled through the income statement.
Fair value hedges
Hedges of the change in fair value of recognised assets or liabilities are classified as fair value hedges. For fair value hedges, the
gain or loss on the fair value of the hedging instrument is recognised in the income statement. The gain or loss on the hedged item
attributable to the hedged risk adjusts the carrying amount of the hedged item and is also recognised in the income statement.
If the hedge relationship no longer meets the criteria for hedge accounting, the hedged item would no longer be adjusted and the
cumulative adjustment to its carrying amount would be amortised to the income statement based on a recalculated effective interest
rate. The fair value gain or loss on the hedging instrument would continue to be recorded in the income statement.
62 Britvic plc Annual Report 2011
3. Accounting policies continued
Derecognition of financial instruments
The derecognition of a financial asset takes place when the contractual rights to the cash flows expire, or when the contractual
rights to the cash flows have either been transferred or an obligation has been assumed to pass them through to a third party
and the group does not retain substantially all the risks and rewards of the asset.
Financial liabilities are only derecognised when they are extinguished, that is, when the obligation is discharged or cancelled or expires.
Share-based payments
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are
granted. Fair value is determined by an external valuer using an appropriate pricing model. In valuing equity-settled transactions,
no account is taken of any performance conditions, other than conditions linked to the price of the shares (‘market conditions’).
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award
(‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the number of equity instruments that, in the opinion of the
directors and based on the best available estimate at that date, will ultimately vest (or in the case of an instrument subject to a
market condition, be treated as vesting as described below). The income statement charge or credit for a period represents the
movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other
performance conditions are satisfied.
Taxation
The current income tax expense is based on taxable profits for the period, after any adjustments in respect of prior periods.
It is calculated using taxation rates enacted or substantively enacted by the balance sheet date and is measured at the amount
expected to be recovered from or paid to the taxation authorities.
Provision is made for deferred tax liabilities, or credit taken for deferred tax assets, on all material temporary differences between
the tax base of assets and liabilities and their carrying values in the consolidated financial statements.
The principal temporary differences arise from accelerated capital allowances, provisions for pensions and other post-retirement
benefits, provisions for share-based payments and employee profit share schemes.
Deferred tax assets are recognised to the extent that it is regarded as probable that future taxable profits will be available against
which the temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the periods in which the asset or liability will be settled
based on the tax rates enacted or substantively enacted by the balance sheet date.
Pensions and post-retirement benefits
The group operates a number of pension schemes. These include both defined benefit and defined contribution plans.
Defined benefit plans
The defined benefit pension liability or asset in the balance sheet comprises the total for each plan of the present value of the
defined benefit obligation less any past service cost not yet recognised and less the fair value of plan assets out of which the
obligations are to be settled directly. Plan assets are measured at fair value based on market price information and in the case of
quoted securities, the published bid price. Plan liabilities are measured on an actuarial basis, using the projected unit credit method
and discounted at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency
and term to the plan liabilities.
The movement in the defined benefit pension asset or liability in the balance sheet consists of four main elements.
• The service cost of providing pension benefits to employees for the period which is recognised in the income statement.
• A charge representing the unwinding of the discount on the plan liabilities during the year which is included within administrative
expenses.
• A credit representing the expected return on the plan assets during the year which is included within administrative expenses.
This credit is based on the market value of the plan assets, and expected rates of return, at the beginning of the period.
• Actuarial gains and losses. These may result from: differences between the expected return and the actual return on plan assets;
differences between the actuarial assumptions underlying the plan liabilities and actual experience during the year; or changes in
the actuarial assumptions used in the valuation of the plan liabilities. Actuarial gains and losses, and taxation thereon, are
recognised immediately in other comprehensive income.
Britvic plc Annual Report 2011
63
financial statements
notes to the consolidated financial statements continued
3. Accounting policies continued
Pensions and post retirement benefits continued
Changes to benefits under a defined benefit plan are accounted for as follows:
• Past service cost is the increase in the present value of the defined benefit obligation for employee service in prior periods,
resulting from changes to post-employment benefits. Past service costs are recognised in profit or loss on a straight-line
basis over the vesting period or immediately if the benefits have vested.
• When a settlement (eliminating all obligations for part or all of the benefits already accrued) or a curtailment (reducing future
obligations as a result of a material reduction in the scheme membership or a reduction in future entitlement) occurs the obligation
and related plan assets are re-measured using current actuarial assumptions and the resultant gain or loss is recognised in the
income statement during the period in which the settlement or curtailment occurs.
Defined contribution plans
Under defined contribution plans, contributions payable for the period are charged to the income statement as an operating expense.
Employee benefits
Wages, salaries, bonuses and paid annual leave are accrued in the period in which the associated services are rendered by the employees of the group.
Leases
Leases in which substantially all the risks and rewards of ownership of the leased asset are retained by the lessor are classified as
operating leases by the group. Leases in which the group assumes substantially all the risks and rewards of ownership are classified
as finance leases.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Any lease
incentives received are credited to the income statement on a straight-line basis over the term of the leases to which they relate.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments
with original maturities of three months or less, which are readily convertible into known amounts of cash and subject to insignificant
risk of changes in value. For the purposes of the statement of cash flows, bank overdrafts repayable on demand are a component of
cash and cash equivalents.
Trade and other receivables
Trade receivables, which generally have 30–90 day terms, are recognised at the lower of their original invoiced value and recoverable amount.
Provision is made when collection of the full amount is no longer considered probable. Balances are written off when the probability
of recovery is assessed as being remote.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are initially recognised in the balance sheet at fair value less directly attributable transaction
costs and are subsequently measured at amortised cost using the effective interest rate method.
Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively in finance
income and finance cost.
Foreign currencies
Functional and presentation currency
The consolidated financial statements of the group are presented in pounds sterling. The presentation currency of the consolidated
financial statements is the same as the functional currency of the company.
Transactions and balances
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences are taken to the income
statement other than those differences relating to financial instruments designated as part of a net investment hedge. These are
recognised in other comprehensive income until the disposal of the net investment, at which time they are recognised in profit and loss.
Foreign operations
The income statement and statement of cash flows of foreign operations are translated at the average rate of exchange during the
period. The balance sheet is translated at the rate ruling at the reporting date. Exchange differences arising on opening net assets and
arising on the translation of results at an average rate compared to a closing rate are both recognised in other comprehensive income.
On disposal of a foreign operation, the accumulated exchange differences previously recognised in other comprehensive income are
included in the consolidated income statement.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the board of directors of the company.
64 Britvic plc Annual Report 2011
3. Accounting policies continued
Issued share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Nature and purpose of other reserves
Share premium account
The share premium account is used to record the excess of proceeds over the nominal value on the issue of shares.
Own shares reserve
The own shares reserve is used to record purchases by the group of its own shares, which will be distributed to employees
as and when share awards made under the Britvic employee share plans vest.
Share scheme reserve
The share scheme reserve is used to record the movements in equity corresponding to the cost recognised in respect of
equity-settled share-based payment transactions. Amounts recognised in the share scheme reserve are transferred to retained
losses upon subsequent settlement of any awards that vest either by issue or purchase of the group’s shares, or when awards lapse.
Hedging reserve
The hedging reserve records the effective portion of movements in the fair value of forward exchange contracts, interest rate and
cross currency swaps that have been designated as hedging instruments in cash flow hedges.
Translation reserve
The translation reserve includes cumulative net exchange differences on translation into the presentational currency (sterling) of items
recorded in group entities with a non-sterling functional currency net of amounts recognised in respect of net investment hedges.
Merger reserve
The movement on the merger reserve during the period ended 3 October 2010 was the result of the non pre-emptive share
placement which took place on 21 May 2010. It was executed using a structure which created a merger reserve under Section 612-3
of the Companies Act 2006.
Own shares
The cost of own shares held in employee share trusts and in treasury is deducted from shareholders’ equity until the shares are
cancelled, reissued or disposed. Where such shares are subsequently sold or reissued, the fair value of any consideration received
is also included in shareholders’ equity.
Exceptional and other items
The group presents items as exceptional and other items on the face of the income statement to allow shareholders to understand
better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess trends in
financial performance more readily.
• ‘Exceptional’ items include those significant items of income and expense which, because of the nature and infrequency of the
events giving rise to them, merit separate presentation.
• ‘Other’ items include fair value movements on financial instruments where hedge accounting cannot be applied. These items have been
included within ‘exceptional and other items’ because they are non-cash and do not form part of how management assesses performance.
Key judgements and sources of estimation uncertainty
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during
the year. However, the nature of estimation means that the actual outcomes could differ from those estimates. In the process of
applying the group’s accounting policies, management has made the following judgements which have the most significant effect
on the amounts recognised in the financial statements.
Post-retirement benefits
The determination of the pension and other post retirement benefits cost and obligation is based on assumptions determined with
independent actuarial advice. The assumptions include discount rate, inflation, pension and salary increases, expected return on
scheme assets, mortality and other demographic assumptions. These key assumptions are disclosed in note 24.
Impairment of goodwill and intangible assets with indefinite lives
Determining whether goodwill and intangible assets with indefinite lives are impaired requires an estimation of the value in use of
the cash generating units to which the goodwill / intangible asset has been allocated. The value in use calculation requires an
estimate of the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value. Further details are given in note 16.
Deferred tax
Deferred tax assets and liabilities require management’s judgement in determining the amounts to be recognised. In particular,
significant judgement is used when assessing the extent to which deferred tax assets should be recognised which is dependent
on the generation of sufficient future taxable profits. The group recognises deferred tax assets to the extent it is probable that the
benefit will be realised. Further details are given in note 10.
Britvic plc Annual Report 2011
65
financial statements
notes to the consolidated financial statements continued
3. Accounting policies continued
Key judgements and sources of estimation uncertainty continued
Cross currency interest rate swaps
The group measures cross currency interest rate swaps at fair value at each balance sheet date. The fair value represents the net
present value of the difference between the projected cash flows at the swap contract rate and the relevant exchange / interest rate
for the period from the balance sheet date to the contracted expiry date. The calculation therefore uses estimates of present value,
future foreign exchange rates and interest rates. Information regarding cross currency interest rate swaps is provided in notes 23 and 27.
Other
The group also makes estimations and judgements in the valuation of share-based payments. However, the value of this item is
such that any variation in the estimates used is unlikely to have a significant effect on the amounts recognised in the financial
statements. Further details are given in note 29.
New standards adopted in the current period
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.
New standards and interpretations not applied
The group has not applied the following IFRSs, which may be applicable to the group, that have been issued but are not yet
effective:
Effective date – periods
commencing on or after
1 July 2011
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 July 2012
1 January 2012
1 January 2013
1 January 2011
1 January 2013
1 January 2013
1 January 2011
1 January 2013
International Financial Reporting Standards (IFRS)
IFRS 7
IFRS 9
IFRS 10
IFRS 11
IFRS 12
IFRS 13
Amendment to IFRS 7 – Disclosures – Transfers of financial assets
Financial Instruments – Classification and measurement
Consolidated financial statements
Joint arrangements
Disclosures of interests in other entities
Fair value measurement
International Accounting Standards (IAS)
IAS 1
IAS 12
IAS 19
IAS 24
IAS 27
IAS 28
Amendment to IAS 1 – Presentation of financial statements
Amendment to IAS 12 – Income taxes
IAS 19 (revised 2011) – Employee benefits
Amendment to IAS 24 – Disclosure requirements for government related
entities and definition of a related party
IAS 27 (revised 2011) – Separate financial statements
IAS 28 (revised 2011) – Investments in associates and joint ventures
IFRS Interpretations Committee (IFRIC)
Amendment – Prepayments of a minimum funding requirement
Stripping costs in the production phase of a surface mine
IFRIC 14
IFRIC 20
Other
Annual
improvements
Annual improvements 2010
1 January 2011
The directors do not anticipate that the adoption of these standards will have a material impact on the group’s reported income or
net assets in the period, with the exception of IAS 19 revised which is not anticipated to have a material impact on net assets, but
the impact on the reported income of the group is not possible to determine as it will depend on conditions at the time of adoption.
The most significant change for Britvic under IAS 19 revised is the replacement of interest cost and expected return on plan assets
with a finance cost component which is determined by applying the same discount rate used to measure the defined benefit
obligation to the net defined benefit liability or asset. The difference between the actual return on plan assets and the discount
rate will be presented in other comprehensive income. The effect at the date of adoption will depend on market interest rates,
rates of return and the actual mix of scheme assets at that time. Following consultation with GB employees, the group principal
pension scheme, the Britvic Pension Plan (BPP), was closed to future accrual for active members with effect from 10 April 2011
and the intention of the Trustees is to change the asset allocation over time to reduce the risk of volatility within the asset portfolio.
Changes to the mix of scheme assets to reduce risk may also reduce the impact of IAS 19 revised.
66 Britvic plc Annual Report 2011
4. 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
• 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.
52 weeks ended 2 October 2011
Revenue
- External
- Inter-segment***
Brand contribution
Non-brand advertising & promotion *
Fixed supply chain**
Selling costs**
Overheads and other costs*
Operating profit before exceptional
& other items
Finance costs before exceptional
& other items
Exceptional & other items
Profit before tax
53 weeks ended 3 October 2010
Revenue
- External
- Inter-segment***
Brand contribution
Non-brand advertising & promotion *
Fixed supply chain**
Selling costs**
Overheads and other costs*
Operating profit before exceptional
& other items
Finance costs before exceptional &
other items
Exceptional & other items
Loss before tax
GB Stills
£m
GB Carbs
£m
International
£m
Total GB &
International
£m
Ireland
£m
France
£m
Adjustments
£m
Total
£m
351.2
13.8
365.0
150.1
502.6
10.1
512.7
189.1
29.1
-
29.1
10.9
882.9
23.9
906.8
350.1
162.8
8.4
171.2
57.8
244.7
0.6
245.3
62.0
-
(32.9)
1,290.4
-
(32.9)
1,290.4
-
469.9
(8.0)
(111.1)
(121.7)
(94.1)
135.0
(29.9)
(25.2)
79.9
GB Stills
£m
GB Carbs
£m
International
£m
Total GB &
International
£m
Ireland
£m
France
£m
Adjustments
£m
Total
£m
369.2
12.2
381.4
172.5
477.6
8.2
485.8
187.1
27.6
-
27.6
9.9
874.4
20.4
894.8
369.5
179.0
5.6
184.6
64.1
85.2
-
85.2
24.1
-
(26.0)
1,138.6
-
(26.0)
1,138.6
-
457.7
(10.4)
(94.9)
(117.2)
(100.6)
134.6
(25.5)
(137.9)
(28.8)
*
Included within ‘Administration expenses’ in the Consolidated Income Statement. Costs included within ‘Overheads and other costs’ relate to central costs
including salaries, IT maintenance, depreciation and amortisation.
**
Included within ‘Selling and distribution costs’ in the Consolidated Income Statement.
*** Inter-segment revenues are eliminated on consolidation.
Britvic plc Annual Report 2011
67
financial statements
notes to the consolidated financial statements continued
4. Segmental reporting continued
Geographic information
Revenues from external customers
The analysis below is based on the location where the sale originated.
United Kingdom
Other
Total revenue
Non-current assets
United Kingdom
Republic of Ireland
France
Total
2011
£m
913.4
377.0
2010
£m
899.9
238.7
1,290.4
1,138.6
2011
£m
262.6
128.7
196.0
587.3
2010
Restated*
£m
260.1
131.5
200.9
592.5
* Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
Non-current assets for this purpose consist of property, plant and equipment, intangible assets and other receivables.
5. Exceptional and other items
Net pension gain*
Asset impairments*
Costs in relation to the purchase of Britvic France*
Restructuring costs*
Head office relocation*
Onerous leases*
Write off of unamortised financing fees**
Other fair value movements***
Total exceptional and other items before tax
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
2011
£m
13.2
-
-
(25.0)
(1.3)
-
(1.5)
(10.6)
(25.2)
2010
£m
-
(116.1)
(8.5)
(5.7)
-
(3.1)
-
(4.5)
(137.9)
*
Included within administration expenses in the consolidated income statement
**
Included within finance costs in the consolidated income statement
*** For 2011, £nil (2010: £2.4m) included within cost of sales, £10m (2010: £1.3m) within administration expenses and £0.6m (2010: £0.8m) included within
finance costs in the consolidated income statement.
a) This includes a pension curtailment gain of £17.7m arising due to the closure to future accrual of the defined benefit section of
the Britvic Pension Plan. Offsetting the gain is a one off transitional payment of 10% of final salary to pension members of £2.9m
and consultancy costs of £1.6m.
b) In 2010, asset impairments can be analysed as follows:
• Impairments of goodwill in the GB segment (Red Devil £5.0m, Orchid £6.4m)
• Impairments of intangible assets in the Ireland segment (£89.6m)
• Impairments of land and buildings in the Ireland segment (£14.6m, £0.5m relates to assets previously held for sale)
• Impairments of plant and equipment in the GB segment (£0.5m)
In respect of tangible fixed assets, all impairments were calculated based on fair value less costs to sell, where the fair value is
determined by reference to an active market.
c) In 2010, costs relating to the purchase and integration of Britvic France were primarily Advisors’ fees.
d) Restructuring costs includes the costs of major restructuring programmes undertaken.
The 2011 costs principally relate to:
• Redundancy costs arising in the Ireland segment;
• Redundancy and restructuring costs relating to the separation of functional support structures between group and the GB business unit;
• Costs relating to the outsourcing of the group data centre involving dual running and temporary infrastructure cost; and
• The outsourcing of our GB full service vending operation. This includes exit and redundancy costs and a write down of the associated assets.
