2013 Annual Report
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OPTION C v2 2013 ANNUAL REPORT CALEDONIA SMOOTH HIGHS & LOWS - HD DIGITAL Spirit Font Domed Lens SHADOWS - HD DIGITAL 12 June 2008 CALEDONIA SMOOTH - HD DIGITAL BACKGROUND - PHOTOSHOP GRADIENT CLIENT Tennet’s Crown SPECIAL INSTRUCTIONS CONTACT Wendy Espie WorldReginfo - ae5e5932-cf37-4276-8ad7-59eb73fcb3f0 JOB NUMBER TCB032/05C DEVELOPMENT WORK ONLY NOT FINAL ARTWORK PROJECT Caledonia Best DESIGN Dome Lens - OPTION C DESIGNER / ARTWORKER LS/GH PRODUCTION CONTACT Judith Allan ARTWORK AW APPLICATION Illustrator CS4 VERSION No. COLOUR PROFILE X_act ISO Coated v2.icc DATE 07/02/12 4 PRINT COLOURS PLEASE READ N.B. The colours on this artwork run out are for colour indication only. Refer to listed Pantone (PMS) specification or attached swatches where applicable for true colour representation. CYAN MAGENTA YELLOW BLACK WHITE PLATE All artwork is approved by jkr as of the date given. Please double check ALL details with client prior to final production. ANY changes made after this date are the responsibility of the client. SCALE MM: THIS RULER MEASURES 100MM WHEN ARTWORK IS 100% PLEASE NOTE IF VIEWING THIS ARTWORK AS A PDF IT MAY NOT 0 10 20 30 40 50 60 70 80 90 100 BE TO SCALE. THE SCALE OPPOSITE WILL GIVE AN INDICATION OF THE REDUCTION PRINT COLOURS Design APPROVAL Date A/C management Date Production Date WorldReginfo - ae5e5932-cf37-4276-8ad7-59eb73fcb3f0 C&C GROUP PLC - 2013 ANNUAL REPORT 1 CONTENTS GROUP STRATEGY 2 OPERATING AND STRATEGIC HIGHLIGHTS 3 MARKET OPERATION 4 CHAIRMAN’S STATEMENT 6 GROUP CHIEF EXECUTIVE OFFICER’S REVIEW 8 OPERATIONS REVIEW 13 2013 GROUP CHIEF FINANCIAL OFFICER’S REVIEW 22 ANNUAL CORPORATE RESPONSIBILITY 28 REVIEW BUSINESS REPORT BOARD OF DIRECTORS 36 DIRECTORS’ REPORT 38 DIRECTORS’ STATEMENT OF CORPORATE GOVERNANCE 44 REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION 53 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 62 INDEPENDENT AUDITOR’S REPORT 63 CORPORATE GOVERNANCE CORPORATE GROUP INCOME STATEMENT 65 GROUP STATEMENT OF COMPREHENSIVE INCOME 66 GROUP BALANCE SHEET 67 GROUP CASH FLOW STATEMENT 68 GROUP STATEMENT OF CHANGES IN EQUITY 69 COMPANY BALANCE SHEET 70 COMPANY CASH FLOW STATEMENT 71 COMPANY STATEMENT OF CHANGES IN EQUITY 72 STATEMENT OF ACCOUNTING POLICIES 73 NOTES FORMING PART OF THE FINANCIAL STATEMENTS 84 FINANCIAL DEFINITIONS 137 VIEW THIS FINANCIAL STATEMENTS REPORT ONLINE candcgroupplc.com or candc.annualreport13.com SHAREHOLDER AND OTHER INFORMATION 138 SHAREHOLDER INFORMATION WorldReginfo - ae5e5932-cf37-4276-8ad7-59eb73fcb3f0 2 C&C GROUP PLC - 2013 ANNUAL REPORT GROUP STRATEGY Our long term strategy is to build a sustainable international cider-led, multi-beverage business through a combination of organic growth and selective acquisitions. The medium-term strategic goals for the Group are: • to maintain strong brand market combinations in core markets by investing in our premium brands and developing out our multi-beverage platforms • to transform our international business through investment in brands and infrastructure and through the development of strategic alliances and acquisitions thus enhancing future earnings growth. WorldReginfo - ae5e5932-cf37-4276-8ad7-59eb73fcb3f0 C&C GROUP PLC - 2013 ANNUAL REPORT 3 OPERATING AND STRATEGIC HIGHLIGHTS OPERATING PROFIT OPERATING MARGIN NET REVENUE €113.9m 23.9% €476.9m before exceptional items increased 2.4% before exceptional items up 0.8ppts declined 0.8% on prior year BUSINESS REVIEW BUSINESS NET DEBT ADJUSTED DILUTED PROPOSED FINAL EARNINGS PER SHARE (EPS) DIVIDEND €123.4m for continuing operations at the year-end giving a leverage ratio to 4.75 cent per share EBITDA of 0.9x 27.7 cent increase of 5.6% per share, delivering increased 0.4% 7.1% growth in full year dividend to 8.75 cent per share ADJUSTED DILUTED EARNINGS PER SHARE 35c 30c CORPORATE GOVERNANCE CORPORATE 25c 20c FY2009 FY2010 FY2011 FY2012 FY2013 • Resilient financial performance despite difficult trading environment in United Kingdom (UK) and Republic of Ireland (ROI) • Strong Tennent’s performance helping to offset challenging core cider markets • Int ernational volume growth of 55.2%, including acquisitions, representing 9.6% of total branded volumes • Robust cost control and operational efficiency improvements helping to protect margins FINANCIAL STATEMENTS • Announced and completed the acquisition of Vermont Hard Cider Company, LLC, the leading US craft cider company, for a gross consideration of US$305.0 million (€230.9 million). The new business contributed €1.8 million of operating profit since completion on 21 December 2012 • Completion of an accelerated integration of the Magners USA commercial infrastructure into the VHCC business • Announc ed the acquisition of the Gleeson Group, a leading supplier