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CONTENTS
2013
ANNUAL
REPORT
VIEW THIS
REPORT
ONLINE
candcgroupplc.com
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candc.annualreport13.com
C&C GROUP PLC - 2013 ANNUAL REPORT
1
GROUP STRATEGY
OPERATING AND STRATEGIC HIGHLIGHTS
MARKET OPERATION
CHAIRMAN’S STATEMENT
GROUP CHIEF EXECUTIVE OFFICER’S REVIEW
OPERATIONS REVIEW
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
CORPORATE RESPONSIBILITY
BOARD OF DIRECTORS
DIRECTORS’ REPORT
DIRECTORS’ STATEMENT OF CORPORATE GOVERNANCE
REPORT OF THE REMUNERATION COMMITTEE ON
DIRECTORS’ REMUNERATION
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
INDEPENDENT AUDITOR’S REPORT
GROUP INCOME STATEMENT
GROUP STATEMENT OF COMPREHENSIVE INCOME
GROUP BALANCE SHEET
GROUP CASH FLOW STATEMENT
GROUP STATEMENT OF CHANGES IN EQUITY
COMPANY BALANCE SHEET
COMPANY CASH FLOW STATEMENT
COMPANY STATEMENT OF CHANGES IN EQUITY
STATEMENT OF ACCOUNTING POLICIES
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
FINANCIAL DEFINITIONS
2
3
4
6
8
13
22
28
36
38
44
53
62
63
65
66
67
68
69
70
71
72
73
84
137
SHAREHOLDER AND OTHER INFORMATION
138
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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.
OPERATING AND STRATEGIC HIGHLIGHTS
C&C GROUP PLC - 2013 ANNUAL REPORT
3
OPERATING PROFIT
€113.9m
before exceptional items increased 2.4%
OPERATING MARGIN
NET REVENUE
23.9%
before exceptional items up 0.8ppts
on prior year
€476.9m
declined 0.8%
NET DEBT
€123.4m
at the year-end giving a leverage ratio to
EBITDA of 0.9x
ADJUSTED DILUTED
EARNINGS PER SHARE (EPS)
for continuing operations
27.7 cent
increased 0.4%
PROPOSED FINAL
DIVIDEND
4.75 cent per share
increase of 5.6% per share, delivering
7.1% growth in full year dividend to 8.75
cent per share
ADJUSTED DILUTED EARNINGS PER SHARE
35c
30c
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
• International 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
• 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
• Announced 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
• Creation 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
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C&C GROUP PLC - 2013 ANNUAL REPORT
MARKET OPERATION
BRAND MARKETS
ROI
CIDER - UK
TENNENT’S - UK
CIDER BRANDS
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.
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,
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
ingredients, including 100% Scottish barley. It is a golden lager with
a well rounded flavour and a distinct smooth maltiness.
THIRD PARTY BRANDS (UK)
(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
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.
*
*In NI, packaged only
C&C GROUP PLC - 2013 ANNUAL REPORT
5
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Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Italy
Latvia
Luxembourg
Malta
Netherlands
Portugal
Russia
Spain
Sweden
Switzerland
Turkey
Ukraine
USA
Brazil
Canada
Caribbean
Singapore
South Korea
Thailand
UAE
Australia
Bahrain
China
Hong Kong
Israel
Malaysia
New Zealand
Qatar
INTERNATIONAL
6
CHAIRMAN’S STATEMENT
C&C HAS MADE
SIGNIFICANT
PROGRESS IN
DEVELOPING
ITS STRATEGIC
MODEL THIS
YEAR
I am pleased to report that C&C has made
significant progress in developing its
strategic model this year, with our goal of
building a sustainable international cider-
led long alcoholic drinks business. Over
the course of the year we substantially
developed our international cider business
with the acquisition of Vermont Hard Cider
Company. We have also developed our
multi-beverage strategy in core markets
with the post year-end acquisition of the
Gleeson Group in ROI and a recent joint-
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 enhanced
our Group with their talented management teams contributing
to integration and business development. We look forward to
working with them in the coming years.
C&C GROUP PLC - 2013 ANNUAL REPORT 7
THE STRATEGIC
AND FINANCIAL
POSITION OF
THE GROUP
PROVIDES A
SOUND BASIS
FOR GROWTH
Over the course of the year, the Board continued to
progressively refresh its composition, with the orderly
succession of appointments to reflect the current scale and
internationalisation of the Group. Mr Joris Brams, the Managing
Director of the Group’s International Business, was appointed
to the Board. Joris has made a significant contribution to the
development of our international cider and beer business since
he joined the Group. In April last year we welcomed Mr Anthony
Smurfit and Mr Stewart Gilliland as non-executive directors to
the Board. The year also saw the retirement of Mr Phillip Lynch
and the announced retirement of Mr John Burgess as non-
executive directors. Both Phillip and John had been members of
the Board since C&C’s flotation in 2004 and the Company thanks
them for their significant contribution over many years.
While higher profile appointments are inevitably a focus of
attention one of our key successes has been the recruitment and
internal development of a depth and breadth of management
to take the business forward. It’s also crucial that the
entrepreneurial drive of the business is not dissipated. The
executive directors have recommended to the Board, who are
wholly supportive, a rebalancing this year of the overall incentive
scheme towards the key middle management to maintain
momentum and ensure the longer term success of the business.
The Board would like to express its appreciation for the efforts
of all employees during a period of difficult trading conditions in
our core markets and in meeting the challenges of integrating
Vermont Hard Cider Company into the Group.
GOVERNANCE & CORPORATE RESPONSIBILITY
The Board and senior management team are committed to
maintaining the highest standards of governance and ethical
behaviour throughout the business. A statement of our main
Governance principles and practice is provided on pages 44 to
52. We continued to work under the requirements of the UK
Corporate Governance Code and the Irish Corporate Governance
Annex. The Board also works to ensure its own effectiveness,
by undertaking a regular evaluation of the performance of the
Board and its committees.
We take corporate responsibility seriously and our Corporate
Responsibility statement on pages 28 to 35 sets out our work
this year. Over the course of the year C&C continued to develop
its Corporate Responsibility agenda, with Mr Paul Bartlett being
appointed as Head of Corporate Affairs. A fundamental strength
of our business lies in our sense of community and community
values. You can hardly build a heritage business without that
perspective.
DIVIDENDS & DIVIDEND POLICY
Last year we committed to a progressive dividend policy and,
recognising the continued financial strength and cash generation
of the business, we propose to pay a final dividend of 4.75 cent
per share, subject to shareholder approval. If approved, this
will be an increase of 5.6% and will bring the Group’s full year
dividend to 8.75 cent per share. A scrip dividend alternative will
also be available.
At the AGM we are also seeking the usual authority for the
Company to purchase its own shares. Any authority given to
the Company to purchase its own shares will only be exercised
if the Board considers it would be in the best interests of the
shareholders generally.
BONUS & REWARDS
Our management and staff have performed well under difficult
economic conditions, but the business did not achieve sufficient
financial performance required for Group-wide bonuses to be
earned. We believe in rewards only for outperformance and our
track record demonstrates this. Therefore only limited divisional
performance bonuses have been earned in this financial year.
Nevertheless 43% of employees at local level were rewarded,
with an average payment of €2,700. Our purpose is to optimise
shareholder value and we have structured our employee
incentives this year to ensure that they are aligned with the
interests of our shareholders, particularly through long term
equity participation. At the Annual General Meeting we will
be seeking to renew a number of our employee shares share
schemes that were introduced on the flotation of the Company
in 2004.
CONCLUSION
It has been an exciting year for C&C and we believe the strategic
and financial position of the Group provides a sound basis for
growth. The start of FY2014 has seen less than hospitable
weather in Ireland and the UK and we expect a number of
our markets to continue to be challenging. We are confident
however, that our developing business model will prove resilient
and provide growth opportunities in both core and international
markets.
Sir Brian Stewart
Chairman
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW 8
GROUP CHIEF EXECUTIVE OFFICER’S REVIEW
SIGNIFICANT
STRATEGIC
PROGRESS
IN OUR CORE
MARKETS
AND OUR
INTERNATIONAL
BUSINESS
It has been a busy year for the Group in
which we have made significant strategic
progress in consolidating and investing
in our core markets, and accelerating the
development of our international business.
In core markets, we weathered tough economic and trading
headwinds to deliver another robust financial performance in
line with guidance, again demonstrating the resilience of our
business model. We continued to develop our model in these
markets, as we have over the last few years, leveraging our
strong brand/market combinations to move from a mono-brand
to a multi-beverage model. This moves our business model from
classic single-brand consumer models to broader customer-
focused multiple-brand businesses. The post year-end
acquisition of the Gleeson Group in Ireland and a recent equity
investment in Wallaces Express in Scotland will both significantly
improve our ability to execute this strategy and broaden our
offering in these markets.
Internationally we continue to accelerate our growth ambitions
and achieved a major milestone this year with the completion
of the acquisition of Vermont Hard Cider Company in December
2012. Other achievements during the year include the re-launch
of the Hornsby’s brand in the US and the further introduction of
Tennent’s into new international markets. Recent developments
should serve to enhance our business model whilst laying the
foundations for accelerated international growth.
C&C GROUP PLC - 2013 ANNUAL REPORT 9
OUR BUSINESS
MODEL SEEKS
GROWTH IN OUR
CORE MARKETS
THROUGH
STRONG
BRAND/MARKET
COMBINATIONS
WINNING IN DEVELOPED MARKETS
CORE MARKET CONSOLIDATION
In our core markets we took significant steps to accelerate our
move into multi-beverage.
The post year-end acquisition of the Gleeson Group in Ireland
offers the prospect of returning the ROI business to growth
for the first time in many years. The Gleeson Group is the
largest distributor of packaged long alcohol drinks (LAD) to the
licensed on-trade in Ireland. Its sales network services over
4,000 customers directly in the Irish market. It represents a
number of beer, wine and spirits brands on an agency basis
and manufactures Tipperary mineral water, Finches soft drinks
and a range of own-label brands. We believe the acquisition will
enhance our route to market in ROI and provide opportunities
to grow our branded beer and wine portfolio in the Irish market,
and provides Group-wide opportunities in soft-drinks and water.
In Scotland, after the year-end we made an equity investment
in Wallaces Express, a Scottish independent wines and spirits
wholesaler. The Wallaces Express business will move our brand
offering into a multi-beverage model.
During the course of the year, we entered, for a modest
investment, the on-trade wine segment with the acquisition of
a number of brands from the Waverley portfolio. Well known
brands such as Oliver & Greg’s and Moondara, exclusive to the
on-trade channel, will continue to be developed across our core
markets and help to broaden our own branded portfolio offering.
Our business model seeks growth in our core markets through
strong brand/market combinations, combining brand investment
with a focus on local markets. We believe that we have the right
strategy to grow the businesses in our core markets by focusing
on four central themes:
• Developing multi-beverage platforms in markets where we
have strong brand positions; and having the flexibility to
differentiate our brand proposition across the channels
• Operating a decentralised business model with local
management focused on our customer’s needs
• Investment in both our strong authentic local brands through
advertising and promotion; and our local customers through
trade lending and support
• Focusing on cost leadership in manufacturing and logistics
In a challenging economic environment in ROI and the UK,
the Group’s results for the year continue to demonstrate the
resilience of this model. On a constant currency basis, net
revenues before exceptional items declined by 5.5% but Group
operating profit, before exceptional items, increased by 0.4%.
ROI operating profit declined by 11.9% following a poor summer
trading period but stabilised in the second half of the year as
market conditions improved relatively.
Cider UK experienced a challenging year as poor summer
weather and new entrants led to increased competition across
the category. This resulted in an operating profit decline of 15.6%
in the business as both Magners and the Gaymers branded
portfolio underperformed the market.
The Tennent’s business continues to surpass expectations with
operating profits growing by 34.7% supported by high quality
market share growth across the Independent Free Trade (IFT)
and increased trade lending.
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW 1 0
GROUP CHIEF EXECUTIVE OFFICER’S REVIEW - CONTINUED
RECENT
DEVELOPMENTS
WILL LAY THE
FOUNDATIONS FOR
ACCELERATED
INTERNATIONAL
GROWTH
AUTHENTIC LOCAL BRANDS
Our philosophy is that local brands appeal to local consumers
who are looking for authentic, quality brands with a strong
heritage. Our marketing efforts and brand strategies, therefore,
are tailored to reach consumers in each of our core markets.
The creation of the Shepton Mallet Cider Mill trading division in
England post the year-end is a first step towards drawing out
the latent potential in some of the brands acquired as part of the
Gaymers portfolio, such as Addlestones, Blackthorn and Olde
English. As part of this initiative, we committed over £1 million
to an investment fund to support local agriculture through new
orchard projects.
In Scotland the Caledonia Best brand launched its first TV advert
and was unveiled as the official beer of Scottish Rugby in a three
year deal. Provenance remains a key feature of both Caledonia
Best and our leading Tennent’s Lager brands, and we announced
that we would source all our barley from Scottish farmers.
Other brand initiatives included the development of Heverlee,
a premium Belgian lager, which we launched in the Scottish
on-trade market. We also seeded The Five Lamps Dublin Beer
Company, an Irish craft beer brewer.
INTERNATIONAL DEVELOPMENT
The unique attributes of cider are central to our thesis that as a
category it will continue to grow and internationalise. Cider as
a natural, craft and traditional product will continue to benefit
from the global trend of ‘savoury to sweet’, and be seen as a
refreshing and gluten-free alternative to other long alcoholic
drinks such as beer. We see evidence in many international
markets to support our belief that cider will establish itself there
as a long term sustainable category.
the United States for a gross consideration of US$305 million
(€230.9 million). In absolute terms the cider category in the
United States is still small but it has seen strong volume growth
over the last year and could in time become one of the largest
markets outside of the UK and Ireland. This gives us confidence
in the category’s development and underlines the significant
opportunity that lies ahead.
VHCC is one of the leading premium craft cider producers in
the United States. Over the last 13 years it has developed its
principal brand Woodchuck as the leading cider brand in the
US, and has established a national distribution platform. Since
our acquisition we are delighted to find a strong cultural fit –
shared commitment to values, heritage and brand attributes.
We have retained the key senior management that have
successfully grown the business and we are committed to
investing over $30 million in order to double existing capacity.
The combined salesforce in North America will also provide
increased opportunities for the Magners brand, which remains in
reasonable growth in the United States and Canadian markets.
Magners volumes grew 10% in the United States in the year.
In other international markets we continued to invest in our
infrastructure and grow the Magners brand. During the year
we had good success in some European markets such as Spain
and France, while seeding opportunities in new territories such
as South America and Africa. Recent underperformance in
the Australian market has been disappointing, but we believe
we have rectified the core issue and recent shipment data are
showing a return to market growth rates.
Hornsby’s was re-launched in the United States during the year
and was repositioned as a more contemporary product in our
growing portfolio. We innovated with some flavoured varieties but
Hornsby’s ‘Crisp Apple’ remains the driving force for the brand.
During the year we took a number of major strategic steps in
positioning the International business to make the most of this
opportunity. Centre stage in this regard was the acquisition
in December 2012 of Vermont Hard Cider Company (VHCC) in
Tennent’s had a very promising year, with over 32 kHL exported
to international markets, notably Italy, Canada and Australia,
as the brand’s Scottish provenance and heritage resonate with
C&C GROUP PLC - 2013 ANNUAL REPORT
1 1
consumers. Over the year we have innovated with premium
variants. We continue to see attractive opportunities and intend
to invest behind the brand.
CASH AND BALANCE SHEET
Our balance sheet remains in robust health with a net debt to
EBITDA ratio of less than 1x at the year-end. The Group ended
the year with a net debt position of €123.4m, despite significant
acquisition expenditure during the year. Historically the Group
has generated significant cash returns, and while we do not
expect this to change significantly, we recognise that there are
current opportunities to invest in trade lending and some high
quality capital expenditure projects.
CORPORATE RESPONSIBILITY
Key initiatives launched during the year included job creation
through trade apprenticeships in Scotland; sustainable
agriculture support through the creation of an investment fund
of £1 million for apple farmers; and contributing to the new
Portman Code on the responsible marketing of alcohol.
We continue to strengthen our links with local communities,
suppliers and customers. Where possible we look to source
raw materials from local partners, investing in their sustainable
projects and helping our customers meet the challenges of duty
and regulation. We encourage responsible drinking and our
views on minimum pricing are well documented.
PEOPLE
OUTLOOK
In the twelve months to May 2013 we have increased our
headcount by over 750 employees mainly through our acquisition
of VHCC and the acquisition of the Gleeson Group which was
completed after the end of the year. I look forward to these
talented new employees bringing their experience to the Group
and participating in our performance reward culture.
The significant activity over the last year and since year end will,
we believe, lay a strong foundation for the Group. Our recent
developments in core markets should help further consolidate
our position and provide the financial stability to allow for
continued investment in our growing international business. Our
balance sheet remains conservatively geared, which provides
scope for investing in further growth opportunities.
The management team of the Group has continued to evolve
during the year. Mr Joris Brams, our International MD, was
appointed to the Board of C&C in recognition of his contribution
to the International business.
Stephen Glancey
Group Chief Executive Officer
The Group’s management and staff have worked hard to
ensure the ongoing success of the business and the quality of
our brands, and I would like to sincerely thank them for their
efforts. Our remuneration philosophy focuses on stakeholder
participation through equity participation, to align their
interests with those of shareholders. This included introducing
partnership and share matching plans for all employees
alongside the existing Group-wide bonus incentive scheme.
Since our financial performance did not meet internal targets
Group-wide bonuses were not achieved this year.
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW N C v 2
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Refer to listed Pantone (P M S) specification or attached sw atches
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A N Y changes m ade after this date are the responsibility of the client.
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OPERATIONS REVIEW REPUBLIC OF IRELAND (ROI)
C&C GROUP PLC - 2013 ANNUAL REPORT
1 3
Constant Currency(i)
Revenue
Net revenue
- Price /mix impact
- Volume impact
Operating profit
Operating margin (Net revenue)
Volume – (kHL)
FY2013
€m
133.8
92.2
38.5
41.8%
615
ROI
FY2012
€m
142.5
101.4
43.7
43.1%
622
Change
%
(6.1%)
(9.1%)
(8.0%)
(1.1%)
(11.9%)
(1.3ppts)
(1.1%)
FOLLOWING
POOR SUMMER
TRADING ROI
STABILISED IN
THE SECOND
HALF OF THE
YEAR
LAD category(ii): Retail sales volume of Long Alcohol Drinks
(LAD) in ROI declined by 2% in the 12 month period to the end
of February 2013. The trend in overall consumption remains
reasonably predictable, within the range of level to minus 2%
over the last few years. However, there has been a notable
slowing of volume shift from the on-trade to the off-trade. In
the 12 months to the end of February 2013, LAD volume in the
on-trade declined by 3% whilst the off-trade declined by 1%.
The 2ppt differential represents a significant narrowing of the
gap in channel performance. In the three months to April, the
on-trade outperformed the off-trade when measured by sales
trend, despite on-trade wholesale price increases on the market
leading brands for the first time in several years.
Over the 12 months to January 2013, the growth in cider total
volume sales outperformed the growth in beer total volume
sales, with growth of 1% achieved. The channel of trade
differential is more marked for cider with a strong performance
in off-trade (volume +6%) in part attributable to expansion of the
value category.
Total ROI: Following on from first half financials dominated by
poor summer weather and its impact on cider consumption,
trading stabilised in the second half of the financial year. LAD
volume in ROI for the Group was up 1.5% in the second half
compared with a decline of 3.2% in the first half. At the same
time, rate of price/mix deflation improved from 9.1% in the
first half to 6.2% in the second. In a market down 2% in the 12
months to January 2013, the Group picked up some modest
volume share growth.
Net revenue for the full year declined 9.1%. The relative growth
of beer within the portfolio has had a small impact on average
revenues. However the price mix deflation of 8.0% is split fairly
evenly between the effects of channel weighting of cider volume
sales and price promotional activity to support the portfolio in
the off-trade.
Operating profit(i) declined 11.9% to €38.5 million with margin
down 1.3ppts to 41.8%. In the second half, operating profit was
stable year-on-year.
Cider ROI: Net revenue was down 10.8% in the year with volume
accounting for 3.2% of the decline and price/mix a further 7.6%.
Over half of the price mix deflation was attributable to channel
weighting with Bulmers enjoying good market share growth in
the off-trade. Pricing in the on-trade was level for Bulmers. In
the off-trade, promotional activity and the growth of our value
cider brands reduced average pricing, albeit by a lower amount
than in previous years.
The brand health of Bulmers remains strong. Effective advertising
campaigns and sponsorship events during the year helped keep
the brand vibrant and front of mind for consumers. In FY2014, a
fresh TV campaign has just been launched for Bulmers.
Beer ROI: The Group’s beer portfolio continued to perform
well in ROI with volume growing 11.1% in a beer market(ii) that
declined by 2% in the same period. Volume of C&C ‘owned’
brands, Tennent’s Lager and Caledonia Smooth, grew 25.6%.
Beer now represents 16.3% of the portfolio volume in ROI.
(i) On a constant currency basis, constant currency calculation is set out on page 26
(ii) Per Nielsen data
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OPERATIONS REVIEW CIDER - UNITED KINGDOM (UK)
C&C GROUP PLC - 2013 ANNUAL REPORT
1 5
Constant Currency(i)
Revenue
Net revenue
- Price /mix impact
- Volume impact
Operating profit
Operating margin (Net revenue)
Volume – (kHL)
FY2013
€m
195.8
137.8
30.9
22.4%
1,216
Cider UK
FY2012
€m
232.8
172.6
36.6
21.2%
1,430
Change
%
(15.9%)
(20.2%)
(5.2%)
(15.0%)
(15.6%)
1.2ppts
(15.0%)
A TOUGH YEAR
FOR CIDER IN
THE UK BUT
THE MAGNERS
BRAND
REMAINS IN
GOOD HEALTH
Cider category(ii): The GB cider category experienced its first
volume decline in almost a decade, falling by 2% as poor
weather depressed home consumption in the key summer
months. Despite the heavy promotion of the category by retailers
and brand owners, off-trade volume declined 4% in the year
to March, in line with beer. There were positives, however, in
the value growth of cider in the off-trade and in the on-trade
category trend. Value grew by 2% in the off-trade, outstripping
LAD by over 2ppts and illustrating the continued premiumisation
of the category from a retailer/consumer perspective. In the on-
trade, cider volume growth remained in positive territory, up 1%
year-on-year and 5ppts ahead of LAD. Packaged variants in the
fridge enjoyed a good year with flavoured ciders delivering much
of the growth at the expense of standard draught.