68 Britvic plc Annual Report 2011
5. Exceptional and other items continued
The 2010 costs related to:
• Redundancy costs arising in the Ireland segment; and
• Costs in relation to the Business Transformation project in the Ireland segment.
e) Head office relocation relates to costs associated with the transfer of the Britvic head office from Chelmsford to Hemel
Hempstead which is proposed to take place in 2012. The 2011 cost principally relates to a dilapidations provision and lease break
fee in respect of the existing office in Chelmsford.
f) In 2010, the onerous leases related to two sites within the Ireland business segment where, in addition to accruals made in
previous years, incremental future lease commitments were accrued for based on our experience of the deterioration in the Irish
property market during 2009/10.
g) Following the successful refinancing of the group’s committed bank facility in March 2011 (see note 23), the unamortised 2009
refinancing fees of £1.5m have been written off to finance costs in the consolidated income statement.
h) Other fair value movements relate to the fair value movement of derivative financial instruments where hedge accounting cannot be applied.
Details of the tax implications of exceptional items are given in note 10a.
6. Operating profit / (loss)
This is stated after charging:
Cost of inventories recognised as an expense
Write-down of inventories to net realisable value
Research and development expenditure written off
Net foreign currency differences
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease payments – minimum lease payments
7. Auditors’ remuneration
Auditors’ remuneration – audit of the group financial statements
Other fees to auditors
Local statutory audits for subsidiaries
Other services
2011
£m
627.3
2.3
0.6
(0.1)
35.6
12.9
16.6
2011
£m
0.3
0.1
0.6
2010
£m
509.2
2.9
1.7
4.0
32.9
9.5
14.9
2010
£m
0.4
0.1
0.2
In the current period, fees in the other services category comprise £0.1m for tax services, £0.1m for corporate finance services and £0.4m for
other services. The fees in the other services category in the prior period comprise £0.15m of audit related fees and £0.05m of tax related fees.
8. Staff costs
Wages and salaries*
Social security costs
Pension costs (note 24)
Expense of share-based compensation (note 29)
2011
£m
147.3
19.8
(6.4)**
4.7
165.4
* £13.3m (2010: £2.6m) of this is included within ‘restructuring costs’ in exceptional and other items (note 5).
** Includes curtailment gain of £17.7m arising in relation to the Britvic Pension Plan which is in exceptional and other items (note 5).
Directors’ emoluments which are included above are detailed in the Directors’ Remuneration Report.
The average monthly number of employees during the period was made up as follows:
Distribution
Production
Sales and marketing
Administration
2011
407
1,516
1,114
495
3,532
2010
£m
123.9
14.1
12.3
9.4
159.7
2010
395
1,244
983
435
3,057
Britvic plc Annual Report 2011
69
financial statements
notes to the consolidated financial statements continued
9. Finance costs
Bank loans, overdrafts and loan notes
Fair value movement on interest rate swap (see note 27)
Total finance costs
10. Taxation
a) Tax on loss on ordinary activities
Income statement
Current income tax
Current income tax (charge) / credit
Amounts overprovided / (underprovided) in previous years
Total current income tax (charge) / credit
Deferred income tax
Origination and reversal of temporary differences
Amounts (underprovided) / overprovided in previous years
Total deferred tax credit
Total tax (charge) / credit in the income statement
Statement of comprehensive income
Current tax on additional pension contributions
Deferred tax on actuarial losses on defined benefit pension schemes
Deferred tax in respect of cash flow hedges accounted for in the hedging reserve
Tax on exchange differences accounted for in the translation reserve
Total tax charge in the statement of comprehensive income
Statement of changes in equity
Current tax on share options exercised
Deferred tax on share options granted to employees
Total tax charge in the statement of changes in equity
2011
£m
31.4
0.6
32.0
Before
exceptional
& other
items
£m
Exceptional
& other
items
£m
(31.3)
1.1
(30.2)
3.3
(0.3)
3.0
(27.2)
4.3
(0.3)
4.0
1.5
0.2
1.7
5.7
2010
£m
25.5
0.8
26.3
2011
Total
£m
(27.0)
0.8
(26.2)
4.8
(0.1)
4.7
(21.5)
4.3
(16.7)
(0.5)
1.5
(11.4)
0.7
(2.5)
(1.8)
70 Britvic plc Annual Report 2011
10. Taxation continued
a) Tax on loss on ordinary activities (continued)
Income statement
Current income tax
Current income tax (charge) / credit
Amounts overprovided in previous years
Total current income tax (charge) / credit
Deferred income tax
Origination and reversal of temporary differences
Amounts underprovided in previous years
Total deferred tax credit
Total tax (charge) / credit in the income statement
Statement of comprehensive income
Current tax on additional pension contributions
Deferred tax on actuarial losses on defined benefit pension schemes
Deferred tax in respect of cash flow hedges accounted for in the hedging reserve
Tax on exchange differences accounted for in the translation reserve
Total tax credit in the statement of comprehensive income
Statement of changes in equity
Current tax on share options exercised
Deferred tax on share options granted to employees
Total tax credit in the statement of changes in equity
Before
exceptional
& other
items
£m
Exceptional
& other
items
£m
(33.2)
1.6
(31.6)
2.6
(0.1)
2.5
(29.1)
2.0
0.8
2.8
6.9
-
6.9
9.7
2010
Total
£m
(31.2)
2.4
(28.8)
9.5
(0.1)
9.4
(19.4)
2.8
8.3
(0.3)
1.9
12.7
1.0
2.2
3.2
Britvic plc Annual Report 2011
71
financial statements
notes to the consolidated financial statements continued
10. Taxation continued
b) Reconciliation of the total tax charge
The tax expense in the income statement is lower (2010: higher) than the standard rate of corporation tax in the UK of 27%
(2010: 28%). The differences are reconciled below:
Profit / (loss) before tax
Profit / (loss) multiplied by the UK average rate of corporation tax of 27%
Permanent differences
Impact of change in UK tax rate on deferred tax liability
Tax overprovided in previous years
Overseas tax rates
Effective income tax rate
Profit / (loss) before tax
Profit / (loss) multiplied by the UK average rate of corporation tax of 28%
Permanent differences
Tax relief on share-based payments
Tax overprovided in previous years
Overseas tax rates
Effective income tax rate
c) Unrecognised tax items
Before
exceptional
& other
items
£m
Exceptional
& other
items
£m
105.1
(25.2)
(28.4)
(0.2)
1.1
0.8
(0.5)
(27.2)
25.9%
6.8
0.1
0.1
(0.1)
(1.2)
5.7
Before
exceptional
& other
items
£m
Exceptional
& other
items
£m
109.1
(137.9)
(30.5)
(0.5)
0.1
1.5
0.3
(29.1)
26.7%
38.6
(12.4)
-
0.8
(17.3)
9.7
2011
Total
£m
79.9
(21.6)
(0.1)
1.2
0.7
(1.7)
(21.5)
26.9%
2010
Total
£m
(28.8)
8.1
(12.9)
0.1
2.3
(17.0)
(19.4)
(67.4%)
The temporary differences associated with investments in subsidiaries for which a deferred tax liability has not been recognised
total £13m (2010: £11.6m). No deferred tax has been provided in respect of these differences, since the timing of the reversals
can be controlled and it is probable that the temporary differences will not reverse in the future.
The group expects that future remittances of earnings from its overseas subsidiaries will be covered by the UK dividend
exemption and so the un-remitted earnings of these subsidiaries are not disclosed above.
A deferred tax asset of £0.2m (2010: £nil) has not been recognised in respect of tax losses. The tax losses do not expire under
current tax legislation. Deferred tax assets have not been recognised as it is not probable that future taxable profits will be
available against which the group can utilise the benefits therefrom.
72 Britvic plc Annual Report 2011
10. Taxation continued
d) Impact of rate change
The main rate of UK Corporation tax was reduced to 26% from 1 April 2011. The Finance Act 2011 further reduced the main rate
of UK Corporation tax to 25% from 1 April 2012. The effect of the new rate is to reduce the deferred tax provision by a net
£0.4m, comprising a credit of £1.2m to the Consolidated Income Statement and a charge of £0.8m to the Consolidated
Statement of Comprehensive Income.
Additional changes to the main rate of UK Corporation Tax are proposed, to reduce the rate by 1% per annum to 23% by 1 April
2014. These changes had not been substantively enacted at the balance sheet date and consequently are not included in these
financial statements. The effect of these proposed reductions would be to reduce the UK net deferred tax liability by £0.6m.
On 7 November 2011, the French government announced a proposal to apply a temporary two year 5% surcharge to the
corporate tax liabilities of French companies whose turnover exceeds €250m. This change was only announced after the period
end and consequently has not been included in these financial statements. The effect of this proposed increase would be to
increase the Britvic France net deferred tax liability by £0.6m.
e) Deferred tax
The deferred tax included in the balance sheet is as follows:
Deferred tax liability
Accelerated capital allowances
Acquisition fair value adjustments
Other temporary differences
Employee incentive plan
Deferred tax liability
Deferred tax asset
Employee incentive plan
Post employment benefits
Other temporary differences
Deferred tax asset
Net deferred tax liability
2011
£m
(17.5)
(20.2)
(0.1)
-
(37.8)
3.7
7.4
3.7
14.8
2010
Restated*
£m
(19.7)
(21.5)
(3.1)
-
(44.3)
6.7
27.5
2.0
36.2
(23.0)
(8.1)
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for
financial reporting purposes:
Net deferred tax assets
Net deferred tax liabilities
The deferred tax included in the income statement is as follows:
Employee incentive plan
Accelerated capital allowances
Post-employment benefits
Acquisition fair value adjustments
Other temporary differences
Deferred tax credit
£1.7m of the deferred tax credit in the current period relates to exceptional items (2010: £6.9m).
* Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
2011
£m
-
(23.0)
(23.0)
2011
£m
(0.5)
2.2
(3.4)
0.9
5.5
4.7
2010
Restated*
£m
6.2
(14.3)
(8.1)
2010
£m
0.7
1.0
(0.4)
6.3
1.8
9.4
Britvic plc Annual Report 2011
73
financial statements
notes to the consolidated financial statements continued
11. Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit / (loss) for the period attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders 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:
Basic earnings per share
Profit / (loss) for the period attributable to equity shareholders
Weighted average number of ordinary shares in issue for basic earnings per share
Basic earnings per share
Diluted earnings per share
Profit / (loss) for the period attributable to equity shareholders
Weighted average number of ordinary shares in issue for diluted earnings per share
Diluted earnings per share
2011
£m
58.4
240.4
2010
£m
(48.2)
224.9
24.3p
(21.4p)
58.4
246.4
(48.2)
231.8
23.7p
(21.4p)*
* The diluted earnings per share is unchanged from the basic earnings per share, as the inclusion of the dilutive ordinary shares would reduce the loss per share
and is therefore not dilutive in accordance with IAS 33 ‘Earnings per Share’.
The group presents as exceptional and other items on the face of the 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 better 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 table below:
Adjusted basic earnings per share
Profit / (loss) for the period attributable to equity shareholders
Add: Net impact of exceptional and other items
Add: Intangible assets amortisation (acquisition related)
Weighted average number of ordinary shares in issue for basic earnings per share
2011
£m
58.4
19.5
3.1
81.0
240.4
2010
Restated*
£m
(48.2)
128.2
2.2
82.2
224.9
Adjusted basic earnings per share
33.7p
36.5p
Adjusted diluted earnings per share
Profit for the period attributable to equity shareholders before exceptional items and
other items and acquisition related intangible assets amortisation
Weighted average number of ordinary shares in issue for diluted earnings per share
Adjusted diluted earnings per share
81.0
246.4
82.2
231.8
32.9p
35.5p
* The add back of amortisation of intangible assets was previously stated on a total basis. In order to better reflect the ongoing underlying earnings, only
acquisition related amortisation is now adjusted and comparatives have been restated accordingly.
74 Britvic plc Annual Report 2011
12. Dividends paid and proposed
Declared and paid during the period
Equity dividends on ordinary shares
Final dividend for 2010: 12.0p per share (2009: 10.9p per share)
Interim dividend for 2011: 5.1p per share (2010: 4.7p per share)
Dividends paid
Proposed for approval by the shareholders at the AGM
Final dividend for 2011: 12.6p per share (2010: 12.0p per share)
13. Property, plant and equipment
2011
£m
28.3
12.0
40.3
29.9
Freehold
land and
buildings
£m
Leasehold
land and
buildings
£m
Plant and
machinery
£m
Fixtures,
fittings,
tools and
equipment
£m
At 27 September 2009, net of accumulated
depreciation and impairment
Exchange differences
Acquisitions
Additions
Disposals at cost
Depreciation eliminated on disposals
Assets transferred which were previously
held for sale
Depreciation charge for the year
Impairment
At 3 October 2010, net of accumulated
depreciation and impairment
Exchange differences
Reclassifications
Acquisitions
Additions
Disposals at cost
Depreciation eliminated on disposals
Assets transferred to held for sale
Depreciation charge for the year
Impairment
At 2 October 2011, net of accumulated
depreciation and impairment
At 2 October 2011
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
At 3 October 2010
Cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
48.0
(0.5)
18.0
1.6
-
-
4.7
(1.3)
(8.8)
61.7
(0.3)
(0.3)
0.5
1.4
(1.2)
0.7
(0.7)
(1.9)
-
59.9
78.6
(18.7)
59.9
79.2
(17.5)
61.7
35.0
(0.6)
-
1.0
-
-
-
(0.7)
(5.8)
28.9
(0.1)
-
-
0.5
(0.1)
-
-
(0.5)
-
28.7
40.6
(11.9)
28.7
40.3
(11.4)
28.9
86.6
(0.7)
17.4*
18.0
(12.0)
7.2
-
(14.7)
(1.1)
100.7
(0.5)
0.3
0.1
23.7
(24.5)
23.8
-
(18.0)
(0.5)
105.1
256.1
(151.0)
105.1
257.0
(156.3)
100.7*
56.5
(0.7)
0.6
17.4
(14.4)
13.2
-
(16.2)
-
56.4
(0.1)
-
-
12.6
(36.8)
33.2
-
(15.2)
-
50.1
161.4
(111.3)
50.1
185.7
(129.3)
56.4
2010
£m
23.6
11.3
34.9
28.7
Total
£m
226.1
(2.5)
36.0
38.0
(26.4)
20.4
4.7
(32.9)
(15.7)
247.7
(1.0)
-
0.6
38.2
(62.6)
57.7
(0.7)
(35.6)
(0.5)
243.8
536.7
(292.9)
243.8
562.2
(314.5)
247.7
* Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
During the period, properties with a net book value of £26.6m, comprising freehold land and buildings of £21.4m and leasehold land
and buildings of £5.2m, were transferred to Britvic Property Partnership (see note 24). These secure the future income stream to the
pension plan.
Finance leases
The net book value of freehold land and buildings and plant and machinery includes £0.3m and £0.5m respectively (2010: £0.5m and
£0.9m respectively) in respect of assets held under finance leases. The assets are pledged as security for the finance lease liabilities.
Britvic plc Annual Report 2011
75
financial statements
notes to the consolidated financial statements continued
14. Intangible assets
Cost as at 27 September 2009,
net of accumulated amortisation
Exchange differences
Acquisitions
Additions
Disposals at cost
Amortisation eliminated on disposals
Amortisation charge for the period
Impairment
Cost as at 3 October 2010,
net of accumulated amortisation
Exchange differences
Acquisitions
Additions
Disposals at cost
Amortisation eliminated on disposals
Amortisation charge for the period
At 2 October 2011
At 2 October 2011
Cost (gross carrying amount)
Accumulated amortisation
and impairment
Net carrying amount
At 3 October 2010
Cost (gross carrying amount)
Accumulated amortisation
and impairment
Net carrying amount
Trademarks
£m
Franchise
rights
£m
Customer
lists
£m
Software costs
£m
Goodwill
£m
73.3
(4.3)
62.4
-
-
-
-
(29.8)
101.6
(1.7)
-
-
-
-
-
99.9
129.8
(29.9)
99.9
131.5
(29.9)
101.6
25.6
(1.3)
-
-
-
-
(0.8)
-
23.5
(0.2)
-
-
-
-
(0.7)
22.6
25.5
(2.9)
22.6
25.7
(2.2)
23.5
15.1
(0.6)
35.2
-
-
-
(1.4)
(5.1)
43.2
(0.5)
-
-
-
-
(2.4)
40.3
51.0
(10.7)
40.3
51.5
(8.3)
43.2
27.0
0.2
1.2
9.6
(0.6)
0.6
(7.3)
-
30.7
(0.2)
-
11.9
(24.6)
24.3
(9.8)
32.3
51.8
(19.5)
32.3
64.7
(34.0)
30.7
Total
£m
293.1
(11.4)
161.7
9.6
(0.6)
0.6
(9.5)
(101.0)
342.5
(3.7)
0.4
11.9
(24.6)
24.3
(12.9)
337.9
467.0
(129.1)
337.9
152.1
(5.4)
62.9*
-
-
-
-
(66.1)
143.5
(1.1)
0.4
-
-
-
-
142.8
208.9
(66.1)
142.8
209.6
483.0
(66.1)
143.5*
(140.5)
342.5
* Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
Trademarks
Britvic Ireland and Britvic France
Trademarks represent those trade names acquired which the group plans to maintain. All trademarks have been allocated an
indefinite life by management. A list of the trademarks held in respect of the Britvic Ireland and Britvic France segments is shown
in note 16.
It is expected, and in line with existing well-established trademarks within the group, that the trademarks with indefinite lives in
respect of Britvic France and Britvic Ireland will be held and supported for an indefinite period of time and are expected to generate
economic benefits. The group is committed to supporting its trademarks by investing in significant consumer marketing
promotional spend.
