TIDMCCR
RESULTS FOR THE SIX MONTHSED 31 AUGUST 2022
C&C Group plc ('C&C' or the 'Group'), a leading,
vertically integrated premium drinks company which manufactures,
markets and distributes branded beer, cider, wine, spirits and soft
drinks across the UK and Ireland announces unaudited results for
the six months ended 31 August 2022 ('H1 FY2023').
H1 FY2023 FINANCIAL OVERVIEW
H1 FY2023 H1 FY2022 Change
EUR'm except per share items EUR'm EUR'm %
Net revenue(i) 903.0 666.1 35.6%
Adjusted EBITDA(i)(ii) 70.9 30.5 132.5%
Operating profit(i)(iii) 54.9 15.5 254.2%
Operating margin(iii) 6.1% 2.3% 3.8%pts
Basic EPS(iv) 9.6c 2.5c 284.0%
Adjusted diluted EPS(iv) 9.5c 1.6c 493.8%
Exceptional (charge)/credit (pre-tax) (0.3) 3.4 (108.8%)
Dividend per share (cent) - -
Free cash flow(iii)(v) 55.3 26.2 110.7%
Free cash flow(iii)(v) (% conversion) 78.0% 85.1% (7.1%)pts
Net Debt(vi) 179.7 245.8 (26.7%)
Net Debt(vi) (excluding lease liabilities) 104.5 175.2 (40.4%)
FINANCIAL HIGHLIGHTS
-- Net revenue increased 35.6%(i) year-on-year to EUR903.0m, driven by
volume growth of +11% and price/mix growth of +25%.
-- Operating profit of EUR54.9m(iii) (EUR15.5m(i) H1 FY2022) delivered an
operating margin of 6.1% (H1 FY2022: 2.3%).
-- C&C's inherent cash generating capability has resulted in a free cash
inflow(v) of EUR55.3m pre-exceptional and a related free cash flow
conversion of 78.0%. This performance includes a non-recurring repayment
of EUR16.1m for tax deferrals.
-- Net debt to adjusted EBITDA (12 month trailing) of 1.5x, a significant
improvement from 3.4x reported in February 2022.
-- Reduction in leverage multiple reflects the sale of the Group's interest
in Admiral Taverns, combined with solid underlying performance of the
business and strong cash flow generation. The Group has now exited
covenant waivers.
-- Significant adjusted diluted EPS growth to 9.5c in H1 FY2023 compared
with 1.6c in H1 FY2022. Basic EPS was 9.6c.
-- The Board intends to recommence a full and final year dividend following
the release of the full year FY2023 results.
STRATEGIC & OPERATING HIGHLIGHTS
-- Distribution operating margin of 4.2% for H1 FY2023, in line with the
target outlined at our Capital Markets Day in May.
-- Marketing investment increased as planned to 11.1% of branded net revenue
from 7.5%(i) in H1 FY2022 and 5.2%(i) in H1 FY2020.
-- Bulmers has grown Moving Annual Total ('MAT') volume and value share(ix),
(x).
-- Our premium beer portfolio reporting volume growth and volume share
growth(vii),(viii),(ix),(x).
-- The Group has grown its revenue share of the customer with revenue per
outlet in double digit growth compared to H1 FY2022 and the same period
pre COVID-19.
-- Group branded operating margins are broadly in line year-on-year, with
volume, price/mix growth and price actions being offset by increased
marketing investment, inflationary impact on cost base and manufacturing
input costs.
-- Customer service levels have continued to improve with H1 FY2023 average
On Time In Full ('OTIF') for Matthew Clark and Bibendum of 87% compared
to 76% for H1 FY2022.
ESG & SUSTAINABILITY HIGHLIGHTS
-- Progress with the Group's ESG and sustainability initiatives, including:
-- Launch of a community partnership with the Big Issue Group, a
three-year partnership, focused on mentoring, skills and access to
employment opportunities to support people living in poverty.
-- Continued focus on reducing carbon, the Group is on track to
deliver Scope 1 and 2 emissions targets in FY2023.
-- Progress being made on heat recovery systems at both
manufacturing sites, saving energy, in addition to reducing
carbon.
-- In Clonmel work commenced on a heat pump, which will be
operational in FY2024 and reduce the site's gas consumption
by 40% and CO2 emissions by 1,800 tonnes per annum.
CURRENT TRADING & OUTLOOK
-- Macro-economic and consumer environment remains difficult with net
revenues for September 2022 -5% compared to the same period in 2021.
-- The Board intends to recommence a full and final year dividend following
the release of the full year FY2023 results.
-- Our near-term trading focus is on ensuring the highest standards of
service and stock availability to our customers and consumers as we
prepare for the first unrestricted Christmas trading period for three
years and the upcoming FIFA World Cup.
David Forde, C&C Group Chief Executive Officer:
"We are pleased with the Group's resilient and progressed H1
performance, where -- despite the challenging economic backdrop --
we have delivered significant revenue and operating profit growth.
Encouragingly, our profit growth has been coupled with margin
expansion as the business returns to a more normalised
product/price and channel mix. We are delivering on a number of key
priorities outlined at our recent Capital Markets Day; achieving
our guided medium-term targets for distribution margins and target
leverage. Further, we increased brand investment, grew our share of
premium beer, increased revenue per customer, grew our agency
brands and also implemented a number of our sustainability
initiatives.
FY2023 H2 will provide our first unrestricted Christmas trading
period for three years, in addition to the upcoming FIFA World Cup,
therefore our focus is on ensuring the highest standards of service
and stock availability over this period and beyond. However,
despite these positive tailwinds, the outlook for H2 is challenging
with inflationary pressures on our own margins as well as those of
our customers, and the cost of living pressures on the consumer
environment in the near-term.
The Group's priority continues to be on executing our strategy;
enhancing efficiencies to insulate the business from inflationary
pressures where possible whilst progressing our sustainability
ambitions. This coupled with the strength of the C&C model and
its combination of brand power and unique last mile distribution,
alongside its robust balance sheet, puts the Group in a position of
relative competitive strength."
S
OPERATING REVIEW
Great Britain
EUR'm
Constant currency(i) H1 FY2023 H1 FY2022 Change %
Net revenue 752.3 550.6 36.6%
of which Branded 107.1 89.6 19.5%
- Price / mix impact 17.4%
- Volume impact 2.1%
of which Distribution 631.8 442.3 42.8%
- Price / mix impact 24.0%
- Volume impact 18.8%
of which Co-pack / Other 13.4 18.7 (28.3%)
Operating profit/(loss)(iii) 35.9 7.2 398.6%
Operating margin 4.8% 1.3% 3.5%pts
of which Branded 10.7 12.2 (12.3%)
of which Distribution 25.2 (5.0) NM
Volume -- (kHL) 2,386 2,141 11.4%
of which Tennent's 495 455 8.8%
of which Magners 320 347 (7.8%)
Our Great Britain division delivered EUR752.3m of net revenue in
H1 FY2023, an increase of 36.6% compared to H1 FY2022, driven by,
strong growth in our distribution volumes and a full six months of
unrestricted trading. As a result, operating profit increased to
EUR35.9m, compared with EUR7.2m in H1 FY2022, driven by volume and
pricing growth alongside a better channel mix, which delivered
operating margin of 4.8% compared with 1.3% in H1 FY2022. We have
also seen an as expected rebalancing of the on-trade/off-trade
channel split which is now broadly in line with pre COVID-19
levels. Despite a slowdown in on-trade momentum over Q2 FY2023,
consistent with the wider market and reflecting of the impact of
inflation on discretionary consumer spending, the trend has not
been linear with performance in August better than July.
The improvements to our model and a more normalised trading
environment have allowed us to deliver increased distribution
margins have increased and are now in line with medium-term guided
targets, branded margins reflect EUR6.6m of increased marketing
investment in H1 FY2023 and continuing cost pressures, particularly
in manufacturing overheads. The division has navigated a
challenging market backdrop and continued to progress our One
C&C GB integration and optimisation strategy.
Operational Summary
We are pleased to report that Matthew Clark and Bibendum OTIF,
one of our key delivery metrics, has continued to improve with 87%
on average for H1 FY2023 compared to 76% for the same period in
FY2022. CSI (Customer Service Index) and NPS (Net Promotor Score)
scores across our Tennent's, Matthew Clark and Bibendum business
have also continued to improve over H1 FY2023. Together these
metrics reflect our market leading service and ability to meet the
evolving needs of our customers.
We continue to grow the level of business we conduct through our
market leading ecommerce platforms. In August 2022, 78% of our IFT
on-trade revenues were ordered online, with the business well on
track to achieve its near-term target of 80% of Independent Free
Trade ('IFT') revenue fulfilled through ecommerce. We continue to
see higher order values online compared with traditional contact
centre orders, with orders on average 15.5% higher.
Wellpark, our Glasgow based manufacturing facility, has had to
navigate a challenging inflationary environment with aluminium and
energy costs continuing to be the key areas where we are seeing
inflationary pressures. Alongside our sustainability initiatives
which are on track to deliver the Group's carbon reduction plans
for FY2023, we have focused activity on maximising energy
efficiency, reducing both our site usage and overall carbon
footprint. Wellpark has also retained its British Retail Consortium
AA grade, the highest level of food safety standards in the UK.
Brands
Tennent's volumes have grown 8.8% vs H1 FY2022, benefitting from
the reopening of the on-trade, with on-trade Tennent's volumes
+53%. The investment behind the brand continues to drive positive
brand health scores, with Tennent's Lager brand index score
reaching 17.8(xi) , its highest ever in July 2022. In the on-trade
channel, the brand has lost share of beer with MAT volume share
decreasing by 2.1%pts to 35.8%(xii) , share losses have in part
been driven by competitor supply chain challenges in 2021
improving. In the off-trade channel, MAT beer volume share of 23.0%
has declined compared with H1 FY2022 (24.3%)(vii) , in the
near-term, share losses have narrowed in the latest three month
data(vii) . The off-trade we have been impacted by continuing
premiumisation, as well as several competitor brand launches and
format expansions into the off-trade. Despite the share losses,
Tennent's volume sales, outsell the two closest competitors by
20%(xiii) .
Cider's share of Long Alcoholic Drinks ('LAD') volume has
declined 1.1%pts year-on-year. With Magners, we have lost overall
volume share of GB cider, in the off-trade Magners MAT volume share
of GB cider decreased by 0.5%pts(vii) and reduced by 0.2%pts in the
on-trade(viii) . We are pleased to report the latest four and
twelve week off-trade data, Magners is in volume and value growth,
with brand volume share growth of 11.0% and 4.6% in the latest four
and twelve week data respectively(vii) . We have continued to grow
outlet penetration of Magners in the IFT, with this growing from
33% in H1 FY2022 to 35% in H1 FY2023.
