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9
ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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WELCOME TO FEVER-TREE 2019
ANNUAL REPORT AND ACCOUNTS
WHAT MAKES US DIFFERENT?
We put quality at the heart of everything we do, nowhere
more so than in the selection of our ingredients, going to the
ends of the earth to discover and source the highest quality
ingredients for our range of mixers. After all, life is too short
to compromise.
CULTURE
Our culture was established by our co-founders who were not
afraid to challenge the status quo in the pursuit of the best.
Fever-Tree is, by its nature, an entrepreneurial company, giving
its employees the opportunities to make a difference in and
outside of the workplace, enabling them to grow to their full
potential within the Group and be part of its ongoing success.
OUR PURPOSE
Fever-Tree was founded on the belief that there had to be a
better way, to not compromise or accept the status quo.
This belief remains central to everything Fever-Tree does.
Whether it’s going to the ends of the earth for the highest
quality ingredients, continuing to innovate in terms of our
products and packaging or how we build direct, sustainable
relationships throughout our supply chain, we want our approach
to inspire and engage our colleagues, our partners and our
consumers in the pursuit of the best.
WHAT WE DO
Fever-Tree pioneered the concept of the premium mixer to
partner both the well-established and ongoing premiumisation
of the global spirits category and the increasing focus from both
consumers and the trade on simple long mixed drinks.
Fever-Tree has created a range of premium carbonated mixers,
including Tonics, Ginger Ales, Ginger Beer, Cola, Sodas and
Lemonades, offering both regular and Refreshingly Light (low-
calorie) variants. The Group currently sells the following range
of products, all under the Fever-Tree brand:
Indian Tonic Water | Mediterranean Tonic Water | Elderflower
Tonic Water | Aromatic Tonic Water | Cucumber Tonic Water
| Clementine Tonic Water | Citrus Tonic Water | Lemon Tonic
Water | Ginger Beer | Ginger Ale | Smoky Ginger Ale | Spiced
Orange Ginger Ale | Madagascan Cola | Sicilian Lemonade |
Lemonade | Mediterranean Orange | Premium Soda Water
In addition, the Group has a range of three ready-to-drink
bottled Gin & Tonics.
→ Read more in our timeline
on pages 02 to 04
C
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com 2019 HIGHLIGHTS
REVENUE (£M)
£260.5M
2018: £237.4m
ADJUSTED EBITDA (£M)
£77.0M
2018: £78.6m
5
1
6
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7
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5
1
6
1
7
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127M 441M
CANS SOLD
BOTTLES SOLD
#1
MIXER BRAND
BY VALUE IN
THE UK ON AND
OFF-TRADE
CHANNEL
→ Read more in our Financial
Review on pages 24 and 25
Footnote: Analysis on pages 1 to 61 of this front end of the Annual Repor t refers to adjusted EBITDA. The Group believes
adjusted EBITDA to be a key indicator of underlying operational performance, adjusting operating profit for cer tain accounting
estimates and non-cash items and is an impor tant metric for the Group’s various stakeholders. Adjusted EBITDA for the year
ended 31 December 2019 is operating profit of £72.2m before depreciation of £2.2m, amor tisation of £0.7m and share based
payment charges of £1.9m. Adjusted EBITDA is an appropriate measure since it represents a normalised, comparable profit,
excluding the effect of cer tain accounting estimates and non-cash items.
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CONTENTS
OVERVIEW
Highlights
At a glance
Chairman's statement
STRATEGIC REPORT
Case study: Rwanda/Congo
Our strategy
Chief Executive’s Review
Sustainability Review
Financial Review
Principle Risks and Uncer tainties
Section 172
GOVERNANCE
Board of Directors
01
02
04
08
10
12
18
24
26
31
36
Corporate Governance Statement 38
Audit Commit tee Repor t
Nomination Commit tee Repor t
42
46
Remuneration Commit tee Repor t 47
Directors’ Repor t
Statement of Directors’
Responsibilities
FINANCIAL STATEMENTS
Independent Auditor’s Repor t
Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the Consolidated
Financial Statements
Company Statement of
Financial Position
Company Statement of
Changes in Equity
Notes to the Company
Financial Statements
OTHER INFORMATION
Company Information
58
60
64
68
69
70
71
72
97
98
99
104
Notice of Annual General Meeting 105
01
Stock code: FEVROVERVIEW
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019
FEVERTREE AT A GLANCE
OUR KEY STRENGTHS
1
AWARD WINNING, HIGHEST QUALITY
PRODUCTS WITH GLOBALLY SOURCED
INGREDIENTS AND PREMIUM PROVENANCE
• The Group* uses only the highest quality ingredients
in its products, sourced from around the world.
• The founders, Charles and Tim, as well as the wider
team, continue to travel the globe to discover the
very highest quality ingredients for our products,
forging long-standing relationships with our key
suppliers.
• This premium provenance and direct method of
sourcing is a clear differentiator from Fever-Tree’s
mass-market competition and is key to our product
quality and brand image.
• Fever-Tree’s premium packaging supports this
positioning and in order to protect product quality
and being mindful of sustainable packaging our drinks
are not sold in PET bottles.
2
3
A STRONG DISTINCTIVE BRAND WITH FIRST
MOVER ADVANTAGE AHEAD OF SIGNIFICANT
GLOBAL OPPORTUNITY
• Fever-Tree is the no.1 premium mixer brand
globally and now sells in over 75 countries.
• As the pioneer and first mover, Fever-Tree has
the brand equity, exper tise, global footprint
and track record that no other premium
brand, whether local or the premium variant of
mainstream brands, is able to match.
• The brand has been voted the no.1 best-selling
and no.1 trending tonic water for the sixth
year running by the world’s best bars in Drinks
International’s Annual Brand Repor t.
EXPERIENCED FOUNDER-LED
MANAGEMENT TEAM
• The Group’s executive management team and
Board includes the co-founders of the business who
have considerable experience in the mixers and
premium spirits sectors and continue to foster the
entrepreneurial culture within the business.
• The Executive Directors are also supported by an
experienced operational team as well as outsourced
partners with many years’ experience in the
beverage industry.
*Footnote: Fever tree Drinks Plc and each of the subsidiaries within its group of companies are separate and distinct entities. In this publication, the collective expressions “Fever-Tree” and “Group”
may be used for convenience where reference is made in general to those companies. Likewise, the words “we”, “us”, “our” and “ourselves” are used in some places to refer to the companies of the
Fever-Tree Group in general. These expressions are also used where no useful purpose is ser ved by identifying any par ticular company or companies.
OUR JOURNEY SO FAR
2003
Fever-Tree is launched
with one simple
premise.
2005
First bottle of Indian Tonic
Water is produced and
shor tly after, Fever-Tree
gets its first ever retail
listing, in Waitrose
2007
Fever-Tree enters the
Spanish market having
been endorsed by chef,
Ferran Adrià, of world’s
no.1 restaurant, El Bulli.
02
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www.fever-tree.com 4
5
SCALABLE BUSINESS MODEL
• The Group’s largely outsourced business
model, underpinned by strong, well-established
relationships, allows for scalability and operational
flexibility while maintaining the highest quality
control, without the requirement for major capital
commitment from the Group.
• The Group continues to increase its footprint of
outsourced production and manufactures in both
the UK and Europe across seven different partners,
with a new US bottling partner scheduled to begin
production on the West Coast in 2020.
STRONG AND DIVERSE RELATIONSHIPS
BUILT OVER MANY YEARS
• Led by its founders and built over 15 years, the
Group has established productive, long-standing
relationships with its impor ters, customers,
ingredients suppliers, bottlers, spirits par tners
and employees. These relationships continue
to evolve and remain at the hear t of the
Group’s business.
• The Group’s current revenue, and global
oppor tunity ahead, is well diversified across
geographies, channels, customers and products.
OUR GLOBAL MARKETS
UK
USA
£132.7M
REVENUE
2018: £134.1m
£47.6M
REVENUE
2018: £35.8m
CONTINENTAL EUROPE
REST OF WORLD
£64.4M
REVENUE
2018: £55.5m
£15.8M
REVENUE
2018: £12.0m
2011
Fever-Tree joins the
Sunday Times Fast Track
100 as fastest growing UK
Drinks company
2013
Fever-Tree wins the
Queen's Award for
Enterprise in the
International Trade categor y
2014
Fever-Tree successfully
lists on the AIM market
of the London Stock
Exchange
03
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Stock code: FEVROVERVIEW CHAIRMAN’S STATEMENT
Before commenting on the year’s performance
and the Company’s strategy, it is impor tant
to acknowledge the impact being seen
across global markets due to the outbreak
of COVID-19. Fever-Tree’s top priority is the
health and safety of our employees and we
have been taking precautions, in line with
guidance across our markets, to protect them.
While a great deal of uncer tainty remains
about the overall impact of the virus, the
whole Fever-Tree team will continue to work
closely with our customers, suppliers and our
par tners to navigate through this period.
2019 PERFORMANCE
The financial and operational progress seen
in 2019 is testament to the Group’s growing
global footprint with revenue growth of 9.7%
to £260.5m. The oppor tunity ahead remains
significant and the Group has multiple
long-term growth drivers both within its
more mature markets, where Fever-Tree has
established a market leadership position,
as well in a number of regions around
the world where the consumer and trade
tailwinds for long mixed drinks are gathering
pace. While it is disappointing that adjusted
EBITDA declined year on year to £77.0m
(2018: £78.6m), this reflects not only the
weaker second half in the UK, but also
the fact that we continued to invest in the
oppor tunity ahead.
The challenging macroeconomic environment
in the UK, coupled with the poor weather
seen over the summer, meant that the Group
and the wider categor y had a more testing
year, especially when taken against the
exceptional performance delivered in 2018.
However, Fever-Tree remains in a strong
position in its most mature market. The
Group is the market leader across both the
On-Trade and Off-Trade channels, reflecting
the ongoing strength of the brand, with
par ticularly encouraging underlying trading
across our national accounts as well as
growing regional footprint in the On-Trade
in 2019.
Fever-Tree USA now has over 40 employees
and 2019 was a year of real progress across
the business with the Group repor ting
revenue growth of 33.0% in the year and
seeing a widening and deepening of its
penetration across both channels while
strengthening our relationships with key
customers and spirits companies. There are
encouraging signs that the mixer categor y is
gaining greater attention from customers and
consumers alike and the strategic steps we
are taking, such as repositioning our pricing
and format architecture, will ensure we are
best placed to drive the continued growth of
the categor y.
2019 was another year of strong growth in
Europe with revenue up 16.0%. The Group
continued to build its distribution across the
region with key markets including Germany
and Spain seeing significant new listings.
Premium gin remains in good growth but the
Group has also seen a strong performance
from its ginger range in a number of markets
reflecting the popularity of the “Mule” and
“Highball” serves and the ability of the
Group’s broader range to drive fur ther
growth. Finally, Fever-Tree remains very much
a global brand with oppor tunities across
the Rest of the World illustrated by the
performance in territories such as Australia
and Canada, both of which delivered very
positive results and are becoming ever more
notable markets for the Group.
STRATEGY
The Board works closely with the founder-
led executive management team and as par t
of its responsibilities, carries out a review of
the Group’s strategy on an annual basis.
While the performance in the UK in the
second half was behind expectations, it
should be put into context of not only the
wider macroeconomic conditions and our
categor y leadership position but also the
positive performance delivered across our
other regions, demonstrating the truly global
platform the Group continues to build.
BILL RONALD
Chairman
“
THE OTHER BOARD
MEMBERS AND
I CONTINUE TO BE
DEEPLY IMPRESSED
BY THE PASSION
AND EXCITEMENT
OF THE
WHOLE TEAM
“
2017
Fever-Tree broadens its
ginger range with the
introduction of Spiced
Orange and Smoky
ginger ales designed to
pair with dark spirits
2018
Fever-Tree USA opens
for business in New York
2020
Voted as bestselling and top
trending tonic water brand
in the Drinks International
Annual Brands Repor t 2020
for the 6th year running
04
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com THE DISCOVERY AT THE
HEART OF FEVER-TREE
On deciding to launch a tonic
water worthy of premium gin,
Charles and Tim spent many
days in the British Library
researching the history of
quinine, the key ingredient in
tonic water. It was here that
they learnt that one of the
last remaining plantations of
fever trees, descended from
the botanist Charles Ledger’s
cinchona ledgeriana variety,
was still in existence in the
Rwanda/DRC border region.
Given its renowned quality and
provenance, Charles and Tim
knew there and then that they
had found the quinine for their
tonic. All that was left to do was
to go out and track it down…
→ Read more about our
relationship with our
suppliers in our case
study on pages 8 to 9
The Board held a three-day session in
the US in 2019 dedicated to US strategy
with site visits and presentations from our
regional leadership team. In addition, we
have received presentations from other
regional and depar tmental heads through
the year, updating us on strategy and
execution across the Group. The other
Board members and I continue to be deeply
impressed not only by the passion and
professionalism of the whole team but also
the operational execution and foundations
that have been established as we build a
global beverage business.
THE BOARD
An external evaluation of the Board was
carried out for the first time this year.
The repor t reflected that the Board is
functioning well. The Board is characterised
as transparent and collaborative with a
good mix of industr y knowledge which has
helped add value to the executive.
CULTURE
The refusal of our co-founders, Charles and
Tim, to compromise in pursuit of the best
remains integral to Fever-Tree’s purpose to
this day. This is evident in how we build long-
term relationships throughout our supply
chain, source the highest quality ingredients
directly from our key suppliers, ensure we
build meaningful relationships within the
communities in which we operate and most
impor tantly, through our culture which
fosters and encourages our employees to
challenge and push the boundaries.
The Board recognises its role in helping to
promote our desired culture throughout
the Group. 2019 saw a number of new
initiatives successfully launched, reflecting the
growing focus on employee engagement and
development and it remains a key area of
focus for the Board as we move into 2020.
CASH POSITION
The Group continues to enjoy strong on-
going underlying cash generation and retains
a ver y robust balance sheet, with year-end
cash position of £128.3m, an increase of
53.5% (2018: net cash of £83.6m).
The Group intends to retain sufficient cash
to allow for investment against the global
oppor tunity ahead and see our strong cash
position as a competitive advantage over
many of our premium mixer competitors
globally. However, where the Board then
considers there to be surplus cash held on
the Balance Sheet it will consider additional
distribution to shareholders.
DIVIDEND
The Group remains committed to a
progressive dividend policy and reflecting
the confidence in the financial strength
of the business, the Board is pleased to
recommend a final dividend of 9.88 pence
per share in respect of 2019 (2018: 10.28
pence per share) bringing the total dividend
for the year to 15.08 pence per share (2018:
14.50 pence per share). If approved by
shareholders at the AGM on 4 June 2020 the
final dividend will be paid on 12 June 2020
to shareholders on the register on 15 May
2020.
AGM
The AGM is due to take place on Thursday
4 June 2020. In light of the issues caused
by COVID-19, unfor tunately shareholders
shall not be permitted to attend the AGM in
person this year and shall be refused entr y.
However, shareholders shall be able to vote
on resolutions by proxy. The AGM notice
provides fur ther information on voting by
proxy and we encourage all shareholders
to take advantage of this functionality.
Shareholders are invited to submit any
questions for the Board by sending an email
to agm@fever-tree.com.
BILL RONALD
Chairman
31 December 2019
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05
Stock code: FEVROVERVIEW STRATEGIC
REPORT
06
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www.fever-tree.com STRATEGIC
REPORT
“
FEVER-TREE
USES ONLY THE
HIGHEST QUALITY
INGREDIENTS AND
WE CONTINUE TO
TRAVEL THE GLOBE
TO TRACK DOWN
AND SOURCE THESE
INGREDIENTS
“
CONTENTS
Case study: Rwanda/Congo
Our strategy
Chief Executive’s Review
Sustainability Review
Financial Review
Principle Risks and Uncer tainties
Section 172
08
10
12
18
24
26
31
07
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Stock code: FEVR CASE STUDY
BUILDING LONG TERM RELATIONSHIPS
WITH OUR SUPPLIERS
NEW HERO IMAGE?
A LONG HISTORY
Building and maintaining long-term
supplier par tnerships is crucial to our
sourcing of high quality, sustainable
ingredients.
In November 2019 our CEO Tim and
Marketing Director Saskia travelled to
Rwanda to revisit Pharmakina, our long-
standing quinine supplier.
Building on a relationship that began in
2004, and was founded on a principle
of long-term commitment on pricing
and sourcing that continues to this day,
the visit gave the Fever-Tree team the
oppor tunity to see how our par tnership
has evolved on the ground and to discuss
future plans.
A GROWING AND SUSTAINABLE
COMMUNITY
Not only do we believe that the quinine
is the best in the world, we are also
proud of the community that has built up
around its growing and processing. With
more than 1,000 hectares of cinchona
plantations, Pharmakina is the largest
private employer in this region, offering
employment to up to 2,000 local people.
The company offers on-site medical care
for all personnel and their families.
Pharmakina also has a fully integrated
supply chain whereby the cinchona bark
is transformed and processed into the
finished quinine powder we use in our
tonic water, all in the same location. This
reduces the distance it has to travel and
provides fur ther employment for local
people.
08
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“
“
BUILDING AND
MAINTAINING
LONG-TERM SUPPLIER
PARTNERSHIPS IS
CRUCIAL TO OUR
SOURCING OF HIGH
QUALITY, SUSTAINABLE
INGREDIENTS.
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com FROM SEED TO INGREDIENT
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1
PLANTING THE SEEDS
On each plantation owned by
Pharmakina, there is a plant nurser y where
cinchona saplings are carefully nur tured
for the first two years of their life. The
saplings are fed, watered, trimmed and
aerated by hand.
They are trimmed ever y couple of weeks
to strengthen them and get rid of any
dead leaves before being taken out to the
fields to be planted.
2
GROWING THE TREES
After two years, the saplings are
taken out to be planted in the field. The
saplings are hand ploughed during the
rainy season and carefully planted 90cm
apar t from each other using a wooden
measurement device to enable them to
grow sufficiently.
Space is also left between each row of
saplings to allow other vegetation to grow,
helping to prevent diseases and increase
biodiversity.
3
HARVESTING
The trees are left to grow until they
are eight years old. They are then har vested,
and the bark is removed and laid out in
the sun to dr y before being transpor ted to
Pharmakina for processing. The quinine is
then ready to be delivered to Fever-Tree
for use in tonic water. There is no waste
as the remaining wood is used to fire the
extraction process or for building as it is
ver y strong.
Instead of removing the roots, the stump
is left to regrow, and the trees are then
re-har vested ever y six years. The mature
fever trees are grown in mixed woodland to
prevent disease from spreading.
09
STRATEGIC REPORTStock code: FEVR OUR STRATEGY
Fever-Tree pioneered the concept of the premium mixer to partner the ongoing premiumisation of
the global spirits category and the increasing focus on simple long mixed drinks. The Group’s strategy
remains unchanged to this day and the year under review has seen the Group continue to build an
excellent platform for capturing the global opportunity ahead.
STRATEGIC PRIORITY
PROGRESS IN 2019
FUTURE OPPORTUNITIES
A
CAPITALISING ON
MARKET TRENDS
The twin drivers of spirits
premiumisation and the
move towards simple long
drink mixability continue
to gather pace across
the globe.
2019 saw the Group both benefit from and continue
to drive the continued popularity of premium gin and
tonic not just across the UK and Western Europe
but also in territories such as Australia and Canada.
Alongside this, Fever-Tree has performed strongly in
the US where the Group is at the forefront of growth
in the US mixer categor y.
The trend towards spirits premiumisation continues,
with all the major spirits categories seeing positive
growth at the premium end of their por tfolios.
The continued popularity of a premium gin and tonic
across the UK and Western Europe, the emergence
of the Spritz ser ve, the resurgence of the Moscow
Mule in the USA and the global oppor tunity within
the wider dark spirits categor y all reflect the growing
prominence of long-mixed drinks.
We will continue to tell our unique brand stor y far
and wide, using the most compelling messaging to
differentiate Fever-Tree and reinforce our position as
pioneers of the Premium Mixer categor y.
There remain significant oppor tunities for fur ther
growth in the Group’s existing territories by
expanding the Group’s distribution footprint, its
customer penetration, and the volume of sales to
each customer, par ticularly as awareness of Fever-
Tree increases with end consumers in each territor y.
The Group expects growth to continue to be
driven mainly within its existing markets, while also
generating growth in the medium to long term by
entering cer tain new markets.
B
STRENGTHENING
DISTRIBUTION IN EXISTING
MARKETS AND IDENTIFYING
NEW MARKETS
The Group intends
to drive increased
penetration in all of the
markets in which it has
established a presence,
increasing the number of
customers in both the
On-Trade and Off-Trade.
During the period under review the Group extended
its position as the leading global premium mixer
brand.
In the UK, we extended our On-Trade footprint and
consolidated our market leadership position in the
Off-Trade.
The US has seen excellent momentum across both
the On-Trade, where the par tnership with Southern
Glazers Wines & Spirits (“SGWS”) has developed
well in 2019, and in the Off-Trade, which has seen
significant broadening of our footprint across major
national accounts.
We have continued to make significant distribution
strides in Europe in 2019 and are encouraged by our
growing market share across multiple markets in the
region.
In addition, the Group appointed a Director for Asia
who is focused on exploring oppor tunities across the
region both within markets where the Group already
has a presence but also potential new markets,
reflecting the longer-term oppor tunity that the region
presents.
10
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com STRATEGIC PRIORITY
PROGRESS IN 2019
FUTURE OPPORTUNITIES
C
EXTENSION OF
CO-PROMOTION STRATEGY
WITH DRINKS PARTNERS
Reflecting the
premiumisation movement
across the beverage
sector, global spirits
companies are increasingly
focused on promoting
their higher margin
“premium” products
to customers as a
long-mixed drink.
D
INNOVATION
The Group will
continue to innovate
and is dedicated to the
development of the
highest quality mixer
drinks to complement the
increasingly broad long
mixed drink opportunity
that is developing across
spirits categories and
across regions.
The Fever-Tree team has continued to broaden our
relationships with spirits companies both large and
small across all our regions, demonstrating the value
to both par ties of co-promoting.
As well as establishing global frameworks, we have
under taken well over 300 co-promotion activities
across the globe, be it through value added packs,
events, par tnerships, menus, display racks with clear
evidence of the uplift in sales that such activities
delivers for both Fever-Tree and the spirits brand.
There is growing awareness of the role that the
premium mixer plays in enabling the spirit to be
consumed at different occasions during the day, many
of which were previously the preser ve of beer and
wine. Spirits companies are increasingly tailoring their
ser ve strategies to reflect this.
Fever-Tree intends to drive growth from fur ther
involvement in co-branded promotional activities with
both craft and global spirits brands across the wider
spirits categor y reflecting the continued focus the
categor y will receive.
Reflecting Fever-Tree’s pioneering position in the
premium mixer categor y, innovation remains at the
hear t of the Group’s strategy. Our commitment to
sourcing the highest quality ingredients is integral
to this approach and during the year the Fever-
Tree team continued to travel across the globe,
meeting with key suppliers and identifying new
potential par tners.
2019 also saw fur ther focus on our extended range
of gingers with our spiced orange and smoky ginger
ales both gaining increased distribution across the
On-Trade and the 500ml Spiced Orange being listed
in the UK Off-Trade in the second half of the year
as well as being introduced successfully into the
US market.
Our gifting has once again proved extremely popular
with increased level of activations in the UK for our
Christmas crackers which were also made available in
cer tain European markets for the first time.
The Group’s innovation pipeline in terms of product
development remains exciting with customers across
both the On and Off-Trade increasingly receptive to
our extended range of products.
The year ahead will see the Group launch a new
range of Sodas for the UK market. While the
On-Trade launch has been delayed due to the current
shut-down, the range will be rolled out across our
Off-Trade par tners through the year.
As the Group’s global footprint continues to grow,
the oppor tunity remains to extend our flavours and
formats to ensure our products reflect the drinking
habits and taste profiles for the region. To this end, we
will be launching a Sparkling Pink Grapefruit Soda in
the US market. Positioned to be mixed with Tequila
or Vodka, two of the largest spirits categories in that
market, the new product will be available across both
the On and Off-Trade.
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STRATEGIC REPORTStock code: FEVR CHIEF EXECUTIVE’S REVIEW
TIM WARRILLOW
Chief Executive
“
THE LAST 12
MONTHS HAVE
SEEN FEVER-TREE
STRENGTHEN ITS
GLOBAL LEADERSHIP
POSITION &
ESTABLISH A
STRONG PLATFORM
TO DELIVER
FURTHER GROWTH.
“
2019 REVIEW
Fever-Tree has made good progress
during the year and the Group began
2020 well placed across our key regions.
Notwithstanding the current challenges
related to the impact of COVID-19, we
have the team, relationships, leadership
position, por tfolio and brand strength to
approach the global oppor tunity ahead with
real ambition and excitement.
The Group delivered revenue of £260.5m,
representing growth of 9.7% on 2018. This
revenue growth was underpinned by strong
margins, with a gross profit margin of 50.5%
and adjusted EBITDA margin of 29.6%,
which translated to profit after tax for the
year of £58.5m.
We ended the year with a strong balance
sheet and net cash of £128.3m, an increase
of 53.5% on last year.
REGIONAL REVIEW
We consider our global sales across four
regions, being the UK, USA, Continental
Europe, and Rest of the World (“RoW”).
REVENUE BY REGION
2019
£m
2018
£m
%
change
United Kingdom
132.7
134.1
-1%
United States of
America
Europe
Rest of the World
47.6
64.4
15.8
35.8 +33%
55.5 +16%
12.0 +32%
Total
260.5
237.4 +10%
UK
After several years of exceptional growth
which has seen Fever-Tree establish itself
as the UK’s no.1 mixer brand, 2019 was a
more challenging year for the Group in the
UK, reflecting a number of headwinds faced
by the wider mixer categor y.
The categor y lapped some exceptional
comparators from 2018, driven by the
summer heatwave, major spor ting events
and royal weddings. On top of this the UK
experienced unseasonably poor weather
over the summer months in 2019 which
was followed by weaker than expected
consumer confidence towards the end of
the year. This all had a notable impact not
only on the mixer categor y but the wider
grocer y channel, with our major retail
customers seeing a deceleration in growth
in the second half.
As a result, mixer categor y volumes
declined at UK retail in 2019, with our
volumes declining in line with the categor y.
Additionally, and as expected, we saw a
de-stock from our retail customers, which
fur ther reduced our sales into them, resulting
in a 7% decline in Off-Trade revenue over
the year.
While this performance was behind our
expectations, we retained our categor y
leadership position within mixers, holding
our volume share and ending the year with
40% value share (IRI - Total UK Retail Mixer
Market value share - 13 weeks to 29/12/19),
testament to the brand’s ongoing strength
at retail. None of the competitors in the
premium segment have had discernible
impact on the categor y despite the significant
incremental shelf space and the high levels
of promotional activity they under took
during 2019, with their total categor y share
remaining flat.
In the On-Trade, despite the channel seeing
a slower end to the year versus 2018, we
delivered an encouraging performance
with growth of 5% in 2019. We performed
well across our national pub groups and
continued to gain distribution, par ticularly
regionally, strengthening our position as the
clear mixer of choice across the channel.
There remains white space to broaden and
deepen our footprint as we continue to
focus on delivering value for our customers
alongside driving awareness with consumers.
Turning to innovation, our Spiced Orange
and Smoky Ginger Ales both gained
increased distribution across the On-Trade,
reflecting a growing interest amongst our
customers for our broader range of mixers.
Alongside this, our 500ml Spiced Orange
Ginger Ale was listed in the Off-Trade
during the second half of 2019 and was one
of our best performing products over the
Christmas period.
Looking ahead, we have recently launched a
new range of premium flavoured sodas. Using
the same exper tise applied to craft our
tonic waters and gingers, the four flavours
have been developed to perfectly pair with
a variety of different premium spirits from
vodkas and gins through to vermouths and
12
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com Italian bitters. With the desire for longer,
lighter yet simple drinks becoming ever
more pronounced amongst health-conscious
consumers, the new range had an extremely
positive reception from our key customers.
While the roll out across the On-Trade has
been understandably delayed due to the
current shut down, the range has gained Off-
Trade listings and is an exciting addition to
our broader range of mixers.
The Group continued to work closely
with a broad range of spirits companies
both large and small throughout the year.
We under took a number of successful
co-promotional activities in the Off-
Trade, notably at Easter and Christmas,
across our range of tonics and broader
ginger range. In addition, our pioneering
approach to marketing and brand awareness
continued with our G&T Gardens, long
mixed drink menus and event activations,
including the second year of the Fever-Tree
Championships, all designed to suppor t our
On and Off-Trade par tners in stimulating
consumer awareness and trialling. Finally,
our gifting has once again proved extremely
popular with increased level of activations
in the UK for our Christmas crackers
which were also made available in cer tain
European markets for the first time.
Our long-term relationships with our
retail par tners remain ver y positive and
these relationships, alongside our categor y
leadership position, remains a key strength
in the current challenging times. While a
lot of focus is currently on the shor t-term
categor y management, we are also working
closely with our par tners on revenue
growth management plans for 2020 and
are confident in our ability to continue
to outperform the premium competition.
Our On-Trade business is robust and
notwithstanding the challenging months
ahead for the whole sector, we will continue
to invest in the categor y and suppor t
our par tners. We continued to win new
accounts in 2019 and have identified clear
oppor tunities to gain fur ther distribution
across the UK in the year ahead.
While the UK gin categor y saw a year of
more moderate growth when compared to
2018, it is impor tant to remember that it is a
now a £2.5bn categor y, firmly established as
the second biggest spirits categor y in the UK.
It remains a key focus for spirits companies
and continues to be invested in and
suppor ted by both the On and Off-Trade.
The gin & tonic will of course remain
a fundamental par t of our UK strategy;
however, there is a growing focus across
both channels and amongst our spirits
TOTAL REVENUE
£260.5M
+10%
par tners on the wider long mixed drink
occasion. As well as building on the
relationships already established, our
strategy remains focused on our best
in class innovation, such as our recently
launched soda range, and marketing
exper tise to ensure we have not only the
right flavours and formats but are driving
awareness to suppor t this broader move.
US
Our US business performed strongly in
2019 with sales accelerating in the second
half across all channels. Fever-Tree is now
the 4th largest mixer brand overall in the
US, driving two thirds of the premium
categor y growth. Fever Tree remains the
clear premium market leader, over two
and half times the size of our nearest
competitor. Although the mixer categor y
still remains relatively underdeveloped in
the US, it is one of the fastest growing
categories in soft drinks.
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In the On-Trade we have built on our
par tnership with Southern Glazers Wines
and Spirits (“SGWS”), with our distribution
growth accelerating in 2019. We have
enjoyed success with our national accounts
and secured a number of new mandates
across hotels, casinos, bars and restaurant
groups. In addition, the integration of Union
Beer as our distributor in New York has
gone well, enabling us to tackle this complex
market, whilst accelerating distribution and
increasing activation.
In the Off-Trade, we continued to perform
strongly across our total account base,
embedding the strong distribution gains
across the likes of Kroger, Safeway, Target
and Publix. In addition, regional chains and
liquor stores also saw strong growth driven
by new distribution and increased brand
activation, with expanded point of sale
materials and spirits par tnerships securing
accelerated rate of sale.
Within the por tfolio, we have seen growth
across our full range of mixers, targeting
multiple drinks occasions, from the mule
(Ginger beer), to highballs (Ginger Ale)
and spritzes (Club Soda), alongside the
emergence of the premium gin & tonic, albeit
at an early stage. We remain excited about
the longer-term oppor tunity for our gingers
range in the US, with innovation playing a key
role. In addition, we are currently launching
our Sparkling Pink Grapefruit, a low-calorie
soda ideally suited for the Paloma occasion.
