C&C Group FY2020 Results Disclaimer
This presentation has been prepared solely in connection with the financial results of C&C Group plc (the "Company") for the period ended 29 February, 2020 and should be read in conjunction with the announcement of the financial results of the Company for the period ended 29 February, 2020, released 3 June, 2020 (the “FY2020 Results Announcement”). For the purposes of this notice, the presentation that follows shall mean and include the slides that follow, the oral presentation of the slides by the Company, the question-and-answer session that follows that oral presentation, hard and electronic copies of this document and any materials distributed at, or in connection with, that presentation.
This presentation is not intended to and does not constitute or form part of any offer, or invitation, or solicitation of any offer to issue, underwrite, subscribe for, or otherwise acquire or dispose of any shares or other securities of the Company in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
The presentation contains forward-looking statements, including statements about the Company's intentions, beliefs and expectations. These statements are based on the Company's current plans, estimates and projections, as well as the Company's expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties, are based on certain assumptions and speak only as of the date they are made. The Company undertakes no duty to and will not necessarily update any such statements in light of new information or future events, except to the extent required by any applicable law or regulation. Recipients of this presentation are therefore cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
Your attention is drawn to the ‘Principal Risks and Uncertainties’ set out on page 20 of the Company’s FY2020 Results Announcement. The risks described, however, are not exhaustive and there may be other risks which may have an adverse effect on the business, financial condition, results or future prospects of theCompany.
Bulmers Ltd of Clonmel, Ireland, a company within the C&C Group, owns the trade mark BULMERS® in the Republic of Ireland. Bulmers Ltd is not connected with HP Bulmer Ltd of Hereford, UK. BULMERS ® Original Vintage Cider produced by Bulmers Ltd of Clonmel, Ireland is sold outside the Republic of Ireland under the name MAGNERS® Original Irish Cider.
For further information see www.candcgroupplc.com
C&C Group plc 2 Managing Through COVID-19
WORKSTREAMS
EMPLOYEE HEALTH AND SAFETY OPERATIONAL RESPONSES LIQUIDITY ACTIONS
Well positioned business beyond the short term challenges of COVID-19
• Protect our strong market leading positions • Structurally important to the on-trade in the UK and Ireland • Robust liquidity position • Talented and dedicated people
C&C Group plc 3 Managing Through COVID-19 – Employee Health and Safety
EMPLOYEE HEALTH AND SAFETY
Social distancing in manufacturing/logistics sites
Work from home where possible
Continued health and wellbeing support
C&C Group plc 4 Managing Through COVID-19 – Operational Responses
OPERATIONAL RESPONSES
▪ Reallocated manufacturing ▪ Off-Trade Revenue opportunity resources behind our core focus brands in the Off-Trade ▪ Continued optimisation of ▪ Furlough of 70% of staff logistics network (investment in Scotland) ▪ Salary reductions with Board committing to 40% reduction ▪ Development of on-line functionality and capability ▪ Support to On-Trade customers including loan repayment holidays
C&C Group plc 5 Managing Through COVID-19 – Liquidity Actions
LIQUIDITY ACTIONS
Immediate drawdown of debt facilities
Successful placement of USPP - €140M
Bank & USPP covenant waiver
Suspension of dividends
CCFF eligibility
C&C Group plc 6 Review of FY20
C&C Group plc 7 Summary of FY2020 Results
€m except per share items FY2020 Growth % FY2020 including IFRS16 Growth %
Net Revenue 1,719.3 7.8% 1,719.3 7.8%
Adjusted EBITDA1 131.9 9.0% 153.6 26.9%
Operating Profit1 116.4 10.4% 120.8 14.6% constant currency constant Operating Margin 1 6.8% 0.2% 7.0% 0.4%
Adjusted diluted EPS 29.4 10.5% 29.6 11.3%
Dividend per share 5.5c 5.5c
Exceptional Items (pre-tax) 92.5 92.5
Free cash flow / Adjusted EBITDA (% 103.5% 101.0% conversion)1 Net Debt 233.6 326.9
Net Debt / EBITDA1 1.77x 2.13x
1. Pre-exceptionals C&C Group plc 8 FY2020 Highlights
Financial Operational Strategic
▪ EPS growth of 10.5% ▪ Core brand revenue flat despite ▪ Delivery of brand led distribution exceptional summer and sporting model ▪ Revenue growth of 7.8% events the previous year ▪ Admission to FTSE 250 ▪ Operating Profit growth of 10.4% ▪ Super-premium and craft portfolio now 8.4% of branded revenues ▪ Continued progress on Matthew ▪ Operating margins in Matthew Clark Clark and Bibendum recovery and Bibendum of 2.4% ▪ Awarded exclusive distribution program rights for Budweiser in Ireland (#4 ▪ Net debt to EBITDA of 1.77 times LAD brand) ▪ Diversified our capital structure with our first USPP issue (c €140m) ▪ Exceptional provisions amounting to ▪ Logistics now fully in-house in €92.5m (pre-tax) with €47.6m Scotland ▪ Invested behind our ESG directly relating to COVID-19 commitments
▪ Invested in insight capabilities
C&C Group plc 9 Group Overview : A decentralized, entrepreneurial business with market leading positions
