Annual Report 2018

About C&C Group

C&C Group is a brand-led drinks business which owns, manufactures, markets and distributes a broad range of branded alcoholic and non-alcoholic drinks.

C&C Group’s brands include: Bulmers, the leading Irish cider brand; Tennent’s, the leading Scottish beer brand; Magners, the premium international cider brand; as well as a range of super-premium and craft ciders and beers.

C&C is also a leading drinks wholesaler in the UK and Ireland, where it operates under the Matthew Clark, Bibendum, Tennent’s and C&C Gleeson brands.

C&C Group is headquartered in Dublin and its manufacturing operations are based in Co. Tipperary, Ireland; Glasgow, Scotland; and Vermont, US. As well as operating in its home markets of the UK and Ireland, the Company exports its key brands to over 60 countries globally. C&C Group plc is listed on the Irish and London Stock Exchanges.

Financial Highlights

Profitability

Net Revenue

€548.2m

decreased by 4.9%

Operating Profit

€86.1m

before exceptional items down 7.0%

Operating Margin

15.7%

before exceptional items down 0.4 ppts

Adjusted Diluted Earnings Per Share

22.0 cent

per share down 5.2%

Cash

Free Cash Flow Conversion

70.5%

before exceptional items

Shareholder Return

Proposed Final Dividend

9.37 cent

per share delivering 1.7% growth in the full year dividend to 14.58 cent per share

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Sir Brian Stewart

Chairman

Sir Brian Stewart

Chairman

Chairman's Statement

Our commitment to you last year, in a challenging wider operating environment, was to continue to advance our strategy to build a sustainable, international, cider-led, multi-beverage business through a combination of organic growth and selective acquisitions. The results of the last 12 months demonstrate the merits of that approach. While our headline numbers reflect a relatively static financial performance, the further development of our heritage brands, craft offering and customer reach is particularly encouraging.

Download Chairman's Statement

Stephen Glancey

Group Chief Executive Officer

Stephen Glancey

Group Chief Executive Officer

Group Chief Executive Officer's Review

FY2018 was a significant year of progress for the Group, both in terms of strategic development as well as improved underlying performance. While the trading environment in our key markets of the UK and Ireland remained challenging, our branded portfolio returned to volume and revenue growth, outperforming the broader LAD market.

Download CEO's Review

Jonathan Solesbury

Group Chief Financial Officer

Jonathan Solesbury

Group Chief Financial Officer

Group Chief Financial Officer's Review

C&C is reporting net revenue of €548.2 million, operating profit of €86.1 million, adjusted diluted EPS of 22.0 cent and FCF of 70.5%. On a constant currency basis net revenue decreased 4.9% and operating profit decreased 7.0%. The Group revenue decline of 4.9% was largely attributable to the discontinuation of certain wholesale accounts in Ireland under the terms of our new revised distribution arrangements with AB InBev.

Download CFO's Review
Download Chairman's Statement Download CEO's Review Download CFO's Review

Brand Portfolio

Core Brands

Super-Premium & Craft

Local Brands

Drinks Distribution

Including distribution rights for certain AB InBev beer brands such as Stella Artois, Beck’s, Corona, Budweiser.

Core Brands

Super-Premium & Craft

Local Brands

Drinks Distribution

Including distribution rights for certain AB InBev beer brands such as Stella Artois, Beck’s, Corona, Budweiser.

Core Brands

Super-Premium & Craft

Local Brands

Download Brand Portfolio

Core Brands

Super-Premium & Craft

Local Brands

Drinks Distribution

Including distribution rights for certain AB InBev beer brands such as Stella Artois, Beck’s, Corona, Budweiser.

Core Brands

Super-Premium & Craft

Local Brands

Drinks Distribution

Including distribution rights for certain AB InBev beer brands such as Stella Artois, Beck’s, Corona, Budweiser.

Core Brands

Super-Premium & Craft

Local Brands

Download Brand Portfolio

Core Brands

All own brands

"Must-have" local brands

Super-Premium and Craft Portfolio

Own brands, international agency or craft JVs

Craft and premium consumer experimentation

Local Brands

Owned local and specialty brands

Local, niche and specialty brands

World Premium Brands

3rd party brands distributed under contract, primarily AB InBev brands

Access to global brands

Drinks Wholesale

All 3rd party brands bought-in

Range, insight, expertise – a "one-stop shop"

Enhance value of key brands

Brand and product investment to build value of key brands over the long-term

Grow Super-Premium and Craft portfolio

Leverage key brand strength and market position to grow our portfolio of Premium and Craft brands

Brand-led drinks wholesaler in key markets

Deliver unrivalled portfolio strength, value and service to the UK and Irish hospitality sectors