The early signs are ver y encouraging,
reflecting the continued focus and growth of
tequila across the trade.
2019 saw a fur ther step up in investment
in the brand in the US with multiple
activations across the countr y, focused on
building brand advocacy amongst the trade
through key trade shows and targeted PR
and sponsorships as well as driving trial and
awareness with consumers.
When we took over our US operations
in June 2018, we made it clear that our
priorities were building the right team,
ensuring we secured the ideal route to
market, developing the relationships with
key On and Off-Trade par tners, widening
and deepening our distribution footprint
and then driving sales and awareness. I
have been ver y encouraged with how the
US team has delivered to this strategy
thus far and we are establishing strong
foundations from which to capitalise on the
oppor tunity ahead. Given this progress, and
as announced in Januar y 2020, we firmly
believe it is the right time to execute on
the next stage of our strategy through a
repositioning of our pricing and format
architecture in the US.
Whilst we have performed strongly in 2019,
our detailed analysis and successful trials
have shown that there is a clear oppor tunity
to unlock a greater oppor tunity in the
US, opening up the brand to a broader
audience, more consumption occasions and
fur ther distribution. This move will ensure
we are positioned at an affordable premium
price as well as broadening range on shelf
through a range of diverse formats.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com While the initiative will take time to be
fully rolled out, the early results have
been encouraging. Implementation of the
new pricing with a number of Off-Trade
customers has resulted in a significant uplift
in the rate of sale, in line, or in some cases
ahead of, the pricing elasticity studies we
carried out. Our On-Trade distribution
par tners such as SGWS are ver y suppor tive
of the steps we are taking, and we have
already seen promising new account wins
resulting from the initiative.
This approach is aligned with how we
successfully built the brand in the UK
and as such is a natural next step in the
development of our US business. Alongside
the strong network and relationships we are
building with our On-Trade and Off-Trade
par tners, this is positioning us to deliver
long-term volume and profit growth.
EUROPE
Sales in Europe accelerated in the second
half of 2019 with a good performance across
our key territories. The premiumisation
trend is gaining momentum in many
countries across the region and Fever-Tree is
outperforming its premium competitors and
driving the growth of the categor y.
The region continues to offer multiple
oppor tunities for the Group across a
number of different countries. In our
more established markets such as Benelux,
Ireland and Denmark, the last 12 months
have seen the Group maintain its no.
1 premium position and reinforce its
relationships across the On and Off-Trade.
While we remain focused on the gin
& tonic movement, these markets also
offer oppor tunities to drive fur ther
distribution across our wider range of
mixers, most notably our gingers, as we
leverage our brand strength and categor y
leadership position.
There are also a number of markets that
offer significant growth oppor tunities
and where the Group has made ver y
good progress in the last 12 months. Our
relationship with Grupo Damm in Spain
has continued to strengthen, resulting in an
encouraging uplift in listings across the On-
Trade as well as significant brand activation
through events in gastronomy, culture, and
spor t and through major trade par tners.
Notable success included our Vermouth &
Tonic campaign in Madrid in Summer 2019
as major vermouth players begin to signal
their interest in the long mixed drink.
Germany is another market that saw good
growth in 2019, with national and regional
listings with major retailers ReWe, Edeka,
and Kaufland secured, providing good
momentum in the second half.
In Italy, 2019 provided a great oppor tunity to
fur ther the growth of our tonics, especially
our Mediterranean tonic, as gin & tonic
trial begins to build momentum. Closer
par tnership with major national wholesalers
has allowed us to develop our routes to
market and build upon our notable ginger
success now evident across all of Italy.
Our dedicated European team has been
supplemented during the year and we have
regional exper tise and focus across Nor thern
and Southern Europe as well as the Nordics
and Ireland. This is complemented by in-
market Fever-Tree marketing personnel,
ensuring best in class marketing execution
and co-promotional activities with both
global and local spirits brands.
We entered our first European market 15
years ago and I look at the markets where
we have established a market leading
position as a great blueprint for what can
be achieved across the region. Fever-Tree
is the only premium brand with the scale,
distribution footprint and track record
across Europe and this gives us a clear
advantage over our premium competitors
who are in decline in many of these
countries. Clearly the impact of COVID-19
will be felt widely across the region in the
year ahead but there remains a significant
group of markets that offer real potential as
we look to the medium to longer term. This
is underpinned by the size of the premium
spirits market in Europe that remains in
strong growth. We have built an excellent
platform in Europe and plan to continue to
invest in the oppor tunity.
REST OF THE WORLD
The premium mixed drinks trend continues
to spread around the world with Fever-
Tree’s global market leadership position
growing alongside it and we have made
excellent progress during 2019 in a number
of key markets.
AUSTRALASIA
The region delivered a ver y strong
performance in 2019. Growth was driven
through increased rate of sale as well as
fur ther distribution wins. We ended the year
with good momentum reflecting excellent
trading over the Christmas period, most
notably in Australia. Fever-Tree launched
and hosted the inaugural G&T festival in
Sydney in November which saw over 5,000
tickets sold and the brand work alongside
over 80 local and global spirits brands.
As well as providing numerous sampling
oppor tunities, it provided an ideal platform
to showcase the strength and quality of the
brand to customers and consumers alike.
We are the clear premium categor y leader,
responsible for the majority of the growth
of the wider categor y. The growth of the
spirits categor y is being driven by premium
and craft brands, especially within gin which
has doubled in size in the last two years. The
suppor tive trends, growing brand awareness
and distribution whitespace mean we are
well positioned as we move into 2020.
This market is growing in size and has real
potential for the brand in the years ahead.
CANADA
Alongside Australia and New Zealand, Canada
continues to be an exciting market, being
typically one tenth of the size of the US market
across the broader drinks category. We have
already established a strong position within
the premium mixer category and 2019 was a
year of fur ther operational progress. We are
adding further resource to this market and
are working closely with our distributors to
optimise our route to market.
Our Off-Trade business performed especially
strongly with further distribution gains within
national retailers. Notwithstanding near term
COVID-19 related challenges, there remains
significant potential to increase our presence
within the On-Trade and liquor channels, both
of which will be a key focus in 2020.
OTHER
Our outsourced business model and first
mover advantage have enabled the brand to
establish a ver y promising position across the
globe. Asia remains a region with long term
potential and scale for Fever-Tree and 2019
saw the appointment of our first Regional
Director for Asia. We are already established
in the premium On-Trade in a number of
15
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markets across the region and have a clear
strategy focused on key cities and countries
as we look to build and enhance our
distribution network while working closely
with spirits companies on the long-mixed
drink oppor tunity.
OPERATIONAL REVIEW
Reflecting the Group’s growing global
footprint, we have continued to expand our
outsourced production capabilities during
the period with the appointment of a new
bottling par tner in Belgium to ser vice our
Nor thern European markets.
In November we announced the signing of
a US bottling par tner. Based on the West
Coast, it is expected to come online in 2020
and is a fur ther step in building out our
operational capability in the region.
PEOPLE
We have continued to build on the fantastic
team that are already in place with fur ther
hires including a Chief Marketing Officer and
Strategy and Planning Director as well as key
regional hires including a Regional Director
for Asia.
While we have continued to grow, we remain
entrepreneurial at hear t and work hard to
ensure we have a culture that enables all our
team, regardless of location, depar tment or
level to feel they can make real difference to
the business.
SUMMARY
While the UK has had a more challenging
year in 2019, the last 12 months have seen
Fever-Tree strengthen its global leadership
position and in doing so establish a strong
platform to deliver fur ther growth.
While cer tain, longer established markets
are becoming more mature, we have built a
ver y strong position within them. We have
long-standing relationships across the On and
Off-Trade as well as with spirits par tners and
continue to work in tandem to drive fur ther
growth in the categor y. While our tonic range
will continue to remain at the centre of our
offering, reflecting the ongoing and evolving
popularity of gin, our wider range of gingers
and new products such as our sodas provide
exciting secondar y growth drivers, enabling
the Group to sit across a number of spirits
categories, such as whisky, rum, vodka and
tequila, all of which are seeing good growth
at the premium end.
16
It is the long-standing success in these
markets that provide us with the case
studies and platform to increasingly turn
towards the global oppor tunity ahead with
real confidence. There are many markets
where the oppor tunity for the Group, while
potentially even more significant, is at an
earlier stage. It is these markets where
we are able and willing to invest ahead in
terms of people, route to market, por tfolio
and marketing to ensure we are ideally
positioned to realise the oppor tunity.
OUTLOOK
Notwithstanding tough comparators in
the UK, we made a solid star t to the new
financial year, with trading in the first two
months in line with expectations. The US in
par ticular performed ahead of expectations
as the momentum in the second half of 2019
continued.
Given the level of uncer tainty and the
dynamic nature of the situation, it is too
early to quantify Covid-19’s full impact on
the remainder of the financial year. While
we will not be unaffected by the current
situation, especially in the On-Trade, we are
a global business with revenue diversified
across regions, channels and customers.
Financially the Group is well placed. We are
debt free, with a cash position of £128m
underpinned by ver y strong cash flows.
The Group’s unique asset light, outsourced
business model means we have a low fixed
cost base, a small, dedicated team and the
flexibility to manage the current challenges.
The wider long-term trend towards premium
spirits and premium long mixed drinks
continues and we are confident the Group
will be well placed once the current period
of disruption and uncer tainty ends.
TIM WARRILLOW
Chief Executive
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“
AT FEVER-TREE WE TAKE
GREAT PRIDE IN BOTH OUR
BRAND AND PRODUCTS.
WE ARE COMMITTED TO DOING
BUSINESS IN A WAY THAT IS
BENEFICIAL TO ALL STAKEHOLDERS,
OUR ENVIRONMENT AND THE WIDER
COMMUNITY, WITH OUR BUSINESS
OPERATING FAIRLY, RESPONSIBLY
AND SUSTAINABLY.
FROM THE SELECTION OF OUR
INGREDIENTS, TO THE BOTTLING OF
OUR DRINKS, TO THE FULFILMENT
OF OUR EMPLOYEES, TO OUR
SERVICE TO OUR CUSTOMERS,
WE WORK WITH PEOPLE WHO
SHARE AND SUPPORT OUR
APPROACH.
“
18
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COMMITMENT TO OUR COMMUNITIES
2019 has seen Fever-Tree continue to work
closely with our long-standing par tner,
Malaria No More (“MNM”). We have
worked together since 2013, sharing in our
ambition to end malaria, one of the world’s
oldest diseases, which threatens over half
the world’s population.
2019 saw the return of our “Raise Your
Glass. Erase Malaria” digital campaign to
raise awareness and funds for the fight
against malaria. The campaign was launched
in Januar y as par t of Fever-Tree’s £1m
commitment to MNM over the next three
years. The funds will be raised through a
number of different initiatives aimed at
building awareness and suppor t for MNM
as it drives the historic commitment made
by Commonwealth Leaders in 2018 to tr y
to halve the number of deaths from Malaria
by 2023.
In October 2019, our CEO and Co-
Founder Tim travelled with colleagues and
a team from MNM to visit a number of
community projects in eastern Rwanda to
see the impressive impact that the charity’s
advocacy work is having in the ongoing fight
against malaria.
During the year we were honoured to
receive the MNM Business Fighting Malaria
Commonwealth Honour, in recognition of
the continued effor t and contribution being
made by Fever-Tree and its consumers
towards helping end malaria.
Our colleagues under took a broad range
of fundraising activities throughout 2019 to
show their suppor t including par ticipating
in Tough Mudder challenges, raising money
through the Fever-Tree choir as well as
our US team running a consumer event
featuring masterclasses taught by top
bar tenders in New York, all of which
contributed funds to MNM.
We are excited about a new par tnership
with Future Frontiers, a charity aiming to
provide sixth form students in the UK with
guidance, networks and oppor tunities they
need to help fulfil their potential – both at
school and beyond. The par tnership means
that Fever-Tree employees from a variety
of depar tments and levels will be trained
to coach a student from a local school.
As coaches, we will then help the pupils
discover and explore careers that inspire
them, and work with them to build a plan to
get there.
20
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“
“
IN PARTNERSHIP WITH
FEVER-TREE, WE ARE
PUTTING THE SPOTLIGHT
ON MALARIA. WE’VE
PERSUADED 53 PRESIDENTS
AND NATIONAL LEADERS
TO COMMIT TO HALVING
MALARIA BY 2023. TOGETHER
WE ARE DETERMINED TO SEE
THIS COMMITMENT MET AND
PUT THE WORLD BACK ON
TRACK TOWARDS COMPLETE
ERADICATION OF MALARIA.
JAMES WHITING
CEO, Malaria No More
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com ENVIRONMENTAL PROTECTION
We recognise our responsibility to mitigate
against climate change and to ensure we are
sourcing responsibly, wherever our quest for
the highest quality ingredients takes us. We
take time to visit suppliers to ensure that we
understand the full end-to-end journey of our
ingredients from growing to processing, and
that outputs are maximised, reducing waste.
In the processing of limes used in some parts
of our range, for example, the leftover lime
carcass is left to dry in the sun and then used
for animal feed, thereby creating a secondary
use for an element of our ingredients which
would otherwise be wasted. In addition, many
of the ingredients we use are processed close
to source to preserve maximum freshness.
Understanding our impact on the
environment is very important to us, whether
that is via our offices or throughout the supply
chain. We buy 100% renewable electricity
to power our headquarters and in 2019,
we under took a project to gain an in-depth
understanding of the carbon footprint of
our own operations, as well as our products.
We are finalising the results of this study,
following which we will be devising clear
targets in relation to our carbon emissions as
well as working alongside our suppliers and
production partners across the globe; we look
forward to providing further details in due
course.
Packaging is a critical component of
our products with the key function of
guaranteeing product quality, reducing
waste and informing our consumers of
important information as well as marketing
the brand. We are committed to ensuring
that environmental impacts are minimised
throughout the lifecycle of our packaging and
seek to use materials which create as little
waste as possible while still being functional,
robust, and attractive. By using a proportion
of recycled material in our packaging solutions,
we directly contribute to the reduction in the
energy and water required when compared to
making virgin (0% recycled material) bottles
and cans.
Fever-Tree manufactures at a returnable
bottling facility in Germany as well as working
with a number of local bottling partners
across our regions, thereby reducing the
transportation of raw materials and finished
goods in our end markets. In line with this, a
bottling partner will come on stream in the
second half of the year in the US, further
reducing the transportation of our products.
We continue to build on our sustainability
strategy and increase our focus on the
environmental impact of our operations. This
includes identifying key partners who share
our vision and ambition such as the Woodland
Trust, with whom we began working in 2019.
We are excited about the potential of this
par tnership and will be announcing details of
further initiatives during this year.
WE SERVED OVER
100K
DRINKS IN OUR
RE-USEABLE CUPS
Cinchona plantation in the DRC/Rwandan
border, grown by Pharmakina, our
quinine supplier
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VALUING OUR PEOPLE
70 COLLEAGUES PLANTED
1,500
TREES IN 2 DAYS
TEAM GREW BY
160%
IN 2019 VS 2018
Fever-Tree’s employees are the key
ingredient to our success, and we value each
and every person who works for us. We have
grown our talented team from 70 in 2018 to
176 employees, serving almost 80 countries.
We have a dedicated People team, led by
a Global Head of Talent who is suppor ted
by a Group HR Manager, the roles of whom
encompass all aspects of recruiting, retaining
and incentivising our most impor tant asset,
the Fever-Tree team. Over the last year,
this team has fur ther strengthened our
competitive employee benefits, including
private healthcare, enhanced family friendly
policies and pension contributions from
the company, Perkbox, a SAYE share
scheme and tickets to events that we
run throughout the year. We have also
introduced an HR platform connecting our
teams around the world.
We actively promote diversity within
our workforce and wholly suppor t equal
oppor tunities in employment. We know
that differing backgrounds and perspectives
create a more dynamic and inclusive
environment, and this reflects our approach
throughout our recruitment, training and
promotion processes. Our workforce
is now made up of 44% male and 56%
female employees, with a broad range
of nationalities and an average age of 34
years old, demonstrating our commitment
to diversity and inclusion and fostering
young talent.
We are committed to investing in and
suppor ting our employees in developing
their careers. We nur ture personal
development and continuous improvement,
rewarding and recognising the contribution
of our people. We have enhanced our
review process to involve more input from
colleagues and increase regular contact
with line managers dedicated to career
development and progression oppor tunities.
Our focus moving forward is to ensure
that as we expand, we uphold an open and
collaborative culture that we are proud of.
We actively encourage colleagues to pursue
personal interests as par t of their working
life and there is already an array of Fever-
Tree groups and clubs, including tennis,
football, climbing and a Fever-Tree choir,
using a performance at our Winter pop up
bar in the City of London to raise funds for
Malaria No More. December 2019 saw the
inaugural Fever-Tree Day of Action; working
with a new charity par tner, the Woodland
Trust, almost 70 colleagues planted a total
of 1,500 trees over two days.
In 2019 we developed our internal
communications strategy to encourage
information and knowledge sharing, ensuring
our colleagues feel involved, inspired by
what others are doing, and empowered
to make decisions for the benefit of the
business.
22
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com SUSTAINABLE SOURCING
This year has seen the team continue
to visit our suppliers around the world,
reflecting the close relationships we have
with our sourcing par tners. These audits
and visits allow us to build and maintain
close par tnerships with our suppliers, from
our bottlers, to our packaging suppliers,
ingredients processors and growers. This
programme of work will now allow us to
build on the relationships our suppliers
have throughout their supply chains to
understand and implement oppor tunities
for sustainability across the entire network
and share examples of best practice
between growers.
Finally, this year we renamed and
updated our Social and Ethical Business
Policy to become our Social, Ethical
and Environmental Business policy
in order to fur ther highlight our
commitment throughout our supply
chains to environmental protection and
enhancement. All our suppliers have
implemented and maintain environmental
management systems to manage areas
including pollution, water, emissions, energy
and sourcing.
FUTURE FOCUS
We are excited and passionate
about the immediate opportunities
we have identified and the work
we will be doing to continue to
improve the way we operate. We
are delighted to have recently
welcomed a new Corporate
Responsibility & Sustainability
Manager to our team, who will be
exploring a number of consumer
and customer-facing partnerships
this year, as well as creating a
clear strategy with key pillars
and workstreams to build on the
positive work being done already.
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23
STRATEGIC REPORTStock code: FEVR FINANCIAL REVIEW
£1.0m, up 7.5%, reflecting a full year’s cost
of the Fever-Tree US team, alongside new
senior hires made during the year, as noted
in the Chief Executive’s repor t. This was also
complemented by a strengthening of our
operational teams, notably our supply chain
resource which has increased alongside the
broadening of our international bottling
footprint. Offsetting these investments was a
reduction year on year in the level of pay-out
of performance-related bonuses.
Other overheads increased by £1.5m
to £11.5m; due to this, as well as the
incremental marketing and staff spends, and
lower than expected revenue in the latter
stages of the year, underlying operating
expenses as a propor tion of revenue
increased to 20.9% (2018: 18.7%).
With gross margin decreasing and increased
levels of investment within our key growth
regions of the US and Europe, the Group’s
adjusted EBITDA margin decreased to
29.6% (2018: 33.1%) with adjusted EBITDA
declining by 2.0% to £77.0m (2018: £78.6m).
Whilst a decline in adjusted EBITDA is a
disappointing result for the year, it reflects
the decision to remain committed to
investing behind our growth regions despite
the deceleration seen in UK growth as the
year progressed and reflects our outlook and
belief in the significant global oppor tunity
ahead for the Group.
Amor tisation costs were flat year on year at
£0.7m, and Share Based Payment expenses
increased marginally, by 5.6% to £1.9m. There
was a more marked increase in depreciation
to £2.2m (2018: £0.7m). The increase of
£1.5m is a reflection of IFRS 16 adjustments
related to our office leases (which impact
2019 but not the 2018 comparatives) as well
as the depreciation of reusable packaging
in Germany, reflecting the strong growth in
that market and the capitalisation of glass
bottles this year, alongside the re-usable
crates that hold them. As a result of these
increases in depreciation charges, the 2.0%
decline in adjusted EBITDA translates to
a 4.2% decrease in operating profit to
£72.2m (2018: £75.4m). Net finance income
of £0.3m resulted in profit before tax of
£72.5m, a decrease of 4.1% (2018: £75.6m).
REVENUE
As described in the Chief Executive’s repor t,
although the Group saw a 1.1% retraction
in UK revenue, the Group performed well
across its international markets, with good
growth delivered across the US, Europe
and RoW regions. As a result, despite the
retraction in the UK, overall Group revenue
grew by 9.7% from £237.4m in 2018 to
£260.5m.
GROSS MARGIN AND
OPERATING EXPENSES
Gross margins decreased in the year to
50.5% (2018: 51.8%). The strengthening
USD and the move to the agency model in
Germany provided some upside; however,
a number of other factors combined to
reduce the overall gross margin. This included
another year of significant underlying
increases in the market price for glass
bottles. Alongside this, the deceleration in
UK growth through the year, coupled with
uncer tainty over the timing and nature
of the UK’s exit from the EU, resulted in
elevated levels of inventor y being held for
much of the year, with a resultant increase in
storage costs relative to revenue. We expect
a fur ther decrease in the gross margin in
2020 as we project changes to the pricing
architecture in the US.
Underlying operating expenses are defined
as all operating expenditure exclusive of
depreciation, amor tisation and share based
payment charges and the propor tion of this
expenditure relative to revenue is seen as an
effective indicator of changes in underlying
operating activity year on year.
On an absolute basis, underlying operating
expenses increased by £10.2m, up 23.0%,
reflecting a commitment to continue to
invest against the longer-term oppor tunity
despite the headwinds encountered in the
UK in 2019.
The majority of this incremental investment
was in marketing spend, which increased
by £7.7m, up 36.7%, reflecting upweighted
investment in the US and European regions.
As a result, Group marketing spend increased
to 11.0% of revenue in 2019 (2018: 8.8%
of revenue).
We remain a lean organisation but have
continued to invest in our team to suppor t
our growth. Total salar y costs increased by
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ANDREW BRANCHFLOWER
Chief Financial Officer
“
THE GROUP
RETAINS A VERY
ROBUST BALANCE
SHEET ENDING
THE YEAR WITH
£128.3M OF CASH.
“
24
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com TAX
The effective tax rate in 2019 was 19.3%
(2018: 18.3%), which was in line with
expectations. The 2018 effective tax rate was
reduced by a combination of both a current
tax adjustment relating to the prior year
and a deferred tax adjustment following the
exercise of a significant value of staff share
options, which combined to reduce the 2018
effective tax rate.
EARNINGS PER SHARE
The basic earnings per share for the year
are 50.46 pence (2018: 53.38 pence) and
the diluted earnings per share for the year
are 50.26 pence (2018: 53.19 pence).
In order to compare earnings per share
year on year, earnings have been adjusted to
exclude amor tisation and the UK statutor y
tax rates have been applied (disregarding
other tax adjusting items). On this basis,
normalised earnings per share for 2019 are
51.08 pence per share and for 2018 were
53.40 pence per share, a decrease of 4.5%.
WORKING CAPITAL
Working capital decreased by £3.7m during
2019 to £54.2m. This was due to a £7.5m
reduction in inventor y levels at year end
compared to 2018, which was a reflection of
both improved operational efficiencies and
lower volume pre-year end production runs
in 2019 lapping an elevated level of inventor y
at the 2018 year end, which was being held
as a contingency against a potential no-deal
exit from the EU in Januar y 2019. There
was a fur ther £2.1m reduction in trade and
other receivables, the result of continued
improvement in the recover y of trade
debtors in 2019 as well as the settlement of
£2.2m of trade debtors following the move
to the agency model in Germany. Against
these improvements in working capital, trade
and other payables reduced by £5.5m, which
was largely a reflection of lower levels of
December production year on year. Working
capital management will remain an area of
focus in 2020.
Due to the improvement in working
capital, cash generated from operations has
improved to 103.9% of adjusted EBITDA
(2018: 74.3%)
CAPITAL EXPENDITURE
Due to the Group’s outsourced business
model, capital expenditure requirements
remain low. Despite this, 2019 saw an
increase in capital expenditure, with additions
of £6.4m (2018: £1.3m). The additions in
the year included the capitalisation of the
leases of the head office in London and the
US offices in New York in accordance with
IFRS 16, alongside continued investment in
reusable packaging within Germany, reflecting
the on-going strong growth in that territor y
and the capitalisation this year of glass
bottles, alongside the reusable crates that
hold them.
CASH POSITION
The Group delivers strong margins, with
efficient operating cash flow conversion and,
due to the outsourced business model, has
modest capital expenditure requirements. As
such, the Group retains a ver y robust balance
sheet, and having repaid £6.1m of bank loans
during 2019, ended the year with £128.3m
of cash, an increase of 53.5% (2018: net cash
of £83.6m).
CAPITAL ALLOCATION FRAMEWORK
The Group intends to retain sufficient cash
to allow for investment against the Global
oppor tunity ahead and see our strong cash
position as a competitive advantage over
many of our premium mixer competitors
globally. We primarily foresee this investment
taking the form of operational expenditure,
including upweighted marketing spend
across our growth regions at the appropriate
stage, and we intend to retain sufficient cash
reserves to allow us to take advantage of
oppor tunities to upweight and accelerate
investment as they arise. Whilst not a priority
or essential component of the Group’s plans,
we also remain vigilant with regards to M&A
oppor tunities that would fur ther assist with
the delivery of our strategy. Where the Board
then considers there to be surplus cash
held on the Balance Sheet it will consider
additional distribution to shareholders.
DIVIDEND
The Group remains committed to a
progressive dividend policy and as such, the
Board is recommending a final dividend of
9.88 pence per share in respect of 2019
(2018: 10.28 pence per share) bringing the
total dividend for the year to 15.08 pence
per share (2018: 14.50 pence per share). If
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approved by shareholders at the AGM on
4 June 2020 the final dividend will be paid on
12 June 2020 to shareholders on the register
on 15 May 2020.
PERFORMANCE INDICATORS
The Group monitors its performance through
a number of key indicators. These are
formulated at Board meetings and reviewed
at both an operational and Board level.
Following weaker than expected trading in
the final period of the year, the final result
for 2019 reflected performance against
these indicators which was behind Board
expectations
ANDREW BRANCHFLOWER
Chief Financial Officer
REVENUE GROWTH
9.7%
2018: 39.5%
GROSS MARGIN
50.5%
2018: 51.8%
ADJUSTED EBITDA MARGIN
29.6%
2018: 33.1%
25
STRATEGIC REPORTStock code: FEVR PRINCIPAL RISKS AND UNCERTAINTIES
We recognise that maximising our potential and growth opportunities in accordance with our
strategy requires a robust and effective risk management framework. Our approach to managing risk
is simple and practical.
MANAGING RISK
We recognise that maximising our potential
and growth oppor tunities in accordance
with our strategy requires a robust and
effective risk management framework. Our
approach to managing risk is simple and
practical.
The Audit Committee, under delegated
authority from the Board, oversees our
risk management framework and assumes
ultimate responsibility for facilitating the
effective identification and evaluation of
risks for the Group and reviewing the
controls in place to mitigate any potential
adverse impacts.
Each functional area of the Group is tasked
with monitoring emerging or changing risks
in their field. This may include the formation
of sub-committees for par ticular risks,
that meet regularly to monitor trends and
challenge the impact of mitigation effor ts
relating to that risk. The output of these
processes is subject to periodic review with
the executive Directors and repor ted back
to the Audit Committee and Board.
In addition, the Board receives presentations
from different depar tments within the
Group on an ongoing basis to keep the
Board informed on strategic and operational
performance and the controls in place to
mitigate risks faced by the Group. We aim
to hold at least one such presentation at
each Board meeting with contributions from
Regional Heads and Strategy, Supply Chain,
Technical, HR, Marketing, Sustainability, Legal
and Finance teams during the year.
When we look at risks, we specifically
consider the effects they could have on
our business model, our culture and our
long-term strategic objectives. We consider
both shor t-term and long-term risks, as well
as environmental, social and governance
risks. Each risk is independently quantified
against set criteria, considering both the
likelihood of occurrence and the potential
impact on the Group both before and after
the application of controls. We promote
the use of the results to identify specific
actions and mitigation measures, and the
implementation of these in operations
by each of our Group companies. These
assessments are recorded in a Group Key
Risk Register, approved and maintained
by the Audit Committee, formed of our
most significant risks from across the
entire business. This register is then finally
reviewed, challenged and then ratified by
the Board on a periodic basis.
An over view of the principal risks facing
Fever-Tree is summarised on the following
page. The Board’s assessment of the
long-term viability of the Company is also
reviewed annually and more detail on this
can be found in the Audit Committee
Repor t on page 44.
PRINCIPAL RISKS AND
UNCERTAINTIES
The Board sets out below the principal
risks and uncer tainties that the Directors
consider could impact the business. This list
is not intended to be an exhaustive list of
all the risks faced by the business. The Board
recognises that the nature and scope of
risks can change and that there are other
risks to which the Group is exposed.
26
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com 1
COMPETITION
DESCRIPTION OF RISK
The Group continues to face competition
from other beverage companies in the mixer
category. This could intensify in the Group’s
core markets through other companies further
increasing focus and investment in their existing
brands, introducing their own brands or
acquiring local brands.
In the UK, the Group’s priority is to maintain its
market leading status and to continue growing in
the face of increasingly aggressive pricing policies
and marketing strategies from its competitors,
who are focused on taking share from the
brand. Outside of the UK, the Group’s emphasis
remains on continuing to build market share
by challenging competitors in these regions,
creating brand awareness and taking advantage
of consumer trends towards premiumisation.
IMPACT OF RISK
Increased competition and unanticipated actions
by competitors could lead to a decline in the
Group’s market share or downward pressure
on prices, which may have a materially adverse
effect on the Group’s operations and hinder its
growth potential.
ACTIONS TO MITIGATE RISK
The Group has consistently faced strong, robust
competition over its lifetime, from both large
multinationals and more focused, copycat
local brands, and despite this has successfully
built market share in every region in which it
operates. The Group’s key strengths, including
first mover advantage, product quality, brand
strength and diverse territorial, channel and
customer mix all combine to mitigate the
risk that increased competition will affect
overall Group performance. The Group’s
entrepreneurial culture and exceptional track
record of innovation and category leadership,
alongside the strength of its team and increasing
levels of investment available to deploy, also
continue to strengthen its ability to defend and
react to competitor actions.
This year we have seen further evidence of the
Group’s ability to defend and grow market share
against its premium mixer competition, with
preference in the premium segment remaining
with Fever-Tree and other players lacking
consumer penetration.
2
3
DISRUPTION TO OUTSOURCED
PRODUCTION AND LOGISTICS
DESCRIPTION OF RISK
The Group relies on outsourced production
and bottling partners, and although bottling
volume is increasingly being spread across these
partners, around half of its volume is still bottled
by one main bottling partner in the UK. The
Group also relies on third party warehousing
facilities in the UK and the US. In addition, the
Group is dependent on the supply of a number
of key ingredients for its products, such as
quinine and fresh green ginger, for which there
are a limited number of suppliers.
The Group could be affected if there were a
significant disruption to any of the Group’s key
raw material suppliers, production, storage or
distribution operations.
IMPACT OF RISK
In the event of such disruption the Group
may not be able to arrange for alternative
supply, production, storage or distribution on
as favourable terms, or with sufficient speed to
ensure continuity of business.