Our premium beer brands, saw significant year-on-year growth in
H1 FY2023, albeit from a low base, driven by no restrictions in the
hospitality sector. We delivered 48% on-trade volume growth for
Heverlee and Menabrea. Our Menabrea and Heverlee brands alongside
our agency and equity for growth premium beer brands, namely Innis
& Gunn, Drygate and Jubel, have continued to grow both volume
and penetration within our IFT account base, with volumes +82%
compared H1 FY2022. Heverlee's brand awareness continues to grow
and the brand is now the fifth Premium Lager brand by value in
Scotland(xi) . In addition, Menabrea has won a number of national
listings and the brand has delivered its first above the line media
campaign -- reaching a third of UK adults.
Distribution
H1 FY2023 volumes have seen a strong start to the year, growing
19% compared with H1 FY2022, with corresponding net revenues +43%
on the same basis. We continue to execute our strategy, driving
efficiencies into our system through network optimisation; minimum
order values and growing our revenues per customer through
incremental volumes and categories. As a result, we are pleased to
report that distribution margins have grown to 4.0% from 2.3% in H1
in FY2020.
International
International volumes are down 7.2% compared with the same
period in H1 FY2022, however, on a like-for-like basis (excluding
the divested Vermont Hard Cider Company), volumes are broadly flat.
Magners continues to be our main export brand, contributing over
70% of the total international volume. EMEA remains our strongest
performing territory with Spain the strongest performing market,
aided in part by a strong return of tourism.
Ireland
EURm
Constant currency(i) H1 FY2023 H1 FY2022 Change %
Net revenue 150.7 115.5 30.5%
of which Branded 58.7 39.7 47.9%
- Price / mix impact 38.1%
- Volume impact 9.8%
of which Distribution 90.8 71.7 26.6%
- Price / mix impact 20.7%
- Volume impact 5.9%
of which Co-pack / Other 1.2 4.1 (70.7%)
Operating profit(iii) 19.0 8.3 128.9%
Operating margin 12.6% 7.2% 5.4%pts
of which Branded 14.0 7.1 97.2%
of which Distribution 5.0 1.2 316.7%
Volume -- (kHL) 800 741 8.0%
of which Bulmers 204 184 10.9%
Our Ireland division's net revenue increased by 30.5%(i) to
EUR150.7m in H1 FY2023, driven by the re-opening of the on-trade.
Ireland's operating profit increased by 128.9% to EUR19.0m with
margins growing to 12.6% from 7.2% last year. A better channel mix
as a consequence of the removal of trade restrictions, alongside
the introduction of Minimum Unit Pricing ('MUP') has helped in
improving margins year-on-year despite inflationary cost pressures
being faced by the business. Branded operating margins have grown
to 23.9% in H1 FY2023 from 17.9% in H1 FY2022. Margins reflect
increased marketing investment (48% higher year-on-year) and cost
pressure particularly, manufacturing input costs. Distribution
margins have grown to 5.5% in H1 FY2023 from 1.7% last year.
Operational Summary
With customer service being core to the success of our brand-led
distribution model, we are pleased to note that the average OTIF
for H1 FY2023 has improved compared with the same period in H1
FY2022, with August 22 OTIF of 97.5% compared to 94.6% in August
21. This has been key in delivering the revenue and profit growth
we have reported.
In January 2022, the Republic of Ireland introduced MUP, we are
pleased to report that in the latest MAT volume share data that our
Bulmers brand has performed resiliently and increased market share
in the off-trade(ix) . We believe this is a reflection of the
strength of the brand, its special affinity with Irish consumers
and the work undertaken to optimise its position before the
introduction of MUP.
We are pleased to report that the revenue being captured online
through our ecommerce platform was 71% of total revenue in August
2022 compared with 66% in February 2022. We continue to see higher
order values online compared with traditional contact centre
orders, with orders on average 15% higher.
Building on the work undertaken in FY2022 to reduce our Clonmel
manufacturing site's energy usage, in H1 FY2023 we commenced work
to install a heat pump at the site. The pump should be operational
in FY2024 and will reduce the site's gas consumption by 40% and
reduce our CO2 emissions by 1,800 tonnes per annum. This is another
example of a capital investment project being implemented to
insulate the business from cost pressures, ensuring security of
supply and meeting our sustainability ambitions.
Brands
Bulmers brand investment has been made in a number of areas
including traditional sponsorship, outlet activity and above the
line campaigns and increasing the level of digital engagement
through our social media platforms. This has included experiential
events over the summer on Bulmers Light activity, which engaged
over 60,000 consumers in nearly 500 outlets with sampling and point
of sale.
The Bulmers Brand MAT off-trade cider volume share has grown
year-on-year to 55.1%, a significant increase (+7.9pp) compared to
pre COVID-19 levels(ix),(x) . Across the latest 13 weeks, share has
increased to 57.2%, +11.4pp compared to the same 13 weeks one year
ago(ix) . In the on-trade, the latest Bulmers MAT cider volume
share at 63.8% reflects growth in Bulmers market share ahead of
last year (+0.9pp), however that also reflects significant growth
vs pre COVID-19 levels (+2.7pp)(x) . Bulmers continues to enjoy its
position as the largest and most popular cider brand in
Ireland(ix),(x) .
Distribution
Distribution volumes increased 5.9% in H1 FY2023 compared with
the same period in FY2022, with price/mix benefiting from
unrestricted trading in the on-trade through H1 FY2023 and improved
product mix from spirits. The Group's wine business delivered 20%
net revenue growth in H1 FY2023 compared to pre COVID-19
levels.
C&C took on the distribution of Budweiser in summer 2020 and
at the time the brand was in MAT lager volume share decline in the
off trade. As of August 2022, we are pleased to report that this
has largely stabilised with Budweiser MAT off-trade volume share at
10.1% compared with 9.9% in August 2021(x) . This reflects the
focus and investment that has gone into repositioning the brand
with retailers and consumers.
Notes to Operating Review are set out below.
1. H1 FY2022 comparative adjusted for constant currency (H1 FY2022
translated at H1 FY2023 FX rates) as outlined on pages 12-13.
2. Adjusted EBITDA is earnings before exceptional items, finance income,
finance expense, tax, depreciation, amortisation and share of equity
accounted investments' profit/(loss) after tax. A reconciliation of the
Group's operating profit to adjusted EBITDA is set out on page 11.
3. Before exceptional items.
4. Adjusted diluted earnings per share ('EPS') excludes exceptional items.
The current period and comparative periods EPS calculations include an
adjustment to the number of shares outstanding before the Rights Issue to
reflect the bonus element inherent in it and to ensure both period
calculations are on a comparable basis. Please see Note 5 of the
Condensed Consolidated Financial Statements.
5. Free Cash Flow ('FCF') that comprises cash flow from operating activities
net of tangible and intangible cash outflows which form part of investing
activities. FCF highlights the underlying cash generating performance of
the ongoing business. FCF benefits from the Group's purchase receivables
programme which contributed EUR109.7m (28 February 2022: EUR84.1m
reported or EUR82.0m on a constant currency basis, 31 August 2021:
EUR115.6m or EUR115.4m on a constant currency basis) inflow in the year.
A reconciliation of FCF to net movement in cash per the Group's Cash Flow
Statement is set out on page 11.
6. Net debt comprises borrowings (net of issue costs) less cash. Net debt,
including the impact of IFRS 16, comprises borrowings (net of issue
costs), lease liabilities capitalised less cash. Please see Note 9 of the
Condensed Consolidated Financial Statements.
7. IRI GB 04.09.22.
8. CGA GB P08 2022.
9. Ireland NielsenIQ 11.09.2022.
10. CGA, Ireland 31.08.2022.
11. Tennent's: Source: YouGov Brand Index, Period to 31/0722, Scottish Likely
Beer Drinkers.
12. CGA OPM Data to 08/10/2022. Embargoed for wider release until 08/11/2022.
13. IRI GB Worldwide MAT 04.09.22.
Conference Call & Webcast Details | Analysts &
Institutional Investors
C&C Group plc will host a live conference call and webcast,
for analysts and institutional investors, today, 27 October 2022,
at 08:30 BST (03:30 ET). Dial-in details are below for the
conference call.
Conference Call:
Ireland: +353 (1) 436 0959
UK: +44 (0) 330 551 0200
USA: +1 (212) 999-6659
Passcode: Quote 'C&C' when prompted.
For all conference call replay numbers, please contact FTI
Consulting at candcgroup@fticonsulting.com.
Webcast:
The Webcast can be accessed at
https://candcgroupplc.com/investors/.
Contacts
C&C Group plc
Patrick McMahon, Chief Financial Officer
Ewan Robertson, Finance and Investor Relations Director
Email: ewan.robertson@candcgroup.com
UK & International Media
Richard Hayhoe
Email: richard.hayhoe@candcgroup.com
Investors, Analysts & Irish Media
FTI Consulting
Jonathan Neilan / Paddy Berkery / Aline Oliveira
Tel: +353 86 231 4135 / +353 86 6025988 / +353 83 8331644
Email: candcgroup@fticonsulting.com
About C&C Group plc
C&C Group plc is a leading, vertically integrated premium
drinks company which manufactures, markets and distributes branded
beer, cider, wine, spirits, and soft drinks across the UK and
Ireland.
-- C&C Group's portfolio of owned/exclusive 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
fast-growing, premium and craft ciders and beers, such as Heverlee,
Menabrea, Five Lamps and Orchard Pig. C&C exports its Magners and
Tennent's brands to over 40 countries worldwide.
-- C&C Group has owned brand and contract manufacturing/packing operations
in Co. Tipperary, Ireland and Glasgow, Scotland.
-- C&C is the No.1 drinks distributor to the UK and Ireland hospitality
sectors. Operating through the Matthew Clark, Bibendum, Tennent's and
Bulmers Ireland brands, the Group has a market leading range, scale and
reach including an intimate understanding of the markets it serves.
Together this provides a key route-to-market for major international
beverage companies.
C&C Group is a FTSE 250 company headquartered in Dublin and
is listed on the London Stock Exchange.
Note regarding forward-looking statements
This announcement includes forward-looking statements, including
statements concerning current expectations about future financial
performance and economic and market conditions which C&C
believes are reasonable. However, these statements are neither
promises nor guarantees, but are subject to risks and
uncertainties, including those factors discussed on page 14 that
could cause actual results to differ materially from those
anticipated.
Financial review
A summary of results for the six months ended 31 August 2022 is
set out in the table below:
Period ended Period ended CC Period ended
31 August 31 August 31 August
2022 (i) 2021(i) 2021(i)(ii)
EURm EURm EURm
Net revenue 903.0 657.3 666.1
Operating profit 54.9 16.0 15.5
Net finance costs (7.5) (8.5)
Share of equity accounted
investments' loss after
tax - (0.4)
Profit before tax 47.4 7.1
Income tax expense (10.0) (1.3)
Profit for the financial
period 37.4 5.8
Basic EPS 9.6 cent 2.5 cent
Adjusted diluted EPS(iii) 9.5 cent 1.6 cent
Net revenue increased 37.4% on a reported basis or 35.6% on a
constant currency basis to EUR903.0m reflecting the resumption of
trading to pre-COVID-19 levels. The operating profit of the Group,
before exceptional items, for the six-month period to 31 August
2022 was EUR54.9m compared to EUR16.0m in the prior period.
