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Britvic plc   -  BVIC   

2018 Annual Report and Notice of AGM

Released 10:16 13-Dec-2018

RNS Number : 3938K
Britvic plc
13 December 2018

Britvic plc ("Britvic", the "Company" or the "Group")



13 December 2018





Following the release on 29 November 2018 of the Group's Preliminary Results Announcement for the 52 weeks to 30 September 2018, and in compliance with Listing Rule 9.6.1, the Company has today submitted the following documents to the UK Listing Authority, and they will shortly be available for inspection at the National Storage Mechanism which is located at  


·     Annual Report and Accounts 2018.

·     Notice of the Annual General Meeting of the Company, to be held on Thursday 31 January 2019 at 11.00am at the offices of Linklaters LLP, One Silk Street, London EC2Y 8HQ.

·     Proxy form for the 2019 AGM.


The Annual Report and Accounts 2018 are available to view or download in pdf format from the Company's website at


The Notice of Meeting is available to view or download in pdf format from the Company's website at


A condensed set of Britvic plc financial statements and information on important events that have occurred during the year and their impact on the financial statements were included in the Company's preliminary announcement on 29 November 2018. That information, together with the information set out below which is extracted from the Annual Report and Accounts 2018, constitute the requirements of DTR 6.3.5 which are to be communicated via a RIS in unedited full text.  This announcement is not a substitute for reading the full Annual Report and Financial Statements.  Page and note references in the text below refer to page numbers in the Annual Report and Accounts 2018.


Jonathan Adelman

Company Secretary



Appendix A

Principal risks and uncertainties


The principal risks and uncertainties relating to the Company are set out on pages 31 - 34 of the Britvic Annual Report and Accounts 2018. The following is extracted in full and unedited text from the Britvic Annual Report and Accounts 2018.


The table below sets out the principal risks faced by the company, the link to the company's strategies, movement in the risk score, examples of relevant controls and mitigating factors and recent developments. The company is exposed to a wide range of risks in addition to those listed.


Alignment to strategy key:

G: Generate profitable growth in our core markets

E: Exploit global opportunities in kids, family and adult categories

C: Continue to step-change our business capability

B: Build trust and respect in our communities




Principal risk

Failure to deliver brand propositions which respond to changing consumer preferences.


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, B


Risk description

Consumer preferences, tastes and behaviours change over time and differ between the different markets in which we operate. As part of this, the consumer's desire for healthier choices (including some beginning to want 'all natural, clean label' products in addition to low sugar drinks) and premiumisation are significant trends. Our ability to anticipate these trends and ensure the relevance of our brands and communication messages is critical to our competitiveness in the market place and our performance.


Controls and mitigating activities

• We have a broad portfolio of products across a number of sub-categories and markets to increase coverage of consumer trends.

• We monitor market trends to identify consumer, customer and shopper insights in order to develop category and brand strategies.

• Our brand communication strategies are designed to optimise digital and traditional channel opportunities.

• Our innovation process is informed by our category strategies and uses tools, processes and resources to develop new products and brand communication.


2018 developments

• We continue to invest in innovation and marketing programmes.

• Britvic has recently launched innovations and brand extensions, such as Purdey's natural energy multi-vitamin drink and super-premium and naturally light London Essence Company tonics and sodas in order to capitalise on consumer trends towards healthier choices and

premium products.

• In 2018, Robinsons extended its squash portfolio with the launch of Robinsons Fruit Cordials, targeted at adults, and Robinsons Creations, a premium alternative to the everyday range. Together they are worth £25m of retail sales value and have helped to deliver Robinsons and category value growth in 2018.

• The Pressade Bonjour range of organic juices was launched in 2017 and continues to deliver strong growth in the French juice market.

• The investment in the company's supply chain will increase our ability to create natural/ 'clean label' products through the introduction of new aseptic lines.




Principal risk

Failure to respond to growing health concerns of consumers and expectations from public health bodies and government officials on the soft drinks industry role in tackling health issues (such as obesity).


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, B


Risk description

There is a continued high level of media and government scrutiny on health and obesity in all of the markets we operate in, with a soft drinks levy introduced in the UK, a soft drinks tax in Ireland and revisions to the French soda tax in 2018. It is important that we continue to take a leadership position on health issues.


Controls and mitigating activities

• We have a wide range of soft drinks, many of which are low or no sugar. In Ireland, Britvic leads the 'No added sugar' ('NAS') market and in GB Britvic has a significantly higher market share in NAS than the total soft drinks market.