ACTIONS TO MITIGATE RISK
The Group continues to increase its footprint
of outsourced production and in 2019
entered into two new international production
arrangements, and now manufactures with seven
different partners across the UK and Europe,
with a US bottling partner scheduled to begin
production on the West Coast later this year.
In addition, the Group’s principal UK bottling
partner manufactures the Group’s products
across four bottling lines located in four distinct
buildings across two separate sites.
In respect of key ingredients, the Group
requests, where appropriate, that its suppliers
hold contingency stock, and alongside this the
Group maintains elevated levels of stock of
these key ingredients to allow sufficient buffer
for continued production should there be a
period of disruption in supply.
To further mitigate risk, alongside holding
appropriate insurance cover, the Group
maintains, tests and updates a thorough business
continuity plan which monitors and seeks to
continually improve the redundancy of supply
and reduce lead times in the event of disruption
in all aspects of the outsourced business model.
This includes an evaluation of key suppliers’ own
business continuity plans.
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INCONSISTENT QUALITY OR
CONTAMINATION OF THE GROUP’S
PRODUCTS
DESCRIPTION OF RISK
A key strength of the Group is the quality of
its products, which in turn is a key component
of Fever-Tree’s brand strength. The Group’s
products are bottled by a network of different
outsourced partners based around the world,
and the products include key ingredients
sourced from multiple partners. The network
of different bottling partners and ingredients
suppliers must combine to consistently deliver
products of the highest quality which are safe
for consumption by Fever-Tree’s consumers.
IMPACT OF RISK
A lack of consistency in the quality of products
or contamination of the Group’s products,
whether occurring accidentally or through
deliberate third-party action, could harm the
integrity of, or consumer support for, the brand
and adversely affect sales. A significant product
liability issue or a widespread product recall
could negatively impact the reputation of the
affected product and/or the Group’s brand for a
period of time depending on product availability,
competitive reaction and consumer attitudes.
ACTIONS TO MITIGATE RISK
The Group employs an experienced Technical
and Quality Director who is supported by a
Technical team that has continued to grow
significantly during 2019. Together, they work
closely with key suppliers and our bottlers and
canners to ensure appropriate systems and
controls are in place to minimise the risk of
quality or contamination issues.
This begins with a rigorous due diligence
process to evaluate the quality controls of
any new manufacturers and suppliers that
are onboarded, alongside scheduled ongoing
periodic audits with established partners
and bottlers.
27
STRATEGIC REPORTStock code: FEVR PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
4
KEY MANAGEMENT
DESCRIPTION OF RISK
The Group’s success is linked to the efforts and
abilities of key personnel and its ability to retain
such personnel. The executive management team
has significant experience in the industry and has
made an important contribution to the Group’s
growth and success.
IMPACT OF RISK
The loss from the Group of a member of the
executive management team could have an
adverse effect on operations.
ACTIONS TO MITIGATE RISK
The Group’s Remuneration Policy is designed
to attract, retain and motivate key management
and includes a long-term incentive scheme and
performance-related pay.
5
6
FOREIGN EXCHANGE RISK
DESCRIPTION OF RISK
Due to the global nature of the Group’s activities,
the Group transacts in multiple foreign currencies,
both with respect to revenue generated across
its international markets and with respect to local
production, logistics, marketing, staff and other
local overheads. Such transactions also result in
assets and liabilities held on the Group’s balance
sheet which originate in foreign currencies.
IMPACT OF RISK
Movements in the exchange rate will impact
the Group’s results, which are presented in
sterling. The main foreign currency risk relates to
transactions in euro for our European region and
US dollar for our US region.
ACTIONS TO MITIGATE RISK
As the Group’s activities become increasingly
international, and as it continues to build out its
production and operational footprint, there is an
increasing level of local currency spend, which
acts as a natural hedge against the impact of
foreign exchange movements on the Group’s
reported revenue and margins. Alongside this, in
2019 the Group introduced a revised Treasury
Policy, which set out a dynamic 12 month hedging
strategy against future euro and US dollar cash
flows, a monthly hedge against euro and US
dollar balance sheet assets and liabilities and
introduced Hedge Accounting under IFRS 9,
which will provide a more accurate reflection of
the performance of this hedging approach on the
Group’s results.
POLITICAL AND ECONOMIC
ENVIRONMENT
DESCRIPTION OF RISK
A worsening of the economic conditions in the
Group’s key geographic markets could lead to
reduced consumer confidence and spending. The
Group also continues to monitor the potential
impact and risks of the UK’s exit from the
European Union’s Single Market and Customs
Union in January 2021.
IMPACT OF RISK
Reduced consumer confidence and spending
could lead to reduced demand for products and
limitations on the Group’s ability to increase or
maintain the prices of its products. In the UK, the
Group is at a more mature phase and as market
leader may be more exposed to downturns
in consumer confidence than it was during
phases of accelerated growth and rapid gains in
market share.
ACTIONS TO MITIGATE RISK
The position of the Group’s products as an
affordable luxury and its diverse customer,
channel and regional mix would be expected to
mitigate the impact at Group level of worsening
economic conditions on consumer demand
in specific markets. During the financial crisis
in 2008, the Group’s trend of strong growth
continued, giving the Group confidence in its
ability to grow even in periods of economic
downturn. However, we are also mindful of the
impact during the latter stages of 2019 that the
downturn in consumer confidence in the UK had
on our trading and hence we remain vigilant as
to the potential impact that worsening economic
conditions could have on trading within certain
markets, particularly those in which the Group
has already achieved strong market share.
The Group has a designated Committee who
meet regularly to monitor, model and assess
preparedness against the different potential
scenarios related to the UK’s exit from the
European Union from January 2021. The Group’s
outsourced business model, manufacturing across
three different sites in the UK and four in Europe,
provides a strong degree of operational flexibility
which underpins an ability to adapt our business
operations to address and mitigate perceived
Brexit risks.
28
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com Whilst certain ingredients cannot be held on-
site for long periods ahead of production, as a
matter of course we hold healthy contingency
stock levels of all other key raw materials and
took steps early on in the crisis to increase these
further. Additionally, our operating model means
we have a relatively well contained supply chain
process with a limited number of well-established
suppliers which provides comfort as to the
security of our major sources of ingredients, raw
materials and packaging.
The Group is in a very strong financial position.
We are debt-free, with year-end cash of £128m.
Alongside this, our strong underlying cash flow
conversion, our low level of capital commitments
and low fixed cost base means that we are in
robust position to withstand the potential impacts
of COVID-19.
7
COVID - 19
DESCRIPTION OF RISK
The Group is very mindful of the effects that the
spread of COVID-19 is having on our workforce,
supply chain, events, distribution and customers
during its current phase. We are also mindful
of the wider macro-economic effects that
COVID-19 could have on the global economy in
2020 and beyond.
IMPACT OF RISK
In the short-term, government policies of
social distancing and lock-down are having a
pronounced effect on the Group’s trading in
its key geographic markets. Whilst sales in the
Off-Trade channel have been less affected to
date, the impact has been felt most keenly in the
On-Trade channel, where lock-downs and forced
closures of outlets have led to an immediate and
severe slowdown in trading. There is heightened
credit risk as customers and importers will
increasingly be put under financial pressure.
Furthermore, there is the possibility that the
Group’s supply chain could be disrupted as our
suppliers come under increasing financial and
operational pressure, particularly if the situation
continues for a prolonged period.
In the medium term, it is possible that financial
pressures will result in some On-Trade outlets
not reopening once restrictions are lifted. Any
reduction in On-Trade outlets as a result of
closures could have an on-going impact on
Group trading. It is also possible that COVID-19
will trigger a prolonged worsening of economic
conditions in the Group’s key geographic markets,
which could impact consumer confidence and
spending. Reduced consumer confidence and
spending could lead to reduced demand for
products and limitations on the Group’s ability to
increase or maintain the prices of its products.
ACTIONS TO MITIGATE RISK
It is clear that the level of uncertainty in relation
to the potential impacts of COVID-19 is very
high and that we are likely to see further shocks
over the coming months; however, we believe
that the Group is well positioned to manage its
way through this situation over the medium term.
More specifically, the Group has established a
dedicated cross-departmental committee to
actively monitor and take action to prepare
contingencies for the high level of uncertainty
arising from the global spread of COVID-19, to
take mitigating actions when situations arise and
to consider and effect opportunities to grow if
such exist.
The Group is a global business with revenue
diversified across regions, channels and customers
and as such is not reliant on one region, channel
or major customer. The position of the Group’s
products as an affordable luxury would also be
expected to mitigate the impact of worsening
economic conditions on consumer demand.
The On-Trade channel, which makes up 45% of
Group sales, has been severely challenged across
many of our regions. We are remaining in close
contact with our On-Trade customers, many of
whom have been severely impacted by the crisis.
Our focus has been on offering support as and
when it is needed most. This can be through
extending payment terms to help ease near term
cashflow pressure and more recently looking at
ways we can support them as and when the on
trade begins to reopen.
Within the Off-Trade channel, the initial weeks
of lockdown were characterised by periods of
very strong sales and overall sales have remained
strong since that initial period. We continue
to work very closely with our key Off-Trade
customers to ensure we are able to react to
the different buying patterns that have been
emerging.
The Group’s unique asset-light, outsourced
business model means it has the flexibility to
navigate through these unprecedented times.
We are working very closely with our bottling
and canning partners across the UK and Europe
as they have enacted their own business
contingency plans. To date, our key bottlers and
canners have continued to operate through the
crisis with segregated shift patterns and we have
not suffered any notable disruption to supply.
In addition, we have taken action to ensure our
finished goods stock in the UK is held across
separate locations within our logistics partner’s
estate, and in the US we hold our stock across
three locations on the West Coast, East Coast
and in Texas.
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29
STRATEGIC REPORTStock code: FEVR 30
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com SECTION 172
SECTION 172 STATEMENT
Section 172 of the Companies Act 2006
requires a Director of a company to act in
the way he or she considers, in good faith,
would most likely promote the success of the
company for the benefit of its members as a
whole. In doing this s.172 requires a Director
to have regard, amongst other matters, to the:
•
likely consequences of any decisions in
the long term;
•
interests of the company’s employees;
• need to foster the company’s business
relationships with suppliers, customers
and others;
•
impact of the company’s operations on
the community and environment;
• desirability of the company maintaining
a reputation for high standards of
business conduct; and
• need to act fairly as between members
of the company.
The Board receives regular training on their
obligations as Directors from advisers and on
an ongoing basis from the Company Secretary.
Board papers are prepared with section 172
duties in mind, to ensure Directors have all the
relevant information required to enable them
to properly reflect and consider the factors set
out above in their decision making. The Board
recognises that each decision made will not
always result in a positive outcome for each
of the Company’s stakeholders. However, by
having good governance procedures in place
for decision-making, the Board does aim to
make sure that its decisions maintain a high
standard of business conduct.
For details on how our Board operates and
the way in which it reaches decisions, including
matters discussed and debated during the year
please see pages 26, 42 to 44, 46 and 47 to 57.
Our Corporate Responsibility and Sustainability
report on pages 18 to 23 provides examples
of the sorts of issues considered by the
Board when assessing the impact of the
Group’s operations on the environment and
community and also the interests of employees.
As a business we take pride in building strong
and long-term business relationships with
customers, suppliers and other stakeholders.
The Stakeholder Engagement statement on
pages 32 to 33 explains how the Board has
regard to fostering such business relationships.
In addition, set out below are some further
specific examples of how the Directors have
had regard to the matters set out in s.172.
1. STRATEGY REVIEW
The Board carries out a review of the
Company’s strategy on an annual basis.
This includes approving the business plan
for the period 2020 – 2022, budgeting and
investment proposals and considering the
impact of decisions in the longer term. As a
key growth market, in 2019 the Directors’
strategic review included a three-day Board
session in Miami dedicated to US strategy with
On and Off-Trade site visits, presentations
from the US team and a review of format
and pricing architecture. The Board has also
received presentations from Regional Heads,
Group Human Resources, Supply Chain,
Sustainability and Compliance functions with
key stakeholder considerations and the way
we foster the Company’s business relationships
with customers, suppliers and our workforce
being a central theme in those discussions. In
addition to covering our business and financial
performance, the Board has also considered
papers relating to the Company’s regulatory
obligations and how we comply with them,
how we can help promote our desired culture
throughout the Group and how to promote
diversity in our workforce.
2. NEW US BOTTLING PARTNER
In 2019 the Company signed a new contract
with a US bottler for production in 2020 to
ser vice the West Coast. Following involvement
of the Chief Supply Chain Officer and wider
senior executive team, the transaction was
referred to the Board for review and approval.
In reaching its final decision, the Board had
regard to a number of factors including:
the business case and financial returns; the
effect on the Group’s workforce and existing
suppliers; the ability to better service US
customers; the impact on the environment
including discussions of other potential
locations close to the US market; risk
management, and the long-term interests and
reputation of the Company.
3. WORKFORCE ENGAGEMENT
AND SAYE SCHEME
In 2019 the Board considered how to embed
a culture that will help deliver long-term
success to the Company and foster strong
relations with its workforce. To assist with this
work, during the year the Board commissioned
senior management to undertake engagement
exercises with the Company’s workforce about
whether the behaviours and conduct of our
business and workforce reflects our desired
culture. Kevin Havelock, who is the Board’s
appointed workforce NED, also participated
in the engagement exercises. The results of
the engagement exercise and the Directors’
own observations in this area were then
documented and considered by the Board.
One output of this process saw the Board
approve a decision to implement an employee
save as you earn (“SAYE”) scheme in 2019.
The scheme enables all UK employees to invest
in the Company’s shares in a tax-advantaged
way to align their interest with shareholders
and to allow them to share in the success of
the business. Balancing the financial costs of
implementing the scheme with the material
benefits for the employees, the Board reached
the conclusion that it was in the best interests
of the Company to proceed with the SAYE
scheme. The SAYE scheme has been very well
received by employees with high take up and
engagement.
4. CAPITAL ALLOCATION
Each year the Board makes an assessment of
the strength of the Group’s balance sheet and
future prospects relative to uncertainties in
the external environment. This year the Board
engaged with advisors to assess and debate
the need for, and form of, a revised capital
allocation framework. Details of the Capital
Allocation framework are set out on page 25.
In 2019 the Board recommended a final
ordinary dividend of 9.88p per share, bringing
the total ordinary dividend for 2019 to 15.08p
per share, an increase of 4% on 2018. In making
this decision the Board considered a range of
factors. These included the long-term viability
of the Company, its expected cash flow and
financing requirements, and the ongoing need
for strategic investment in our business and
our workforce as well as the expectations of
and need to act fairly between our members.
Founders Charles Rolls and Tim Warrillow, who
continue to hold substantial shareholdings in
the Company, did not vote on the Company’s
capital allocation framework in recognition of
the need to act fairly between members and
to avoid any potential conflict of interest.
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31
STRATEGIC REPORTStock code: FEVR SECTION 172 CONTINUED
STAKEHOLDER ENGAGEMENT
The table below sets out how we engage with our key stakeholders. Not all information is repor ted directly to the Board and not all
engagement takes place directly with the Board. However, the output of this engagement informs business-level decisions, with an over view
of developments and relevant feedback being repor ted to the Board.
3
END CONSUMERS
FORM OF ENGAGEMENT
We monitor consumer feedback to help
us understand our consumers’ views on
our products as well as inform our strategy.
Our engagement with consumers through
marketing initiatives takes many forms, including
sponsorship of events, co-promotional activity
with spirits partners, creation of bespoke
menus at bars and restaurants, and an online
pairing wheel that helps our consumers mix
the best cocktails using our products.
HOW THIS ENGAGEMENT INFLUENCED BOARD
DISCUSSIONS AND DECISION-MAKING
The Board has first-hand experience of some
of our in-market activations, and Directors
have brought valuable regional and industry
exper tise to discussions and recommendations
on the Group’s consumer engagement strategy
at Board meetings.
1
2
CUSTOMERS
(ON AND OFF-TRADE PARTNERS)
INTERNATIONAL
DISTRIBUTORS
FORM OF ENGAGEMENT
We have dedicated sales teams for On-trade
and Off-trade channels, who are in continual
and regular contact with our customers to
monitor feedback, create marketing plans and
implement promotions. Our “G&T” Garden
campaign was inspired by discussions with
customers looking for ways to reinvigorate
outdoor spaces. We provided assets such
as parasols, deck chairs and signage and a
website helping consumers find the best
pub gardens near to them. The campaign
has been enormously successful, culminating
in awards from customers such as Punch,
and is being rolled out internationally.
Our Christmas gifting packs, created after
consultations with John Lewis, including
G&T crackers and advent calendars, have
proved immensely popular and a great way
to engage with new consumers. In 2019 our
commitment to being a reliable and trusted
supplier was recognised by Tesco, one of
our largest customers, who ranked us as
its highest performing supplier by inbound
ser vice levels.
HOW THIS ENGAGEMENT INFLUENCED BOARD
DISCUSSIONS AND DECISION-MAKING
The Board receives regular updates and
presentations on customer feedback and sales
throughout the year, which informs its strategic
decisions. In 2019 this included, for example,
a three-day strategy session in Miami where
the Board received presentations from our
sales teams and visited multiple On-Trade and
Off-Trade locations to better understand the
needs and concerns of customers and to assist
decision making on matters related to the
Group’s strategic approach in the USA.
32
FORM OF ENGAGEMENT
In addition to formal regular check-ins,
we have dedicated regional suppor t that
engages with our distribution par tners on
an ongoing basis to ensure we properly
tailor our approach to each market with
the right formats of our product range and
marketing plans. Our brand guidelines and
induction processes also ensure that the
Group’s cultural values and brand messaging
are properly understood and transmitted
in market. Our international team also
runs a regular “Fever-Tree Academy” for
international distributors, to educate them
on product innovations and key brand
messages.
HOW THIS ENGAGEMENT INFLUENCED BOARD
DISCUSSIONS AND DECISION-MAKING
In addition to regular updates on performance
in the Group’s international markets from the
CEO, the Board has received presentations at
Board meetings from Regional Heads to better
understand our working relationships with
distributors and also to discuss, and in view of
their international experience, provide guidance
on the particular challenges and oppor tunities
presented in different markets.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com 4
WORKFORCE
5
SUPPLIERS
6
INVESTORS
FORM OF ENGAGEMENT
Engagement with our workforce includes
formal and informal meetings. Directors are
encouraged, and expected, to visit our offices
and to engage with the workforce on these
trips. Directors are also invited to attend
Company events and gatherings where they
can engage with the workforce. Our Chief
People Officer presented to the Board on the
Company’s culture and how we look to engage
with the workforce through various initiatives
and activities to protect and further enhance
our desired culture. For more information on
workforce engagement activities please see
the Valuing Our People section on page 22. In
addition, Kevin Havelock, our designated Non-
Executive Director for workforce engagement,
meets with employee groups and provides
feedback to the Board on workforce culture
and alignment with Company values.
HOW THIS ENGAGEMENT INFLUENCED BOARD
DISCUSSIONS AND DECISION-MAKING
The Board regularly receives presentations
from the workforce at Board meetings, with
time set aside to ask questions and engage
in active discussion on the topics at hand.
Following on from feedback from workforce
engagement activities the Board approved
the implementation of an SAYE scheme. For
fur ther details please see page 31.
FORM OF ENGAGEMENT
We recognise the importance of good
relationships with our suppliers to support the
Group’s largely outsourced business model. We
have strong, long-term relationships with most
of our suppliers, built over a number of years.
We engage regularly with our supply network
throughout the year in one-to-one meetings,
site-visits and quality audits. This commitment
was recognised by the British Bottlers Institute
in 2019, who awarded Fever-Tree the BBI
Achievement Award in recognition of the
Group’s outstanding contribution towards the
industry. All our suppliers are required to sign
up to our Social, Ethical and Environmental
Policy to ensure they share our commitment to
high standards and quality (for further details
please see Sustainable Sourcing on page 23).
HOW THIS ENGAGEMENT INFLUENCED BOARD
DISCUSSIONS AND DECISION-MAKING
Key strategic supplier par tnerships are
discussed at the Board and in cer tain
circumstances, such as the onboarding of
our new US bottler, brought to the board
for approval (see page 31 for more detail).
For more details of our long-standing
relationship with our quinine supplier and
recent site visit by our CEO please see
pages 8 to 9.
This Strategic Report was approved on behalf of the Board on 21 April 2020.
ANDREW BRANCHFLOWER
Chief Financial Officer
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FORM OF ENGAGEMENT
The Group maintains communication
with institutional shareholders through
individual meetings with executive
Directors, par ticularly following publication
of the Group’s interim and full year
results. 2019 saw the executive Directors
under take a US roadshow incorporating
three cities, providing our US investors
with the oppor tunity to meet with senior
management. Feedback following such
roadshows and investor meetings is
communicated to the Board as a whole.
In addition, the year under review saw the
Investor Relations Director attend a number
of investor conferences both in the UK
and Europe, under taking in excess of 100
investor meetings at these events as well
as hosting meetings at our office in London
throughout the year.
Fur thermore, the Group communicates to
all shareholders through our interim and full
year results, as well as our trading updates,
all of which are available on our website
alongside our analyst results presentation
slides.
HOW THIS ENGAGEMENT INFLUENCED BOARD
DISCUSSIONS AND DECISION-MAKING
Investor relations activity and a review of
the share register are standing items on the
Board’s agenda.
In addition, the non-executive Directors are
available to discuss any matter stakeholders
might wish to raise and the Chairman and
Senior independent Director will attend
meetings with investors and analysts as
required.
33
STRATEGIC REPORTStock code: FEVR GOVERNANCE
34
www.fever-tree.com
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GOVERNANCE
“
FROM THE
SELECTION OF
OUR INGREDIENTS,
THROUGH TO THE
BOTTLING OF OUR
DRINKS, WE WORK
WITH PEOPLE WHO
SHARE AND SUPPORT
OUR APPROACH
“
CONTENTS
Board of Directors
Corporate Governance Statement
Audit Committee Repor t
Nomination Committee Repor t
Remuneration Committee Repor t
Directors’ Repor t
Statement of Directors’ Responsibilities
36
38
42
46
47
58
60
Stock code: FEVR
35
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BOARD OF DIRECTORS
BOARD OF DIRECTORS
BILL RONALD (64)
Chairman
CHARLES ROLLS (62)
Co-founder and Non-
executive Deputy Chairman
TIM WARRILLOW (45)
Co-founder and
Chief Executive Officer
ANDREW BRANCHFLOWER (40)
Chief Financial Officer
N
Bill Ronald has been the
Chairman of the Group since
June 2013. Bill has a sales and
marketing background, having
spent 23 years in a variety
of roles at Mars, including
Managing Director of the UK
confectioner y operation. Since
leaving Mars, he has been Chief
Executive Officer of Uniq and
has held non-executive roles in
Bezier, Halfords, Alfesca, Dialight
and the Compleat Food Group.
Charles has an engineering
degree from Imperial College
and an MBA from INSEAD.
After leaving strategy
consultants Bain & Company, he
has been a serial entrepreneur,
best known for his success in
turning around the gin maker,
Plymouth Gin. He acquired an
equity stake in Plymouth Gin
in 1997, becoming Managing
Director, and after growing sales
14 times, it was sold to Absolut
Vodka in 2001. This experience
led Charles to identify an
oppor tunity for a quality tonic
water, and after meeting Tim
Warrillow in 2003, he set to
work with Tim on a premium
mixers business, which resulted
in the formation of Fever-Tree.
Tim has a business management
degree from Newcastle
University, specialising in food
marketing. During university
he star ted his first business,
a waitering agency. In 1998
he joined a London-based
adver tising and branding agency.
Subsequently, he launched
the Business Development
Consultancy which included
identifying oppor tunities in the
premium food and drink sector.
It was in this role that he made
contact with Charles Rolls,
which resulted in the formation
of Fever-Tree.
Andrew joined the Group in
September 2012 and joined
the Board on 16 October
2014. Andrew is a graduate of
Cambridge University, where
he studied natural sciences, and
qualified as an ACA in 2007.
He worked for a boutique firm
specialising in star t-ups and fast-
growing businesses and prior to
joining the Group, was Head of
Finance at the Design Council.
Andrew joined the Group in
September 2012, in the run-up
to the investment in the Group
by Lloyds Development Capital,
and was appointed Finance
Director in September 2013.
36
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com KEY
R Member of the Remuneration Committee
N Member of the Nomination Committee
A Member of the Audit Committee
Chair of Committee
COLINE MCCONVILLE (55)
Senior Independent
Non-executive Director
DOMENIC DE LORENZO (55)
Independent
Non-executive Director
KEVIN HAVELOCK (62)
Independent
Non-executive Director
JEFF POPKIN (55)
Independent
Non-executive Director
R
A N
A
R N
R
A N
A N
Domenic joined the Group as
a non-executive Director on
17 May 2018 and is Chair of
the Audit Committee. Domenic
is a qualified char tered
accountant and brings with
him a wealth of financial
management experience having
spent 20 years at SABMiller,
the former FTSE 100 beverage
company, focusing on strategy
and corporate development
before reaching the position of
Chief Financial Officer. During
his time at SABMiller he was
involved with more than 100
global transactions, acquisitions
and disposals, prior to its sale
to ABInBev in 2016.
Coline joined the Group as
a non-executive Director
on 7 November 2014 and is
Chair of the Remuneration
Committee. Coline studied
law at the University of New
South Wales and holds an
MBA from Har vard (Baker
Scholar). She has previously
worked for McKinsey and for
Clear Channel as CEO of the
International division and was
Chairman of the Remuneration
Committee at Inchcape plc for
5 years. Coline is currently a
non-executive director on the
Boards of 3i Group plc and
Travis Perkins plc. She is also on
the German Super visor y Board
of TUI AG, since its merger
with TUI Travel plc. Coline was
Remuneration Committee Chair
at TUI Travel plc for three years
and is Remuneration Committee
Chair at Travis Perkins, as well
as holding various Committee
responsibilities on other Boards.
Kevin joined the Group as
a non-executive Director
on 11 Januar y 2018. Kevin
has more than 25 years’
drinks industr y experience
and was Global President
of Refreshment at Unilever
from 2011 until the end of
2017, responsible for the
Group’s €10bn revenue global
beverages and ice cream
business. Kevin held a wealth
of senior leadership positions
for Unilever around the
world, including Chairman for
Unilever UK, Unilever France
and Unilever Arabia as well
as President, Unilever Nor th
America. He was a Unilever
Executive Committee member,
sat on the Group’s Sustainability
Board and was co-Chair of the
Pepsi/Lipton tea joint venture.
Kevin became a Trustee of both
the Eden Project and British
Council in 2017 and a non-
executive director of Morrisons
Plc in Februar y 2018. Kevin also
sits on the board of Ben and
Jerr y’s and The All England Lawn
Tennis Club and Championships.
Jeff joined the Group as
a non-executive Director
on 11 Januar y 2018. Jeff
has significant experience
across the Nor th American
beverage industr y, gathered
over almost 30 years, with
par ticular exper tise in sales
and distribution in the US.
His experience spans the beer,
spirits, premium non-alcoholic
carbonated soft drink and
health & wellness beverage
categories for a range of global
brands. His leadership roles
have included CEO of Red Bull
Distribution, Nor th America,
President of Vita Coco and he is
currently Nor th American CEO
of Mast-Jägermeister.
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37
Stock code: FEVRGOVERNANCE CORPORATE GOVERNANCE STATEMENT
AN INTRODUCTION FROM
OUR CHAIRMAN
I am pleased to present our Corporate
Governance Repor t for the year ended
31 December 2019. As an AIM quoted
company, we recognise good governance is
essential to the successful deliver y of our
long-term strategy and the way in which
the Group operates. It is for this reason
that we have chosen to formally adopt the
2018 UK Corporate Governance Code
(the “Code”). We do, however, recognise
that the Code has been drafted with larger,
main market listed companies in mind, and
given our stage of development, there are
cer tain limited exceptions where we do not
fully comply with the Code. Instances of
non-compliance are detailed and explained
on page 40 (Chairman Independence –
Provision 9) and page 47 (Remuneration
Chairman’s Statement – Provision 36).
Following on from a number of new
appointments in 2018 when we welcomed
Kevin Havelock, Jeff Popkin and Domenic
De Lorenzo as Directors, the Board’s
composition in 2019 remained unchanged.
During the year we carried out an external
evaluation of the Board, its Committees
and individual Directors, which reflected
that the Board is functioning ver y well.
Fur ther details of the process, outcomes
and recommendations are set out on pages
40 and 41.
A key focus of the new Code is the
requirement for more detailed expositions
on stakeholder engagement and how the
Directors have had consideration to and
applied their duties under s.172 of the
Companies Act 2006. Our statements on
these topics are detailed on pages 31 to 33.
BILL RONALD
Chairman
LEADERSHIP
ROLE OF THE BOARD
The Board is responsible to the
shareholders and sets the Group’s
strategy for achieving long-term success in
accordance with our purpose and values.
The Board is also ultimately responsible
for establishing the Group’s governance
structure, the effectiveness of internal
controls, risk management, and the
direction of the Group in accordance with
our purpose, strategy and values to help
deliver our strategy. We look to provide the
framework for our Group companies to
follow these principles and provide guidance
at Group level on measures to implement
them.
The day-to-day responsibilities for the
running of each of our Group companies
is delegated to the executive and senior
management. However, there are a
number of matters where, because of their
impor tance to the Group, it is considered
appropriate to have enhanced oversight
from the Board. The Board therefore has
a documented formal schedule of matters
reser ved for its approval, which is reviewed
annually. This includes matters relating to:
• The Group’s strategic aims and
objectives
• The structure and capital of the Group
•
•
Financial repor ting, financial controls and
dividend policy
Internal controls, risk and the Group’s
risk appetite
• The approval of unusual and/or
significant capital expenditures or
disposals
• Effective communication with
shareholders
• Any changes to Board membership or
structure
The Board understands the impor tance
of the Group’s governance framework
to ensure it effectively challenges
strategy, performance, responsibility and
accountability to ensure that ever y decision
we make is of the highest quality. All of
its decisions are discussed within the
context of the risks involved. Effective risk
management is central to achieving our
strategic objectives and fur ther details of
the Group’s internal processes are set out
on pages 26 to 29.
DIVISION OF RESPONSIBILITIES
CHAIRMAN AND CEO
The Chairman is responsible for leadership
of the Board and ensuring its effectiveness
in all aspects of its role. The Chief Executive
Officer is responsible for delivering the
strategy and commercial objectives agreed
by the Board. There is a clear division of
responsibility between the Chairman and
the CEO to ensure that there is a balance
of power and authority between leadership
of the Board and executive leadership. This
is in writing and has been approved by
the Board.
NON-EXECUTIVE DIRECTORS AND SID
The Chairman promotes a culture of
openness and debate by facilitating the
effective contribution of non-executive
Directors, as well as maintaining good
working relationships between all
Directors, with non-executive Directors
communicating directly with executive
Directors and senior management between
formal Board meetings.
Coline McConville is the Senior
Independent Director (SID). She provides
a sounding board for the Chairman and
ser ves as an intermediar y for the other
Directors when necessar y. As the SID,
Coline is available to shareholders, as may
be appropriate in cer tain circumstances.
38
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com ROLE OF COMMITTEES
The Board has delegated specific
responsibilities to the Audit, Remuneration
and Nomination Committees, details of
which are set out below. Each Committee
has written terms of reference setting
out its duties, authority and repor ting
responsibilities. Copies of the terms of
reference for each Committee are available
on the Company’s website or on request
from the Company Secretar y. The terms
of reference of each Committee have
been reviewed by the Board during the
year and it is intended that these will be
kept under continuous review to ensure
they remain appropriate and reflect any
changes in legislation, regulation or best
practice. Each Committee is composed of
non-executive Directors of the Company.