The Group maintains a robust liquidity position with available
liquidity of EUR486.4m at the end of August 2022. With the
publication of the Group's Condensed Consolidated Interim Financial
Statements, the Group is again compliant with its original
covenants, as outlined in Note 8 of the Condensed Consolidated
Interim Financial Statements. The net debt: EBITDA (12 month
trailing) ratio was 1.5x, with interest cover of 8.9x.
Basic EPS has grown by 284.0% compared to the same prior
financial period, with adjusted diluted EPS growing by 493.8%.
The conflict in Ukraine has contributed to heightened
uncertainty and inflationary pressures. Geopolitical events are
causing rapid distortions in supply, and inflationary pressures are
negatively impacting input costs. It is not clear to what extent
these external factors will continue to impact the Group as supply
chains and markets adjust in the medium to long-term, and whether
product price increases continue to mitigate input price inflation.
The rapid increases in interest rates to counter inflation may
cause a shift in customer purchasing behaviour.
Finance costs, income tax and shareholder returns
Net finance charges before exceptional items of EUR7.5m (31
August 2021: EUR8.5m) were incurred in the six months ended 31
August 2022. Exceptional finance charges of EUR2.0m (31 August
2021: EUR4.1m) were also incurred in the current financial period
directly associated with the Covenant waivers including waiver
fees, increased margins payable and other professional fees
associated with covenant waivers. The Group also recorded EUR0.1m
(31 August 2021: EUR0.1m) of exceptional finance income with
respect to interest earned on the promissory notes which were a
component of the consideration on disposal of the Group's US
subsidiary, Vermont Hard Cider Company.
Income tax expense for the period, excluding the impact of
exceptional items, was EUR10.0m. The income tax credit with respect
to exceptional items was EUR0.3m (31 August 2021: charge EUR0.1m).
In line with IAS 34 Interim Financial Reporting the effective tax
rate for the period ended 31 August 2022 was 21.1% excluding share
of equity accounted investments loss after tax. The effective tax
rate is influenced by several factors including the mix of profits
and losses generated across the main geographic locations and
carried forward losses on which no deferred tax has been
recognised.
Due to the ongoing impact of COVID-19, no final dividend was
paid with respect FY2022 (FY2021: EURnil). No interim dividend is
being declared with respect to FY2023 (FY2022: EURnil), but the
Board intends to recommence a final year dividend following the
release of the full year FY2023 results.
Exceptional items
The Group has incurred an exceptional charge on a before tax
basis of EUR0.3m in the current financial period. This includes
EUR2.0m of exceptional finance charges and EUR0.1m of exceptional
finance income as outlined above.
Also included is a credit of EUR0.4m directly related to the
COVID-19 pandemic. The Group reviewed the recoverability of its
debtor book and booked a credit of EUR0.4m with respect to its
provision against trade debtors. At 31 August 2022, the remaining
provision balances relating to the COVID-19 pandemic amounted to a
EUR1.1m provision against trade debtors, a EUR1.5m provision for
advances to customers and a EURnil provision with respect to
inventory.
The Group also recognised a charge of EUR0.6m in the current
financial period in relation to restructuring costs.
During the current financial period, the Group released EUR0.1m
of legal costs previously provided as it was concluded that a
proportion of these costs would no longer be required.
The disposal of the first two tranches of the Group's investment
in Admiral Taverns for EUR42.8m cash proceeds (GBP36.7m) were
completed in the current financial period, realising a profit of
EUR1.0m on disposal. This results in the Group continuing to hold
the remaining 16.6% equity interest in Admiral Taverns, as an asset
held for sale as at 31 August 2022. We expect that the remaining
share will be disposed of in H2 FY2023.
Also in the current financial period, the Group received further
consideration of EUR0.7m in relation to the disposal of its
non-core Tipperary Water Cooler business in FY2021 due to certain
revenue targets being achieved.
Cashflow
Summary cash flow for the six months ended 31 August 2022 is set
out in the table below. Strong working capital discipline and the
Group's inherent cash generation capability resulted in a free cash
inflow of EUR55.3m pre-exceptional and a related free cash flow
conversion of 78.0%.
The increase in the Group's receivables purchase programme, as a
direct consequence of increased trading, is a key driver of the
working capital inflow in the period. The contribution to period
end Group cash from the receivables purchase programme was
EUR109.7m compared to EUR84.1m (EUR82.0m on a constant currency
basis) at 28 February 2022 -- a cash inflow of EUR27.7m on a
constant currency basis in the six month period to 31 August
2022.
Six months ended Six months ended
31 August 2022 31 August 2021
EURm EURm
Operating profit 54.8 19.0
Exceptional items 0.1 (3.0)
Operating profit before exceptional
items 54.9 16.0
Amortisation and depreciation charge 16.0 14.8
Adjusted EBITDA(iv) 70.9 30.8
Cash flow summary 70.9 30.8
Adjusted EBITDA(iv)
Tangible / intangible net expenditure (7.6) (11.4)
Exceptional net proceeds on disposal
of tangible assets - 2.3
Advances to customers 2.0 1.5
Working capital movement (0.9) 10.9
Income taxes paid (3.4) (0.8)
Exceptional items paid (0.8) (4.0)
Net finance costs paid (7.3) (8.8)
Exceptional finance costs paid (2.3) (4.8)
Pension contributions paid - (0.2)
Other* 1.6 4.2
Free Cash Flow(v) 52.2 19.7
Free Cash Flow(v) exceptional cash
outflow 3.1 6.5
Free Cash Flow(v) excluding
exceptional cash outflow 55.3 6.2
Reconciliation to Condensed Consolidated Cash Flow
Statement
Free Cash Flow(v) 52.2 19.7
Proceeds from sale of business 0.7 12.9
Proceeds from exercise of share
options/sale of equity interests - 0.7
Proceeds from sale of asset held for
sale 42.8 -
Proceeds from Rights Issue - 176.3
Payment of Rights Issue costs - (8.6)
Payment of lease liabilities (11.1) (9.8)
Drawdown of debt 38.5 9.5
Repayment of debt (56.6) (220.1)
Net increase/(decrease) in cash 66.5 (19.4)
(* Other primarily relates to the add back of share options,
pensions debited to operating profit, exceptional Rights Issue
costs and net profit on disposal of property, plant and
equipment.)
Pensions
In compliance with IFRS, the net assets and actuarial
liabilities of the various defined benefit pension schemes operated
by Group companies, computed in accordance with IAS 19(R) Employee
Benefits, are included on the Condensed Consolidated Balance Sheet
as retirement benefits.
At 31 August 2022, the Group is reporting a retirement benefit
surplus of EUR45.0m (31 August 2021 net surplus: EUR18.8m, 28
February 2022 net surplus: EUR37.6m). All schemes are closed to new
entrants. There are 2 active members in the Northern Ireland ('NI')
scheme and 48 active members (less than 10% of total membership) in
the Republic of Ireland ('ROI') schemes. The Group has an approved
funding plan in place, the details of which are disclosed in Note
11 of the Condensed Consolidated Interim Financial Statements. The
most recent actuarial valuations of the ROI defined benefit pension
schemes were carried out with an effective date of 1 January 2021
while the date of the most recent actuarial valuation of the NI
defined benefit pension scheme was 31 December 2020.
Arising from the formal actuarial valuations of the Group's
staff defined benefit pension scheme, the Group committed to
contributions of EUR418,000 per annum commencing in 2021 and
increasing at a rate of 1.4% each year thereafter. This will be
reviewed at the next actuarial valuation, which is due in the
normal course of events at 1 January 2024. There is no funding
requirement with respect to the Group's ROI executive defined
benefit pension scheme or the Group's NI defined benefit pension
scheme, both of which are in surplus.
The key factors influencing the change in valuation of the
Group's defined benefit pension scheme obligations are as outlined
below:
EURm
Net surplus at 28 February 2022 37.6
Employer contributions paid -
Current service cost (0.3)
Net interest cost on scheme liabilities/assets 0.4
Experience gains and losses on scheme liabilities (1.3)
Effect of changes in financial assumptions 28.9
Actual return less Interest income on scheme assets (20.1)
Translation adjustment (0.2)
Pension surplus at 31 August 2022 45.0
The increase in the net surplus of the Group's defined benefit
pension schemes from the 28 February 2022 to 31 August 2022, as
computed in accordance with IAS 19(R) Employee Benefits is
primarily due to a decrease in liabilities due to a significant
increase in bond yields over the six-month period, which also
offsets asset value decreases.
Foreign currency and comparative reporting
Six month period Six month period
ended 31 August ended 31 August
2022 2021
Translation exposure EUR:GBP 0.846 0.859
EUR:USD 1.055 1.194
Comparisons for revenue, net revenue and operating profit/(loss)
before exceptional items for each of the Group's reporting segments
are shown at constant exchange rates for transactions by subsidiary
undertakings in currencies other than their functional currency and
for translation in relation to the Group's sterling (GBP) and US
dollar (USD) denominated subsidiaries by restating the prior period
at current period effective rates.
The impact of restating currency exchange rates on the results
for the period ended 31 August 2021 is as follows:
Period
ended 31
August 2021
Period Constant
ended 31 FX FX currency
August 2021 Transaction Translation comparative
EURm EURm EURm EURm
Revenue
Ireland 177.0 - 0.4 177.4
Branded 68.3 - 0.2 68.5
Distribution 102.2 - 0.2 102.4
Co-pack/ Other 6.5 - - 6.5
Great Britain 654.8 - 10.2 665.0
Branded 148.5 - 2.3 150.8
Distribution 486.2 - 7.6 493.8
Co-pack/Other 20.1 - 0.3 20.4
Total 831.8 - 10.6 842.4
Net revenue
Ireland 115.1 - 0.4 115.5
Branded 39.6 - 0.1 39.7
Distribution 71.4 - 0.3 71.7
Co-pack/ Other 4.1 - - 4.1
Great Britain 542.2 - 8.4 550.6
Branded 88.1 - 1.5 89.6
Distribution 435.7 - 6.6 442.3
Co-pack/Other 18.4 - 0.3 18.7
Total 657.3 - 8.8 666.1
Operating
profit/(loss)(i)
Ireland 8.3 - - 8.3
Branded 7.1 - - 7.1
Distribution 1.2 - - 1.2
Great Britain 7.7 (0.7) 0.2 7.2
Branded 11.9 - 0.3 12.2
Distribution (4.2) (0.7) (0.1) (5.0)
Total 16.0 (0.7) 0.2 15.5
Notes to the Finance Review are set out below.
1. Before exceptional items.
2. H1 FY2022 comparative adjusted for constant currency (H1 FY2022
translated at H1 FY2023 FX rates) as outlined on pages 12-13.
3. Adjusted diluted earnings per share ('EPS') excludes exceptional items.
As outlined in Note 5 of the Group's Condensed Consolidated Interim
Financial Statements, the comparative period EPS calculations include an
adjustment to the number of shares outstanding before the Rights Issue to
reflect the bonus element inherent in it.