The health of the category was further validated by a number
of new entrants during the course of the year. There was a
significant level of investment behind brand launches and range
extensions and there is no doubt that competition in the space
intensified as a consequence.
Cider UK: There was little improvement in the second half,
following a challenging first six months. The rate of volume
decline improved from 18.6% at the end of August to 15.0% for
the full year but the price/mix effect still left net revenues down
20.2%. Operating profit(i) declined by 15.6% to €30.9m. Operating
margin(i) improved by 1.2ppts, reflecting the decision taken
earlier in the year to hold back on marketing investment given
the dynamics of the trading environment for the category.
Magners UK: The Magners brand underperformed the market
with volume declining 13.9%. Key summer events, such as the
European Football Championships and Olympic Games, failed to
deliver any volume uplift. In contrast to last year, Magners saw a
significant reduction of share across Grocery promotional deals,
impacting volume negatively through the year. While trading
began to stabilise toward the end of the financial year as the new
retailer trading plan cycle kicked in and comparatives eased, we
expect that increased competition will bring another challenging
year of trading.
The Magners brand remains in good health, supported by a
brand investment level in FY2013 equating to a very competitive
double-digit % of net sales revenue. As with Bulmers in Ireland,
it is the intention to invest behind a fresh advertising campaign
for the brand in FY2014.
Gaymers Branded Portfolio: The Gaymers branded portfolio,
including Gaymers Original, Blackthorn and Olde English
declined by 16.4% in the period, as standard cider lost ground
to premium cider and fruit flavoured variants. The launch of
Gaymers fruits enjoyed some success and slowed the overall
decline but the brand is a relatively small component part of
the ‘non Magners’ portfolio. Post the end of the the financial
year, the Shepton Mallet Cider Mill trading division was created,
as a separate business division within the Group, with its own
dedicated sales and marketing infrastructure, the new division
will focus on the development of regional, craft and specialist
cider brands within the UK cider portfolio. It is anticipated that
authenticity and craft heritage will become key features of the
cider category development over the next few years.
(i) On a constant currency basis, constant currency calculation is set out on page 26
(ii) Per CGA/Nielsen data
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C&C GROUP PLC - 2013 ANNUAL REPORT
1 7
Constant Currency(i)
Revenue
Net revenue
- Price /mix impact
- Volume impact
Operating profit
Operating margin (Net revenue)
Volume – (kHL)
FY2013
€m
229.3
108.9
30.3
27.8%
1,294
Tennent’s UK
FY2012
€m
223.5
102.0
22.5
22.1%
1,375
Change
%
2.6%
6.8%
12.7%
(5.9%)
34.7%
5.7ppts
(5.9%)
OPERATIONS REVIEW TENNENT’S UK
ROBUST
PERFORMANCE
IN A
CHALLENGING
ENVIRONMENT
UK beer(ii): Market data to end of February suggested a decline
of 4% in beer volumes in Scotland. Volume held up better in the
on-trade with a decline of 2% comparing favourably to an off-
trade that was down 6% year-on-year. Value was up 1% for the
market in the period. Robust market data are not available for
the market in Northern Ireland.
Tennent’s UK: Tennent’s, including Caledonia Best, delivered
a very robust set of financials in a challenging environment.
Volume decline of 5.9% was broadly in line with the market but
the substitution of low margin volumes with more profitable
channels deals contributed to net revenue(i) growth of 6.8% for
the year. There were a number of features behind the 12.7%
positive price mix impact including reduced promotional activity
in the off-trade, some moderate premiumisation of the portfolio
and the re-negotiation of low margin legacy contracts. Operating
margin(i) continued to expand with improved pricing and robust
cost control growing margin by 5.7ppts. Marketing investment
behind the brands remained highly competitive and double digit
as a percentage of net sales revenue. The Tennent’s brand is in
good health in all of its territories.
Tennent’s Scotland: Tennent’s Lager volume sold to the
Independent Free Trade (IFT) and Local Multiple segments of
the on-trade grew by 3.3% in the year, delivering market share
growth. Distribution improved for the brand in these segments,
supported by a net £11.5 million incremental investment in trade
lending, good brand support and a sensible approach to pricing
in a tough environment for retailers and consumers.
The Group invested to sustain growth in Caledonia Best during
the year. Distribution now stands at around 1,400 outlets with a
solid presence in the IFT. Above the line support for the brand
was introduced via a TV campaign in the second half of the
financial year and further support is planned for FY2014. The
brand is enjoying some momentum. Share of Ale in the IFT
reached 4.5% for the year and data for the last 13 weeks of the
year suggest share has grown to 7.6%.
Caledonia Best is now the fastest growing beer brand in the
Scottish on-trade; over the last year it has reached No.2 position
in the smooth draught ale category according to CGA. The
success of Caledonia Best, and the relative outperformance of
Magners in Scotland compared with England & Wales, serves to
highlight the attractiveness of further diversification into multi-
beverage in Scotland.
Tennent’s NI: In Northern Ireland Tennent’s remains competitive
within a weak on-trade market. The C&C portfolio, including
third-party brands, was down 8.0% for the period in a market
believed to have declined by over 10%. Net investment in trade
lending increased by €0.3 million in the year. The low level of
churn in pub ownership serves to highlight the difficulties facing
the on-trade.
(i) On a constant currency basis, constant currency calculation is set out on page 26
(ii) Per CGA/Nielsen data
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B a c k S 5
F r o n t S 2
B a c k S 4
F r o n t S 1
OPERATIONS REVIEW INTERNATIONAL
A SIGNIFICANT
YEAR FOR
DEVELOPMENT
C&C GROUP PLC - 2013 ANNUAL REPORT
1 9
Constant Currency(i)
Including VHCC
Revenue
Net revenue
- Price /mix impact
- Volume impact
Operating profit
Operating margin (Net revenue)
Volume – (kHL)
Excluding VHCC
Net Revenue
Operating profit
Operating margin (Net revenue)
Volume – (kHL)
FY2013
€m
48.5
47.8
9.1
19.0%
326
€m
41.4
7.3
17.6%
283
International
FY2012
€m
31.9
31.8
6.8
21.4%
210
€m
31.8
6.8
21.4%
210
Change
%
52.0%
50.3%
(4.9%)
55.2%
33.8%
(2.4ppts)
55.2%
%
30.2%
7.4%
(3.8ppts)
34.8%
T o p S 3
B a c k S 5
F r o n t S 2
International: Strategically, FY2013 should prove to be a significant
year for the development of an international business within C&C.
The acquisition of the Vermont Hard Cider Company, LLC (VHCC)
in December was an exciting move. VHCC owns a leading US cider
brand in Woodchuck, a well-invested cidery in Vermont and has a
national distribution network. The US cider category is currently
enjoying strong growth and VHCC provides a great platform to tap
into the longer term potential of this emerging market. In doing so, it
reduces the exposure of C&C to the more challenging cider category
in the UK. FY2014 should also prove to be a significant year for the
export of Tennent’s. A number of new markets for the brand were
opened during the year, including Italy, and the potential opportunity
is reasonable in scale.
Operationally, the international business unit enjoyed good
volume growth of 55.2% in the period as Hornsby’s, Tennent’s
and Woodchuck contributed alongside Magners. Excluding the
two months worth of contribution from Woodchuck, volume was
up 34.8% and revenue(i) increased 30.2%. International volume
accounted for 9.6% of total C&C branded volume and 14.5% of cider.
A full year contribution from Woodchuck in FY2014 will, for the first
time, give the International LAD business unit meaningful scale
within C&C.
Excluding VHCC, operating margin reduced 3.8 ppts in the year.
We expect this margin to expand as we progress through FY2014
for a number of reasons. First, the sourcing of Hornsby’s for the
US market is expensive but the arrangements are temporary in
nature. Secondly, the FY2013 investment in US sales infrastructure
to support the Magners brand was made in anticipation of future
growth, temporarily increasing fixed cost ratios in FY2013. Planned
capacity expansion in Vermont will provide a permanent lower cost
solution, once completed. Operating margin on Tennent’s export
volume is in line with cider exports and the addition of Woodchuck to
the portfolio should further improve margin in FY2014.
B a c k S 4
F r o n t S 1
(i) On a constant currency basis, constant currency calculation is set out on page 26
Cider: Magners volume in FY2013 was up 3.9% on the prior year. This
was some way below the trend line of the previous few years, albeit
there were specific issues affecting the performance of the brand
in the US and Australia. In the US, the extraction of the Hornsby’s
brand from the E&J Gallo business and integration into the Magners
infrastructure and distribution network proved to be a resource
hungry project. For much of the year, this served as a considerable
distraction to the focus of the front line sales team. Following the
acquisition of VHCC in December, an accelerated integration of
commercial resource is now complete and the enlarged business
will be better placed to capitalise on the opportunity presented by a
stronger sales team with a broader cider portfolio in FY2014.
In Australia, the brand suffered owing to issues with its route to
market in FY2013. The cider category remains in good growth
and the Magners brand continues to enjoy good consumer appeal
but volume dropped 24% in the year. Work continues on resolving
the route to market issue and the performance of the brand has
improved in recent weeks with a return to more stable volume year-
on-year. Excluding Australia, the volume of Magners sold outside of
Ireland and the UK grew 10% in FY2013. In North America, growth of
Magners was 10%.
Other international markets enjoyed solid growth with some
European markets, including France and Spain, benefitting from
new distribution arrangements. Volumes were up 13% and 11% in
each market respectively.
Tennent’s: The launch of premium variants of the Tennent’s brand
into a number of different markets is proving to be an attractive
‘support act’ sitting alongside the development of cider. In year one,
20 kHL of Tennent’s Lager was shipped into Italy and the growth of
the brand in Canada impressed. There are also encouraging signs
from some states in the US. International volume of Tennent’s is
around 32 kHL, some 10% of total international volume. The Scottish
heritage and authenticity of the brand is a marketable attribute that
resonates in a range of international markets, suggesting that there
could be reasonable growth potential for the next few years.
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OPERATIONS REVIEW THIRD PARTY BRANDS UK
C&C GROUP PLC - 2013 ANNUAL REPORT
2 1
AGENCY
BRANDS
CONTINUE TO
PERFORM WELL
Constant Currency(i)
Revenue
Net revenue
- Price /mix impact
- Volume impact
Operating profit
Operating margin (Net revenue)
Volume – (kHL)
FY2013
€m
116.7
90.2
5.1
5.7%
871
Third Party Brands UK
FY2012
€m
122.4
96.8
3.8
3.9%
896
Change
%
(4.7%)
(6.8%)
(4.0%)
(2.8%)
34.2%
1.8ppts
(2.8%)
Third Party Brands UK: This segment relates to the distribution
of third party products and the production and distribution of
private label brands in the UK. Private label accounted for 68% of
the total third party volume in FY2013, up from 63% in FY2012.
Net revenue was down 6.8% in the year. Overall volume was
down 2.8%, with a decrease in third party brands partly offset by
an increase in volume in private label. This was mitigated in part
by improvement in average pricing achieved for both private label
and third party products.
Agency: Volume declined 15.2% in the period. Route to market
changes in commercial arrangements to service one significant
national account in the Scottish market resulted in lower margin
factored brands no longer being distributed by C&C. Likewise,
route to market amendments in Northern Ireland reduced duty
in suspense volume by a reasonably significant amount during
the year. In both Scotland and Northern Ireland, the agency
brands continue to perform well in the core Independent Free
Trade segment of the on-trade.
The reduction in lower value activity improved average pricing
by 3.8%, contributing to the overall 1.8ppt improvement in third
party brand operating margin.
Private Label: A number of new contracts for cider and beer
helped push volume up 4.2% in FY2013. The nature of the new
contracts was higher in quality, a point well illustrated by a
2.3% improvement in average pricing achieved and a healthier
operating margin.
(i) On a constant currency basis, constant currency calculation is set out on page 26
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2 2
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
RESULTS FOR THE YEAR
C&C is reporting net revenue of €476.9
million, operating profit(i) of €113.9 million and
adjusted diluted EPS(ii) of 27.7 cent.
This represents a moderate decline of 0.8% in net revenue
(decline of 5.5% on a constant currency(iii) basis) but an operating
profit(i) increase of 2.4% (up 0.4% on a constant currency(iii) basis)
equating to an operating margin of 23.9%, an increase of 0.8
percentage points on the prior year (up 1.4 percentage points on
a constant currency (iii) basis).
In challenging domestic markets, the results achieved highlight
both the resilience and adaptability of the C&C business model
and the importance of growth from international markets.
C&C IS PLEASED
TO REPORT NET
REVENUE OF
€476.9 MILLION
Table 1 – Key financial indicators
Financial Summary
Net revenue
EBITDA(iv)
Adjusted Diluted EPS(ii)
Free cash flow(v)
Free cash flow conversion ratio
Net (debt)/cash (vi)
Dividend per share
Dividend cover
Financing
Net interest paid
Interest Cover
Net debt/EBITDA
Net debt as percentage of market capitalisation
Share price performance
Share price at 28/29 February
52 week high
52 week low
Market capitalisation at year-end
(i)
Before exceptional items.
(ii)
See note 10 on pages 100 - 101.
€m
€m
Cent
€m
€m
Cent
€m
2013
476.9
135.6
27.7
54.8
40.4%
(123.4)
8.75
31.6%
1.9
41.1
0.9
7.3%
2012
480.8
131.4
27.6
102.6
78.1%
68.3
8.17
29.6%
3.9
34.6
-
n/a
€4.895
€4.94
€3.17
€3.665
€3.69
€2.70
€m
1,686
1,243
(iii) On a constant currency basis, constant currency calculation is set out on page 26.
(iv)
EBITDA: Earnings before exceptional items, interest, tax, depreciation and amortisation and inclusive of discontinued operations.
(v)
Free Cash Flow is a non-GAAP measure that comprises cash flow from operating activities net of capital investment cash outflows which form part of investing activities.
Free Cash Flow highlights the underlying cash generating performance of the ongoing business, see page 25.
(vi) Net debt comprises cash and borrowings, net of issue costs of €2.2m (FY2012:NIL).
C&C GROUP PLC - 2013 ANNUAL REPORT
2 3
The performance of each of the Group’s reporting segments is
discussed in detail in the Operations Review on pages 13 to 21,
in summary the key drivers of this financial performance were:-
• Stable performance from ROI in second half of financial
year: poor weather dominated financials in the first half of
the financial year. However, trading stabilised in the second
half with LAD volume for the Group up 1.5% compared to a
decline of 3.2% in the first 6 months. Price/Mix deflation also
improved from 9.1% in the first 6 months to 6.2% in the second
6 months.
• A tough year for cider in the UK: The GB cider category
experienced its first volume decline in almost a decade as poor
weather depressed consumption in the key summer months.
Net revenue for C&C’s Cider UK business unit declined 20.2%
with operating profits, on a constant currency basis, down
15.6% to €30.9m. Operating margins, on a constant currency
basis, improved by 1.2ppts as marketing plans were adapted to
reflect the challenging trading environment.
• Tennent’s going from strength to strength: Despite a decline in
volume, the prioritisation and focus on share growth within more
profitable channels contributed to a positive mix and net revenue
growth of 6.8% for the year. Operating margins grew by 5.7ppt,
a consequence of improved pricing and robust cost control. The
brand remains in good health across all of its territories.
• Increasing scale of International. FY2013 was a significant
year for the development of an international business within
the Group with the acquisition of the Vermont Hard Cider
Company, LLC (VHCC) in December. The international business
unit enjoyed good volume growth of 55.2% in the period, 34.8%
excluding the two months worth of contribution from VHCC
since acquisition. The new business provides C&C with a great
opportunity to tap into the fast growing US cider category. The
contribution from Tennent’s, introduced to a number of new
markets during the year, is encouraging.
• Currency: applying this year’s effective rates to last year’s
operating profit improves FY2012 reported profits by a net €2.2
million as a result of a strengthening in the sterling effective
translation rate which was partially offset by a weakening in
the effective transaction rate.
ACCOUNTING POLICIES
As required by European Union (EU) law, the Group’s financial
statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the EU,
which comprise standards and interpretations approved by
the International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee
(IFRIC), applicable Irish law and the Listing Rules of the Irish and
London Stock Exchanges. Details of the basis of preparation and
the significant accounting policies are outlined on pages 73 to 83.
FINANCE COSTS, INCOME TAX AND SHAREHOLDER RETURNS
Net finance costs reduced to €4.9 million (2012: €5.1 million)
reflecting a reduction in average drawn debt during the period,
the benefit of no fixed interest contracts, offset by a reduction in
interest income earned. On a time weighted basis the average
drawn debt reduced from €92 million during FY2012 to €49
million in FY2013, reflecting the fact that the Group was debt free
for almost 9 months of the year prior to the acquisition of VHCC.
Net finance costs are also inclusive of an unwind of discount on
provisions charge of €1.0 million (2012: €1.0 million).
The income tax charge in the year excluding exceptional items
amounted to €16.0 million. This represents an effective tax rate
of 14.7%, an increase of 1.7 percentage points on the prior year.
The increase is primarily due to the increased proportion of profits
arising in the UK. The effective tax rate at 14.7% reflects the fact
that, currently, the majority of the Group’s profits are earned in
either Ireland or the UK, both of whom have competitive tax rates
relative to European averages.
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW 2 4
GROUP CHIEF FINANCIAL OFFICER’S REVIEW- CONTINUED
Subject to shareholder approval, the proposed final dividend
of 4.75 cent per share will be paid on 12 July 2013 to ordinary
shareholders registered at the close of business on 24 May 2013.
The Group’s full year dividend will therefore amount to 8.75 cent
per share, a 7.1% increase on the previous year. The proposed
full year dividend per share will represent a payout of 31.6%
(FY2012: 29.6%) of the full year reported adjusted diluted earnings
per share. A scrip dividend alternative will be available. Total
dividends paid to ordinary shareholders in the current financial
year amounted to €28.4 million of which €21.2 million was paid
in cash, €0.1 million was accrued with respect to LTIP (Part I)
dividend entitlements while €7.1 million or 25% (FY2012: 19%) was
settled by the issue of new shares.
EXCEPTIONAL ITEMS
The Group posted to operating profits a net expense of €4.6
million before tax in relation to a number of items, which due to
their nature and materiality were classified as exceptional items
for reporting purposes, a presentation which in the opinion of
the Board, provides a more helpful analysis of the underlying
performance of the Group.
The items which were classified as exceptional include:-
(a) Restructuring costs: comprising severance and other
initiatives arising from cost cutting initiatives and the consolidation
of the Group’s offices in the UK and US, resulted in an exceptional
charge before taxation of €1.2 million (2012: €4.6 million).
(b) Acquisition related costs of €3.3 million: comprising costs
directly attributed to the acquisition of VHCC and the Gleeson
Group, the latter which was completed post year-end.
(c) IT Systems implementation & integration costs of €1.1
million: primarily relating to the integration of the previously
acquired Hornsby’s brand with the Group’s existing business.
(d) Inventory recovery: juice stocks which were previously impaired
were recovered and used by the Group’s cider business during the
current financial year resulting in a write back of juice stocks to
operating profit at their recoverable value of €1.0 million. As the
original impairment charge was accounted for as an exceptional
cost the write-back has also been accounted for in this manner.
BALANCE SHEET STRENGTH, DEBT MANAGEMENT AND
CASHFLOW GENERATION
A key strength of the Group remains the strength of its balance
sheet.
Total assets reported by the Group were €1,200.3 million at
28 February 2013 (2012: €960.8 million). The Group’s portfolio
of market leading brands and related goodwill is valued at
€705.8 million (2012: €483.3 million). The current year increase
primarily reflects the acquisition of VHCC.
Brand values and goodwill are assessed for impairment on a
regular basis with the Directors concluding that no material
adjustments to the assumptions underlying the impairment
testing models applied would result in any foreseeable risk of an
impairment arising.
In addition, the Group generated Free Cash Flow of €54.8 million
in the period, reflecting an EBITDA to Free Cash Flow conversion
ratio of 40.4%. The Group ended the year in a net debt position
of €123.4 million (2012: net cash €68.3 million) as a result of the
current year acquisitions and related debt drawdown. The Group
had undrawn committed facilities available of €103.4 million as
at 28 February 2013.
Debt management
During the year the Group used existing cash resources to repay
and cancel the outstanding balance on the 2007 committed
facility (€60.0 million). Subsequent to the acquisition of VHCC
and the pending acquisition of the Gleeson Group, the Group had
drawn debt of €246.6 million at year-end.
In February 2012, the Group entered into a committed €250.0
million multi-currency five year syndicated revolving loan facility
with seven banks, repayable on 28 February 2017. The facility
agreement provided for a further €100.0 million in the form
of an uncommitted accordion facility which was successfully
negotiated as committed, but was not utilised, during the
financial year. In addition the Group is permitted to have
additional indebtedness to a maximum value of €150.0 million.
In total therefore, under the terms of the agreement, the Group
has a total debt capacity of €500.0 million.
Cash generation
Management reviews the Group’s cash generating performance
by measuring the conversion of EBITDA to Free Cash Flow as
we consider that this metric best highlights the underlying cash
generating performance of the ongoing business.