The Company Secretar y is the secretar y of
each Committee.
AUDIT COMMITTEE
The Audit Committee is chaired by
Domenic De Lorenzo and its other
members during the year were Coline
McConville and Jeff Popkin. In addition,
Kevin Havelock has been appointed to join
the Audit Committee for 2020. All members
are fully independent. The Audit Committee
has primar y responsibility to assist the
Board in fulfilling its obligations regarding
the monitoring of the effectiveness of the
Group’s risk management and internal
control system; reviewing the integrity of
the Group’s interim and full year financial
statements and repor ting; and assessing the
scope, resources, performance, effectiveness
and independence of the external Auditor.
It receives and reviews repor ts from the
Group’s management and Auditor relating
to the annual accounts and the accounting
internal control systems in use throughout
the Group. The Audit Committee meets
at least twice a year and has unrestricted
access to the Group’s Auditor. The
Chairman, Chief Executive Officer and Chief
Financial Officer attend the Committee
meetings by invitation.
The Audit Committee Repor t on pages 42
to 44 contains more detailed information
on the Committee’s role.
REMUNERATION COMMITTEE
The Remuneration Committee is chaired
by Coline McConville. Its other members
during the year were Kevin Havelock
and Domenic De Lorenzo. Coline, Kevin
and Domenic are fully independent. The
Remuneration Committee reviews the
performance of the executive Directors and
makes recommendations to the Board on
matters relating to their remuneration and
terms of employment. The Remuneration
Committee also makes recommendations
to the Board on proposals for the granting
of share options and other equity incentives
pursuant to any share option scheme or
equity incentive scheme in operation from
time to time. The remuneration and terms
and conditions of appointment of the non-
executive Directors of the Group is set
by the Board. The Deputy Chairman, Chief
Executive Officer and Chief Financial Officer
are invited to attend for some par ts of the
Committee meetings where their input is
required although they do not take par t in
any discussion on their own benefits and
remuneration.
The Remuneration Committee Repor t on
pages 47 to 57 contains more detailed
information on the Committee’s role and
the Directors’ remuneration and fees.
NOMINATION COMMITTEE
The Nomination Committee is chaired by
Bill Ronald. Its other members are Coline
McConville, Kevin Havelock, Jeff Popkin
and Domenic De Lorenzo. The Nomination
Committee is responsible for reviewing
the structure, size and composition
(including the skills, knowledge, experience
and diversity) of the Board and making
recommendations to the Board with
regard to any changes. During the year
the Nomination Committee approved the
appointment of John Finlay as Company
Secretar y of the Company who joined with
effect from 24 May 2019.
The Nomination Committee Repor t on
page 46 contains more detailed information
on the Committee’s activity during the year.
BOARD AND COMMITTEE MEETINGS
The Board meets regularly to help ensure it discharges its duties effectively. Non-executive
Directors communicate directly with executive Directors and senior management between
formal Board meetings. The Board has a schedule of regular business, financial and operational
matters, and each Board Committee has compiled a schedule of work, to ensure that all
areas for which the Board has responsibility are addressed and reviewed during the course of
the year.
The Board held six scheduled board meetings during the year and in addition met once to
consider matters of a time-sensitive nature. Directors are expected to attend all relevant
Board and Committee meetings. The Board held a focused, dedicated three-day meeting
on US strategy in September 2019 and intends to continue to schedule similar meetings
annually. This meeting was held in Miami and the Board considered key issues such as regional
US focus, manufacturing footprint and distribution oppor tunities. The table below sets out
attendance at all Board and Committee meetings held during the year to 31 December 2019.
Name
Bill Ronald
Charles Rolls
Tim Warrillow
Andrew Branchflower
Domenic De Lorenzo
Kevin Havelock
Coline McConville
Jeff Popkin
Scheduled
Board
Audit Remuneration
Nomination
Short Notice
Board
6/6
6/6
6/6
6/6
6/6
6/6
6/6
5/6*
N/A
N/A
N/A
N/A
3/3
N/A
3/3
3/3
3/3
N/A
N/A
N/A
3/3
3/3
3/3
N/A
2/2
N/A
N/A
N/A
N/A
2/2
2/2
2/2
1/1
1/1
1/1
1/1
1/1
1/1
1/1
0/1*
* Jeff Popkin was travelling on business in September and speaking at a conference for the unscheduled Board meeting in November.
39
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Stock code: FEVRGOVERNANCE CORPORATE GOVERNANCE STATEMENT CONTINUED
BOARD EFFECTIVENESS
The Board continuously evaluates the
balance of skills, experience, knowledge
and independence of the Directors. It
ensures that all new Directors receive a
tailored induction programme and the
Board scrutinises its performance through
an annual effectiveness review. Profiles of
the skills and experience of the Directors
are included in their biographical details on
pages 36 to 37.
INDEPENDENCE
In light of his existing appointment as
Chairman of the Group prior to admission
to AIM, Bill Ronald is not considered to
be independent which is an area in which
the Group is non-compliant with the
Code. Charles Rolls’ previous executive
position with the Group also means that
he is also not considered independent.
However, Coline McConville, Kevin
Havelock, Jeff Popkin and Domenic De
Lorenzo are considered to be independent
by the Board and therefore the Board
satisfies the requirement of the Code
of having a balanced Board and exceeds
the requirement that at least half of the
Directors excluding the chairman are
independent.
APPOINTMENTS TO THE BOARD
The Nomination Committee leads the
process for the appointment of new
Directors to the Board. Page 46 sets
out more detailed information on the
Nomination Committee, its role and
principal activities during the financial year.
COMMITMENT
All Directors have been advised of the
time required to fulfil the role prior
to appointment and were asked to
confirm that they can make the required
commitment before they were appointed.
This requirement is also included in their
letters of appointment. The Board is
satisfied that the Chairman and each of the
non-executive Directors are able to devote
sufficient time to the Group’s business.
In the appropriate circumstances, the
Board may authorise executive Directors
to take non-executive positions in other
companies and organisations, provided
the time commitment does not conflict
with the Director’s duties to the Company,
since such appointments should broaden
their experience. The acceptance of
appointment to such positions is subject
to the approval of the Chairman. Currently,
the executive Directors do not have any
external appointments.
DEVELOPMENT
When new Directors join the Board a
formal, rigorous and transparent induction
programme takes place, which is tailored to
their existing knowledge and experience.
New members are also introduced to
senior employees and, as appropriate,
external advisers. The Company Secretar y
ensures that all Directors are kept abreast
of changes in relevant legislation and
regulations, with the assistance of the
Company’s other professional advisers
where appropriate.
Executive Directors are subject to the
Company’s performance development
review process, through which their
performance against predetermined
objectives is reviewed by the Chairman
and their personal and professional
development needs considered. Non-
executive Directors are encouraged to raise
any personal development or training needs
with the Chairman or through the Board
evaluation process.
INFORMATION AND SUPPORT
The Chairman, aided by the Company
Secretar y, is responsible for ensuring that
the Directors receive accurate and timely
information. The Company Secretar y
compiles the Board and Committee papers
which are circulated to Directors one
week prior to meetings. The Company
Secretar y also ensures that any feedback
or suggestions for improvement on Board
papers are fed back to management.
Directors have access to independent
professional advice at the Company’s
expense. In addition, they have access to
the advice and ser vices of the Company
Secretar y who is responsible for advice
on corporate governance matters to the
Board. The Company Secretar y provides
minutes of each meeting and ever y Director
is aware of the right to have any concerns
minuted.
EVALUATION
Each year the Board carries out an
evaluation process. To date this process has
been carried out by way of a questionnaire
and Chairman inter view. In addition, the
non-executive Directors meet informally,
without the Chairman present, to evaluate
his performance. In line with the Code,
the Board carried out its first external
evaluation process during the year.
Following a tender process conducted by
the Chairman and clearance of any potential
conflicts, Lisa Thomas of Independent Board
Evaluation (“IBE”) was selected to complete
the evaluation.
PROCESS
A comprehensive briefing was given to
Lisa by the Chairman during July 2019. Lisa
obser ved the Board and Audit Committee
meetings held on 18 July 2019. Detailed
inter views were conducted with ever y
board member during June and July 2019.
In addition, Lisa inter viewed a number
of Fever-Tree’s senior management, the
Company Secretar y, the Auditor from BDO,
remuneration consultants from Deloitte
and brokers from Numis. Thereafter, IBE’s
draft conclusions were discussed with the
Chairman and feedback on the Chairman
was discussed with the Senior Independent
Director. Full repor ts on the Board and
recommendations were then shared with
the Directors. Lisa also presented to the
Board on IBE’s findings at the Board meeting
on 10 October 2019.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com OUTCOMES AND RECOMMENDATIONS
Overall, the repor t reflected feedback that the Board is functioning ver y well as a group,
with each member contributing effectively. A good mix of industr y knowledge has helped
add value to the executive and Board discussions are characterised as transparent and
collaborative. Key areas based on best practice as described in the Code and identified for
focus and development during 2020 are set out below.
Focus Area
Actions being or to be taken in 2020
Review of Board composition
and diversity
• Deeper mapping of existing skills against future business
needs and strategy
ANNUAL GENERAL MEETING
The Annual General Meeting of the
Company will take place on 4 June 2020.
The Notice of Annual General Meeting
and the ordinar y and special resolutions
to be put to the meeting are included at
the end of this Annual Repor t and financial
statements. In accordance with the Code, all
Directors will be submitted for re-election
at the Annual General Meeting.
•
Implementation of board diversity and inclusion policy for
board appointments
Purpose, values and culture
• Continue to solidify the Group’s purpose and link this
through to its values, culture and strategy
• Add the alignment of culture with values and strategy as a
standalone board agenda item with presentations from the
business on culture
Board information
• Ensure that board papers are consistently circulated at least
Board engagement
with business
a week in advance of meeting
• Greater sharing of ad hoc updates with the NEDs to keep
them abreast of developments in the Group between
meetings
• Longer board meetings to incorporate a regular plan of
deep dives from different areas of the business and to
receive repor ts on workforce engagement
•
Fur ther increase visibility of non-executive Directors in the
organisation with attendance at formal and informal events
and management strategy days
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41
Stock code: FEVRGOVERNANCE AUDIT COMMITTEE REPORT
DEAR SHAREHOLDER,
On behalf of the Board, I am pleased to
present the Audit Committee repor t for the
year ending 31 December 2019.
The Audit Committee assists the Board
in fulfilling its oversight responsibilities. Its
primar y responsibilities include monitoring
and assessing the preparation of the
Group’s financial and corporate repor ting,
the effectiveness of the Group’s systems of
risk management and internal controls, and
the effectiveness and independence of the
external Auditor.
This repor t sets out how it has discharged
its responsibilities during the financial year
and in relation to the financial statements,
the significant issues it considered. The
Board is required to ensure that the annual
repor t is fair, balanced and understandable,
and the Audit Committee assists the Board
by considering this. The Audit Committee
has also assessed the Group’s prospects and
viability over a three-year period.
DUTIES OF THE AUDIT COMMITTEE
The main duties of the Audit Committee
are set out in its Terms of Reference, which
are available on the Company’s website
(www.fever-tree.com) and are available
on request from the Company Secretar y.
The Committee’s terms of reference are
reviewed annually. The Committee repor ts
to the Board on its activities, identifying any
key issues including recommendations as to
the steps to be taken.
The main items of business conducted
by the Audit Committee on behalf of the
Board included:
FINANCIAL AND CORPORATE REPORTING
• Review of the integrity of the
Group’s financial statements and any
announcements relating to the Group’s
financial performance.
• Assess the extent to which the Group’s
financial statements are fair, balanced
and understandable and provide the
information necessar y for shareholders
to assess the Group’s strategy, position
and performance.
• Consider the appropriateness of the
Group’s accounting policies and review
of any significant financial repor ting
judgements contained in the Group’s
financial statements.
42
EFFECTIVENESS OF RISK MANAGEMENT AND
INTERNAL CONTROL SYSTEMS
• Review and assess the effectiveness
of the Group’s risk management and
internal control systems; and the
processes in place to monitor this.
• Review the appropriateness of
the Group’s whistleblowing and
anti-briber y procedures.
EXTERNAL AUDIT INDEPENDENCE AND
EFFECTIVENESS
• Review the scope, resources,
effectiveness and performance of the
external Auditor.
• Review of the external Auditor’s
independence, objectivity and
assessment of the Group’s policy for
engaging the external Auditor in non-
audit ser vices.
VIABILITY STATEMENT
• Review of the Group’s prospects and
viability over a three-year period to
31 December 2022.
ACTIVITIES DURING THE YEAR
FINANCIAL AND CORPORATE REPORTING
In relation to the integrity of the full year
financial statements and repor ting, the
Committee:
• Reviewed repor ts from management
and from the external Auditor and
discussed key matters, including
the appropriateness and consistent
application of accounting policies;
• Assessed the financial statements’
compliance with applicable accounting
standards and statutor y and listing
requirements;
• Assessed the impact of the introduction
of the new accounting standard IFRS 16
Lease Accounting, concluding that the
impact was limited;
• Assessed the implementation of IFRS
9 Hedge Accounting following the
introduction of a revised Treasur y Policy
during the year ;
•
Focussed on critical areas of accounting
judgement and estimation made in the
preparation of the financial statements,
noting the key area of revenue
recognition, specifically the classification
of cer tain marketing and promotional-
related expenses between overheads
and as a net-off against revenue; and
• Reviewed the adequacy and clarity of
repor ting disclosures and compliance
with applicable financial and other
repor ting requirements.
Additionally, the Committee considered
and discussed with management whether
the annual repor t, taken as a whole, is fair,
balanced and understandable and provides
the information necessar y for stakeholders
to assess the Group’s strategy, position
and performance.
The Committee also suppor ted the Board
by considering the appropriateness of the
going concern basis of accounting.
EFFECTIVENESS OF THE RISK MANAGEMENT
AND INTERNAL CONTROL SYSTEMS
The Board has delegated responsibility
for the review of the adequacy and
effectiveness of the Group’s risk
management framework and system of
internal controls to the Audit Committee.
As described on page 26 of the Corporate
Governance Repor t, the Group has an
established framework of risk management
and internal control systems, policies and
procedures.
The Group’s risk register was reviewed
by the Committee twice during 2019 and
included the discussion of a wide range
of matters with management and external
auditors. This included a robust assessment
of the Group’s principal and emerging
risks and changes in the level of these
risks during the year. The review included
consideration of the potential impact and
probability of such events or circumstances
considered to be the principal risks
occurring, alongside a review of the
procedures in place to identify emerging
risks. The assessment included case studies
and presentations delivered by members
of the wider team on the monitoring,
assessment and on-going mitigation actions
of cer tain key and emerging risks.
The Group continues to review its system
of internal control to ensure compliance
with best practice and Code guidance,
whilst also having regard to its size and the
resources available. The Group notes that
an initial review of the key Purchase to
Pay processes was under taken by a third
par ty during the year, which concluded that
the controls in place were appropriate.
In addition, the external auditor obtained
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com an understanding of our internal controls
for the purposes of forming their audit
opinion as set out on pages 64 to 67.
No significant deficiencies in our internal
controls were repor ted by the external
auditor. The Committee takes comfor t from
the assurance this provides, and taking into
account the current nature of operations
and the experience and skill of the
management team, the Committee believes
that management is able to derive assurance
as to the adequacy and effectiveness of
internal controls and risk management
procedures without the need for an Internal
Audit function. This matter will continue to
be actively reviewed by the Committee. The
Audit Committee Chairman had meetings
with senior finance and operational
management during the year to go through
key risk management and internal control
procedures in place. These meetings are a
standard par t of Audit Committee process.
The Group has in place a whistleblowing
policy which sets out the formal process
by which an employee of the Group may,
in confidence, raise concerns about possible
improprieties in financial repor ting or other
matters. Whistleblowing is a standing item
on the Committee’s agenda, and updates
are provided at each meeting. During
the year, there were no major incidents
for consideration.
The Audit Committee review of the
effectiveness of the systems of internal
control and risk management was based on
the activities and engagements noted above.
The objective of these systems is to manage,
rather than eliminate, the risk of failure to
achieve business objectives. Accordingly,
they can only provide reasonable, but
not absolute, assurance against material
misstatement or loss. The Committee
repor ted to the Board on that basis.
COVID-19
Clearly, the implications of COVID-19 have
more recently been at the forefront of the
risk management process and while the
level of uncer tainty is high, management has
been robustly considering and evaluating
the risk to the Group’s people, business and
operations and putting in place mitigation
wherever possible.
The Group’s top priority is the health and
safety of our employees and their families
and we have been taking precautions, in
line with government guidance, to protect
them. Our global team is currently working
remotely until government advice in their
region changes.
The Committee is mindful that disruption
to working practices and changing resource
demands in the current situation can lead to
the need for new forms of management and
control. It is mindful of the need to ensure
that the flow of management information to
the Board is retained, and the potential for
disruption to risk management processes
and internal controls caused by relocation
of staff is considered and mitigating actions
are put in place where necessar y. Our
IT systems are cloud-based and all our
teams have been able to make a smooth
transition to remote working and as such,
minimal changes have been required to
our typical risk management processes and
internal controls. We have established a
cross depar tmental team from across all
our regions to focus and co-ordinate our
response to the rapidly changing situation
and the Board is kept up to date with any
key business developments.
EXTERNAL AUDIT INDEPENDENCE
AND EFFECTIVENESS
The Committee considers a number
of different elements in respect of its
relationship with the external Auditor :
• The Group has a well-established policy
on the independence of the external
Auditor and management of the Group’s
relationship with them, including the
selection of Auditor to be proposed for
appointment or reappointment and the
terms of such engagement, audit scope
and fees, the Auditor independence
requirements and the policy on the
provision of non-audit ser vices, the
rotation of the audit team, and the
conduct of the relationship between the
Committee and the Auditor.
• The external Auditor prepares an audit
plan for the full year financial statements
which sets out the scope of the audit,
areas of significant risk of material
misstatement and audit timetable. This
plan is reviewed and agreed in advance
by the Audit Committee. Following
•
their review, the Auditor presents
their findings to the Audit Committee
for discussion. Areas of significant risk
and other matters of audit relevance
are regularly communicated to the
Committee during the audit process.
No major areas of concern were
highlighted by the Auditor during the
current financial year. The Committee
met to consider the effectiveness of the
external audit process and concluded
that BDO continued to provide
independent, objective and effective
audit ser vices.
In relation to the provision of non-
audit ser vices, the Auditor is precluded
from engaging in ser vices that would
compromise its independence or
violate any professional requirements
or regulations affecting its appointment
as Auditor. Any non-audit ser vices
proposed to be provided by the Auditor
require justification as to why such
appointment is in the best interests of
the company and how independence
would be safeguarded, and above a
cer tain de minimis fee level, require
approval by the Committee. The ratio
of fees for audit ser vices to non-
audit ser vices for 2019 was 4.8:1. The
breakdown of the external Auditor’s
fees between audit and non-audit
ser vices as approved by the Committee
is provided in note 5 of the Group’s
consolidated financial statements.
The non-audit ser vice relates to
administrative assistance with cer tain US
tax filings for the Group.
• The external Auditor, BDO LLP, was
appointed as the company’s Auditor on
22 August 2013, following a competitive
tender process. BDO has confirmed
to the Committee their continuing
independence and compliance
with the Group’s policy on Auditor
independence. The external Auditor is
required to rotate the lead audit par tner
responsible for the audit engagement
ever y five years, unless there are
unusual extenuating circumstances. As
par t of that process, as agreed with our
external Auditor, Diane Campbell was
appointed as the new lead audit par tner
in 2018 and this represented her second
year as lead audit par tner. Having
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Stock code: FEVRGOVERNANCE AUDIT COMMITTEE REPORT CONTINUED
reviewed the Auditor’s independence
and performance, the Audit Committee
recommends that BDO LLP be re-
appointed as the Group’s Auditor at
the next AGM. However, following
completion of the 2020 audit, which
will represent Diane Campbell’s third
year as lead audit par tner, the Audit
Committee intends to perform a tender
process for the 2021 audit.
VIABILITY STATEMENT
As required by the Code, the Board has
assessed the Group’s prospects and viability
over a three-year period to 31 December
2022. The three-year assessment period was
selected as it corresponds with the Board’s
normal and well-established strategic
planning horizon as well as the time
period over which senior management are
remunerated via long-term incentive plans.
The three-year period balances the long-
term nature of investments in the beverages
industr y with an assessment of the viability
of the key drivers of near-term business
performance as well as external factors
impacting our business.
In making this assessment, the Board took
account of the Group’s current financial
position, annual budget, three-year plan,
forecasts and sensitivity testing on the
performance of the business over the
medium term. The Board also considered
a number of other factors including the
Group’s operational business model, its
risk management and internal control
effectiveness and whether the principal
risks and uncer tainties, alone or combined,
would be likely to impact the Group’s
viability during the three-year period under
consideration.
The impact of COVID-19 on the Group’s
prospects and viability has also been
separately considered by reforecasting and
modelling various scenarios over a three-
year period to 31 December 2022.
The Group has a strong balance sheet, with
no debt and a significant cash balance. Even
though the Group is financially strong and
has well balanced revenue streams, it is
clear that COVID-19 will have a material
impact on 2020 trading. The On-Trade
channel, which makes up 45% of Group
sales, has been severely challenged across
many of our regions especially in those
44
markets where government advice has led
to the temporar y closing of all On-Trade
outlets. In the Off-Trade channel, overall
sales have remained strong, most notably in
the UK and the US.
Due to the high level of uncer tainty in
relation to the length, breadth and depth
of the potential impacts of COVID-19,
the Group have modelled three separate
scenarios, including a highly conser vative,
prudent worst-case scenario. These
scenarios consider sales performance across
the On-Trade and Off-Trade channel for
each of the Group’s four main regions: UK,
US, Europe and RoW, and consider :
• Lockdown: Different periods of
lockdown and different trading
performance, par ticularly for the Off-
Trade, during the period of lockdown
• Post lockdown: different rates of
recover y, and ultimate levels of recover y
compared to previously expected levels
of sales
In addition to this, the Directors have
considered possible additional costs arising
from COVID-19, including bad debt risk,
alongside the mitigating actions the group
could take to reduce variable costs. The
scenarios have also assumed that working
capital will increase during, and immediately
after the period of lockdown but gradually
recover to previously expected levels by the
end of 2020. We have assumed no change
to planned Capital Expenditure, which
remains at an immaterial level.
Based on this assessment, notwithstanding
the high level of uncer tainty arising from
the global spread of COVID-19, the Board
has a reasonable expectation that the
Group will continue to operate and meet its
liabilities as they fall due during the period
to 31 December 2022.
DOMENIC DE LORENZO
Audit Committee Chairman
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com 27197
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45
Stock code: FEVRGOVERNANCE NOMINATION COMMITTEE REPORT
On behalf of the Board, I am pleased to
present the Nomination Committee repor t
of the Company for the year ended 31
December 2019.
The Nomination Committee is responsible
for reviewing the structure, size and
composition (including the skills, knowledge,
experience and diversity) of the Board and
making recommendations to the Board with
regard to any changes.
MEMBERS OF THE
NOMINATION COMMITTEE
During the year, the Committee consisted
of Bill Ronald, Kevin Havelock, Jeff
Popkin, Domenic de Lorenzo and Coline
McConville. All but Bill Ronald are fully
independent. Although only Committee
members have the right to attend meetings,
other individuals, such as other Board
members and external advisers, may be
invited to attend for all or par t of any
meeting.
DUTIES
The Committee’s principal duties are to:
• Monitor the structure, size and
composition (including the skills,
knowledge, experience and diversity) of
the Board and make recommendations
to the Board with regard to any changes;
• Give full consideration to succession
planning for Directors and other senior
executives in the course of its work,
taking into account the challenges and
oppor tunities facing the Company, and
the skills and exper tise needed on the
Board in the future;
• Keep under review the leadership needs
of the organisation, both executive
and non-executive, with a view to
ensuring the continued ability of the
organisation to compete effectively in
the marketplace; and
• Keep up to date and fully informed
about strategic issues and commercial
changes affecting the company and the
market in which it operates.
The Committee’s full Terms of Reference
are available on our website. They were last
reviewed on 12 December 2019.
COMMITTEE ATTENDANCE
The Nomination Committee met
formally twice during the year with all
representatives present. For fur ther details
please see the table on page 39.
BOARD EVALUATION
Following on from a number of new
appointments in 2018 when we welcomed
Kevin Havelock, Jeff Popkin and Domenic
De Lorenzo as Directors, the Board’s
composition in 2019 remained unchanged.
During the year we carried out an external
evaluation of the Board, its Committees
and individual Directors, which reflected
that the Board is functioning ver y well.
Fur ther details of the process, outcomes
and recommendations are set out on
pages 40 to 41. As Chairman I meet with
the non-executive Directors without the
executive present at least once in each year
to discuss Board dynamics and assess areas
for improvement. In addition, in her role as
SID, Coline meets with the non-executive
to review and appraise my performance as
Chairman.
DIVERSITY
The Group promotes the impor tance
of diversity and adopts a workforce
Equality and Diversity Policy which aims
to develop and sustain a diverse and
inclusive workforce, including with regards
to gender, age, exper tise, nationality, sexual
orientation, experience and otherwise.
We recognise the strategic impor tance
of maintaining a workforce that reflects
the diversity of our consumer base. The
Group’s wider workforce is made up of a
diverse range of nationalities with a variety
of industr y experience and exper tise. The
Group’s workforce during the year was
approximately 56% female and 44% male. At
a senior management level below the board,
the gender composition during the year was
approximately 36% female and 64% male.
Steps have been taken, in consultation with
the Group’s Chief People Officer, to identify
and develop a pipeline of diverse and high
calibre candidates from both within the
existing workforce and externally to tr y
and improve the gender balance of senior
management.
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The Board recognises the value of increased
diversity at Board level in achieving its
strategic objectives and in driving innovation
and growth. Whilst Board appointments will
continue to be based on merit and relevant
skill, the Directors appreciate that varied
backgrounds, experience and opinion can
promote more balanced and nuanced debate
and lead to improved decision-making. With
regard to gender diversity, the Directors are
mindful that as at the date of this Repor t
the Board currently comprises just 12.5%
female representation, and that steps need
to be taken to redress the current gender
imbalance. The Board adopted a new Board
Diversity Policy during the year and aims to
improve the gender balance of the Board
within the shor t to medium term.
SUCCESSION PLANNING
Ensuring that there are robust succession
plans in place at Board and senior
management level is fundamental to the
long-term prospects of the business.
The Committee conducted a review of
its succession plans during the year. This
involved an evaluation of its external
recruitment consultants, and confirmation
they have no connection to the Group. The
Board is committed to restricting its use of
independent recruitment consultancy firms to
those who can demonstrate a commitment
to diversity and inclusion and ‘long-lists’
created in the search for new candidates will
include at least 50% female applicants.
The Board recognises that effective
succession planning also requires a thorough
induction programme upon joining the Board.
Work has been conducted to improve this
process for all incoming board members,
while recognising too that each induction
programme will also need to be tailored to
the specific needs of the individual.
NOMINATION COMMITTEE IN 2020
The Committee is scheduled to meet at
least twice in 2020. The Committee will
continue to review the balance of skills
and diversity of the Board. The Board shall
also be conducting an internally facilitated
evaluation of its effectiveness with suppor t
from the Company Secretar y with a view
to providing a constructive agenda for
continued improvements.
BILL RONALD
Nomination Committee Chairman
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com REMUNERATION COMMITTEE REPORT
CHAIRMAN’S STATEMENT
On behalf of the Board, I am pleased to
present the 2019 Directors’ Remuneration
Repor t, which sets out our remuneration
policy, the remuneration paid to the
Directors in 2019 and the implementation
of our policy for 2020. Fever-Tree is listed
on the Alternative Investment Market and
therefore provides these remuneration
disclosures on a voluntar y basis. As such,
the char ts and tables included herein are
unaudited. In general, such disclosures have
been prepared in accordance with the DRR
repor ting regulations for main market listed
companies.
During 2019, the Group made significant
progress in many of our regions, and as
a result delivered revenues of £260.5m
representing an increase of 10% on prior
year. However, this performance was below
the Board’s expectations at the star t of
the year, primarily reflecting subdued
trading in the UK towards the end of the
year. Despite this performance, the Group
continues to explore oppor tunities across
our key markets to ensure Fever-Tree is
positioned for future growth as we proceed
through 2020.
ANNUAL AND LONG-TERM INCENTIVE
PAYOUTS BASED ON PERFORMANCE
For the year under review, annual bonuses
were based 75% on turnover and 25% on
adjusted EBITDA (hereafter referred to
as EBITDA throughout this Remuneration
Committee Repor t). At the star t of the
year, the Committee set ver y stretching
annual targets. Despite solid year on year
revenue growth the Group did not meet
the challenging targets set and therefore no
bonus is payable in respect of 2019.
The LTIP awards granted in 2017 will vest
in May 2020 following the completion of
the three year performance period to the
end of 2019. These awards were based 75%
on turnover and 25% on EBITDA. Over the
last three years revenue has grown by 155%
with EBITDA increasing by 115%. Given this
strong financial performance by the Group,
which was significantly ahead of Board
expectations of performance at the star t
of the performance period, these awards
will vest in full. Notwithstanding recent
performance headwinds the Committee
considers that this level of vesting is
appropriate to reflect the significant
progress the business has achieved over the
past three years.
REMUNERATION IMPLEMENTATION
FOR 2020
In terms of remuneration arrangements
for 2020, base salaries for the CEO and
CFO will be increased by 2%, in line
with increases for the wider workforce.
The overall incentive framework for
2020 will be consistent with prior years,
with performance based on stretching
turnover and EBITDA targets. Annual bonus
maximum oppor tunity levels will remain
unchanged at 150% of salar y for both the
CEO and CFO.
When considering LTIP award levels for
2020, the Committee was mindful of the
Company’s share price performance over
the last year and considered whether a
reduction in award levels was appropriate
to guard against the potential for ‘windfall
gains’ from the LTIP. It is the Committee’s
intention that LTIP award levels for 2020
will be reduced to appropriately reflect
this fall in share price. The Committee
will continue to monitor the share price
performance over the period to grant and
will make a final decision on the level of
reduction at that time.
CORPORATE GOVERNANCE
AND DISCLOSURE
During the year the Committee reviewed
the discretion and recover y provisions
within the annual bonus and LTIP rules
to ensure that they continued to be
suitable. Following this review the recover y
provisions have been expanded to enable
malus and clawback where there has
been serious reputational damage to
the company or where there has been
a material corporate failure. Recover y
provisions could already be applied in the
event of material misstatement, error in the
calculation or the performance condition
or summar y dismissal. Discretion provisions
have also been amended to ensure they
remain suitable.
The Committee considered whether it
would be appropriate to introduce a post-
vesting holding period for LTIP awards
and/or a post-employment shareholding
guideline. Holding periods are not common
practice in AIM-listed companies. Given
this, the Committee has decided that it
is not appropriate to introduce a post-
vesting LTIP holding period at this time.
Fur thermore, executive Directors have
significant shareholdings in the business.
The Committee believes that these and
the leaver provisions currently in place
ensure the continued alignment of the
interests of our Executive Directors and our
shareholders post-cessation of employment.
The Committee will keep our approach in
these areas under review.
This is the third year that the Committee
has voluntarily put the Remuneration
Committee Repor t to a shareholder
advisor y vote reflecting shareholders’
expectations in this area. I look forward to
meeting with you at our AGM on 4 June
2020 and will be available to answer any
questions you may have.