4. Adjusted EBITDA is earnings before exceptional items, finance income,
finance expense, tax, depreciation, amortisation charges and equity
accounted investments' loss after tax. A reconciliation of the Group's
operating profit to EBITDA is set out on page 11.
5. Free Cash Flow ('FCF') that comprises cash flow from operating activities
net of tangible and intangible cash outflows/inflows which form part of
investing activities. FCF highlights the underlying cash generating
performance of the ongoing business. FCF benefits from the Group's
purchase receivables programme which contributed EUR109.7m (28 February
2022: EUR84.1m; 31 August 2021: EUR115.6m) to cash in the period. A
reconciliation of FCF to net movement in cash per the Group's Cash Flow
Statement is set out on page 11.
Principal risks and uncertainties
We have an established risk management process to identify,
assess and monitor the principal risks that we face as a business.
We have performed a robust assessment of the principal risks facing
the Group, including those that would threaten its business model,
future performance, solvency or liquidity.
The Directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance in the remaining 26 weeks of the financial year, other
than those noted below, remain substantially the same as those
stated on pages 34 to 44 of the Group's Annual Financial Statements
for the year ended 28 February 2022, which are available on the
Group's website, http://www.candcgroupplc.com.
The conflict in Ukraine has contributed to heightened
uncertainty and inflationary pressures. Geopolitical events are
causing rapid distortions in supply, and inflationary pressures are
negatively impacting input costs. It is not clear to what extent
these external factors will continue to impact the Group as supply
chains and markets adjust in the medium to long-term, and whether
product price increases continue to mitigate input price inflation.
The rapid increases in interest rates to counter inflation may
cause a shift in customer purchasing behaviour.
Directors' responsibility statement in respect of the
half-yearly financial report for the six months ended 31 August
2022
We confirm our responsibility for the half-yearly financial
report in accordance with the Disclosure Guidance and Transparency
Rules ('DTR') of the Financial Conduct Authority ('FCA') and with
IAS 34 Interim Financial Reporting as adopted by the EU, and that
to the best of our knowledge:
-- the condensed set of financial statements comprising the Condensed
Consolidated Income Statement, the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Balance Sheet, the
Condensed Consolidated Cash Flow Statement, the Condensed Consolidated
Statement of Changes in Equity and the related notes have been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by the
EU;
-- the interim management report includes a fair review of the information
required by:
1. DTR 4.2.7R,
-- being an indication of important events that have occurred
during the first six months of the financial year and their
impact on the condensed set of financial statements; and,
-- a description of the principal risks and uncertainties for
the remaining six months of the year; and
2. DTR 4.2.8R,
-- being related party transactions that have taken place in
the first six months of the current financial year and that
have materially affected the financial position or
performance of the entity during that period; and,
-- any changes in the related party transactions described in
the last Annual Report that could do so.
The Directors of C&C Group plc, and their functions, are
listed in the Group's Annual Financial Statements for the year
ended 28 February 2022, with the exception of the following changes
during the period:
-- Stewart Gilliland resigned as Chair on 7 July 2022; and
-- Ralph Findlay was appointed as Chair on 7 July 2022.
The Group's auditor has not audited or reviewed the Condensed
Consolidated Interim Financial Statements or the remainder of the
half-yearly financial report.
On behalf of the Board
R. Findlay
Chair
27 October 2022
D. Forde
Chief Executive Officer
Condensed Consolidated Income Statement
for the six months ended 31 August 2022
Six months ended 31 August 2022 Six months ended 31 August 2021
(unaudited) (unaudited)
Exceptional Exceptional
Before items Before items
exceptional (Note 4) Total exceptional (Note 4) Total
Notes items EURm EURm EURm items EURm EURm EURm
Revenue 2 1,101.2 - 1,101.2 831.8 - 831.8
Excise duties (198.2) - (198.2) (174.5) - (174.5)
Net revenue 2 903.0 - 903.0 657.3 - 657.3
Operating costs (848.1) (0.1) (848.2) (641.3) 3.0 (638.3)
Group operating
profit/(loss) 2 54.9 (0.1) 54.8 16.0 3.0 19.0
Profit on
disposal 4 - 1.7 1.7 - 4.5 4.5
Finance income - 0.1 0.1 - 0.1 0.1
Finance expense (7.5) (2.0) (9.5) (8.5) (4.1) (12.6)
Share of equity
accounted
investments'
loss after tax - - - (0.4) (0.1) (0.5)
Profit/(loss)
before tax 47.4 (0.3) 47.1 7.1 3.4 10.5
Income tax
(expense)/credit 3 (10.0) 0.3 (9.7) (1.3) (0.1) (1.4)
Group profit for
the financial
period
attributable to
equity
shareholders 37.4 - 37.4 5.8 3.3 9.1
Basic earnings 5 9.6c 2.5c
per share
(cent)
Diluted earnings 5 9.5c 2.5c
per share
(cent)
All of the results are related to continuing operations.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 August 2022
Six months ended Six months ended
31 August 2022 31 August 2021
(unaudited) (unaudited)
Notes EURm EURm
Other comprehensive income:
Items that may be reclassified
to Income Statement in
subsequent years:
Foreign currency translation
differences arising on the net
investment in foreign
operations (10.1) 2.3
Foreign currency recycled on
disposal of equity accounted
investment (1.0) (0.2)
Gain relating to cash flow
hedges 0.8 -
Deferred tax liability relating
to cash flow hedges (0.2) -
Items that will not be
reclassified to Income
Statement in subsequent years:
Actuarial gain on retirement
benefits 11 7.5 13.9
Deferred tax charge on
actuarial gain on retirement
benefits (0.6) (1.9)
Net (loss)/gain recognised
directly within Other
Comprehensive Income (3.6) 14.1
Group profit for the financial
period 37.4 9.1
Total comprehensive income for
the financial period 33.8 23.2
Condensed Consolidated Balance Sheet
as at 31 August 2022
As at 28
As at 31 As at 31 February
August 2022 August 2021 2022
(unaudited) (unaudited) (audited)
Notes EURm EURm EURm
ASSETS
Non-current assets
Property, plant &
equipment 6 207.4 197.9 214.0
Goodwill & intangible
assets 7 649.1 648.5 656.5
Equity accounted
investments/financial
assets 1.3 67.5 1.3
Retirement benefits 11 45.0 18.8 37.6
Deferred tax assets 22.8 22.2 27.0
Derivative financial
assets 5.4 - 4.3
Trade & other
receivables 35.9 39.0 43.0
966.9 993.9 983.7
Current assets
Inventories 174.4 149.2 168.2
Trade & other
receivables 256.6 266.0 186.3
Cash 131.8 89.0 64.7
562.8 504.2 419.2
Assets held for sale 21.3 - 65.8
584.1 504.2 485.0
TOTAL ASSETS 1,551.0 1,498.1 1,468.7
EQUITY
Equity share capital 4.0 4.0 4.0
Share premium 347.2 347.2 347.2
Other reserves 89.0 86.8 98.3
Treasury shares (35.4) (36.3) (36.0)
Retained income 329.6 239.5 285.5
Total Equity 734.4 641.2 699.0
LIABILITIES
Non-current
liabilities
Lease liabilities 57.2 52.1 59.8
Interest bearing loans
& borrowings 8 237.2 205.1 219.4
Provisions 3.7 6.6 3.9
Deferred tax
liabilities 31.5 17.5 30.2
329.6 281.3 313.3
Current liabilities
Lease liabilities 18.0 18.5 20.2
Derivative financial
liabilities - - 0.1
Trade & other payables 459.1 487.5 386.1
Interest bearing loans
& borrowings 8 (0.9) 59.1 36.6
Provisions 4.3 4.8 8.2
Current income tax
liabilities 6.5 5.7 5.2
487.0 575.6 456.4
Total liabilities 816.6 856.9 769.7
TOTAL EQUITY &
LIABILITIES 1,551.0 1,498.1 1,468.7
Condensed Consolidated Cash Flow Statement
for the six months ended 31 August 2022
Six months ended Six months ended
31 August 2022 31 August 2021
(unaudited) (unaudited)
Notes EURm EURm
CASH FLOWS FROM OPERATING
ACTIVITIES
Group profit for the financial
period 37.4 9.1
Finance income (0.1) (0.1)
Finance expense 9.5 12.6
Income tax expense 3 9.7 1.4
Loss on share of equity
accounted investment - 0.5
Profit on disposal of asset
held for sale 4 (1.0) -
Depreciation of property,
plant & equipment 6 14.8 13.5
Amortisation of intangible
assets 7 1.2 1.3
Profit on disposal of a
subsidiary 4 (0.7) (4.5)
Net profit on disposal of
property, plant & equipment 6 - (1.8)
Rights Issue costs recorded as
exceptional 4 - 2.0
Charge for equity settled
share-based payments 1.6 1.9
Pension charged to Income
Statement less contributions
paid 11 (0.1) 0.1
72.3 36.0
Increase in inventories (9.6) (26.9)
Increase in trade & other
receivables (73.2) (159.1)
Increase in trade & other
payables 87.4 195.5
Decrease in provisions (4.1) (2.3)
72.8 43.2
Interest and similar costs
paid (9.6) (13.6)
Income taxes paid (3.4) (0.8)
Net cash inflow from operating
activities 59.8 28.8
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant &
equipment 6 (5.5) (11.4)
Purchase of intangible assets 7 (2.1) -
Net proceeds on disposal of
property, plant & equipment 6 - 2.3
Sale of business 4 0.7 12.9
Net proceeds on disposal of
asset held for sale 4 42.8 -
Net cash inflow from investing
activities 35.9 3.8
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from exercise of
share options/sale of equity
Interests - 0.7
Proceeds from Rights Issue - 176.3
Drawdown of debt 38.5 9.5
Repayment of debt (56.6) (220.1)
Payment of lease liabilities (11.1) (9.8)
Payment of Rights Issue costs - (8.6)
Net cash outflow from
financing activities (29.2) (52.0)
Net increase/(decrease) in
cash 66.5 (19.4)
Reconciliation of opening to
closing cash
Cash at beginning of year 64.7 107.7
Translation adjustments 0.6 0.7
Net increase/(decrease) in
cash 66.5 (19.4)
Cash at end of period 131.8 89.0
A reconciliation of Net Debt
is presented in Note 9.
