Annual Report 2021 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; exclusive distribution of the Budweiser Brewing Group portfolio in Ireland including Budweiser, the fifth largest long alcoholic drink (“LAD”) brand; as well as a range of fast- growing, super-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 independent drinks distributor to the UK and Ireland hospitality sectors. Operating under the Matthew Clark, Bibendum, Tennent’s and Bulmers Ireland brands, the Group supplies over 34,000 pubs, bars, restaurants and hotels, and is a key route-to-market for local and international beverage companies. C&C Group also has a joint venture in the Admiral Taverns tenanted pub group, which owns approximately 1,000 pubs across England & Wales. C&C Group plc is headquartered in Dublin and is listed on the London Stock Exchange. View this report online candcgroupplc.com or candc.annualreport21.com Business & Strategy Corporate Governance Financial Statements 1 Contents “ With approximately 80% of C&C’s pre COVID-19 Business & Strategy revenue derived from the hospitality sector, the pandemic has presented an unprecedented challenge Chair’s Statement 2 for C&C. The team have responded with immediate and Vision, Purpose and Values 6 decisive action to secure the near term: maximising Divisional Structure 7 liquidity; supporting our customer base; streamlining Our Engagement with Stakeholders 8 costs and responding to off-trade demand with a change in consumption dynamics. We have continued Group Chief Executive Officer’s Review 10 to execute our strategy and are well positioned as Strategic Report - Group Strategy 22 the hospitality sector reopens. I would like to extend Strategic Report - Business Model 24 my appreciation to every C&C colleague for their Strategic Report - How we create sustainable value 28 commitment and flexibility during this period.” Strategic Report - Key Performance Indicators 30 David Forde Strategic Report - Management of Risks and Uncertainties 32 Group Chief Executive Officer Group Chief Financial Officer’s Review 43 Responsibility Report 50 Governance Directors’ Report 68 Directors and Officers 74 Corporate Governance Report 76 Financial Highlights Audit Committee Report 86 Environmental, Social and Governance Committee Report 92 Nomination Committee Report 94 Results Directors’ Remuneration Committee Report 102 Statement of Directors’ Responsibilities 133 Operating Loss before Net Revenue Exceptional Items €736.9 m €59.6m Financial Statements Decrease of -56.1% on a constant Independent Auditor’s Report 134 currency basis Consolidated Income Statement 144 Consolidated Statement of Comprehensive Income 145 Balance Sheet Consolidated Balance Sheet 146 Consolidated Cash Flow Statement 147 Net Debt Net Debt Consolidated Statement of Changes in Equity 148 Liquidity Including Leases Excluding Leases Company Balance Sheet 149 €314.6m €441.9m €362.3m Company Statement of Changes In Equity 150 Statement of Accounting Policies 151 Notes Forming Part of the Financial Statements 167 Shareholder Return Financial Definitions 236 Dividend Suspended Shareholder and Other Information 238 2 C&C Group plc Annual Report 2021 Chair’s Statement “ Continued health, safety, Stewart Gilliland and wellbeing of our Chair stakeholders remains our top priority.” This year marked a period of unprecedented uncertainty, displaying compassion and turmoil in our world which is impacting the flexibility for those in the hospitality sector; lives of all our stakeholders. COVID-19 has and agility in meeting off-trade demand, had an unparalleled impact on the hospitality fundamentally putting them at the centre of sector and specifically C&C with the entire our decision making. Lastly, I would like to financial year impacted by continuously extend my sincere thanks to our supplier base evolving national lockdowns and regional for their support, which has been key in what trading restrictions. During what has been we have been able to do in the hospitality one of the most challenging periods for the sector whilst also meeting changes in drinks industry the continued health, safety, demand dynamics in the off-trade. and wellbeing of our stakeholders remains our top priority. Operating Results The Group reacted quickly to the pandemic, I would like to extend my appreciation displaying agility and resilience in navigating to our colleagues for their continued the near term challenges, while positioning support. They are core to the success of the business to deliver on its strategy as and our business and the resilience we have when normal trading conditions return. We displayed during FY2021. They have all had worked swiftly to establish a safe, compliant to rapidly adapt to a change in their working and supportive working environment and environment, whether