COLINE MCCONVILLE
Remuneration Committee Chairman
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47
Stock code: FEVRGOVERNANCE REMUNERATION COMMITTEE REPORT CONTINUED
DIRECTORS’ REMUNERATION POLICY
This section of the repor t sets out the remuneration policy for executive Directors and outlines how this policy will be implemented for 2020.
Fever-Tree remains an innovative, rapidly growing and dynamic business. Our remuneration arrangements are designed to be clear and simple
while suppor ting our ambitious expansion strategy and are therefore structured slightly differently from typical market practice. We have lower
base salaries but higher long-term incentive oppor tunities, ensuring an overall competitive package that is in line with other companies of a
similar size and complexity while being appropriate in the context of our approach throughout the organisation. Maximum incentive awards
are capped and incentive targets are set to be stretching while not encouraging executives to take excessive risk. This structure has meant
that we have been able to be flexible and agile in the context of our rapid growth since IPO while ensuring that management are fully aligned
with shareholders. The Committee intends to review the remuneration policy during 2020 as the business continues to expand and mature to
ensure that our approach remains appropriate.
EXECUTIVE DIRECTOR POLICY TABLE
Element (purpose
and link to strategy) Operation
Reviewed on an annual
basis, with any increases
normally taking effect
from 1 January.
Payable in cash.
The Committee reviews
base salaries with
reference to:
• the size and scope
of the individual’s
roles;
• the individual’s
performance and
experience;
• business
performance and the
external economic
environment;
• market practice at
other companies of
a similar size and
complexity; and
• salar y increases
across the Group.
Executive Directors may
participate in the Group
pension scheme.
Salary is the only element
of remuneration that is
pensionable.
Benefits may include car
allowance and private
health insurance.
Other benefits may be
introduced as appropriate
and include relocation
and other expatriate
benefits.
Base salary
To reflect size and
scope of the role and
individual’s performance
and contribution.
Pension
To provide a market
competitive pension.
Benefits
To provide market
competitive benefits.
48
Performance
metrics
Implementation of remuneration
policy for 2020
Company and individual
performance are
considered when setting
executive Director base
salaries
Base salaries will be increased by 2% with
effect from 1 January 2020 to:
CEO - £393,618
CFO - £253,062.
These increases are in-line with the
increases across the wider workforce.
Opportunity
There is no maximum
salary increase. The
Committee retains
discretion to make
appropriate adjustments
to salary levels to ensure
they remain appropriate
in the context of the size
and scope of the role and
the size and complexity of
the business.
Maximum pension
contribution or cash
allowance for 2020 is 6%
of salary
Not performance
related.
As disclosed in last year’s DRR, a pension
allowance was introduced from 1 January
2019 for executive Directors. This pension
allowance was initially 5% of salary and will
increase by 1% of salary per year up to a
maximum of 10% of salary. This approach is
in-line with the policy for other employees
in the Company.
Benefits vary by role and
individual circumstances;
eligibility and cost are
reviewed periodically.
Not performance
related.
No changes.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com Element (purpose
and link to strategy) Operation
Annual bonus
To incentivise the
delivery of annual
financial performance
and the achievement
of strategic business
priorities, thus delivering
value to shareholders.
LTIP
To drive sustained long-
term performance that
supports the creation of
shareholder value.
Performance is measured
on an annual basis for
each financial year.
Performance measures
are reviewed prior to
the start of the year
to ensure they remain
appropriate and align
with the business strategy.
Stretching targets are set.
At the end of the
year the Committee
determines the
extent to which these
were achieved.
Awards are paid in cash.
Clawback (of any bonus
paid) provisions apply
(see below).
Annual awards of shares
or nil-cost options may
be made to participants.
Award levels and
performance conditions
are reviewed before each
award cycle to ensure
they remain appropriate.
Awards made under
the LTIP will have a
performance period of
at least three years and a
minimum vesting period
of three years.
Dividend equivalents may
accrue on LTIP awards
and are paid on those
shares which vest.
Malus (of any unvested
LTIP) and clawback
(of any vested LTIP)
provisions apply (see
below).
Performance
metrics
Performance measures
are selected, and their
respective weightings
may vary from year to
year, depending on financial
and strategic priorities.
Measures may include
personal performance
objectives provided no
less than 75% of the
annual bonus is based on
financial measures.
The Committee has
discretion to adjust the
formulaic bonus outcomes
both upwards (within
the policy limits) and
downwards to ensure
alignment of pay with the
underlying performance
of the business over the
financial year.
Vesting of LTIP awards
is subject to Company
performance and
continued employment.
The Committee has
discretion to adjust the
formulaic LTIP outcomes
both upwards (within
the policy limits) and
downwards to ensure
alignment of pay with the
underlying performance
of the business over the
performance period.
Opportunity
The Committee
determines the maximum
bonus opportunity each
year to ensure that the
overall remuneration
package remains
competitive.
25% of the maximum
annual bonus opportunity
will be paid at Threshold
performance, 50% at
Target performance
and 100% at Maximum
performance, with
straight- line vesting
between each.
The LTIP provides for
annual awards of up
to 300% of salary for
Executive Directors.
The Committee reserves
the right to review the
maximum opportunity
to ensure that the overall
remuneration package
remains competitive.
Under each measure,
Threshold performance
will result in 25% of
maximum vesting for
that element, rising on a
straight- line to full vesting
for achieving Stretch
performance.
Implementation of remuneration
policy for 2020
There is no change in the annual bonus
maximum opportunity or performance
measures for 2020.
The maximum annual bonus opportunity
will be 150% of salary for all executive
Directors and performance measures are:
• 75% on turnover
• 25% on EBITDA
Annual awards under the LTIP are normally
up to 300% of salary.
When considering LTIP award levels for
2020, the Committee was mindful of the
Company’s share price performance over
the last year and considered whether a
reduction in award levels was appropriate
to guard against the potential for ‘windfall
gains’ from the LTIP. It is the Committee’s
intention that LTIP award levels for 2020
will be reduced to appropriately reflect
this fall in share price. The Committee
will continue to monitor the share price
performance over the period to grant and
will make a final decision on the level of
reduction at that time.
LTIP performance measures and weightings
will continue to be:
• 75% on turnover
• 25% on EBITDA
NOTES TO THE POLICY TABLE
MALUS AND CLAWBACK
Malus and clawback provisions may be applied in following circumstances:
• material misstatement of results;
•
•
•
an act or omission by the par ticipants which would enable the Company to summarily dismiss him or her ;
an error in assessing the performance conditions;
serious reputational damage to the Company or any other Group Company (2019 awards onwards); or
• material corporate failure in the Company or any other Group Company (2019 awards onwards).
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49
Stock code: FEVRGOVERNANCE REMUNERATION COMMITTEE REPORT CONTINUED
PERFORMANCE MEASURES
For 2020, turnover and EBITDA have been selected as measures for the annual bonus and LTIP as they are considered by the Board to be
the two most impor tant key performance indicators for Fever-Tree at this stage in the Company’s growth, and are well aligned with Fever-
Tree’s shor t- and long-term strategy. Fever-Tree operates in a segment which is attractive to new entrants and it is therefore critical to drive
market penetration and consequent revenue growth as fast as possible. The Committee has considered other measures but these are not
felt to be the most appropriate for the business at this time. The Committee will continue to keep the performance measures under review
as the business matures. The Committee is conscious of shareholder guidance around the same performance measures not being used in
both the annual bonus plan and the LTIP, however, for the reasons outlined above the Committee ver y much believes that our current
approach remains appropriate.
Targets applying to the annual bonus and LTIP are reviewed annually, based on internal and external reference points, and are set to be
stretching but achievable with regard to the par ticular strategic priorities in a given year.
Annual bonus performance and LTIP targets for 2020 are considered to be commercially sensitive and will be disclosed retrospectively
within two years from the date of this repor t, subject to commercial sensitivity at that time.
SHAREHOLDING GUIDELINES
The Committee continues to recognise the impor tance of executive Directors aligning their interests with shareholders through building up
a significant shareholding in the Company. Our shareholding guidelines require executive Directors to acquire a holding equivalent to 200%
of base salar y within 5 years of joining the Company. Until the relevant shareholding levels are acquired, vested but unexercised awards are
included in shareholding guidelines on a net of tax basis. Details of the executive Directors’ current personal shareholdings are provided in
the Annual Repor t on Remuneration.
NON-EXECUTIVE DIRECTOR POLICY TABLE
Details of the policy on fees paid to our non-executive Directors and how this policy will be implemented for 2020 are set out in the
table below:
Performance metrics
Not performance related.
Implementation of
remuneration policy
for 2020
The Chairman and non-
executive Directors’ fees
were not increased from 1
January 2020. Fees will next
be reviewed from 1 January
2021. The Chairman and non-
executive Directors’ fees were
last increased with effect from
1 January 2019.
Element (purpose and
link to strategy)
Fees
To attract and retain non-
executive Directors of the
highest calibre with broad
commercial and other
experience relevant to
the Company.
Operation
Opportunity
There is no maximum fee
increase. It is expected that
increases to non-executive
Director fee levels will
be in-line with salaried
employees over the life of
the policy. However, in the
event that there is a material
misalignment with the
market or a change in the
complexity, responsibility or
time commitment required to
fulfil a non-executive Director
role, the Board has discretion
to make an appropriate
adjustment to the fee level.
Chairman and non-executive
Directors receive a basic fee
for their respective roles.
Additional fees may be
payable to non-executive
Directors for additional
services such as acting as
Senior Independent Director
or as Chairman of any of the
Board’s Committees, etc.
Fee levels are reviewed
from time-to-time against
similar roles at comparable
companies, taking into
account time commitment
and responsibility of the role,
with any adjustments normally
effective 1 January in the year
following review.
The fees paid to the
Chairman are determined
by the Committee, whilst the
fees of the non-executive
Directors are determined
by the Board.
50
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com PAY SCENARIO CHARTS
The char ts below provide estimates of the potential future reward oppor tunity for the two current executive Directors. The potential is
split between the different elements of remuneration under four different performance scenarios: ‘Minimum’, ‘On Target’, ‘Maximum’ and
‘Maximum (including share price growth)’.
In illustrating potential reward oppor tunities, the following assumptions have been made:
Component
‘Minimum’
‘On-target’
‘Maximum’
‘Maximum
(including share price growth)’
Fixed
Base salary (from
1 January 2020)
Pension (from
1 January 2020)
Other benefits
CEO - £393,618
CFO - £253,062
6% of base salary
£1,500 (based on disclosed single figure for 2019)
Annual bonus
No bonus payable
Target bonus
(50% of maximum)
Maximum bonus
LTIP
No LTIP vesting
Threshold vesting
(25% of maximum)
Maximum vesting
(assuming an LTIP grant of
up to 300% of salary)*
Maximum vesting
(including 50% share price growth
over the performance period)
* Annual awards under the LTIP are normally up to 300% of salar y and therefore the scenario char ts have been shown on this basis. The Committee is mindful, however,
of the Company’s share price performance compared to the share price used to determine LTIP awards in 2019. It is the Committee’s intention that LTIP award levels
for 2020 will be reduced to appropriately reflect this fall in share price. The Committee will continue to monitor the share price performance over the period to grant
in May 2020 and will make a final decision on the level of reduction at that time.
It should be noted that LTIP awards granted in a year normally vest on the third anniversar y of the date of grant. The projected value of LTIP amounts excludes the
impact of any dividends over the vesting period.
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Stock code: FEVRGOVERNANCE£419k£2,109k£1,009kMINIMUMTARGETMAXIMUM£2,780kMAXIMUM(INCLUDING SHAREPRICE GROWTH)£1,788kMAXIMUM(INCLUDING SHAREPRICE GROWTH)LTIPANNUAL BONUSSHAREPRICEGROWTHFIXED PAY£270k£649k£1,409kMINIMUMTARGETMAXIMUM£3,000K£2,500K£2,000K£1,500K£1,000K£500K£0K
REMUNERATION COMMITTEE REPORT CONTINUED
APPROACH TO RECRUITMENT REMUNERATION
In the case of appointing a new executive Director, the Committee may make use of any or all of the existing components of remuneration,
as described in the Policy table.
In determining appropriate remuneration for a new executive Director, the Committee will take into consideration all relevant factors
(including quantum, nature of remuneration and the jurisdiction from which the candidate was recruited) to ensure that the pay
arrangements are in the best interests of Fever-Tree and its shareholders. The Committee may consider it appropriate to grant an award
under a structure not included in the Policy, for example to buy out incentive arrangements forfeited on leaving a previous employer. In
doing so, the Committee will consider all relevant factors including the form of awards, expected value and vesting timeframe of forfeited
oppor tunities. When determining any such “buyout”, the guiding principle is that awards would generally be on a “like-for-like” basis unless
this is considered by the Committee not to be practical or appropriate.
SERVICE CONTRACTS
EXECUTIVE DIRECTORS
The executive Directors signed new ser vice contracts with the Company on admission to AIM. These are not of fixed duration and are
terminable by either par ty giving 12 months’ written notice.
Executive Director
Tim Warrillow
Andy Branchflower
Date of service contract
3 November 2014
3 November 2014
Executive Directors’ contracts may be terminated early by making a payment in lieu of notice. Any payments in lieu of notice will normally
be based on base salar y only but may also include pension and benefits.
NON-EXECUTIVE DIRECTORS
The non-executive Directors signed letters of appointment with the Company for the provision of non-executive Directors’ ser vices, which
may be terminated by either par ty giving one month’s written notice. The non-executive Directors’ fees are determined by the Board.
Non-executive Director
Initial agreement date
Expiry date of current agreement
Bill Ronald
Coline McConville
Charles Rolls
Kevin Havelock
Jeff Popkin
Domenic De Lorenzo
16 October 2014
16 October 2014
15 May 2017
11 January 2018
11 January 2018
17 May 2018
15 October 2020
15 October 2020
15 May 2020
11 January 2021
11 January 2021
17 May 2021
EXIT PAYMENT POLICY
In the event that an executive Director leaves, LTIP awards will normally lapse, unless the individual is considered a ‘good leaver’. Good
leavers retain an interest in LTIP grants and awards and are normally pro-rated for time based on the propor tion of the vesting period
ser ved and performance is tested at the end of the relevant three-year performance period. An individual would normally be considered a
good leaver if they leave for reasons of death, ill-health, injur y, redundancy, retirement with the agreement of the Company, or such event as
the Remuneration Committee determines.
Similarly, in respect of the annual bonus, if an executive leaves they would normally lose any entitlement for bonus, unless a good leaver.
Good leavers retain an interest in the bonus and the award is normally pro-rated for time and performance.
CONSIDERATION OF CONDITIONS ELSEWHERE IN THE COMPANY
Fever-Tree remains in many ways a small company, with around 180 employees. The Committee considers the range of base pay increases
across the Company when determining the base salar y increases for executives.
The Remuneration Committee does not consult with employees over the effectiveness and appropriateness of this remuneration policy and
framework; however Remuneration Committee members are also Board members and therefore receive updates from the executives on
their discussions and consultations with the wider employee population.
During the year the Board received a detailed update on our people strategy including our approach to remuneration throughout the
company and in the different jurisdictions in which we operate.
52
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com In light of the new UK Corporate Governance Code, during 2018, Kevin Havelock was appointed as the Company’s designated non-
executive Director who will be responsible for engaging with employees and ensuring that the employee voice is represented in the
Boardroom. During 2019, he attended employee group meetings and engaged with employees and feedback received was fed into Board
discussions. For fur ther details on workforce engagement activities please see page 33.
CONSIDERATION OF SHAREHOLDER VIEWS
The Committee is committed to on-going dialogue with shareholders and welcomes feedback on Directors’ remuneration. The
Remuneration Committee regularly consults with major shareholders about executive remuneration and took their views into account when
determining the remuneration policy and its implementation for 2020. The Committee will continue to monitor trends and developments
in corporate governance, market practice and shareholder views to ensure the structure of executive remuneration at Fever-Tree
remains appropriate.
ANNUAL REPORT ON REMUNERATION
The following section provides details of how Fever-Tree’s remuneration policy was implemented during the financial year ending
31 December 2019.
REMUNERATION COMMITTEE MEMBERSHIP AND ACTIVITIES IN 2019
The Remuneration Committee’s members at 31 December 2019 were Coline McConville, who is the Chair of the Committee, Kevin
Havelock and Domenic De Lorenzo. All members of the Committee are therefore independent non-executive Directors. Bill Ronald,
Company Chair, is also invited to attend meetings.
The Committee operates under the Group’s agreed Terms of Reference which sets out its duties including reviewing all senior
executive appointments and determining the Group’s policy in respect of the terms of employment, including remuneration packages
of executive Directors.
The Committee’s Terms of Reference are available on the Company’s website (www.fever-tree.com) and on request from the Company
Secretar y. The Remuneration Committee met formally three times during 2019 and also on an ad hoc basis when required.
Remuneration Committee activities during the year were as follows:
• Approval of the Directors’ Remuneration Repor t for 2018
• Review of executive Director remuneration arrangements
• Review and approval of the executive Directors’ performance against 2018 annual objectives
• Determination of performance targets for the executive Directors’ 2019 bonus and LTIP awards
• Review of LTIP performance conditions in advance of making 2019 awards
• Review of developments in corporate governance and best practice
• Review of remuneration arrangements and policies for senior management and the wider Group
ADVISERS
During the year, the Committee sought internal suppor t from the Chief Executive Officer and Chief Financial Officer, who attended
Committee meetings by invitation from the Chair, to advise on specific questions raised by the Committee and on matters relating to the
performance and remuneration of senior managers. The Chief Executive Officer, Chief Financial Officer and Chairman were not present for
any discussions that related directly to their own remuneration.
The Committee has appointed Deloitte to provide independent advice on executive remuneration matters. Deloitte is a signator y to the
Code of Conduct for Remuneration Consultants in the UK. The fees paid to Deloitte in relation to advice provided to the Committee for
2019 were £45,200. The Committee evaluates the suppor t provided by Deloitte annually and is comfor table that they do not have any
connections with Fever-Tree that may impair their independence. No non-remuneration related advice was provided by Deloitte to the
Group in the year.
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Stock code: FEVRGOVERNANCE REMUNERATION COMMITTEE REPORT CONTINUED
SINGLE TOTAL FIGURE OF REMUNERATION FOR EXECUTIVE DIRECTORS
The table below sets out a single figure for the total remuneration received by each executive Director for the year ended 31 December
2019 and the prior year :
Basic salary / fees
(£k)
Taxable Benefits
(£k)
Pension
(£k)
Annual Bonus
(£k)
LTIP
(£k)
Total
(£k)
2019
2018
2019
2018
2019
2018
2019
2018
2019¹
2018²
2019
2018
Executive Directors
Tim Warrillow
Andrew Branchflower
Non–Executive Directors
Bill Ronald
Coline McConville
Kevin Havelock3
Jeff Popkin4
Domenic De Lorenzo5
Charles Rolls6
Executive Director role
Non–Executive Director role
386
248
368
236
1.5
1.5
1.5
1.5
23
15
140
125
67
52
52
62
–
112
58
46
46
30
–
108
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
552
354
2,479
1,077
3,176
1,380
2,890
1,342
4,098
1,972
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
140
125
67
52
52
62
58
46
46
30
3,176
–
3,176
–
112
108
1 LTIP awards granted in 2017 vest on 16 May 2020 based on performance to 2019. Performance targets were met and the award will vest in full. As the awards have not yet vested they have been
valued based on the three month average share price for the period 1 October 2018 to 31 December 2019 of £20.73.
2 LTIP awards granted in 2016 vested on 24 May 2019 based on performance to 2018. Performance targets were met and the awards vested in full. The value of awards has been updated to reflect
the actual share price at the time of vesting of £27.55. The amounts disclosed in the 2018 remuneration repor t were £3,059k for Tim Warrillow and £1,329k for Andrew Branchflower.
3 Kevin Havelock joined the Board on 11 Januar y 2018. Remuneration is shown from this date.
4 Jeff Popkin joined the Board on 11 Januar y 2018. Remuneration is shown from this date.
5 Domenic De Lorenzo joined the Board on 17 May 2018. Remuneration is shown from this date.
6 Charles Rolls stepped down from his executive position at the AGM on 15th May 2017. As a non-executive Charles does not receive any incentives, although he retained the LTIP award granted to
him in 2016 which vested during 2019. This award has not been pro-rated for time following his move to non-executive Deputy Chairman given his continued involvement in the operations of the
business.
54
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com INCENTIVE OUTCOMES FOR THE YEAR ENDED 31 DECEMBER 2019
ANNUAL BONUS IN RESPECT OF 2019 PERFORMANCE
The maximum annual bonus award for 2019 was 150% of salar y for Tim Warrillow and Andrew Branchflower. Performance was measured
based 75% on turnover and 25% on EBITDA. Performance delivered in 2019 was below the Board’s expectations, primarily reflecting
subdued trading in the UK towards the end of the year. Revenues of £260.5m represented growth of 10% on prior year. Adjusted EBITDA of
£77m was slightly behind 2018. At the star t of the year the Board set highly stretching targets and the performance achieved was below the
threshold set. No annual bonus was therefore paid in respect of 2019.
Fever-Tree has grown rapidly since its establishment and our strategic focus is on continuing to drive rapid expansion to cement our market
leading position. Our market is highly competitive, and the Committee strongly believes that the targets set for our incentive arrangements
could provide market intelligence to our competitors which could be damaging to our business and therefore ultimately to shareholders.
Consequently, we have not disclosed our 2019 Annual Bonus targets in this repor t but we plan to do so next year provided the Board is
comfor table that this information is no longer commercially sensitive.
In the 2018 Remuneration Committee Repor t we committed to disclose the performance targets for the 2018 annual bonus within this
year’s repor t unless the Board considered that these targets continue to be commercially sensitive. In keeping with this commitment we
have provided the performance targets set out below. The annual bonus targets for 2018 were met in full and the bonus paid out 100% of
the maximum oppor tunity.
2018 ANNUAL BONUS
Weighting
Threshold
25% payout
Target
50% payout
Maximum
100% payout
Actual
performance
achieved for
2018
Turnover
EBITDA
75%
25%
£190m
£61.8m
£200m
£65m
£220m
£71.5m
£237.4m
£78.6m
Payout
100%
100%
LTIP VESTING IN RESPECT OF 2019 PERFORMANCE
LTIP awards granted in 2017 vest on 16 May 2020 based on performance to 2019. These awards were based 75% on turnover and 25% on
EBITDA. The targets set at the star t of the performance period were considered to be ver y challenging. The actual performance achieved
was significantly in excess of the Board expectations and therefore targets were met and the awards will vest in full. Performance targets for
the 2017 awards are set out below:
Turnover
EBITDA
Total
Weighting
Target
25% vesting
Maximum
100% payout
Performance
achieved
Portion
vesting
75%
25%
£144.5m
£42.5m
£170m
£50m
£260.5m
£77m
100%
100%
100%
SCHEME INTERESTS AWARDED IN 2019
2019 LTIP
In 2019, LTIP awards were granted with a face value of 300% of salar y for the Chief Executive Officer and for the Financial Director. The
awards will vest on the third anniversar y of the date of grant, 8 May 2022. The performance condition is based 75% on turnover and 25% on
EBITDA. The three-year performance period began on 1 Januar y 2019 and will end on 31 December 2021.
Executive director
Date of grant
Face value1
Tim Warrillow
8 May 2019
Andrew Branchflower
8 May 2019
39,240 shares
(£1,158k)
25,226 shares
(£744k)
End of
performance
period
31 December 2021
Performance measures
75% on turnover
25% on EBITDA
(25% vests for threshold performance, increasing on a straight line
to full vesting for stretch performance)
1 Face value based on the average ordinar y share price in the Company for the two months immediately preceding the date of grant of £29.5010
LTIP performance targets for 2019 – 21 were set, taking into account internal and external reference points, to be stretching but achievable
with regard to our strategic priorities and the economic environment.
55
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Stock code: FEVRGOVERNANCE REMUNERATION COMMITTEE REPORT CONTINUED
Fever-Tree has grown rapidly since its establishment and our strategic focus is on continuing to drive rapid expansion to cement our market
leading position. Our market is highly competitive, and the Committee strongly believes that the targets set for our incentive arrangements
could provide market intelligence to our competitors which could be damaging to our business and therefore ultimately to shareholders.
Consequently, we have not disclosed our 2019 LTIP targets in this repor t but we plan to do so in the year performance is assessed provided
the Board is comfor table that this information is no longer commercially sensitive.
EXIT PAYMENTS MADE IN THE YEAR
There were no payments for loss of office in the year.
PAYMENTS TO PAST DIRECTORS
There were no payments to past Directors in the year.
PAY FOR PERFORMANCE
The following char t compares the total shareholder return performance (TSR) of the Group vs. the FTSE 250 and AIM 100 indices since
IPO. The AIM 100 index has been chosen as this is the index of which the Company is a constituent. The FTSE 250 has been chosen as it
includes other companies of comparable market capitalisation to Fever-Tree.
TOTAL SHAREHOLDER RETURN PERFORMANCE
The char t shows the value by 31 December 2019, of £100 invested in Fever-Tree on 7 November 2014 compared with the value of £100
invested in the FTSE 250 Index and the FTSE AIM 100 Index on the same date.
The table below shows the CEO’s single figure pay since 2014 and what percentage of the maximum bonus and LTIP vesting was awarded
each year.
CEO single figure (£000)
Annual bonus payout (% of maximum)
LTIP vesting (% of maximum)
2014
£000
487
100%
–
2015
£000
460
100%
–
2016
£000
725
100%
–
2017
£000
842
100%
–
2018
£000
4,098
100%
100%
2019
£000
2,890
0%
100%
56
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com£0£200£400£600£800£1000£1200£1400£160001/11/201401/03/201501/07/201501/11/201501/03/201601/07/201601/11/201601/03/201701/07/201701/11/201701/03/201801/07/201801/11/201801/03/201901/07/201901/11/2019FEVER-TREEFTSE 250AIM 100 DIRECTORS’ INTERESTS AND SHAREHOLDING
The table below shows the shareholding of each Director against their respective shareholding requirement as at 31 December 2019:
Shares held
Options held
Ordinary
shares at
31 December
2019
Vested but
not exercised
Unvested and
subject to
performance
Vested but
not exercised
5,460,172
141,488
392,771
8,203,325
11,406
47,038
7,033
3,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
115,299
50,095
–
115,299
–
–
–
–
Unvested
and subject
to continued
employment
135,123
75,395
–
–
–
–
–
–
S/holding req.
(% Salary)
Req. Met?
200%
200%
–
–
–
–
–
–
Yes
Yes
–
–
–
–
–
–
Director
Tim Warrillow
Andrew Branchflower
Bill Ronald
Charles Rolls
Coline McConville
Kevin Havelock
Jeff Popkin
Dom De Lorenzo
DIRECTORS’ INTERESTS IN SHARES AND OPTIONS
The individual interests of the executive Directors under the Group’s share option schemes are as follows:
Tim Warrillow
LTIP
LTIP
LTIP
Andrew Branchflower
LTIP
LTIP
LTIP
Date of
grant
Share price
Exercise
price
Number of
shares/
options
Awarded
Face value
at grant
Performance
Period
Release date
8/05/19
2,950.10p1
8/05/18
2,754.42p1
16/05/17
1,566.53p1
8/05/19
2,950.10p1
8/05/18
2,754.42p1
16/05/17
1,566.53p1
0.25p
0.25p
0.25p
0.25p
0.25p
0.25p
39,240
£1,157,619
40,027
£1,102,500
55,856
£875,000
25,226
£744,192
21,443
£590,625
28,726
£450,000
01/01/2019 –
31/12/2021
01/01/2018 –
31/12/2020
01/01/2017 –
31/12/2019
01/01/2019 –
31/12/2021
01/01/2018 –
31/12/2020
01/01/2017 –
31/12/2019
08/05/22
08/05/21
16/05/20
08/05/22
08/05/21
16/05/20
1 based on the average mid-market price of an ordinar y share in the Company for the two months immediately preceding the date of grant.
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57
Stock code: FEVRGOVERNANCE DIRECTORS’ REPORT
The Directors present their repor t together
with the audited financial statements for
the year ended 31 December 2019. The
Corporate Governance Statement on pages
38 to 41 also forms par t of this Directors’
Repor t.
DIVIDENDS
The Board is pleased to recommend a final
dividend of 9.88 pence per share, bringing
the total dividend for 2019 to 15.08 pence
per share (2018: 14.50 pence per share).
DIRECTORS
The Directors of the Company during the
period and to the date of this repor t are as
follows:
• WDG Ronald
• CT Rolls
• TDG Warrillow
• AJ Branchflower
• CL McConville
• KJ Havelock
•
J Popkin
• D De Lorenzo
The names of the Directors, along with
their brief biographical details are given on
pages 36 to 37.
DIRECTORS’ INTERESTS
The Directors’ interests in the Company’s
shares and options over ordinar y shares
are shown in the Remuneration Repor t on
page 57.
No Director has any beneficial interest
in the share capital of any subsidiar y or
associate under taking.
DIRECTORS’ INDEMNITY PROVISIONS
As permitted by the Ar ticles of Association,
the Directors have the benefit of an
indemnity which is a qualifying third par ty
indemnity provision as defined by s236 of
the Companies Act 2006. The indemnity
was in force throughout the financial period
and at the date of approval of the financial
statements. The Group also purchased and
maintained throughout the financial period
Directors’ and Officers’ liability insurance in
respect of itself and its Directors.
POLITICAL DONATIONS
The Group made no political donations in
the financial period.
58
DISCLOSURE OF INFORMATION
TO AUDITOR
As far as the Directors are aware, there
is no relevant audit information (that is,
information needed by the Group’s auditor
in connection with preparing their Repor t)
of which the Group’s auditor is unaware,
and each Director has taken all reasonable
steps that he ought to have taken as a
Director in order to make himself aware
of any relevant audit information and to
establish that the Group’s auditor is aware
of that information.
FINANCIAL INSTRUMENTS
The financial risk management objectives of
the Group, including credit risk, interest rate
risk and currency risk, are provided in note
3 to the Consolidated Financial Statements
on pages 78 to 81.
SUBSIDIARIES
The Company has eight subsidiaries; a
complete list is provided at note 12 to
the Consolidated Financial Statements on
page 87.
SHARE CAPITAL STRUCTURE
At 31 December 2019, the Company’s
issued share capital was £290,327 divided
into 116,131,199 ordinar y shares of 0.25p
each. Fur ther details of the Company’s
issued share capital are given in note 19 on
page 90.
The Company’s ordinar y shares rank
pari passu in all respects with each other,
including for voting purposes and for all
dividends. Each share carries the right
to one vote at general meetings of the
Company. Fur ther information on the voting
and other rights of shareholders, including
deadlines for exercising voting rights,
are set out in the Company’s Ar ticles of
Association and in the explanator y notes
that accompany the Notice of the Annual
General Meeting, which are available on the
Company’s website (www.fever-tree.com).
RESTRICTION ON SHARES
The Company’s ordinar y shares are freely
transferable and there are no restrictions on
the size of a holding. Transfers of shares are
governed by the provisions of the Ar ticles
of Association and prevailing legislation.
The ordinar y shares are not redeemable;
however, the Company may purchase any
of the ordinar y shares, subject to prevailing
legislation and the requirements of the
Listing Rules.
The Directors are not aware of any
agreements between holders of the
Company’s shares that may result in the
restriction of the transfer of securities or
on voting rights. No shareholder holds
securities carr ying any special rights or
control over the Company’s share capital.
AUTHORITY TO PURCHASE
OWN SHARES
The Company was authorised by
shareholder resolution at the 2019 Annual
General Meeting to purchase up to 10%
of its issued share capital. No shares were
purchased by the Company during the year.