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 August 2022
Cash
Equity Other flow Share-based Currency
share Share capital hedge payments translation Revaluation Treasury Retained
capital premium reserves reserve reserve reserve reserve shares income Total
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
At 28 February
2022 4.0 347.2 25.8 (0.1) 4.4 53.3 14.9 (36.0) 285.5 699.0
Profit for the
financial
period - - - - - - - - 37.4 37.4
Other
comprehensive
income/(expense) - - - 0.6 - (11.1) - - 6.9 (3.6)
Total
comprehensive
income - - - 0.6 - (11.1) - - 44.3 33.8
Reclassification
of share-based
payments
reserve - - - - (0.4) - - - 0.4 -
Sale of treasury
shares/purchases
of shares to
satisfy employee
share
entitlements - - - - - - - 0.6 (0.6) -
Equity settled
share-based
payments - - - - 1.6 - - - - 1.6
Total
transactions
with owners - - - - 1.2 - - 0.6 (0.2) 1.6
At 31 August 2022 4.0 347.2 25.8 0.5 5.6 42.2 14.9 (35.4) 329.6 734.4
Condensed Consolidated Statement of Changes in Equity -
continued
for the financial year ended 28 February 2022
Cash
Equity Other flow Share-based Currency
share Share capital hedge payments translation Revaluation Treasury Retained
capital premium reserves reserve reserve reserve reserve shares income Total
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
At 1 March 2021 3.2 171.3 25.8 - 3.3 41.6 12.4 (36.5) 225.0 446.1
Profit for the
financial
period - - - - - - - - 9.1 9.1
Other
comprehensive
income - - - - 2.1 - - 12.0 14.1
Total
comprehensive
income - - - - - 2.1 - - 21.1 23.2
Ordinary Share
Capital issued 0.8 175.5 - - - - - - - 176.3
Share issue costs - - - - - - - - (6.6) (6.6)
Exercised share
options - 0.4 - - - - - - - 0.4
Reclassification
of share-based
payments
reserve - - - - (0.2) - - - 0.2 -
Sale of treasury
shares/purchases
of shares to
satisfy employee
share
entitlements - - - - - - - 0.2 (0.2) -
Equity settled
share-based
payments - - - - 1.8 - - - - 1.8
Total
transactions
with owners 0.8 175.9 - - 1.6 - - 0.2 (6.6) 171.9
At 31 August 2021 4.0 347.2 25.8 - 4.9 43.7 12.4 (36.3) 239.5 641.2
Profit for the
financial
period - - - - - - - - 28.0 28.0
Other
comprehensive
income/(expense) - - - (0.1) - 9.6 2.5 - 18.1 30.1
Total
comprehensive
income - - - (0.1) - 9.6 2.5 - 46.1 58.1
Reclassification
of share-based
payments
reserve - - - - (0.2) - - - 0.2 -
Sale of treasury
shares/purchases
of shares to
satisfy employee
share
entitlements - - - - - - - 0.3 (0.3) -
Equity settled
share-based
payments - - - - (0.3) - - - - (0.3)
Total
transactions
with owners - - - - (0.5) - - 0.3 (0.1) (0.3)
At 28 February
2022 4.0 347.2 25.8 (0.1) 4.4 53.3 14.9 (36.0) 285.5 699.0
C&C Group plc | Six months to 31 August 2022
Notes to the Condensed Consolidated Interim Financial
Statements
for the six months ended 31 August 2022
1. Basis of preparation and Accounting policies
The interim financial information presented in this report has
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU. The accounting policies and methods of
computation adopted in preparation of the Condensed Consolidated
Interim Financial Statements are consistent with the recognition
and measurement requirements of IFRS as endorsed by the EU
Commission and those set out in the Consolidated Financial
Statements for the year ended 28 February 2022 and as described in
those Financial Statements on pages 154 to 170, except for the
adoption of new standards, interpretations and standard amendments
effective as of 1 March 2022.
Adoption of IFRS and International Financial Reporting
Interpretations Committee (IFRIC) Interpretations
The following new standards, interpretations and standard
amendments became effective for the Group as of 1 March 2022:
-- Reference to the Conceptual Framework -- Amendments to IFRS 3;
-- Property, Plant and Equipment: Proceeds before Intended Use -- Amendments
to IAS 16;
-- Onerous Contracts -- Costs of Fulfilling a Contract -- Amendments to IAS
37;
-- AIP IFRS 1 First-time Adoption of International Financial Reporting
Standards -- Subsidiary as a first-time adopter;
-- AIP IFRS 9 Financial Instruments -- Fees in the '10 per cent' test for
derecognition of financial liabilities; and
-- AIP IAS 41 Agriculture -- Taxation in fair value measurements.
The new standard amendments did not result in a material impact
on the Group's results.
Basis of preparation
The preparation of the interim financial information requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of certain
assets, liabilities, revenues and expenses together with disclosure
of contingent assets and liabilities. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised, if the revision affects only that period, or
in the period of the revision and future periods if the revision
affects both current and future periods.
These Condensed Consolidated Interim Financial Statements should
be read in conjunction with the Group's Annual Report for the year
ended 28 February 2022 as they do not include all the information
and disclosures required by International Financial Reporting
Standards (IFRS). The accounting policies and methods of
computation and presentation adopted in the preparation of the
Condensed Consolidated Interim Financial Statements are consistent
with those described and applied in the Annual Report for the
financial year ended 28 February 2022.
The interim financial information for both the six months ended
31 August 2022 and the comparative six months ended 31 August 2021
are unaudited and have not been reviewed by the auditors. The
financial information for the year ended 28 February 2022
represents an abbreviated version of the Group's financial
statements for that year. Those financial statements contained an
unqualified audit report and have been filed with the Registrar of
Companies.
The financial information is presented in Euro millions, rounded
to one decimal place. The exchange rates used in translating
Balance Sheet and Income Statement amounts were as follows:
Six months to Six months to Year ended
31 August 2022 31 August 2021 28 February 2022
Balance Sheet
(Euro:Sterling
closing rate) 0.860 0.859 0.836
Income Statement
(Euro:Sterling
average rate) 0.846 0.859 0.852
Balance Sheet
(Euro:USD closing
rate) 1.00 1.183 1.112
Income Statement
(Euro:USD average
rate) 1.055 1.194 1.170
Going concern
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for at
least 12 months from the date of this report. Liquidity of the
Group, defined as cash and undrawn credit facilities, as at 31
August 2022 was EUR486.4m.
With the publication of the Group's Condensed Consolidated
Interim Financial Statements, the Group is back within compliance
with its original covenants, as outlined in Note 8 of the Condensed
Consolidated Interim Financial Statements.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the Condensed Consolidated Interim Financial
Statements.
2. Segmental analysis
The Group's business activity is the manufacturing, marketing
and distribution of branded beer, cider, wine, spirits and soft
drinks. Two operating segments were newly identified in the prior
financial year; Ireland and Great Britain. In FY2021, the Group
reported under four segments (Ireland, GB, MCB and International),
however following a business review and organisational structure
change in FY2022, this was reduced to two for FY2022. The Group has
restated the operating segment information for the financial period
ended 31 August 2021 to conform with the current financial period
presentation.
The Group continually reviews and updates the manner in which it
monitors and controls its financial operations resulting in changes
in the manner in which information is classified and reported to
the Chief Operating Decision Maker ('CODM'). The CODM, identified
as the executive Directors, assesses and monitors the operating
results of segments separately via internal management reports in
order to effectively manage the business and allocate
resources.
The identified business segments are as follows:
(i) Ireland
This segment includes the financial results from sale of the
Group's own branded products across the island of Ireland,
principally Bulmers, Magners, Tennent's, Five Lamps, Clonmel 1650,
Heverlee, Dowd's Lane, Seven Summits hard seltzer, Roundstone Irish
Ale, Linden Village, Finches and Tipperary Water. The Group also
operates the Bulmers Ireland drinks distribution business, a
leading distributor of third-party drinks to the licenced on and
off-trade in Ireland. The Group distributes San Miguel, Tsingtao
and Budweiser Brewing Group beer brands across the island of
Ireland. Since July 2020, the Group has also distributed the
Budweiser brand on an exclusive basis. The primary manufacturing
plant is located in Clonmel, Co. Tipperary, with major distribution
and administration centres in Dublin and Culcavy, Northern
Ireland.
(ii) Great Britain (GB)
This segment includes the financial results from sale of the
Group's own branded products in Scotland, with Tennent's, Caledonia
Best, Heverlee and Magners the main brands. This division includes
the sale of the Group's portfolio of owned cider brands across the
rest of GB, including Magners, Orchard Pig, K Cider and Blackthorn
which are distributed in partnership with the Budweiser Brewing
Group. In addition, the division includes the Tennent's drinks
distribution business in Scotland. The Group also distributes
selected Budweiser Brewing Group brands in Scotland and the
Tsingtao and Menabrea international beer brands across the UK. The
primary manufacturing plant and administration centre is located at
the Wellpark Brewery in Glasgow.
In addition, this segment includes the financial results from
the Matthew Clark and Bibendum distribution businesses. Matthew
Clark is the largest independent distributor to the UK on-trade
drinks sector. It offers an unrivalled range of products, including
beers, wines, spirits, cider and soft drinks. Matthew Clark and
Bibendum also have a number of exclusive distribution agreements
for third party products (mainly wines but also including spirits)
into the UK market and also has a limited range of own brand wines.
Bibendum is one of the largest wine, spirits and craft beer
distributors and wholesalers to the UK on-trade and off-trade, with
a particular focus on wine.
Together the Tennent's, Matthew Clark and Bibendum distribution
businesses operate a nationwide distribution network serving the
independent free trade and national accounts.
Further, this segment includes the financial results from the
sale and distribution of the Group's own branded products,
principally Magners and Tennent's outside of the UK and Ireland.
The Group exports to over 40 countries globally, notably in
continental Europe, Asia and Australia. The Group operates mainly
through local distributors in these markets and regions.
This segment also includes the sale of the Group's cider and
beer products in the US and Canada. In April 2021, the business
divested the wholly-owned US subsidiary, Vermont Hard Cider Company
and its Woodchuck suite of brands.
The Group's analysis by segment includes both items directly
attributable to a segment and those, including central overheads,
which are allocated on a reasonable basis in presenting information
to the CODM.
Inter-segmental revenue is not material and thus not subject to
separate disclosure.
(a) Analysis by reporting segment
Six months to 31 August 2022 Six months to 31 August 2021*
Net Operating Net Operating
Revenue revenue profit/(loss) Revenue revenue profit/(loss)
EURm EURm EURm EURm EURm EURm
Ireland 209.9 150.7 19.0 177.0 115.1 8.3
Great Britain 891.3 752.3 35.9 654.8 542.2 7.7
Total before
exceptional
items 1,101.2 903.0 54.9 831.8 657.3 16.0
Exceptional
items (Note
4) - - (0.1) - - 3.0
Group
operating
profit - - 54.8 - - 19.0
Profit on
disposal - - 1.7 - - 4.5
Finance income - - 0.1 - - 0.1
Finance
expense - - (7.5) - - (8.5)
Finance
expense
exceptional
items - - (2.0) - - (4.1)
Share of
equity
accounted
investments'
loss after
tax before
exceptional
items - - - - - (0.4)
Share of
equity
accounted
investments'
exceptional
items - - - - - (0.1)
1,101.2 903.0 47.1 831.8 657.3 10.5
*The Group has restated the operating segment information for the period ended
31 August 2021 to conform with the current period presentation.
Of the exceptional items in the current financial period,
EUR0.2m credit relates to Ireland (31 August 2021: EUR1.2m) and
EUR0.3m charge relates to Great Britain (31 August 2021: EUR3.8m
credit). Also in the prior financial period, there was a EUR2.0m
charge unallocated.