• Ongoing evaluation and development of the brand portfolio and innovation pipeline; our innovation pipeline is weighted towards lower sugar or nutritionally enhanced brands.

• Reformulation of products where we can, to help consumers make healthier choices.

• We market our brands responsibly and don't directly target under 12s and have a focus on low or no sugar variants, as well as encouraging consumers to lead active lifestyles.

• We work closely with non-government organisations and trade associations in our markets to fully participate in the debate and help shape solutions.


2018 developments

• 3.5 billion calories have been removed from the GB portfolio in 2018 through new reformulations.

• 90% of Britvic's total GB portfolio by volume and 83% of Britvic's volume in Ireland is now exempt/below the levy/tax threshold (including PepsiCo).

• In GB & Ireland we benefited from the introduction of the sugar levy in the UK and the sugar tax in Ireland as a result of our strong portfolio of leading low and no sugar brands. Additionally stills brands such as Robinsons, MiWadi and Ballygowan delivered strong market value share growth.

• We continued to support health programmes and charities through our brands, including the Fruit Shoot partnership with Public Health England's Change4Life campaign and MiWadi supporting Diabetes Ireland.




Principal risk

We may not be able to maintain strong relationships or respond to changes in the retailer landscape.


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, C


Risk description

Maintaining strong relationships with our existing customers and building relationships with new customers and technology-enabled channels is critical for our brands to be available and well presented to our consumers. A failure to do this may impact our ability to obtain competitive pricing and trade terms and/or the availability and presentation of our brands.


Controls and mitigating activities

• We operate across many different customer channels and markets.

• Continuous monitoring of customer performance and trends.

• We develop joint business plans with customers that include investment and activation plans.

• We have capabilities in the soft drinks category and customer outlet design, which enable us to find new ways to improve customer performance and enhance our relationships.


2018 developments

• The GB supply chain investment programme is enabling us to respond to customer and consumer needs through improved capability to produce different products and pack sizes.

• Strengthened position in the licensed and leisure channel with the successful retention of Marston's and win of Cineworld in GB.

• Successfully integrated East Coast into our Irish wholesale business, enabling it to accelerate the distribution of Britvic brands in the Dublin on-trade sector.




Principal risk

Partnerships may not be renewed or are renewed on less favourable terms.


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, C


Risk description

We currently bottle and co-market a number of PepsiCo products in GB and Ireland, including 7UP and Pepsi. Additionally we have a relationship with a number of partners to grow our family, adult and kids brands outside of our core markets. Our partnership with PepsiCo and distributors and franchisees is an important part of our business and delivery of our strategy going forward.


Controls and mitigating activities

• Robust governance and management of relationship with PepsiCo and other partners.


2018 developments

• Pepsi and Pepsi MAX achieved record share in 2018 in GB continuing the upward trajectory in performance we have been driving for well over a decade.




Principal risk

Supplier failure, market shortage or an adverse event in our supply chain impacts sourcing of our products and/or that the cost of our products is significantly affected by commodity price movements.


Risk score movement from the prior year: Increased.

Alignment to strategy: G, E, C, B


Risk description

Our business depends on purchasing a wide variety of products and services, efficient manufacturing and distribution processes. Brexit presents a specific risk, which is explored in further detail in the 2018 developments.


Controls and mitigating activities

• We have robust supplier strategy, selection, monitoring and management processes.

• We monitor market conditions for commodities and, where appropriate, hedge our contractual positions.

• Externally certified management systems across the supply chain.

• Business continuity planning processes.


2018 developments

• The GB supply chain investment programme will further improve the flexibility and therefore resilience of our supply chain.

• We maintain multiple sources of supply for our products wherever possible. During the summer, the industry-wide CO2 shortage impacted a number of companies including Britvic. The company reduced the level of promotional activity to help manage demand during the shortage.

• Unlike some other businesses, leaving the European Union of itself, does not present specific challenges to the company as we manufacture the vast majority of finished goods in the same market as our selling market. Nonetheless, Brexit could result in higher cost of goods for the company, as a result of the introduction of trade tariffs for imports to the UK from the EU which would impact the raw materials that we purchase from the EU. Additionally, in the event of a 'no-deal' Brexit, there is a risk of disruption at borders, which could impact the supply of some raw materials sourced from the EU. We are working closely with suppliers to understand their plans, reviewing all supply alternatives and increasing

the level of raw materials that we hold in the run-up to 29 March 2019.