Franchise rights
Franchise rights represent the franchise agreements acquired as part of the Britvic Ireland business combination which provide
the long-term right to distribute certain soft drinks. These agreements have been allocated a 35 year useful economic life. As at
2 October 2011 these intangible assets have a remaining useful life of 31 years. The franchise agreement itself has a contract life
less than the useful economic life. The useful economic life has been determined on the basis that the renewal of the contract is
highly probable.
76 Britvic plc Annual Report 2011
14. Intangible assets continued
Customer lists
Britvic France
Customer lists recognised on the acquisition of Britvic France relate to those customer relationships acquired. These intangible
assets have been allocated useful economic lives of 20 years. At 2 October 2011 these intangible assets have a remaining useful
life of 19 years.
Britvic Ireland
Customer lists represent those customer relationships acquired which are valued in respect of the grocery and wholesale
businesses. These customer lists have been allocated useful economic lives of between 10 and 20 years. At 2 October 2011
these intangible assets have a remaining useful life of between 6 and 16 years.
Software costs
Software is capitalised at cost. These intangible assets have been assessed as having finite lives and are amortised using the
straight-line method over a period of 3 to 7 years. These assets are tested for impairment where an indicator of impairment arises.
As at 2 October 2011 these intangible assets have a remaining useful life of up to 6 years.
Goodwill
Goodwill is not amortised. Instead it is subject to an impairment review at each reporting date in accordance with IAS 36
‘Impairment of Assets’. Further detail is provided in note 16.
Intangible assets recognised on the acquisition of Britvic Ireland and Britvic France are valued in euros and translated to sterling
at the reporting date.
15. Business combinations
There were no material acquisitions during the period.
Acquisition of Britvic France
On 28 May 2010, the group acquired Britvic France for a cash consideration of €186.4m (translated at £160.5m at the time of
acquisition).
The initial fair value / acquisition accounting for Britvic France was determined provisionally in the financial statements for the 53
weeks ended 3 October 2010. The fair value adjustments have now been finalised and are shown in the table below. The overall
impact of the changes made result in an increase to goodwill of £1.0m. The comparatives for the 53 weeks ended 3 October 2010
have been adjusted in these financial statements to reflect these updated fair values accordingly.
The difference between the fair value of the consideration paid and the fair value of the identifiable net assets acquired is recognised
as goodwill. Included in goodwill are certain intangible assets that cannot be separated and reliably measured due to their nature.
These items include the favourable market presence which Britvic France enjoys, an assembled workforce and anticipated future
operating synergies from the combination.
The sterling carrying value of the net assets acquired shown in the table below has been calculated using the exchange rate on the
date of acquisition which was £1: €1.1611
Book value
€m
Fair value
adjustments
€m
Fair value
€m
Fair value
£m
Intangible assets
Property, plant and equipment
Other financial assets
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Pension liability
Interest-bearing loans and borrowings
Other non-current liabilities
Other financial liabilities
Deferred tax liability
Current income tax payable
Net assets acquired
Purchased goodwill
Cost of investment satisfied by cash consideration
81.4
27.2
2.3
35.7
73.2
10.0
(86.2)
(1.2)
(53.4)
(3.8)
(0.9)
-
(1.8)
82.5
33.3
14.7
-
2.1
-
-
-
-
-
-
-
(17.7)
(1.5)
30.9
114.7
41.9
2.3
37.8
73.2
10.0
(86.2)
(1.2)
(53.4)
(3.8)
(0.9)
(17.7)
(3.3)
113.4
73.0
186.4
98.8
36.0
2.0
32.6
63.0
8.6
(74.2)
(1.0)
(46.0)
(3.3)
(0.8)
(15.3)
(2.8)
97.6
62.9
160.5
Britvic plc Annual Report 2011
77
financial statements
notes to the consolidated financial statements continued
16. Impairment testing of intangible assets
Goodwill
Goodwill acquired through business combinations has been allocated by senior management to seven individual cash-generating
units for impairment testing as follows:
• Orchid
• Tango
• Robinsons
• Britvic Soft Drinks business (‘BSD’)
• Water Business
• Britvic Ireland
• Britvic France
With the exception of Britvic Ireland and Britvic France, all other goodwill amounts were recognised on acquisitions made within
Britvic GB.
Carrying amount of goodwill
At 2 October 2011
At 3 October 2010
Orchid
£m
6.0
6.0
Tango
£m
8.9
8.9
Robinsons
£m
38.6
38.6
BSD
£m
7.8
7.8
Water
£m
1.7
1.7
Britvic
Ireland
£m
17.0
16.8
Britvic
France
Restated
£m
62.8
63.7*
Total
£m
142.8
143.5
* Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
The Britvic Ireland and Britvic France goodwill is valued in euros and translated at the reporting date.
Apart from a £0.4m increase in goodwill in Ireland relating to the non-material acquisition of Quinn’s of Cookstown, there are no
movements from the prior year other than translation movements.
Trademarks with indefinite lives
Carrying amount of trademarks with indefinite lives in the Ireland segment
As part of the fair value exercise regarding the 2007 acquisition of Britvic Ireland, certain trademarks with indefinite lives were
recognised. These trademarks have been allocated by senior management to five individual cash-generating units for impairment
testing as follows:
At 2 October 2011
At 3 October 2010
Britvic
£m
6.4
6.5
Cidona
£m
5.7
5.8
Mi Wadi
£m
Ballygowan
£m
8.8
8.9
2.4
2.5
Club
£m
14.6
14.8
The trademarks are valued in euros and translated at the reporting date. The movements in the carrying amount from the prior year
relate only to translation movements.
Carrying amount of trademarks with indefinite lives in the France segment
Additional trademarks with indefinite lives were recognised as part of the fair value exercise on the 2010 acquisition of Britvic
France. These trademarks have been allocated by senior management to four individual cash-generating units for impairment testing
as follows:
At 2 October 2011
At 3 October 2010
Teisseire
£m
49.1
49.9
Moulin de
Valdonne
£m
4.0
4.1
Pressade
£m
4.6
4.7
Fruité
£m
4.3
4.4
The trademarks are valued in euros and translated at the reporting date. The movements in the carrying amount from the prior year
only relate to translation movements.
78 Britvic plc Annual Report 2011
16. Impairment testing of intangible assets continued
Method of impairment testing
The recoverable amount of the goodwill and intangible assets allocated to the cash-generating units detailed above has been
determined based on a value in use calculation. To calculate this, 20 year cash flow projections are based on financial budgets
prepared by senior management and approved by the board of directors. A 20 year cash flow period has been used reflecting
the current economic uncertainty in the markets in which we operate.
The group has considered the impact of the current economic climate in determining the appropriate discount rate to use in
impairment testing. The pre-tax discount rate applied to pre-tax cash flow projections is 11% (2010: 11 per cent) for goodwill
relating to Britvic GB. A pre-tax discount rate of 11% (2010: 10 per cent) was applied for the Britvic Ireland goodwill and trademarks
recognised on the acquisition of Britvic Ireland. A pre-tax discount rate of 12% was applied for the Britvic France goodwill
and trademarks recognised on the acquisition of Britvic France.
Cash flows beyond a one year period are extrapolated based on senior management forecasts for the following four years and
beyond that based on growth and inflationary assumptions as described below. No growth besides inflationary growth increases
is assumed beyond five years given the current economic uncertainty. Senior management expectations are formed in line with
performance to date and experience, as well as available external market data.
Key assumptions used in value in use calculation
The following describes each key assumption on which management has based its cash flow projections to undertake impairment
testing of goodwill.
Growth rates – reflect senior management expectations of volume growth based on growth achieved to date, current strategy and expected
market trends. No growth besides inflationary growth increases is assumed beyond five years given the current economic uncertainty.
Discount rates – reflect senior management’s estimate of the pre-tax cost of capital adjusted where necessary to reflect the different
risks of different countries in which the group operates. The estimated pre-tax cost of capital is the benchmark used by management
to assess operating performance and to evaluate future capital investment proposals.
Marginal contribution – being revenue less material costs and all other marginal costs that management considers to be directly
attributable to the sale of a given product. Marginal contribution is based on financial budgets approved by the Britvic plc board.
Key assumptions are made within these budgets about pricing, discounts and costs based on historical data, current strategy and
expected market trends.
Advertising and promotional spend – financial budgets approved by senior management are used to determine the value assigned
to advertising and promotional spend. This is based on the planned spend for year one and strategic intent thereafter.
Raw materials price, production and distribution costs, selling costs and other overhead inflation – the basis used to determine the
value assigned to inflation is the forecast increase in consumer price indices in the relevant market. This has been used in all value
in use calculations performed.
Conclusions
In 2010, impairment losses were recognised in respect of Red Devil goodwill (£5.0m), Orchid goodwill (£6.4m), Britvic Ireland
goodwill (£54.7m), Britvic Ireland indefinite life trademarks (£29.7m) and Britvic Ireland finite life trademarks (£0.1m). No further
impairments have been identified during 2011 and for all cash-generating units, with the exception of Orchid, there are no reasonably
possible changes in key assumptions other than a further, currently unforecast, material decline in the prospects for the economies
in which the group operates, which would cause the value of the goodwill or any of the intangible assets with indefinite lives to
materially fall short of their carrying value. For the Orchid cash generating unit, no growth has been assumed in the cash flow
projections. Based on this assumption, the recoverable amount exceeds the carrying amount by approximately £0.7m. A decline
in volumes of 2% per annum in the five year forecasts used would reduce this to £nil.
Intangible assets with finite lives
Franchise rights
Franchise rights represent the franchise agreements acquired, as a result of the acquisition of Britvic Ireland, which provide
the long-term right to distribute certain soft drinks. Management have reviewed the performance of those products since acquisition
and no indicators of impairment have been identified.
Customer lists
As part of the fair value exercise regarding the acquisitions of Britvic Ireland in 2007 and Britvic France in 2010, customer list assets
with finite lives were recognised. Management have reviewed trading levels with those customers since acquisition and in the prior
year identified a number of material reductions which have been directly attributed to the difficult trading conditions experienced in
Ireland due to the sustained economic downturn. As a result an impairment loss of £5.1m was recognised in 2010.
No indicators of impairment have been identified in the current year and accordingly no further impairments have been recognised
in respect of customer lists.
Recognition of impairment losses
In 2010, impairment losses, in respect of intangible assets as detailed above, totalling £101.0m were recognised in the income
statement within exceptional administration expenses. £11.4m related to the GB carbs business segment and £89.6m related
to the Britvic Ireland business segment.
Britvic plc Annual Report 2011
79
financial statements
notes to the consolidated financial statements continued
17. Other receivables (non-current)
Operating lease premiums
Prepayments
Other
Total other receivables (non-current)
2011
£m
2.3
3.1
0.2
5.6
Operating lease premiums relates to the un-amortised element of lease premiums paid on inception of operating leases.
18. Inventories
Raw materials
Finished goods
Consumable stores
Returnable packaging
Total inventories at lower of cost and net realisable value
* Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
19. Trade and other receivables (current)
Trade receivables
Other receivables
Prepayments
2011
£m
28.6
49.2
6.1
4.6
88.5
2011
£m
209.1
10.8
30.1
250.0
2010
£m
2.3
-
-
2.3
2010
Restated*
£m
22.9
50.8
6.0
3.9
83.6
2010
£m
184.4
8.8
34.8
228.0
Trade receivables are non-interest bearing and are generally on credit terms usual for the markets in which the group operates. As at
2 October 2011, trade receivables at nominal value of £1.2m (2010: £1.2m) were impaired and fully provided against. Movements in
the provision for impairment of receivables were as follows:
At 27 September 2009
Acquisition
Charge for period
Utilised
Unused amounts reversed
At 3 October 2010
Charge for period
Utilised
Unused amounts reversed
At 2 October 2011
Total
£m
1.3
0.5
0.8
(0.6)
(0.8)
1.2
1.0
(0.5)
(0.5)
1.2
The group takes the following factors into account when considering whether a provision for impairment should be made for trade receivables:
• Payment performance history; and
• External information available regarding credit ratings.
As at 2 October 2011, the ageing analysis of trade receivables is as follows:
2011
2010
Total
£m
209.1
184.4
Neither past due
nor impaired
£m
<30 days
£m
30 – 60 days
£m
60 – 90 days
£m
90 – 120 days
£m
> 120 days
£m
194.1
172.2
12.0
7.5
0.8
2.1
0.5
1.7
0.5
0.9
1.2
-
Past due but not impaired
The credit quality of trade receivables that are neither past due nor impaired is considered good. Refer to note 26 for details of the group’s
credit risk policy. The group does however monitor the credit quality of trade receivables by reference to credit ratings available externally.
80 Britvic plc Annual Report 2011
20. Cash and cash equivalents
Cash at bank and in hand
2011
£m
43.0
2010
£m
54.0
During the year short-term deposits are made for varying periods of between one day and one month depending on the immediate
cash requirements of the group, and earn interest at the respective short-term deposit rates. The fair value of cash and cash
equivalents is equal to the book value.
At 2 October 2011, the group had available £400.0m (2010: £213.0m) of un-drawn committed borrowing facilities in respect of
which all conditions precedent had been met.
Where available, the group operates cash pooling arrangements whereby the net cash position across a number of accounts is
recognised for interest purposes.
21. Non-current assets held for sale
Net transfer from property, plant and equipment
2011
£m
0.7
2010
£m
-
The current period transfer relates to a property held for sale in Britvic France. The sale of the property completed on 10 November
2011. There was no gain or loss on transfer from property, plant and equipment to non-current assets held for sale.
22. Issued share capital
The issued share capital as at 2 October 2011 comprised 241,400,052 ordinary shares of £0.20 each (2010: 239,906,178 ordinary
shares), totalling £48,280,010 (2010: £47,981,236).
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.
Authorised
327,500,000 ordinary shares of £0.20 each
Called up, issued and fully paid ordinary shares
241,400,052 (2010: 239,906,178) ordinary shares of £0.20 each
Share issues in the current and prior periods relating to incentive schemes for employees are detailed below:
2011
£m
65.5
2010
£m
65.5
48.3
48.0
52 weeks ended 2 October 2011
2 December 2010
15 December 2010
23 December 2010
4 February 2011
1 April 2011
8 April 2011
12 May 2011
27 June 2011
No of shares
issued
12,244
122,449
21,974
300,000
32,013
484,343
20,851
500,000
1,493,874
Nominal
Value
£
2,449
24,490
4,395
60,000
6,402
96,868
4,170
100,000
298,774
Britvic plc Annual Report 2011
81
financial statements
notes to the consolidated financial statements continued
22. Issued share capital continued
53 weeks ended 3 October 2010
25 November 2009
30 November 2009
7 December 2009
14 January 2010
28 January 2010
22 February 2010
5 March 2010
29 March 2010
9 April 2010
1 June 2010
19 August 2010
1 October 2010
No of shares
issued
103,102
134,684
34,837
57,749
131,140
57,789
50,039
46,118
406,083
12,244
300,000
12,244
Nominal
Value
£
20,620
26,937
6,967
11,550
26,228
11,558
10,008
9,224
81,217
2,449
60,000
2,449
1,346,029
269,207
Of the issued and fully paid ordinary shares, 258,683 shares (2010: 466,343 shares) are treasury shares. This equates to £51,737 (2010:
£93,269) at £0.20 par value of each ordinary share. These shares are held for the purpose of satisfying the share schemes detailed in note 29.
An explanation of the group’s capital management process and objectives is set out in note 26.
23. Interest-bearing loans and borrowings
Non-current
Finance leases
Unsecured bank loans
Private placement notes
Less unamortised issue costs
Total non-current
The table below provides an analysis of amounts included within interest-bearing loans and borrowings:
Finance leases
2007 Notes
2009 Notes
2010 Notes
Accrued interest
Unsecured bank loans
Capitalised issue costs
Analysis of changes in interest-bearing loans and borrowings
At the beginning of the period (non-current liabilities)
Acquisition of Britvic France
Net loans repaid
Issue of 2010 / 2009 Notes
Issue costs
Amortisation and write off of issue costs
Net translation loss / fair value adjustment
Accrued interest
At the end of the period (non-current liabilities)
Derivatives hedging balance sheet debt*
Debt translated at contracted rate
2011
£m
(1.2)
(2.2)
(574.4)
4.6
(573.2)
2011
£m
(1.2)
(278.6)
(174.3)
(116.5)
(5.0)
(2.2)
4.6
(573.2)
2011
£m
(569.9)
-
123.4
(113.9)
3.9
(2.9)
(12.6)
(1.2)
(573.2)
78.2
(495.0)
2010
£m
(1.5)
(126.3)
(445.7)
3.6
(569.9)
2010
£m
(1.5)
(275.0)
(167.9)
-
(3.8)
(125.3)
3.6
(569.9)
2010
£m
(450.7)
(46.0)
95.0
(149.8)
1.2
(1.7)
(17.1)
(0.8)
(569.9)
64.7
(505.2)
* 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.
82 Britvic plc Annual Report 2011
23. Interest-bearing loans and borrowings continued
Bank loans
In March 2011, the group reached agreement with its banks to refinance £333m of existing bank facilities which were due to mature
in May 2012. The previous 3 year facility has been replaced with a new six-bank £400m revolving multi-currency 5 year facility which
will mature in March 2016.
The unsecured bank loans classified as non-current are repayable in December 2012 and 2018 (2010: May 2012).
Loans outstanding at 2 October 2011 attract interest at an average rate of 5.09% for euro denominated loans (2010: 3.04%). There
were no sterling denominated loans outstanding at 2 October 2011 (2010: Nil).