The profit on disposal of EUR1.7m in the current financial
period (31 August 2021: EUR4.5m) consists of EUR1.0m relating to
the disposal of Admiral Taverns within the Great Britain operating
segment and EUR0.7m further consideration received in relation to
the disposal of the Group's non-core Tipperary Water Cooler
business in FY2021 attributable to the Ireland operating
segment.
Due mainly to the classification of the Admiral Taverns equity
investment as an asset held for sale in FY2022, the share of equity
accounted investments' profit/(loss) after tax before exceptional
items is EURnil (31 August 2021: EUR0.4m loss) and its share of
exceptional profit/(loss) is also EURnil (31 August 2021: EUR0.1m
loss), these related to Great Britain in the prior financial
period.
Total assets for the period ended 31 August 2022 amounted to
EUR1,551.0m (31 August 2021: EUR1,498.1m, 28 February 2022:
EUR1,468.7m).
(b) Geographical analysis of non-current assets
Ireland Great Britain International Total
EURm EURm EURm EURm
31 August 2022
Property, plant &
equipment 72.7 130.1 4.6 207.4
Goodwill & intangible
assets 157.2 466.7 25.2 649.1
Equity accounted
investments/financial
assets 0.7 0.4 0.2 1.3
Total 230.6 597.2 30.0 857.8
Ireland Great Britain International Total
EURm EURm EURm EURm
31 August 2021
Property, plant &
equipment 70.2 122.9 4.8 197.9
Goodwill & intangible
assets 157.7 465.6 25.2 648.5
Equity accounted
investments/financial
assets 0.4 62.9 4.2 67.5
Total 228.3 651.4 34.2 913.9
The geographical analysis of non-current assets, with the
exception of Goodwill & intangible assets, is based on the
geographical location of the assets. The geographical analysis of
Goodwill & intangible assets is allocated based on the country
of destination of sales at date of acquisition.
(c) Disaggregated net revenue
In the following table, net revenue is disaggregated by
principal activities and products. Principal activities and
products is the primary basis on which management reviews its
businesses across the Group. To aid in more useful analysis of the
Group's business performance, the Group introduced Branded and
Distribution in FY2022 to better reflect how the business is
managed commercially and the distinct revenue sources which drive
its performance as a brand-led distributor in the UK and
Ireland.
Principal activities and products -- Net revenue
Ireland Great Britain Total
31 August 2022 EURm EURm EURm
Branded* 58.7 107.1 165.8
Distribution** 90.8 631.8 722.6
Co pack/Other 1.2 13.4 14.6
Net revenue 150.7 752.3 903.0
* Branded is defined as being brands either fully owned by C&C or sold by C&C
as part of a long-term distribution deal, whereby C&C are responsible for the
marketing as well as sale of the brand in the associated geography.
** Distribution is defined as third-party brands sold through our distribution
businesses and brands where C&C act as an exclusive agent for a brand in a
specific geography.
Ireland Great Britain Total
31 August 2021*** EURm EURm EURm
Branded* 39.6 88.1 127.7
Distribution** 71.4 435.7 507.1
Co pack/Other 4.1 18.4 22.5
Net revenue 115.1 542.2 657.3
* Branded defined as being brands either fully owned by C&C or sold by C&C as
part of a long-term distribution deal, whereby C&C are responsible for the
marketing as well as sale of the brand in the associated geography.
** Distribution defined as third-party brands sold through our distribution
businesses and brands where C&C act as an exclusive agent for a brand in a
specific geography.
*** The Group has restated the disaggregated net revenue information for the
period ended 31 August 2021 to conform with the current financial period
presentation.
Cyclicality of interim results
Under a normal trading environment, Branded (excluding
Distribution) within the Group's portfolio, particularly its cider
brands, tend to have higher consumption during the summer months,
which fall within the first half of the financial year. In
addition, external factors such as weather and significant sporting
events, which traditionally take place in the summer months, will
have a greater impact on first half trading. Accordingly, trading
profit is usually higher in the first half than in the second. For
Distribution, the most important trading period in terms of sales,
profitability and cash flow has been the Christmas season, in which
case the second half of the year will have a greater impact on our
distribution business.
In the current financial period, we have had our first
unrestricted trading period without the impact of COVID-19 trading
restrictions. This will continue to be a key influencing factor on
the performance of the Group's financial year ending 28 February
2023, compared to its prior periods.
3. Income tax expense
Income tax expense for the period, excluding the impact of
exceptional items, was EUR10.0m (31 August 2021: EUR1.3m). The
income tax credit with respect to exceptional items was EUR0.3m (31
August 2021: expense EUR0.1m).
In line with IAS 34 Interim Financial Reporting the effective
tax rate for the period ended 31 August 2022 was 21.1%. The
effective tax rate is influenced by several factors including the
mix of profits and losses generated across the main geographic
locations.
4. Exceptional items
Six months to Six months to
31 August 2022 31 August 2021
EURm EURm
Operating costs
COVID-19 (a) 0.4 3.0
Restructuring costs (b) (0.6) 2.0
Costs associated with Rights Issue (c) - (2.0)
Other (d) 0.1 -
Operating (loss)/profit exceptional
items (0.1) 3.0
Profit on disposal (e) 1.7 4.5
Finance income (f) 0.1 0.1
Finance charges (g) (2.0) (4.1)
Share of equity accounted investments'
exceptional items (h) - (0.1)
(Loss)/profit before tax (0.3) 3.4
Income tax credit/(expense) (i) 0.3 (0.1)
Total (loss)/profit after tax - 3.3
(a) COVID-19
The Group continues to account for the ongoing effect of
COVID-19 as an exceptional item and, in that regard, has incurred
an exceptional credit of EUR0.4m from operating activities at 31
August 2022 (31 August 2021: a credit of EUR3.0m). The Group
reviewed the recoverability of its debtor book and booked a credit
of EUR0.4m with respect to its provision against trade debtors (31
August 2021: EUR1.8m). At 31 August 2022, the remaining provision
balances relating to the COVID-19 pandemic amounted to a EUR1.1m
provision against trade debtors, EUR1.5m provision for advances to
customers and a EURnil provision with respect to inventory.
In the prior financial period, the Group also recognised a
credit of EUR1.2m relating to the disposal of inventory, which had
previously been deemed obsolete in FY2021, as a consequence of the
COVID-19 restrictions.
(b) Restructuring costs
The Group incurred costs of EUR0.6m in relation to redundancy
costs in the current financial period. In the prior financial
period, the Group recognised a credit of EUR2.0m as a direct
consequence of the optimisation of the delivery networks in England
and Scotland, primarily relating to a profit of EUR1.8m arising
from the disposal of a property and a release of EUR0.2m on
revision of expected spend of the project.
(c) Costs associated with Rights Issue
In the prior financial period, the Group completed a successful
Rights Issue in June 2021 issuing 81,287,315 New Ordinary Shares at
186 pence per New Ordinary Share, raising gross proceeds of
GBP151.2m (EUR176.3m). Attributable costs of EUR8.6m were incurred,
of which EUR6.6m was debited directly to Equity and EUR2.0m was
recorded as an exceptional charge in the Group's Condensed
Consolidated Income Statement.
(d) Other
During the current financial period, the Group released EUR0.1m
of legal costs previously provided as it was concluded that a
proportion of these costs would no longer be required.
(e) Profit on disposal
Admiral Taverns was classified as an asset held for sale in
FY2022. On 17 May 2022, the Group announced the sale of its joint
venture in Admiral Taverns, to Proprium Capital Partners for a
total consideration of EUR65.8m (GBP55.0m). The consideration and
the sale of the respective shares is payable in three tranches in
FY2023. The first two tranches equating to EUR42.8m cash proceeds
(GBP36.7m) were completed in the current financial period,
realising a profit of EUR1.0m on disposal. This results in the
Group continuing to hold the remaining 16.6% equity interest in
Admiral Taverns, as an asset held for sale as at 31 August 2022. It
is expected that the remaining share will be disposed of in H2
FY2023.
Also in the current financial period, the Group received further
consideration of EUR0.7m in relation to the disposal of its
non-core Tipperary Water Cooler business in FY2021 due to certain
revenue targets being achieved.
In the prior financial period, the Group completed the sale of
its wholly owned US subsidiary, Vermont Hard Cider Company to
Northeast Kingdom Drinks Group, LLC for a total consideration of
EUR17.5m (USD 20.5m) (comprised of cash proceeds of EUR13.4m
(EUR12.9m net cash impact on disposal) and promissory notes of
EUR4.1m), realising a profit of EUR4.5m on disposal.
(f) Finance income exceptional items
The Group earned finance income of EUR0.1m in the current
financial period (31 August 2021: EUR0.1m) relating to promissory
notes issued as part of the disposal of the Group's subsidiary
Vermont Hard Cider Company in FY2022.
(g) Finance expense exceptional items
The Group incurred costs of EUR2.0m (31 August 2021: EUR4.1m)
directly associated with the covenant waivers secured due to the
impact of COVID-19. These costs included waiver fees, increased
margins payable and other professional fees associated with the
covenant waivers.
(h) Share of equity accounted investments' exceptional items
Admiral Taverns was classified as an asset held for sale in
FY2022, the Group discontinued equity accounting for this
investment at that date. As such in the current financial period,
the Group incurred no share of Admiral Taverns' exceptional
items.
In the prior financial period, the Group incurred a charge of
EUR0.1m with respect to its share of Admiral Taverns' exceptional
items. The Group recognised an exceptional credit in relation to
its share of a release from the expected loss provision with
respect to the recoverability of Admiral Taverns' debtor book as a
consequence of COVID-19 of EUR0.5m. This was offset by the Group's
share of acquisition costs of EUR0.6m incurred with respect to
Admiral Taverns' acquisition of Hawthorn.
(i) Income tax expense
The tax credit in the current financial period with respect to
exceptional items was EUR0.3m (31 August 2021: expense
EUR0.1m).
5. Earnings per ordinary share
Denominator computations
31 August 2022 31 August 2021
Number Number
'000 '000
Number of shares at beginning of period 401,914 320,480
Shares issued in respect of options
exercised - 147
Shares issued in Rights Issue - 81,287
Number of shares at end of period 401,914 401,914
Weighted average number of ordinary
shares, excluding treasury shares
(basic) 391,268 357,646
Adjustment for the effect of conversion of
options 1,560 879
Weighted average number of ordinary
shares, including options (diluted) 392,828 358,524
Profit for the period attributable to ordinary shareholders
Six months to Six months to
31 August 2022 31 August 2021
EURm EURm
Profit attributable to equity holders of
the parent 37.4 9.1
Adjustments for exceptional items, net
of tax (Note 4) - (3.3)
Earnings as adjusted for exceptional
items, net of tax 37.4 5.8
Basic earnings per share Cent Cent
Basic earnings per share 9.6 2.5
Adjusted basic earnings per share 9.6 1.6
Diluted earnings per share
Diluted earnings per share 9.5 2.5
Adjusted diluted earnings per share 9.5 1.6
Basic earnings per share is calculated by dividing the profit
attributable to the equity holders of the parent by the weighted
average number of ordinary shares in issue during the period,
excluding ordinary shares purchased/issued by the Company and
accounted for as treasury shares (31 August 2022: 10.5m shares; 31
August 2021: 10.8m shares, 28 February 2022: 10.7m shares).
