Contents

COMPANY OVERVIEW....................................................................................................................1

ANALYSIS OF SHORT TERM ASSET MANAGEMENT RATIOS...........................................................2

ANALYSIS OF CAPITAL STRUCTURE................................................................................................5

PROFITABILITY RATIOS...................................................................................................................9

PART B......................................................................................................................................... 13

SHARE PRICE BEHAVIOR.............................................................................................................. 13

CONCLUSION............................................................................................................................... 14

COMPANY OVERVIEW

Britvic Plc is one of Europe's leading soft drinks companies having 3280 employees. It is an

enviable portfolio of market leading brands, such as Robinsons, J2O, Fruit Shoot, Tango and

Drench in GB, MiWadi, Club and Ballygowan in Ireland, and Teisseire, Fruité and Pressade in

France. They also have exclusive bottling agreements with PepsiCo in the UK and Ireland for

global brands such as Pepsi and 7UP (Plc, 2014) .

The total revenue recorded in the last financial reporting year of September 29, 2013 was £1.32B

along with total assets of the company having £1.05 B. The market capitalization for the

company is £1.7 B. Britvic Plc. is rated below average in market capitalization category among

related companies. Market capitalization of Beverages industry is currently estimated at

about £141.57 B. Britvic claims roughly £1.7 B in market capitalization contributing just

under 2% to stocks in Beverages - Soft Drinks industry. Currently, the price to book ratio is

£35.06 (Library, 2013).

Britvic has a manufacturing base both in the UK and Ireland, producing carbonates, stills and

plain water in both countries. A well-invested production base is at the heart of their strategy

to be the supplier of choice. They aim to manufacture soft drinks to the highest standards and

to take a leading role in within the industry (Bloomberg, 2013).

Quality is a basic business principle for Britvic, they consistently provide their external and

internal customers with products and services which fully meet their expectations of Quality,

Safety and compliance with Legislation.

They have an excellent future opportunities for growth since as their strategy is to:

1. Leverage scale in markets through various strategies

2. Investing in their owned brands

3. Maximizing PepsiCo Partnership

4. Delivering quality in kids, Family and Adult segments.

ANALYSIS OF SHORT TERM ASSET MANAGEMENT RATIOS

The table below shows the value of Debtor Days, Creditor Days and Stock days. For the year

2012/13, the average collection period (Days Sales Outstanding) was 72 days and the average

day’s payable outstanding was 228 days as shown in the table.

Turnover ratio

Value, daysRatio

2009/10  Ratio

2012/13

Change, days

(col.5 - col.2)2009/10 2010/11 2011/12 2012/13

1 2 3 4 5 6 7 8

Receivables turnover (days sales outstanding) or Debtor Days

(average trade and other current receivables divided by average daily revenue*)

65 68 74 72 5.6 5.1 +7

Accounts payable turnover (days payable outstanding) or Creditor Days

(average current payables divided by average daily purchases)

216 207 218 208 1.7 1.8 -8

Inventory turnover (days inventory outstanding) or Stock days

(average inventory divided by average daily cost of sales)

48 50 48 46 7.5 7.9 -2

Debtor Days for 2013 = 266.1+257.4/2 * 365 Divided by 1321.9

= 72.22 = 72 days

Stock Days for 2013 = 90.8 + 73.8 / 2 * 365 Divided by 646.9

= 46 days

Creditor Days = 381.5 + 357.2 / 2 * 365 Dividend by 646.9

= 208 Days

The current and quick ratio are demonstrated below:

Liquidity ratio

Value

Change(col.5 - col.2)

Description of the ratio and its recommended value

30.09.2009

30.09.2010 –

30.09.2011 (averaged)

30.09.2012 30.09.2013

1 2 3 4 5 6 7

1. Current ratio (working capital ratio)

0.89 0.99 1.02 0.92 +0.03

The current ratio is calculated by dividing current assets by current liabilities. It indicates a company's ability to meet short-term debt obligations.Normal value: 2 or more.

