Britannia’s FY16 annual report highlights a healthy operating performance, with revenue growing 10% y-o-y to R86.8 bn and EBITDA margin expanding 310bp y-o-y to 14.1% led by benign commodity prices and premiumisation.
EBITDA grew 43% y-o-y to R12.3 b (FY15: R8.6 bn). Operating cash flow increased to R9.6 bn, supported by R1.5 bn reduction in bank deposits; adjusted for this, operating cash flow was R8.2 bn.
Adjusted earnings to cash conversion declined to 99% (FY15: 121%) as cash conversion cycle marginally increased to17 days. Over FY12-16, although funds were primarily utilised for capex and repayment of borrowings, we note that 19% of funds were utilised to place inter-corporate deposits.
This along with high in cash and treasury investments has resulted in widening of the gap between RoIC and RoE. Contingent liabilities increased by R1 bn to R1.5 bn due to a rise in claims of statutory dues.
In FY16, consolidated revenue grew 10% to R86.8 bn. Benign commodity prices and premiumisation led to expansion in gross margin to 42.4%, part of which was invested in advertising. Ad spends rose to R7.4 bn (8.6% of revenue; FY15: R6.5 bn, 8.4% of revenue). EBITDA rose 43% to R12.3 bn (FY15: R8.3 bn), with margin up 310bp to 14.1%.