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Fevertree Drinks PLC - Preliminary Results 2014

RNS Number : 1103I
Fevertree Drinks PLC
23 March 2015

23rd March 2015


Fevertree Drinks plc ("Fever-Tree")


Preliminary Results


Fever-Tree, the world's leading supplier of premium carbonated mixers for alcoholic spirits by retail sales value, today announces its Preliminary Results for the year ended 31 December 2014.


Financial highlights(1):


·      Revenue up 49% to £34.7m (2013: £23.3m)

·      Adjusted EBITDA up 48% to £10.0m (2013: £6.7m)

·      Gross profit margin of 50.9% (2013: 51.0%)

·      Adjusted operating cash flow conversion of 73% of adjusted EBITDA (2013: 75%)

·      Strong balance sheet with net cash at year end of £3.3m

·      Diluted EPS of 1.54 pence

·      Final dividend of 0.30 pence per share recommended to shareholders


Operational highlights:


·      Successful AIM listing in November 2014 positioning the Group for its next stage of development and providing it with a strong platform for future growth

·      Entry into our 50th territory through launch in India

·      Second production partner added to allow refillable bottles in Germany


Charles Rolls, Executive Deputy Chairman of Fever-Tree said:


"Fever-Tree's organic growth continues to be driven by consumers' desire to drink premium mixers that match the quality of their favourite premium spirits. Fever-Tree's superior taste, ingredients and brand proposition is winning new converts in both old and new markets alike.


"We are confident that we will continue to be able to grow and lead in this premium segment, which we believe will outperform other drinks categories for some time to come as the natural ratio between premium spirits and premium mixers equilibrates."


Tim Warrillow, CEO of Fever-Tree said:


"2014 was a notable year for Fever-Tree as we continued to strengthen our market share and reputation as the leading international premium mixer brand.  We achieved a 49% increase in revenue and 48% increase in adjusted EBITDA.  Encouragingly, growth came from all four of our international regions, illustrating the global appeal of the brand and was underpinned by strong margins and high cash conversion rates.  We look forward to the year ahead with confidence."


(1)Fevertree Drinks plc was incorporated in February 2013 and acquired the trading entity Fevertree Limited in March 2013.  As such, the audited financial statements are required by the Companies Act to present as the comparison the trading period from 7 March 2013 to 31 December 2013.  To allow meaningful comparisons to be made against prior year figures, this front section of the Preliminary Results refers to the full year ending 31 December 2013 as the comparison period. The Preliminary Results refer to adjusted EBITDA and adjusted operating cash flow.  Adjusted EBITDA for the year ended 31 December 2014 is operating profit of £8.1m before depreciation of £0.1m, amortisation of £0.7m and exceptional items of £1.1m.  Adjusted operating cash flow at 31 December 2014 is cash generated from operations of £6.2m excluding exceptional items of £1.1m.


For further information:

Fevertree Drinks plc

c/o FTI +44 (0)20 3727 1000

Tim Warrillow, Co-founder and CEO

Charles Rolls, Co-founder and Executive Deputy Chairman

Andy Branchflower, Finance Director

FTI Consulting - Financial PR

+44 (0)20 3727 1000

Jonathon Brill

[email protected]

Georgina Goodhew

Tom Hufton

Investec Bank plc - Nominated Adviser and Broker

+44 (0)20 7597 4000

Garry Levin

Duncan Williamson

Matt Lewis

David Anderson

Notes to Editors:


Fever-Tree is the world's leading supplier of premium carbonated mixers for alcoholic spirits by retail sales value, with distribution to approximately 50 countries worldwide. Based in the UK, the brand was launched in 2005 to provide high quality mixers which could cater to the growing demand for premium spirits, in particular gin, but also increasingly for vodka, rum and whisky. The Company now sells a range of carbonated mixers to hotels, restaurants, bars and cafes ("On Trade") as well as selected retail outlets ("Off Trade"). Approximately 70 per cent of the Group's sales were derived from outside of the UK in financial year 2014, with key overseas markets in the US and Europe.