Private placement notes
2007 Notes
On 20 February 2007, Britvic plc issued US$375m and £38m of Senior Notes (‘the 2007 Notes’) in the United States Private
Placement market. The proceeds of the issue were used to repay and cancel a £150m term loan, with the remainder being used to
repay the amounts drawn on the group’s revolving credit facility. The amount, maturity and interest terms of the Notes are shown in
the table below:
Series
A
B
C
D
E
F
Tranche
7 year
7 year
7 year
10 year
12 year
12 year
Maturity date
20 February 2014
20 February 2014
20 February 2014
20 February 2017
20 February 2019
20 February 2019
Amount
US$87m
US$15m
£25m
US$147m
US$126m
£13m
Interest terms
Swap interest
US$ fixed at 5.80%
US$ LIBOR + 0.5%
UK£ fixed at 6.11%
US$ fixed at 5.90%
US$ fixed at 6.00%
UK£ fixed at 5.94%
UK£ fixed at 6.10%
UK£ fixed at 6.07%
n/a
UK£ fixed at 5.98%
UK£ fixed at 5.98%
n/a
Britvic plc makes quarterly and semi-annual interest payments in the currency of issue. The Notes are unsecured and rank pari passu
in right of repayment with other senior unsecured indebtedness of the company. In order to manage the risk of foreign currency and
interest rate fluctuations, the group has entered into currency interest rate swaps whereby fixed / floating US dollar interest is
swapped for fixed sterling interest. The swap contracts have the same duration and other critical terms as the borrowings which
they hedge and are designated as part of effective hedge relationships (see note 27).
Covenants on these Notes include a term which states that Britvic plc must offer to repay the Notes should a change in control
of the group occur which results in a downwards movement in the credit rating as defined in the Note purchase agreement.
2009 Notes
On 17 December 2009, Britvic plc issued US$250m of Senior Notes in the United States Private Placement market (‘the 2009
Notes’). The 2009 Notes are additional borrowings to the 2007 Notes. The proceeds from the 2009 Notes were principally used to
repay amounts drawn on the group’s existing borrowings, including the repayment of €100m of the revolving credit facility.
Britvic plc makes semi-annual interest payments in US dollars, with the first payment being made on 17 June 2010. The 2009 Notes
are unsecured and rank pari passu in right of repayment with other senior unsecured indebtedness of the group.
In order to manage foreign exchange risk, interest rate risk and to ensure an appropriate mix of sterling and euro funding, the group
has entered into a number of new cross currency interest rate swaps. The 2009 Notes were swapped into floating rate sterling and
euro liabilities through a series of US dollar to sterling and sterling to euro swap instruments. These cross currency interest rate
swap contracts have the same duration and other critical terms as the relevant borrowings they hedge and are designated as part of
effective hedge relationships (see note 27).
The amount, maturity and interest terms of the 2009 Notes are shown in the table below:
Series
A
B
C
D
Tranche
5 year
7 year
8 year
10 year
Maturity date
17 December 2014
17 December 2016
17 December 2017
17 December 2019
Amount
US$30m
US$75m
US$25m
US$120m
Interest terms
Swap interest
US$ fixed at 4.07%
US$ fixed at 4.77%
US$ fixed at 4.94%
US$ fixed at 5.24%
UK£ LIBOR + 1.44%
EURIBOR + 1.69%
EURIBOR + 1.70%
EURIBOR + 1.75%
As detailed in the table above, the 2009 USPP cross currency swaps converted an amount of US dollar borrowings into a €147.0m
floating rate euro liability. To mitigate exposure to changes in euro interest rates on this liability, €75.0m of interest rate swaps were
transacted. These swaps do not form part of an effective hedge relationship.
Britvic plc Annual Report 2011
83
financial statements
notes to the consolidated financial statements continued
23. Interest-bearing loans and borrowings continued
2010 Notes
On 17 December 2010, Britvic plc issued US$163m and £7.5m of Senior Notes in the United States Private Placement market
(‘the 2010 Notes’). The 2010 Notes are additional borrowings to the 2007 and 2009 Notes. The proceeds from the 2010 Notes were
principally used to repay amounts drawn on the group’s existing borrowings. Issue costs incurred in the period relate to the issue
of the 2010 Notes and the refinancing of the group’s bank facilities.
Britvic plc makes semi-annual interest payments in US dollars with the first payment being made on 17 June 2011. The 2010 Notes
are unsecured and rank pari passu in right of repayment with other senior unsecured indebtedness of the group.
In order to manage foreign exchange risk, interest rate risk and to ensure an appropriate mix of sterling and euro funding, the group
has entered into a number of cross currency interest rate swaps. The 2010 Notes were swapped into a mix of fixed and floating rate
sterling and euro liabilities through a series of US dollar to sterling and sterling to euro swap instruments. These cross currency
interest rate swap contracts have the same duration and other critical terms as the relevant borrowings they hedge and are
designated as part of effective hedge relationships (see note 27).
The amount, maturity and interest terms of the 2010 Notes are shown in the table below:
Series
A
B
C
D
Tranche
7 year
7 year
Maturity date
17 December 2017
17 December 2017
10 year
17 December 2020
12 year
17 December 2022
Amount
£7.5m
US$25m
US$25m
US$37m
US$23m
US$10m
US$18m
US$25m
Interest terms
Swap interest
UK£ fixed at 3.74%
US$ fixed at 3.45%
US$ fixed at 3.45%
US$ fixed at 4.04%
US$ fixed at 4.04%
US$ fixed at 4.04%
US$ fixed at 4.14%
US$ fixed at 4.14%
N/A
UK£ fixed 3.85%
€ fixed 3.34%
UK£ LIBOR +1.24%
€ fixed 3.85%
UK£ fixed 4.49%
UK£ LIBOR +1.18%
€ fixed 3.97%
As detailed in the table above, the 2010 USPP cross currency swaps converted an amount of US dollar borrowings into a £35.6m
floating rate sterling liability. To mitigate exposure in a proportion of this liability, £20m of 3-year interest rate swaps were transacted
with an effective date of December 2011.
24. Pensions
The group principal pension scheme for GB employees, the Britvic Pension Plan (BPP), has both a defined benefit and a defined
contribution section. The defined benefit section of the BPP was closed to new members on 1 August 2002, and following
consultation with GB employees was closed to future accrual for active members with effect from 10 April 2011, with members
moving into the defined contribution section for future service benefits.
Contributions are paid into the Plan in accordance with the recommendations of an independent actuary and as outlined in the
Schedule of Contributions. The latest formal actuarial valuation for contribution purposes was carried out as at 31 March 2010.
Following the conclusion of the previous triennial valuation, the final annual payment of £10m contributions in respect of the funding
shortfall, outlined in the recovery plan, was made by 31 December 2010. As a result of the latest formal valuation, a proposal was
set out under which a monetary contribution or contributions will be made to enable the Trustee of the BPP to acquire an interest
in a limited partnership. This partnership interest is intended to provide the Trustee with an income of at least £5m per annum in
each year over a 15 year period together with a final payment of up to a maximum of £105m to the extent required under funding
conditions to be agreed to the satisfaction of the Trustee and the company, at the end of the 15 year period.
A first tranche of this proposal was completed prior to the period end. Britvic Scottish Limited Partnership (Britvic SLP) and Britvic
Property Partnership (Britvic PP) were established by the group and properties with a market value of £28.6m were then transferred
to Britvic PP and leased back to Britvic Soft Drinks Limited. Britvic SLP holds an investment in Britvic PP.
The BPP is a partner in Britvic SLP and is entitled to a share of the profits of the partnership over the next 15 years. At the end of
this period, the partnership capital allocated to the BPP will be changed to an amount equal to any funding deficit of the BPP at
that time, up to a maximum value of £25m. At that point the group may be required to transfer this amount in cash to the BPP.
Both Britvic SLP and Britvic PP are consolidated by the group. The investment held by the BPP in Britvic SLP does not represent a
plan asset for accounting purposes and is therefore not included in the fair value of plan assets. The share of profits of Britvic SLP
received by the BPP will be accounted for by the group as contributions when paid. The properties transferred to Britvic PP continue
to be included within the group’s property, plant and equipment on the balance sheet and the group retains operational flexibility over
the transferred properties, including the ability to substitute the properties held by Britvic PP.
In addition to the expected partnership income of at least £5m per annum, the group will make payments to the BPP of £5m by 31
December 2011, £7.5m by 31 December 2012 and £15m per annum by 31 December of each year from 2013 to 2017. In the event
that further tranches of the proposal do not proceed, the BPP will instead receive total contributions of £10m by 31 December 2011,
£12.5m by 31 December 2012 and £20m per annum by 31 December of each year from 2013 to 2022 inclusive.
The amount recognised as an expense in relation to the BPP defined contribution scheme in the income statement for 2011 was
£5.8m (2010: £3.6m).
84 Britvic plc Annual Report 2011
24. Pensions continued
In Northern Ireland, the Britvic Northern Ireland Pension Plan (BNIPP) was closed to new members on 28 February 2006, and since
this date new employees have been eligible to join a Stakeholder plan with Legal & General. Employees of C&C Group transferred
out of BNIPP on 30 June 2008 with the bulk transfer of assets for the C&C employees taking place in December 2009. The latest
formal actuarial valuation for contribution purposes was carried out as at 31 December 2008 and as a result shortfall correction
additional contributions of £90,000 per month until 31 December 2010, and £125,000 per month from 1 January 2011 to 31
December 2019 are being paid in accordance with the Recovery Plan dated December 2009.
In the Republic of Ireland, employees continued to participate in a number of C&C Group pension schemes following the acquisition
until transferring into two newly formed pension plans called the Britvic Ireland Defined Contribution Pension Plan and the Britvic
Ireland Defined Benefit Pension Plan (BIPP) on 1 September 2008. Since 1 March 2006 new employees have been offered
membership of the defined contribution plan in the first instance, with the ability to transfer into the defined benefit plan for
future service benefits after a period of 5 years. The first formal actuarial valuation was carried out at 31 December 2009 and is
still being finalised.
The amount recognised as an expense in relation to the Irish defined contribution schemes in the Income Statement for 2011
was £0.6m (2010: £0.4m).
All group pension schemes are administered by trustees who are independent of the group’s finances.
The assets and liabilities of the pension schemes were valued on an IAS 19 basis at 2 October 2011 by Towers Watson (BPP) and
Mercer (BIPP and BNIPP).
Included within the pension liability on the consolidated balance sheet is an accrual of £1.4m (2010: £1.1m) for retirement indemnities
in respect of Britvic France. This liability is considered to be immaterial and no further disclosure is included within
this note.
Principal Assumptions
Financial Assumptions
Discount rate
Rate of compensation increase
Expected long term return on plan assets
Pension increases
Inflation assumption
2011
%
ROI
5.35
3.00
5.90
3.00
2.00
2011
%
NI
5.20
4.00
6.71
3.00
3.00
2011
%
GB
5.60
n/a
5.83
2.30-3.40
3.50
2010
%
ROI
4.90
3.00
6.00
3.00
2.00
2010
%
NI
5.00
4.50
6.65
2.30-3.40
3.50
2010
%
GB
5.05
4.50
5.82
2.30-3.40
3.50
To develop the expected long term rate of return on assets assumption, the group considered the level of expected returns on risk
free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in
which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class
was then weighted based on the target asset allocation to develop the expected long term rate on assets assumption for the
portfolio.
Demographic assumptions
The most significant non-financial assumption is the assumed rate of longevity. This is based on standard actuarial tables, which for
the BPP are known as SAPS Series 1. An allowance for future improvements in longevity has also been included. The following life
expectancy assumptions have been used:
Current pensioners (at age 65) – males
Current pensioners (at age 65) – females
Future pensioners currently aged 45
(at age 65) – males
Future pensioners currently aged 45
(at age 65) – females
2011
years
ROI
22.7
24.4
25.6
26.7
2011
years
NI
20.9
23.7
22.7
25.2
2011
years
GB
22.0
24.5
24.2
26.9
2010
years
ROI
22.7
24.4
25.6
26.7
2010
years
NI
20.9
23.7
22.6
25.1
2010
years
GB
21.9
24.2
24.1
26.6
The mortality assumptions used to calculate the GB pension obligation were revised in 2010 following a mortality analysis carried out
as part of the actuarial valuation of the Britvic Pension Plan at 31 March 2010.
Britvic plc Annual Report 2011
85
financial statements
notes to the consolidated financial statements continued
24. Pensions continued
Sensitivities
The value of plan assets is sensitive to market conditions, particularly equity values. Changes in assumptions used for determining
retirement benefit costs and obligations may have a material impact on the income statement and balance sheet. The main
assumptions are the discount rate, the rate of inflation and the assumed mortality rate. The following table provides an estimate
of the potential impact of each of these variables on the principal pension plans.
Assumption
Change in assumption
Impact on ROI plan liabilities
Impact on NI plan liabilities
Impact on GB plan liabilities
Discount rate Increase/Decrease by 0.1% Decrease/Increase by £1.7m Decrease/Increase by £0.5m Decrease/Increase by £9.5m
Inflation rate
Increase/Decrease by 0.1% Increase/Decrease by £0.9m Increase/Decrease by £0.2m Increase/Decrease by £6.8m
Mortality rate Increase in life expectancy
by one year
Net benefit income / (expense)
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Curtailment gain
Net income / (expense)
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Curtailment gain
Net expense
Increase by £1.4m
Increase by £0.6m
Increase by £12.9m
ROI
£m
(2.4)
(3.6)
2.8
1.2
(2.0)
ROI
£m
(2.0)
(3.0)
2.6
0.8
(1.6)
NI
£m
(0.3)
(1.3)
1.3
-
(0.3)
NI
£m
(0.3)
(1.3)
1.1
0.2
(0.3)
GB
£m
(2.6)
(27.0)
27.0
17.7
15.1
GB
£m
(4.2)
(26.3)
24.1
-
(6.4)
2011
Total
£m
(5.3)
(31.9)
31.1
18.9
12.8
2010
Total
£m
(6.5)
(30.6)
27.8
1.0
(8.3)
The net income detailed above is all recognised in arriving at net profit from continuing operations before tax and finance costs /
income, and is included within cost of sales, selling and distribution costs and administration expenses.
The ROI curtailment gain in the year was triggered by the redundancies of employees resulting in a significant number of members
moving from active to deferred status in the period, thereby no longer accruing future entitlement. The GB curtailment gain in the
year arose due to the closure to future accrual of the defined benefit section of the GB plan.
Taken to the statement of comprehensive income
Actual return on scheme assets
Less: Expected return on scheme assets
Other actuarial gains
Actuarial gains taken to the statement of comprehensive income
Actual return on scheme assets
Less: Expected return on scheme assets
Other actuarial losses
Actuarial losses taken to the statement of comprehensive income
86 Britvic plc Annual Report 2011
ROI
£m
(2.2)
(2.8)
(5.0)
8.8
3.8
ROI
£m
4.3
(2.6)
1.7
(15.3)
(13.6)
NI
£m
0.7
(1.3)
(0.6)
2.2
1.6
NI
£m
1.5
(1.1)
0.4
(2.4)
(2.0)
GB
£m
5.9
(27.0)
(21.1)
60.8
39.7
GB
£m
49.2
(24.1)
25.1
(58.5)
(33.4)
2011
Total
£m
4.4
(31.1)
(26.7)
71.8
45.1
2010
Total
£m
55.0
(27.8)
27.2
(76.2)
(49.0)
24. Pensions continued
Net liability
Present value of benefit obligation
Fair value of plan assets
Net liability
Present value of benefit obligation
Fair value of plan assets
Net liability
Movements in the present value of benefit obligation are as follows:
At 3 October 2010
Exchange differences
Curtailment gain
Current service cost
Member contributions
Interest cost on benefit obligation
Benefits paid
Actuarial gains
At 2 October 2011
At 27 September 2009
Exchange differences
Curtailment gain
Current service cost
Member contributions
Interest cost on benefit obligation
Benefits paid
Actuarial losses
At 3 October 2010
ROI
£m
(64.4)
44.5
(19.9)
ROI
£m
(69.6)
45.7
(23.9)
ROI
£m
(69.6)
0.8
1.2
(2.4)
(0.5)
(3.6)
0.9
8.8
(64.4)
ROI
£m
(52.4)
2.6
0.8
(2.0)
(0.6)
(3.0)
0.3
(15.3)
(69.6)
NI
£m
(25.4)
20.3
(5.1)
NI
£m
(26.8)
18.8
(8.0)
NI
£m
(26.8)
-
-
(0.3)
-
(1.3)
0.8
2.2
(25.4)
NI
£m
(23.8)
-
0.2
(0.3)
-
(1.3)
0.8
(2.4)
(26.8)
GB
£m
(481.2)
462.5
(18.7)
GB
£m
(544.6)
459.3
(85.3)
GB
£m
(544.6)
-
17.7
(2.6)
(0.8)
(27.0)
15.3
60.8
(481.2)
GB
£m
(470.8)
-
-
(4.2)
(1.5)
(26.3)
16.7
(58.5)
(544.6)
2011
Total
£m
(571.0)
527.3
(43.7)
2010
Total
£m
(641.0)
523.8
(117.2)
2011
Total
£m
(641.0)
0.8
18.9
(5.3)
(1.3)
(31.9)
17.0
71.8
(571.0)
2010
Total
£m
(547.0)
2.6
1.0
(6.5)
(2.1)
(30.6)
17.8
(76.2)
(641.0)
Britvic plc Annual Report 2011
87
financial statements
notes to the consolidated financial statements continued
24. Pensions continued
Movements in the fair value of plan assets are as follows:
At 3 October 2010
Exchange differences
Expected return on plan assets
Actuarial losses
Employer contributions
Member contributions
Benefits paid
At 2 October 2011
At 27 September 2009
Exchange differences
Expected return on plan assets
Actuarial gains
Employer contributions
Member contributions
Benefits paid
At 3 October 2010
ROI
£m
45.7
(0.6)
2.8
(5.0)
2.0
0.5
(0.9)
44.5
ROI
£m
34.0
(1.7)
2.6
1.7
8.8
0.6
(0.3)
45.7
Categories of scheme assets as a percentage of the fair value of total scheme assets
Equities & real estate
Bonds and gilts
Cash
Total
Equities & real estate
Bonds and gilts
Cash
Total
ROI
£m
28.0
16.5
-
44.5
ROI
£m
30.6
14.6
0.5
45.7
Analysis of expected return on assets by categories of scheme assets
Equities & real estate
Bonds and gilts
Cash
Total
Equities & real estate
Bonds and gilts
Cash
Total
88 Britvic plc Annual Report 2011
ROI
£m
2.3
0.5
-
2.8
ROI
£m
2.2
0.4
-
2.6
NI
£m
9.5
10.2
0.6
20.3
NI
£m
15.4
1.9
1.5
18.8
NI
£m
1.2
0.1
-
1.3
NI
£m
1.0
0.1
-
1.1
NI
£m
18.8
-
1.3
(0.6)
1.6
-
(0.8)
20.3
NI
£m
16.2
-
1.1
0.4
1.9
-
(0.8)
18.8
GB
£m
243.5
214.0
5.0
462.5
GB
£m
260.2
194.7
4.4
459.3
GB
£m
18.5
8.3
0.2
27.0
GB
£m
16.6
7.5
-
24.1
GB
£m
459.3
-
27.0
(21.1)
11.8
0.8
(15.3)
462.5
GB
£m
411.7
-
24.1
25.1
13.6
1.5
(16.7)
459.3
2011
Total
£m
281.0
240.7
5.6
527.3
2010
Total
£m
306.2
211.2
6.4
523.8
2011
Total
£m
22.0
8.9
0.2
31.1
2010
Total
£m
19.8
8.0
-
27.8
2011
Total
£m
523.8
(0.6)
31.1
(26.7)
15.4
1.3
(17.0)
527.3
2010
Total
£m
461.9
(1.7)
27.8
27.2
24.3
2.1
(17.8)
523.8
2011
Total
%
53
46
1
100
2010
Total
%
59
40
1
100
2011
Total
%
71
29
-
100
2010
Total
%
71
29
-
100
24. Pensions continued
History of experience gains and losses
Fair value of schemes assets
Present value of defined benefit obligations
Deficit in the schemes
Experience adjustments arising on plan
liabilities
Experience adjustments arising on plan assets
2011
£m
527.3
(571.0)
(43.7)
1.5
(26.7)
2010
£m
523.8
(641.0)
(117.2)
36.7
27.2
2009
£m
461.9
(547.0)
(85.1)
2.0
(2.7)
2008
£m
424.5
(448.4)
(23.9)
3.3
(98.9)
2007
£m
479.3
(484.9)
(5.6)
(17.2)
13.6
The cumulative amount of actuarial gains and losses recognised since 4 October 2004 in the group statement of comprehensive
income is an overall loss of £58.4m (2010: loss of £103.5m). The directors are unable to determine how much of the pension scheme
deficit recognised on transition to IFRS and taken direct to equity of £1.3m is attributable to actuarial gains and losses since the
inception of those pension schemes. Consequently, the directors are unable to determine the amount of actuarial gains and losses
that would have been recognised in the group statement of comprehensive income before 4 October 2004.