SIGNIFICANT SHAREHOLDERS
As of 31 December 2019, the Company is
aware of the following holdings of significant
shareholders in the Company (as defined in
the AIM Rules).
Name
Charles Rolls
Aberdeen Standard
Investments
Holding
8,203,325
6,198,088
Fidelity Mgt & Research
5,925,707
Tim Warrillow
5,460,172
%
7.06
5.34
5.10
4.70
TIAA Investment
Management
3,573,776
3.08
SHARE OPTION SCHEMES
Details of employee share schemes are set
out in note 20 to the Consolidated Financial
Statements.
APPOINTMENT AND RETIREMENT
OF DIRECTORS
The Board may from time to time appoint
one or more additional Directors so long
as the total number of Directors does not
exceed the limit prescribed in the Ar ticles
of Association.
GOING CONCERN
After making enquiries, including modelling
a number of scenarios in relation to
the potential impact of COVID-19, the
Directors have a reasonable expectation
that the Group and parent company
have adequate resources to continue in
operational existence for at least 12 months
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com from the date of approval of the financial
statements. For this reason, they continue to
adopt the going concern basis in preparing
the financial statements.
DIRECTORS’ STATEMENT
The Directors believe that the annual
repor t and financial statements, taken as a
whole, is fair, balanced and understandable
and provides the information necessar y for
shareholders to assess the Group’s position
and performance, business model and
strategy.
The Directors have carried out a robust
assessment of the Group’s emerging and
principal risks and the disclosures in the
annual repor t that describe the principal
risks and the procedures in place to identify
emerging risks and explain how they are
being managed or mitigated.
AUDITOR
BDO LLP has expressed their willingness
to continue in office as Auditor and a
resolution to reappoint them will be
proposed at the for thcoming Annual
General Meeting.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on
4 June 2020.
The ordinar y business comprises receipt of
the Directors’ Repor t and audited financial
statements for the year ended 31 December
2019, the re-election of Directors, the
reappointment of BDO LLP as Auditor and
authorisation of the Directors to determine
the Auditor’s remuneration.
The Notice of Annual General Meeting
and the ordinar y and special resolutions
to be put to the meeting are included
at the end of this Annual Repor t and
financial statements.
APPROVAL
This Directors’ Repor t was approved by
the Board and was signed on its behalf on
21 April 2020.
ANDREW BRANCHFLOWER
Chief Financial Officer
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59
Stock code: FEVRGOVERNANCE STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing
the Annual Repor t and the financial
statements in accordance with applicable
law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have elected to prepare the Group’s
Consolidated Financial Statements in
accordance with International Financial
Repor ting Standards (“IFRS”) as adopted
by the European Union, and the Company
Financial Statements in accordance with
FRS 101 “Reduced Disclosure Framework”.
Under company law the Directors must
not approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and Company and of the profit or loss of
the Group for that period. The Directors
are also required to prepare financial
statements in accordance with the rules of
the London Stock Exchange for companies
trading securities on the Alternative
Investment Market.
In preparing these financial statements, the
Directors are required to:
• Select suitable accounting policies and
then apply them consistently;
• Make judgements and accounting
estimates that are reasonable and
prudent;
• State whether they have been prepared
in accordance with IFRSs as adopted
by the European Union, subject to
any material depar tures disclosed and
explained in the financial statements;
and
• Prepare the financial statements on
a going-concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Company’s transactions and disclose
with reasonable accuracy at any time
the financial position of the Group and
Company and enable them to ensure that
the financial statements comply with the
requirements of the Companies Act 2006.
60
They are also responsible for safeguarding
the assets of the Group and Company and
hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The Directors are responsible for ensuring
the annual repor t and the financial
statements are made available on a website.
Financial statements are published on
the Company’s website in accordance
with legislation in the United Kingdom
governing the preparation and dissemination
of financial statements, which may var y
from legislation in other jurisdictions.
The maintenance and integrity of the
Company’s website is the responsibility of
the Directors. The Directors’ responsibility
also extends to the ongoing integrity of the
financial statements contained therein.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com 27197
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61
Stock code: FEVRGOVERNANCE FINANCIAL STATEMENTS
62
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www.fever-tree.com FINANCIAL STATEMENTS
CONTENTS
CONTENTS
Independent Auditor’s Repor t
Independent Auditor’s Repor t
Consolidated Statement of Prof it or
Consolidated Statement of Prof it or
Loss and Other Comprehensive Income
Loss and Other Consolidated Statement
of Financial Position
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Consolidated Statement
of Cash Flows
Notes to the Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
Company Balance Sheet
64
••
68
••
69
••
70
••
71
••
72
••
Company Statement
Company Statement of
Financial Position
of Changes in Equity
97
••
Company Statement
of Changes in Equity
OTHER INFORMATION
Notes to the Company
Company Information
Financial Statements
Notice of Annual General Meeting
Explanator y Notes to the Notice
of Annual General Meeting
98
••
99
••
••
63
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Stock code: FEVR
• whether the directors’ statement
relating to going concern made in
accordance with the UK Corporate
Governance Code is materially
inconsistent with our knowledge
obtained in the audit; or
•
the Directors’ explanation set out on
page 44 in the annual repor t as to how
they have assessed the prospects of
the Group, over what period they have
done so and why they consider that
period to be appropriate, and their
statement as to whether they have a
reasonable expectation that the Group
will be able to continue in operation
and meet its liabilities as they fall due
over the period of their assessment,
including any related disclosures drawing
attention to any necessar y qualifications
or assumptions.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FEVERTREE DRINKS PLC
OPINION
We have audited the financial statements
of Fever tree Drinks Plc (“the Parent
Company”) and its subsidiaries (“the
Group”) for the year ended 31 December
2019 which comprise the Consolidated
Statement of Profit or Loss and Other
Comprehensive Income, the Consolidated
Statement of Financial Position, the
Consolidated Statement of Changes in
Equity, the Consolidated Statement of
Cash Flows, the Company Statement of
Financial Position, the Company Statement
of Changes in Equity and notes to the
financial statements, including a summar y of
significant accounting policies.
The financial repor ting framework that
has been applied in the preparation of the
Group financial statements is applicable
law and International Financial Repor ting
Standards (IFRSs) as adopted by the
European Union. The financial repor ting
framework that has been applied in the
preparation of the Parent Company financial
statements is applicable law and United
Kingdom Accounting Standards, including
Financial Repor ting Standard 101 Reduced
Disclosure Framework (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and
fair view of the state of the Group’s and
of the Parent Company’s affairs as at
31 December 2019 and of the Group’s
profit for the year then ended;
the Group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the European
Union;
the Parent Company financial
statements have been properly prepared
in accordance with United Kingdom
Generally Accepted Accounting Practice;
and
the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
BASIS FOR OPINION
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are fur ther described in the Auditor’s
responsibilities for the audit of the financial
statements section of our repor t. We are
independent of the Group and the Parent
Company in accordance with the ethical
requirements that are relevant to our
audit of the financial statements in the
UK, including the FRC’s Ethical Standard
as applied to listed entities, and we have
fulfilled our other ethical responsibilities in
accordance with these requirements. We
believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion
CONCLUSIONS RELATING TO
PRINCIPAL RISKS, GOING CONCERN
AND VIABILITY STATEMENT
We have nothing to repor t in respect of the
following information in the Annual Repor t,
in relation to which the ISAs (UK) require us
to repor t to you whether we have anything
material to add or draw attention to:
•
•
the directors’ confirmation set out on
page 26 in the annual repor t that they
have carried out a robust assessment of
the Group’s emerging and principal risks
and the disclosures in the annual repor t
that describe the principal risks and the
procedures in place to identify emerging
risks and explain how they are being
managed or mitigated;
the Directors’ statement set out on
page 59 in the financial statements
about whether the Directors considered
it appropriate to adopt the going
concern basis of accounting in preparing
the financial statements and the
Directors’ identification of any material
uncer tainties to the Group and the
Parent Company’s ability to continue to
do so over a period of at least twelve
months from the date of approval of the
financial statements; or
64
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the effor ts
of the engagement team. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on this matter.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition – customer arrangements (Note 1)
Our audit procedures included the following:
The Group agrees promotional sales related discount arrangements
with certain distributors and customers and also, as part of a number of
agreements, contributes towards marketing and campaign expenditure to
support and develop the Fever-Tree brand.
The number and variety of arrangements with customers makes it complex
to determine the correct accounting treatment. This gives rise to scope for
error in the measurement, recognition and classification for such promotional
sales discounts and contributions as either a reduction in revenue or as
marketing expenditure within administrative expenses, as required by relevant
accounting standards.
Furthermore, as these amounts are material and management consider
revenue growth to be a key performance indicator, we consider there to be a
significant risk in relation to the potential misstatement of revenue. Therefore,
we have identified this to be an area of focus for our audit.
• We reviewed a sample of contracts and discussed arrangements
in place with management to obtain an understanding of the
more significant arrangements with distributors and customers
and the processes that the Group has established over the
related revenue recognition and marketing contributions.
• We considered the accounting for these customer arrangements
in the context of relevant accounting standards.
• We tested a sample of revenue and marketing expense entries to
agreed arrangements with customers and distributors to check
that the correct accounting treatment had been applied.
• We tested whether amounts were accurately recorded in
the correct accounting period through sampling marketing
commitments and price arrangements in place around the
year-end. We obtained corroborative third par ty evidence and
documentation prepared by the group to confirm the year end
accounting treatment for these arrangements.
Key observations:
No issues arose from our work that suggested revenue was materially
misstated.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements. Impor tantly, misstatements below these levels will not necessarily be evaluated as
immaterial as we also take account of the nature of identified misstatements, and the par ticular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Group financial statements
£3.6m (2018: £3.8m)
5% of profit before tax.
Company financial statements
£2.8m (2018: £2m)
2% of total assets.
We consider the benchmark of profit before
tax to be a key metric for the directors,
investors and users of the Group’s financial
statements.
We considered an asset based measure to
reflect the nature of the Company which acts
as a parent holding company for the Group’s
investments.
For each component we allocated a materiality threshold ranging between 25% and 90% of the overall Group materiality.
In considering individual account balances and classes of transactions we apply a lower level of materiality (performance materiality) in order
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
Performance materiality was set at £2.5m (2018: £2.6m) for the Group, representing 70% (2018: 70%) of materiality based upon our
assessment of expected misstatements, management’s attitude towards posting proposed adjustments and the Group’s control environment.
The same percentage was applied to the determination of performance materiality for each component and the parent company.
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65
Stock code: FEVRFINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FEVERTREE DRINKS PLC CONTINUED
based on the work we have performed,
we conclude that there is a material
misstatement of this other information, we
are required to repor t that fact.
We have nothing to repor t in this regard.
In this context, we also have nothing to
repor t in regard to our responsibility to
specifically address the following items in
the other information and to repor t as
uncorrected material misstatements of the
other information where we conclude that
those items meet the following conditions:
• Fair, balanced and understandable
set out on page 59 – the statement
given by the Directors that they
consider the annual repor t and financial
statements taken as a whole is fair,
balanced and understandable and
provides the information necessar y
for shareholders to assess the Group’s
position, performance, business model
and strategy, is materially inconsistent
with our knowledge obtained in the
audit; or
• Audit committee reporting set
out on pages 42 to 44 – the section
describing the work of the audit
committee does not appropriately
address matters communicated by us to
the audit committee; or
• Directors’ statement of
compliance with the UK
Corporate Governance Code set
out on page 38 – the par ts of the
directors’ statement relating to the
Company’s compliance with the UK
Corporate Governance Code containing
provisions that would, for a company
subject to the Listing Rules of the
Financial Conduct Authority, be specified
for review by the auditor in accordance
with Listing Rule 9.8.10R(2) do not
properly disclose a depar ture from a
relevant provision of the UK Corporate
Governance Code.
OPINIONS ON OTHER MATTERS
PRESCRIBED BY THE COMPANIES
ACT 2006
In our opinion, based on the work
under taken in the course of the audit:
•
•
the information given in the Strategic
Repor t and the Directors’ Repor t for
the financial year for which the financial
statements are prepared is consistent
with the financial statements; and
the Strategic Repor t and the Directors’
Repor t have been prepared in
accordance with applicable legal
requirements.
MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and
understanding of the Group and the Parent
company and its environment obtained
in the course of the audit, we have not
identified material misstatements in the
Strategic Repor t or the Directors’ Repor t.
We have nothing to repor t in respect of the
following matters in relation to which the
Companies Act 2006 requires us to repor t
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
are not in agreement with the
accounting records and returns; or
cer tain 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.
We agreed with the Audit Committee
that we would repor t on all differences
in excess of 5% (2018: 5%) of materiality
relating to the Group financial statements.
We also agreed to repor t differences
below this threshold that, in our view,
warranted repor ting on qualitative grounds
and financial statement disclosure matters
identified when assessing the overall
consistency and presentation of the
consolidated financial statements.
AN OVERVIEW OF THE SCOPE OF
OUR AUDIT
Our Group audit was scoped by obtaining
an understanding of the Group and its
environment, including the Group’s system
of internal control, the performance and
financial position of each component as a
propor tion of the total for the Group and
assessing the risks of material misstatement
at the Group level. We also addressed the
risk of management override of internal
controls, including assessing whether there
was evidence of bias by the directors that
may have represented a risk of material
misstatement due to fraud.
OTHER INFORMATION
The Directors are responsible for the
other information. The other information
comprises the information included in
the annual repor t, other than the financial
statements and our auditor’s repor t
thereon. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our repor t,
we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information
is materially inconsistent with the financial
statements or our knowledge obtained
in the audit or otherwise appears to be
materially misstated. If we identify such
material inconsistencies or apparent material
misstatements, we are required to determine
whether there is a material misstatement
in the financial statements or a material
misstatement of the other information. If,
66
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com USE OF OUR REPORT
This repor t is made solely to the Parent
Company’s members, as a body, in
accordance with Chapter 3 of Par t 16 of
the Companies Act 2006. Our audit work
has been under taken so that we might state
to the Parent Company’s members those
matters we are required to state to them
in an auditor’s repor t and for no other
purpose. To the fullest extent permitted
by law, we do not accept or assume
responsibility to anyone other than the
Parent Company and the Parent Company’s
members as a body, for our audit work, for
this repor t, or for the opinions we have
formed.
DIANE CAMPBELL
Senior Statutory Auditor
For and on behalf of BDO LLP, Statutor y
Auditor
London, UK
21 April 2020
BDO LLP is a limited liability par tnership
registered in England and Wales (with
registered number OC305127).
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Statement of
Directors’ responsibilities set out on page
60, the directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and
fair view, and for such internal control as the
directors determine is necessar y to enable
the preparation of financial statements that
are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
Group’s and the Parent Company’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the Group or the Parent
Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES
FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to fraud
or error, and to issue an auditor’s repor t
that includes our opinion. Reasonable
assurance is a high level of assurance, but
is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always
detect a material misstatement when it
exists. Misstatements can arise from fraud
or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
A fur ther description of our responsibilities
for the audit of the financial statements
is located on the Financial Repor ting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms par t of our auditor’s repor t.
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67
Stock code: FEVRFINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Adjusted EBITDA
Depreciation
Amortisation
Share based payment charges
Operating profit
Finance costs
Finance income
Finance expense
Profit before tax
Tax expense
Profit for the year
Items that may be reclassified to profit or loss
Foreign currency translation difference of foreign operations
Effective portion of cash flow hedges
Total other comprehensive income
Total comprehensive income for the year
Earnings per share
Basic (pence)
Diluted (pence)
Note
4
10
11
20
5
7
7
8
9
9
2019
£m
260.5
(129.0)
131.5
(59.3)
77.0
(2.2)
(0.7)
(1.9)
72.2
0.5
(0.2)
72.5
(14.0)
58.5
0.1
0.2
0.3
58.8
50.46
50.26
2018
£m
237.4
(114.5)
122.9
(47.5)
78.6
(0.7)
(0.7)
(1.8)
75.4
0.3
(0.1)
75.6
(13.8)
61.8
(0.1)
–
(0.1)
61.7
53.38
53.19
68
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2019
At 31 December 2019
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Other financial assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Corporation tax liability
Derivative financial instruments
Lease liability
Total current liabilities
Non-current liabilities
Lease liability
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to equity holders of the company
Share capital
Share premium
Capital redemption reserve
Cash flow hedge reserve
Translation reserve
Retained earnings
Total equity
Note
10
11
18
13
14
16
15
17
16
23
23
18
19
21
21
21
21
21
2019
£m
6.9
41.0
0.5
2.1
50.5
20.8
60.8
0.1
128.3
210.0
260.5
(27.5)
–
(5.1)
–
(0.6)
(33.2)
(1.2)
–
(1.2)
(34.4)
2018
£m
2.7
41.7
–
44.4
28.3
62.9
–
89.7
180.9
225.3
(33.0)
(6.1)
(2.5)
(0.3)
–
(41.9)
–
(0.2)
(0.2)
(42.1)
226.1
183.2
0.3
54.8
0.1
0.2
–
170.7
226.1
0.3
54.8
0.1
–
(0.1)
128.1
183.2
The financial statements were approved and authorised for issues by the Board of Directors on 21 April 2020 and were signed on its behalf by:
ANDREW BRANCHFLOWER
Chief Financial Officer
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Stock code: FEVRFINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Share
capital
£m
0.3
Share
premium
£m
53.7
Capital
redemption
reserve
£m
0.1
Cash flow
hedge
reserve
£m
Translation
reserve
£m
Retained
earnings
£m
–
–
(0.1)
(0.1)
–
–
–
–
Total
£m
130.1
61.8
(0.1)
61.7
76.0
61.8
–
61.8
(13.7)
(13.7)
1.8
2.2
–
1.8
2.2
1.1
(0.1)
128.1
183.2
–
0.1
–
0.1
–
–
–
–
–
58.5
–
–
58.5
58.5
0.1
0.2
58.8
(18.0)
(18.0)
1.9
0.2
–
1.9
0.2
–
170.7
226.1
Equity as at 31 December 2017
Profit for the year
Foreign currency translation difference
of foreign operations
Total comprehensive income for
the year
Contributions by and
distributions to owners
Dividends issued
Share based payments
Tax on share based payments
Shares issued
–
–
–
–
–
–
–
Equity as at 31 December 2018
0.3
Profit for the year
Foreign currency translation difference
of foreign operations
Effective portion of cash flow hedges
Total comprehensive income for
the year
Contributions by and
distributions to owners
Dividends issued
Share based payments
Tax on share based payments
Shares issued
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.1
54.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
0.2
–
–
–
–
Equity as at 31 December 2019
0.3
54.8
0.1
0.2
70
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Operating activities
Profit before tax
Finance expense
Finance income
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share based payments
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in inventories
(Decrease)/Increase in trade and other payables
Cash generated from operations
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Interest paid
Issue of shares
Dividends paid
Repayment of loan
Issue of other financial assets
Payment of lease liabilities
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of movements in exchange rates on cash held
Cash and cash equivalents at end of period
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Proof 9
2019
£m
72.5
0.2
(0.5)
2.2
0.7
1.9
77.0
1.3
5.7
(4.0)
3.0
80.0
2018
£m
75.6
0.1
(0.3)
0.7
0.7
1.8
78.6
(7.3)
(16.4)
3.5
(20.2)
58.4
(12.0)
(12.7)
68.0
45.7
(2.6)
0.5
(2.1)
(0.2)
–
(18.0)
(6.1)
(2.2)
(0.5)
(27.0)
38.9
89.7
(0.3)
128.3
(1.5)
0.3
(1.2)
(0.1)
1.1
(13.7)
–
–
–
(12.7)
31.8
57.0
0.9
89.7
71
Stock code: FEVRFINANCIAL STATEMENTS 1. ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International Financial Repor ting Standards (“IFRS”) and
IFRIC Interpretations issued by the International Accounting Standards Board as adopted by the European Union and with those par ts
of the Companies Act 2006 applicable to companies preparing their financial statements under IFRS.
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies
have been consistently applied to all of the years presented, unless otherwise stated.
The impact of COVID-19 has also been reflected in the Directors’ assessment of the going concern basis of preparation for the Group
and Company financial statements. This has been considered by modelling the impact on the group’s cashflow for the period to the end
of June 2021.
Whilst the Group is financially strong and has well balanced revenue streams, it is clear that COVID-19 will have a material impact on
2020 trading. The On-Trade channel, which makes up 45% of Group sales, has been severely challenged across many of our regions
especially in those markets where government advice has led to the temporar y closing of all On-Trade outlets. In the Off-Trade
channel, overall sales have remained strong, most notably in the UK and the US.
Due to the high level of uncer tainty in relation to the length, breadth and depth of the potential impacts of COVID-19, the Directors
have modelled the impact on the Group and Company under three separate scenarios, as set out in the viability statement on page 44.
Under these differing scenarios, the forecasts for the period to the end of June 2021 indicate that the Group and the Company
continue to have positive cashflows and significant cash balances and as a result are able to continue operating and to meet their
liabilities as they fall due.
The Directors have therefore concluded that the Group and the Company have adequate resources to continue in operational
existence for at least the 12 months following the signing of the financial statements, that it is appropriate to continue to adopt the
going concern basis of preparation in the financial statements, that there is not a material uncer tainty in relation to going concern and
that there is no significant judgement involved in making that assessment.
NEW ACCOUNTING POLICIES AND STANDARDS
IFRS 16 Leases has introduced a single, on-balance sheet accounting model for lessees, eliminating the distinction between operating
and finance leases. As a result, the Group has recognised £2.2m of right-of-use assets and corresponding lease liabilities on the date of
initial application (1 Januar y 2019). These are included within proper ty, plant and equipment and loans and borrowings respectively in
the consolidated statement of financial position.
The Group has applied IFRS 16 using the modified retrospective approach; accordingly, the comparative information presented for 2018
has not been restated – i.e. it is presented, as previously repor ted, under IAS 17 and related interpretations. The Group has applied the
practical expedients permitted by IFRS 16 of not recognising right-of-use assets and liabilities for leases with less than 12 months of
lease term remaining, and of applying a single discount rate to a por tfolio of leases with reasonably similar characteristics on transition,
specifically our leased cars in the UK. The impact of transition to IFRS 16 is summarised below. These are the first financial statements of
the Group to apply IFRS 16 Leases.
TABLE RECONCILING LEASE COMMITMENT AT 31 DECEMBER 2018 TO LEASE LIABILITIES ON 1 JANUARY 2019
Operating lease commitment on 31 December 2018
Short-term exemption
Extension and termination options
Effect of discounting
Lease liabilities recognised on 1 January 2019
The weighted average rate applied is 2.5% reflecting the incremental borrowing rate at 1 Januar y 2019.
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET EFFECTIVE
None of the standard or interpretations available for early adoption have been implemented by the Group.
1 January
2019
£m
2.7
(0.1)
(0.2)
(0.2)
2.2
72
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 1. ACCOUNTING POLICIES CONTINUED
BASIS OF CONSOLIDATION
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
The consolidated financial information incorporates the results of business combinations using the acquisition method. In the
consolidated statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at
their fair values at the acquisition date.
Intragroup balances including unrealised profit in stock, where inventor y purchased from Group companies has not been sold on to
third par ties, are eliminated upon consolidation.
REVENUE RECOGNITION
Revenue is measured based on the consideration specified in a contract with a customer. There is only one type of product – premium
carbonated mixers – thus the revenue recognition policy is consistent across all sales.
Revenue is recognised when the Group’s performance obligations are fulfilled, i.e. when control over goods is transferred to customers.
Customers obtain control of the goods when they are delivered to and have been accepted at their premises or made available for
ex-works collection, depending on individual customer arrangements.
Invoices are generated at that point in time and are usually payable within 30 days. Revenue is recorded based on the price specified in
sales invoices, net of any agreed discounts and rebates, and exclusive of value added tax on goods supplied to customers during the year.
There are a variety of discounts and rebates provided to customers, which are assessed on a case by case basis as to whether the
resulting payment to customers is for a distinct good or ser vice (such as marketing) or for a promotional discount. If a payment to
a customer is judged to be for a distinct good or ser vice, this is accounted for as a cost in administrative expenses. If the payment is
judged to represent a discount, this is accounted for as a reduction in the underlying transaction price. Management will restrict revenue
to the amount that is highly unlikely to subsequently be reduced by promotion or discount. Accruals are included in the consolidated
statement of financial position in respect of expected amounts necessar y to meet the claims of the Group’s customers based on
discount and rebate agreements in place. None of the discounts or rebates result in a material right being provided to the customer, as
there are no cases where customers are given the option to purchase at a discount in the future as a result of their historical purchases.
Returns are permitted, but typically these only occur in isolated instances where inaccuracy has been made in the order.
EXPENDITURE
Expenditure is recognised in respect of goods and ser vices received when supplied in accordance with contractual terms. A provision
is made when a present obligation exists for a future liability relating to a past event and where the amount of the obligation can be
reliably estimated.
GOODWILL
Goodwill arising on the acquisition of a business represents any excess of the fair value of the consideration over the fair value of the
identifiable assets and liabilities acquired. The identifiable assets and liabilities acquired are incorporated into the consolidated financial
statements at their fair value to the Group.
Goodwill is not amor tised but tested for impairment annually. Any impairment is recognised immediately in the profit or loss and is not
subsequently reversed. On disposal of a business, the attributable amount of goodwill is included in the determination of the profit or
loss on disposal.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Impairment tests on goodwill and other intangible assets with indefinite useful lives are under taken annually at the repor ting date.
Other non-financial assets are subject to impairment tests if there is any indication of impairment. Where the carr ying value of an asset
is judged to exceed its recoverable amount (i.e. the higher of value in use or the fair value less costs to sell), the asset is written down
accordingly. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s
cash generating unit (i.e. the lowest group of assets, in which the asset belongs, for which there are separately identifiable cash flows).
Goodwill is allocated on initial recognition to each of the Group’s cash-generating units that are expected to benefit from the synergies
of the combination giving rise to the goodwill.
Impairment charges, and the reversal of previous impairment charges, are expensed/credited to the profit or loss. An impairment loss
recognised for goodwill is not reversed.
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Stock code: FEVRFINANCIAL STATEMENTS 1. ACCOUNTING POLICIES CONTINUED
EXTERNALLY ACQUIRED INTANGIBLE ASSETS
Externally acquired intangible assets, including software, are initially recognised at cost and subsequently amor tised on a straight-line
basis over their useful economic lives.
The amor tisation expense for both externally acquired and internally generated intangible assets is recognised within administrative
expenses.
INTANGIBLE ASSETS ACQUIRED AS PART OF A BUSINESS COMBINATION
Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the
definition of an intangible asset. The cost of such intangible assets is their fair value at the acquisition date and comprises the Group’s
brand names. All intangible assets acquired through business combination are amor tised over their estimated useful lives.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of the
intangibles acquired in a business combination are as follows:
Intangible asset
Brands
Useful economic life
20 years
Valuation method
Fair value
Subsequent to initial recognition, intangible assets acquired in a business combination are measured at cost less accumulated
amor tisation and, where appropriate, provision for impairment in value. Amor tisation is included within administrative expenses.
PROPERTY, PLANT AND EQUIPMENT
Items of proper ty, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable
costs. Subsequently, proper ty, plant and equipment are stated at cost less the accumulated depreciation and, where appropriate,
provision for impairment in value or estimated loss on disposal.
Depreciation is provided on all items of proper ty, plant and equipment so as to write off their carr ying value over the expected useful
economic lives. It is included within administrative expenses and is charged at the following rates:
– over the life of the lease
Leasehold proper ty
Fixtures and fittings
– 33% per annum straight-line
Re-usable packaging – 20% per annum straight-line
– 20% per annum straight-line
Motor vehicles
CASH AND CASH EQUIVALENTS
Included within cash and cash equivalents are demand deposits and shor t-term deposits used for shor t-term cash requirements. The
carr ying amount of these assets approximates to their fair value.
FINANCIAL ASSETS
The Group classifies its financial assets into the categories, discussed below, based upon the purpose for which the asset was acquired.
The Group has not classified any of its financial assets as fair value through other comprehensive income (FVOCI).
FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
This categor y comprises only in-the-money derivatives (see “Financial liabilities” section for out-of-the-money derivatives) not used for
hedge accounting purposes. They are carried in the consolidated statement of financial position at fair value with changes in fair value
recognised in the consolidated statement of comprehensive income. Other than these derivative financial instruments, the Group does
not have any assets classified as FVTPL.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 1. ACCOUNTING POLICIES CONTINUED
AMORTISED COST
The Group’s assets at amor tised cost comprise trade and other receivables included within the consolidated statement of financial
position and cash and cash equivalents including cash held at bank.
Trade and other receivables are classified as financial assets at amor tised cost as they are held only with the purpose of collecting
the contractual cash flows. They arise principally through the provision of ser vices to customers (e.g. trade receivables), where the
contractual cash flows comprise only the invoiced amounts, but also incorporate other types of contractual monetar y assets in which
payments comprise only principal and interest. They are initially recognised at fair value plus, where relevant, directly attributable
transactions costs and are subsequently carried at amor tised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised based on the expected credit loss model, with the amount of such a provision being the
difference between the net carr ying amount and the present value of the future expected cash flows associated with the impaired
receivable. For trade receivables, which are repor ted net, such provisions are recorded in a separate allowance account with the loss
being recognised separately in the consolidated statement of profit or loss and other comprehensive income. On confirmation that the
trade receivables will not be collectable, the gross carr ying value of the asset is written off against the associated provision.
FINANCIAL LIABILITIES
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired:
FAIR VALUE THROUGH PROFIT OR LOSS
This categor y comprises only out-of-the-money derivatives (see “Financial assets” for in-the-money derivatives) not used for hedge
accounting purposes. They are carried in the consolidated statement of financial position at fair value with changes in fair value
recognised in the profit or loss.
OTHER FINANCIAL LIABILITIES
• Bank loans are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such
interest-bearing liabilities are subsequently measured at amor tised cost using the effective interest rate method, which ensures that
any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated
statement of financial position. The interest expense includes initial transaction costs and premiums payable on redemption, as well as
any interest coupon payable while the liability is outstanding.
• Trade payables, other borrowings and other shor t-term monetar y liabilities, which are initially recognised at fair value and
subsequently carried at amor tised cost using the effective interest method.
HEDGE ACCOUNTING
The Group designates a por tion of its derivatives as cash flow hedges, hedging the currency risk of highly probable forecast future
transactions by utilising forward contracts. The forward rate designation accounting approach is used, which includes the forward
element of the derivative in the hedge designation. Changes in fair value of the effective por tion of the hedge accounted derivatives
are recognised in other comprehensive income before being recycled to the statement of profit or loss when the forecasted cash flow
affects the profit or loss. Hedge effectiveness is forward looking and is tested on an ongoing basis. The Group utilises critical terms
matching to assess effectiveness and any ineffectiveness is recognised immediately in the profit or loss.
SHARE CAPITAL
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial
liability. The Group’s ordinar y shares are classified as equity instruments.
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75
Stock code: FEVRFINANCIAL STATEMENTS 1. ACCOUNTING POLICIES CONTINUED
LEASED ASSETS
LEASE ACCOUNTING UNDER IFRS 16 (APPLICABLE AFTER 1 JANUARY 2019)
When entering into a contract the Group assesses whether or not a lease exists. A lease exists if a contract conveys a right to control
the use of an identified asset under a period of time in exchange for consideration. The Group has elected not to separate non-lease
components for the lease of land and buildings. Leases of low value items and shor t-term leases (leases of less than 12 months at the
commencement date) are charged to the profit or loss on a straight-line basis over the lease term in administrative expenses.