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive ordinary shares. The average market
value of the Company's shares for purposes of calculating the
dilutive effect of share options was based on quoted market prices
for the period of the year that the options were outstanding.
Employee share awards (excluding awards which were granted under
plans where the rules stipulate that obligations must be satisfied
by the purchase of existing shares), which are performance-based,
are treated as contingently issuable shares because their issue is
contingent upon satisfaction of specified performance conditions in
addition to the passage of time. In accordance with IAS 33, these
contingently issuable shares are excluded from the computation of
diluted earnings per share where the vesting conditions would not
have been satisfied at the end of the reporting period. If dilutive
other contingently issuable ordinary shares are included in diluted
EPS based on the number of shares that would be issuable if the end
of the reporting period was the end of the contingency period.
Contingently issuable shares excluded from the calculation of
diluted earnings per share totalled 156,699 at 31 August 2022
(997,323: 31 August 2021).
6. Property, plant & equipment
Acquisitions and disposals
During the current financial period, the Group acquired assets
of EUR4.3m (31 August 2021 total additions: EUR6.4m). Total cash
outflow in the period in relation to the purchase of property,
plant & equipment amounted to EUR5.5m (31 August 2021 total
cash outflow: EUR11.4m) as a result of a decrease in accruals
relating to capital expenditure.
In the current financial period, the Group disposed of no
property plant and equipment. In the prior financial period, the
Group disposed of assets, with a net book value of EUR5.4m, as part
of the sale of its wholly owned US subsidiary, Vermont Hard Cider
Company. Also, in the prior financial period, the Group disposed of
other assets with a net book value of EUR0.5m and realised a profit
of EUR1.8m on the disposal.
The Group's depreciation charge for six months to 31 August 2022
amounted to EUR14.8m (31 August 2021: EUR13.5m).
Impairment
The carrying value of items of land & buildings and plant
& machinery are reviewed and tested for impairment at each
financial year end date or more frequently if events or changes in
circumstances indicate that their carrying value may not be
recoverable. There was no impairment during the current financial
period.
7. Goodwill & intangible assets
Other
intangible
Goodwill Brands assets Total
EURm EURm EURm EURm
Cost
At 1 March 2021 599.8 321.9 40.5 962.2
Additions - - - -
Translation adjustment 2.1 1.5 0.2 3.8
At 31 August 2021 601.9 323.4 40.7 966.0
Additions - - 2.2 2.2
Translation adjustment 4.4 3.0 0.3 7.7
At 28 February 2022 606.3 326.4 43.2 975.9
Additions - - 2.1 2.1
Translation adjustment (4.7) (3.2) (0.4) (8.3)
At 31 August 2022 601.6 323.2 44.9 969.7
Amortisation and impairment
At 1 March 2021 (76.2) (214.6) (25.4) (316.2)
Charge for the period ended
31 August 2021 - - (1.3) (1.3)
At 31 August 2021 (76.2) (214.6) (26.7) (317.5)
Impairment charge for the
year - - (0.6) (0.6)
Charge for the period ended
28 February 2022 - - (1.3) (1.3)
At 28 February 2022 (76.2) (214.6) (28.6) (319.4)
Charge for the period ended
31 August 2022 - - (1.2) (1.2)
At 31 August 2022 (76.2) (214.6) (29.8) (320.6)
Net Book Value at 31 August
2022 525.4 108.6 15.1 649.1
Net Book Value at 28 February
2022 530.1 111.8 14.6 656.5
Net Book Value at 31 August
2021 525.7 108.8 14.0 648.5
Other intangible asset additions for the financial period were
EUR2.1m relating to the ERP upgrade in GB (31 August 2021: EURnil;
year ended 28 February 2022 EUR2.2m) and the amortisation charge
for the financial period ended 31 August 2022 was EUR1.2m (31
August 2021: EUR1.3m; year ended 28 February 2022 EUR2.6m). In
FY2022, the Group wrote off IT intangible assets of EUR0.6m
relating to cloud software licence agreements treated as service
contracts.
Brands and goodwill assets considered to have an indefinite
life, are reviewed for indicators of impairment regularly and are
subject to impairment testing on an annual basis unless events or
changes in circumstances indicated that the carrying values may not
be recoverable and impairment testing is required earlier.
The value of brands and goodwill considered to have an
indefinite life were assessed for impairment at 28 February 2022
and given no material changes in circumstances since that date,
they will be formally assessed again at 28 February 2023.
8. Interest bearing loans & borrowings
31 August 2022 31 August 2021 28 February 2022
EURm EURm EURm
Current liabilities
Unsecured loans
repayable by one
repayment on
maturity 0.8 0.7 0.7
Unsecured loans
repayable by
instalment - (59.9) (37.4)
Private Placement
notes repayable by
one repayment on
maturity 0.1 0.1 0.1
0.9 (59.1) (36.6)
Non-current
liabilities
Unsecured loans
repayable by one
repayment on
maturity (94.7) (62.7) (75.0)
Private Placement
notes repayable by
one repayment on
maturity (142.5) (142.4) (144.4)
(237.2) (205.1) (219.4)
Total borrowings (236.3) (264.2) (256.0)
Covenants
As outlined previously, as a direct consequence of the impact of
COVID-19, the Group successfully negotiated waivers on its debt
covenants from its lending group. With the publication of the
Group's Condensed Consolidated Interim Financial Statements, the
Group is back within compliance with its original covenants.
The Group's multi-currency debt facility incorporates the
following original financial covenants:
-- Interest cover: The ratio of EBITDA to net interest for a period of 12
months ending on each half-year date will not be less than 3.5:1
-- Net debt: EBITDA: The ratio of net debt on each half-year date to EBITDA
for a period of 12 months ending on a half-year date will not exceed
3.5:1
The net debt: EBITDA (12 month trailing) ratio was 1.5x, with
interest cover of 8.9x at the current financial period end.
9. Analysis of net debt
Additions/ Cash 31
1 March Translation disposals/ flow, Non-cash August
2022 adjustment remeasurement net changes 2022
EURm EURm EURm EURm EURm EURm
Interest
bearing
loans &
borrowings (256.0) 2.0 - 18.1 (0.4) (236.3)*
Cash 64.7 0.6 - 66.5 - 131.8
Net debt
excluding
leases (191.3) 2.6 - 84.6 (0.4) (104.5)
Lease
liabilities (80.0) 2.1 (8.4) 12.6** (1.5) (75.2)
Net debt
including
leases (271.3) 4.7 (8.4) 97.2 (1.9) (179.7)
*Interest bearing loans & borrowings as at 31 August 2022 are net of
unamortised issue costs of EUR2.5m.
** Payments are apportioned between Finance charges EUR1.5m and payment of
lease liabilities EUR11.1m in the Condensed Consolidated Cash Flow Statement.
1 Additions/ Cash 28
September Translation disposals/ flow, Non-cash February
2021 adjustment remeasurement net changes 2022
EURm EURm EURm EURm EURm EURm
Interest
bearing
loans &
borrowings (264.2) (2.9) - 11.6 (0.5) (256.0)*
Cash 89.0 1.8 - (26.1) - 64.7
Net debt
excluding
leases (175.2) (1.1) - (14.5) (0.5) (191.3)
Lease
liabilities (70.6) (2.1) (19.4) 13.9 (1.8) (80.0)
Net debt
including
leases (245.8) (3.2) (19.4) (0.6) (2.3) (271.3)
*Interest bearing loans & borrowings at 28 February 2022 are net of
unamortised issue costs of EUR2.9m.
Additions/ Cash 31
1 March Translation disposals/ flow, Non-cash August
2021 adjustment remeasurement net changes 2021
EURm EURm EURm EURm EURm EURm
Interest
bearing
loans &
borrowings (470.0) (4.3) - 210.6 (0.5) (264.2)*
Cash 107.7 0.7 - (19.4) - 89.0
Net debt
excluding
leases (362.3) (3.6) - 191.2 (0.5) (175.2)
Lease
liabilities (79.6) (1.1) 0.3 11.3** (1.5) (70.6)
Net debt
including
leases (441.9) (4.7) 0.3 202.5 (2.0) (245.8)
* Interest bearing loans & borrowings as at 31 August 2021 are net of
unamortised issue costs of EUR3.4m.
** Payments are apportioned between Finance charges EUR1.5m and payment of
lease liabilities EUR9.8m in the Condensed Consolidated Cash Flow Statement.
During the period to 31 August 2022, the leases for HGV fleet
for Matthew Clark were transferred to a new lessor and the lease on
one depot was renewed. There were no other significant changes and
the movement in leases was otherwise in line with expectations
based on the current lease portfolio.
The non-cash changes for interest bearing loans & borrowings
in the current and prior financial periods relate to the
amortisation of issue costs. The non-cash changes for lease
liabilities in the current and prior financial periods relate to
discount unwinding.
10. Financial assets and liabilities
The carrying and fair values of financial assets and liabilities
at 31 August 2022 and 31 August 2021 were as follows:
Derivative Other Other
31 August
2022 financial financial financial Carrying Fair
instruments assets liabilities Value value
EURm EURm EURm EURm EURm
Financial
assets:
Cash - 131.8 - 131.8 131.8
Trade
receivables - 209.5 - 209.5 209.5
Advances to
customers - 37.8 - 37.8 37.8
Derivative
contracts 0.7 - - 0.7 0.7
Financial
liabilities:
Interest
bearing loans
& borrowings - - (236.3) (236.3) (238.8)
Trade & other
payables - - (459.1) (459.1) (459.1)
0.7 379.1 (695.4) (315.6) (318.1)
31 August
2021 Derivative Other Other
financial financial financial Carrying Fair
instruments assets liabilities value value
EURm EURm EURm EURm EURm
Financial
assets:
Cash - 89.0 - 89.0 89.0
Trade
receivables - 219.8 - 219.8 219.8
Advances to
customers - 41.1 - 41.1 41.1
Financial
liabilities:
Interest
bearing loans
& borrowings - - (264.2) (264.2) (267.6)
Trade & other
payables - - (487.5) (487.5) (487.5)
- 349.9 (751.7) (401.8) (405.2)
Short term bank deposits and cash
The nominal amount of all short-term bank deposits and cash is
deemed to reflect fair value at the balance sheet date.
Advances to customers
Advances to customers, adjusted for advances of discount
prepaid, is considered to reflect fair value.
Trade & other receivables/ payables
The nominal amount of all trade receivables/trade & other
payables after provision for impairment is deemed to reflect fair
value at the balance sheet date.
Interest bearing loans & borrowings
The fair value of all interest-bearing loans & borrowings
has been calculated by discounting all future cash flows to their
present value using a market rate reflecting the Group's cost of
borrowing at the balance sheet date (Level 2).