Normal contributions of £2.0m and additional contributions of £11.5m are expected to be paid into the pension schemes during
the 2012 financial year.
25. Trade and other payables (current)
Trade payables
Other payables
Accruals and deferred income
Other taxes and social security
2011
£m
235.9
8.7
89.0
36.5
370.1
2010
Restated*
£m
231.9
11.3
74.8
30.4
348.4
*Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
Trade payables are non-interest bearing and are normally settled on 60–90 day terms.
26. Financial risk management objectives and policies
Overview
The group’s principal financial instruments comprise derivatives, borrowings and overdrafts, cash and cash equivalents. These
financial instruments are used to manage interest rate and currency exposures, funding and liquidity requirements and share price
exposure arising under the group’s employee incentive schemes. Other financial instruments which arise directly from the group’s
operations include trade receivables and payables (see notes 19 and 25 respectively).
It is, and has always been, the group’s policy that no derivative is entered into for trading or speculative purposes.
The main risks arising from the group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk.
Additionally, the group is exposed to commodity price risk and share price risk. The board of directors review and agree policies for
managing these risks as summarised below.
Interest rate risk
The group’s exposure to the risk of changes in market interest rates relates primarily to the group’s long-term debt obligations with
floating interest rates.
The group’s policy is to manage its interest cost by maintaining a mix of fixed and variable rate debt. The group’s policy is to have an
average over the next three years of between 25% and 80% of its borrowings at fixed rates of interest. To manage this, the group
enters into interest rate swaps, cross currency swaps and forward rate agreements which are designated to hedge underlying debt
obligations. At 2 October 2011, after taking into account the effect of these instruments, approximately 82% of the group’s
borrowings are at a fixed rate of interest (2010: 63%).
Britvic plc Annual Report 2011
89
financial statements
notes to the consolidated financial statements continued
26. Financial risk management objectives and policies continued
Interest rate risk table
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant,
of the group’s profit before tax (through the impact on floating rate borrowings) and equity for changes in the fair values of applicable
derivative instruments.
2011
Sterling
Euro
2010
Sterling
Euro
Foreign currency risk
Increase /
(decrease) in
basis points
Effect on
profit / (loss)
before tax
£m
Effect on
equity
£m
200
(200)
200
(200)
200
(200)
200
(200)
0.4
(0.1)
3.5
(2.3)
(0.9)
0.9
2.3
(3.1)
28.9
(32.8)
6.8
(8.2)
26.4
(30.4)
8.5
(10.5)
Foreign currency risk is primarily in respect of exposure to fluctuations to the sterling-euro, sterling-US dollar and euro-US dollar rates
of exchange. The group has operations in euro-denominated countries and finances these partly through the use of foreign currency
borrowings and cross currency swaps which hedge the translation risk of net investments in foreign operations. Additionally cash
generation from euro-denominated operations can be utilised to meet euro payment obligations in sterling denominated companies,
providing a natural hedge.
The group also has transactional exposures arising from purchases of prime materials, capital expenditure and interest costs in
currencies other than the functional currency of the individual group entities. Non functional currency purchases and interest costs
are made in the currencies of US dollars and euros. As at 2 October 2011, the group has hedged 67% (2010: 68%) of forecast net
exposures 12 months in advance using forward foreign exchange contracts.
Where funding is raised in a currency other than the currency ultimately required by the group, cross currency interest rate swaps
are used to convert the cash flows to the required currency. These swaps have the same duration and other critical terms as the
underlying borrowing.
The following table demonstrates the sensitivity to a reasonably possible change in the US dollar and euro exchange rates, with all
other variables held constant, of the group’s profit before tax (due to changes in the fair value of monetary assets and liabilities) and
the group’s equity (due to changes in fair value of forward exchange contracts).
Increase /
(decrease) in
currency rate
%
Effect on
profit before
tax
£m
Effect on
equity
£m
10
(10)
10
(10)
10
(10)
10
(10)
10
(10)
10
(10)
(0.4)
0.4
-
-
-
-
(0.1)
0.1
(0.1)
0.1
-
-
5.0
(5.0)
1.2
(1.2)
1.7
(1.7)
3.5
(3.5)
0.7
(0.7)
1.4
(1.4)
2011
Sterling / euro
Sterling / US dollar
Euro / US dollar
2010
Sterling / euro
Sterling / US dollar
Euro / US dollar
90 Britvic plc Annual Report 2011
26. Financial risk management objectives and policies continued
Credit risk
The group trades only with recognised creditworthy third parties. It is the group’s policy that all customers who wish to trade on
credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the
result that the group’s exposure to bad debts is not significant. The maximum exposure is the carrying amount disclosed in note 19.
For transactions that do not occur in the country of the relevant operating unit, the group does not offer credit terms without the
approval of the Head of Finance Shared Services. There are no significant concentrations of credit risk within the group.
The group maintains a policy on counterparty credit exposures with banks and financial institutions arising from the use of derivatives
and financial instruments. This policy restricts the investment of surplus funds and entering into derivatives to counterparties with a
minimum credit rating maintained by either Moody’s, Standard & Poors or Fitch. The level of exposure with counterparties at various
ratings levels is also restricted under this policy. The level of exposure and the credit worthiness of the group’s banking
counterparties is reviewed regularly to ensure compliance with this policy.
Commodity price risk
The main commodity price risk arises in the purchases of prime materials, being PET, sugar, steel and frozen concentrated orange
juice. Where it is considered commercially advantageous, the group enters into fixed price contracts with suppliers to hedge against
unfavourable commodity price changes.
Share schemes equity price risk
The group operates several employee incentive share schemes. It has an exposure to the share price for the schemes in which
shares are purchased in the market to satisfy the requirements of the plan. To hedge this risk the group has entered into a number
of total return share swaps against schemes maturing in 2011, 2012 and 2013.
The following table demonstrates the sensitivity to a reasonably possible change in the Britvic plc share price, with all other variables
held constant, of the group’s profit before tax (due to changes in the fair value of the share swaps).
2011
2010
Increase /
(decrease) in
share price
%
Effect on
profit before
tax
£m
10
(10)
10
(10)
1.9
(1.9)
2.2
(2.2)
Liquidity risk
The group monitors its risk of a shortage of funds using rolling cash flow forecasts. These forecasts consider the maturity of both its
financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations.
The objective of the group’s liquidity policy is to maintain a balance between continuity of funds and flexibility through the use of
bank loans and overdrafts and long-term private placement issuance. The bank loans entered into by the group are unsecured.
At 2 October 2011, none of the group’s debt will mature in less than one year (2010: none).
The table below summarises the maturity profile of the group’s financial liabilities at 2 October 2011 based on contractual
undiscounted payments:
2011
Unsecured bank loans
Private placement notes
Derivatives hedging private placement notes - payments
Derivatives hedging private placement notes - receipts
Interest rate swap - payments
Interest rate swap - receipts
Trade and other payables
Finance leases
Other financial liabilities
Less than 1
year
£m
0.1
27.9
19.8
(25.3)
22.4
1.7
(1.4)
0.3
333.6
-
4.3
360.7
1 to 5
years
£m
2.7
206.8
140.6
(161.7)
185.7
5.5
(4.3)
1.2
-
1.2
-
> 5 years
£m
-
486.7
413.2
(425.0)
474.9
-
-
-
-
-
-
Total
£m
2.8
721.4
573.6
(612.0)
683.0
7.2
(5.7)
1.5
333.6
1.2
4.3
190.8
474.9
1,026.4
Britvic plc Annual Report 2011
91
financial statements
notes to the consolidated financial statements continued
26. Financial risk management objectives and policies continued
Less than 1
year
£m
2010
Unsecured bank loans
Private placement notes
Derivatives hedging private placement notes - payments
Derivatives hedging private placement notes - receipts
Interest rate swap - payments
Interest rate swap - receipts
Trade and other payables
Finance leases
Other financial liabilities
3.8
23.6
16.7
(23.3)
17.0
0.7
(0.4)
0.3
318.0*
-
1.4
340.5
1 to 5
years
£m
128.1
195.3
139.6
(179.4)
155.5
5.9
(3.1)
2.8
-
0.7
-
287.1
> 5 years
£m
-
375.4
431.9
(483.7)
323.6
0.7
(0.4)
0.3
-
0.8
-
324.7
Total
£m
131.9
594.3
588.2
(686.4)
496.1
7.3
(3.9)
3.4
318.0
1.5
1.4
952.3
* Restated following the finalisation of the fair value allocation of Britvic France, acquired on 28 May 2010.
In respect of the private placement notes, the periods when the cash flows are expected to occur (as shown by the tables above)
and when they are expected to affect the income statement are the same.
Details with regard to derivative contracts are included in note 27.
Fair value hierarchy
The group uses the following valuation hierarchy to determine the carrying value of financial instruments that are measured at fair value:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.
2011
Level 1
Level 2
- Derivatives used for hedging
- Financial instruments at fair value through profit or loss
Level 3
Total
2010
Level 1
Level 2
- Derivatives used for hedging
- Financial instruments at fair value through profit or loss
Level 3
Total
92 Britvic plc Annual Report 2011
Assets
Liabilities
£m
-
95.9
-
-
95.9
£m
-
(2.7)
(11.3)
-
(14.0)
Assets
Liabilities
£m
-
82.0
0.1
-
82.1
£m
-
(4.3)
(0.9)
-
(5.2)
26. Financial risk management objectives and policies continued
Capital management
The group defines ‘capital’ as being net debt plus equity.
The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern and maintain an appropriate
capital structure to balance the needs of the group to grow, whilst operating with sufficient headroom within its bank covenants.
The group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or
adjust the capital structure, the group has a number of options available to it including modifying dividend payments to shareholders,
returning capital to shareholders or issuing new shares. In this way, the group balances returns to shareholders between long-term
growth and current returns whilst maintaining capital discipline in relation to investing activities and taking any necessary action on
costs to respond to the current environment.
The group monitors capital on the basis of the adjusted net debt / EBITDA ratio. Adjusted net debt is calculated as being the net of cash and
cash equivalents, interest-bearing loans and borrowings and the element of the fair value of interest rate currency swaps hedging the balance
sheet value of the US private placement Notes. Adjusted net debt is shown in note 30. The adjusted net debt / EBITDA ratio enables the
group to plan its capital requirements in the medium term. The group uses this measure to provide useful information to financial institutions
and investors. The group believes that an adjusted net debt / EBITDA ratio in the range of 2.0 – 3.0 provides an efficient capital structure and
an appropriate level of financial flexibility. At 2 October 2011 the adjusted net debt / EBITDA ratio was 2.4 (2010: 2.4).
27. Derivatives and hedge relationships
Fair values of financial assets and financial liabilities
Set out below is a comparison by category of carrying amounts and fair values of all of the group’s financial instruments,
except trade and other receivables and payables.
Financial assets
Cash
Cross currency interest rate swaps*
Share swaps*
Favourable contracts recognised on the acquisition of Britvic
France**
Forward currency contracts**
Foreign exchange swaps**
Financial liabilities
Interest-bearing loans and borrowings
(bank loans and private placement notes):
Fixed rate borrowings
Floating rate borrowings
Finance leases
Forward currency contracts***
Unfavourable contracts recognised on the acquisition
of Britvic France***
Cross currency interest rate swaps****
Interest rate swaps****
Forward rate agreements***
Share swaps***
Share swaps****
Book value
2011
£m
Fair value
2011
£m
Book value
2010
£m
Fair value
2010
£m
43.0
93.0
-
-
1.8
1.1
43.0
93.0
-
-
1.8
1.1
54.0
81.3
0.1
0.3
0.7
-
54.0
81.3
0.1
0.3
0.7
-
138.9
138.9
136.4
136.4
(563.4)
(8.6)
(1.2)
(0.3)
-
(2.4)
(1.4)
(0.1)
(3.9)
(5.9)
(616.7)
(8.6)
(1.2)
(0.3)
-
(2.4)
(1.4)
(0.1)
(3.9)
(5.9)
(433.5)
(134.9)
(1.5)
(1.3)
(0.1)
(3.0)
(0.9)
-
-
-
(481.2)
(134.9)
(1.5)
(1.3)
(0.1)
(3.0)
(0.9)
-
-
-
(587.2)
(640.5)
(575.2)
(622.9)
* Included within ‘Non-current assets: Other financial assets’ on the consolidated balance sheet
** Included within ‘Current assets: Other financial assets’ on the consolidated balance sheet
*** Included within ‘Current liabilities: Other financial liabilities’ on the consolidated balance sheet
**** Included within ‘Non-current liabilities: Other financial liabilities’ on the consolidated balance sheet
Non-derivative financial assets are categorised as loans and receivables as defined in IAS 39 ‘Financial instruments –
recognition and measurement’. Non-derivative financial liabilities are all carried at amortised cost.
The fair value of derivatives, which are quoted at market price, has been calculated by discounting the expected future cash flows at
prevailing interest rates.
The fair value of the current trade and other receivables and payables approximate to book value.
The fair value of fixed rate borrowings has been derived from the sum of future cash flows to maturity discounted back to present
values at a market rate.
Britvic plc Annual Report 2011
93
financial statements
notes to the consolidated financial statements continued
27. Derivatives and hedge relationships continued
Derivatives not designated as part of hedge relationships
Interest rate swaps
The 2009 USPP cross currency swaps converted an amount of US dollar borrowings into a €147.0m floating rate euro liability.
To mitigate exposure to changes in euro interest rates on this liability, €75.0m of interest rate swaps were transacted. These 5-year
fixed rate swaps had an effective start date of December 2010.
From the 2010 USPP issuance an amount of $55m was swapped into £35.6m of floating rate sterling liability. To mitigate exposure
for a proportion of this liability, £20m of 3-year interest rate swaps were transacted with an effective date of December 2011.
Forward rate agreement
To mitigate exposure to floating interest rates at the next interest rate fixing on the remaining €72m of 2009 floating rate euro
liability, a series of forward rate agreements with a notional totalling €70m were transacted with an effective date of December 2011.
Share swaps
The group operates several employee incentive share schemes. It has an exposure to the share price for the schemes in which
shares are purchased in the market to satisfy the requirements of the plan. To hedge this risk the group has entered into a number
of total return share swaps against schemes maturing in 2011, 2012 and 2013.
Foreign exchange swaps
As part of operational cash management €108m of euro / sterling FX swaps were in existence at 2 October 2011.