The Group ended the year with an EBITDA to Free Cash Flow
conversion ratio of 40.4% (2012: 78.1%). The current year cash
flow performance reflects a number of factors. Working capital
was negative, primarily as a consequence of adding VHCC to
the Group and exiting transitional service arrangements for
the Hornsby’s brand during the year. FY2012 working capital
movements had enjoyed the benefit of some slow recovery of
credit due to customers. The sustained challenges of the trading
environment appear to have sharpened cash recovery across
the board, negatively impacting our working capital movement
in FY2013 as a consequence. The Group increased advances
to customers in the period, primarily in Scotland. Capital
expenditure also increased in the current year. FY2013 capital
expenditure includes the purchase of land in Vermont that was
purchased by the Group post the acquisition of VHCC.
Net finance costs of the Group reduced due to the reduction in
average drawn debt for the period, the benefit of no fixed interest
contracts in the current year offset by a reduction in interest
income earned. Taxation payments increased in line with an
increased proportion of UK taxable profits.
A summary cash flow statement is set out in Table 2 on page 25.
C&C GROUP PLC - 2013 ANNUAL REPORT Table 2 – Cash flow summary
Operating profit (i)
Amortisation/depreciation
EBITDA (ii)
Working capital
Advances to customers
Net capital expenditure
Net finance costs
Tax paid
Exceptional items paid
Other*
Free cash flow(iii)
Free cash flow conversion ratio
Proceeds on disposal of operations
Proceeds from exercise of share options
Proceeds with respect to Joint Share Ownership Plan
Proceeds from the sale of shares held by Employee Trust
Proceeds from issue of new shares following acquisition of subsidiary
Acquisition of brand & business/deferred consideration paid
Acquisition of equity accounted investees
Dividends paid in cash
(Increase)/reduction in net debt
Net cash/(debt) at beginning of year
Translation adjustment
Non cash movement
Net (debt)/cash(iv) at end of year
2 5
2012
€m
111.1
20.3
131.4
13.5
(5.5)
(17.7)
(3.9)
(4.4)
(8.7)
(2.1)
102.6
78.1%
4.7
1.5
0.1
-
-
(16.6)
-
(18.5)
73.8
(6.3)
1.1
(0.3)
68.3
2013
€m
113.9
21.7
135.6
(21.8)
(16.7)
(24.1)
(1.9)
(8.5)
(4.9)
(2.9)
54.8
40.4%
-
3.5
-
6.6
5.3
(233.5)
(2.9)
(21.2)
(187.4)
68.3
(3.7)
(0.6)
(123.4)
*
other relates to the share options add back, pensions charged to operating profit before exceptional items less contributions paid and profit on disposal of plant & equipment
(i)
before exceptional costs and inclusive of discontinued activities.
(ii)
EBITDA: Earnings before exceptional items, interest, tax, depreciation and amortisation and inclusive of discontinued operations.
(iii) Free Cash Flow is a non-GAAP measure that comprises cash flow from operating activities net of capital investment cash outflows which form part of investing activities.
Free Cash Flow highlights the underlying cash generating performance of the ongoing business.
(iv) Net Debt comprises cash and borrowings, net of issue costs of €2.2m (2012 : nil).
RETIREMENT BENEFIT OBLIGATIONS
In compliance with IFRS, the net assets and actuarial liabilities
of the various defined benefit pension schemes operated by the
Group companies, computed in accordance with IAS 19 Employee
Benefits, are included on the face of the Group balance sheet as
retirement benefit obligations.
In FY2012 the Group worked with the Pension Scheme Trustees
to implement pension reform in order to manage the Group’s
funding risk. The process concluded with the Pensions Board
issuing a Section 50 directive to remove the mandatory pension
increase rule, which guaranteed 3% per annum increase to
certain pensions in payment, and replaced it with guaranteed
pension increases of 2% per annum for each of the 3 years 2012,
2013 and 2014 and thereafter future pension increases to be
awarded on a discretionary basis.
A Funding Proposal was also approved by the Pensions Board which
commits the Group to contributions of 14% of Pensionable Salaries
to fund future pension accrual of benefits; a deficit contribution of
€3.4 million; and an additional supplementary deficit contribution
of €1.9 million for which C&C reserves the right to reduce or
terminate on consultation with the Trustees and on advice from the
Scheme Actuary that it is no longer required due to a correction
in market conditions. The level of future funding commitment is
in line with current funding levels. The Directors believe that the
agreed plan will enable the schemes to meet the Minimum Funding
Standard by 31 December 2016.
At 28 February 2013, the retirement benefit obligations on the IAS
19 basis amounted to €21.5 million gross and €18.8 million net of
deferred tax (FY2012: €15.1 million gross and €13.2 million net of
deferred tax). The movement in the deficit is as follows:-
Deficit at 1 March 2012
Employer contributions paid
Actuarial loss
Charge to the Income Statement
Net deficit at 28 February 2013
€m
15.1
(7.2)
12.3
1.3
21.5
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW
2 6
The retirement benefit deficit computed in accordance with IAS
19 was impacted by a number of factors, namely:-
• actuarial loss: €12. 3 million recognised as a result of a
reduction in the discount rate applied to liabilities: ROI
schemes reduced from 4.7% - 4.9% at 29 February 2012 to
3.8% - 4.25% at 28 February 2013. For the UK scheme the
discount rate reduced from 4.75% at 29 February 2012 to 4.4%
at 28 February 2013,
• Employer contributions: €7.2 million
All other significant assumptions applied in the measurement of
the Group’s pension obligations at 28 February 2013 are broadly
consistent with those as applied at 29 February 2012.
FINANCIAL RISK MANAGEMENT
The most significant financial market risks that the Group
is exposed to include foreign currency exchange rate
risk, commodity price fluctuations, interest rate risk and
creditworthiness risk in relation to its counterparties.
The board of Directors set the treasury policies and objectives
of the Group, the implementation of which is monitored by the
Audit Committee. There has been no significant change during
Table 3 – Constant Currency Comparatives
Revenue
ROI
Cider UK
Tennent’s UK
International
Third party brands UK
Total
Net revenue
ROI
Cider UK
Tennent’s UK
International
Third party brands UK
Total
Operating profit
ROI
Cider UK
Tennent’s UK
International
Third party brands UK
Total
the financial year to the Board’s approach to the management of
these risks. Details of both the policies and control procedures
adopted to manage these financial risks are set out in detail in
note 23 to the financial statements.
Debt and interest rate risk management
It is Group policy to ensure that a structure of medium/long term
debt funding is in place to provide it with the financial capacity to
promote the future development of the business and to achieve
its strategic objectives. The Group manages its borrowing ability
by entering into committed loan facility agreements. Currently
the Group has a multi-currency five year syndicated loan facility,
entered into in February 2012 with seven banks including Bank
of Ireland, Bank of Scotland, Barclays Bank, Danske Bank,
HSBC, Rabobank, and Ulster Bank. The principal agreement
provided the Group with debt capacity of up to €250.0 million and
in addition provided for a further €100.0 million in the form of
an uncommitted accordion facility which the Group successfully
negotiated, as committed, in December 2012.
The Group’s cash deposits are all invested on a short term basis
with banks who are members of the Group’s banking syndicate.
Year ended
29 February
2012
€m
FX
Transaction
€m
FX
Translation
€m
Year ended 29
February 2012
Constant
currency
comparative
€m
142.5
218.6
209.9
30.7
115.0
716.7
101.4
162.1
95.8
30.6
90.9
480.8
44.4
35.2
21.2
6.8
3.6
111.2
-
-
-
0.8
-
0.8
-
-
-
0.8
-
0.8
(0.7)
0.6
-
(0.2)
-
(0.3)
-
14.2
13.6
0.4
7.4
35.6
-
10.5
6.2
0.4
5.9
23.0
-
0.8
1.3
0.2
0.2
2.5
142.5
232.8
223.5
31.9
122.4
753.1
101.4
172.6
102.0
31.8
96.8
504.6
43.7
36.6
22.5
6.8
3.8
113.4
C&C GROUP PLC - 2013 ANNUAL REPORT
2 7
Commodity price and other risk management
The Group is exposed to commodity price fluctuations, and
manages this risk, where economically viable, by entering into
fixed price supply contracts with suppliers. The Group does
not directly enter into commodity hedge contracts. The cost of
production is also sensitive to variability in the price of energy,
primarily gas and electricity. It is Group policy to fix the cost
of a certain level of its energy requirement through fixed price
contractual arrangements directly with its energy suppliers.
The Group seeks to mitigate risks in relation to the continuity of
supply of key raw materials and ingredients by developing trade
relationships with key suppliers. The Group has over 60 long-term
apple supply contracts with farmers in the west of England and has
an agreement with malt farmers in Scotland for the supply of barley.
In addition, the Group enters into insurance arrangements
to cover certain insurable risks where external insurance
is considered by management to be an economic means of
mitigating these risks.
Kenny Neison
Group Chief Financial Officer
Currency risk management
The Group publishes its consolidated financial statements in euro
but transacts business in other currencies. By entering into foreign
currency transactions and by the consolidation of the results of its
non-euro reporting foreign operations the Group is exposed to both
transaction and translation foreign currency rate risk.
The Group hedges a portion of its exposure to the sterling and
US dollar value of its foreign operations by designating sterling
and dollar borrowings as net investment hedges and enters
into forward rate hedge agreements to hedge an appropriate
portion of the transaction exposure borne by its subsidiary
undertakings for a period of up to two years ahead. Currency
transaction exposures primarily arise on the sterling and US
dollar denominated sales of its euro subsidiaries.
The principal foreign currency forward contracts in place at
28 February 2013 are:
Local Currency
Amount (m)
Average forward rate
(Euro:FX)
Sterling
20.0
0.81
USD
1.0
1.24
Where hedge accounting is applied, hedges are documented and
tested for effectiveness on an ongoing basis. All currency hedges
are based on forecasted exposures and meet the requirements
of IAS 39 Financial Instruments: Recognition and Measurement
to qualify as cash flow hedges. The fair value of all outstanding
hedges at 28 February 2013 as calculated by reference to current
market value amounted to a net asset of €1.7 million (2012: €0.8
million net liability) and this has been included on the balance
sheet under “derivative financial assets and liabilities”.
The effective rate for the translation of results from sterling
currency operations was €1:£0.81 (year ended 29 February 2012:
€1:£0.87) and the effective rate for the translation of sterling
currency revenue/net revenue transactions by euro functional
currency operations resulted in an effective rate of €1:£0.86
(year ended 29 February 2012: €1:£0.85) at operating profit level.
Comparisons for 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 sterling and US dollar
denominated subsidiaries by restating the prior year at FY2013
effective rates. Applying the realised FY2013 foreign currency
rates to the reported FY2012 revenue, net revenue and operating
profit rebases the comparatives as shown in Table 3 on page 26.
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW
2 8
CORPORATE RESPONSIBILITY
HIGHLIGHTS
IN THE YEAR ENDED 28 FEBRUARY 2013 THE
GROUP HAS:
• REDUCED TOTAL USAGE OF ELECTRICITY
BY 3% AND NATURAL GAS BY 4.5%,
PREVENTING OVER 2,740 TONNES OF
CARBON EMISSIONS
• REDUCED CO2 USAGE AT SHEPTON
MALLET BY 24% AFTER THE
IMPLEMENTATION OF A NEW UTILITY
MANAGEMENT SYSTEM AND SPECIALIST
TRAINING
• MADE 322 NEW DIRECT SHIPMENTS FROM
CLONMEL TO GB CUSTOMERS, SAVING
64,400 MILES AND 87 TONNES OF CO2
EQUIVALENT
• IMPLEMENTED LOCAL KEGGING
ARRANGEMENTS AND MORE EFFICIENT
KEG RETURN PROCESSES SAVING OVER
936,000 MILES TRAVELLED AND 1,258
TONNES OF CO2 EQUIVALENT
• RECOVERED AND RECYCLED OVER 2,100
TONNES OF CO2 PRODUCED BY THE CIDER
FERMENTATION PROCESS IN CLONMEL
AND USED IT TO CARBONATE OUR
PRODUCTS
• RECYCLED OR RE-USED 100% OF WASTE
PRODUCED AT CLONMEL
• REDUCED THE TOTAL NUMBER OF
ACCIDENTS IN MANUFACTURING BY 18%
AND DAYS LOST DUE TO ACCIDENTS BY
48%
• MADE £1 MILLION AVAILABLE TO APPLE
GROWERS IN GREAT BRITAIN FOR
PROJECTS RELATED TO SUSTAINABILITY
• NOW TRAINED OVER 7,000 STUDENTS AT
THE TENNENT’S TRAINING ACADEMY FOR
THE SCOTTISH PUB AND HOSPITALITY
INDUSTRY
• LAUNCHED THE TENNENT’S MODERN
APPRENTICESHIP PROGRAMME WHICH
SAW 25 APPRENTICES RECEIVE HIGH-
QUALITY TRAINING
• TAKEN OVER THE CHAIR OF THE
NATIONAL ASSOCIATION OF CIDER
MAKERS
REDUCING THE
IMPACT THAT
OUR BUSINESS
HAS ON THE
ENVIRONMENT
INTRODUCTION
The Group aims to meet the needs of its
stakeholders in ways that are economically,
environmentally and socially responsible.
We operate a Group-wide corporate
responsibility and sustainability policy.
Sustainability not only reduces our costs but
also reduces the impact that our business
has on the environment.
ENVIRONMENTAL IMPACT & ENERGY
Our energy reduction teams in each of the Group’s manufacturing
facilities seek to reduce our impact on the environment. Each
team looks at ways of reducing consumption of energy and
raw materials, waste going to landfill and emissions, and also
looks at ways of increasing transport efficiency and packaging
optimisation. Each team reports monthly to the Group
Manufacturing Director, who reports through the Group Chief
Executive Officer to the Board.
Compared with FY2012, we have reduced our electricity usage by
over 3%, and we have reduced our natural gas usage by 4.5%. We
are committed to further reducing our electricity and natural gas
usage and we remain on track to achieve our energy reduction
target of 11% by the end of FY2015, against FY2012 as a base year.
Annual targets are established across all manufacturing sites to
monitor and direct energy usage, water consumption and effluent
discharge, and awareness training ensures that all personnel
are familiar with our environmental policy and our business’s
environmental impact.
C&C GROUP PLC - 2013 ANNUAL REPORT 2 9
Our cider manufacturing facilities at Clonmel and Shepton Mallet
continue to be accredited with the Environmental Management
Standard ISO 14001; the facility at Clonmel also continues to
be accredited to the Irish Energy Management Standard IS EN
16001:2009, and works closely with the Sustainable Energy
Authority of Ireland (SEAI). These standards require us to
demonstrate the systematic management of energy leading to
a decline in greenhouse gas (GHG) emissions. Our facilities at
Wellpark and Shepton Mallet continue to meet their regulatory
targets, and operated within the European Union Emissions
Trading Scheme up until the end of 2012 when they took
advantage of the UK government’s small emitters opt out scheme
(see further below). As members of the British Beer and Pub
Association (BBPA), we participate in energy reduction initiatives,
surveys and seminars.
The Group put a new energy management system into Shepton
Mallet in June 2012 to measure and manage gas, electricity and
water usage. This also resulted in a 24% reduction in CO2 usage
in our manufacturing processes between December 2012 and
February 2013.
A proposal for a new 800KW wind turbine on the Clonmel site is now
at the planning stage and, if installed, is planned to provide 25% of
Clonmel’s electricity usage, which will act as a hedge against future
energy price rises and further reduce CO2 emissions.
Our cidery in Vermont switched to efficient lighting and water
systems in the early 2000’s. In 2010 it invested in Vermont’s
Cow Power programme, which turns manure into energy, and
from which the cidery has received 25% of its power over the
last three years. It is also in the process of constructing a 1.5
acre solar power facility which, when operational, is expected to
provide an additional 10% to 15% of its power usage.
SUSTAINABLE LOGISTICS
FY2013 has seen a continuation of the focus on driving
efficiencies in conjunction with our transport partners. We have
sustained an average of 26 pallets per load on movements from
Clonmel to our National Distribution Centre (NDC) in Bristol and
have increased the average pallets per load from 22 to 22.4 on
deliveries from Shepton Mallet and the NDC to customers within
GB. In addition, we have engineered a number of key changes to
our ways of working, which include:
• 322 new direct shipments from Clonmel to GB Customers,
saving 64,400 miles and 87 tonnes of CO2 equivalent over the
year
• Two new backhaul agreements with key strategic GB
customers enabling them to better utilise their fleet and
reduce overall road trips
• Contract kegging agreements in Italy, USA, Australia and
Canada, saving over 781,000 miles and 1,050 tonnes of CO2
equivalent over the year
• New improved process for storing returning kegs from
Australia and USA more efficiently (honeycombing) saving over
155,000 miles and 208 tonnes of CO2 equivalent over the year.
PACKAGING
We continue to look for ways to reduce the weight of our
packaging. Measures taken this year to reduce the weight of
our packaging include increasing the stretch of the pallet shrink
wrapping, meaning fewer wraps per pallet and less material
used across all manufacturing sites, which resulted in a 3%
reduction in plastic used over the year, and down-gauging
shrink wrap which saves 10% on the volume of plastic used. This
was established in Clonmel in FY2013 and will be rolled out to
Shepton Mallet and Wellpark in FY2014.
Between 60%-70% of the glass used in our bottles is recycled
and this is increasing. Another project planned for FY2014 is a
new non-returnable keg which will be recycled at its destination
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW 3 0
CORPORATE RESPONSIBILITY - CONTINUED
location and which eliminates international transportation of
empty kegs back to the UK and ROI. This will significantly reduce
the Group’s carbon footprint.
we also recovered and recycled approximately 2,132 tonnes of
CO2 produced by the cider fermentation process and used it to
carbonate our products.
CARBON CONSUMPTION
The Group continuously monitors the impact of its operations on
the climate and we look to reduce our emissions. We assess and
manage climate change related risks and opportunities, including
the impact on the availability and security of our sources of raw
materials, such as aquifers, orchards and maltings.
The Group has participated in the Carbon Disclosure Project
(CDP) Supply Chain Programme for a number of years, and CO2
emissions for the Group are evaluated annually and posted on
the CDP website. Further information on the CDP, including
a copy of the CDP Ireland Report 2012, is available at www.
cdproject.net. In CDP Ireland Report 2012, the Irish CDP
respondents’ average disclosure score was 78%, the Group
scored 96% and was second in the consumer staples sector. Our
incentive scheme provides financial rewards to all employees,
based on successful achievement of a range of targets at both
site and overall Group levels.
In the ROI and the UK, through our rural development
commitment and by supporting orchard growers who manage
over 2,000 hectares of orchards for apples used in the production
of our cider, in FY2013 we offset 22,090 tonnes of CO2 equivalent
and helped to preserve the biodiversity of these regions.
Our cidery in Vermont participates in the American Forests
programmes, and has planted 7,311 trees this year and a total of
42,033 trees in the last four years to offset its carbon emissions.
In 2012 the UK Government offered small carbon emitters the
opportunity to “opt out” from the European Union Emissions
Trading Scheme (EU ETS) from the beginning of 2013 to 2020
as part of the UK Government’s efforts to cut down on red tape.
Small emitters account for 1% of the UK’s EU ETS emissions and
this opt out scheme could save the industry up to £80 million in
administrative costs from now until 2020. Our two manufacturing
sites at Shepton Mallet and Wellpark along with around 250 other
eligible facilities opted out of the EU ETS for this period and will
have an industry sector-specific emission reduction target.
WASTE
We have systems in place to maximise the recycling of the waste
that we produce and minimise what we send to landfill. Our
ultimate goal is to recycle or recover for reuse 100% of our waste
products. In FY2013, our manufacturing sites reduced the overall
amount of waste sent to landfill by over 30%.
At Clonmel our recovery and recycling rate was 100%, and we
sent no waste to landfill as all non-recycled waste was converted
to RDF (refuse derived fuel).
At Shepton Mallet our recovery and recycling rate was 86% and
the amount of waste sent to landfill dropped from 57 tonnes in
FY2012 to 50 tonnes in FY2013, a 12% reduction. In addition a
can wastage reduction project has brought can wastage down to
0.7% of all cans used, and specialist training completed on our
cardboard case packers has further reduced packaging waste.
Each year we ensure compliance to national packaging
regulations for our products placed into the marketplace. In the
UK the actual sale volume of packaging recycled in the calendar
year 2012 saved over 1,450 tonnes of CO2 equivalent. In ROI
At Wellpark no waste is sent directly to landfill. The amount of
waste sent by our third party waste management contractor
to landfill dropped from 115 tonnes in FY2012 to 70 tonnes in
FY2013, a 39% reduction. We also commenced a project with
C&C GROUP PLC - 2013 ANNUAL REPORT 3 1
WE ENCOURAGE
SUSTAINABLE
AGRICULTURAL
PRACTICES
AND THE
PRESERVATION
OF BIODIVERSITY
Zero Waste Scotland in January 2013 to identify waste reduction
opportunities along our supply chain, and it will involve our
suppliers and customers as partners in the project.
In Vermont there is a recycling programme for all industrial
waste materials. More detailed data will be included for FY2014.
WATER
The Group’s manufacturing sites are not located in any region
identified as prone to drought, and water scarcity is not
considered to be a critical risk for our business. Nevertheless,
water preservation and management is an important business
consideration for the Group and we continue to monitor the
usage of water per hectolitre of finished product from each
manufacturing facility and across our supply chain.
This year the Group participated in the 2012 CDP Water
Disclosure initiative. The results of the report are available on
the CDP website.
PROCUREMENT
The implementation of our sustainable and ethical procurement
policy is regularly monitored by the Board via the Group
Manufacturing Director, and each business unit is required to
demonstrate compliance with this policy by providing access to
its audit and review records, its procedure manuals and its staff
training materials for audit purposes.
Our central teams in procurement and technical services
actively audit our suppliers’ track record in environmental
management, health and safety, sustainability and corporate
social responsibility.
We proactively audit and approve our existing supplier base
after reviewing responses received back from a supplier
approval questionnaire. This questionnaire specifically asks for
details in the management of environmental, health and safety,
sustainability and corporate social responsibility. Reviewing
of supplier responses is a function of our central teams in
procurement and technical services.
In FY2013, our total water usage in UK and ROI was 17.08
million hectolitres, equivalent to 3.69 hectolitres of water used
per hectolitre (hl/hl) of product produced, which is significantly
better than the recognised global brewing benchmark of 4 hl/hl.