Chairman's Statement




This year has been a landmark one for the business, with the successful initial public offering in November 2014 positioning the Group for its next stage of development, further raising the profile of the business and providing it with a platform for future growth.




The Group achieved a very pleasing result in 2014, with revenue of £34.7 million reflecting growth of 49% versus 2013. Although high growth was achieved in all regions, of particular note is the growth achieved in our two largest single territories - UK, which grew by 60% and USA, which grew by 59%. This growth continued to be underpinned by strong stable margins.




The Board is pleased to recommend a final dividend of 0.30 pence per share, reflecting the short trading period from our listing date to year end.  If approved by the shareholders at the AGM on 7 May 2015, it will be paid on 22 May 2015 to shareholders on the register on 24 April 2015.




I joined the Board as non-executive Chairman in June 2013. In November 2014, we welcomed two new non-executive Directors, Coline McConville and David Adams. Between them, they have a wealth of experience and in the short time since their appointments they have already made a valuable contribution to the Group. It is a great privilege for me to be able to work with this Board and a founder-led executive management team who have made the business the success that it has become.


This is a young, dynamic business driven by a small team of talented individuals. On behalf of the Board and shareholders, I would like to record our thanks for their fantastic contribution to our result.




The outlook for the Group in 2015 is positive and continued implementation of the Group's strategy will allow us to build on the success of 2014.  There is much to do, with growth opportunities to realise, and I very much look forward to working with the Board and the wider team over the coming years to achieve our aims.



Bill Ronald



Chief Executive's Report

In my first Chief Executive's report I am delighted to be able to report on a notable year for Fever-Tree. We achieved revenue of £34.7m, representing growth of 49% on 2013 and in the year in which we added our 50th territory it is particularly encouraging that strong growth was achieved across all regions, illustrating the international appeal of the brand. 


The growth in revenue was underpinned by a stable gross profit margin of 50.9% and adjusted EBITDA margin of 28.8%, resulting in £10m of adjusted EBITDA generated in the year. We ended the year with a strong balance sheet and net cash of £3.3m.



Regional review


We consider our global sales across four regions, being the UK, USA, Rest of Europe ("Europe"), and Rest of the World ("RoW"). 




In our largest market the Group achieved sales growth of 60%.  UK growth was skewed slightly to the On-Trade, where 60% of UK revenue is generated, and where growth came from both an uplift in the rate of sale and significant new distribution wins.  In the Off-Trade, strong underlying sales growth was achieved at each of the Group's principal retail customers (Waitrose, Tesco and Sainsbury's) alongside a significant distribution increase at Tesco.  The year was capped by a notable sales performance over the Christmas period against strong comparatives in the prior year.


The continued growth in the number of craft gin producers and the emphasis placed on premium gin and vodka brands by the major spirits companies shows no sign of diminishing which in turn plays to the Fever-Tree drinks proposition. Tonic flavours in particular benefit from the craft gin trend and continue to be our best-selling range of products in the UK.




The USA is currently the Group's second largest single territory and it was especially encouraging to achieve growth of 59% in this market, aided as in the UK by a very strong finish to the year across the Thanksgiving and Christmas periods. Both the On and Off-Trade markets grew strongly with significant new national listings being achieved.   In the US, the growing popularity of the "Moscow Mule" cocktail has driven growth of 91% in Ginger Beer sales in 2014.   Ginger Beer is now the Group's highest selling product in the US, representing over a third of total US revenue.




Sales growth of 35% was achieved in the region in 2014, underpinned by the continued sweep of the gin and tonic renaissance across Western Europe.  Sales in Belgium built impressively on strong performance in 2013 which followed a switch to a new importer in that territory.  Equally of note was the strong growth in other key territories including Italy, Germany, Holland and Switzerland.




Key territories within the RoW region are Canada, Australia and Colombia.  However, another 19 territories are also included within this region, many of which have been added in the last 18 months and provide good potential for growth in the future.  Of note this year was the launch of the brand in India, returning high quality Indian Tonic Water back to its spiritual home.