Hedging activities
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:
Consolidated balance sheet
Non-current assets: Other financial assets
Fair value of the 2007 cross currency interest rate swaps¹
Fair value of the 2009 USD GBP cross currency interest rate swaps³
Fair value of the 2009 GBP euro cross currency interest rate swaps²
Fair value of the 2010 USD GBP cross currency floating interest rate swaps³
Current assets: Other financial assets
Fair value of forward currency contracts¹
Current liabilities: Other financial liabilities
Fair value of forward currency contracts¹
Non-current liabilities: Other financial liabilities
Fair value of the 2009 GBP euro cross currency interest rate swaps²
Fair value of the 2010 GBP euro cross currency interest rate swaps²
Fair value of the 2010 USD GBP cross currency floating interest rate swaps³
Fair value of the 2010 USD GBP cross currency fixed interest rate swaps¹
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
2011
£m
61.6
29.6
0.6
1.2
1.8
(0.3)
-
(1.1)
-
(1.3)
2010
£m
58.0
23.3
-
-
0.7
(1.3)
(0.4)
(1.2)
(0.7)
(0.7)
94 Britvic plc Annual Report 2011
27. Derivatives and hedge relationships continued
As at the 2 October 2011 these hedging relationships are categorised as follows:
Cash flow hedges
Forward currency contracts
At 2 October 2011, the group held 72 (2010: 60) US dollar and 51 (2010: 30) euro forward exchange contracts (the ‘forward currency
contracts’) designated as hedges of expected future purchases from suppliers in US dollars and euros which the group believe to
be highly probable transactions. The forward currency contracts are being used to hedge the foreign currency risk of these highly
probable transactions.
The forward currency contracts hedge the expected future purchases in the period to 30 September 2012 and have been assessed
as part of effective cash flow hedge relationships. At the period end there is a net unrealised gain of £1.5m (2010: net unrealised
loss of £0.6m), with a related deferred tax liability of £0.4m (2009: related deferred tax asset of £0.1m), which has been included in
equity in respect of these contacts.
The terms of these forward contracts are detailed in the table below.
Forward contracts to hedge expected future purchases
Maturity range
2011
£ / US$19.4m
£ / € 57.5m
€ / US$26.8m
2010
£ / US$10.3m
£ / €40.2m
€ / US$21.3m
Oct 11 to Jul 12
Oct 11 to Aug 12
Oct 11 to Sept 12
Oct 10 to Sept 11
Oct 10 to Jul 11
Oct 10 to Sept 11
Average
exchange rate
£ / US$1.62
£ / €1.16
€ / US$1.43
£ / US$1.54
£ / €1.15
€ / US$1.31
Cross currency interest rate swaps
2007 Notes / 2007 cross currency interest rate swaps
The group continues to have a number of cross currency interest rate swaps relating to the 2007 Notes. These cross currency
interest rate swaps (the ‘2007 cross currency interest rate swaps’) have the effect of fixing the borrowings into sterling and the rate
of interest payable on the 2007 Notes. The 2007 cross currency interest rate swap instruments have the same duration and other
critical terms as the 2007 Notes and continue to be designated as part of a cash flow hedge relationship with the 2007 Notes. This
has been assessed to be a highly effective relationship as at 2 October 2011. The fair value of the 2007 cross currency interest rate
swap instruments at 2 October 2011, included within ‘Non-current assets: Other financial assets’ on the balance sheet, was £61.6m
(2010: £58.0m). The movement in the fair value has been taken to Consolidated Statement of Comprehensive Income. A total of
£3.6m (2010: £1.9m) has been recycled to the Consolidated Income Statement to match the foreign exchange movement on the
2007 Notes. Within equity there is a net unrealised gain of £11.4m (2010: net unrealised gain of £11.4m) with a related deferred tax
liability of £2.9m (2010: deferred tax liability of £3.1m) in respect of the 2007 cross currency interest rate swap instruments.
2010 Notes / 2010 USD GBP cross currency fixed interest rate swaps
The group continues to have a number of cross currency interest rate swaps relating to the 2010 Notes. These instruments swap
the principal and interest from US dollar into sterling (the ‘2010 USD GBP cross currency fixed interest rate swaps’). The 2010 USD
GBP cross currency interest rate swaps which swap interest from fixed US dollar to fixed sterling are designated as part of a cash
flow hedge relationship with the future cash flows associated with the 2010 Notes. This has been assessed to be a highly effective
relationship as at 2 October 2011. The fair value of these instruments at 2 October 2011, included within ‘Non-current liabilities:
Other financial liabilities’ on the balance sheet, was £1.3m (3 October 2010: £0.7m) with a related deferred tax asset of £0.2m
(3 October 2010: deferred tax asset of £0.2m). The movement in fair value has been taken to equity. A total of £0.7m (3 October
2010: £nil) has been recycled to the Consolidated Income Statement to match the foreign exchange movement on the 2010 Notes.
Within equity there is a net unrealised loss of £0.7m (3 October 2010: net unrealised loss of £0.7m) with a related deferred tax asset
of £0.2m (3 October 2010: deferred tax asset of £0.2m) in respect of the 2010 cross currency interest rate swap instruments.
Britvic plc Annual Report 2011
95
financial statements
notes to the consolidated financial statements continued
27. Derivatives and hedge relationships continued
Fair value hedges
2009 Notes / 2009 USD GBP cross currency interest rate swaps
The group continues to have a number of cross currency interest rate swaps in respect of the 2009 Notes. These instruments swap
the principal and interest from fixed US dollar into floating sterling (the ‘2009 USD GBP cross currency interest rate swaps’). The
2009 USD GBP cross currency interest rate swaps are designated as part of a fair value hedge relationship with the 2009 Notes.
The fair value movements on the 2009 USD GBP cross currency interest rate instruments are recorded in the Consolidated Income
Statement, as is the fair value movement in the 2009 Notes. The 2009 USD GBP cross currency interest rate swap contracts have
the same duration and other critical terms as the 2009 Notes they hedge. The 2009 USD GBP cross currency interest rate swaps
have been assessed as part of a highly effective hedge relationship as at 2 October 2011. The fair value of the swap instruments at
2 October 2011, included within ‘Non-current assets: Other financial assets’ on the Consolidated Balance Sheet, was £29.6m
(3 October 2010: £23.3m).
2010 Notes / 2010 USD GBP cross currency floating interest rate swaps
The group has entered into swap instruments which swap the principal and fixed rate interest of the 2010 Notes to floating sterling
(‘2010 USD GBP cross currency floating interest rate swaps’). These instruments are designated as part of a fair value hedge
relationship with the 2010 Notes. The fair value movements on the 2010 USD GBP cross currency floating interest rate swaps are
recorded in the Consolidated Income Statement, as is the fair value movement of the hedged item. The swap contracts have the
same duration and other critical terms as the 2010 Notes they hedge. The 2010 USD GBP cross currency floating interest rate
swaps have been assessed as part of a highly effective hedge relationship as at 2 October 2011. The fair value of the swap
instruments at 2 October 2011, included within ‘Non-current assets: Other financial assets’ on the Consolidated Balance Sheet,
was £1.2m (3 October 2010: Non-current liabilities: Other financial liabilities £0.7m).
Net investment hedges
2009 GBP euro cross currency interest rate swaps
These instruments swap floating sterling liabilities into floating euro liabilities. They have been designated as part of an effective
hedge of the net investment in Britvic Ireland. The 2009 GBP euro cross currency interest rate swaps, along with the underlying loan
instruments, are being used to hedge the group’s exposure to foreign exchange risk on this euro investment. Movements in the fair
value of the 2009 GBP euro cross currency interest rate swaps are taken to equity where they offset foreign exchange movements
on the translation of the net investment in Britvic Ireland. The fair value of the 2009 GBP euro cross currency interest rate swaps at
2 October 2011, is an asset of £0.6m (3 October 2010: liability of £0.4m) included within ‘Non-current assets: Other financial assets’
on the Consolidated Balance Sheet (2010: included within ‘Non-current liabilities: Other financial liabilities’).
2010 GBP euro cross currency interest rate swaps
These instruments swap fixed sterling liabilities into fixed euro liabilities and have been designated as part of an effective hedge
of the net investment in Britvic France. The 2010 GBP euro cross currency interest rate swaps, along with the underlying loan
instruments, are being used to hedge the group’s exposure to foreign exchange risk on this euro investment. Movements in the fair
value of the 2010 GBP euro cross currency interest rate swaps are taken to equity where they offset foreign exchange movements
on the translation of the net investment in Britvic France. The fair value of the 2010 GBP euro cross currency interest rate swaps at
2 October 2011, is a liability of £1.1m (3 October 2010: liability of £1.2m) included within ‘Non-current liabilities: Other financial
liabilities’ on the Consolidated Balance Sheet.
96 Britvic plc Annual Report 2011
27. Derivatives and hedge relationships continued
The impact on the consolidated statement of comprehensive income of the derivatives and hedge relationships described above is
summarised in the table below.
2011
£m
2010
£m
Consolidated statement of comprehensive income
Amounts recycled to the income statement in respect of cash flow hedges
Forward currency contracts*
2007 cross currency interest rate swaps**
2010 cross currency interest rate swaps**
Gains / (losses) in the period in respect of cash flow hedges
Forward currency contracts
2007 cross currency interest rate swaps
2010 cross currency interest rate swaps
Exchange differences on translation of foreign operations
Movement on 2009 GBP euro cross currency interest rate swaps
Movement on 2010 GBP euro cross currency interest rate swaps
Exchange movements on translation of the euro net investment
* Offsetting amounts recorded in cost of sales
** Offsetting amounts recorded in finance costs
28. Other non-current liabilities
Firm Commitment
(0.7)
(3.6)
0.6
(3.7)
2.8
3.6
(0.6)
5.8
1.0
0.1
(2.7)
(1.6)
2011
£m
1.9
(1.1)
(1.9)
-
(3.0)
(0.9)
6.1
(0.7)
4.5
(0.4)
(1.2)
(12.1)
(13.7)
2010
£m
4.2
A firm commitment exists in respect of the receipt of the 2009 and 2010 Notes.
29. Share-based payments
The expense recognised for share-based payments in respect of employee services received during the 52 weeks ended 2 October
2011, including national insurance of £0.5m (2010: £0.9m) and dividend equivalents of £0.4m (2010: £0.7m), is £4.7m (2010: £9.4m).
All of that expense arises from transactions which are expected to be equity-settled share-based payment transactions.
The Britvic Share Incentive Plan (‘SIP’)
The SIP is an all-employee plan approved by HMRC. The plan allows for annual awards of free ordinary shares with a value of 3%
of salary (subject to HMRC maximum limits) together with an offer of matching shares on the basis of one free matching share
for each ordinary share purchased with a participant’s savings, up to a maximum of £75 per four week pay period. Employees are
entitled to receive the annual free share award provided they are employed by the company on the last day of each financial year
and on the award date. There are no cash settlement alternatives.
Awards made during the period are shown in the table below. The fair value of these awards is equivalent to the intrinsic value of the shares.
Annual free shares award
Matching shares award – 1 free share for every ordinary share purchased
2011
484,343
346,267
No of shares
2010
406,083
287,132
Britvic plc Annual Report 2011
97
financial statements
notes to the consolidated financial statements continued
29. Share-based payments continued
The Britvic Executive Share Option Plan (‘Option Plan’)
The Option Plan allows for options to buy ordinary shares to be granted to selected employees. The option price is the average
market price of Britvic plc’s shares on the three business days before the date of grant. Options become exercisable on the
satisfaction of the performance condition and remain exercisable until ten years after the date of grant.
The performance condition requires average growth in EPS of 7% per annum over a three year period in excess of the average
growth in RPI over the same period for the options to vest in full. If EPS growth averages 3% per annum in excess of RPI growth,
25% (2010: 25%) of the options will vest. Straight-line apportionment will be applied between these two levels to determine the
number of options that vest and no options will vest if average EPS growth is below the lower threshold.
In some circumstances, at the discretion of the company, an option holder who exercises his / her option may receive a cash
payment rather than the Ordinary shares under option. The cash payment would be equal to the amount by which the market value
of the ordinary shares under option exceeds the option price. However, it is expected that this plan will be equity-settled and as a
consequence has been accounted for as such.
The following table illustrates the movements in the number of share options during the period.
Outstanding as at 27 September 2009
Granted during the period
Exercised during the period
Forfeited during the period
Outstanding as at 3 October 2010
Granted during the period
Exercised during the period
Forfeited during the period
Outstanding at 2 October 2011
Exercisable at 2 October 2011
Number
of share
options
Weighted average
exercise price
(pence)
6,564,530
1,785,576
(639,946)
(162,077)
7,548,083
1,566,418
(209,531)
(140,584)
8,764,386
2,923,260
251.8
387.0
245.0
285.1
283.7
464.6
265.8
392.4
314.8
281.1
The weighted average share price at the date of exercise for share options exercised during the period was 459.3p (2010: 412.7p).
The share options outstanding as at 2 October 2011 had a weighted average remaining contractual life of 7.1 years (2010: 7.6 years)
and the range of exercise prices was 221.0p – 464.6p (2010: 221.0p – 387.0p).
The weighted average fair value of options granted during the period was 82.8p (2010: 81.6p).
The fair value of equity-settled share options granted is estimated as at the date of grant using a binomial model, taking account of
the terms and conditions upon which the options were granted.
The following table lists the inputs to the model used in respect of the award granted during the 52 weeks ended 2 October 2011.
The comparative shows the inputs to the model used in respect of the award granted during the 53 weeks ended 3 October 2010.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Share price at date of grant (pence)
Exercise price (pence)
2011
4.8
27.5
1.9
5.0
475.0
464.6
2010
4.2
32.3
2.5
5.0
380.0
387.0
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome.
98 Britvic plc Annual Report 2011
29. Share-based payments continued
The Britvic Performance Share Plan (‘PSP’)
The PSP allows for awards of ordinary shares or nil cost options to be made to selected employees with vesting subject to the
satisfaction of a performance condition. Different performance conditions apply to different groups of employees. Awards up to and
including 2008 were made in respect of ordinary shares. Awards granted in 2009 and 2010 were made in respect of nil cost options.
Nil cost options become exercisable on the satisfaction of the performance conditions and remain exercisable until 10 years / 7 years
after the date of grant for employees based in the UK / Ireland respectively.
The performance condition applying to the total number of awards granted to members of the senior leadership team during the
current period is divided equally between the total shareholder return (‘TSR’) and return on invested capital (‘ROIC’) performance
conditions described below.
The TSR condition measures the company’s TSR relative to a comparator group (consisting of 22 companies) over a three year
performance period. The awards will not vest unless the company’s position in the comparator group is at least median. At median
25% (2010: 25%) will vest, rising on a straight-line basis to 100% vesting at upper quartile.
For the award granted during the 52 weeks ended 2 October 2011, the ROIC performance condition requires the company’s ROIC to
be at least 22.7% (2010: for the award granted during the 53 weeks ended 3 October 2010, 23.2%) over the three year performance
period for the award to vest in full. If ROIC is 21.9% (2010: 21.9%) over the performance period, 25% (2010: 25%) of the award will
vest. Straight-line apportionment will be applied between these two levels to determine the percentage of awards that vest and no
awards will vest if ROIC is below the lower threshold.
Awards granted to members of the senior management team vest subject to a performance condition which requires average
growth in EPS of 7% pa over a three year period in excess of the growth in RPI over the same period for the awards to vest in full.
If EPS growth averages 3% pa in excess of RPI growth, 25% (2010: 25%) of the awards will vest. Straight-line apportionment will
be applied between these two levels to determine the number of awards that vest and no awards will vest if average EPS growth
is below the lower threshold.
In some circumstances, at the discretion of the company, vested awards may be satisfied by a cash payment rather than a transfer of
ordinary shares. However, it is expected that this plan will be equity-settled and as a consequence has been accounted for as such.
The following tables illustrate the movements in the number of shares and nil cost options during the period.
Outstanding as at 27 September 2009
Vested during the period*
Lapsed during the period
Outstanding as at 3 October 2010
Granted during the period
Vested during the period*
Lapsed during the period
Outstanding at 2 October 2011
* The share price on the date of vesting was 462.0p (2010: 370.6p).
Outstanding as at 27 September 2009
Granted during the period
Forfeited during the period
Outstanding at 3 October 2010
Granted during the period
Forfeited during the period
Outstanding at 2 October 2011
Number of shares
subject to
TSR condition
Number of shares
subject to
EPS condition
Number of shares
subject to
ROIC condition
1,716,624
(625,594)
(38,041)
1,052,989
-
(460,963)
(7,245)
584,781
2,336,861
(489,791)
(191,019)
1,656,051
10,575
(463,228)
(107,970)
1,095,428
620,591
-
(28,919)
591,672
-
-
(6,893)
584,779
Number of nil cost
options subject to
TSR condition
Number of nil cost
options subject to
EPS condition
Number of nil cost
options subject to
ROIC condition
-
396,578
-
396,578
353,423
(50,723)
699,278
-
816,207
(69,349)
746,858
749,543
(154,376)
1,342,025
-
396,578
-
396,578
353,423
(50,723)
699,278
There were no nil cost options exercisable at 2 October 2011 (2010: Nil).
The nil cost options outstanding as at 2 October 2011 had a weighted average remaining contracted life of 8.5 years (TSR condition)
(2010: 9.0 years), 8.4 years (EPS condition) (2010: 8.7 years) and 8.5 years (ROIC condition) (2010: 9.0 years).
The weighted average fair value of nil cost options granted during the period was 258.6p (TSR condition) (2010: 208.5p), 413.0p
(EPS condition) (2010: 336.3p) and 413.0p (ROIC condition) (2010: 336.3p).