working from home took action to secure our short-term liquidity or within one of our distribution depots or position. In addition, we tightly controlled manufacturing sites, whilst managing the our working capital, implementing a cost various complications of COVID-19, such as streamlining programme whilst accelerating home schooling. The impact of COVID-19 optimisation of our distribution network has meant that many of our customers have and e-commerce offering. We responded been unable to trade since March 2020 and quickly to the change in consumption others are navigating the impact of their dynamics meeting the increased off-trade third lockdown, closing their businesses and sales, ensuring continuity of supply and furloughing staff again. We have supported continuing to tailor and develop our portfolio our customers throughout this period of to meet consumer demand and preferences. Business & Strategy Corporate Governance Financial Statements 3 Encouragingly, the inherent strength of our in our core markets has led to the divestment brand led distribution business model and of non-core assets including the Tipperary the fundamental role the Group occupies Coolers business in Ireland and more recently in the infrastructure of the UK and Irish the divestment of Vermont Hard Cider drinks market supported a strong return Company in the USA which completed in to profitability and cash generation on the April 2021. easing of trade restrictions in July, August and September. However, the on-trade We were pleased that the UK and the restrictions have been longer and tougher European Union signed a Trade and than anticipated with Ireland experiencing Cooperation Agreement, which provided one of the longest hospitality sector for, among other things, zero-rate tariffs lockdowns in the world and H2 FY2021 and zero quotas on the movement of goods providing only 54 trading days out 181 between the UK and the European Union. where the on-trade was open across all of The Brexit transition period formally ended C&C’s core markets. The off-trade channel on 31 December 2020 and to date we have saw a temporary change in consumer had minimal disruption to our operations and consumption dynamics with considerable supply chain. year-on-year growth. Reflecting the special affinity our core brands have with their local People and Culture markets, we are pleased to report that Our people are at the heart of our business Bulmers, Tennent’s and Magners performed and our decentralised business model puts strongly in FY2021, with each gaining them in the centre of the local communities Our people are at the volume share in the off-trade channel. we serve. Their compassion, commitment heart of our business However, with on-trade operating under and resourcefulness during this period restrictions for the period, the Group’s total and our decentralised of adversity has been extraordinary. We net revenues declined by 56.1% against business model recognise that many colleagues have been FY2020 on a constant currency basis, puts them in the placed on furlough for the many months delivering a pre-exceptional operating loss centre of the local and we thank those affected for their of €59.6 million for FY2021. communities we perseverance and patience. Through my role as interim Executive Chair until 2 November serve. The strength of our service offering and 2020, I had the pleasure of working day unrivalled scale and reach of our drinks to day with the local management teams, distribution platform and the power of gaining a deeper understanding of the this route to market has driven significant challenges faced and our responses. The distribution deals in FY2021. In Ireland pandemic has presented both physical we strengthened our partnership with complications in our manufacturing sites and Budweiser Brewing Group, beginning distribution network, in addition to challenges exclusive distribution of Budweiser, on around employee wellbeing and engagement. the island of Ireland. With the addition of Budweiser, C&C now has exclusive The Group has followed government policy, distribution of Budweiser Brewing Group’s ensuring only essential staff attend their complete beer brand portfolio across normal place of work and quickly established Ireland. In the UK, we were chosen as a safe and compliant working environment. exclusive distributor and representative of Thanks to the excellent work of our Tito’s Handmade Vodka, the #1 selling spirit colleagues and suppliers, the Group’s supply brand in the USA. Most recently we agreed chain and production facilities remained a new long-term partnership with Innis & fully operational throughout the period. A Gunn to sell and distribute Scotland’s #1 programme of stringent ongoing COVID-19 craft beer in the UK and Ireland on-trade.