Operational review


The Group principally focuses on the selection of quality ingredients, the development of new flavours and the branding and marketing of its products, with other aspects of its operations, including manufacturing and fulfilment, being outsourced. This model has enabled the Group to grow without the requirement for significant capital investment to date and has allowed the Group's management to focus on realising strategic growth opportunities.


The Group aims to use the highest quality ingredients acquired through both its own sources and through flavour houses. The Group also outsources the buying of commodity ingredients to its bottler to benefit from further economies of scale.


Manufacturing is completely outsourced, primarily to a single UK based bottler.  The Group is responsible for arranging for the delivery of key ingredients, water, glass and packaging to the bottler who manufactures the final product from these component parts.  The Group's UK bottler has sufficient manufacturing capacity to cater for its near term growth, with scope to increase capacity by adding additional shifts, additional machinery and increasing the length and volume of runs.


Whilst the majority of production for global distribution is manufactured and bottled in the UK, 2014 saw the establishment of outsourced bottling in Germany, which utilises the reusable glass bottles specifically required in that territory.


Market developments


The Group is the pioneer and market leader of the premium mixer category, not only in market share (estimated to be c.50% globally - EY, September 2014), but also in terms of reputation. This was recently confirmed by a Drinks International survey of the world's top 250 bars that stated the Fever-Tree brand was the no.1 best-selling and no.1 trending tonic water.


The Group's key competitor has a highly fragmented ownership structure due to the past intervention of the Competition Commission and as a result is in the hands of more than 15 owners around the world, many of whom have competing interests.  One of these owners has launched a premium version of the brand, however, this is restricted to certain parts of Europe where that owner has distribution rights and we estimate its size to be less than 25% of the Group.


We strongly believe that the consumer trend towards spirits "premiumisation" will continue and that product innovation and increased awareness of taste differentiations between standard and premium, is driving consumers to spend more to get better quality and variety from what they buy.


This movement is being fuelled by the marketing efforts of the premium spirit producers and supported by the On and Off-Trade market who are increasing their focus on higher margin premium products.


We believe that as the gin market further premiumises in more countries, demand for premium tonic water will increase. Similarly, as the market for other spirits (for example, vodka, rum and whisky blends) continues to premiumise, there is expected to be increased demand for the wider range of premium mixers that the Group produces.  As such we are confident about the future opportunities for the Group.




We are encouraged by our start to the current financial year and the Board remains positive about the outlook for 2015.  With continued implementation of our strategy across our diverse range of products, territories, channels and customers we look forward to the future with confidence.


Tim Warrillow

Chief Executive



Financial Review


Fevertree Drinks plc was incorporated in February 2013 and acquired the trading entity Fevertree Limited in March 2013.  As such, the audited financial statements are required by the Companies Act to present as the comparison the trading period from 7 March 2013 to 31 December 2013. 


To allow meaningful comparisons to be made against prior year figures, this front section of the Preliminary Results refers to the full year ending 31 December 2013 as the comparison period.  Therefore, the comparative information in the table below includes loss after tax of £116,000 relating to the period from 1 January 2013 to 6 March 2013.


Year ended
31 Dec 2014

Year ended
31 Dec 2013


£ '000

£ '000







Cost of sales




Gross Profit




Administrative expenses




Adjusted EBITDA












Exceptional Items




Operating profit




Finance income




Finance expense




Profit/(loss) before tax




Tax expense




Profit/(loss) for the period






Revenue grew by 49% from £23.3m to £34.7m.  An overview of sales is included in the Chief Executive's report.

Gross margin and operating expenses


In 2014, despite the impact on overseas revenue of a weakening Euro and US Dollar against Sterling, gross margin was maintained at 50.9%, representing a very small decrease from the 51.0% gross margin achieved in 2013.  


Underlying operating expenses(2) remained consistent as a proportion of revenue (22.1% in 2014 and 2013) and whilst certain efficiencies were achieved on central overheads in 2014 these were offset by increased marketing expenditure.