The fair value of equity-settled shares and nil cost options granted is estimated as at the date of grant using separate models as
detailed below, taking account of the terms and conditions upon which the shares and nil cost options were granted.
Britvic plc Annual Report 2011
99
financial statements
notes to the consolidated financial statements continued
29. Share-based payments continued
The following table lists the inputs to the models used in respect of the award granted during the 52 weeks ended 2 October 2011.
Valuation model used
Dividend yield (%)
Expected volatility (%)
Share price at date of grant (pence)
Nil cost options
subject to
TSR condition
Monte Carlo
simulation
4.8
27.5
475.0
Nil cost options
subject to
EPS condition
Nil cost options
subject to
ROIC condition
Share price at date of grant
adjusted for dividends not
received during vesting period
Share price at date of grant
adjusted for dividends not
received during vesting period
4.8
N/A
475.0
4.8
N/A
475.0
The following table lists the inputs to the models used in respect of the award granted during the 53 weeks ended 3 October 2010.
Nil cost options
subject to
EPS condition
Nil cost options
subject to
ROIC condition
Share price at date of grant
adjusted for dividends not
received during vesting period
Share price at date of grant
adjusted for dividends not
received during vesting period
Valuation model used
Dividend yield (%)
Expected volatility (%)
Share price at date of grant (pence)
Nil cost options
subject to
TSR condition
Monte Carlo
simulation
4.2
32.3
380.0
30. Notes to the consolidated cash flow statement
Analysis of net debt
Cash at bank and in hand
Debt due after more than one year
Derivatives hedging the balance sheet debt*
Adjusted net debt
Cash at bank and in hand
Debt due after more than one year
Derivatives hedging the balance sheet debt*
Adjusted net debt
2010
£m
54.0
(569.9)
64.7
(451.2)
2009
£m
39.7
(450.7)
44.6
(366.4)
Cash flows
£m
(10.4)
13.4
**
-
3.0
Cash flows
£m
14.8
(53.6)
**
-
(38.8)
(0.6)
(12.6)
13.5
0.3
Exchange
differences
£m
(0.5)
(17.1)
20.1
2.5
4.2
N/A
380.0
Exchange
differences
£m
Other
movement
£m
-
(4.1)
-
(4.1)
Other
movement
£m
-
4.2
N/A
380.0
2011
£m
43.0
(573.2)
78.2
(452.0)
2010
£m
54.0
(48.5)
***
(569.9)
-
(48.5)
64.7
(451.2)
*
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 debt due after more than one year.
** This includes issue costs paid on new loans / facilities received during the period of £3.9m (2010: £1.2m). This has been included in the ‘Finance costs’
in the Consolidated Statement of Cash Flows.
*** This includes debt assumed on the acquisition of Britvic France of £46.0m.
100 Britvic plc Annual Report 2011
31. Commitments and contingencies
Operating lease commitments
Future minimum lease payments under non-cancellable operating leases are as follows:
Within one year
After one year but not more than five years
More than five years
Within one year
After one year but not more than five years
More than five years
Land and
buildings
£m
4.1
13.5
42.0
59.6
Land and
buildings*
£m
4.4
14.8
45.3
64.5
* Restated to include two properties within Britvic Ireland that were not previously included in the prior year disclosure.
Finance lease commitments
Future minimum lease payments under finance leases are as follows:
Within one year
After one year but not more than five years
More than five years
Other
£m
9.2
15.4
1.1
25.7
Other
£m
8.9
18.5
2.2
29.6
2011
£m
-
1.2
-
1.2
2011
Total
£m
13.3
28.9
43.1
85.3
2010
Total
£m
13.3
33.3
47.5
94.1
2010
£m
-
0.7
0.8
1.5
Due to the timing of the expiry of the finance lease commitments, there is no material difference between the total future minimum
lease payments and their fair value.
Capital commitments
At 2 October 2011, the group has commitments of £16.9m (2010: £12.6m) relating to the acquisition of new plant and machinery.
Contingent liabilities
The group had no material contingent liabilities at 2 October 2011 (2010: none).
Britvic plc Annual Report 2011
101
financial statements
notes to the consolidated financial statements continued
32. Related party disclosures
The consolidated financial statements include the financial statements of Britvic plc and the subsidiaries listed in the table below.
Particulars of dormant and non-trading subsidiaries which do not materially affect the group results have been excluded.
Name
Directly held
Britannia Soft Drinks Limited
Britvic Finance No 2 Limited
Indirectly held
Britvic Finance Limited
Britvic Holdings Limited
Britvic Overseas Limited
Britvic International Limited
Britvic Soft Drinks Limited
Robinsons Soft Drinks Limited
Orchid Drinks Limited
Red Devil Energy Drinks Limited
Britvic Irish Holdings Limited
Robinsons (Finance) Limited
Robinsons (Finance) No 2 Limited
Britvic Ireland Limited
Britvic Northern Ireland Limited
Aquaporte Limited
Britvic Worldwide Brands Limited
Britvic France SNC
Fruité Entreprises SA
Fruité SAS
Bricfruit SAS
Unisource SAS
Teisseire SAS
Teisseire Benelux SA
Principal activity
Country of
incorporation
% equity
interest
Holding company
Financing company
England and Wales
Jersey
Financing company
Holding company
Holding company
Marketing and distribution of soft drinks
Manufacture and sale of soft drinks
Non-trading
Non-trading
Non-trading
Holding company
Financing company
Financing company
Manufacture and marketing of soft drinks
Marketing and distribution of soft drinks
Supply of water-coolers and bottled water
Marketing and distribution of soft drinks
Holding company
Holding company
Manufacture and sale of soft drinks
Manufacture and sale of soft drinks
Manufacture and sale of soft drinks
Manufacture and sale of soft drinks
Marketing and distribution of soft drinks
Jersey
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Republic of Ireland
Republic of Ireland
England and Wales
Republic of Ireland
Republic of Ireland
Republic of Ireland
Republic of Ireland
France
France
France
France
France
France
France
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
The group has an interest in two partnerships, Britvic Scottish Limited Partnership and Britvic Property Partnership, both of which are
consolidated by the group. The group has taken advantage of the exemption conferred by Regulation 7 of the Partnership (Accounts)
Regulations 2008 and has therefore not appended the accounts of these qualifying partnerships to these accounts. Separate
accounts for these partnerships are not required to be, and have not been, filed at Companies House.
Key management personnel are deemed to be the Executive and Non-Executive Directors of the company and members of the
Executive Committee. The compensation payable to key management in the period is detailed below.
Short-term employee benefits
Post-employment benefits
Share-based payment
2011
£m
2.8
0.5
1.1
4.4
2010
£m
5.1
0.6
2.0
7.7
There were no other related party transactions requiring disclosure in these financial statements.
33. Going concern
The directors are confident that it is appropriate for the going concern basis to be adopted in preparing the financial statements.
As at 2 October 2011, the Consolidated Balance Sheet is showing a net assets position of £22.5m (3 October 2010: net liabilities of £30.7m).
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 make dividend payments.
The liquidity of the group remains strong in particular in light of the refinancing of the group’s committed facility as well as the
December 2010 issue of US$163m and £7.5m Senior Notes in the US private placement market. Details are provided in note 23.
102 Britvic plc Annual Report 2011
financial statements
financial statements
independent auditors’ report
to the members of Britvic plc
We have audited the parent company financial statements of Britvic plc for the 52 week period ended 2 October 2011 which
comprise the company balance sheet and the related notes 1 to 17. The financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors’ responsibilities in relation to the financial statements set out on page 44,
the directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and express an opinion on the parent company financial statements in accordance
with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the auditing
practices board’s ethical standards for auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to
identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the parent company financial statements:
• Give a true and fair view of the state of the company’s affairs as at 2 October 2011;
• Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• Have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by The Companies Act 2006
In our opinion:
• The part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act
2006; and
• The information given in the directors’ report for the financial year for which the financial statements are prepared is consistent
with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
• Adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
• The parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• Certain disclosures of directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the group financial statements of Britvic plc for the 52 week period ended 2 October 2011.
Nigel Meredith
Senior statutory auditor
for and on behalf of Ernst & Young LLP,
Statutory Auditor
Birmingham
29 November 2011
Britvic plc Annual Report 2011
103
fi nancial statements
company balance sheet
As at 2 October 2011
Non-current assets
Investments in group undertakings
Other fi nancial assets
Current assets
Trade and other receivables
Deferred tax asset
Cash in hand and at bank
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Other fi nancial liabilities
Net current assets / (liabilities)
Total assets less current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Other fi nancial liabilities
Other non-current liabilities
Net assets
Capital and reserves
Issued share capital
Share premium account
Own shares reserve
Share scheme reserve
Hedging reserve
Merger reserve
Retained earnings
Equity shareholders’ funds
Note
6
11
8
7
9
10
11
10
11
12
13
14
14
14
14
14
14
2011
£m
739.5
93.0
832.5
50.7
1.4
8.0
60.1
(8.0)
-
(0.1)
(8.1)
52.0
884.5
(569.8)
(3.8)
(1.9)
(575.5)
2010
£m
734.8
81.3
816.1
10.5
2.5
-
13.0
(17.4)
(4.9)
-
(22.3)
(9.3)
806.8
(442.4)
(3.9)
(4.2)
(450.5)
309.0
356.3
48.3
15.0
(1.0)
7.8
10.8
87.3
140.8
309.0
48.0
10.6
(1.9)
9.7
10.9
87.3
191.7
356.3
The fi nancial statements were approved by the board of directors and authorised for issue on 29 November 2011. They were signed
on its behalf by:
Paul Moody
Chief Executive
John Gibney
Finance Director
104 Britvic plc Annual Report 2011
financial statements
notes to the company
financial statements
1. Parent undertaking
The financial statements are prepared under the historical cost convention except for the measurement of derivative instruments at
fair value. They have been drawn up to comply with applicable accounting standards in accordance with the Companies Act 2006.
These accounts present information about the company as an individual undertaking, under UK Generally Accepted Accounting
Principles, and not about its group.
The company has taken advantage of the exemption permitted by section 408 of the Companies Act 2006 not to publish its
individual profit and loss account and related notes.
The company is exempt from the requirements of Financial Reporting Standard No.1 (Revised) ‘Cash Flow Statements’.
2. Accounting policies
Investments
The company recognises its investments in subsidiaries at cost less any provisions made for impairment.
In respect of FRS 20 ‘Share-based payment’, the company records an increase in its investment in subsidiaries to reflect the
share-based compensation expense recorded by its subsidiaries. This reflects current best practice following the issue of UITF 44.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are initially recognised at fair value less directly attributable transaction costs and are
subsequently measured at amortised cost using the effective interest rate method.
Finance costs arising from the outstanding loan balance and finance charges are charged to the profit and loss account using an
effective interest rate method.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences are taken
to the profit and loss account.
Issued share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Dividends
Dividend income is recognised when the company’s right to receive payment is established.
Final dividends are recorded in the financial statements in the period in which they are approved by the company’s shareholders.
Interim dividends are recorded in the period in which they are approved and paid.
Deferred taxation
Deferred tax assets and liabilities are recognised, subject to certain exceptions, in respect of all material timing differences between
the recognition of gains and losses in the financial statements and for tax purposes. Those timing differences recognised include
accelerated capital allowances, unrelieved tax losses and short-term timing differences. Timing differences not recognised include
those relating to the revaluation of fixed assets in the absence of a commitment to sell the assets, the gain on sale of assets rolled
into replacement assets and the distribution of profits from overseas subsidiaries in the absence of any commitment by the
subsidiary to make the distribution.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered and to the
extent that it is regarded as probable that future taxable profits will be available against which temporary differences can be utilised.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing
differences reverse, based on tax rates and laws enacted or substantially enacted at the balance sheet date.
Britvic plc Annual Report 2011
105
financial statements
notes to the company financial statements continued
2. Accounting policies continued
Derivative financial instruments and hedging
The company uses interest rate swaps to hedge its risks associated with foreign currency and interest rate fluctuations classified as
cash flow hedges (when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction). All derivative financial instruments are initially recognised and
subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair
value is negative.
For those derivatives designated as hedges and for which hedge accounting is desired, the hedging relationship is documented at its
inception. This documentation identifies the hedging instrument, the hedged item or transaction, the nature of the risk being hedged
and how effectiveness will be measured throughout its duration. Such hedges are expected at inception to be highly effective.
Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken to the
profit and loss account. The treatment of gains and losses arising from revaluing interest rate swaps designated as hedging
instruments is as follows:
For cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the
ineffective portion is recognised in the profit and loss account. Amounts taken to equity are transferred to the profit and loss account
when the hedged transaction affects profit or loss, such as when a forecast sale or purchase occurs.
If a forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to the profit and loss
account. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation
as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs and are
transferred to the profit and loss account. If the related transaction is not expected to occur, the amount is taken to the profit and
loss account.
For fair value hedges, the gain or loss on the fair value of the hedging instrument is recognised in the profit and loss account.
The gain or loss on the hedged item attributable to the hedged risk shall adjust the carrying amount of the hedged item and be
recognised in the profit and loss account. If the hedge relationship was ineffective the hedged item would no longer be adjusted
and the fair value gain or loss on the hedging instrument would continue to be recorded in the profit and loss account.
3. Auditors’ remuneration
Auditors’ remuneration has been borne by another group undertaking. For further details, refer to note 7 to the consolidated financial
statements.
4. Profit of the company
The company made a loss of £9.6m in the period (2010: loss £21.7m).
5. Directors’ remuneration
The remuneration of the directors of the company is borne by another group company.
Directors’ emoluments are disclosed in the directors’ remuneration report on pages 45 to 53 of the consolidated financial statements.
6. Investments in group undertakings
Cost and net book value at the beginning of the period
Acquisitions
Capital contribution
Cost and net book value at the end of the period
2011
£m
734.8
-
4.7
739.5
2010
£m
633.8
91.6
9.4
734.8
On 17 May 2010, the company subscribed for 100 ordinary shares (of nil par value) and 100 fixed rate redeemable preference shares
(of nil par value) in Britvic Finance No 2 Limited for a consideration of £91.6m.
106 Britvic plc Annual Report 2011
6. Investments in group undertakings continued
The following is a list of the principal subsidiary undertakings of which Britvic plc is, either directly or through subsidiary companies,
the beneficial owner of the whole of the equity share capital.
Name
Directly held
Britannia Soft Drinks Limited
Britvic Finance No 2 Limited
Indirectly held
Britvic Finance Limited
Britvic Holdings Limited
Britvic Overseas Limited
Britvic International Limited
Britvic Soft Drinks Limited
Robinsons Soft Drinks Limited
Orchid Drinks Limited
Red Devil Energy Drinks Limited
Britvic Irish Holdings Limited
Robinsons (Finance) Limited
Robinsons (Finance) No 2 Limited
Britvic Ireland Limited
Britvic Northern Ireland Limited
Aquaporte Limited
Britvic Worldwide Brands Limited
Britvic France SNC
Fruité Entreprises SA
Fruité SAS
Bricfruit SAS
Unisource SAS
Teisseire SAS
Teisseire Benelux SA
7. Deferred tax
Opening balance
Profit and loss account
Closing balance
Principal activity
Country of
incorporation
% equity
interest
Holding company
Financing company
England and Wales
Jersey
Financing company
Holding company
Holding company
Marketing and distribution of soft drinks
Manufacture and sale of soft drinks
Non-trading
Non-trading
Non-trading
Holding company
Financing company
Financing company
Manufacture and marketing of soft drinks
Marketing and distribution of soft drinks
Supply of water-coolers and bottled water
Marketing and distribution of soft drinks
Holding company
Holding company
Manufacture and sale of soft drinks
Manufacture and sale of soft drinks
Manufacture and sale of soft drinks
Manufacture and sale of soft drinks
Marketing and distribution of soft drinks
Jersey
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Republic of Ireland
Republic of Ireland
England and Wales
Republic of Ireland
Republic of Ireland
Republic of Ireland
Republic of Ireland
France
France
France
France
France
France
France
2011
£m
2.5
(1.1)
1.4
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2010
£m
-
2.5
2.5
Analysed as tax on timing differences related to:
Other
8. Trade and other receivables
Amounts due from subsidiary undertakings
Other receivables
9. Trade and other payables
Amounts due to subsidiary undertakings
Accruals and deferred income
1.4
2.5
2011
£m
50.6
0.1
50.7
2011
£m
7.0
1.0
8.0
2010
£m
10.5
-
10.5
2010
£m
15.5
1.9
17.4
Britvic plc Annual Report 2011
107
financial statements
notes to the company financial statements continued
10. Interest-bearing loans and borrowings
Current
Bank overdrafts
Non-current
Private placement notes
Less unamortised issue costs
Total non-current
Private placement notes
2011
£m
-
(574.4)
4.6
(569.8)
2010
£m
(4.9)
(445.7)
3.3
(442.4)
2007 Notes
On 20 February 2007, Britvic plc issued US$375m and £38m of Senior Notes (‘the 2007 Notes’) in the United States Private
Placement market. The proceeds of the issue were used to repay and cancel a £150m term loan, with the remainder being used
to repay the amounts drawn on the group’s revolving credit facility. The amount, maturity and interest terms of the Notes are shown
in the table below:
Series
A
B
C
D
E
F
Tranche
7 year
7 year
7 year
10 year
12 year
12 year
Maturity date
20 February 2014
20 February 2014
20 February 2014
20 February 2017
20 February 2019
20 February 2019
Amount
US$87m
US$15m
£25m
US$147m
US$126m
£13m
Interest terms
Swap terms
US$ fixed at 5.80%
US$ LIBOR + 0.5%
UK£ fixed at 6.11%
US$ fixed at 5.90%
US$ fixed at 6.00%
UK£ fixed at 5.94%
UK£ fixed at 6.10%
UK£ fixed at 6.07%
n/a
UK£ fixed at 5.98%
UK£ fixed at 5.98%
n/a
Britvic plc makes quarterly and semi-annual interest payments in the currency of issue. The Notes are unsecured and rank pari passu
in right of repayment with other senior unsecured indebtedness of the company. In order to manage the risk of foreign currency and
interest rate fluctuations, the company has entered into cross currency interest rate swaps whereby fixed / floating US dollar interest
is swapped for fixed sterling interest. The swap contracts have the same duration and other critical terms as the borrowings which
they hedge and are considered to be effective.