2. Quick ratio (acid-test ratio)

0.72 0.76 0.83 0.74 +0.02

The quick ratio is calculated by dividing liquid assets (cash and cash equivalents, trade and other current receivables, other current financial assets) by current liabilities. It is a measure of a company's ability to meet its short-term obligations using its most liquid assets (near cash or quick assets).Acceptable value: 1 or more.

Current Ratio 2013 = 463.7 / 504.5

= 0.92

Quick Ratio 2013 = 463.7 – 90.8 / 504.5

= 0.74

The current ratio was 0.92 at the end of the period analyzed; that is only +0.03 higher than on

the first day of the period. The value of the ratio is atypical and is in the area of critical values

on the last day of the period analyzed (29.09.2013). The values of the current ratio were not

acceptable during the whole of the period.

On 29.09.2013, the quick ratio was equal to 0.74. For the entire period reviewed, the quick ratio

rose only by 0.02. The ratio increased during almost the whole of the period, but the rate

decreased at this period. The value of the quick ratio can be considered as an unacceptable one

on 29 September, 2013. This means, Britvic Plc. has either too many current liabilities or not

enough liquid assets to satisfy the mentioned liabilities.

The current liabilities of the company exceeds its current liabilities which shows the

deteriorating or even no working capital of Britvic Plc. From the above tables, we can conclude

that the company Britvic Plc asset management fluctuates as it is evident from the inventory

turnover which increased from 7.5 to 7.9. This shows that the company is trying to put its

inventory available for sale so that no more inventory is left as higher inventory can lead to

drastic results in the performance of the business. Apart from that, receivable turnover shows

that the credit policy is extending the days to receive the payment from its customers. It might

be to generate more sales but it can prove to be ineffective in certain cases like bad debts.

More than that, Britvic Plc is able to repay its suppliers without any reluctance. The current and

quick ratio shows ineffectiveness of Britvic plc. This can only be made effective through

following ways:

1. Strict credit policy

2. Paying off current liabilities

3. Selling unproductive Assets

4. Increasing Shareholder’s funds

ANALYSIS OF CAPITAL STRUCTURE

The debt-to-equity ratio and debt ratio are the main coefficients describing financial stability.

The ratios are similar in their meaning and indicate a relationship between two main sources of

capital: equity and borrowed capital. The difference between the ratios is that the first one is

calculated as a relationship of the borrowed capital (liabilities) to the equity, while the second

ratio is calculated as a relationship of the liabilities to the overall capital (i.e. the sum of equity

and liabilities).

The debt-to-equity amounted to 24.99 at the end of the period analysed. On the last day of the

period analyzed, the debt ratio was equal to 0.96. For the period reviewed, it was verified that

the debt ratio reduced somewhat (by 0.04).

The value of the debt ratio for Britvic Plc. indicates an excessive percentage of liabilities on the

last day of the period analysed (30.09.2013), which equaled 96.2% of total capital. It is believed

that liabilities should not be more than 60%. If not, dependence from creditors increases too

much and the financial stability of the company suffers. When the structure of capital is normal,

the debt ratio is 0.6 or less (optimum 0.3-0.5). During the whole of the evaluated period, the

debt ratio kept a value outside the normal range

ValueChange(col.5-col.2)

Description of the ratio and its recommended value

20092010 –2011 (averaged)

2012 2013

1 2 3 4 5 6 7

Debt-to-equity ratio (financial leverage) -342.4 5.64 26.65 24.99 +367.39

A debt-to-equity ratio is calculated by taking the total liabilities and dividing it by shareholders' equity. It is the key financial ratio and used as a standard for judging a company's financial standing.Normal value: 1.5 or less (optimum 0.43-1).

Debt ratio (debt to assets ratio)

1 1 0.96 0.96 -0.04

A debt ratio is calculated by dividing total liabilities (i.e. long-term and short-term liabilities) by total assets. It shows how much the company relies on debt to finance assets (similar to debt-to-equity ratio).Normal value: 0.6 or less (optimum 0.3-0.5).