We seek to support our suppliers through entering into long
term supply arrangements with our suppliers of apples and
barley, our key raw materials.
Our continuing aquifer protection programme in Clonmel has
resulted in us retaining our successful accreditation to the
Irish IS 432:2005 Spring Water standard. Across the Group, we
continue with our projects on brewery condensate recovery,
reclaiming pasteuriser and bottle rinse water, fruit processing,
and minimising plant and process cleaning systems, and in
FY2013 we recovered and reused over 270,000m3 of biogas from
our anaerobic waste water treatment plant in Clonmel for use as
fuel for our boilers.
GREEN PRODUCTION
In FY2013, we milled 41,000 tonnes of apples in our cider mills.
We are also encouraging apple growers to plant early harvesting
varieties to increase the availability of apples in the off season.
We encourage sustainable agricultural practices and the
preservation of biodiversity. We are actively involved in the
National Association of Cider Makers (NACM) which takes the
lead in adopting and working to sustainable principles both in the
physical and social environment, and carries out annual climate
change assessments.
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW 3 2
CORPORATE RESPONSIBILITY - CONTINUED
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We have continued the Green Apple Awards, a biennial
competition open to all contracted growers who supply apples
to the cider mill at Shepton Mallet. Growers are encouraged to
practise Integrated Pest Management, which involves the use
of carefully timed sprays to minimise usage and the impact
on beneficial insects. We continue to focus on local sourcing
of apples and have fostered close partnerships with the local
farming communities.
COMMUNITY ENGAGEMENT
The Group takes its responsibilities as a corporate citizen
seriously. This includes respecting and complying with local
tax laws and paying the required levels of tax in the different
countries where we operate. We claim the allowances and
deductions that we are properly entitled to, for instance on the
investment and employment that we bring to our communities.
We benefit from having always been established in Ireland’s low
tax environment as our major cider production unit is located in
Clonmel and the Group is headquartered in Dublin. The majority
of the Group’s taxable profits are earned in Ireland and the UK,
which both have competitive corporation tax rates compared
with the European average. In Ireland and the UK we remit
substantial amounts of duty on alcohol production.
Dialogue with customers
Understanding the views of our stakeholders is an important
part of our business. We seek feedback from our customers and
our divisional managing directors are partially targeted on the
basis of their customer satisfaction results.
two years. In ROI, similar “Voice of Customer” surveys of our on-
trade and off-trade customers are carried out by Behaviour and
Attitudes, an independent research agency.
ROI
Our brand campaigns continue to have a community focus. In
FY2012 we launched the Bulmers “doing our bit campaign”. This
continued in FY2013 with the “Doing Our Bit” Christmas promotion
2012 where winners received €2,000 for themselves and €2,000
for a community cause of their choice. We also engaged in many
local community activities, including the Annerville Awards and
various charitable donations including a donation to Musical Youth
Foundation enabling it to launch Its ‘Guitars for Kids’ project for
children in the Rutland Street area, Dublin.
Bulmers continued its support of Tall Ships Dublin and the
Forbidden Fruit Festival, which brings top music acts to Dublin
at an affordable price for consumers. We also participated
in the Irish Training and Employment Authority’s Redundant
Apprenticeship Scheme, enabling five apprentices to complete
their apprenticeships.
Northern Ireland
Tennent’s Vital is Northern Ireland’s biggest music festival, and
the annual sponsorship of this event by Tennent’s helps bring
world-class musicians to Northern Ireland. Again in the summer
of 2012, through ‘Tennent’s UnTapped’, two unsigned acts were
offered the chance to showcase their music by playing onstage
at the event.
In the UK, our customers’ organisations are surveyed by
Advantage Group, an independent provider of business
relationship benchmarking, covering all areas of our interactions
with customers from supply chain to marketing support, and
this year we are pleased to report we came 8th, a significant
improvement compared with our performance in the previous
Scotland
Over 7,000 students have now been trained at the Tennent’s
Training Academy for the pub and hospitality industry. To
complement the Tennent’s Training Academy, in 2012 we
launched a modern “apprenticeship plus” programme to give
25 young people additional skills in hospitality businesses
C&C GROUP PLC - 2013 ANNUAL REPORT 3 3
BEING THERE
ESSENTIAL
DON’T MISS THE MUSIC EVENT OF THE SUMMER.
GET YOUR TICKET AT TENNENTSVITAL.COM
Please drink Tennent’s responsibly. ©2012 C&C Group. Tennent’s, Tennent’s Vital and the red T are registered trademarks.
in Scotland. We have offered work experience placements for
school and university students, as well as taking on engineering
apprentices for the first time in 17 years. After investing in new
visitor facilities, we have opened the Wellpark Brewery for public
site tours.
We also support the local community through numerous local
sponsorships, including sponsorship through our Blackthorn
cider brand of Bristol City and Bristol Rovers football clubs and
Bristol and Shepton Mallet rugby clubs, and by donations to
various local groups and charities.
RESPONSIBLE DRINKING
The Portman Group
C&C is a member of The Portman Group, the UK industry body
set up to ensure that the marketing and promotion of alcohol
is consistent with responsible drinking. The Portman Code of
Practice seeks to ensure that alcohol is promoted in a socially
responsible manner and only to those over 18 years of age. Over
the last 12 months, as a member of the Portman Group Council,
we have worked hard to update the Code. Its 5th edition was
launched in the autumn of 2012, and updates the Code to fit in
with the changing media landscape, particularly social media, and
the promotion of lower strength alcoholic products. We hosted a
training day in Glasgow for local drinks businesses and are now
implementing the updated Code across all of our marketing and
promotional activity. As a result of our extensive experience in
music and sports sponsorships we are also taking a leading role
on updating the Portman Group’s sponsorship code.
Tennent’s is a founding partner of T in the Park, one of the top
music festivals in Europe, which helps bring some of the world’s
biggest music stars to Scotland. Since 1996, Tennent’s T Break has
enabled the most fresh and exciting unsigned talent in Scotland to
showcase their music on the T Break Stage at T in the Park. The T
Break team also offers one student a six-month music internship.
C&C Group’s sponsorship of Celtic and Rangers football clubs also
has a strong community element, with the “Could Have Been A
Player” programme enabling some of our consumers to live their
footballing dream by playing at the clubs’ stadiums. We donated
sponsorship rights to Celtic and Rangers U19 and Women’s teams
to promote the clubs’ respective Charity Foundations.
We have also strengthened our links to Scottish farmers by
sourcing all of our barley from Scottish farms. We continue to
support fledgling businesses in brewing and farming in Scotland
through our Seed Fund initiative. 5p from every pint of Caledonia
Best sold during its first six months was donated to the Seed Fund
raising £58,000 for innovative projects selected by us in conjunction
with National Farmers Union Scotland and Heriot-Watt University’s
International Centre for Brewing and Distilling.
England
In Shepton Mallet, we launched a £1 million agricultural
investment fund. The major part of the fund has already been
disbursed in grants to local growers, who were selected in
conjunction with the local Chamber of Commerce and local MP
Tessa Munt. Together with our long-established 20 year apple
buying contracts, the fund helps ensure a sustainable future for
our apple growers.
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW 3 4
CORPORATE RESPONSIBILITY - CONTINUED
Public policy leadership
In September 2012 we took over the chair of the National
Association of Cider Makers (NACM), a major step forward as
we were only admitted to the association a few years ago. The
principal objectives of the NACM are the promotion of the merits,
qualities, heritage and authenticity of cider and the cider-
making industry, engagement with tax and regulatory bodies and
opinion-forming bodies having an interest in cider and/or alcohol
generally, and leading by example in sustainability, community
engagement and alcohol responsibility. The NACM is the first
drinks trade body to work with Business in the Community (BITC)
to address sustainability. It also hosts twice yearly Parliamentary
receptions for around 300 MPs interested in developments in the
cider industry.
We have worked with the pomology and technical experts in the
NACM to develop our sustainability agenda.
On the global cider stage, with the NACM, we have supported
the creation of the United States Association of Cider Makers
(USACM) and we are represented on its board and legislative
committee. We are already working on a revised definition for
cider in the US allowing higher carbonation, more aligned to
European levels. Additionally, in Europe we are key influencers
within the European Cider and Fruit Wine Association (AICV).
Working with these and other organisations enables us to press
for consistency in cider definitions across the world, which is
important for our global expansion aspirations.
Public Health Responsibility Deal
In March 2012, the Group joined with the majority of the alcohol
industry to pledge a reduction of one billion units of alcohol
from the 52 billion units currently anticipated to be consumed
in the UK up to 2015, with 30 million units of that reduction
coming from the Group’s products. This is ongoing and will be
achieved by the greater presence of lower alcohol products in
our portfolio, the first of which is Caledonia Best ale.
Scottish Government Alcohol Industry Partnership (SGAIP)
Tennent’s was a founding and remains an active member of the
SGAIP. The SGAIP has undertaken various initiatives over the
last six years towards achieving a reduction in alcohol misuse in
Scotland. As part of this programme, we have joined the “Best
bar none” scheme, through which we hope to improve the night-
time economy of many Scottish high streets.
Minimum Unit Pricing
The Scottish Government has passed legislation to introduce
minimum pricing for alcohol, and in the rest of the UK
consultations on minimum unit pricing are underway. In each
market we support these proposals as long as they are fair,
proportionate and reasonably implemented, and are part of
an overall programme to reduce the abuse of alcohol. The
legislation in Scotland is currently the subject of a legal
challenge and we await the outcome.
Responsible Drinking Initiatives
The Group has continued its commitment to responsible drinking
messages throughout the last 12 months and we are an active
member of Drinkaware. Tennent’s again donated advertising
space in its football sponsorships to Drinkaware’s “Why Let Good
Times Go Bad?” campaign.
T in the Park leads the way in communicating responsible
drinking messages. During the festival, Tennent’s once again
operated ‘Be Chilled’ at T in the Park, which comprises a
facility for consumers camping at the festival to pre-order and
collect chilled Tennent’s Lager to encourage trading down.
All communications carried responsible drinking messages
including emphasis on eating (‘Healthy T’) and alternating
alcoholic drinks with water. T in the Park provides free drinking
water across the festival site via standpipes.
C&C GROUP PLC - 2013 ANNUAL REPORT 3 5
TENNENT’S
AGAIN DONATED
ADVERTISING
SPACE IN ITS
FOOTBALL
SPONSORSHIPS
TO DRINKAWARE
ROI
Bulmers adheres to all of the alcohol marketing, communications
and sponsorship codes of practice in place in ROI.
Bulmers is committed to promoting the responsible serving, and
consumption of alcohol in ROI, and it is a member of the Alcohol
Beverage Federation of Ireland (ABFI) and the Mature Enjoyment
of Alcohol in Society Limited (MEAS). We adhere to the ABFI
and MEAS voluntary codes governing both the placement and
promotion of alcohol. All brand communications carry the “Enjoy
Bulmers Sensibly. Visit drinkaware.ie” taglines, and Bulmers
contributes finance and marketing resources to the production of
drinkaware.ie communications and media planning in Ireland. In
addition, we continue to work on proposals outlined by the Irish
government as part of their alcohol strategy.
Overseas markets
We work with our distributors to ensure that the marketing and
sale of our products in our international markets complies with
all relevant local laws and regulations in this regard.
In the USA where we have increased our presence through the
acquisition of Vermont Hard Cider Company, we are committed
to promoting responsible serving and consumption of alcohol.
EMPLOYEES
Developing, engaging and rewarding employees fairly is
fundamental to the success of our business and also to the
relationships that we have with the local communities in which
we work.
We are an equal opportunities employer. We aim to create a
working environment in which all individuals are able to make
best use of their skills, free from discrimination or harassment,
and in which all decisions are based on merit. We have a
formal equal opportunities policy that commits us to promoting
equality of opportunity for all our staff and job applicants. For
our operations in Northern Ireland this includes adherence
to the MacBride Principles. Our policy states that we do not
discriminate on the basis of age, disability, marital status,
ethnicity, creed, sex or sexual orientation. The policy also
requires our staff to treat customers, suppliers and the wider
community in accordance with these principles as well.
Health and wellbeing of employees
In December 2012 we conducted a safety climate survey across
our three manufacturing sites in Clonmel, Wellpark and Shepton
Mallet using surveys based on the internationally respected
Health & Safety Executive’s Safety Climate Survey. Over 80% of
employees in manufacturing participated and a detailed report
of the findings was presented to each manufacturing site’s
leadership teams.
During FY2013 we have reduced the number of days lost due to
accidents by 48% and the number of total accidents by 18%. In
the last two years we have reduced our total accident rate (being
the aggregate of lost days and total accidents) by over 41%. Our
site at Wellpark has now gone for over 1,800 days without a lost
time accident.
We have commenced a safety behaviour programme across
manufacturing. We have also invested in focused training &
development for our employees, including machine specialist
skills, business improvement techniques and compliance
training.
Business continuity
Business continuity exercises, facilitated by external experts,
were held at Wellpark and at Shepton Mallet during September
2012. Suggestions made at those exercises have led to a revised
business continuity and action plan. A similar exercise was
carried out at Clonmel in March 2013.
C&C GROUP PLC - 2013 ANNUAL REPORT SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCEBUSINESS REVIEW 3 6
C&C GROUP PLC - 2013 ANNUAL REPORT
BOARD OF DIRECTORS
1
3
2
4
BOARD COMMITTEES
Audit Committee
John Hogan (Chairman)
Richard Holroyd
Anthony Smurfit
Nomination Committee
Sir Brian Stewart (Chairman)
Breege O’Donoghue
Richard Holroyd
Remuneration Committee
Breege O’Donoghue (Chairman)
Stewart Gilliland
Richard Holroyd
Senior Independent Director
Richard Holroyd
1. SIR BRIAN STEWART*
Chairman
3. KENNY NEISON
Group Chief Financial Officer
Brian Stewart (68) was appointed as a non-executive Director of the Group and
Kenny Neison (43) was appointed Chief Financial Officer in 2012. He joined the
as a member of the Nomination Committee in March 2010. He was appointed as
Group in November 2008 and was appointed to the Board as Group Strategy Director
Chairman of the Group in August 2010. He is a former Chairman of Standard Life plc
and Head of Investor Relations in November 2009. He qualified as a chartered
and of Miller Group plc and a former chairman and former chief executive of Scottish
accountant and has previously held a number of senior financial positions in Scottish
& Newcastle plc.
& Newcastle plc, including UK Finance Director and Finance Director for Western
2. STEPHEN GLANCEY
Group Chief Executive Officer
Stephen Glancey (52) was appointed Group Chief Executive Officer in 2012. Prior to
Europe.
4. JORIS BRAMS
Managing Director, International division
that, he was appointed Chief Operating Officer in November 2008 and Group Finance
Joris Brams (44) was appointed as Managing Director of the Group’s International
Director in May 2009. He qualified as a chartered accountant and was previously the
division in 2012 and was appointed to the Board in October 2012. He was previously
group operations director of Scottish & Newcastle plc.
Group Operations Director at Puratos Group, a Belgian company supplying the
bakery, patisserie and chocolate sectors in more than 100 countries. He previously
served as Group Technical and Development Director at Scottish & Newcastle plc
and, prior to that, he held a number of commercial roles at Alken-Maes Breweries.
He brings significant experience of international transactions as well as having
production, supply-chain management and procurement expertise. He is a non-
executive director of Democo NV, a Belgian engineering company.
C&C GROUP PLC - 2013 ANNUAL REPORT
3 7
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5. STEWART GILLILAND*
9. ANTHONY SMURFIT*
Stewart Gilliland (56) was appointed as a non-executive Director of the Company in
Anthony Smurfit (49) was appointed as a non-executive Director of the Company
April 2012 and is a member of the Remuneration Committee. From 2006 to 2010 he
in April 2012 and is a member of the Audit Committee. Anthony Smurfit has been
was Chief Executive Officer of Müller Dairy (UK) Ltd. Prior to that, he held positions
President and Chief Operations Officer of Smurfit Kappa Group since 2002. He
at Whitbread Beer Company and at Interbrew SA in markets including the UK and
previously held the role of Chief Executive of Smurfit France and then Smurfit
Ireland, Europe and Canada. He is currently a non-executive Director of Booker
Europe and has worked in a number of divisions in SKG both in Europe and the
Group plc, Vianet Group PLC, Tulip Limited, Natures Way Foods Limited and Sutton
United States. He holds an honorary Doctorate of Business Administration for his
& East Surrey Water Plc. He brings significant experience of the long alcohol drinks
contribution to business. He was awarded the Legion d’Honneur to recognise his
sector in international markets.
6. JOHN HOGAN*
work in France. He has long-standing experience in global markets, managing an
extensive portfolio of international operations serving a world-wide customer base.
John Hogan (72) was appointed as a non-executive Director of the Company in 2004
10. JOHN BURGESS*
and is the Chairman of the Audit Committee. He was the managing partner of Ernst
& Young in Ireland between 1994 and 2000 and was a member of its global board.
He is currently a non-executive director of Prudential International Assurance plc,
and other private companies. John Hogan has over 40 years of financial experience.
The Board has determined that John Hogan is the financial expert on the Audit
Committee.
7. RICHARD HOLROYD*
Richard Holroyd (66) was appointed as a non-executive Director of the Company in
2004 and is a member of the Audit Committee, the Remuneration Committee and
the Nomination Committee. He was previously the managing director of Colman’s of
Norwich and head of the global marketing futures department of Shell International.
He has served as non-executive Director of several companies in the UK and
continental Europe and was a member of the UK Competition Commission from
September 2001 to April 2010. Richard Holroyd has many years’ experience in the
fast moving consumer goods sector.
8. BREEGE O’DONOGHUE*
Breege O’Donoghue (68) was appointed as a non-executive Director of the Company
in 2004. She was appointed the Chairman of the Remuneration Committee in
John Burgess (62) was a non-executive Director of the Company during the year
ended 28 February 2013 and resigned on 14 May 2013. Consequently he is not
offering himself for re-election this year.
For information on independence of the Directors, please see Directors’ Statement of
Corporate Governance on pages 44 to 52.
* Non-Executive Director
PAUL WALKER
Company Secretary
and General Counsel
December 2012 and is a member of the Nomination Committee. She is an executive
Paul Walker joined the Group in 2010
director of Penneys/Primark. She is Chair of the Labour Relations Commission, a
as General Counsel and was appointed
member of the Outside Appointments Board of the Code of Standards and Behaviour
Company Secretary in 2011. Prior to that,
for the Civil Service, a trustee of IBEC, and was previously a Director of An Post
he was a partner in Lawrence Graham
and Aer Rianta. Breege O’Donoghue has many years experience in the Irish and
LLP, a London law firm. He previously
international retail sector.
worked in investment banking.
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ REPORT
The Directors present the annual report and audited consolidated financial statements of the Group for the year ended 28 February 2013.
PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The Group’s principal trading activity is the production, marketing and selling of cider and beer.
The Company announced on 23 October 2012 that the Group had conditionally agreed to acquire Vermont Hard Cider Company, LLC
for a gross consideration of $305.0 million (€230.9 million). The acquisition was completed on 21 December 2012. Following this
acquisition, the Company allotted a total of 1,422,099 ordinary shares in the Company to two of the vendors for a subscription price of
approximately $7.0 million (€5.3 million).
On 5 November 2012, the Group bought a portfolio of wine brands from Waverley TBS Limited (in administration) for a consideration
of £1.0 million (€1.3 million euro equivalent at the date of payment).
The Company announced on 22 November 2012 that the Group had conditionally agreed to acquire M. & J. Gleeson (Investments)
Limited and its subsidiaries, a supplier and distributor of beverages in Ireland. The acquisition was conditional upon clearance by the
Irish Competition Authority, which was given on 27 February 2013. The acquisition was completed after the year-end on 7 March 2013.
During the year the Group also acquired a majority interest in The Five Lamps Dublin Beer Company Limited, a 25% minority interest
in Maclay Group plc and a 50% interest in Thistle Pub Company Limited.
Subsequent to the year-end the Company announced on 22 March 2013 that the Group had acquired 50% of the ordinary share capital
of Wallaces Express Limited.
There has been no other material change in the nature of the business of the Group.
The information to be included with respect to the review of the business and future developments as required by section 13 of the
Companies (Amendment) Act 1986 is contained in the Operations Review on pages 13 to 21. Information in respect of environmental
and employee matters is included in the Report on Corporate Responsibility on pages 28 to 35.
RESULTS
For the year ended 28 February 2013, the Group reported Revenue of €724.1 million (2012: €716.7 million) and Net revenue of €476.9
million (2012: €480.8 million).
Operating profit before exceptional items amounted to €113.9 million (2012: €111.2 million). This was in line with guidance given
by the Company during the year that operating profit would be in the range of €112 million to €118 million before the benefit of
acquisitions.
Profit for the year attributed to equity shareholders amounted to €88.7 million (2012: €95.7 million). On this basis, basic earnings per
share amounted to 27.0c (2012: 29.4c per share) and diluted earnings per share amounted to 26.4c (2012: 28.7c per share).
Earnings excluding exceptional items amounted to €93.0 million (2012: €92.2 million). On this basis, adjusted basic earnings per
share amounted to 28.3c (2012: 28.3c per share) and adjusted diluted earnings per share amounted to 27.7c (2012: 27.6c per share).
The financial statements for the year ended 28 February 2013 are set out on pages 65 to 136.
DIVIDENDS
An interim dividend of 4.0 cent per share for the year ended 28 February 2013 was paid in December 2012. Subject to approval at the
Annual General Meeting, it is proposed to pay a final ordinary dividend of 4.75 cent per share for the year ended 28 February 2013 to
shareholders who are registered at close of business on 24 May 2013.
C&C GROUP PLC - 2013 ANNUAL REPORT
3 9
BOARD OF DIRECTORS
The following changes have occurred in the composition of the Board since 16 May 2012, the date of the last Directors’ Report. Mr Joris
Brams was appointed as a Director on 23 October 2012. Mr Philip Lynch resigned as a Director on 30 November 2012. Mr John Burgess
resigned as a Director on 14 May 2013.