Net Revenue €m Adjusted Diluted EPS €c
• Core brands revenue flat 2000 40 • Super-Premium & Craft 1500 30 Revenue +9% 1000 20 • ABI partner in UK & Ireland 500 10 0 0 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20
• Distribution revenue +10% • #1 final mile distributor Net Revenue Product Split Net Revenue Channel Split* • 24 stocked locations • 2 world class manufacturing sites
• Strategic partner to global drink suppliers • Range of 13k SKUs • Over 35k customers
• Only truly national Core Brands Other Owned 3rd Party On Off *UK & IOI only distributor in the UK • Data and insight
C&C Group plc 10 Matthew Clark & Bibendum : Progression since acquisition
Bibendum NPS month Matthew Clark NPS month
70.0 C&C acquisition 4 • Revenue growth of 9.3% to €1,120m 60.0 April 2018 • Matthew Clark +12.7% to €886m 50.0 • Bibendum +1.8% to €212m
40.0 • Operating profit margin of 2.4% with Matthew 30.0 Clark delivering 2.9% and Bibendum breakeven in 20.0 profit
10.0 ✓ Continued strong cash generation 0.0 ✓ Logistics and back office cost reduction program ✓ Procurement synergies ✓ C&C Brand growth of 42% Apr 18 Feb 18 Feb 19 Feb 20 ✓ Exit of low/ no margin business On Time in Full (OTIF) 63.6% 91.8% 96.2% 96.8% ✓ Exited Elastic and Peppermint Stock Availability 41.6% 90.3% 98.5% 98.3%
C&C Group plc 11 Environmental, Social and Governance (ESG)
Environmental Social Governance
▪ ‘Because life is bigger than beer’ ▪ COVID response - provided hand ▪ Corporate Governance framework campaign sanitizers, bottled water and soft drinks aligned to UK Corporate Governance whilst also supporting foodbanks Code
▪ Pledges underpinned by €16m ▪ Inner City Enterprise (ICE) in Dublin ▪ 3 new Non-Execs enhancing diversity investment (FY2020 capex €6m) and oversight ▪ Kids Out Glasgow ▪ CDP Climate Change Score: B ▪ Appointment of each Non-Executive ▪ Tennents Training Academy Director to a single business unit ▪ Drinks Industry Sustainability Index – Trends Report 2020
C&C Group plc 12 Financial Performance
C&C Group plc 13 Net revenue
€m Organic change +2.6%
83.2
40.1 0.6 2.1 0.7 0.8 19.7
1,719.3
1,636.1 1,594.6 1,574.9
0% +9% +3% -8% +3%
FY2019 Currency FY2019 CC Core brands Craft & Super- Other owned US brands Wholesale/3rd FY2020 like-for-like Mar19 NR MCB FY2020 reported premium brands Party/Own Label
C&C Group plc 14 Operating profit
€m 4.4
0.8 0.1 0.2
10.5
0.9 120.8 116.4
104.5 105.4
FY2019 Currency FY2019 constant MCB GB Ireland International FY2020 pre-IFRS 16 IFRS 16 - FY2020 reported currency Adjustment
C&C Group plc 15 Group free cash flow – pre IFRS16
€m 4.2 8.0
14.0 FCF 47.6 0.4 103.5% EBITDA 19.4
3.0 9.5
15.5
136.5 131.9 127.0 116.4
Op Profit pre- Dep./Amort. Adjusted EBITDA Working Capital Trade loans Tax Net finance costs Pension Net capital Other FCF before Exceptional items Free Cash Flow exceptionals contributions expenditure exceptional
C&C Group plc 16 Group net debt – pre IFRS16
€m Net proceeds Purchase of from exercise of equity share Net Debt Disposal accounted options/equity Non-cash Issue FY2019 Free Cash Flow proceeds investments Share buyback Interest Dividends paid costs Translation FY2020
Net debt to EBITDA 5.1 pre-IFRS 16 1.77x 11.2 233.6 23.0 0.4 301.6 29.7 1.4 127.0 0.8
C&C Group plc 17 Exceptional items
Exceptional items FY20 FY19 €'m €'m COVID-19 (47.6) -
Impairment of intangibles (34.2) -
Contract termination (4.4) -
Restructuring costs (3.0) (5.3)
Impairment of PPE (1.0) (0.4)
Other (0.8) (2.1)
Operating profit exceptional items (91.0) (7.8)
Profit on disposal 0.9 -
Share of equity accounted investments (2.4) (3.3)
Loss before tax (92.5) (11.1)
Income tax credit 9.8 1.1
Total exceptionals (82.7) (10.0)
C&C Group plc 18 Strong Balance Sheet & Liquidity Position
Low gearing Total cash & facilities Access to funding
➢ FY2020 net debt/EBITDA of 1.77x ➢ Current liquidity of c.€550 million of ➢ Eligibility to the UK COVID-19 which c.€405 million is cash Corporate Financing Facility
➢ Committed non recourse receivables ➢ Accessible undrawn facilities €300m purchase programme £200m, 36% utilised at end of May
➢ Debt maturing in next 12 months €34m
➢ RCF maturing 2024
➢ USPP maturing 2030 and 2032
C&C Group plc 19 Current trading and outlook
C&C Group plc 20 Current Trading
• On-trade in the UK and Ireland closed
• Core Brands performance April - May • Bulmers’ volume -16% (off-trade +62%) • Tennent’s volume in Scotland -42% (off-trade +41%) • Magners’ volume in GB -7% (off-trade +25%)
• Cash position remains very strong
• Average loss while on-trade is closed has been €6m per month(1)
• Underlying cash burn is €7m whilst on-trade is closed, this is net of c €5m furlough employee support
1. Net of furlough €5m C&C Group plc 21 FY2021 outlook withdrawn
FY2021 Unknowns FY2021 Knowns
We remain committed to the safety of our people
Progression of the COVID-19 virus Strong cash and liquidity position
Duration of the crisis A strong FY2020 that demonstrates the success of our model in normal conditions Consumers trends in the medium & long term Closure of on-trade shifts consumption to off-trade Impact of Government support Our fabric brands and distribution network are Our addressable market post the crisis structurally important to the drinks industry in the UK and Ireland
Continued trade support and customer collaboration to tackle challenges together.