and distributor of beverages in Ireland for an enterprise value of €58.0 million. The deal successfully completed on 7 March 2013 • Cr eation of the Shepton Mallet Cider Mill trading division to support the development of regional, craft and specialist cider brands such as Addlestones, Blackthorn and Olde English • Significant on-trade loan activity (€16.7 million incremental investment) in core markets in response to growing customer demand SHAREHOLDER INFORMATION WorldReginfo - ae5e5932-cf37-4276-8ad7-59eb73fcb3f0 4 C&C GROUP PLC - 2013 ANNUAL REPORT MARKET OPERATION BRAND MARKETS CIDER BRANDS ROI IRISH BRANDS Bulmers is a premium, traditional blend of Irish cider with an authentic clean and refreshing taste. Magners is a premium, traditional blend of Irish cider with a crisp, refreshing flavour and a natural authentic character. ENGLISH BRANDS The Gaymers cider range has been relaunched to include apple, pear and two fruit flavoured ciders. Blackthorn Cider is a West Country legend and is one of Britain’s best known ciders. Olde English is a traditional medium dry cider and is enjoyed for its distinctive taste. CIDER - UK Addlestones is a premium cloudy cider, smooth and easy drinking thanks to its unique double fermentation process. American BRANDS Woodchuck Hard Cider is a premium hard cider handcrafted in Vermont, USA. Wyder’s Cider was formulated in 1987 by cider master Ian Wyder and is now available throughout the central and western United States. Hornsby’s is an American cider which combines traditional cider- making techniques with American attitude. It comes in two styles, TENNENT’S - UK Crisp Apple and Amber Draft. Other cider brands include Bulmers Berry, Bulmers Pear, Magners Pear, Magners Specials, Special Vat, K, Natch and Diamond White. BEER BRANDS Tennent’s Lager is brewed to the highest standards to create a lager with a crisp taste and refreshingly clean finish. Tennent’s has been made with pride in the heart of Glasgow since 1885, but is famous far beyond its home city. Tennent’s Lager is Scotland’s best-selling lager. Tennent’s Original Export is brewed in Glasgow using finest natural THIRD PARTY BRANDS (UK) ingredients, including 100% Scottish barley. It is a golden lager with a well rounded flavour and a distinct smooth maltiness. (Distribution in Scotland and Northern Ireland) Caledonia Best is a modern, distinctive new pint that is perfectly * balanced, sweet and smooth, with a malty, roast flavour and a pleasant hoppy bitterness. Heverlee is our first premium Belgian Beer, which is endorsed *In NI, packaged only by the Abbey of the order of Prémontré, in the town of Heverlee in Leuven. Other beer brands include Tennent’s Extra, Tennent’s Scotch Ale, Tennent’s 1885 and Caledonia Smooth. WorldReginfo - ae5e5932-cf37-4276-8ad7-59eb73fcb3f0 C&C GROUP PLC - 2013 ANNUAL REPORT 5 BUSINESS REVIEW BUSINESS CORPORATE GOVERNANCE CORPORATE Austria Germany Portugal USA Australia Singapore Belgium Greece Russia Brazil Bahrain South Korea Bulgaria Hungary Spain Canada China Thailand Cyprus Italy Sweden Caribbean Hong Kong UAE Czech Republic Latvia Switzerland Israel Denmark Luxembourg Turkey Malaysia Finland Malta Ukraine New Zealand France Netherlands Qatar FINANCIAL STATEMENTS International SHAREHOLDER INFORMATION WorldReginfo - ae5e5932-cf37-4276-8ad7-59eb73fcb3f0 6 C&C GROUP PLC - 2013 ANNUAL REPORT CHAIRMAN’S STATEMENT I am pleased to report that C&C has made C&C HAS MADE significant progress in developing its strategic model this year, with our goal of SIGNIFICANT building a sustainable international cider- led long alcoholic drinks business. Over PROGRESS IN the course of the year we substantially developed our international cider business DEVELOPING with the acquisition of Vermont Hard Cider Company. We have also developed our ITS strategic multi-beverage strategy in core markets with the post year-end acquisition of the MODEL THIS Gleeson Group in ROI and a recent joint- YEAR venture with Wallaces Express in Scotland. Our financial performance during the year was satisfactory in challenging consumer markets. The resilience of our operating model again came to the fore despite poor summer trading in ROI and UK, increased competition in the UK cider category and ongoing weakness in underlying economies. Internationally we saw a significant increase in our volumes, both in cider and beer, and we continue to invest in our international infrastructure as we lay the foundation for longer term growth. The Group balance sheet remains conservatively geared, despite the significant acquisition spend this year, and we remain well positioned for the future. PEOPLE As a result of our recent acquisitions, I am delighted to welcome the staff of Vermont Hard Cider Company and the Gleeson Group to C&C. The newly acquired businesses have already