Principal risk

Natural capital depletion, climate change and environmental pollution all present a risk to our ability to source, manufacture and market our drinks.


Risk score movement from the prior year: Increased.

Alignment to strategy: G, E, C, B


Risk description

The impact of extreme and longer-term shifts in weather patterns, natural resource depletion and other ecological effects of climate change could impact the business in a number of ways, financially and reputationally. It could lead to reduced availability (for example of agricultural material) which in turn could result in price rises or interruptions to supply. Further regulatory action to manage climate change and environmental pollution impacts could see restrictions imposed and/or taxes introduced.


Additionally, it is important that we continually look to reduce the company's direct environmental impact by managing our resource consumption efficiently and sourcing sustainably.


Increasing regulatory requirements and growing societal pressure with regards to packaging (plastics in particular) may present a financial and/or reputational risk to our existing packaging portfolio and impact upon our ability to market our products.


Controls and mitigating activities

• Environmental considerations including impacts associated with sourcing, production and end-of-life stages are embedded within our innovation pipeline.

• We work closely with our suppliers to understand the environmental impact of key ingredients and, through our responsible sourcing programme, promote environmental protection and pollution prevention.

• Within our A Healthier Everyday sustainability programme we make environmental commitments, including carbon emission reductions, water savings and reducing the environmental impact of our packaging.

• We have externally certified management systems in place to monitor and reduce the environmental impact of our operations and ensure compliance with environmental legislation.

• Our sustainable packaging strategy focuses on: system changes that are needed to support a more circular economy; changes we can make as a business to reduce the environmental impact of our packaging; and how we can encourage consumer change in support of recycling and anti-littering.


2018 developments

• The investment in the GB supply chain will enable the company to be more efficient, reduce energy consumption and the number of road miles travelled by finished product. For example the manufacturing carbon intensity ratio has reduced from 30.2 to 26.0 kg CO2e per tonne production in 2018.

• The GB supply chain investment programme is enabling us to access the latest in packaging technology, allowing us to further light-weight bottles and cans. Nearly 600 tonnes of primary plastic removed and 2,825 tonnes of can material saved in 2018.

• Through our trade associations and directly, we continue to proactively engage with government on the feasibility of a Deposit Return Scheme (DRS) system and other actions to increase recycling and reduce littering.

• This year we committed to only purchasing Packaging Recovery Notes (PRN) from the UK, investing in the UK recycling industry in support of the circular economy.



Principal risk

Our plan to grow our international business is limited by lack of brand momentum, local geo-political or economic risks, the risks associated with start-up profitability or substandard processes and systems.


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, B


Risk description

To achieve our strategy of growing internationally, it is important that we have the appropriate governance, systems and processes in place and that our brand propositions respond appropriately to local consumer preferences.


Controls and mitigating activities

• We have a strategy of a mix of 'asset light' franchise and business acquisitions, which reduces our exposure to this risk.

• We carry out extensive due diligence prior to entering into a new market.

• We closely monitor current and forecast performance of our business units and, where required, rebalance investment priorities.


2018 developments

• In Brazil we continue to invest for the long term against a backdrop of macro uncertainty. The Bela Ischia acquisition is enabling us to expand market and channel coverage, and delivering cost synergies ahead of guidance. We continue to focus on longer term opportunities to grow through brand development and innovation, leveraging local and

group brands.

• Continued focus on quality of distribution and in-store presence to drive the rate of sale of Fruit Shoot in the United States and ongoing focus on growing the London Essence Company in major cities across the world.

• Teisseire distribution and share increased in both Belgium and Holland.




Principal risk

A faulty or contaminated product, either through malicious contamination, human error or equipment failure, is supplied to the market.


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, C, B


Risk description

The quality of our products is of the utmost importance to us and it is essential that we manage product quality and integrity.


Controls and mitigating activities

• We have robust quality management standards applied and rigorously monitored.

• We have supplier assurance and management processes.

• We have dedicated central teams to oversee quality and supplier assurance, working closely with the business units.


2018 developments

• Continued focus on improving the management standards framework and the monitoring and oversight processes used across the company.

• Evolve and amend management systems and quality processes to reflect the new technology in the GB supply chain.





Principal risk

Non-compliance with local laws or regulations or breach of our internal policies and standards.