The names, functions and date of appointment of the current Directors, who give the responsibility statement on page 62, are as follows:
Director
Sir Brian Stewart
Stephen Glancey
Kenny Neison
Joris Brams
Stewart Gilliland
John Hogan
Richard Holroyd
Breege O’Donoghue
Anthony Smurfit
Function
Chairman
Group Chief Executive Officer
Group Chief Financial Officer
Executive Director
Non-executive
Non-executive
Non-executive
Non-executive
Non-executive
Appointment
2010
2008
2009
2012
2012
2004
2004
2004
2012
Short biographical notes on each current Director are given on pages 36 and 37.
In line with the provisions of the UK Corporate Governance Code, C&C Group is adopting a policy of annual re-election for all Board
Directors. Consequently, all Directors will offer themselves for election or re-election at the Company’s Annual General Meeting to be
held on 3 July 2013.
INTERESTS OF DIRECTORS AND COMPANY SECRETARY
Information in relation to the beneficial and non-beneficial interests in the share capital of Group companies held by the Directors and
Company Secretary who held office at 28 February 2013 is contained within the Report of the Remuneration Committee on Directors’
Remuneration on pages 53 to 61.
RESEARCH AND DEVELOPMENT
Certain Group undertakings are engaged in ongoing research and development aimed at improving processes and expanding product
ranges.
PRINCIPAL RISKS AND UNCERTAINTIES
Under Irish company law (Statutory Instrument 116/2005 European Communities (International Financial Reporting Standards and
Miscellaneous Amendments) Regulations 2005), the Group and the Company are required to give a description of the principal risks and
uncertainties which they face.
The principal risks and uncertainties faced by the Group’s businesses are set out below. The Group considers that currently the most
significant risks to its results and operations over the short term are (a) strategic failures, (b) economic conditions affecting consumer
spending and confidence and (c) failure to attract and retain high-performing employees.
Risks and uncertainties relating to strategic goals
• The Group’s strategy is to focus upon earnings growth through organic growth, acquisitions and joint ventures and entry into new
markets. These opportunities may not materialise or deliver the benefits or synergies expected and may present new social and
compliance risks. The Group seeks to mitigate these risks through due diligence, careful investment and continuing monitoring post-
acquisition.
Risks and uncertainties relating to revenue and profits
• The majority of the Group’s revenue derives from Ireland and the UK, where economic growth is slow. The Group seeks to mitigate this
risk through changes to its business model, geographical diversification into higher growth markets and through acquisitions and joint
ventures offering costs synergies.
• Economic conditions in the Group’s principal markets may affect consumer spending and confidence. The Group seeks to mitigate
these risks through careful forecasting and regular monitoring of market conditions and by maximising operating efficiency.
• Customers, particularly in the on-trade where the Group has exposure through advances to customers, may experience financial
difficulties. The Group monitors the level of its exposure carefully.
• Consumer preference may change, new competing brands may be launched and competitors may increase their marketing or change
their pricing policies. The Group has a programme of brand investment and innovation to maintain and enhance the market position of
its products.
• Seasonal fluctuations in demand, especially an unseasonably bad summer in Ireland or the UK, could materially affect demand for the
Group’s cider products. Geographical diversification is helping to mitigate this risk.
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ REPORT - CONTINUED
Risks and uncertainties relating to costs and production
• Input costs may be subject to volatility and inflation and the continuity of supply of raw materials may be affected by the weather and
other factors. The Group seeks to mitigate some of these risks through long term or fixed price supply agreements. The Group does
not seek to hedge its exposure to commodity prices by entering into derivative financial instruments.
• Circumstances such as the loss of a production or storage facility or disruptions to its supply chains or critical IT systems may
interrupt the supply of the Group’s products. The Group seeks to mitigate the operational impact of such an event by the availability of
multiple production facilities, fire safety standards and disaster recovery protocols, and the financial impact of such an event through
business interruption and other insurances.
Financial risks and uncertainties
• There is continued concern surrounding the euro currency. The Group’s operations involve the sale and purchase of goods
denominated in currencies other than the euro, principally pounds sterling and the US dollar. Fluctuations in value between the euro
and these currencies may affect the Group’s revenues and costs. The Group seeks to mitigate currency and interest rate risks, where
appropriate, through hedging and structured financial contracts to hedge a portion of its foreign currency transaction exposure and to
fix a portion of its variable rate interest exposure. The Group has not entered into structured financial contracts to hedge its translation
exposure on its foreign acquisitions.
• The Group’s shares have a primary listing on the Irish Stock Exchange and are denominated in euro and the continued economic crisis
may affect liquidity. The Group keeps its listings under review.
• The solvency of the Group’s defined benefit pension schemes may be affected by a fall in the value of their investments, market and
interest rate volatility and other economic and demographic factors. Each of these factors may require the Group to increase its
contribution levels. The Group seeks to mitigate this risk by continuous monitoring, taking professional advice on the optimisation of
asset returns within agreed acceptable risk tolerances and implementing liability management initiatives such as the reduction in
member contractual benefits approved by the Pensions Board in February 2012.
Fiscal, regulatory and liability-related risks and uncertainties
• The Group may be adversely affected by changes in excise duty or taxation on cider and beer in Ireland, the UK, the US and other
territories.
• The Group may be adversely affected by changes in government regulations affecting alcohol pricing, sponsorship or advertising.
Within the context of supporting responsible drinking initiatives, the Group supports the work of its trade associations to present the
industry’s case to government.
• The Group’s operations are subject to extensive regulation, including stringent environmental, health and safety and food safety laws
and regulations and competition law. Legislative non-compliance or adverse ethical practices could lead to prosecutions and damage
to the reputation of the Group and its brands. The Group has in place a permanent legal and compliance monitoring and training
function and an extensive programme of corporate responsibility.
• The Group is vulnerable to contamination of its products or base raw materials, whether accidental, natural or malicious.
Contamination could result in a recall of the Group’s products, damage to brand image and civil or criminal liability. The Group has
established protocols and procedures for incident management and product recall and mitigates the financial impact by appropriate
insurance cover.
• Fraud, corruption and theft against the Group whether by employees, business partners or third parties are risks, particularly as the
Group develops internationally. The Group maintains appropriate internal controls and procedures to guard against economic crime
and imposes appropriate monitoring and controls on subsidiary management.
Employment-related risks and uncertainties
• The Group’s continued success is dependent on the skills and experience of its executive Directors and other high-performing
personnel, including those in newly acquired businesses, and could be affected by their loss or the inability to recruit or retain
them. The Group seeks to mitigate this risk through appropriate remuneration policies and succession planning.
• Whilst relations with employees are generally good, work stoppages or other industrial action could have a material adverse effect
on the Group. The Group seeks to ensure good employee relations through engagement and dialogue.
FINANCIAL RISK MANAGEMENT
As required by Irish company law (Statutory Instrument 765.2004), the financial risk management objectives and policies of the Company
and the Group, including hedging activities and the exposure of the Company and the Group to financial risk, are set out in the Group
Chief Financial Officer’s Review on pages 26 to 27 and note 23 to the financial statements on pages 120 to 128.
C&C GROUP PLC - 2013 ANNUAL REPORT
4 1
ACCOUNTING RECORDS
The measures taken by the Directors to secure compliance with the requirements of Section 202 of the Companies Act, 1990 with
regard to the keeping of proper books of account are to employ accounting personnel with appropriate expertise and to provide
adequate resources to the finance function. The books of account of the Company are maintained at Group offices in Annerville,
Clonmel, Co. Tipperary.
POLITICAL DONATIONS
No political donations were made by the Group during the year that require disclosure in accordance with the Electoral Acts, 1997 to 2002.
CORPORATE GOVERNANCE
The corporate governance statement of the Company for the year, including the main features of the internal control and risk
management systems of the Group, is contained in the Directors’ Statement on Corporate Governance on pages 44 to 52.
DIRECTORS’ REMUNERATION
The Report of the Remuneration Committee on Directors’ Remuneration is set out on pages 53 to 61. The Board will present this
report to shareholders at the Annual General Meeting for the purposes of a non-binding advisory vote.
SUBSTANTIAL HOLDINGS
As the table below shows all notified shareholdings in excess of 3% of the issued ordinary share capital of the Company as at
28 February 2013 and 15 May 2013.
Standard Life Investments Limited
Franklin Templeton Institutional, LLC
Oppenheimer Funds, Inc. and OFI Institutional Asset
Management, Inc.
Invesco Limited
Prudential plc Group of Companies
Independent Franchise Partners, LLP
F&C Asset Management plc
Fidelity Management and Research
No. of ordinary shares
held at
28 February 2013
% held as at
28 February 2013
19,053,987
17,236,551
20,391,331
15,543,674
13,803,563
13,422,336
13,185,114
-
5.53%
5.01%
5.92%
4.51%
4.01%
3.90%
3.83%
-
No. of ordinary
Shares held at
15 May 2013
20,862,149
20,702,251
20,391,331
15,543,674
13,803,563
13,422,336
13,185,114
10,632,053
% held as at 15
May 2013
6.06%
6.01%
5.92%
4.51%
4.01%
3.90%
3.83%
3.09%
As far as the Company is aware, other than as stated above, no other person or company had at 28 February 2013 or 15 May 2013 an
interest in 3% or more of the share capital of the Company.
SHARE PRICE
The price of the Company’s ordinary shares as quoted on the Irish Stock Exchange at the close of business on 28 February 2013 was
€4.895 (29 February 2012: €3.665). The price of the Company’s ordinary shares ranged between €3.17 and €4.94 during the year.
AUDITOR
In accordance with Section 160(2) of the Companies Act, 1963, the auditor, KPMG, Chartered Accountants, Statutory Audit Firm, will
continue in office.
ISSUE OF SHARES AND PURCHASE OF OWN SHARES
At the Annual General Meeting held on 27 June 2012, the Directors received a general authority to allot shares. A limited authority was
also granted to Directors to allot shares for cash otherwise than in accordance with statutory pre-emption rights. Resolutions will be
proposed at the Annual General Meeting to be held on 3 July 2013 to allot shares to a nominal amount which is equal to approximately
one-third of the issued ordinary share capital of the Company. In addition, a resolution will also be proposed to allow the Directors allot
shares for cash otherwise than in accordance with statutory pre-emption rights up to an aggregate nominal value which is equal to
approximately 5% of the nominal value of the issued share capital of the Company, and in the event of a rights issue. If granted, these
authorities will expire at the conclusion of next year’s Annual General Meeting or 3 October 2014, whichever is the earlier. The Directors
have currently no intention to issue shares pursuant to these authorities except for issues of ordinary shares under the Company’s share
option plans and the Company’s scrip dividend scheme.
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ REPORT - CONTINUED
At the Annual General Meeting held on 27 June 2012 authority was granted to purchase up to 10% of the Company’s Ordinary Shares. No
shares were purchased by the Company in the year under review.
Special resolutions will be proposed at the Annual General Meeting to be held on 3 July 2013 to renew the authority of the Company, or
any of its subsidiaries, to purchase up to 10% of the Company’s Ordinary Shares in issue at the date of the Annual General Meeting and
in relation to the maximum and minimum prices at which treasury shares (effectively shares purchased and not cancelled) may be re-
issued off-market by the Company. If granted, the authorities will expire on the earlier of the date of the Annual General Meeting in 2014
and the date 18 months after the passing of the resolution. The minimum price which may be paid for shares purchased by the Company
shall not be less than the nominal value of the shares and the maximum price will be 105% of the average market price of such shares
over the preceding five days. The Directors will only exercise the power to purchase shares if they consider it to be in the best interests of
the Company and its shareholders.
Options to subscribe for a total of 5,564,563 Ordinary Shares are outstanding, representing 1.62% of the issued ordinary share capital. If
the authority to purchase Ordinary Shares were used in full, the options would represent 1.80% of the issued ordinary share capital.
THE EUROPEAN COMMUNITIES (TAKEOVER BIDS (DIRECTIVE 2004/25/EC))REGULATIONS 2006
Structure of the Company’s share capital
At 15 May 2013 the Company has an issued share capital of 344,331,716 ordinary shares of €0.01 each and an authorised share
capital of 800,000,000 ordinary shares of €0.01 each.
Shares held by the trustee of the C&C Employee Trust, including shares held jointly by it under the terms of the C&C Joint Share
Ownership Plan (further information on which is contained in the Report of the Remuneration Committee on Directors’ Remuneration
on pages 53 to 61), are accounted for as treasury shares. At 28 February 2013 and at the date of this report the C&C Employee Trust
held 8,310,416 ordinary shares of €0.01 each in the capital of the Company. These shares are, however, included in the calculation of
Total Voting Rights for the purposes of Regulation 20 of the Transparency (Directive 2004/109/EC) Regulations 2007.
Details of employee share schemes, and the rights attaching to shares held in these schemes, can be found in note 4 to the Financial
Statements on pages 89 to 94 and the Report of the Remuneration Committee on Directors’ Remuneration on pages 53 to 61. Details of
the rights attaching to shares issued under the Joint Share Ownership Plan are set out in the Report of the Remuneration Committee on
Directors’ Remuneration on pages 53 to 61.
The Company has no securities in issue conferring special rights with regard to control of the Company.
Details of persons with a significant holding of securities in the Company are set out on page 41.
Rights and obligations attaching to the Ordinary Shares
All Ordinary Shares rank pari passu, and the rights attaching to the Ordinary Shares (including as to voting and transfer) are as set
out in the Company’s articles of association (“Articles”). A copy of the Articles may be obtained on request to the Company Secretary.
Holders of Ordinary Shares are entitled to receive duly declared dividends in cash or, when offered, additional Ordinary Shares. In
the event of any surplus arising on the occasion of the liquidation of the Company, shareholders would be entitled to a share in that
surplus pro rata to their holdings of Ordinary Shares.
Holders of Ordinary Shares are entitled to receive notice of and to attend, speak and vote in person or by proxy, at general meetings
having, on a show of hands, one vote, and, on a poll, one vote for each Ordinary Share held. Procedures and deadlines for entitlement
to exercise, and exercise of, voting rights are specified in the notice convening the general meeting in question. There are no
restrictions on voting rights except in the circumstances where a “Specified Event” (as defined in the Articles) shall have occurred
and the Directors have served a Restriction Notice on the shareholder. Upon the service of such Restriction Notice, no holder of
the shares specified in the notice shall, for so long as such notice shall remain in force, be entitled to attend or vote at any general
meeting, either personally or by proxy.
Holding and transfer of Ordinary Shares
The Ordinary Shares may be held in either certificated or uncertificated form (through CREST). Save as set out below, there is no
requirement to obtain the approval of the Company, or of other shareholders, for a transfer of Ordinary Shares. The Directors may
decline to register (a) any transfer of a partly-paid share to a person of whom they do not approve, (b) any transfer of a share to
more than four joint holders, and (c) any transfer of a certificated share unless accompanied by the share certificate and such other
evidence of title as may reasonably be required. The registration of transfers of shares may be suspended at such times and for such
periods (not exceeding 30 days in each year) as the Directors may determine.
C&C GROUP PLC - 2013 ANNUAL REPORT
4 3
Transfer instruments for certificated shares are executed by or on behalf of the transferor and, in cases where the share is not
fully paid, by or on behalf of the transferee. Transfers of uncertificated shares may be effected by means of a relevant system in the
manner provided for in the Companies Act, 1990 (Uncertificated Securities) Regulations, 1996 (the “CREST Regulations”) and the
rules of the relevant system. The Directors may refuse to register a transfer of uncertificated shares only in such circumstances as
may be permitted or required by the CREST Regulations.
Rules concerning the appointment and replacement of the Directors and amendment of the Company’s Articles
Unless otherwise determined by ordinary resolution of the Company, the number of Directors shall not be less than two or more than
14. Subject to that limit, the shareholders in general meeting may appoint any person to be a Director either to fill a vacancy or as
an additional Director. The Directors also have the power to co-opt additional persons as Directors, but any Director so co-opted is
under the Articles required to be submitted to shareholders for re-election at the first annual general meeting following his or her
co-option.
The Articles require that at each annual general meeting of the Company one-third of the Directors retire by rotation. However, in
accordance with the recommendations of the UK Corporate Governance Code, the Directors have resolved they will all retire and
submit themselves for re-election by the shareholders at the Annual General Meeting to be held this year.
The Company’s Articles may be amended by special resolution (75% majority of votes cast) passed at general meeting.
Powers of Directors
Under its Articles, the business of the Company shall be managed by the Directors, who exercise all powers of the Company as are
not, by the Companies Acts or the Articles, required to be exercised by the Company in general meeting.
The powers of Directors in relation to issuing or buying back by the Company of its shares are set out above under “Issue of Shares
and Purchase of Own Shares”.
Miscellaneous
Pursuant to the terms of subscription agreements entered into with Bret Williams and Dan Rowell for the subscription of a total
of 1,422,099 ordinary shares in the Company following the acquisition by the Company of Vermont Hard Cider Company, LLC, each
subscriber undertook not to dispose of the subscribed shares until 7 July 2013. Save as aforesaid, there are no agreements between
shareholders that are known to the Company which may result in restrictions on the transfer of securities or voting rights.
Certain of the Group’s borrowing facilities include provisions that, in the event of a change of control of the Company, could oblige
the Group to repay the facilities. Certain of the Company’s customer and supplier contracts and joint venture arrangements also
contain provisions that would allow the counterparty to terminate the agreement in the event of a change of control of the Company,
but none of these are considered to be significant in terms of their potential impact on the business of the Group as a whole. The
Company’s Executive Share Option Scheme and Long Term Incentive Plan each contain change of control provisions which allow for
the acceleration of the exercise of share options/awards in the event of a change of control of the Company.
There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid.
ANNUAL GENERAL MEETING
Your attention is drawn to the letter to shareholders and the notice of meeting accompanying this report which set out details of the
matters which will be considered at the Annual General Meeting.
Signed
On behalf of the Board
Sir Brian Stewart
Chairman
Stephen Glancey
Group Chief Executive Officer
15 May 2013
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ STATEMENT OF CORPORATE GOVERNANCE
C&C Group plc is incorporated and resident in Ireland and is subject to Irish company law. It has a primary listing on the Irish Stock
Exchange (‘ISE’) and a secondary listing on the London Stock Exchange. C&C Group plc also has a Level 1 American Depository
Receipt (ADR) programme.
The Directors are committed to maintaining the highest standards of corporate governance. The Listing Rules of the ISE require
every company listed on the Main Securities Market of the ISE to state in its annual report how the principles of the UK Corporate
Governance Code published by the Financial Reporting Council (the ‘UK Code’) have been applied and whether the company has
complied with all relevant provisions of the UK Code and the Irish Corporate Governance Annex (the ‘Irish Annex’), which implements
additional requirements for companies (such as C&C Group) with a primary equity listing on the Main Securities Market of the ISE.
Where companies diverge from the provisions of the UK Code or the Irish Annex, the ISE expects them to include explanations that
provide a rationale for the divergence. The text of the UK Code and the Irish Annex can be found on the ISE’s website: www.ise.ie. This
Corporate Governance statement describes how the Group applied the principles of the UK Code (June 2010 edition) and the Irish
Annex throughout the financial year ended 28 February 2013.
BOARD OF DIRECTORS
Role
The Board is responsible for the oversight, leadership and control of the Group and its long-term success. There is a formal schedule
of matters reserved to the Board for decision. This includes approval of Group strategic plans, annual budgets, financial statements,
significant capital expenditure items, major acquisitions and disposals, changes to capital structure, Board appointments, and the
review of the Group’s corporate governance arrangements and system of internal control. The Board is also responsible for instilling
the appropriate culture, values and behaviour throughout the Group.
The roles of the Chairman and the Group Chief Executive Officer are separate with a clear division of responsibility between them,
which is set out in writing and which has been approved by the Board. The Board delegates responsibility for the management of the
Group through the Group Chief Executive Officer to executive management. The Board also delegates some of its responsibilities to
Board Committees, details of which are set out below. The responsibilities of the Chairman are covered in detail on page 45.
The Group Chief Executive Officer has full day-to-day operational and profit responsibility for the Group and is accountable to the
Board for all authority delegated to executive management. His overall brief is to execute agreed strategy, to co-ordinate and
maintain the continued profitability of the Group and to oversee senior management responsible for the day-to-day running of the
business.
Non-executive Directors are expected to constructively challenge management proposals and to examine and review management
performance in meeting agreed objectives and targets. In addition, they are expected to draw on their experience and knowledge in
respect of any challenges facing the Group and in relation to the development of proposals on strategy.
Individual Directors may seek independent professional advice at the Company’s expense, where they judge it necessary to discharge
their responsibilities as Directors.
The Group has a policy in place which indemnifies the Directors in respect of certain legal actions taken against them.
Board Composition, Membership and Renewal
The Board considers that, between them, the Directors bring a range of skills, knowledge and experience so as to provide leadership,
control and oversight of the Group and discharge their responsibility to all shareholders. The biographical details of the continuing
directors are set out on pages 36 and 37. The Company’s Articles of Association require that the number of Directors shall be not
less than two and not more than 14. The Board regards the number of non-executive Directors currently appointed to the Board
as sufficient to ensure satisfactory oversight of the Group’s management and to enable its Committees to operate without undue
reliance on individual non-executive Directors. As set out below the Board has an ongoing programme for Board refreshment and
renewal, recognising the need for independence and diversity, including gender diversity, on the Board. The Board is, through
the Nomination Committee, committed to achieving a greater level of gender diversity on the Board over time and recognises the
importance and benefit of gender diversity throughout the Group.
At 28 February 2013, the Board comprised of ten Directors, of whom three were executive and seven non-executive Directors
(including the Chairman). On 14 May 2013 John Burgess resigned as a Director.
Board Independence
In line with the UK Code, it is Board policy that at least half the Board, excluding the Chairman, shall consist of independent non-
executive Directors. The Board has reviewed the composition of the Board and has determined that of the Directors as at 28 February
2013, John Burgess, John Hogan, Richard Holroyd, Breege O’Donoghue, Stewart Gilliland and Anthony Smurfit, were independent.
