Britvic Plc Financial Analysis

Topics: Financial ratio, Asset, Financial ratios Pages: 14 (5081 words) Published: December 3, 2011
Alexandra-Gabriela Sirbu
Business and Management, year 2, University of Salford
Table of contents:
1 .Aim pg. 2
2. Company overview pg. 2
3. Short-term assets management pg. 3
4. Liquidity pg. 4
5. Profitability pg. 5
6. Financial structure and cost of capital pg.7
7. Share price behaviour pg. 8
8. Portfolio effect pg. 10
9. Concluding remarks pg 12
10. Bibliography pg 13

Britvic PLC –financial analysis-

1. Aim
The aim of the following report is to assess the financial activity of Britvic PLC over a sixty months period, from January 2005 until December 2009, in order to make recommendations for a future investment in the company. 2. Company overview

Britvic PLC was founded in 1938, in Chemsford, under the name of British Vitamin Company Products, from which it takes its name and has been the first company to launch fruit juice in baby bottles. Barely in 1971, the company became known as we know it today, changing its name to Britvic PLC. Nowadays, Britvic PLC is, according to their website, one of Europe’s leading companies in the soft drinks industry, trading in over fifty countries across Europe, amongst which we may enumerate Great Britain, Ireland and France and possessing a brand portfolio which comprises names, such as Robinsons, Drench, and, from 2010, Fruite. Moreover, Britvic PLC owns bottling agreements with PepsiCo in the United Kingdom, for the brands Pepsi and 7UP. According to the website, a company’s size is defined by its market capitalization, alongside its physical size, described by its number of factories, employees. Britvic Plc had in the past five years an average number of employees of 3500, working in the company’s twelve factories to produce approximately 1.9 billions of litres of soft drinks that generated sales of 755000, on average, with a maximum of 978,800, reached in 2009. In terms of market capitalization, the mean revolves around 535,250, the peak being achieved in 2009, with almost 200000 over the mean. Therefore, it may be stated that Britvic plc is one of the largest companies trading on United Kingdom’s soft drinks market. In regards to the future prospects, Britvic Plc declared strategy is for “growth through both organic and international expansion” (  | 2005| 2006| 2007| 2008| 2009| Average 2005-2008| Number of employees| 3,042| 2,895| 2,690| 3,153| 3,036| 2,945| Sales| 698,200| 677,900| 716,300| 926,500| 978,800| 754,725| Total assets| 492,400| 467,100| 694,600| 741,300| 853,500| 598,850| Market capitalisation | 494,000| 504,000| 702,000| 441,000| 762,000| 535,250|  |  |  |  |  |  |  |

Market-to-book ratio| 18.75| 8.74| 163.21| 47.43| 305.09| 59.53| Market value per share (£)| 2.3| 2.32| 3.23| 2.03| 3.53| 2.47| № of shares outstanding (000)| 181,000| 217,282| 217,282| 217,282| 216,067| 208,212|  |  |  |  |  |  |  |

3. Short-term assets management
In order to analyse the efficiency of Britvic PLC, it is recommended to calculate the short-term assets management ratios, like the debtors’ days, the creditors’ days and the stock’s days. Atrill defines the stock days as the average period for which inventories are held. Britvic PLC held its stock in 2009 for 48 days, with 10 days less than the average for the 2005-2008 period, timeline in which the maximum recorded was in 2007 and had the value of 69 days. A reduction in this ratio was firstly observed in 2008, when the stock was held for only 47 days. Consequently, it may be stated that Britvic PLC improved its trading performance by increasing the number of transactions taking place in one year time, increase derived from a smaller number of days in which the stock is held by the company. The debtors’ days are described by Atrill as the amount of time in which credit customers pay their debts to the business. In 2009, the...
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