Exceptional costs


The 2014 exceptional costs of £1.1m were the fees associated with the listing on AIM.


The 2013 exceptional costs of £3.2m related to the acquisition of Fevertree Limited by Fevertree Drinks plc in March 2013.


Finance expenses


The 2014 finance expenses of £5.6m included £4m of shareholder loan note interest expense incurred prior to the IPO in November 2014.  The shareholder loan notes were converted to equity immediately prior to the IPO and so this expense will not be on-going.  In addition, the conversion of the shareholder loan notes to equity triggered a one-off £1.1m release of the shareholder loan note arrangement fee in 2014 which again will not be on-going. The on-going expense incurred on the Group's bank loans, being interest expense and the release of the bank loan arrangement fee was £0.4m.


The 2013 finance expenses of £4.1m included £3.8m of shareholder loan note expense and £0.3m of expense related to the Group's bank loans for the period from the acquisition of Fevertree Limited by Fevertree Drinks plc in March 2013.




The effective tax rate in 2014 and 2013 was influenced by the level of exceptional costs in each year, as well as the proportion of investor loan note interest deemed to be deductible in advance of finalising an Advanced Thin Capitalisation Agreement with HMRC. It is expected that in future years the Group's effective tax rate will be in line with statutory levels.


Earnings per share and dividends


The basic and diluted earnings per share for the year are 1.54 pence


In order to compare earnings per share year on year and to aid future comparisons, the weighted average number of shares in issue has been restated on a pro-forma basis to reflect the post-IPO share capital structure. The adjustment assumes the total shares issued post-IPO were in issue throughout all of 2014 and 2013. In addition, earnings have been adjusted to exclude amortisation, shareholder loan note interest and exceptional items, and the statutory tax rates have been applied (disregarding other tax adjusting items).


On this basis, normalised earnings per share for 2014 were 6.46 pence per share and for 2013 were 4.27 pence per share, an increase of 51%.


The Board is recommending payment of a final dividend in respect of 2014, calculated on a pro-rata basis to reflect the proportion of the year that the Group has been listed on the AIM market. The dividend to be proposed at the AGM on 7 May 2015 is 0.30 pence per share. If approved, the dividend will be paid on 22 May 2015 to shareholders on the register on 24 April 2015.


Cash position


The Group had net cash of £3.3m at year end, with £9.6m of cash at the bank offset by £6.3m of bank loans.  In addition the Group has access to a £2m revolving credit facility provided by Lloyds Bank plc.


Working capital


Working capital increased by £2.7m during 2014.  This is a 47% increase in working capital compared to revenue growth of 49%.  Adjusted operating cash flow remains strong at 73% of adjusted EBITDA.


Capital expenditure


Due to the Group's outsourced business model, capital expenditure requirements are low.  The main area of capital expenditure in 2014 was the £0.2m spent on crates used to transport re-usable bottles within Germany.  This level of expenditure was required in 2014 due to rapid growth in the German market and in future, as crates are returned more rapidly from local distributors it is expected that the level of investment required in crates relative to incremental revenue in Germany will decrease.


Performance indicators


The Group monitors its performance through a number of key indicators.  These are formulated at Board meetings and reviewed at both operational and Board level. 


Revenue growth %


Group revenue growth was 48.9% in 2014 (2013: 43.4%)


Gross margin %


The Group achieved a gross margin of 50.9% in 2014 (2013: 51.0%)


Adjusted EBITDA margin%


The Group achieved an adjusted EBITDA margin of 28.8% (2013: 28.9%)



Andrew Branchflower

Finance Director


(2)Underlying operating expenses are defined as administrative expenses less depreciation, amortisation and


exceptional items.