Consequently, as at 28 February 2013, excluding the Chairman, 66% of the C&C Group Board comprised of independent, non-executive
Directors. As of the date of this report, excluding the Chairman, 62% of the Board comprised of independent, non-executive Directors.
C&C GROUP PLC - 2013 ANNUAL REPORT
4 5
The independence of Board members is considered annually. In determining the independence of non-executive Directors, the Board
considered the principles relating to independence contained in the UK Code and the guidance provided by a number of shareholder
voting agencies. Those principles and guidance address a number of factors that might appear to affect the independence of
Directors, including former service as an executive of the Group, extended service to the Board and cross-directorships. However,
they also make clear that a Director may be considered independent notwithstanding the presence of one or more of these factors.
This reflects the Board’s view that independence is determined by a Director’s character and judgement. The Board considers that
each of the non-executive Directors brings independent judgement to bear. In the case of Richard Holroyd, Breege O’Donoghue and
John Hogan, the Board has considered their length of service but is satisfied that their independence is not compromised. As part of
this assessment, the Board considers that, while each of them has served on the Board of the Company since 2004, none of them has
served for more than nine years concurrently with the same executive Directors. The Board has also noted that Anthony Smurfit is a
shareholder and director of Smurfit Kappa Group plc, which provides packaging materials to the Group on normal commercial terms,
and is satisfied that his independence is not compromised. In the case of Sir Brian Stewart, the Board was satisfied that he was
independent on his appointment as referred to below.
Chairman
Sir Brian Stewart has been Chairman of the Group since August 2010. The Chairman is responsible for the efficient and effective
working of the Board. He is responsible for ensuring that the Board considers the key strategic issues facing the Group and that
the Directors receive accurate, timely, relevant and clear information. He also ensures that there is effective communication with
shareholders and that the Board is apprised of the views of the Group’s shareholders. While the Board has determined that Sir Brian
Stewart was independent on appointment to the Board, it recognises that previous working relationships with the Group’s senior
executives is a consideration in determining independence as set out by the UK Code and by some shareholder voting agencies.
Consequently, while the Board was satisfied as to Sir Brian’s independence, he stepped down from his position as a member of
the Remuneration Committee on his appointment as Chairman. During the period under review there was no change in the other
significant commitments of the Chairman.
Senior Independent Director
Richard Holroyd was appointed Senior Independent Director in July 2007. He is available to shareholders who have concerns for
which contact through the normal channels of Chairman, Group Chief Executive Officer or Group Chief Financial Officer, has failed to
resolve or for which such contact is inappropriate. He is also available to meet major shareholders on request.
Audit Committee Financial Expert
The Audit Committee has determined that John Hogan, who also chairs the Committee, is the Audit Committee financial expert. He
is a qualified chartered accountant and was the managing partner of Ernst & Young in Ireland between 1994 and 2000. He was also a
member of the Ernst & Young global board.
Company Secretary
Paul Walker is the Company Secretary. All Directors have access to the Company Secretary, who is responsible to the Board for ensuring
that Board procedures are complied with. The appointment and removal of the Company Secretary is a matter for the Board.
Appointment, Retirement and Re-election
The non-executive Directors are engaged under the terms of letters of appointment, details of which are set out in the Report of
the Remuneration Committee on Directors’ Remuneration. Copies of the letters of appointment are available on request from the
Company Secretary.
The Company’s Articles of Association require that at least one-third of the Directors subject to rotation shall retire by rotation at the
Annual General Meeting in every year. Directors appointed by the Board must also submit themselves for election at the first annual
general meeting following their appointment. However, in accordance with the recommendations of the UK Code, the Directors have
resolved that they will all retire and submit themselves for re-election by the shareholders at the Annual General Meeting this year.
Induction and Development
A comprehensive tailored induction programme is arranged for each new Director. The aim of the programme is to provide the Director
with a detailed insight into the Group. The programme involves meeting with the Chairman, Group Chief Executive Officer, Group
Chief Financial Officer, Company Secretary and key senior executives. It covers areas such as strategy and development, organisation
structure, succession planning, financing, corporate responsibility and compliance, investor relations and risk management. The Board
receives regular updates from the external legal and other advisers in relation to regulatory and accounting developments. Throughout
the year, Directors meet with key executives and meet with local management teams, and a site visit for all Board Directors, to one of
the Group’s production facilities, is usually scheduled annually.
Newly-appointed members of the Audit Committee will meet with the key members of the external audit, internal audit and finance
teams. New members of the Remuneration Committee will meet with the Committee’s remuneration consultants in the year of their
appointment to the Committee.
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ STATEMENT OF CORPORATE GOVERNANCE- CONTINUED
External non-executive directorships
The Board recognises that there can be benefit if executive Directors accept a non-executive directorship with other companies
to broaden their skills, knowledge and experience. Joris Brams is currently a non-executive director at Democo NV, a Belgian
construction company. Apart from him, currently none of the executive Directors has such an appointment. The Remuneration
Committee determines whether Directors should be permitted to retain any fees paid in respect of such appointments. The
Remuneration Committee has determined that Joris Brams is permitted to retain fees from his appointment.
Meetings
It is Board practice to meet not less than nine times a year. The Board will also meet at other times as it considers appropriate. The
Board usually makes at least one visit a year to one of the operating subsidiaries. During the period under review there were eleven
scheduled meetings of the Board. Details of Directors’ attendance at these scheduled meetings are set out in the table on page 49.
Further meetings took place throughout the year. In addition, a meeting of members of the Board was held without the executive
Directors present to provide an opportunity for non-executive Directors and the Chairman to assess their performance, and a further
meeting of the non-executive Directors led by the Senior Independent Director was held without the Chairman being present to
assess the Chairman’s performance.
The Chairman sets the agenda for each meeting in consultation with the Group Chief Executive Officer and the Company Secretary.
The agenda and Board papers, which provide the Directors with relevant information to enable them to fully consider the agenda
items in advance, are circulated prior to each meeting. Directors are encouraged to participate in debate and constructive challenge.
While Directors are expected to attend all scheduled meetings, in the event a Director is unable to attend a meeting, his or her view
on all agenda items is sought and conveyed to the Chairman in advance of the meeting. In addition, following the meeting, matters
discussed and decisions made at the meeting are conveyed to the Director.
Performance evaluation
The Board recognises the importance of a formal and rigorous evaluation of the performance of the Board and its Committees. The
Chairman conducts an annual review of corporate governance and the operation and performance of the Board and its Committees.
In the year under review the Chairman has reviewed the performance of individual Directors and, within the remit of the Nomination
Committee, succession planning, identifying in this process the experience and qualities required by the Group for the future
implementation of its strategy.
The Chairman conducts one to one discussions each year with each Director to assess his or her individual performance.
Performance is assessed against a number of criteria, including his or her contribution to Board and Committee meetings; time
commitments; contribution to strategic developments; and relationships with other Directors and management.
The Senior Independent Director and the other non-executive Directors review the Chairman’s performance and the Board’s
performance each year, the results being reported back to the Chairman with recommendations for improvement.
The Board also recognises the need for periodic external evaluation and the UK Code’s recommendation that such reviews be
externally facilitated at least every three years. The Group intends to progress a formal policy and process for external evaluation
including the involvement of an external facilitator.
Remuneration
Details of remuneration paid to Directors (executive and non-executive) are set out in the Report of the Remuneration Committee on
Directors’ Remuneration on pages 53 to 61.
Non-executive Directors are remunerated by way of a Director’s fee. Additional fees are also payable to the Chairman of the Audit
Committee, Chairman of the Remuneration Committee and to the Senior Independent Director. Non-executive Directors’ fees and
additional fees payable to Committee Chairman and the Senior Independent Director have not been increased since 2008.
It is Board policy that non-executive Director remuneration does not comprise any performance-related element and, therefore,
non-executive Directors are not eligible to participate in the Group’s bonus schemes, option plans or share award schemes. Non-
executive Directors’ fees are not pensionable and non-executive Directors are not eligible to join any Group pension plans. Executive
Directors’ remuneration is inclusive of any Director’s fee.
The current limit under the Articles on Directors’ ordinary remuneration (i.e. directors’ fees, not including executive remuneration) is
€750,000. A resolution will be proposed at the 2013 Annual General Meeting to fix the annual ceiling at €1,000,000.
The report of the Remuneration Committee on Directors’ Remuneration will be presented to shareholders for the purposes of a
non-binding advisory vote at the Annual General Meeting on 3 July 2013. While there is no legal obligation for the Group to put such a
resolution to a vote of shareholders at the Annual General Meeting, the Board believes that such a resolution is good practice.
C&C GROUP PLC - 2013 ANNUAL REPORT
4 7
Share ownership and dealing
Details of Directors’ shareholdings are set out on page 60.
The Group has a policy on dealing in shares that applies to all Directors and senior management. This policy adopts the terms of
the Model Code as set out in the Listing Rules published by the UK Listing Authority and the Irish Stock Exchange. Under this policy,
Directors are required to obtain clearance from the Chairman (or in the case of the Chairman himself, from the Senior Independent
Director) before dealing. Directors and senior management are prohibited from dealing in the Company’s shares during designated
close periods and at any other time when the individual is in possession of Inside Information (as defined by the Market Abuse
(Directive 2003/6/EC) Regulations 2005).
COMMITTEES
The Board has established three permanent committees to assist in the execution of its responsibilities. These are the Audit
Committee, the Nomination Committee and the Remuneration Committee. The current membership of each committee is set out on
page 36. Attendance at meetings held is set out in the table on page 49. Ad-hoc committees are formed from time to time to deal with
specific matters.
Each of the permanent Board Committees has terms of reference under which authority is delegated to them by the Board. These
terms of reference are available on the Company’s website www.candcgroupplc.com. Minutes of all Committee meetings are
circulated to the entire Board.
The Chairman of each committee attends the Annual General Meeting and is available to answer questions from shareholders.
Audit Committee
The Audit Committee comprises only independent, non-executive Directors. The members during the year were John Hogan
(Chairman), Richard Holroyd and Anthony Smurfit (appointed 17 April 2012).
As set out on page 45, the Audit Committee has determined that John Hogan, who also chairs the Committee, is the Audit Committee
financial expert.
It meets a minimum of four times a year. During the period under review it met nine times. Attendance at meetings held is set out in
the table on page 49.
The Group Chief Financial Officer attends Audit Committee meetings as appropriate, while the internal auditor and the external
auditor attend as required and have direct access to the Audit Committee Chairman. The acting Head of Finance is the secretary of
the Audit Committee.
The Audit Committee’s responsibilities include:
• monitoring the integrity, truth and fairness of the financial statements of the Group, including the annual report, interim
report, interim management statements, preliminary results and other formal announcements relating to the Group’s financial
performance;
• reviewing the adequacy and effectiveness of the Group’s internal financial controls and risk management systems;
• reviewing the effectiveness of the Group’s internal audit function;
• reviewing the adequacy and security of the Group’s arrangements for its employees raising concerns, its procedures for detecting
fraud and the Group’s systems and controls for the prevention of bribery;
• making recommendations to the Board in relation to the appointment and removal of the Group’s external auditor;
• evaluating the performance of the external auditor including their independence and objectivity;
• reviewing the annual internal and external audit plans and reviewing the effectiveness and findings of the external audit with the
external auditor;
• ensuring compliance with the Group’s policy on the provision of non-audit services by the external auditor.
The Audit Committee discharged its obligations during the year as follows:
• the Audit Committee reviewed the preliminary results announcement and the annual report and financial statements for the year ended
29 February 2012
• In particular the Committee addressed the going concern status of the Company and the matters referred to in the Financial Review
contained in the 2012 annual report: it reviewed the post-audit report from the external auditor identifying any accounting or judgemental
issues requiring its attention and noted that no significant issues had arisen;
• the Audit Committee reviewed the Financial Report for the six months ended 31 August 2012 prior to its release in October 2012;
• the Audit Committee reviewed the Interim Management Statements issued in June 2012 and January 2013;
• the Audit Committee considered whether or not to recommend the re-appointment of the external auditor;
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ STATEMENT OF CORPORATE GOVERNANCE- CONTINUED
• the Audit Committee reviewed the external audit plan presented by the external auditor in advance of the audit for the year ended
28 February 2013; in particular, it considered the accounting treatment of acquisitions and joint ventures and the categorisation of
exceptional items and other matters referred to in the Financial Review set out on pages 22 to 27.
• the Audit Committee approved the annual internal audit plan and received and reviewed internal audit reports including the annual
assessment of internal control and other work described below;
• the Audit Committee received an internal review of the pension schemes and reviewed the audited statements of the pension schemes;
The terms of reference of the Audit Committee require it to conduct an annual assessment of internal control. The risks facing the Group
are reviewed regularly by the Audit Committee with the executive management. Specific annual reviews of the risks and fundamental
controls of each business unit are undertaken on an ongoing basis, the results and recommendations of which are reported to and analysed
by the Audit Committee with a programme for action agreed by the business units.
Accordingly through the process outlined above, the Board confirms that it has conducted a review of the internal control systems in
operation.
The Group’s internal auditor reports to the Audit Committee and the Audit Committee has approved his terms of reference. He is engaged
on a programme of work, which includes, inter alia, maintaining the Group’s risk register, examining the fundamental controls of the Group
and assessing anti-bribery and corruption risk and business continuity risk.
The Group has a policy in place governing the conduct of non-audit work by the external auditor. Under this policy the auditor is prohibited
from performing services where the auditor:
• may be required to audit his/her own work;
• would participate in activities that would normally be undertaken by management;
• is remunerated through a “success fee” structure;
• acts in an advocacy role for the Group.
Other than the above, the Group does not impose an automatic ban on the external auditor undertaking non-audit work. The external
auditor is permitted to provide non-audit services that are not, or are not perceived to be, in conflict with auditor independence, provided
it has the skill, competence and integrity to carry out the work and is considered by the Audit Committee to be the most appropriate to
undertake such work in the best interests of the Group. The engagement of the external auditor in non-audit work must be pre-approved by
the Audit Committee or entered into pursuant to pre-approved policies and procedures established by the Audit Committee.
Details of the amounts paid to the external auditor during the year for audit and other services are set out in note 2 to the financial statements on
page 88. The Audit Committee has adopted a policy that except in exceptional circumstances with the prior approval of the Audit Committee non-
audit fees paid to the Group’s Auditor should be capped at a maximum of 100% of audit fees in any one year. During the year the Audit Committee
gave approval to the auditor providing non-audit advisory services principally in relation to tax.
Nomination Committee
The Nomination Committee is chaired by the Group Chairman and its constitution requires it to consist of a majority of independent, non-
executive Directors. The members during the year were Sir Brian Stewart (Chairman), John Burgess, Philip Lynch (resigned 30 November
2012) and Breege O’Donoghue. Richard Holroyd joined the Committee 14 May 2013 following the resignation of John Burgess on that day.
It meets a minimum of twice a year and met three times in the period under review. Attendance at meetings held is set out in the table on
page 49.
The Nomination Committee’s responsibilities include:
• reviewing the structure, size and composition (including the skills, knowledge and experience) required of the Board and making
recommendations regarding any changes in order to ensure that the composition of the Board and its Committees is appropriate to the
Group’s needs;
• overseeing succession planning for the Board and senior management and the leadership needs of the organisation;
• establishing processes for the identification of suitable candidates for appointment to the Board;
• making recommendations to the Board on membership of Board Committees.
The Nomination Committee is empowered to use the services of independent consultants to facilitate the search for suitable candidates
for appointment as non-executive Directors. In respect of the non-executive directors appointed in FY2013, Stewart Gilliland was recruited
through an external consultancy and Anthony Smurfit was recruited through business associates. Both of them had significant relevant
industry experience and in Mr. Smurfit’s case, international experience.
During the period under review the Nomination Committee met three times. The Nomination Committee considered:
C&C GROUP PLC - 2013 ANNUAL REPORT
4 9
• immediate succession requirements for non-executive directors. It finalised the appointments of two new independent, non-executive
Directors, Stewart Gilliland and Anthony Smurfit. Stewart Gilliland was appointed a member of the Remuneration Committee and
Anthony Smurfit was appointed a member of the Audit Committee.
• longer-term succession planning for non-executive directors recognising the need for ongoing Board refreshment and renewal and the
need for independence and diversity on the Board.
• immediate succession requirements for executive directors. The Nomination Committee approved the appointment of Joris Brams,
managing director of the International division, to the Board.
• the appointment of senior managers including the appointment of a Head of Corporate Affairs.
Remuneration Committee
The Remuneration Committee comprises solely of independent, non-executive Directors. The Chairman was Philip Lynch (resigned
30 November 2012) and, subsequently, Breege O’Donoghue. Other members were Richard Holroyd and Stewart Gilliland (appointed
17 April 2012).
The Remuneration Committee meets at least twice a year. During the period under review the Remuneration Committee met seven times.
Attendance at meetings held is set out in the table below.
The Remuneration Committee’s responsibilities include:
• making recommendations to the Board on the Group’s policy for executive remuneration;
• determining the remuneration of the Chairman, the executive Directors, the Company Secretary and senior management;
• monitoring the level and structure of remuneration for senior management and trends across the Group;
• approving the design and targets of any performance-related pay schemes and the total annual payments made under such schemes;
• reviewing the design of all share incentive plans;
• approving any grant of options or awards under the Executive Share Option Scheme, the Long Term Incentive Plan (Part I), the Joint Share
Ownership Plan and other share plans;
• overseeing any major changes in employee benefits structures throughout the Group;
• overseeing the preparation of the Report of the Remuneration Committee on Directors’ Remuneration.
During the year under review the Remuneration Committee considered
• the determination of whether performance conditions under share schemes and bonus schemes were achieved;
• the granting of share options under the C&C Executive Share Option Scheme;
• the granting of awards under the C&C Long Term Incentive Plan (Part I);
• the granting of awards and potential awards under the C&C Long Term Incentive Plan (Part II);
• the granting of awards under the C&C Recruitment and Retention Plan;
• the granting of shadow awards;
• amendments to the rules of the Long Term Incentive Plan I, the Approved Profit Sharing Scheme and Joint Share Ownership Plan;
• the remuneration of the managing director of the International division and the US managing director and other members of senior
management.
ATTENDANCE AT MEETINGS
Attendance at Board meetings and Board committee meetings during the year was as follows:
Scheduled Board
Meetings
Short Notice Board
Meeting
Audit Committee
Meetings
Nomination
Committee
Meetings
Remuneration
Committee
Meetings
Sir Brian Stewart
Joris Brams
John Burgess
Stewart Gilliland
Stephen Glancey
John Hogan
Richard Holroyd
Philip Lynch
Kenny Neison
Breege O’Donoghue
Anthony Smurfit
10/10
4/4
7/10
9/9
9/10
10/10
10/10
7/8
10/10
10/10
9/9
1/1
1/1
1/1
0/1
1/1
1/1
1/1
1/1
1/1
1/1
1/1
9/9
9/9
9/9
3/3
2/3
3/3
3/3
5/5
7/7
6/6
1/1
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ STATEMENT OF CORPORATE GOVERNANCE- CONTINUED
In the above table the numerator in each fraction represents the number of meetings actually attended by each Director in respect of the
Board and each Board committee of which he or she was a member, whilst the denominator represents the number of such meetings
that the Director was scheduled to attend.
In addition, the non-executive Directors including the Chairman met to evaluate the performance of the executive Directors, and the
non-executive Directors, led by the Senior Independent Director, without the Chairman present, met to evaluate the performance of the
Chairman. Several ad hoc meetings were held during the year for share allotment and other administrative matters in accordance with
the Board’s procedures.
COMMUNICATIONS WITH SHAREHOLDERS
The Group attaches considerable importance to shareholder communications and has an established investor relations programme.
There is regular dialogue with institutional investors with presentations given to investors at the time of the release of the Group’s
first half and full year financial results and when other significant announcements are made. Interim Management Statements were
issued in June 2012 and January 2013. The Board is briefed regularly on the views and concerns of institutional shareholders.
An investor day for major shareholders was held in November 2012 at the Shepton Mallet cider mill, including presentations by
management and a tour of the cider mill.
The Group’s website, www.candcgroupplc.com, provides the full text of the Annual Report and financial statements, the interim
report and other releases. News releases are also made available immediately after release to the Stock Exchange. Presentations
given to investors and at conferences are also made available on the Company’s website.
General Meetings
The Company operates under the Companies Acts 1963 to 2012. These Acts provide for two types of shareholder meetings: the
annual general meeting (‘AGM’) with all other meetings being called extraordinary general meetings (‘EGM’).
The Company must hold a general meeting in each year as its AGM in addition to any other general meetings held in that year. Not
more than 15 months may elapse between the date of one AGM and the next. An AGM was held on 27 June 2012, and this year’s AGM
will be held on 3 July 2013. The Directors may at any time call an EGM. EGMs shall also be convened on the requisition of members
holding not less than five per cent of the voting share capital of the Company.
The notice period for an AGM and an EGM to consider any special resolution (a resolution which requires a 75% majority vote, not
a simple majority) is 21 days. The Company may call any other general meeting on 14 days’ notice subject to obtaining shareholder
authority to do so. The Directors consider that it is in the interests of the Company to retain this flexibility, and intend to seek annually
such authority. As a matter of policy, the 14 day notice period will only be utilised where the Directors believe that it is merited by the
business of the meeting and the circumstances surrounding the business in question.
In accordance with UK Code recommendations, the annual report and the notice of annual general meeting are sent to shareholders
at least 20 working days before the AGM.
No business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to
business. Three members present in person or by proxy and entitled to vote shall be a quorum.
Only those shareholders registered on the Company’s register of members at the prescribed record date, being a date not more than
48 hours before the general meeting to which it relates, are entitled to attend and vote at a general meeting.
The Acts require that resolutions of the general meeting be passed by the majority of votes cast (ordinary resolution) unless the
Acts or the Company’s Articles of Association provide for 75% majority of votes cast (special resolution). The Company’s Articles of
Association provide that the Chairman has a casting vote in the event of a tie.