Covenants on these Notes include a term which states that Britvic plc must offer to repay the Notes should a change in control of
the group occur which results in a downwards movement in the credit rating as defined in the Note purchase agreement.
2009 Notes
On 17 December 2009, Britvic plc issued US$250m of Senior Notes in the United States Private Placement market (‘the 2009
Notes’). The 2009 Notes are additional borrowings to the 2007 Notes. The proceeds from the 2009 Notes were principally used to
repay amounts drawn on the group’s existing borrowings, including the repayment of €100m of the revolving credit facility.
Britvic plc makes semi-annual interest payments in US dollars, with the first payment made on 17 June 2010. The 2009 Notes are
unsecured and rank pari passu in right of repayment with other senior unsecured indebtedness of the group.
In order to manage foreign exchange risk, interest rate risk and to ensure an appropriate mix of sterling and euro funding, the
company has entered into a number of new cross currency interest rate swaps. The 2009 Notes were swapped into floating rate
sterling and euro liabilities through a series of US dollar to sterling and sterling to euro swap instruments. The US dollar to sterling
cross currency interest rate swap contracts have the same duration and other critical terms as the relevant borrowings they hedge
and are designated as part of effective hedge relationships.
The amount, maturity and interest terms of the 2009 Notes are shown in the table below:
Series
A
B
C
D
Tranche
5 year
7 year
8 year
10 year
Maturity date
17 December 2014
17 December 2016
17 December 2017
17 December 2019
Amount
US$30m
US$75m
US$25m
US$120m
Interest terms
Swap terms
US$ fixed at 4.07%
US$ fixed at 4.77%
US$ fixed at 4.94%
US$ fixed at 5.24%
UK£ LIBOR + 1.44%
EURIBOR + 1.69%
EURIBOR + 1.70%
EURIBOR + 1.75%
As detailed in the table above, the 2009 USPP cross currency swaps converted an amount of US dollar borrowings into a €147.0m
floating rate euro liability. To mitigate exposure to changes in euro interest rates on this liability, €75.0m of interest rate swaps were
transacted. These 5-year fixed rate swaps had an effective start date in December 2010. These swaps do not form part of an
effective hedge relationship.
108 Britvic plc Annual Report 2011
10. Interest-bearing loans and borrowings continued
2010 Notes
On 17 December 2010, the company issued US$163m and £7.5m of Senior Notes in the United States Private Placement market
(‘the 2010 Notes’). The 2010 Notes are additional borrowings to the 2007 US$375m and £38m United States Private Placement
Notes (‘the 2007 Notes’) and the 2009 US$250m Notes (‘the 2009 Notes’). The proceeds from the 2010 Notes were principally used
to repay amounts drawn on the group’s existing borrowings. Issue costs incurred in the period relate to the issue of the 2010 Notes
and the refinancing of the group’s bank facilities.
Britvic plc makes semi-annual interest payments in US dollars, with the first payment made on 17 June 2011. The 2010 Notes are
unsecured and rank pari passu in right of repayment with other senior unsecured indebtedness of the group.
In order to manage foreign exchange risk, interest rate risk and to ensure an appropriate mix of sterling and euro funding, the
company has entered into a number of cross currency interest rate swaps. The 2010 Notes were swapped into a mix of fixed and
floating rate sterling and euro liabilities through a series of US dollar to sterling and sterling to euro swap instruments. These cross
currency swap contracts have the same duration and other critical terms as the relevant borrowings they hedge and are designated
as part of effective hedge relationships.
The amount, maturity and interest terms of the 2010 Notes are shown in the table below:
Series
A
B
C
D
Tranche
7 year
7 year
Maturity date
17 December 2017
17 December 2017
10 year
17 December 2020
12 year
17 December 2022
Amount
£7.5m
US$25m
US$25m
US$37m
US$23m
US$10m
US$18m
US$25m
Interest terms
Swap terms
UK£ fixed at 3.74%
US$ fixed at 3.45%
US$ fixed at 3.45%
US$ fixed at 4.04%
US$ fixed at 4.04%
US$ fixed at 4.04%
US$ fixed at 4.14%
US$ fixed at 4.14%
N/A
UK£ fixed 3.85%
€ fixed 3.34%
UK£ LIBOR +1.24%
€ fixed 3.85%
UK£ fixed 4.49%
UK£ LIBOR +1.18%
€ fixed 3.97%
11. Other financial asset and financial liabilities
Other financial assets
Cross currency interest rate swaps relating to the 2007 Notes
Cross currency interest rate swaps relating to the 2009 Notes
Cross currency interest rate swaps relating to the 2010 Notes
Other financial liabilities: Current
Forward rate agreements
Other financial liabilities: Non-current
Cross currency interest rate swaps relating to the 2009 Notes
Cross currency interest rate swaps relating to the 2010 Notes
Interest rate swap
12. Other non-current liabilities
Firm commitment
2011
£m
61.6
30.2
1.2
93.0
(0.1)
-
(2.4)
(1.4)
(3.8)
2011
£m
1.9
2010
£m
58.0
23.3
-
81.3
-
(0.4)
(2.6)
(0.9)
(3.9)
2010
£m
4.2
Britvic plc Annual Report 2011
109
financial statements
notes to the company financial statements continued
13. Issued share capital
The issued share capital as at 2 October 2011 comprised 241,400,052 ordinary shares of £0.20 each (2010: 239,906,178 ordinary
shares), totalling £48,280,010 (2010: £47,981,236).
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.
Authorised
327,500,000 ordinary shares of £0.20 each
Issued, called up and fully paid ordinary shares
241,400,052 (2010: 239,906,178) ordinary shares of £0.20 each
Share issues in the current and prior periods relating to incentive schemes for employees are detailed below:
2011
£m
65.5
48.3
52 weeks ended 2 October 2011
2 December 2010
15 December 2010
23 December 2010
4 February 2011
1 April 2011
8 April 2011
12 May 2011
27 June 2011
53 weeks ended 3 October 2010
25 November 2009
30 November 2009
7 December 2009
14 January 2010
28 January 2010
22 February 2010
5 March 2010
29 March 2010
9 April 2010
1 June 2010
19 August 2010
1 October 2010
No of shares
issued
12,244
122,449
21,974
300,000
32,013
484,343
20,851
500,000
1,493,874
No of shares
issued
103,102
134,684
34,837
57,749
131,140
57,789
50,039
46,118
406,083
12,244
300,000
12,244
2010
£m
65.5
48.0
Value
£
2,449
24,490
4,395
60,000
6,402
96,868
4,170
100,000
298,774
Value
£
20,620
26,937
6,967
11,550
26,228
11,558
10,008
9,224
81,217
2,449
60,000
2,449
Shares were also issued under a non pre-emptive placing as follows:
21 May 2010
1,346,029
269,207
No of shares
issued
Par value
£
21,780,153
4,356,031
Consideration received from the non pre-emptive placing, net of costs incurred, was £91,647,000 which was used in the acquisition
of Britvic France.
Of the issued and fully paid ordinary shares, 258,683 shares (2010: 466,343 shares) are treasury shares. This equates to £51,737
(2010: £93,269) at £0.20 par value of each ordinary share. These shares are held for the purpose of satisfying the share schemes
detailed in note 29 of the consolidated financial statements.
110 Britvic plc Annual Report 2011
14. Reconciliation of movement in equity shareholders’ funds
Own
shares
reserve
£m
Share
scheme
reserve
£m
Hedging
reserve
£m
Merger
reserve
£m
Retained
earnings
£m
(1.9)
-
(4.1)
8.3
(3.3)
-
-
-
(1.0)
9.7
-
-
(5.6)
-
3.7
-
-
7.8
10.9
-
-
-
-
-
(0.1)
-
10.8
At 3 October 2010
Loss for the year
Issue of shares
Own shares utilised for share
schemes
Own shares purchased for share
schemes
Movement in share-based schemes
Movement in cash flow hedges
Payment of dividend
Issued
share
capital
£m
48.0
-
0.3
Share
premium
account
£m
10.6
-
4.4
-
-
-
-
-
-
-
-
-
-
At 2 October 2011
48.3
15.0
15. Dividends paid and proposed
Declared and paid during the period
Equity dividends on ordinary shares
Final dividend for 2010: 12.0p per share (2009: 10.9p per share)
Interim dividend for 2011: 5.1p per share (2010: 4.7p per share)
Dividends paid
Proposed for approval by the shareholders at the AGM
Final dividend for 2011: 12.6p per share (2010: 12.0p per share)
87.3
-
-
-
-
-
-
-
191.7
(9.6)
-
(1.0)
-
-
-
(40.3)
Total
£m
356.3
(9.6)
0.6
1.7
(3.3)
3.7
(0.1)
(40.3)
87.3
140.8
309.0
2011
£m
28.3
12.0
40.3
29.9
2010
£m
23.6
11.3
34.9
28.7
16. Contingent liabilities
The company is co-guarantor of the group’s bank loan and overdraft facilities.
17. Related party transactions
The company has taken advantage of the exemption under FRS 8 available to a parent company not to disclose transactions with
its wholly owned subsidiaries within its financial statements.
Britvic plc Annual Report 2011
111
financial statements
financial statements
shareholder information
Range of holdings
1 - 199
200 - 499
500 - 999
1,000 - 4,999
5,000 - 9,999
10,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 - 999,999
1,000,000 Plus
Category
Private individuals
Nominee companies
Limited and public limited companies
Other corporate bodies
Pension funds, insurance companies and banks
Number of
shareholders
Percentage
of total
Ordinary
shareholders
shares (million)
Percentage
of issued share
capital
163
256
359
948
173
162
54
116
29
52
7.05%
11.07%
15.53%
41.00%
7.48%
7.01%
2.34%
5.02%
1.25%
2.25%
11,388
84,595
249,306
1,986,814
1,089,382
3,693,655
3,875,942
24,598,264
21,322,632
184,488,074
0.00%
0.04%
0.10%
0.82%
0.45%
1.53%
1.61%
10.19%
8.83%
76.42%
2,312
100.00%
241,400,052
100.00%
Number of
shareholders
Percentage
of total
Ordinary
shareholders
shares (million)
Percentage
of issued share
capital
1,452
743
27
85
5
2,312
62.80%
32.13%
1.17%
3.68%
0.22%
4,789,606
207,999,252
12,966,714
15,557,236
87,244
1.98%
86.16%
5.37%
6.45%
0.04%
100.00%
241,400,052
100.00%
Dividend mandates
Shareholders who wish dividends to
be paid directly into a bank or building
society account should contact the
Registrar for a dividend mandate form
or the form can be downloaded from the
company’s website http://ir.britvic.com/
shareholder-centre/dividends.aspx
This method of payment removes the
risk of delay or loss of dividend cheques
in the post and ensures that your
account is credited on the due date.
Dividend reinvestment plan (DRIP)
Shareholders can now choose to reinvest
dividends received to purchase further
shares in the company through a DRIP.
A DRIP application form is available via
the registrar or for download from the
company’s website http://ir.britvic.com/
shareholder-centre/dividends.aspx
Share dealing services
The company’s Registrar, Equiniti
Financial Services Limited, offer a
telephone and internet dealing service,
Shareview, which provides a simple
and convenient way of buying and
selling shares. For telephone dealings
call 08456 037 037 between 8.00am
and 4.30pm, Monday to Friday, and
for internet dealings log onto www.
shareview.co.uk/dealing
Individual savings accounts (ISAs)
ISAs in Britvic plc ordinary shares are
available through Equiniti Financial
Services Limited. Further information
may be obtained through their ISA
Helpline, telephone 0845 300 0430.
Financial calendar
Ex-dividend date
7 December 2011
Record date
9 December 2011
Annual general meeting 25 January 2012
Payment of final dividend 10 February 2012
Interim results announcement May 2012
Electronic communications
Shareholders can elect to receive
shareholder documents electronically
by registering with Shareview at
www.shareview.co.uk. This will save
on printing and distribution costs,
creating environmental benefits. When
you register, you will be sent an email
notification to say when shareholder
documents are available on our website
and you will be provided with a link to
that information. When registering,
you will need your shareholder reference
number which can be found on your share
certificate or proxy form. Please contact
Equiniti if you require any assistance or
further information.
Contacts
The Company Secretary
is Emma Thomas.
The registered office is:
Britvic House, Broomfield Road,
Chelmsford CM1 1TU.
Tel: 01245 261871 Fax: 01245 504386,
website www.britvic.com
This report is available to download
via the company’s website:
http://ir.britvic.com/results-and-
presentations/results-and-
presentations/2011.aspx
If you do not have access to the internet
and would like a printed copy of any of our
reports, please call our consumer care team
on 0800 0321 767 or write to Consumer
Care Department, Drayton House,
Drayton Road, Shirley, Solihull B90 4NA.
The company’s registrar is:
Equiniti, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA
Tel: 0871 384 2550* (UK callers),
+44 121 415 7018 (non-UK callers).
*For those with hearing difficulties, a textphone
is available on 0870 600 3950 for UK callers
with compatible equipment.
Calls to 0871 numbers are charged at
8p per minute from a BT landline.
Other telephony provider costs may vary.
112 Britvic plc Annual Report 2011
Britvic at a glance
Britvic is one of the leading branded soft drinks
businesses in Europe.
The company leverages its own leading brand portfolio
including Robinsons, Tango, drench, J2O and Fruit Shoot
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 also
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.
Its market capitalisation at 2 October 2011 was £760m.
Contents
Overview
01 Our performance
02 Where we operate
03 Our brand portfolio
04 Our people
07 Strategy for growth
Business review
10 Chairman’s statement
13 Chief executive’s review
19 Financial review
28 Corporate responsibility
29 Business resources
30 Risks and uncertainties
Governance
34 Board of directors
36 Directors’ report
40 Corporate governance report
45 Directors’ remuneration report
Financial statements
54 Independent auditors’ report
to the members of Britvic plc
55 Consolidated income statement
56 Consolidated statement of
comprehensive income
57 Consolidated balance sheet
58 Consolidated statement
of cash flows
59 Consolidated statement
of changes in equity
60 Notes to the consolidated
financial statements
103 Independent auditors’ report
to the members of Britvic plc
104 Company balance sheet
105 Notes to the company
financial statements
Shareholder information
112 Shareholder profile
and information
ibc Cautionary statement
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 company 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.
Definitions
1.
All numbers and comparisons are quoted on a 52 week basis, constant currency and before exceptional
and other items unless otherwise stated. 2010 was a 53 week reporting period. 2010, 52 week
comparatives have been derived by removing the impact of the 53 week of trading. 2011 Volume
and ARP (average realised price) are adjusted for the impact of double concentrate on Robinsons
and MiWadi to provide a meaningful comparison. Further information, including numbers not
adjusted for double concentrate and last year 53 week numbers are available at the Investor Centre
‘Results and Presentations’ section on the Britvic Investor Relations website at www.britvic.com
2. 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. France is included for the full twelve months this year versus only four months in the prior
period Britvic France was acquired on 28 May 2010.
4. EBITA is defined as operating profit before exceptional and other items and amortisation.
Only amortisation attributable to intangibles on acquisition is added back, in the period this
is £3.1m (2010: £2.2m). EBITA margin is the EBITA number as a proportion of group revenues.
5. 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 240.4m (2010: 224.9m). 2010 adjusted earnings per share is a 53 week number.
6. Underlying free cash flow is defined as net cash flow excluding movements in borrowings,
dividend payments, exceptional and other items.
7.
Group adjusted net debt is defined as group net debt, adding back the impact of derivatives
hedging the balance sheet debt.
8. Underlying return on invested capital (ROIC) - ROIC is defined as operating profit after applying the
tax rate for the period, stated before exceptional and other items, as a percentage of invested capital.
Invested capital is defined as non-current assets plus current assets less current liabilities, excluding
all balances relating to interest bearing liabilities and all other assets or liabilities associated with the
financing and capital structure of the group and excluding any deferred tax balances and effective
hedges relating to interest-bearing liabilities. The measure excludes the reduction in the asset base
following the impairments of intangible assets in Ireland in 2010 to reflect capital initially invested
and subsequent returns. To aid comparability year on year the results and asset base of Britvic France
have been excluded as 2010 would include only 4 months returns versus 12 months in 2011.
All numbers in this announcement other than where stated or included within the financial statements
are disclosed before exceptional and other items.
The auditors have reported on the 2010 and 2009 accounts. Their reports for both years were unqualified
and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
Britvic takes care of the environment by choosing pureprint ® environmental
print technology. All the electricity used in the production of this report was
generated from renewable sources and vegetable oil based inks were used
throughout. The printer is a CarbonNeutral ® company and certificated to
Environmental Management System, ISO 14001 and registered to EMAS,
the Eco Management and Audit Scheme.
The paper used in this production is made from 50% recycled waste
and 50% virgin fibre product with FSC certification.
Designed by sg design [sg-design.co.uk]
Photography by ben fisher [benfisherphotography.com]
annual report 2011
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Britvic plc
Britvic House
Broomfield Road
Chelmsford
Essex
CM1 1TU
Tel: +44 (0)1245 261871
www.britvic.com