Rigorous focus on costs and efficiencies

Ongoing commitment to delivering operational efficiencies and cost control

International growth

Grow international volumes of our key brands through strategic alliances

Capital allocation to enhance growth and shareholder returns

Selective acquisitions to fuel sustainable, profitable growth and/or cash returns to shareholders

Financial characteristics

Cash generation and Balance Sheet strength


EPS growth

Enhance value of key brands

Operating Profit

FY16

€103.2m

FY17

€95.0m

FY18

€86.1m

Operating Margin

FY16

14.5%

FY17

15.9%

FY18

15.7%

Adjusted diluted earnings per share

FY16

24.2c

FY17

23.8c

FY18

22.0c

To generate strong cash flows

Free Cash Flow

FY16

€113.4m

FY17

€54.3m

FY18

€66.0m

Free Cash Flow Conversion Ratio

FY16

103.1%

FY17

53.0%

FY18

70.5%

To ensure the appropriate level of financial gearing and profits to service debt

Net debt: EBITDA

FY16

1.33x

FY17

1.55x

FY18

2.37x

To deliver sustainable shareholder returns

Progressive dividend/return to shareholders

FY16

13.65c

FY17

14.33c

FY18

14.58c

Dividend Payout Ratio

FY16

56.4%

FY17

60.2%

FY18

66.3%

To achieve the highest standards of environmental management

Reduction in CO2 emissions

FY16

45,071t

FY17

41,228t

FY18

31,612t

Waste recycling

FY16

24t

FY17

16t

FY18

0t

To ensure safe and healthy working conditions

Workplace safety accident rate

FY16

0.42

FY17

0.56

FY18

0.54

Core Brands

All own brands

Core Brands

All own brands

"Must-have" local brands

"Must-have" local brands

Super-Premium and Craft Portfolio

Own brands, international agency or craft JVs

Super-Premium and Craft Portfolio

Own brands, international agency or craft JVs

Craft and premium consumer experimentation

Craft and premium consumer experimentation

Local Brands

Owned local and specialty brands

Local Brands

Owned local and specialty brands

Local, niche and specialty brands

Local, niche and specialty brands

World Premium Brands

3rd party brands distributed under contract, primarily AB InBev brands

World Premium Brands

3rd party brands distributed under contract, primarily AB InBev brands

Access to global brands

Access to global brands

Drinks Wholesale

All 3rd party brands bought-in

Drinks Wholesale

All 3rd party brands bought-in

Range, insight, expertise – a "one-stop shop"

Range, insight, expertise – a "one-stop shop"

Financial characteristics

Cash generation and Balance Sheet strength


EPS growth

Enhance value of key brands

Operating Profit

Operating profit (before exceptional items)





FY16

€103.2m

FY17

€95.0m

FY18

€86.1m

Operating Margin

Operating profit (before exceptional items), as a percentage of net revenue

FY16

14.5%

FY17

15.9%

FY18

15.7%

Adjusted diluted earnings per share

Attributable earnings before exceptional items divided by the average number of shares in issue as adjusted for the dilutive impact of equity share awards

FY16

24.2c

FY17

23.8c

FY18

22.0c

To generate strong cash flows

Free Cash Flow

Free Cash Flow is a non GAAP measure that comprises cash flow from operating activities net of capital investment cash outflows which form part of investing activities

FY16

€113.4m

FY17

€54.3m

FY18

€66.0m

Free Cash Flow Conversion Ratio

The conversion ratio is the ratio of free cash flow as a percentage of EBITDA before exceptional items






FY16

103.1%

FY17

53.0%

FY18

70.5%

To ensure the appropriate level of financial gearing and profits to service debt

Net debt: EBITDA

The ratio of net debt (Net debt comprises borrowings (net of issue costs) less cash) to Adjusted EBITDA

FY16

1.33x

FY17

1.55x

FY18

2.37x

To deliver sustainable shareholder returns

Progressive dividend/return to shareholders

Total dividend per share paid and proposed in respect of the financial year in question

FY16

13.65c

FY17

14.33c

FY18

14.58c

Dividend Payout Ratio



Dividend cover is Dividend/Adjusted diluted EPS





FY16

56.4%

FY17

60.2%

FY18

66.3%

To achieve the highest standards of environmental management

Reduction in CO2 emissions

To achieve the highest standards of environmental management

FY16

45,071t

FY17

41,228t

FY18

31,612t

Waste recycling

To achieve the highest standards of environmental management

FY16

24t

FY17

16t

FY18

0t

To ensure safe and healthy working conditions

Workplace safety accident rate

The number of injuries that resulted in lost-work days, per 100,000 hours working time in production facilities

FY16

0.42

FY17

0.56

FY18

0.54