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, C, B


Risk description

Britvic is subject to a wide range of legislation, regulation, guidance and codes of practice in areas such as labelling, packaging, marketing, advertising, safety, environment, competition, data privacy, ethical business and tax. Failure to comply with such requirements could have a significant impact on our reputation and/or incur financial penalties.


Controls and mitigating activities

• Britvic's code of conduct and key global policies are trained and rolled out to new joiners and the workforce at regular intervals.

• We operate a programme of e-learning training for key global policies.

• We monitor processes to ensure compliance with all relevant legislation and regulations.

• We work closely with our external advisors and the regulators, government bodies and trade associations regarding current and future legislation which would impact upon the company.

• Whistleblowing processes are in place.


2018 developments

• Creation of a dedicated compliance function led by the company's Global Head of Compliance.

• A programme was put in place to achieve readiness for the introduction of General Data Protection Regulation (GDPR) in the EU on 25 May 2018. Ongoing data protection processes and compliance will be overseen by the Data Privacy Committee, which will be led by the company's Global Head of Compliance.

• Continue to monitor changes in law and regulation and compliance with company's policies.




Principal risk

We experience a major failure of IT infrastructure or breach in system or information security.


Risk score movement from the prior year: No change.

Alignment to strategy: G, E, C


Risk description

We interact electronically with customers, suppliers and consumers, and our supply chain operations are dependent on reliable IT systems and infrastructure. Disruption to our IT systems could have a significant impact on our sales, cashflows and profits. Additionally, and in common with many businesses, cyber security breaches could lead to unauthorised access to, or loss of, sensitive information.


Controls and mitigating activities

• Disaster recovery plans tested every year.

• Central governance and decision-making processes for system changes.

• Information and IT policies are in place and are regularly reviewed.

• IT security standards are closely monitored to protect systems and information.

• Incident response plans are in place, recognising that whilst this risk can be managed it cannot be eliminated.


2018 developments

• We continue to see an increasing frequency in cyber-attacks (including phishing and ransomware) in the marketplace. We carry out regular auditing and benchmarking to ensure that our approach to managing this risk is consistent with industry practice.

• We have increased investment to improve information and cyber security controls and cyber risk awareness.

• The Chief Information, Transformation and Digital Officer was appointed to the Executive team in 2018.




Principal risk

Changes to exchange rates and interest rates can have an impact on profits and cashflows.


Risk score movement from the prior year: Increased.

Alignment to strategy: C


Risk description

Britvic is exposed to a variety of external financial risks relating to treasury and pensions. Changes to exchange rates and interest rates can have an impact on business results and the cost of interest on our debt.


Additionally, the GB and Ireland businesses have defined benefit pension plans which, whilst closed to new employees, are exposed to movements in interest and inflation rates, values of assets and increased life expectancy.


Controls and mitigating activities

• Robust monitoring of exchange rates and interest rates.

• Active risk management and hedging strategies are in place to manage exchange and interest fluctuations, overseen by the Treasury Committee.

• Pension interest rate hedging strategies in place and regularly reviewed.

• Monitoring of investment and funding strategies for pension fund.


2018 developments

• The recent depreciation of sterling has led to higher input costs across a number of our key commodities. Further the risk of a 'no-deal' Brexit could elevate this risk further. We closely monitor and manage this risk through a rolling 18 month hedging policy which is governed by the Treasury Committee.



Appendix B

Responsibility statement of the Directors in respect of the Annual Report


The Annual Report and Accounts 2018 contain a responsibility statement in compliance with DTR 4.1.12. This statement is set out on page 87 of the Annual Report and Accounts 2018, and is set out below in full and unedited text. This statement relates solely to the Britvic Annual Report and Accounts and is not connected to the extracted information set out in this announcement or the Preliminary Announcement.


The Directors confirm that to the best of their knowledge:

•    the consolidated financial statements prepared in accordance with IFRSs as adopted by the European Union give a true and fair view of the assets, liabilities, financial position and profit of the company and undertakings included in the consolidation taken as a whole;

•    the Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the company and undertakings included in the consolidation as a whole, together with a description of the principal risks and uncertainties that they face; and

•    having taken into account all matters considered by the Board and brought to the attention of the Board during the year, the Directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable. The Directors believe that the disclosures set out in this Annual Report provide the information necessary for shareholders to assess the company's performance, business model and strategy.


On behalf of the Board

Simon Litherland, Chief Executive Officer

Mathew Dunn, Chief Financial Officer

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2018 Annual Report and Notice of AGM - RNS