Any shareholder who is entitled to attend, speak and vote at a general meeting is entitled to appoint a proxy to attend, speak and vote
on his behalf. A proxy need not be a member of the Company.
At meetings, unless a poll is demanded, all resolutions are determined on a show of hands, with every shareholder who is present
in person or by proxy having one vote. On a poll every shareholder who is present in person or by proxy shall have one vote for each
share of which he/she is the holder. A shareholder need not cast all votes in the same way. At the meeting, after each resolution has
been dealt with, details are given of the level of proxy votes lodged for and against that resolution and also the level of votes withheld
on that resolution.
C&C GROUP PLC - 2013 ANNUAL REPORT
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The Company’s AGM gives shareholders the opportunity to question the Directors. The Company must answer any question a
member asks relating to the business being dealt with at the meeting unless answering the question would interfere unduly with the
preparation for the general meeting or the confidentiality and business interests of the Company, or the answer has already been
given on a website in the form of an answer to a question, or it appears to the Chairman of the meeting that it is undesirable in the
interests of good order of the meeting that the question be answered.
The business of the Company is managed by the Directors who may exercise all the powers of the Company unless they are required
to be exercised by the Company in general meeting. Matters reserved to shareholders in general meeting include the election of
directors; the payment of dividends; the appointment of the external auditor; amendments to the articles of association; measures to
increase or reduce the share capital; and the authority to issue shares.
MEMORANDUM AND ARTICLES OF ASSOCIATION
The Company’s Memorandum of Association sets out the objects and powers of the Company. The Articles of Association detail the
rights attaching to each share class; the method by which the Company’s shares can be purchased or reissued; the provisions which
apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retirement,
re-election, duties and powers. Any amendment of the Company’s Articles of Association requires the passing of a special resolution.
Further details in relation to the purchase of the Company’s own shares are included in the Directors’ Report.
CORPORATE RESPONSIBILITY
As part of its overall remit of ensuring that effective risk management policies and systems are in place, the Board examines the
significance of environmental, social and governance (ESG) matters to the Group’s business and it has ensured that the Group has in
place effective systems for managing and mitigating ESG risks. It also examines the impact that such risks may have on the Group’s
short and long-term value, as well as the opportunities that ESG issues present to enhance value. The Board receives the necessary
information to make this assessment in regular reports from the executive management.
Corporate responsibility is embedded throughout the Group. Group policies and activities are summarised on pages 28 to 35 and the
Group’s corporate responsibility report is available on the Group’s website www.candcgroupplc.com.
INTERNAL CONTROL
The Board has overall responsibility for the Group’s system of internal control, for reviewing its effectiveness and for confirming that
there is a process for identifying, evaluating and managing the significant risks affecting the achievement of the Group’s strategic
objectives. The process which has been in place for the entire period accords with the Turnbull Guidance (revised guidance published
in October 2005) and involves the Board considering the following:
• the nature and extent of the key risks facing the Group;
• the likelihood of these risks occurring;
• the impact on the Group should these risks occur;
• the actions being taken to manage these risks to the desired level.
The key elements of the internal control system in operation are as follows:
• clearly defined organisation structures and lines of authority;
• corporate policies for financial reporting, treasury and financial risk management, information technology and security, project
appraisal and corporate governance;
• annual budgets for all operating units, identifying key risks and opportunities;
• monitoring of performance against budgets on a weekly basis and reporting thereon to the Board on a periodic basis;
• an internal audit function which reviews key business processes and controls; and
• an audit committee which approves plans and deals with significant control issues raised by internal or external audit.
This system of internal control can only provide reasonable, and not absolute, assurance against material misstatement or loss.
The terms of reference of the Audit Committee require it to review the adequacy and effectiveness of the Group’s internal financial
controls and risk management systems. The risks facing the Group are reviewed regularly by the Audit Committee with the executive
management. Specific annual reviews of the risks and fundamental controls of each business unit are undertaken on an ongoing
basis, the results and recommendations of which are reported to and analysed by the Audit Committee with a programme for action
agreed by the business units.
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C&C GROUP PLC - 2013 ANNUAL REPORT
DIRECTORS’ STATEMENT OF CORPORATE GOVERNANCE- CONTINUED
The preparation and issue of financial reports, including consolidated annual financial statements is managed by Group Finance with
oversight from the Audit Committee. The key features of the Group’s internal control procedures with regard to the preparation of
consolidated financial statements are as follows:
• the review of each operating division’s period end reporting package by the Group finance function;
• the oversight, review and validation of consolidation journals by the Group Chief Financial Officer;
• the challenge and review of the financial results of each operating division with the management of that division by the Group Chief
Financial Officer;
• the review of any internal control weaknesses highlighted by the external auditor, by the Group Chief Financial Officer, Head of
Internal Audit and the Audit Committee; and the follow up of any critical weaknesses to ensure issues highlighted are addressed.
The Directors confirm that, in addition to the monitoring carried out by the Audit Committee under its terms of reference, they have
reviewed the effectiveness of the Group’s risk management and internal control systems up to and including the date of approval of
the financial statements. This had regard to all material controls, including financial, operational and compliance controls that could
affect the Group’s business. The Directors considered the outcome of this review and found the systems satisfactory.
GOING CONCERN
The principal risks and uncertainties facing the Group are set out in this report on pages 39 and 40. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities are set out in the Group Chief Financial Officer’s Review on pages 22
to 27. A description of the business of the Group is set out in the Group Chief Executive Officer’s Review and the Operations Review on
pages 8 to 21.
An explanation of the basis on which the Group generates and preserves value over the longer term (the business model) and
the strategy for delivering its objectives are set out in the Group Chief Executive Officer’s review on pages 8 to 11. A statement of
the Group’s strategy is set out on pages 8 to 11. The Group’s long term strategy is to build a sustainable cider-led multi-beverage
business through a combination of organic growth and selective acquisitions. The Group’s business model seeks growth through
brand/market combination combining brand investment with a focus on local markets.
The Group has significant revenues, a large number of customers and suppliers across different geographies, and considerable
financial resources. For these reasons, the Directors have a reasonable expectation that the Company, and the Group as a whole,
have adequate resources to continue in operational existence for the foreseeable future. Consequently they continue to adopt the
going concern basis in preparing the financial statements.
COMPLIANCE STATEMENT
The Group has complied with the provisions of the UK Code and Irish Annex throughout the period under review.
REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION
C&C GROUP PLC - 2013 ANNUAL REPORT
5 3
BASIS OF REPORT
The following pages set out the Board’s remuneration policy as it applies to the executive Directors. In accordance with the UK
Corporate Governance Code (whilst this is not a legal requirement) the Directors are proposing at the 2013 Annual General Meeting
an advisory non-binding vote to receive and consider this report of the Remuneration Committee on Directors’ Remuneration.
COMPOSITION
The Remuneration Committee of the Board consists solely of independent non-executive Directors.
During the year ended 28 February 2013 the Chairman of the Committee was Philip Lynch (resigned 30 November 2102) and Breege
O’Donoghue (appointed 13 December 2012). Other members of the Committee were Richard Holroyd and Stewart Gilliland (joined the
Committee on 17 April 2012).
ADVICE AND CONSULTATION
The Chairman of the Board and the Group Chief Executive Officer are fully consulted on remuneration proposals but neither is
present when his own remuneration is discussed. The Remuneration Committee has access to external advice from remuneration
consultants and other independent firms on compensation when necessary. During the year ended 28 February 2013 the Committee
obtained advice from Towers Watson in respect of the remuneration of a new executive Director and from New Bridge Street (an
Aon Hewitt business, part of Aon plc) in respect of the Group’s employee share schemes and other matters. A separate division
of Towers Watson has advised the trustees of the Group’s defined benefit schemes but the Committee was satisfied that this did
not compromise their independence. Apart from that, neither of the consultants has any other connection with the Group. The
Remuneration Committee also obtains advice from the Company Secretary and the Group’s Human Resources Director.
TERMS OF REFERENCE OF COMMITTEE
The Committee’s terms of reference, which are available on the C&C website www.candcgroupplc.com, include making
recommendations to the Board in respect of Group policy on executive and senior management remuneration and the consideration
and determination of the remuneration of the executive Directors and senior management. The Committee also oversees the Group’s
employee share schemes.
REMUNERATION POLICY
The main aim of the Group’s remuneration policy is to attract, retain and reward the Group’s executive Directors and senior
management, having regard to the need to ensure that they are properly remunerated and motivated to perform in the best interests
of shareholders. Accordingly a key policy adopted by the Group for the remuneration of executive Directors and senior management is
to align their interests with those of shareholders through appropriate share-based long-term incentives. In addition, performance-
related annual rewards aligned with the Group’s key financial and operational goals and based on stretching targets are an important
component of the total executive remuneration package. The reward mechanisms for senior management in each market are
tailored for the market dynamics and reflect both short and medium term value creation. Local management are incentivised around
the performance of their local businesses through a combination of bonuses and either share or shadow share arrangements.
Furthermore, the Group seeks to bring transparency to Directors’ and employees’ reward structures through the use of cash
allowances in place of benefits in kind and to align the interests of Directors and other employees with those of shareholders through
share-based and performance-based rewards. In setting executive Directors’ remuneration the Committee has regard to pay levels
and conditions applicable to other employees across the Group.
DIRECTORATE CHANGE
Stephen Glancey continued as Chief Executive Officer of the Group and Kenny Neison as Chief Financial Officer of the Group
throughout the year under review.
Joris Brams, the managing director of the International division, was appointed to the Board as an executive Director on 23 October
2012. The Remuneration Committee reviewed his remuneration upon his appointment as managing director of the international
division on 1 September 2012. There was no change in his terms of employment upon his appointment to the Board.
Stewart Gilliland and Anthony Smurfit were appointed to the Board as non-executive Directors on 17 April 2012. Philip Lynch resigned as
a non-executive Director on 30 November 2012. After the year-end John Burgess resigned as a non-executive Director on 14 May 2013.
EXECUTIVE DIRECTORS’ REMUNERATION
The main elements of the remuneration package for the executive Directors and senior management are base salary and benefits
(including contributions to, or in lieu of, pension, company car and health benefits), performance-related annual bonus and longer
term share incentives.
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C&C GROUP PLC - 2013 ANNUAL REPORT
REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION - CONTINUED
A summary of the remuneration applicable to the executive Directors is as follows:
Fixed Remuneration
Performance-linked remuneration
Base salary – subject to
discretionary review.
Benefits – a 7.5% cash allowance
for car and health benefits.
Pension – allowance of 25% of
base salary as cash or pension
contribution.
Annual incentives
Long term incentives
Cash bonus – up to a
maximum of 80% of
base salary, subject
to the achievement
of a maximum Group
operating profit target.
Annual share option grants - 150% of base salary with a pre-
vesting earnings per share performance target; no retesting
permitted.
Annual award under the Long Term Incentive Plan - 100% of base
salary subject to three-year earnings per share growth and TSR
performance conditions; no retesting permitted.
The composition of each executive Director’s on-target and maximum remuneration for the year ending 28 February 2014 is as follows:
Base
Benefits
Bonus
Options
LTIP
Pension
Total
Target scenario
Base salary
Mix
Maximum scenario
44% Base salary
3%
Assumes target bonus at 30% of base salary
13% Assumes max bonus at 80% of base salary
Expected value
Threshold vesting - 30%
16% Expected value
13% Full vesting - 100%
Pension allowance - 25% of base salary
11% Pension allowance - 25% of base salary
100%
Mix
29%
2%
23%
10%
29%
7%
100%
SERVICE CONTRACTS OF EXECUTIVE DIRECTORS
Each of the executive Directors is employed on a service contract. None of them has a service contract with a notice period in excess
of one year. The service contracts do not contain any pre-determined compensation payments in the event of termination of office or
employment. Details of the service contracts of the executive Directors in office during the year are as follows:
Stephen Glancey
Kenny Neison
Joris Brams
Contract date
9 November 2008, amended 28 February 2012
9 November 2008, amended 28 February 2012
1 September 2012
Notice period
12 months
12 months
12 months
Unexpired term of contract
n/a
n/a
n/a
Base Salary
The salary levels of executive Directors are normally reviewed together with those of senior management annually in January. The
salary levels were reviewed in January 2013 and no amendment was made. Their basic salaries have remained unchanged since 2008
other than by reason of promotion.
The base salaries of Stephen Glancey and Kenny Neison are expressed and payable in pounds sterling, as follows. The base salary of
Joris Brams is expressed and payable in euro.
Stephen Glancey
Kenny Neison
Joris Brams
£585,000
£420,000
€366,160
(equivalent to €719,292 at the average exchange rate)
(equivalent to €516,415 at the average exchange rate)
Benefits
The executive Directors receive a cash allowance of 7.5% of base salary in lieu of benefits such as company car or health benefits. The
Group provides death-in-service cover of four times annual base salary.
Pensions
No executive Director or member of senior management accrues any benefits under a defined benefit pension scheme. Under their
service contracts each of the executive Directors receives a cash payment of 25% of base salary, in order to provide their own pension
benefits, inclusive in Kenny Neison’s case of a fixed sterling payment into a personal pension plan.
Performance Related Annual Bonus
The Group operates a performance-related cash bonus scheme for executive Directors, senior management and other employees. The
bonus scheme and the payment of bonuses are subject to annual approval by the Remuneration Committee. The Committee reserves
the right to vary, amend, replace or discontinue the bonus scheme at any time depending on business needs and/or financial viability
or as appropriate by reference to any changes in corporate structure during the financial year. The Remuneration Committee has not
to date included clawback provisions in variable compensation in the event of material inaccuracy and does not require any part of the
executive Directors’ annual cash bonus to be deferred, whether into shares or otherwise.
C&C GROUP PLC - 2013 ANNUAL REPORT
5 5
The maximum annual bonus payable is 80% of basic salary for the executive Directors, 70% for senior management and lesser
amounts for other employees.
For the year ended 28 February 2013 the Remuneration Committee determined that none of the performance thresholds for any of
the executive Directors was achieved.
For the year ending 28 February 2014 the Remuneration Committee has approved a bonus scheme for executive Directors by
reference to Group adjusted operating profit under which executive Directors will be entitled to a bonus of 10% of base salary at
threshold performance, a bonus of 20% (in total) at an intermediate threshold, 30% on target, and further bonus on a tapering basis
in respect of performance above this level up to a maximum of 80%.
Share Options and Share Awards
The service contracts of the executive Directors in office at the date of this report entitle them to an annual grant under the C&C’s
Executive Share Option Scheme of share options with a value equal to 150% of base salary and an annual award under the Long Term
Incentive Plan (Part I) (LTIP (Part I)) of shares (by way of nil cost options) with a value equal to 100% of annual base salary. S. Glancey
and K. Neison have indicated their intention to waive on a one-off basis their respective annual entitlements in respect of FY2014
under the C&C’s Executive Share Option Scheme and LTIP (Part I).
The Board will continue to review all incentive schemes annually and all awards are made subject to performance. However,
the Board has stated its intention that in the event of a review an equivalent value to the above should be offered to S. Glancey
and K. Neison, whether by way of Long Term Incentive Plan (Part I) or other incentive scheme in order to maintain the market
competitiveness of their package.
Details of the interests of the Directors in share options and share awards granted under the Executive Share Option Scheme, the
Long Term Incentive Plan (Part I) and the Joint Share Ownership Plan, are set out on pages 55 (Executive Share Option Scheme), 60
(LTIP (Part I)), 60 and 61 (Joint Share Ownership Plan) and in note 4 on pages 89 to 94.
EXECUTIVE SHARE OPTION SCHEME (ESOS)
The C&C Executive Share Option Scheme was established in May 2004. Options are granted solely at the discretion of the
Remuneration Committee save where the executive has a contractual entitlement. Under the scheme rules, options cannot be
granted to non-executive Directors. In respect of grants since admission, the maximum grant that can normally be made to any
individual in any one year is an award of 150% of base salary in that year. The exercise option price per share is set by reference to the
market value of a share on or immediately prior to grant.
Options will not normally be exercisable until three years after the date of grant and are subject to meeting a specific performance
target. This performance target requires that the aggregate of Group earnings per share (before exceptional or extraordinary items,
and including any other adjustments authorised by the Remuneration Committee) in the three financial years during the vesting
period must exceed the aggregate that would have been achieved had base-year earnings per share grown by 5% per annum
compound in excess of the change in the Irish Consumer Price Index (Irish CPI) during the period.
The options lapse if the performance target is not met after the relevant three year period and there is no re-testing provision.
Options will normally lapse when a participant ceases to be a director or employee within the Company’s group unless they are
a ‘qualifying leaver’ (i.e. they cease office or employment by reason of death, injury, ill-health, disability, redundancy, retirement
or business disposal). A qualifying leaver’s award will normally vest and become exercisable on the date of cessation; although
in some circumstances vesting can be delayed until the normal vesting date (i.e. the third anniversary). The extent to which a
qualifying leaver’s option becomes exercisable shall depend upon the extent to which the Remuneration Committee determine that
the performance target has been satisfied, which may be measured over a shorter time period. If the Remuneration Committee
determines that the target is met, the options may be exercised within a reduced time period.
If a third party makes a takeover offer or obtains control of the Company or becomes bound or entitled to compulsorily acquire the
Company’s shares or in the event of a scheme of arrangement or a winding up of the Company, options may be exercised early,
subject to the extent to which the Remuneration Committee determine that the performance target has been satisfied (in whole or
part) over the shortened performance period. Replacement options may be issued in the event of an internal reorganisation.
The fair value cost of the share options is amortised over the vesting period to the extent that the Directors believe that the options
will vest. The fair value of each award is disclosed in note 4 to the Financial Statements (Share Based Payments) on pages 89 to 94.
The ESOS allows the grant of UK HM Revenue & Customs (“HMRC”) approved market value options to employees who are UK
taxpayers, which benefit from favourable tax treatment in the UK. Eligible employees may not hold outstanding approved options over
shares worth more than £30,000 at any time. HMRC approved options are granted on substantially similar terms to other options
under the ESOS and are subject to the same performance target described above.
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C&C GROUP PLC - 2013 ANNUAL REPORT
REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION - CONTINUED
LONG TERM INCENTIVE PLAN (Part I) (LTIP (Part I))
The C&C share-based LTIP (Part I) for executive Directors and senior management was established at the time of the Group’s admission
to listing in May 2004. Under the plan, awards of up to 100% of base salary may be granted (or up to 200% in exceptional circumstances).
Awards are in the form of nil-cost options over shares, based on the closing share price on the day before the grant date.
The Remuneration Committee has adopted two performance conditions as a dual metric to align the interests of participants with
those of shareholders while at the same time providing a target related to the Group’s financial performance. The Committee
considers that this dual-metric performance condition is sufficiently stretching to ensure that participants are rewarded only if
shareholders’ interests are successfully met.
As to 50% of the award, a performance condition relating to relative total shareholder return (TSR) applies, with an underpin as
mentioned below. 30% of this part of the award vests if the Company’s TSR over a three-year period equals the median TSR of a
comparator group; 100% of this part of the award vests if the Company’s TSR over a three-year period equals or exceeds the TSR
of the upper quartile of the comparator group; for performance between the median and the upper quartile there is straight-line
pro-rating between 30% and 100%. None of this part of the award vests if the Group’s TSR over a three-year period is less than
the median TSR of a comparator group. The companies in the comparator group for awards made in 2012 and 2013 are as follows:
Anheuser-Busch Inbev N.V., Carlsberg Breweries A/S, Constellation Brands Inc., Diageo plc, Heineken Holding N.V., Molson Coors
Brewing Company, Remy Cointreau SA, SABMiller plc, Britvic plc, Greene King plc, Marston’s plc, Young & Co.’s Brewery plc and
AG Barr plc. TSR is calculated in euros and by reference to the change in the net return index for each comparator company, as
calculated by an independent financial information provider selected by the Committee from time to time. In respect of the TSR
condition, an underpin applies: the growth in the Group’s EPS over the three-year period must be 5% or more per annum in real
terms (compared with Irish CPI) over the same period; alternatively the Remuneration Committee must be satisfied that the Group’s
underlying financial performance warrants that level of vesting; otherwise the award lapses.
As to the remaining 50% of the award, a performance condition relating to aggregate growth in adjusted earnings per share (EPS)
applies. 30% of this part of the award vests if aggregate EPS in a three year period achieves 4% per annum growth in real terms
(compared with Irish CPI) in aggregate. 100% of this part of the award vests if aggregate EPS in a three year period achieves 10%
per annum real growth in aggregate. There is straight-line pro-rating between 30% and 100% for performance between 4% and 10%
per annum. None of this part of the award vests if the real growth in the Group’s aggregate EPS in a three-year period is less than
4% per annum. EPS is calculated using the adjusted earnings per share as disclosed in the Company’s interim or full-year financial
statements as determined and subject to any further adjustments approved by the Remuneration Committee.
Similar provisions to those applicable under the ESOS apply to enable early vesting of LTIP awards held by qualifying leavers or if
a third party makes a takeover offer or obtains control of the Company or becomes bound or entitled to compulsorily acquire the
Company’s shares or in the event of a scheme of arrangement or a winding up of the Company. In these circumstances the extent to
which an award vests will depend upon the extent to which the performance targets have been satisfied up to the date of cessation or,
in some instances, over the original three year performance period. Awards will also normally be subject to a time pro-rata reduction
(except for certain qualifying leavers) to reflect the reduced period of time between grant and vesting, relative to a period of three
years; although the Remuneration Committee can decide not to pro-rate.
In order to achieve a better alignment of the interests of participants in the Plan with the interests of shareholders, shareholder
approval was given at the 2012 AGM to a proposal that awards made in or after 2012 and that vest under the Plan should reflect
the equivalent value to that which accrues to shareholders by way of dividends during the vesting period. The provision is not
retrospective to awards made before 2012. The fair value cost of the share awards is amortised over the vesting period to the extent
that the Directors believe that the awards will vest.
The fair value of each award is disclosed in note 4 to the Financial Statements (Share Based Payments) on pages 89 to 94.