The Group recognises right-of-use assets at cost and lease liabilities at the lease commencement date based on the present value of
future lease payments. The right of use assets are depreciated on a straight-line basis in line with the Group’s accounting policy for
proper ty, plant and equipment. The lease liabilities are recognised at amor tised cost using the effective interest rate method. Discount
rates used reflect the incremental borrowing rate specific to the lease.
LEASE ACCOUNTING UNDER IAS 17 (APPLICABLE BEFORE 1 JANUARY 2019)
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an ”operating lease”), the
total rentals payable under the lease are charged to the profit or loss on a straight line basis over the lease term. The aggregate benefit
of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.
DEFERRED TAXATION
Deferred tax assets and liabilities are recognised where the carr ying amount of an asset or liability in the consolidated statement of
financial position differs from its tax base, except for differences arising on:
•
•
•
the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction
affects neither accounting or taxable profit; and
investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which
the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the repor ting date
and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and
the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either :
•
the same taxable group company; or
• different company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets
and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are
expected to be settled or recovered.
Deferred tax is recognised as income or an expense and included in profit or loss for the period except in relation to deferred tax on
share based payments. If the amount of a future tax deduction exceeds the amount of the cumulative remuneration expense, the excess
of the associated deferred tax is recognised directly in equity.
INVENTORIES
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value after making allowance for
obsolete and slow-moving items.
Weighted average cost is used to determine the cost of ordinarily interchangeable items by considering the cost of similar items at the
beginning of the period and the cost of similar items purchased or produced during the period.
76
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 1. ACCOUNTING POLICIES CONTINUED
OPERATING SEGMENTS
Operating segments are repor ted in a manner consistent with the internal repor ting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the management team including the Chief Executive Officer and the Finance
Director.
The Board considers that although the Group’s activity is generated from global sales across four regions (as shown in the Chairman’s
statement and note 4), there is ultimately one overarching repor ting and operating segment. This is due to the centralised nature of the
Group, with many expenses incurred at the Group head office. Management reviews the performance of the Group by reference to
total results against budget.
The total profit measures are operating profit, adjusted EBITDA and profit for the year, all disclosed on the face of the profit or loss.
No differences exist between the basis of preparation of the performance measures used by management and the figures in the Group
financial statements.
ADJUSTED EBITDA
Operating profit is adjusted for a number of non-cash items, including amor tisation of the Fever-Tree brand intangible acquired in March
2013 and other intangible assets, depreciation, and the share based payment charge which recognises the fair value of share options
granted. The intention is for adjusted EBITDA to provide a comparable, year on year indicator of underlying trading and operational
performance. Adjusted EBITDA is the Group’s primar y alternative performance measure (APM).
SHARE BASED PAYMENTS
Where share options are awarded to employees, the fair value of the option at the date of grant is charged to the profit or loss over
the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected
to vest at each repor ting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number
of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied.
Where share options are cancelled, their remaining unamor tised fair value is fully written off through the profit or loss.
FOREIGN CURRENCY
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 entered into by Group entities in a currency other than the currency of the primar y economic environment in which they
operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetar y assets
and liabilities are translated at the rates ruling at the repor ting date. Exchange differences arising on the retranslation of unsettled
monetar y assets and liabilities are recognised immediately in the profit or loss.
FOREIGN OPERATIONS
The profit or loss and statement of cash flows of foreign operations are translated at the average rate of exchange during the period.
The statement of financial position of a foreign operation is translated at the ruling rate at the repor ting 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 and accumulated in the translation reser ve.
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77
Stock code: FEVRFINANCIAL STATEMENTS 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Management has made estimates and accounting judgements within the financial statements; these are reviewed regularly and revisions
to estimates are recognised prospectively. An element of judgement is involved in determining whether payments to customers
are in exchange for a distinct good or ser vice under IFRS 15 or are instead a reduction in transaction price, namely in relation to
discretionar y marketing spend with our Europe and Rest of World distributors. Management carefully assess what is received in each
individual arrangement with customers to determine the correct accounting treatment. Third par ty evidence is obtained to corroborate
the information provided by customers. In the absence of clear evidence to the contrar y, payments to customers are recognised as
reductions to revenue.
3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective
of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and
flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors.
The Group uses derivative financial instruments including forward currency contracts to manage its exposure to cer tain financial risks.
The Group is exposed to the following financial risks:
• Credit risk
• Liquidity risk
• Pricing risk
• Market risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. The principal financial
instruments used by the Group, from which financial instrument risk arises, are as follows:
• Trade and other receivables
• Cash and cash equivalents
• Trade and other payables
•
Forward currency contracts
To the extent that financial instruments are not carried at fair value in the consolidated statement of financial position, the carr ying
values approximate fair values at 31 December 2019 and 31 December 2018.
FINANCIAL INSTRUMENTS BY CATEGORY
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments in cash flow hedges
Other financial assets (non-current)
Total financial assets
Financial assets at fair value
Financial assets at
amortised cost
2019
£m
–
–
0.2
–
0.2
2018
£m
–
–
–
–
–
2019
£m
128.3
56.2
–
2.1
2018
£m
89.7
57.5
–
–
186.6
147.2
78
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
FINANCIAL LIABILITIES
Trade and other payables
Lease liabilities
Loans and borrowings
Other derivative financial instruments
Total financial liabilities
Financial liabilities at fair
value
Financial liabilities at
amortised cost
2019
£m
–
–
–
0.1
0.1
2018
£m
–
–
–
0.3
0.3
2019
£m
23.5
0.6
–
–
24.1
2018
£m
29.3
–
6.1
–
35.4
CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterpar ty to a financial instrument fails to meet its contractual
obligations. The Group is mainly exposed to credit risk from credit sales. At 31 December 2019 the Group has net trade receivables of
£51.0m (2018: £54.3m).
The Group is exposed to credit risk in respect of these balances such that, if one or more customers encounter financial difficulties, this
could materially and adversely affect the Group’s financial results. In order to minimise this risk, the Group endeavours only to deal with
companies which are demonstrably creditwor thy and this, together with the aggregate financial exposure, is continuously monitored.
Companies which are not deemed to be creditwor thy can only deal with the Group on a prepayment basis.
Supply of products by members of the Group results in trade receivables, which the management consider to be of low risk; other
receivables are likewise considered to be low risk. The management do not consider that there is any concentration of risk within either
trade or other receivables.
The Group performs an expected credit loss assessment for all trade receivables to calculate a provision for expected credit loss, based
on historical credit loss information, current conditions and forecasts of future economic conditions. The simplified approach is used, in
accordance with IFRS 9. The resulting provision in respect of outstanding balances at 31 December 2019 is not material.
Trade receivables are written off when there is no reasonable expectation of recover y; indicators of this include the counterpar ty going
into administration or receivership.
Credit risk on cash and cash equivalents is considered to be low as the counterpar ties are all substantial banks with investment grade
credit ratings.
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79
Stock code: FEVRFINANCIAL STATEMENTS 3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
LIQUIDITY RISK
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due. The Group actively manages its cash generation and maintains sufficient cash holdings to cover its
immediate obligations.
The Group actively manages its cash and currently holds substantial cash balances in Sterling, US Dollars and Euros. The Group also has
access to additional equity funding. Trade and other payables are monitored as par t of normal management routine. See bank loans note
(note 17).
The contractual maturity profile (undiscounted) of the Group’s financial liabilities and derivatives is set out below
31 December 2019
Trade and other payables
Lease liabilities
Bank borrowings principal
Derivative financial instruments outflow
Derivative financial instruments (inflow)
31 December 2018
Trade and other payables
Bank borrowings principal
Derivative financial instruments outflow
Derivative financial instruments (net inflow)
For fur ther details on bank loans, see note 17.
Within
one year
£m
One to
two years
£m
Two to
five years
£m
Over five
years
£m
23.5
0.6
–
67.9
(68.2)
–
0.6
–
–
–
–
0.7
–
–
–
–
–
–
–
–
Within
one year
£m
One to
two years
£m
Two to
five years
£m
Over five
years
£m
29.3
6.1
23.5
(23.2)
–
–
–
–
–
–
–
–
–
–
–
–
PRICING RISK
Pricing risk is the risk that oscillation in the price of key input costs will affect the profitability of the business. The company manages
this risk by agreeing long-term prices with suppliers where possible.
MARKET RISK
Market risk arises from the Group’s interest-bearing, tradable and foreign currency financial instruments. It is the risk that the fair
value, or future cash flows, of a financial instrument will fluctuate because of changes in the interest rates (interest rate risk) or foreign
exchange rates (foreign exchange risk).
(A) INTEREST RATE RISK
The Group is exposed to cash flow interest rate risk from its loan facilities, which carr y interest at variable rates. The Group’s policy is
to balance exposure to interest rate risk with the cost and flexibility of funding. This policy is managed centrally.
The requirement for interest rate hedging is reviewed periodically, being a mechanism available to manage interest rate risk. These
reviews acknowledge that interest rate hedges will not necessarily protect the Group from the risk of paying rates in excess of current
market rates nor eliminate cash flow risk associated with the variability in interest payments. Judgements are therefore exercised in
the context of the market and the materiality of the potential risk compared to the cost. The Group does not currently have any debt
facilities, nor does it engage in interest rate hedging.
80
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
(B) FOREIGN EXCHANGE RISK
Foreign exchange risk is the risk that movements in exchange rates affect the profitability of the business. The Group is exposed to
transaction foreign exchange risk as it operates within the USA and Europe where transactions are predominantly denominated in US
Dollars and Euros respectively. The exposure is limited to the extent to which there is a mismatch between the currencies in which
sales, purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies.
Forward contracts are used to manage foreign exchange risk. Those financial assets in currencies other than Sterling may be the subject
of economic hedging arrangements using forward contracts. Receivables are carried in the consolidated statement of financial position
at the rate of exchange at the period end. The derivative instruments are carried at fair value with that value being the contract value at
the repor ting date.
At 31 December 2019 there were commitments to purchase foreign currency exchange forward contracts with a total Sterling value of
approximately £67.9m (2018: £23.2m) in Euros and US Dollars. All contracts mature within 12 months of the repor ting date.
Although the Board accepts that this policy does not protect the Group entirely from currency risk or from incurring an exchange rate
in the future that is adverse to the then spot rate in operation, it considers that it achieves an appropriate balance against exposure to
the risk.
The summar y quantitative data about the Group’s exposure to currency risk (before the effect of balance sheet hedging) is as follows.
This includes intragroup balances which eliminate on consolidation.
Receivables
Payables
Cash
Total
2019
Currency in m
2018
Currency in m
Euro
21.9
(4.6)
3.3
20.6
USD
18.8
-
1.0
19.8
Euro
14.8
(6.4)
2.2
10.6
USD
17.6
(0.1)
19.3
36.8
EFFECT OF CASH FLOW HEDGES
At 31 December 2019, the Group held derivatives with a notional value of £35.5m (2018: £nil) designated as hedging instruments
for cash flow hedging purposes. They all have maturities in 2020 and have a range of hedged rates between EUR 1.15–1.18 and
USD 1.30–1.33.
In respect of cash flow hedges the Group has recognised a gain of £0.2m in other comprehensive income in the year comprising £0.2m
gain in fair value of hedged instruments. There was no ineffectiveness recognised in the year.
In 2018 the Group did not utilise cash flow hedge accounting.
CAPITAL MANAGEMENT
The Group’s capital is made up of share capital, retained earnings and other reser ves.
The Group’s objectives when maintaining capital are:
• To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and
benefits for other stakeholders; and
• To provide an adequate return to shareholders by pricing products and ser vices commensurately with the level of risk.
The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement of changes in equity.
All working capital requirements are financed from existing cash resources.
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81
Stock code: FEVRFINANCIAL STATEMENTS 4. REVENUE
A) REVENUE STREAMS
There is one revenue stream, being the sale of premium carbonated mixers. All revenue arises from this revenue stream.
Analysis of concentration of customers top 3 and other:
Customer 1
Customer 2
Customer 3
Other
An analysis of turnover by geographical market is given below:
United Kingdom
United States of America
Europe
Rest of the World
2019
11%
6%
5%
78%
100%
2019
£m
132.7
47.6
64.4
15.8
260.5
2018
12%
7%
6%
75%
100%
2018
£m
134.1
35.8
55.5
12.0
237.4
In the year ended 31 December 2019 the Group had one customer representing £29.5m of sales, accounting for 11% of Group revenue
(2018: one customer represented £29.6m of sales, accounting for 12% of revenue).
B) CONTRACT BALANCES
The following table provides information about receivables from contracts with customers.
£m
Receivables, which are included in “trade and other receivables”
31 December
2019
31 December
2018
52.3
56.0
Note
14
No information is provided about remaining performance obligations at 31 December 2019 that have an original expected duration of
one year or less.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 5. PROFIT FROM OPERATIONS
Operating profit is stated after charging:
Foreign exchange loss/(gain)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Lease payments through profit or loss
Logistics and warehousing
Discretionary marketing
International transition costs
Auditors’ remuneration:
Fees for audit of the company
Fees for audit of subsidiaries
Non audit services*
* Non audit ser vices of £47,372 have been rounded down to zero in the above disclosure.
6. STAFF COSTS
Wages and salaries
Employers national insurance
Pensions
The average monthly number of employees (including Directors) during the period was as follows:
Sales and Marketing
Production and Administration
Directors’ remuneration included in staff costs
Salaries
Bonuses
2019
£m
–
2.2
0.7
0.2
18.5
28.7
–
0.1
0.1
–
2019
£m
12.6
1.1
0.6
14.3
2019
91
82
173
2019
£m
1.1
–
1.1
2018
£m
(0.8)
0.7
0.7
0.3
14.0
21.0
1.5
0.1
0.1
0.1
2018
£m
10.5
2.7
0.1
13.3
2018
54
60
114
2018
£m
1.0
0.9
1.9
Total remuneration regarding the highest paid Director was £0.4m (2018: £10.0m). The total remuneration regarding the highest paid
Director includes the gain on exercise of share options, which is not included in staff costs.
The Directors’ gain on exercise of share options was £nil (2018: £21.9m). These share options had no performance conditions attached
and are therefore not included in the single figure table of the remuneration repor t.
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83
Stock code: FEVRFINANCIAL STATEMENTS 2019
£m
2018
£m
0.5
0.5
0.2
–
0.2
2019
£m
14.6
–
14.6
(0.7)
0.1
14.0
0.3
0.3
–
0.1
0.1
2018
£m
15.3
(0.8)
14.5
(0.7)
–
13.8
2018
£m
75.6
14.3
0.2
(0.8)
0.1
13.8
7. FINANCE INCOME AND EXPENSES
Finance income
Interest Income
Finance expense
Interest on lease liabilities
Bank loan interest and other charges
8.
INCOME TAX
Current tax expense
Current tax on profits for the period
Adjustment in respect of prior period
Deferred tax expense
Origination and reversal of temporary differences
Adjustment in respect of prior period
Total tax expense
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the
United Kingdom applied to profit for the year are as follows:
Profit for the year
Expected tax charge based on corporation tax rate of 19% in 2019 (19% in 2018)
Income not deductible for tax purposes
Adjustment in respect of prior period
Differences in tax rates
Total tax expense
2019
£m
72.5
13.8
(0.1)
0.1
0.2
14.0
During the year corporation tax relief of £0.1m (2018: £4.4m) was recognised within equity in relation to share options exercised in
the period.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 9. EARNINGS PER SHARE
Profit
Profit used in calculating basic and diluted EPS
Number of shares
Weighted average number of shares for the purpose of
basic earnings per share
Weighted average number of dilutive employee share options outstanding
Weighted average number of shares for the purpose of
diluted earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
NORMALISED EPS
Profit
Reported profit before tax
Add back:
Amortisation
Adjusted profit before tax
Tax – assume standard rate (19%)
Normalised earnings
Number of shares
Normalised basic earnings per share (pence)
2019
£m
2018
£m
58.5
61.8
116,126,293
115,734,845
448,508
396,350
116,574,801
116,131,195
50.46
53.38
50.26
53.19
2019
£m
2018
£m
72.5
75.6
0.7
73.2
(13.9)
59.3
0.7
76.3
(14.5)
61.8
116,126,293
115,734,845
51.08
53.40
Normalised EPS is an APM in which earning have been adjusted to exclude amor tisation and the UK statutor y tax rates have been
applied (disregarding other tax adjusting items).
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85
Stock code: FEVRFINANCIAL STATEMENTS 10. PROPERTY, PLANT AND EQUIPMENT
Cost
At 31 December 2017
Additions
At 31 December 2018
Application of IFRS 16
Additions
At 31 December 2019
Depreciation
At 31 December 2017
Charge for the year
At 31 December 2018
Charge for the year
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Leasehold
property
£m
Reusable
packaging
£m
Motor
vehicles
£m
Fixtures and
fittings
£m
0.5
0.2
0.7
2.1
–
2.8
–
0.1
0.1
0.7
0.8
2.0
0.6
1.8
0.7
2.5
–
3.9
6.4
0.6
0.4
1.0
1.2
2.2
4.2
1.5
0.3
0.1
0.4
0.1
0.1
0.6
0.1
0.1
0.2
0.1
0.3
0.3
0.2
0.3
0.3
0.6
–
0.2
0.8
0.1
0.1
0.2
0.2
0.4
0.4
0.4
Totals
£m
2.9
1.3
4.2
2.2
4.2
10.6
0.8
0.7
1.5
2.2
3.7
6.9
2.7
Right of use assets relating to leases are included within leasehold proper ty and motor vehicles (see note 23).
Additions to reusable packaging in 2019 include £1.6m of reusable glass which was previously recognised as cost of sales.
11. INTANGIBLE ASSETS
Cost
Goodwill
£m
Brands
£m
Totals
£m
At 31 December 2018 and 31 December 2019
31.5
14.4
45.9
Amortisation
At 31 December 2017
Charge for the year
At 31 December 2018
Charge for the year
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
86
–
–
–
–
–
31.5
31.5
3.5
0.7
4.2
0.7
4.9
9.5
10.2
3.5
0.7
4.2
0.7
4.9
41.0
41.7
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 11. INTANGIBLE ASSETS CONTINUED
Intangible assets represent the fair value at the 12 March 2013 acquisition date of the “Fever-Tree” brand. The fair value has been
determined by applying the “relief from royalty” method to the cash flows earned from the brands. The key management assumptions
are around growth forecasts (over 20 years and at an ongoing growth rate of 3%), discount factors (a discount factor of 20% was used)
and royalty percentage utilised. A brand useful life of 20 years is considered appropriate and projected cash flows have been discounted
over this period.
Goodwill recognised upon the acquisition of Fever tree Limited on 12 March 2013 represented the difference between the
consideration paid and the fair value of assets acquired and liabilities assumed. In line with IAS 36, the cash-generating unit to which
goodwill has been allocated is tested for impairment at least annually by comparing the carr ying amount of the unit, including the
goodwill, with the recoverable amount of the unit. Management have made this consideration and do not believe there to be any
impairment indicators.
Goodwill is not amor tised but tested for impairment annually. The impairment model for goodwill is based on the higher of value in use
and the fair value less costs to sell using the quoted price of the Company’s shares as an estimate of the fair value.
Cer tain disclosures relating to goodwill have not been made, given the significant headroom on impairment testing.
12. SUBSIDIARIES
The subsidiaries of the Company, which have been included in the consolidated financial statements, are as follows:
Principal activity
Incorporated
Registered address
2019
Ownership
%
2018
Ownership
%
Name
Fevertree Limited
Fevertree USA Inc.*
Development and sale of
premium mixer drinks
Development and sale of
premium mixer drinks
UK
USA
Fevertree USA Holding Co. Inc.* The activities of a holding
USA
Fevertree UK Limited*
Fevertree US Limited*
Fevertree Europe Limited*
Fevertree ROW Limited*
Fevertree Germany Limited*
company
Development and sale of
premium mixer drinks
The activities of a holding
company
Development and sale of
premium mixer drinks
Development and sale of
premium mixer drinks
Development and sale of
premium mixer drinks
UK
UK
UK
UK
UK
* Denotes indirectly held subsidiar y
13. INVENTORIES
Raw materials
Finished goods
Kildare House, 3 Dorset Rise,
London, EC4Y 8EN
251 Little Falls Drive, Wilmington,
Delaware, 19808
251 Little Falls Drive, Wilmington,
Delaware, 19808
Kildare House, 3 Dorset Rise,
London, EC4Y 8EN
Kildare House, 3 Dorset Rise,
London, EC4Y 8EN
Kildare House, 3 Dorset Rise,
London, EC4Y 8EN
Kildare House, 3 Dorset Rise,
London, EC4Y 8EN
Kildare House, 3 Dorset Rise,
London, EC4Y 8EN
100%
100%
100%
100%
100%
100%
100%
100%
2019
£m
5.7
15.1
20.8
100%
100%
100%
100%
100%
100%
100%
n/a
2018
£m
6.3
22.0
28.3
The cost of inventories recognised as an expense and included in the cost of sales amounted to £107.1m (2018: £97.4m). The amount
charged to the consolidated statement of profit or loss and other comprehensive income in respect of impairment and write off of
inventories was £0.4m (2018: £0.7m).
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87
Stock code: FEVRFINANCIAL STATEMENTS 14. TRADE AND OTHER RECEIVABLES
Trade receivables
Expected credit loss provision
Net trade receivables
Other receivables
Total financial assets other than cash and cash equivalents held at amortised cost
Prepayments
Recoverable VAT
Total trade and other receivables
2019
£m
52.3
(1.3)
51.0
5.2
56.2
3.2
1.4
60.8
2018
£m
56.0
(1.7)
54.3
3.2
57.5
4.3
1.1
62.9
There is no material difference between the net book amount and the fair value of current trade and other receivables due to their
shor t-term nature.
There is no par ticular concentration of credit risk to the Group’s trade receivables as the Group has a large number of customers.
EXPECTED CREDIT LOSS ASSESSMENT FOR CUSTOMERS AS AT 31 DECEMBER 2019
The following table provides information about the exposure to credit risk and ECLs (expected credit losses) for trade receivables as at
31 December 2019. The simplified approach has been used, as permitted by IFRS 9.
31 December 2019
Current (not past due)
1–30 days past due
31–60 days past due
Over 60 days past due
31 December 2018
Current (not past due)
1–30 days past due
31–60 days past due
Over 60 days past due
Weighted
average loss
rate
Gross
carrying
amount
£m
Impairment
loss
allowance
£m
2%
2%
4%
9%
46.6
3.5
1.0
1.2
1.0
0.1
–
0.2
Weighted
average loss
rate
Gross
carrying
amount
£m
Impairment
loss
allowance
£m
2%
2%
3%
16%
42.4
8.8
2.1
2.7
1.0
0.2
0.1
0.4
Loss rates are based on actual credit loss experience. These rates are multiplied by scalar factors to reflect differences between
economic conditions during the period over which the historical data has been collected, current conditions and the Group’s view of
economic conditions over the expected lives of the receivables.
Impaired receivables are only written off following the conclusion of administration proceedings.
88
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 14. TRADE AND OTHER RECEIVABLES CONTINUED
MOVEMENTS IN THE ALLOWANCE FOR IMPAIRMENT IN RESPECT OF TRADE RECEIVABLES
Movements in the allowance for impairment in respect of trade receivables during the year was as follows.
Balance at 1 January
Amounts written off
Net remeasurement of loss allowance
Balance at 31 December
15. TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Other
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost
Social security and other taxes
Total trade and other payables
2019
£m
1.7
–
(0.4)
1.3
2019
£m
4.5
16.1
2.9
23.5
4.0
27.5
There is no material difference between the net book amount and fair value of trade and other payables due to their shor t-term
nature. No material balances were denominated in currencies other than the Group’s repor ting currency.
16. DERIVATIVE FINANCIAL INSTRUMENTS
Foreign currency exchange contracts
Total derivative financial instruments
2019
£m
0.1
0.1
2018
£m
1.1
–
0.6
1.7
2018
£m
11.3
14.7
3.3
29.3
3.7
33.0
2018
£m
(0.3)
(0.3)
The fair value of a derivative financial instrument is split between current and non-current depending on the remaining maturity of the
derivative contract and its contractual cash flows. All contracts mature in less than 12 months; therefore, the instruments are classified
as current.
The fair value of foreign exchange contracts and interest swap derivatives is based on bank valuations.
The maximum exposure to credit risk at the repor ting date is the fair value of the derivative instruments in the consolidated statement
of financial position.
The increase in fair value on forward contracts of £0.4m (2018: decrease of £0.5m) has been included within the foreign exchange
amount in note 5, with the unrealised profits offsetting the foreign exchange movements in net assets.
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89
Stock code: FEVRFINANCIAL STATEMENTS 17. LOANS AND BORROWINGS
Bank loans
Current portion
Total bank loans
2019
£m
–
–
2018
£m
6.1
6.1
In Januar y 2016, the business agreed a three-year £10,000,000 Revolving Credit Facility at a rate of 0.60% above LIBOR with additional
fees of 0.20% on utilised amounts and 0.24% on non-utilised amounts. In Januar y 2019 the Group repaid the outstanding loan balance in
full and the facility expired. No fur ther financing agreements have been entered into.
18. DEFERRED TAX
Details of the deferred tax liability/(asset) are as follows:
Opening asset/(liability)
Recognised in comprehensive income
Recognised in equity
Closing asset/(liability)
Details of the deferred tax liability/(asset) are as follows:
At 31 December 2018
Comprehensive income debit/(credit)
Recognised in equity
At 31 December 2019
19. SHARE CAPITAL
Ordinary shares of £0.0025 each
At beginning of the period
Issued during the year
At the end of the period
2019
£m
(0.2)
0.6
0.1
0.5
2018
£m
1.3
0.7
(2.2)
(0.2)
Credited to
statement of
comprehensive
income
£m
0.2
(0.6)
(0.1)
(0.5)
2018
£m
0.3
–
0.3
Fair
valuation of
intangible
assets
£m
Share based
payments
£m
1.8
(0.2)
–
1.6
(1.4)
(0.1)
(0.1)
(1.6)
Other
£m
(0.2)
(0.3)
–
(0.5)
2019
Number
2019
£m
2018
Number
116,116,983
14,216
116,131,199
0.3
–
0.3
115,366,102
750,881
116,116,983
90
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 20. SHARE BASED PAYMENTS
In November 2014 the Group established two incentive plans whereby share options are granted to employees.
THE COMPANY SHARE OPTION PLAN (“CSOP”)
The CSOP is a share option plan that satisfies the requirements for tax relief under Schedule 4, ITEPA. All employees and full-time
Directors of the Group are eligible to par ticipate at the discretion of the Remuneration Committee. Options may be granted subject
to objective performance conditions, but no performance conditions applied to the first grant of Options under the CSOP. The exercise
price of options granted under the CSOP must be equal to or above the market value of the ordinar y shares on the date of grant of
the options. Options may not generally be exercised prior to the third anniversar y of grant, unless the option holder’s employment
ceases for a specified “good leaver” reason, such as ill health, disability, redundancy, retirement or a sale out of the Group of the
Company or the business by which they are employed, or if there is a change of control of the Company due to a cash takeover.
The first options granted under the CSOP vested three years from the date of grant and have an exercise price equal to the placing
price under the Group’s initial public offering of £1.34. These options lapse after 10 years.
UNAPPROVED SCHEME
The Unapproved Scheme largely mirrors the CSOP, save to the extent that it does not need to satisfy the requirements of Schedule 4,
ITEPA.
The exercise price of the granted options is equal to the estimated market price of the shares on the date of the grant. Options may
normally be exercised in whole or in par t during the period between the third and tenth anniversaries of their grant provided any
performance targets specified at the date of grant have been achieved. Options may be satisfied by the issue of Ordinar y Shares or the
transfer of existing Ordinar y Shares.
Options will normally lapse on cessation of employment. However, exercise is permitted for a limited period following cessation of
employment for specified reasons such as redundancy, retirement or ill health, and, in other circumstances, at the discretion of the
Remuneration Committee.
In the event of an amalgamation, takeover or winding up of the Company, Options may be exercised within cer tain time limits. There
are also provisions for the exchange of Options in specified circumstances. Options immediately lapse on the tenth anniversar y of the
date of grant and in the event of the par ticipant’s bankruptcy.
LONG TERM INCENTIVE PLAN (“LTIP”)
All employees and full-time Directors of the Group are eligible to par ticipate at the discretion of the Remuneration Committee. Share
awards may be granted subject to objective performance conditions and vest over a vesting period determined by the Remuneration
Committee at the time of the grant.
Awards will normally lapse on cessation of employment. However, exercise is permitted for a limited period following cessation of
employment for specified reasons such as redundancy, retirement or ill-health, and, in other circumstances, at the discretion of the
Remuneration Committee. In the event of an amalgamation, takeover or winding up of the Company, unvested awards may vest
over such number of shares as is specified by the Remuneration Committee. There are also provisions for the exchange of awards in
specified circumstances. The awards immediately lapse on the tenth anniversar y of the date of grant and in the event of the par ticipant’s
bankruptcy.
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91
Stock code: FEVRFINANCIAL STATEMENTS 20. SHARE BASED PAYMENTS CONTINUED
EMPLOYEE SHARESAVE SCHEME (“SAYE”)
In May 2019 the Group introduced a savings-related share scheme in which UK employees can save up to £500 from their net after tax salary
over a period of three years to purchase options. These options can be exercised at the end of their three-year vesting period. Employees
have the option to withdraw their savings at end time and forfeit their right to exercise the options at the end of the vesting period.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
CSOP
Outstanding at beginning of the year
Exercised
Outstanding at end of the year
Of which vested and exercisable
CSOP
Outstanding at beginning of the year
Exercised
Outstanding at end of the year
Of which vested and exercisable
Unapproved scheme
Outstanding at beginning of the year
Exercised
Outstanding at end of the year
Of which vested and exercisable
Unapproved scheme
Outstanding at beginning of the year
Exercised
Outstanding at end of the year
Of which vested and exercisable
92
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2019
Weighted
average
exercise price
£
Number of
shares
250
(250)
–
–
1.34
1.34
–
–
2018
Weighted
average
exercise price
£
Number of
shares
41,845
(41,595)
250
250
1.85
1.69
1.34
1.34
2019
Weighted
average
exercise price
£
Number of
shares
9,925
(9,925)
–
–
2018
Number of
shares
705,216
(695,291)
9,925
9,925
1.34
1.34
–
–
Weighted
average
exercise price
£
1.44
1.45
1.34
1.34
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 20. SHARE BASED PAYMENTS CONTINUED
LTIP
Outstanding at beginning of the year
Exercised
Forfeited
Granted
Outstanding at end of the year
Of which vested and exercisable
LTIP
Outstanding at beginning of the year
Exercised
Granted
Outstanding at end of the year
Of which vested and exercisable
SAYE
Outstanding at beginning of the year
Granted
Outstanding at end of the year
Of which vested and exercisable
2019
Weighted
average
exercise price
£
Number of
shares
511,674
(4,041)
(2,136)
161,233
666,730
297,326
0.0025
0.0025
0.0025
0.0025
0.0025
0.0025
2018
Weighted
average
exercise price
£
Number of
shares
445,620
(13,995)
80,049
511,674
–
0.0025
0.0025
0.0025
0.0025
–
2019
Weighted
average
exercise price
£
Number of
shares
–
50,655
50,655
–
–
20.99
20.99
–
The weighted average grant date fair value of options granted during the period was determined at £25.04 per option. The weighted
average price of options exercised in the year was £27.55. The outstanding options have a weighted average remaining contractual life
of eight years and exercise prices between £0.0025 and £24.66.