C&C Group plc 22 Uniquely strong fundamentals
Fabric Brands Route to Market Strength & Scale
# 1 Brand Positions
# 2 Apple # 1 Independent distributor Cider in UK # 1 Largest final mile capability in UK & Ireland
National network
C&C Group plc 23 Q&A
C&C Group plc 24 APPENDIX
C&C Group plc 25 IFRS 16
Pre-IFRS IFRS 16 IFRS 16 Impact Reported 16 adj
Operating Profit €'m 116.4 4.4 120.8 (pre-exceptional) Operating margin % 6.8% 0.2% 7.0% (pre-exceptional) Net Finance Charges €'m (16.3) (3.5) (19.8)
Adjusted Diluted EPS cent 29.4 0.2 29.6
EPS growth % 10.5% 0.8% 11.3%
EBITDA €'m 131.9 21.7 153.6
FCF €'m 136.5 18.6 155.1 (pre exceptionals) FCF conversion % 103.5% (2.5%) 101.0% (pre exceptionals) Net Debt €'m 233.6 93.3 326.9
Net Debt to EBITDA times 1.77x 0.36 2.13x
C&C Group plc 26 Core brands revenue growth in UK and Ireland
€m Tennent’s
➢ Tennents revenue growth of +5% driven by -8% -4% 5% improved pricing in Scotland and better mix. ➢ 3.9 Additional two months of Minimum Unit Pricing 7.4 0.7 benefit in FY2020. 1.6 2.6 0.4 ➢ Volumes were -2.6% against challenging comparatives.
Bulmers
➢ Bulmers revenue decline of -8% is mainly volume driven. ➢ Volume -7% was always going to be challenging 213.1 versus the previous warm summer. 211.4 Magners
➢ In GB the Magners brand outperformed the market with volumes down -2.4% (market - 6.4%). ➢ Leveraging our partnership with ABI in the grocery channel, and increasing distribution through Matthew Clark we have gained share in FY2019* Tennents volume Tennents Bulmers volume Bulmers Magners volume Magners FY2020 both the on and off-trade. price/mix price/mix price/mix *Opening balance retranslated to FY2020 FX rates C&C Group plc 27 Diluted EPS
EPS pre-IFRS16: 29.4c EPS reported: 29.6c Growth 10.5% Growth 11.3% Cent 0.2 0.3 0.4 0.2
3.8
0.1
29.4 29.6
26.6
FY2019 EPS Share movement Profit movement Finance charges JV/Associate income Tax FY2020 EPS IFRS 16 - Adjustment FY2020 EPS pre-IFRS 16 reported
C&C Group plc 28 Group free cash flow
4.2 €m 8.0
FCF 17.4 47.9 101.0% 0.4 EBITDA
19.4
3.0 9.5 17.3
15.5
€4.4m IFRS 16 153.6 155.1 145.6
120.8
Op Profit pre- Dep./Amort. IFRS 16 - Depn Adjusted EBITDA Working Capital Trade loans Tax Net finance costs Pension Net capital Other FCF before Exceptional Free Cash Flow exceptionals charge contributions expenditure exceptional items
C&C Group plc 29 Group net debt
€m Net proceeds Purchase of from exercise equity of share Net Debt Disposal accounted options/equity Non-cash Issue Translation IFRS 16 - Lease FY2019 Free Cash Flow proceeds investments Share buyback Interest Dividends paid costs cash/debt liabilities* FY2020
Net debt to 5.1 11.2 EBITDA post-IFRS16 23.0 0.4 2.13x 29.7 301.6 1.4 0.8 326.9 145.6
Net debt to EBITDA 111.9 pre-IFRS 16 1.77x
* Includes lease liabilities capitalised at 29 February 2020 under IFRS 16 Leases of €93.3m plus €18.6m of lease payments in the year.
C&C Group plc 30 C&C Group plc 31