Derivative contracts
Derivative contracts are initially recognised at fair value on
the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as
financial assets when the fair value is positive and as financial
liabilities when the fair value is negative. The fair value of
financial instruments that are not traded in an active market (for
example, over-the-counter derivatives) is determined by using
valuation techniques. Such valuation techniques maximise the use of
observable market data, where available, and rely as little as
possible on the Group's estimates. The fair value of the forward
foreign exchange contracts is determined using forward exchange
rates at the date of the statement of financial position, with the
resulting value discounted as relevant. (Level 2).
11. Retirement benefits
As disclosed in the Annual Report for the year ended 28 February
2022, the Group operates a number of defined benefit pension
schemes for certain employees, past and present, in the Republic of
Ireland (ROI) and in Northern Ireland (NI), all of which provide
pension benefits based on final salary and the assets of which are
held in separate trustee administered funds. The Group closed its
defined benefit pension schemes to new members in March 2006 and
provides only defined contribution pension schemes for employees
joining the Group since that date. The Group provides permanent
health insurance cover for the benefit of certain employees and
separately charges this to the Income Statement.
There are no active members remaining in the Group's executive
defined benefit pension scheme (31 August 2021: no active members)
while there are 48 active members (31 August 2021: 52 active
members), representing less than 10% of total membership, in the
ROI Staff defined benefit pension scheme and 2 active members in
the NI defined benefit pension scheme (31 August 2021: 2 active
members).
The Balance Sheet valuation of the Group's defined benefit
pension schemes' assets and liabilities have been marked-to-market
as at 31 August 2022 to reflect movements in the fair value of
assets and changes in the assumptions used by the schemes'
actuaries to value the liabilities.
The key factors influencing the change in valuation of the
Group's defined benefit pension scheme obligations are as outlined
below:
Period ended Period ended Year ended 28
31 August 2022 31 August 2021 February 2022
EURm EURm EURm
Retirement benefit
deficit at
beginning of period
(ROI schemes) - (5.5) (5.5)
Retirement benefit
surplus at
beginning of period
(ROI schemes) 31.1 5.1 5.1
Retirement benefit
surplus at
beginning of period
(NI scheme) 6.5 5.3 5.3
Current service cost (0.3) (0.4) (0.7)
Net interest cost on
scheme
liabilities/assets 0.4 0.1 -
Experience gains and
losses on scheme
liabilities (1.3) 11.2 12.2
Effect of changes in
financial
assumptions 28.9 (12.3) 6.2
Effect of changes in
demographic
assumptions - - 3.1
Actual return less
Interest income on
scheme assets (20.1) 15.0 11.3
Employer
contributions - 0.2 0.4
Translation
adjustment (0.2) 0.1 0.2
Net pension surplus
before deferred
tax 45.0 18.8 37.6
Retirement benefit
surplus at end of
period (ROI
schemes) 40.0 12.9 31.1
Retirement benefit
surplus at end of
period (NI scheme) 5.0 5.9 6.5
Related deferred
income tax
liability (6.7) (3.7) (6.1)
Net pension surplus 38.3 15.1 31.5
The increase in the net surplus of the Group's defined benefit
pension schemes from the 28 February 2022 to the 31 August 2022, as
computed in accordance with IAS 19(R) Employee Benefits is
primarily due to an decrease in liabilities due to a significant
increase in bond yields (discount rates) over the six-month period,
which also offsets asset value decreases.
The discount rate assumptions used by the Group's actuaries in
the computation of the defined benefit liabilities arising on
pension schemes are as follows:
Period ended Period ended Year ended
31 August 2022 31 August 2021 28 February 2022
ROI NI ROI NI ROI NI
Discount
rate 3.45%-3.55% 4.30% 1.05%-1.25% 1.70% 1.80%-2.00% 2.60%
12. Other reserves
Share capital
The movement in the prior financial period relates to the
completion of the Rights Issue which the Group announced on the 26
May 2021. The Group issued 81,287,315 New Ordinary Shares at 186
pence per New Ordinary Share, which was completed in June 2021
raising gross proceeds of GBP151m (EUR176m). This led to an
increase in the Group's share capital of EUR0.8m.
Share premium
The movement in the prior financial period also primarily
relates to the completion of the Rights Issue. This led to an
increase in the Group's share premium of EUR175.5m. Also during the
prior financial period there was the exercise of share options
equating to EUR0.4m (28 February 2022: EUR0.4m).
13. Dividend
No final dividend was paid with respect to FY2022 (FY2021:
EURnil) and no interim dividend is being declared with respect to
FY2023 (FY2022: EURnil).
14. Related parties
The principal related party relationships requiring disclosure
under IAS 24 Related Party Disclosures pertain to the existence of
subsidiary undertakings and equity accounted investments,
transactions entered into by the Group with these subsidiary
undertakings and equity accounted investments and the
identification and compensation of, and transactions with, key
management personnel.
Transactions
Transactions between the Group and its related parties are made
on terms equivalent to those that prevail in arm's length
transactions.
Subsidiary undertakings
The Condensed Consolidated Interim Financial Statements include
the financial statements of the Company and its subsidiaries. Sales
to and purchases from subsidiary undertakings, together with
outstanding payables and receivables, are eliminated in the
preparation of the Condensed Consolidated Interim Financial
Statements in accordance with IFRS 10 Consolidated Financial
Statements.
Key management personnel
For the purposes of the disclosure requirements of IAS 24
Related Party Disclosures, the Group has defined the term 'key
management personnel', as its Executive and Non-Executive
Directors. Executive Directors participate in the Group's equity
share award schemes and are covered for death in service by an
insurance policy. Executive Directors may also benefit from medical
insurance under a Group policy (or the Group offers a cash
alternative). No other non-cash benefits are provided.
Non-Executive Directors do not receive share-based payments nor
post-employment benefits.
Compensation with respect to key management personnel included
in the Income Statement was EUR2.0m for the six months ended 31
August 2022 (31 August 2021: EUR2.1m) of which EUR1.0m pertains to
non share-based payment compensation and EUR1.0m is with respect to
share-based payment compensation (31 August 2021: EUR1.3m pertains
to non share-based payment compensation and EUR0.8m with respect to
share-based compensation).
Equity accounted investments
In FY2022, the Group announced the sale of its joint venture
investment in Admiral Taverns, to Proprium Capital Partners, for a
total consideration of EUR65.8m (GBP55.0m) and it was classified as
an asset held for sale. The Group continued to equity account for
this investment up until this date. The sale of the shares will be
completed, and the consideration will be paid in three tranches
during FY2023 -- with the first two tranches completed in the
current financial period.
Other
Loans extended by the Group to equity accounted investments are
considered trading in nature and are included within advances to
customers in Trade & other receivables.
All outstanding trading balances with equity accounted
investments, which arose from arm's length transactions, are to be
settled in cash within 60 days of the reporting date.
Details of transactions with equity accounted investments during
the period and related outstanding balances at the period end are
as follows:
Joint ventures Associates
31 31 31 31
August August August August
2022 2021 2022 2021
EURm EURm EURm EURm
Net revenue 0.2 0.5 0.2 0.2
Trade & other receivables 0.5 0.4 0.1 -
Purchases 0.3 0.4 0.3 0.3
Trade & other payables - 0.1 0.1 -
Loans 1.4 1.5 0.8 0.9
There have been no other related party transactions that could
have a material impact on the financial position or performance of
the Group for the first six months of the financial year.
15. Events after the balance sheet date
The Group entered into a EURIBOR interest rate hedge to the
value of EUR60m in September 2022 to hedge against the future risk
from fluctuating interest rates.
There were no other material events subsequent to the balance
sheet date of 31 August 2022 which would require disclosure in this
report.
16. Board approval
The Board approved the financial report for the six months ended
31 August 2022 on 27 October 2022.
17. Distribution of interim report
This report, and further information on C&C, is available on
the Group's website (http://www.candcgroupplc.com).
Supplementary financial information
Alternative performance measures
The Directors have adopted various alternative performance
measures ('APMs') to provide additional useful information on the
underlying trends, performance and position of the Group. These
measures are used for performance analysis. The alternative
performance measures are not defined by IFRS and therefore may not
be directly comparable with other companies' alternative
performance measures. These measures are not intended to be a
substitute for, or superior to, IFRS measurements. The key APMs of
the Group are set out below:
-- Operating profit/(loss) before exceptional items: Operating profit/(loss)
for the period as adjusted for exceptional items.
-- Adjusted EBITDA or EBITDA: Adjusted EBITDA or EBITDA is earnings/(loss)
before exceptional items, finance income, finance expense, tax,
depreciation, amortisation charges and equity accounted investments'
(loss)/profit after tax.
-- Constant currency: Prior period revenue, net revenue and operating profit
for each of the Group's reporting segments are shown at constant exchange
rates for transactions by subsidiary undertakings in currencies other
than their functional currency and for translation in relation to the
Group's non-Euro denominated subsidiaries by restating the prior period
at current period effective rates. Refer to pages 12-13 for constant
currency table.
-- Exceptional items: Significant items of income and expense within the
Group results for the period which by virtue of their scale and nature
are disclosed in the Income Statement and related notes as exceptional
items.
-- Free Cash flow: Free Cash Flow ('FCF') that comprises cash flow from
operating activities net of tangible and intangible cash outflows/inflows
which form part of investing activities. FCF highlights the underlying
cash generating performance of the ongoing business. FCF benefits from
the Group's purchase receivables programme which contributed EUR109.7m
(28 February 2022: EUR84.1m or EUR82.0m on a constant current basis; 31
August 2021: EUR115.6m or EUR115.4m on a constant currency basis) to cash
in the period (this represents a cash inflow of EUR27.7m on a constant
currency basis in the six-month period to 31 August 2022). A
reconciliation of FCF to net movement in cash per the Group's Cash Flow
Statement is set out on page 11.
-- Interest cover: Calculated by dividing the Group's EBITDA excluding
exceptional items and discontinued activities by the Group's interest
expense, excluding IFRS 16 Leases finance charges, issue cost write-offs,
fair value movements with respect to derivative financial instruments and
unwind of discounts on provisions, for the same period
-- Net debt: Net debt comprises borrowings (net of issue costs) less cash
plus lease liabilities capitalised under IFRS 16 Leases. Refer to Note 9
of the Condensed Consolidated Interim Financial Statements.
-- Net revenue: Net revenue is defined by the Group as revenue less excise
duty. The duty number disclosed represents the cash cost of duty paid on
the Group's products. Where goods are bought duty paid and subsequently
sold, the duty element is not included in the duty line but within the
cost of goods sold. Net revenue therefore excludes duty relating to the
brewing and packaging of certain products. Excise duties, which represent
a significant proportion of revenue, are set by external regulators over
which the Group has no control and are generally passed on to the
consumer.
-- Operating margin: Operating margin is based on operating profit/(loss)
before exceptional items and is calculated as a percentage of net
revenue. Refer to the operating review for operating margin calculations.
View source version on businesswire.com:
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CONTACT:
C&C Group PLC
SOURCE: C&C Group PLC
Copyright Business Wire 2022
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