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93
Stock code: FEVRFINANCIAL STATEMENTS 20. SHARE BASED PAYMENTS CONTINUED
Options were valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair value
calculations. The fair value per option granted in the year and the assumptions used in the calculation are as follows:
Risk-free interest rate
Expected life
Expected volatility
Expected dividend yield
Share price at grant date
2019
2018
0.39%–0.79%
0.83%–0.92%
5 years
5 years
29.20%–33.56%
23.83%–26.30%
0.53%–0.60%
0.60%
£21.92–£31.58
£27.54–£35.74
For option grants the volatility range reflects the historical volatility based on share transactions since listing. The maximum vesting
period was used as a basis to determine the expected life of the option. The expected life used in the valuation has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The risk-free rate was based on the Bank of England spot yields in effect at the time of grant. The expected dividend yield reflects
management’s and market expectations based on budget projections.
21. RESERVES
Share premium is the amount subscribed for share capital in excess of nominal value.
Retained earnings are the cumulative net profits in the profit or loss. Movements on these reser ves are set out in the consolidated
statement of changes in equity.
Capital redemption reser ve was created as a result of the share buy-back during 2014.
The translation reser ve captures exchange differences arising on the translation of non-GBP functional subsidiaries’ accounts on
consolidation.
The cash flow hedging reser ve was created as a result of the implementation of hedge accounting. It captures the change in fair value
for hedge accounted derivatives before the hedged item is recognised in the financial statements.
22. DIVIDENDS
In the financial year ended 31 December 2019 dividends were paid with a value of £17,976,649 (being £11,937,872 at 10.28 pence per
share in respect of the year ended 31 December 2018, and £6,038,778 at 5.20 pence per share in respect of the six months ended 30
June 2019). Dividends of £13,725,191 (11.86 pence per share) were paid in the prior year. The Directors are proposing a final dividend
of 9.88 pence per share - £11,473,762. This dividend has not been accrued in the consolidated statement of financial position.
23. LEASES
The Group leases its office premises in London and New York and a small fleet of motor vehicles used by its UK-based sales team.
RIGHT-OF-USE ASSETS:
Balance at 1 January 2019
Additions
Depreciation charge for the year
Balance at 31 December 2019
Owned property, plant and equipment
Total property, plant and equipment
94
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Leasehold
property
£m
Motor
vehicles
£m
2.1
–
(0.5)
1.6
0.4
2.0
0.1
–
(0.1)
–
0.3
0.3
Total
£m
2.2
–
(0.6)
1.6
0.7
2.3
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 23. LEASES CONTINUED
LEASE LIABILITIES:
Undiscounted future cash flows
Not later than one year
Later than one year and not later than five years
Later than five years
Total undiscounted future cash flows
Lease liabilities at 31 December 2019
Current lease liabilities
Non-current lease liabilities
Amounts recognised in the profit or loss
Interest on lease liabilities
Depreciation charge for right-of-use assets
Charge relating to short-term leases
Lease expense (IAS 17)
Amounts recognised in consolidated statement of cash flows
Total cash outflow for leases
24. EVENTS AFTER THE REPORTING PERIOD
COVID-19
2019
£m
0.6
1.3
–
1.9
1.8
0.6
1.2
2018
£m
–
–
–
0.3
2019
£m
0.2
0.6
0.2
–
2019
£m
0.5
There remains considerable uncer tainty about how Covid-19 will develop over the coming weeks and months after it was announced as
a global health emergency by the World Health Organisation on 30 Januar y 2020.
To date, our key bottlers and canners have continued to operate through the crisis with segregated shift patterns and we have taken
action to ensure our finished goods stock in the UK is held across separate locations within our logistics par tner’s estate, and in the US
we hold our stock across three locations on the West Coast, East Coast and in Texas.
Whilst the Group is financially strong and has well balanced revenue streams, it is clear that COVID-19 will have a material impact on
2020 trading. The On-Trade channel, which makes up 45% of Group sales, has been severely challenged across many of our regions,
especially in those markets where government advice has led to the temporar y closing of all On-Trade outlets. In the Off-Trade channel,
overall sales have remained strong, most notably in the UK and the US.
There is no indication at this stage that there will be any material impairments of the financial assets presented in the 31 December
2019 financial statements. Whilst trading under COVID-19 has impacted stock turnover, production quantities have also been reduced
accordingly. Credit risk is increasing as customers, par ticularly those operating in the On-Trade, and our impor ters are put under
increasing financial pressure. As such, we are managing our trade receivables closely with our customers and whilst credit risk remains,
we have collected 95% of year end receivables to this point.
We have modelled a number of possible outcomes which consider, amongst other things, the overall length of the lockdown in key
regions, trading within the Off-Trade channel during the period, as well as the rate of normalisation across the On-Trade post lockdown.
These scenarios give a broad range of outcomes on revenue, before considering the related margin impact and approach to
discretionar y spend as we move through the year. Given the level of uncer tainty and the dynamic nature of the situation, it is too early
to quantify the impact on the outturn for the remainder of the financial year.
The Group is in a ver y strong financial position at year end and at the current date. We are debt-free, with year-end cash of £128m,
which has fur ther increased post year end.
Other than the effects of Covid-19, as described above, there were no events after the repor ting period to disclose.
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95
Stock code: FEVRFINANCIAL STATEMENTS 25. RELATED PARTY TRANSACTIONS
Compensation of key management personnel:
Short-term employee benefits
Bonus
Share based payments
Employers national insurance
2019
£m
1.1
–
0.6
0.1
1.8
2018
£m
1.0
0.9
1.4
1.7
5.0
The key management personnel are judged to be Directors. For full details of Directors’ remuneration, see the Remuneration
Committee Repor t on pages 47 to 57.
26. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors there is no ultimate controlling par ty.
96
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.comNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Company number 08415302
Fixed assets
Fixed asset investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium
Capital redemption reserve
Retained earnings
Shareholders’ funds
Note
2019
£m
2018
£m
3
4
5
6
7
7
7
60.5
60.5
66.9
22.9
89.8
6.7
43.8
50.5
(4.5)
(9.0)
85.3
41.5
145.8
145.8
0.3
54.8
0.1
90.6
102.0
102.0
0.3
54.8
0.1
46.8
145.8
102.0
As permitted by Section 408 of the Companies Act 2006, a separate profit or loss account of the parent Company has not been presented.
The parent Company’s profit for the year was £59.7m (2018: £18.8m).
The financial statements were approved and authorised for issue by the Board of Directors on 21 April 2020 and were signed on its behalf by:
ANDREW BRANCHFLOWER
Chief Financial Officer
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97
Stock code: FEVRFINANCIAL STATEMENTS COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Equity as at 31 December 2017
Total comprehensive income for the year
Dividends paid
Share based payments
Tax on share based payments
Shares issued
Equity as at 31 December 2018
Total comprehensive income for the year
Dividends paid
Share based payments
Tax on share based payments
Shares issued
Share
capital
£m
0.3
Share
premium
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
53.7
0.1
37.7
–
–
–
–
–
0.3
–
–
–
–
–
–
–
–
–
1.1
54.8
–
–
–
–
–
–
–
–
–
–
0.1
–
–
–
–
–
18.8
(13.7)
1.8
2.2
–
46.8
59.7
(18.0)
1.9
0.2
–
Total
£m
91.8
18.8
(13.7)
1.8
2.2
1.1
102.0
59.7
(18.0)
1.9
0.2
–
Equity as at 31 December 2019
0.3
54.8
0.1
90.6
145.8
98
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Proof 9
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements of Fever tree Drinks plc Company have been prepared in accordance with Financial Repor ting Standard 101,
Reduced Disclosure Framework (FRS 101) and the Companies Act 2006.
The Company’s financial statements are presented in Sterling.
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore,
these financial statements do not include:
•
•
•
•
•
cer tain comparative information as otherwise required by EU endorsed IFRS;
cer tain disclosures regarding the Company’s capital;
a statement of cash flows;
the effect of future accounting standards not yet adopted;
the disclosure of the remuneration of key management personnel; and
• disclosure of related par ty transactions with wholly owned fellow group companies
In addition, and in accordance with FRS 101 fur ther disclosure exemptions have been adopted because equivalent disclosures are
included in the consolidated financial statements of Fever tree Drinks plc. These financial statements do not include cer tain disclosures
in respect of:
•
•
•
•
share based payments;
financial instruments (other than cer tain disclosures required as a result of recording financial instruments at fair value);
fair value measurement (other than cer tain disclosures required as a result of recording financial instruments at fair value); and
the disclosure requirements of IFRS 15.
In all respects, the Company applies the same accounting policies as the Group, which, as stated above, are outlined in the notes to the
consolidated financial statements. In addition, the following accounting policies are also applied, given the Company’s function as holding
company for the Group.
INVESTMENTS
Fixed asset investments are stated at cost less provisions for diminution in value.
SHARE BASED PAYMENTS
The Company operates equity-settled share-based option plans. The fair value of the employee ser vices received in exchange for the
par ticipation in the plan is recognised as an expense in the profit or loss account. The corresponding credit has been recognised in the
profit or loss account reser ve.
The fair value of the employee ser vice is based on the fair value of the equity instrument granted. This expense is spread over the
vesting period of the instrument.
2. STAFF COSTS
Short term employee benefits
Accrued bonus
Employers national insurance
2019
£m
1.1
–
0.1
1.2
2018
£m
1.0
0.9
1.7
3.6
No headcount figures are included within this note since salaries are recharged for ser vices to the Company from other Group companies.
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99
Stock code: FEVRFINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
3. FIXED ASSET INVESTMENT
At 31 December 2018 and 2019
Refer to note 12 of the consolidated financial statements of the Group for the list of the Company’s subsidiaries.
4. DEBTORS
Amounts owed by group undertakings
Deferred tax asset
5. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Other taxation and social security
Accruals
Bank loans
Amounts owed to group undertakings
Subsidiary
undertakings
£m
60.5
2019
£m
65.2
1.7
66.9
2019
£m
–
–
0.1
–
4.4
4.5
2018
£m
5.3
1.4
6.7
2018
£m
0.1
1.0
1.0
6.1
0.8
9.0
In Januar y 2016, the business agreed a three-year £10,000,000 Revolving Credit Facility at a rate of 0.60% above LIBOR with additional
fees of 0.20% on utilised amounts and 0.24% on non-utilised amounts. In Januar y 2019 the Group repaid the outstanding loan balance in
full and the facility expired. No fur ther financing agreements have been entered into.
6. SHARE CAPITAL
Refer to note 19 of the consolidated financial statements for information on share capital.
7. RESERVES
Refer to note 21 of the consolidated financial statements for a description of the reser ves.
8. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption not to disclose related par ty transactions with wholly owned fellow Group
companies. Related par ty transactions with key management personnel (including Directors) are shown in note 25 of the consolidated
financial statements.
9. SHARE BASED PAYMENTS
Share based payment arrangements for Directors are set out in the Remuneration Repor t.
Details of the share options in existence are shown in note 20 of the consolidated financial statements.
100
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Proof 9
FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com 10. EVENTS AFTER THE REPORTING PERIOD
COVID-19
There remains considerable uncer tainty about how Covid-19 will develop over the coming weeks and months after it was announced as
a global health emergency by the World Health Organisation on 30 Januar y 2020.
We have modelled a number of possible outcomes which consider, amongst other things, the overall length of the lockdown in key
regions, trading within the Off-Trade channel during the period, as well as the rate of normalisation across the On-Trade post lockdown
for all subsidiaries.
These scenarios give a broad range of outcomes on revenue, before considering the related margin impact and approach to
discretionar y spend as we move through the year for the various subsidiaries. Given the level of uncer tainty and the dynamic nature of
the situation, it is too early to quantify its impact on the outturn for the remainder of the financial year. However, there is no indication
at this stage that there will be any material impairments of the financial and non-financial assets presented in the 31 December 2019
financial statements, which includes investment in subsidiaries and recoverability of intercompany trading balances.
Other than the effects of Covid-19, as described above, there were no events after the repor ting period to disclose.
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Stock code: FEVRFINANCIAL STATEMENTS OTHER
INFORMATION
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www.fever-tree.com OTHER
INFORMATION
CONTENTS
Company Information
Notice of Annual General Meeting
Notice of Annual General Meeting –
Explanator y Notes
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105
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Stock code: FEVR COMPANY INFORMATION
REGISTERED OFFICE
Kildare House
3 Dorset Rise
London
EC4Y 8EN
HEAD OFFICE
186-188 Shepherds Bush Road
London
W6 7NL
COMPANY WEBSITE
www.fever-tree.com
COMPANY SECRETARY
John Finlay
ADVISERS
NOMINATED ADVISERS AND BROKERS
Investec Bank plc
2 Gresham Street
London
EC2V 7QP
Numis Securities
10 Paternoster Square
London
EC4M 7LT
LEGAL ADVISERS TO THE COMPANY
Osborne Clarke
One London Wall
London
EC2Y 5EB
AUDITORS
BDO LLP
55 Baker Street
London
W1U 7EU
REGISTRARS
Link Asset Ser vices
The Registr y
34 Beckenham Road
Beckenham
Kent
BR3 4TU
104
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting (the “AGM”) of Fever tree Drinks plc (the “Company”) will be held at the office of
Fever Tree at 186-188 Shepherds Bush Road, W6 7NL, on 4 June 2020 at 11:30 a.m. Pursuant to the stay at home measures brought which
have been applied in the UK in response to the COVID-19 pandemic, shareholders will not be permitted to attend the meeting and access
will be refused. Shareholders are invited to submit any questions for the Board by sending an email to agm@fever-tree.com. We encourage
all shareholders to vote by proxy, fur ther details of which are contained in this notice. The AGM will be for the following purposes:
ORDINARY BUSINESS
To consider and, if thought fit, pass the following resolutions which will be proposed as ordinar y resolutions:
1. Report and accounts
To receive the audited annual accounts of the Company for the year ended 31 December 2019 together with the Directors’ repor ts
and the Auditors’ repor t on those annual accounts.
2. Directors’ Remuneration
To approve the Directors’ remuneration repor t for the year ended 31 December 2019.
3. Declaration of dividend
To declare a final dividend of 9.88p per ordinar y share for the year ended 31 December 2019 payable on 12 June 2020 to shareholders
who are on the register of members of the Company on 15 May 2020.
4. Re-election of William Ronald
To re-elect William Ronald as a Director.
5. Re-election of Timothy Warrillow
To re-elect Timothy Warrillow as a Director.
6. Re-election of Andrew Branchflower
To re-elect Andrew Branchflower as a Director.
7. Re-election Coline McConville
To re-elect Coline McConville as a Director.
8. Re-election of Kevin Havelock
To re-elect Kevin Havelock as a Director.
9. Re-election of Jeff Popkin
To re-elect Jeff Popkin as a Director.
10. Re-election of Domenic De Lorenzo
To re-elect Domenic De Lorenzo as a Director.
11. Re-appointment of Auditors
To re-appoint BDO LLP as Auditors of the Company to hold office from the conclusion of this AGM until the conclusion of the next
general meeting at which accounts are laid before the Company.
12. Auditors’ remuneration
To authorise the Directors to determine the remuneration of the Auditors.
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Stock code: FEVROTHER INFORMATION NOTICE OF ANNUAL GENERAL MEETING CONTINUED
SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions of which resolution 13 and 16 will be proposed as ordinar y resolutions and
resolutions 14 and 15 will be proposed as special resolutions.
13. Directors’ authority to allot shares
That, in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this resolution, the
Directors be and they are generally and unconditionally authorised pursuant to Section 551, Companies Act 2006 (the “Act”) to
exercise all powers of the Company to allot shares in the Company, and grant rights to subscribe for or to conver t any security into
shares of the Company (such shares, and rights to subscribe for or to conver t any security into shares of the Company being “relevant
securities”) up to an aggregate nominal amount of £96,776 provided that, unless previously revoked, varied or extended, this authority
shall expire on the earlier of the date falling 18 months after the date of the passing of this resolution and the conclusion of the next
AGM of the Company, except that the Company may at any time before such expir y make an offer or agreement which would or might
require relevant securities to be allotted after such expir y and the Directors may allot relevant securities in pursuance of such an offer
or agreement as if this authority had not expired.
14. Directors’ power to issue shares for cash
That, in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this resolution, the
Directors be and they are empowered to allot equity securities (as defined in Section 560 of the Act) of the Company wholly for cash
pursuant to the authority of the Directors under Section 551 of the Act conferred by resolution 14 above (in accordance with Section
570(1) of the Act) and/or by way of a sale of treasur y shares (in accordance with Section 573 of the Act), in each case as if Section
561(1) of the Act did not apply to such allotment provided that the power conferred by this resolution shall be limited to:
(i)
the allotment of equity securities in connection with an offer of, or invitation to apply for, equity securities:
(A) in favour of holders of ordinar y shares in the capital of the Company, where the equity securities respectively attributable to
the interests of all such holders are propor tionate (as nearly as practicable) to the respective number of ordinar y shares in the
capital of the Company held by them; and
(B) to holders of any other equity securities as required by the rights of those securities or as the Directors otherwise consider
necessar y,
but subject to such exclusions or other arrangements as the Directors may deem necessar y or expedient to deal with treasur y
shares, fractional entitlements or legal, regulator y or practical problems arising under the laws or requirements of any overseas
territor y or by vir tue of shares being represented by depositor y receipts or the requirements of any regulator y body or stock
exchange or any other matter whatsoever ; and
(ii) the allotment, otherwise than pursuant to sub-paragraph (i) above, of equity securities up to an aggregate nominal value equal to
£14,516; and
unless previously revoked, varied or extended, this power shall expire on the earlier of the date falling 18 months after the date of the
passing of this resolution and the conclusion of the next AGM of the Company except that the Company may before the expir y of
this power make an offer or agreement which would or might require equity securities to be allotted or sold after such expir y and the
Directors may allot equity securities in pursuance of such an offer or agreement as if this power had not expired.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com
15. Authority to purchase shares (market purchases)
That the Company be and is hereby unconditionally and generally authorised for the purposes of Section 701 of the Act to make
market purchases (within the meaning of Section 693(4) of the Act) of its ordinar y shares of 0.25p each (“Ordinar y Shares”) provided
that:
(i)
the maximum number of Ordinar y Shares authorised to be purchased is 11,613,120;
(ii) the minimum price which may be paid for any such Ordinar y Share is 0.25p;
(iii) the maximum price which may be paid for an Ordinar y Share shall be the higher of:
(A) an amount equal to 105% of the average middle market quotations for an Ordinar y Share as derived from the London Stock
Exchange Daily Official List for the 5 business days immediately preceding the day on which the Ordinar y Share is contracted
to be purchased; and
(B) the higher of the price of the last independent trade and the highest current independent bid on the trading venue where the
purchase is carried out; and
(iv) this authority shall, unless previously renewed, revoked or varied, expire on the earlier of the date falling 18 months after the date
of the passing of this resolution and the conclusion of the next AGM, but the Company may enter into a contract for the purchase
of Ordinar y Shares before the expir y of this authority which would or might be completed (wholly or par tly) after its expir y.
16. Directors’ fees
To:
(i) approve, adopt and ratify the decisions of the current and former Directors of the Company to pay fees to Directors in the
amounts set out in the Company’s annual repor t and accounts for each of the financial years from and including the financial
year ended 31 December 2017 up to and including the fees which are payable in the financial year ending 31 December 2020,
notwithstanding that the amounts of such fees exceeded or may have exceeded the limit set out in the Company’s ar ticles of
association (the “Ar ticles”); and
(ii) increase the limit on the aggregate sum that may be paid per year as Directors’ fees under ar ticle 93 of the Ar ticles from £250,000
to £750,000.
Dated: 11 May 2020
Registered Office:
Kildare House
3 Dorset Rise
London
EC47 8EN
By order of the Board
JOHN FINLAY
Company Secretary
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Stock code: FEVROTHER INFORMATION
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
NOTES:
1. Pursuant to Regulation 41 of the Uncer tificated Securities Regulations 2001 (as amended), only those members registered in the
register of members of the Company at the close of business on 2 June 2020 (or if the AGM is adjourned, 48 hours before the time
fixed for the adjourned AGM) shall be entitled to attend and vote at the AGM in respect of the number of shares registered in their
name at that time. Any changes to the register of members after such time shall be disregarded in determining the rights of any person
to attend or vote at the AGM.
2. Pursuant to the stay at home measures brought which have been applied in the UK in response to the COVID-19 pandemic,
shareholders will not be permitted to attend the meeting and access will be refused. We encourage all shareholders to vote by proxy,
fur ther details of which are contained in this notice in Note 7 below.
3.
4.
Each of the resolutions to be put to the meeting will be voted on by a poll reflecting the number of voting rights exercisable by each
member. The results of the poll will be published on the Company’s website once the votes have been counted and verified.
In the case of joint holders of shares, the vote of the first named in the register of members who tenders a vote shall be accepted to
the exclusion of the votes of other joint holders.
5. A member that is a company or other organisation not having a physical presence cannot attend in person but can appoint someone
to represent it. This can be by the appointment of a proxy (described in Note 7 below) Members considering the appointment of a
corporate representative should check their own legal position, the Company’s ar ticles of association and the relevant provision of the
Companies Act 2006.
6. Copies of the executive Directors’ ser vice contracts with the Company and any of its subsidiar y under takings are available on request.
7. You can vote either :
• by logging on to www.signalshares.com and following the instructions;
• You may request a hard copy form of proxy directly from the registrars, Link Asset Ser vices, at enquiries@linkgroup.co.uk or on Tel:
0371 664 0300. Calls are charged at the standard geographic rate and will var y by provider. Calls outside the United Kingdom will
be charged at the applicable international rate. Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in
England and Wales.
•
in the case of CREST members, by utilising the CREST electronic proxy appointment ser vice in accordance with the procedures set
out below.
In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must be received by
Link Asset Ser vices at 34 Beckenham Road, Beckenham, Kent, BR3 4ZF by 11:30 a.m. on 2 June 2020.
8. CREST members who wish to appoint a proxy or proxies through the CREST proxy appointment ser vice may do so for the AGM (and
any adjournment thereof) by following the procedures described in the CREST Manual. CREST personal members or other CREST
sponsored members (and those CREST members who have appointed a voting ser vice provider) should refer to their CREST sponsor
or voting ser vice provider, who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (“Euroclear”) specifications and
must contain the information required for such instructions, as described in the CREST Manual. The message (regardless of whether it
relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy) must, in order to
be valid, be transmitted so as to be received by Link Asset Ser vices, RA10 by 11.30 a.m. on 2 June 2020. For this purpose, the time of
receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from
which Link Asset Ser vices is able to retrieve the message by enquir y to CREST in the manner prescribed by CREST. After this time any
change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members (and, where applicable, their CREST sponsors or voting ser vice providers) should note that Euroclear does not make
available special procedures in CREST for any par ticular messages. Normal system timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or if the CREST member
is a CREST personal member or sponsored member or has appointed a voting ser vice provider, to procure that his CREST sponsor or
voting ser vice provider takes) such action as shall be necessar y to ensure that a message is transmitted by means of the CREST system
by any par ticular time. In this connection, CREST members (and, where applicable, their CREST sponsors or voting ser vice providers)
are referred, in par ticular, to those sections of the CREST Manual (available at www.euroclear.com/CREST) concerning practical
limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncer tificated
Securities Regulations 2001 (as amended).
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com
NOTICE OF ANNUAL GENERAL MEETING –
EXPLANATORY NOTES
RESOLUTION 1 – RECEIVING THE ACCOUNT AND REPORTS
All quoted companies are required by law to lay their annual accounts before a general meeting of the Company, together with the
Directors’ repor ts and Auditors’ repor t on the accounts. At the AGM, the Directors will present these documents to the shareholders for
the financial year ended 31 December 2019.
RESOLUTION 2 – DIRECTORS’ REMUNERATION
To approve the Directors’ remuneration repor t for the year ended 31 December 2019.
RESOLUTION 3 – DECLARATION OF DIVIDEND
This resolution concerns the Company’s final dividend payment. The Directors are recommending a final dividend of 9.88p per ordinar y
share in respect of the year ended 31 December 2019 which, if approved, will be payable on 12 June 2020 to the shareholders on the
register of members on 15 May 2020.
RESOLUTION 4 – RE-ELECTION OF WILLIAM RONALD
This resolution concerns the re-election of William Ronald who is retiring at the meeting by rotation in accordance with the Company’s
ar ticles of association. A biography of William Ronald’s background and experience is provided in the Annual Repor t.
RESOLUTION 5 – RE-ELECTION OF TIMOTHY WARRILLOW
This resolution concerns the re-election of Timothy Warrillow who is retiring at the meeting by rotation in accordance with the Company’s
ar ticles of association. A biography of Tim Warrillow’s background and experience is provided in the Annual Repor t.
RESOLUTION 6 – RE-ELECTION OF ANDREW BRANCHFLOWER
This resolution concerns the re-election of Andrew Branchflower who is up for re-election pursuant to Company’s continued compliance
with the UK Corporate Governance Code. A biography of Andrew Branchflower’s background and experience is provided in the Annual
Repor t.
RESOLUTION 7 – RE-ELECTION OF COLINE MCCONVILLE
This resolution concerns the re-election of Coline McConville who is up for re-election pursuant to Company’s continued compliance with
the UK Corporate Governance Code. A biography of Coline McConville’s background and experience is provided in the Annual Repor t.
RESOLUTION 8 – RE-ELECTION OF KEVIN HAVELOCK
This resolution concerns the re-election of Kevin Havelock who is up for re-election pursuant to Company’s continued compliance with the
UK Corporate Governance Code. A biography of Kevin Havelock’s background and experience is provided in the Annual Repor t.
RESOLUTION 9 – RE-ELECTION OF JEFF POPKIN
This resolution concerns the re-election of Jeff Popkin who is up for re-election pursuant to Company’s continued compliance with the UK
Corporate Governance Code. A biography of Jeff Popkin’s background and experience is provided in the Annual Repor t.
RESOLUTION 10 – RE-ELECTION OF DOMENIC DE LORENZO
This resolution concerns the re-election of Domenic De Lorenzo who is up for re-election pursuant to the Company’s continued
compliance with the UK Corporate Governance Code. A biography of Dom de Lorenzo’s background and experience is provided in the
Annual Repor t.
RESOLUTION 11 – RE-APPOINTMENT OF AUDITORS
This resolution concerns the re-appointment of BDO LLP as Auditors until the conclusion of the next general meeting at which accounts
are laid, that is, the next AGM.
RESOLUTION 12 – AUDITORS’ REMUNERATION
This resolution authorises the Directors to fix the Auditors’ remuneration.
RESOLUTION 13 – DIRECTORS’ POWER TO ALLOT SHARES
This resolution grants the Directors authority to allot shares in the capital of the Company and other relevant securities up to an aggregate
nominal value of £96,776 representing approximately one third of the nominal value of the issued ordinar y share capital of the Company as
at 21 April 2020, being the latest practicable date before publication of this notice.
The Directors do not have any present intention of exercising the authorities conferred by this resolution but they consider it desirable that the
specified amount of authorised but unissued share capital is available for issue so that they can more readily take advantage of possible opportunities.
Unless revoked, varied or extended, this authority will expire at the conclusion of the next AGM of the Company or the date falling 18
months from the passing of the resolution, whichever is the earlier.
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Stock code: FEVROTHER INFORMATION NOTICE OF ANNUAL GENERAL MEETING –
EXPLANATORY NOTES CONTINUED
RESOLUTION 14 – DIRECTORS’ POWER TO ISSUE SHARES FOR CASH FOR PRE-EMPTIVE ISSUES AND GENERAL PURPOSES
This resolution authorises the Directors in cer tain circumstances to allot equity securities for cash other than in accordance with the
statutor y pre-emption rights (which require a company to offer all allotments for cash first to existing shareholders in propor tion to their
holdings). The relevant circumstances are either where the allotment takes place in connection with a rights issue or the allotment is limited
to a maximum nominal amount of £14,516 representing approximately 5% of the nominal value of the issued ordinar y share capital of the
Company as at 21 April 2020 being the latest practicable date before publication of this notice. Unless revoked, varied or extended, this
authority will expire at the conclusion of the next AGM of the Company or 18 months after the passing of the resolution, whichever is the
earlier.
RESOLUTION 15 – AUTHORITY TO PURCHASE SHARES (MARKET PURCHASE)
This resolution authorises the board to make market purchases of up to 11,613,120 ordinar y shares (representing approximately 10% of
the Company’s issued ordinar y shares as at 21 April 2020, being the latest practicable date before publication of this notice). Shares so
purchased may be cancelled or held as treasur y shares. The authority will expire at the end of the next AGM of the Company or 18 months
from the passing of the resolution, whichever is the earlier. The Directors intend to seek renewal of this authority at subsequent AGMs.
The minimum price that can be paid for an ordinar y share is 0.25p being the nominal value of an ordinar y share. The maximum price that
can be paid is 5% over the average of the middle market prices for an ordinar y share, derived from the Daily Official List of the London
Stock Exchange, for the five business days immediately before the day on which the share is contracted to be purchased.
The Directors intend to exercise this right only when, in light of the market conditions prevailing at the time and taking into account all
relevant factors (for example, the effect on earnings per share), they believe that such purchases are in the best interests of the Company
and shareholders generally. The overall position of the Company will be taken into account before deciding upon this course of action. The
decision as to whether any such shares bought back will be cancelled or held in treasur y will be made by the Directors on the same basis at
the time of the purchase.
The Directors do not have any present intention of exercising the authorities conferred by this resolution but they consider it desirable that
the authorities are in place so that they can more readily take advantage of possible oppor tunities.
RESOLUTION 16 – DIRECTORS’ FEES
Under the Company’s Ar ticles, the aggregate fees payable to Directors (excluding any salar y, remuneration or other amount payable to a
Director in accordance with the Ar ticles) per year is £250,000, or such other limit as the Company in a general meeting shall from time to
time determine. The Board’s composition and size has upweighted in recent years and whilst details of the fees paid to Directors in each
financial year have been disclosed in the Company’s annual repor t and accounts in each year, the Company has not formally determined in
a general meeting a revised limit on the aggregate fees payable to Directors under the Ar ticles. In each financial year from and including the
financial year ended 31 December 2017 up to and including the current financial year ending 31 December 2020, the aggregate amount of
fees paid or payable to Directors has exceeded the current £250,000 limit set out in the Ar ticles, as detailed below. There has, therefore, in
relation to each of those financial years, been a technical breach of the limit set under the Ar ticles.
Annual Repor t and Accounts
Financial year ending 31 December 2020
Financial year ended 31 December 2019
Financial year ended 31 December 2018
Financial year ended 31 December 2017
Aggregate Directors’ fees paid £000
(Amount paid in excess of limit in Ar ticles £000)
485
485 (235)
428 (178)
309 (59)
The purpose of resolution 16 is to address this issue by formally increasing the aggregate limit on the fees that may be paid to Directors
from £250,000 to £750,000, which will allow the Company some headroom to accommodate any future increases in the aggregate amount
of fees payable to the Directors whether due to fur ther appointments of Directors or otherwise.
Resolution 16 also formally ratifies, adopts and approves the decisions of current and former Directors of the Company in approving the
fees paid and payable to Directors in each financial year from and including the financial year ended 31 December 2017 up to and including
the current financial year, notwithstanding that the aggregate amount of such fees exceeded or exceeds the current limit set out in the
Ar ticles.
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FEVER-TREE DRINKS PLC Annual Report and Financial Statements for the year ended 31 December 2019 www.fever-tree.com 27197
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#MixWithTheBest
FEVERTREEMIXERS
FEVER-TREE.COM
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