Long-term debt to Equity

-221.08 2.94 16.63 12.65 +233.73This ratio is calculated by dividing long-term (non-current) liabilities by equity.

Non-current assets to Net worth

-231.46 4.04 17.39 14.65 +246.11

This ratio is calculated by dividing long-term (non-current) liabilities by net worth (equity) and measures the extent of a company's investment in low-liquidity non-current assets. This ratio is important for comparison analysis because it's less dependent on industry (structure of company's assets) than debt ratio and debt-to-equity ratio.Normal value: 1.25 or less.

Capitalization ratio

1 1.01 0.94 0.93 -0.07Calculated by dividing non-current liabilities by the sum of equity and non-current liabilities.

Fixed assets to Net worth

-90.44 1.37 6.38 5.27 +95.71

This ratio indicates the extent to which the owners' cash is frozen in the form of fixed assets, such as property, plant, and equipment, investment property and non-current biological assets.Normal value: 0.75 or less.

Current liability ratio

0.35 0.36 0.38 0.49 +0.14Current liability ratio is calculated by dividing non-current liabilities by total (i.e. current and non-current) liabilities.

In the chart below, one can see the structure of the company's capital:

According to common rules, non-current investments should be made, in the first place, with

the help of the most stable source of financing, i.e. with the help of own capital (equity). The

non-current assets to Net worth ratio shows if this rule is followed. The ratio amounted to

14.65 on 29 September, 2013, which is 246.11 higher than on 29.09.2009. On 29 September,

2013, the value of the ratio is unacceptable and is in the area of critical values.

The total liabilities of Britvic Plc. are divided in almost equal parts with non-current and current

liabilities (50.6% and 49.4%, respectively). It is demonstrated with the current liability ratio,

which equaled 0.49 on the last day of the period analyzed (29.09.2013).

The following chart demonstrates the dynamics of the debt and current liability ratios of Britvic

Plc.

PROFITABILITY RATIOS

Profitability ratiosValue in % Change

(col.5 - col.2)2009/10 2010/11 2011/12 2012/13

1 2 3 4 5 6

1. Gross margin. 55.1 51.4 50.3 51.1 -4

2. Return on sales (operating margin). -0.2 8.7 8.6 8.2 +8.4

3. Profit margin. -4.2 4.5 4.6 4.7 +8.9

Reference: Interest coverage ratio (ICR). Normal value: 1.5 or more.

-0.1 3.5 3.5 4.2 +4.2

During the year 2012/13, the company gained gross profit and profit from operational and

financial activities, which became a reason for positive values of all three profitability ratios

given in the table for this period. For the period analyzed (2009–2013), the gross margin

lessened from 55.1% to 51.1% (-4%).

The profitability calculated by earnings before interest and taxes (Return on sales) is more

important from a comparative analyses point of view. For the period from 2012 to 2013, the

return on sales was 0.08 (or 8.2% per annum), and profitability calculated by net profit was

4.7% per annum.

To assess the liabilities that the company should repay for the use of borrowed capital, an

interest coverage ratio was calculated. The acceptable value is deemed to be not less than 1.5.

In this case, the interest coverage ratio was 4.2 during the year 2012/13, which is evidence of

Britvic Plc.'s capability to pay interest on borrowed assets. It should also be mentioned that not

all interest payments are necessarily included on the income statement and used to calculate

the indicated ratio. Interest related to investments in qualified assets is not included in the

financial results (they are taken into account in the asset value).

Profitability ratios

Value, % Change(col.5 - col.2)

Description of the ratio and its reference value

2009/10 2010/11 2011/12 2012/13

1 2 3 4 5 6 7

Return on equity (ROE)

– – 195.9 158.7 +158.7

ROE is calculated by taking a year's worth of earnings (net profit) and dividing them by the average shareholder equity for that period, and is expressed as a percentage. It is one of the most important financial ratios and profitability metrics. Acceptable value: 12% or more.

Return on assets (ROA)

-4.6 5.5 5.6 5.8 +1.2

ROA is calculated by dividing net income by total assets, and displayed as a percentage. Acceptable value: 6% or more.