Consolidated statement of comprehensive income

For the year ended 31 December 2014


Year ended

Period ended

31 December

31 December








Cost of sales



Gross profit



Administrative expenses



Adjusted EBITDA*









Exceptional items



Operating profit



Finance costs

Finance income



Finance expense



Profit/(loss) before tax



Tax expense



Profit/(loss) for the year/period and comprehensive income attributable to equity holders of the parent company



Earnings/(loss) per share for profit/(losses) attributable to the owners of the parent during the year

Basic and Diluted (pence)




*Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, exceptional items and finance costs.


Consolidated statement of financial position

At 31 December 2014


31 December

31 December





Non-current assets

Property, plant and equipment



Intangible assets



Total non-current assets



Current assets




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



Total current liabilities



Non-current liabilities

Loans and borrowings



Deferred tax liability



Total non-current liabilities



Total liabilities



Net assets / (liabilities)



Equity attributable to equity holders of the company

Share capital



Share premium



Capital Redemption Reserve



Retained earnings



Total equity





Consolidated statement of changes in equity

For the year ended 31 December 2014

















Equity as at 22 February 2013






Issue of shares






Comprehensive (Loss) for the period






Equity as at 31 December 2013






Buy back of shares






Issue of shares






Comprehensive income for the year






Share based payments






Equity as at 31 December 2014







Consolidated statement of cash flows

For the year ended 31 December 2014

Year ended

Period ended

31 December

31 December





Operating activities

Profit/(loss) before tax



Finance expense



Finance income



Depreciation of property, plant and equipment



Amortisation of intangible assets



Share based payments





(Increase)/Decrease in trade and other receivables



(Increase)/Decrease in inventories



Increase/(Decrease) in trade and other payables





Cash generated from operations before exceptional items



Exceptional items



Cash generated from operations



Income taxes paid



Net cash flows from operating activities



Investing activities

Purchase of property, plant and equipment



Acquisition of subsidiary, net of cash (note 26)



Net cash used in investing activities



Financing activities

Interest (paid)



Interest received



Loans repaid



Loan note repaid



Loans drawn down



Shares issued (net of fees allocated against equity)



Net cash used in financing activities



Net increase in cash and cash equivalents



Cash and cash equivalents at beginning of period



Cash and cash equivalents at end of period




Notes to the preliminary financial information


Basis of preparation


Fevertree Drinks plc ("The Company") has historically prepared its consolidated financial statements in accordance with UK Generally Accepted Accounting Practice ("UK GAAP"). The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRC Interpretations issued by the International Accounting Standards Board as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies preparing their financial statements under IFRS.


This is the first time that the Company has prepared its consolidated financial statements in accordance with IFRS as adopted by the European Union.


The financial information set out above does not constitute the company's statutory accounts for 2014 or 2013. Statutory accounts for the years ended 31 December 2014 and 31 December 2013 have been reported on by the Independent Auditors.  The Independent Auditors' Report on the Annual Report and Financial Statements for 2014 and 31 December 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.


Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar in due course.


Operating Segments


Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, Executive Deputy Chairman and Chief Financial Officer.


The Board considers that although the Group's activity is generated from global sales across four regions, there is ultimately one overarching reporting and operating segment as defined under IFRS 8.  Management reviews the performance of the Group by reference to total results against budget.


The total profit measures are operating profit and profit for the year, both disclosed on the face of the consolidated statement of comprehensive income. No differences exist between the basis of preparation of the performance measures used by management and the figures in the Group financial statements.


Earnings/ (loss) per share


Basic earnings per ordinary share are calculated using the weighted average number of ordinary shares in issue during the financial year of 83,934,200 (31 December 2013: 63,056,921).  Diluted earnings per ordinary share are calculated with reference to 84,068,082 (31 December 2013: 63,056,921) ordinary shares. The effect of the exercise of options on the weighted average number of ordinary shares in issue is 133,882 (31 December 2013: nil).

Annual General Meeting


The annual general meeting will be held at on 7 May 2015 at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD at 17.00.


This information is provided by RNS
The company news service from the London Stock Exchange

Quick facts: Fevertree Drinks

Price: 2084.3859

Market: AIM
Market Cap: £23.88 m

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