Return on capital employed (ROCE)

-1 45.9 45.6 50.4 +49.4

ROCE is calculated by dividing EBIT by capital employed (equity plus non-current liabilities). It indicates the efficiency and profitability of a company's capital investments.

The return on assets climbed from -4.6% to 5.8% (+1.2%) significantly for the period analyzed

(from 2009 to 2013). During the whole of the analyzed period, a constant increase in the return

on assets was observed. At the beginning of the evaluated period, the return on assets was not

normal, but later it was.

A key indicator of business profitability is the return of equity (ROE), i.e. return from money

invested by the owners. For the year 2012/13, a return on equity was 158.7% per annum. And it

should be observed that such a high return on equity is a result of a low percentage of own

capital (equity) of the total company's capital (3.8%).

The change in the main rates of return on assets and equity of Britvic Plc. is demonstrated in

the following chart for the whole period reviewed.

PART B

SHARE PRICE BEHAVIOR

The fluctuation is clearly observed from the above diagram as returns fall down during 2010 but

kept on increasing from 2010 to 2011 and then it almost remained constant from 2011 to 2012

and then increased somehow till September 2013 (Focus, 2013).

When compared to FTSE 100 TR GBP, the annual return for Britvic seems more (Star, 2013)

enhanced year by year. The growth prospective also seems to be more favorable for Britvic .

Year on year, both dividends per share and earnings per share excluding extraordinary items

growth increased 3.95% and 13.09%, respectively. The positive trend in dividend payments is

noteworthy since very few companies in the Beverages (Nonalcoholic) industry pay a dividend.

Additionally when measured on a five year annualized basis, both dividend per share and

earnings per share growth ranked in-line with the industry average relative to its peers.

CONCLUSION

The main financial state indicator values and Britvic Plc.'s activity results are classified by

qualitative assessment according to the results of the analysis for the 4 years and are given

below.

Financial characteristics with good values are indicated below:

high return on equity (158.7% per annum), which became mainly a result of low

percentage of own capital (equity);

During the last year, earnings before interest and taxes (EBIT) showed GBP 109 million,

moreover, a positive dynamics compared with the data during the year 2011/12 (GBP +111

million) was observed;

The income from financial and operational activities (comprehensive income) was GBP

62 million for the year 2012/13.

There is one characteristic with a marginally acceptable value obtained during the analysis –

return on assets showed 5.9% per annum during the year 2012/13.

Financial characteristics with negative values are the following:

the debt ratio has an unsatisfactory value (0.96) caused by a high percentage of liability,

(96.2% of total capital of the company);

a quick ratio was 0.74 (while the acceptable value is 1);

the cash ratio is equal to 0.19 at the end of the period analyzed (a low cash at hand

required for current payments);

Net worth is less than the share capital (the difference makes GBP 8 million on the last

day of the period analyzed).

The following financial characteristics of Britvic Plc. have critical values:

the value of the non-current assets to net worth ratio equal to 14.65 can be described as

really atypical;

the current ratio (0.92) is significantly lower than the standard value (2);

No working capital (current liabilities exceed current assets).

REFERENCES

Bloomberg, 2013. Bloomberg Quote. [Online]

Available at: http://www.bloomberg.com/quote/BVIC:LN

[Accessed Tuesday January 2013].

Focus, G., 2013. GuruFocus. [Online]

Available at: http://www.gurufocus.com/financials/BTVCY

[Accessed Tuesday January 2013].

Library, D., 2013. Digital Look. [Online]

Available at: http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=104405&

[Accessed Monday January 2013].

Plc, B., 2014. Britvic. [Online]

Available at: http://www.britvic.com/

[Accessed Monday January 2014].

Star, M., 2013. Morningstar. [Online]

Available at: http://tools.morningstar.co.uk/uk/stockreport/default.aspx?

tab=0&vw=pf&SecurityToken=0P00007O1R]3]0]E0WWE$$ALL&Id=0P00007O1R&ClientFund=0&CurrencyId=GBP

[Accessed Tuesday January 2013].