C&C JOINT SHARE OWNERSHIP PLAN
The C&C Joint Share Ownership Plan was approved by shareholders on 18 December 2008. Awards were granted in December 2008 and
June and December 2009 to the then executive Directors and to members of senior management of the Company. No further awards
can be made.
Interests under the Plan take the form of a restricted interest (“Interest”) in ordinary shares of the Company (“Plan Shares”).
Participants contributed funding equal to 10% of the issue price on the acquisition of the Interest (the “Entry Price”) with the balancing
amount (the “Hurdle Value”) being funded by the trustees of the employee benefit trust (“Trustees”). For Interests acquired in December
2008 and June 2009, the Entry Price was €0.115 per share and the Hurdle Value was €1.035 per share and for the Interests acquired
in December 2009, the Entry Price was €0.247 per share and the Hurdle Value was €2.223. The participants must also pay a further
amount if the tax value of their interests exceeds the price paid; the Company compensates the participant for this payment by paying
him an equivalent amount, which is subject to tax.
As at 28 February 2013, all of the continuing Interests under the Plan had vested. Details of the vesting conditions are given in note 4 to
the Financial Statements (Share Based Payments) on pages 89 to 94. Each participant may direct the votes on his vested Interests.
C&C GROUP PLC - 2013 ANNUAL REPORT
5 7
Where Interests have vested and if the participant is a continuing employee and so agrees, the participant is entitled to dividends on the
relevant Plan Shares in proportion to his economic interest. The Trustees are entitled to the dividends otherwise but have waived their
entitlement. The executive Directors who are participants have elected to take their dividend entitlements.
Participants who are continuing employees may transfer their vested Interests to family members and related trusts but otherwise
Interests are not transferable. Once an Interest has vested, the participant may, on payment of the balance of the further amount
referred to below, request the Trustees to transfer to him Plan Shares of equal value to his Interest or the Trustees may sell the Plan
Shares and account to the participant for the difference between the sale proceeds (less expenses) and the Hurdle Value.
If any Plan Shares have not been sold by the seventh anniversary of their acquisition date, the Trustees must then sell them and account
to the participant for his share of the sale proceeds. If the Company is in a proscribed period preventing dealings or there is market
disruption or there are other circumstances preventing or inhibiting an orderly realisation of the Plan Shares, the Board may agree that
the end date may be extended for an additional period not exceeding 12 months to enable an orderly realisation to take place. During
this period no further dividends would be paid in respect of the participant’s Interests.
The award of an Interest under the Plan may give rise to a loan for tax and company law purposes as described under Loans to Directors
on page 61.
OTHER EMPLOYEE SHARE SCHEMES
In addition to the above schemes, the UK tax-resident executive Directors are eligible to participate on the same terms as all other
eligible employees in the UK Revenue-approved Share Incentive Plan that the Company operates.
The Group has established a number of other share-based schemes, in which Directors are not eligible to participate, details of
which are also given in note 4 to the Financial Statements (Share Based Payments) on pages 89 to 94.
RENEWAL OF SCHEMES
Approval is being sought at the Company’s Annual General Meeting to be held in July 2013 to reapprove the ESOS and the LTIP
scheme (Part 1), which expire in April 2014, so that they can continue to be used for a further three years until 3 July 2016. During
this period, the Company intends to undertake a review of its share schemes to take account of recent changes to its business
model, including its acquisition of Vermont Hard Cider Company in the United States, and recently published recommendations of
institutional investor protection committees in respect of employee share schemes. The Directors also propose that the Company’s
Save-as-you-earn savings-related share option scheme should be reapproved for the same duration but they currently have no
plans to make awards under this scheme which has been unused since it was originally approved. Resolutions to implement these
variations will be proposed. Further details are contained in the Notice of AGM.
SHAREHOLDING GUIDELINES
The Company does not impose minimum shareholding requirements on executive Directors. However, Stephen Glancey and Kenny
Neison have significant shareholdings in the Company as set out on page 60, currently representing approximately 35 times and
24 times their respective base salary, well in excess of usual formal shareholding guidelines (generally between one and 2½ times
base salary). Joris Brams, who was appointed to the Board in 2012, has indicated his intention of building up his shareholding in the
Company to approximately two times base salary. The Remuneration Committee is therefore of the view that the executive Directors’
interests are sufficiently aligned with those of other shareholders without the need for additional shareholding guidelines.
DILUTION LIMITS AND TIME LIMITS
Full details of the awards made under the Company’s share schemes and the maximum dilution are given in note 4 (Share Based
Payments) on pages 89 to 94. All share plans with the exception of the Joint Share Ownership Plan, which was specifically approved
by shareholders in December 2008, contain the share dilution limits recommended in institutional guidance, namely that no awards
shall be granted which would cause the number of Shares issued or issuable pursuant to awards granted in the ten years ending
with the date of grant, but excluding awards granted on or prior to admission to the Irish Stock Exchange in 2004, (a) under any
discretionary or executive share scheme adopted by the Company (other than the Joint Share Ownership Plan) to exceed 5 per cent.,
and (b) under any employees’ share scheme adopted by the Company (other than the Joint Share Ownership Plan) to exceed 10 per
cent., of the ordinary share capital of the Company in issue at that time.
In the period from the listing of the Group on the Irish Stock Exchange in 2004 to 28 February 2013, commitments to issue new shares
or re-issue treasury shares under discretionary share schemes (net of lapsed and forfeited commitments and excluding the Joint Share
Ownership Plan which was specifically approved by shareholders in December 2008) amounted to 3.56% of the Company’s issued
ordinary share capital as at 28 February 2013. No equivalent commitments have been made under non-discretionary schemes.
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C&C GROUP PLC - 2013 ANNUAL REPORT
REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION - CONTINUED
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Each of the non-executive Directors in office during the financial year was appointed by way of a letter of appointment. Each
appointment was for an initial term of three years, renewable by agreement (but now subject to annual re-election by the members
in General Meeting). The letter of appointment of Sir Brian Stewart is dated 10 February 2010 and those for Stewart Gilliland and
Anthony Smurfit are dated 17 April 2012. The letters of appointment of all other non-executive Directors in office during the financial
year were dated 26 April 2004. The letters of appointment are each terminable by either party on one month’s notice and do not
contain any pre-determined compensation payments in the event of termination of office or employment.
The remuneration of the non-executive Directors is determined by the Board of Directors as a whole. The Chairman is not involved in
determining his own remuneration. Non-executive Directors receive a Director’s fee and fees directly relating to their membership of
Board committees but no additional remuneration from the Company. It is the Company’s policy that the fees paid to non-executive
Directors should be set at a level which aims to attract individuals with the necessary experience and ability to make a significant
contribution to the Group. No increase has been made to the basic and supplemental fees of the non-executive Directors since 2008.
The current annual fees are as follows:
Chairman:
Non-executive Director:
Supplemental fees:
Senior Independent Director:
Chairman of the Audit Committee:
Chairman of the Remuneration Committee:
€230,000
€65,000
€10,000
€25,000
€20,000
Non-executive Directors are not eligible to participate in the Group’s share option or other employee schemes. None of the
remuneration of the non-executive Directors is performance related. Non-executive Directors’ fees are not pensionable and
non-executive Directors are not eligible to join any Group pension plan. The Group also does not impose minimum shareholding
requirements on non-executive Directors but encourages them to hold shares in the Company.
The Articles of Association provide that the ordinary remuneration of Directors shall not exceed a fixed amount or such other amount
as determined by an ordinary resolution of the Company. The current limit was set at the Annual General Meeting held in 2007. An
ordinary resolution is to be proposed at the 2013 Annual General Meeting to increase this limit to give the Company flexibility in
making further appointments.
5 YEAR TOTAL SHAREHOLDER RETURN
Total shareholder return
Source: Datastream
140
120
100
80
60
40
20
0
29 Feb 2008
28 Feb 2009
28 Feb 2010
28 Feb 2011
29 Feb 2012
28 Feb 2013
This graph shows the value, by 28 February 2013, of €100 invested in C&C Group on 29 February 2008 compared with the value of €100 invested in the ISEQ
General Index. The other points plotted are the values at intervening financial year-ends.
C&C Group
ISEQ General Index
For information only, the above graph shows the value as at 28 February 2013 of a €100 investment in C&C Group plc shares on
29 February 2008 compared with a similar investment in the ISEQ General Index.
C&C GROUP PLC - 2013 ANNUAL REPORT
5 9
DIRECTORS’ REMUNERATION AND INTERESTS IN SHARE CAPITAL
Details of the overall Directors’ remuneration charged to the Group income statement are shown in note 27 on pages 133 to 134.
Details of the remuneration and pension benefits for each Director who served during the year ended 28 February 2013 are given
below. The interests of the Directors and Company Secretary in the share capital of the Company and in share options are shown on
pages 60 and 61. Loans to Directors are shown on page 61.
Executive Directors
Joris Brams(i) (ii)
John Dunsmore(iii)
Stephen Glancey
Kenny Neison
Sub-total
Non-Executive Directors
John Burgess
Liam FitzGerald
Stewart Gilliland
John Hogan
Richard Holroyd
Philip Lynch
Breege O’Donoghue
Anthony Smurfit
Sir Brian Stewart
Sub-total
Basic salary/
fees
Other
remuneration
fees (iii)
Benefits in
kind(iv)
Pension
contribution
(or
equivalent)
Annual
Bonus
€’000
€’000
€’000
€’000
€’000
130
-
719
516
1,365
65
-
57
65
65
49
65
57
230
653
2,018
10
-
54
39
103
-
-
-
25
10
15
3
-
-
53
156
-
-
4
3
7
-
-
-
-
-
-
-
-
-
-
7
33
-
180
129
342
-
-
-
-
-
-
-
-
-
-
342
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity-settled share-based
employee benefits(v)
Total
Average number of executive Directors
Average number of non-executive Directors
Total
2013
€’000
173
-
957
687
1,817
65
-
57
90
75
64
68
57
230
706
2,523
1,049
3,572
2
7
Total
2012
€’000
-
1,463
1,131
748
3,342
65
65
-
90
75
85
65
-
230
675
4,017
282
4,299
3
7
(i) The Board released Joris Brams to serve on the Board of Democo as a non-executive director. He received and retained an annual fee of €5,000 in relation to this
role.
(ii) By an agreement effective 30 January 2012 made between C&C IP Sàrl and Joris Brams BVBA (JBB), (a company wholly owned by Joris Brams and family), JBB
agreed to provide management services in respect of C&C Group’s business outside Ireland and the UK. JBB was remunerated in accordance with the agreement
until 31 August 2012, when the agreement was terminated. It was agreed that the following fees will continue to be payable to JBB after termination:
(a) A deferred introductory incentive fee will be payable on 1 February 2015, with no performance conditions attached, by the payment of a sum equal to 98,600
notional units multiplied by the closing price of C&C Group shares on the dealing day before the settlement date. Payment of the fee is subject to the rules of the
C&C Group Recruitment and Retention Plan, so far as applicable.
(b) A long term incentive fee was awarded on 17 May 2012 and comprised 87,943 notional units. The award was made subject to the rules of the LTIP1 so far as
applicable. Vesting of the award is subject to the achievement of performance conditions equivalent to those applicable under the LTIP1, and the award will be
settled following publication of the Company’s audited results for the financial year 2015 by the payment of a sum equal to the number of units that vest multiplied
by the closing price of C&C Group shares on the dealing day before the settlement date.
(iii) Other fees paid to John Hogan, Richard Holroyd, Philip Lynch and Breege O’Donoghue represent fees paid as Chairman of the Audit Committee, Senior
Independent Director and Chairman of the Remuneration Committee respectively.
(iv) See ‘Loans to Directors’ on page 61.
(v) See Note 4 ‘Share Based Payments’ on pages 89 to 94 .
Subject to (i) and (iii) above no sums were paid to third parties for any Director’s services.
Directors’ interests
The interests of the Directors and the Company Secretary in office at 28 February 2013 in the share capital of Group companies at the
beginning of the year (or date of appointment if later) and the end of the year were:
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C&C GROUP PLC - 2013 ANNUAL REPORT
REPORT OF THE REMUNERATION COMMITTEE ON DIRECTORS’ REMUNERATION - CONTINUED
INTERESTS IN ORDINARY SHARES OF €0.01 EACH IN C&C GROUP PLC(i)
Directors
Joris Brams
John Burgess
Stephen Glancey
Stewart Gilliland
John Hogan
Richard Holroyd
Kenny Neison
Breege O’Donoghue
Anthony Smurfit
Sir Brian Stewart
Total
Company Secretary
Paul Walker
28 February 2013
(or date of appointment if later)
1 March 2012
69,777
106,077
5,120,000(ii)
-
10,432
45,769
2,561,530(ii)
60,961
300,000
100,000
8,374,546
53,777
104,097
5,120,000(ii)
-
10,324
32,933
2,561,530(ii)
59,823
300,000
60,000
8,302,484
63,200
36,200
Notes
(i) All the above holdings are beneficial interests subject as stated in (ii) below.
(ii) The shareholdings of Stephen Glancey and Kenny Neison include interests in shares acquired and held under the Joint Share Ownership Plan which at
28 February 2013 and at 29 February 2012 comprised 3,413,334 shares in respect of Stephen Glancey and 2,560,000 shares in respect of Kenny Neison
(see C&C Joint Share Ownership Plan on pages 56 and 57 and note 4 on pages 89 to 94 for further details).
The Directors and the Company Secretary have no beneficial interests in any of the Group’s subsidiary undertakings.
There was no movement in the Directors’ or the Company Secretary’s interests in C&C Group plc ordinary shares between
28 February 2013 and the approval of the financial statements on 15 May 2013.
INTERESTS IN OPTIONS OVER ORDINARY SHARES OF €0.01 EACH IN C&C GROUP PLC
Date of
grant
Exercise
price
Scheme
Exercise period
Total at
1 March 2012
(or date of
appointment
if later)
Awarded
in year
Exercised
in year
Lapsed
in year
Total at
28 February
2013
Weighted
average
price
Directors
Joris Brams(i)
Stephen Glancey
Kenny Neison
Company Secretary
Paul Walker
Total
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
€1.94
13/5/09
26/5/10
€3.205
24/5/11 €3.6065
29/2/12
€0.00
17/5/12
17/5/12
€0.00
€3.525
€1.94
13/5/09
26/5/10
€3.205
24/5/11 €3.6065
29/2/12
€0.00
17/5/12
17/5/12
€0.00
€3.525
ESOS 13/5/12 - 12/5/16
ESOS 26/5/13 - 25/5/17
ESOS 24/5/14 - 23/518/
LTIP
(Part I)
LTIP
1/3/15 - 28/8/15
(Part I) 17/5/15 - 16/11/15
ESOS 17/5/15 - 16/5/19
Total
ESOS 13/5/12 - 12/5/16
ESOS 26/5/13 - 25/5/17
ESOS 24/5/14 - 23/5/18
LTIP
(Part I)
LTIP
1/3/15 - 28/8/15
(Part I) 17/5/15 - 16/11/15
ESOS 17/5/15 - 16/5/19
Total
386,600
234,100
207,957
191,186
-
-
1,019,843
207,317
310,975
518,292
232,000
140,500
124,774
137,262
-
-
634,536
148,843
223,264
372,107
386,600
234,100
207,957
191,186
207,317
310,975
0 1,538,135
€2.18
232,000
140,500
124,774
137,262
148,843
223,264
0 1,006,643
€2.12
0
0
29/6/10
2/6/10
€0.00
€3.21
R&R
ESOS
LTIP
1/6/11 - 31/5/17
1/6/13 - 31/5/18
54,000
127,200
(27,000)(ii)
29/6/11
€0.00
(Part I) 29/6/14 - 28/12/14
35,380
LTIP
17/5/12
17/5/12
€0.00
€0.00
(Part I) 17/5/15 - 16/11/15
R&R 17/5/14 - 16/5/19
Total
-
-
40,754
122,264
216,580 163,018 (27,000)
0
27,000
127,200
35,380
40,754
122,264
352,598
€1.16
(i) see note (ii) on page 59
(ii) market price at date of exercise: €3.42
C&C GROUP PLC - 2013 ANNUAL REPORT
6 1
Key: ESOS - Executive Share Option Scheme; LTIP (Part I) - Long Term Incentive Plan (Part I); R&R - Recruitment and Retention Plan.
No price was paid for any award of options. The price of the Company’s ordinary shares as quoted on the Irish Stock Exchange at the
close of business on 28 February 2013 was €4.895 (2011: €3.665).
LOANS TO DIRECTORS
When an award is granted to an executive under the Joint Share Ownership Plan, its value is assessed for tax purposes with the resulting
value being deemed to fall due for payment on the date of grant. Under the terms of the Plan, the executive must pay the Entry Price at the
date of grant and, if the tax value of the award (i.e. the initial unrestricted market value) exceeds the Entry Price, the executive must pay a
further amount, equating to the amount of such excess, before a sale of the awarded Interests. The deferral of the payment of the further
amount is considered to be an interest-free loan by the Company to the executive and a taxable benefit-in-kind arises, charged at Revenue
stipulated rates (Ireland 12.5% then 13.5% with effect from 1 January 2013; UK 4.0%). The resulting loans by the Company to the executive
Directors are required to be disclosed under the Companies Act 1990.
The balances of the loans outstanding to the executive Directors as referred to in the previous paragraph as at 28 February 2013 and
29 February 2012 are as follows:
Stephen Glancey
Kenny Neison
Total
28 February 2013
€’000
29 February 2012
€’000
111
83
194
111
83
194
When the further amount is paid, the Company compensates the executive for the obligation to pay this further amount by paying him
an equivalent amount, which is, however, subject to income tax and social security in the hands of the executive.
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C&C GROUP PLC - 2013 ANNUAL REPORT
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. Under that law the
Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the EU and have elected to prepare the Company financial statements in accordance with IFRSs as adopted by
the EU and as applied in accordance with the Companies Acts 1963 to 2012.
The Group and Company financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial
position and performance of the Group and Company. The Companies Acts 1963 to 2012 provide in relation to such financial
statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their
achieving a fair presentation.
In preparing each of the Group and Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state that the financial statements comply with IFRSs as adopted by the EU and, in the case of the Company, as applied in
accordance with the Companies Acts 1963 to 2012; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company
will continue in business.
Under applicable law and the requirements of the Listing Rules issued by the Irish Stock Exchange, the Directors are also
responsible for preparing a Directors’ Report and reports relating to Directors’ remuneration and corporate governance that comply
with that law and those Rules. In particular, in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 (the
“Transparency Regulations”), the Directors are required to include in their report a fair review of the business and a description of the
principal risks and uncertainties facing the Group.
The Directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financial
position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Acts 1963 to
2012 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
RESPONSIBILITY STATEMENT, IN ACCORDANCE WITH THE TRANSPARENCY REGULATIONS
Each of the current Directors, whose names and functions are listed as giving this responsibility statement on page 39, confirms that,
to the best of his or her knowledge and belief:
• the Group financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets,
liabilities and financial position of the Group at 28 February 2013 and its profit for the year then ended;
• the Company financial statements, prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the
Companies Acts 1963 to 2012, give a true and fair view of the assets, liabilities and financial position of the Company at 28 February
2013; and
• the Directors’ report contained in the Annual Report includes a fair review of the development and performance of the business and
the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.
On behalf of the Board
Sir Brian Stewart
Chairman
Stephen Glancey
Group Chief Executive Officer
iNDEPENDENT AUDiTOR’S REPORT TO THE MEMBERS OF C&C GROUP PLC
6 3
We have audited the Group and parent Company financial statements (‘‘financial statements’’) of C&C Group plc for the year ended
28 February 2013 which comprise the Group income statement, Group statement of comprehensive income, Group and Company
balance sheet, Group and Company cash flow statement, Group and Company statement of changes in equity and the related notes.
The financial reporting framework that has been applied in their preparation is Irish law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union, and, as regards the parent Company financial statements, as applied in
accordance with the provisions of the Companies Acts 1963 to 2012.
This report is made solely to the Company’s members, as a body, in accordance with section 193 of the Companies Act 1990. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors’ Responsibilities set out on page 62 the Directors are responsible for the
preparation of the financial statements giving a true and fair view. Our responsibility is to audit and express an opinion on the
financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Ethical Standards for Auditors issued by the Auditing Practices Board.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the company circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation
of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify
material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
•
•
•
the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the
Group’s affairs as at 28 February 2013 and of its profit for the year then ended;
the parent Company balance sheet gives a true and fair view, in accordance with IFRSs as adopted by the EU as applied in
accordance with the provisions of the Companies Acts 1963 to 2012, of the state of the parent Company’s affairs as at 28 February
2013; and
the financial statements have been properly prepared in accordance with the Companies Acts 1963 to 2012 and, as regards the
group financial statements, Article 4 of the IAS Regulation.
Matters on which we are required to report by the Companies Acts 1963 to 2012
We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
The parent Company balance sheet is in agreement with the books of account and, in our opinion, proper books of account have been
kept by the Company.
In our opinion the information given in the Directors’ Report is consistent with the financial statements and the description in the
Corporate Governance Statement of the main features of the internal control and risk management systems in relation to the process
for preparing the Group financial statements is consistent with the Group financial statements.
The net assets of the Company, as stated in the Company balance sheet are more than half of the amount of its called-up share
capital and, in our opinion, on that basis there did not exist at 28 February 2013 a financial situation which under Section 40(1) of the
Companies (Amendment) Act, 1983 would require the convening of an extraordinary general meeting of the Company.
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BUSINESS REVIEWC&C GROUP PLC - 2013 ANNUAL REPORT
6 4
iNDEPENDENT AUDiTOR’S REPORT TO THE MEMBERS OF C&C GROUP PLC
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Acts 1963 to 2012 we are required to report to you if, in our opinion, the disclosures of directors’ remuneration
and transactions specified by law are not made.
Under the Listing Rules of the Irish Stock Exchange we are required to review:
•
•
the Directors’ statement, set out on page 52, in relation to going concern;
the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK
Corporate Governance Code and the two provisions of the Irish Corporate Governance Annex specified for our review; and
•
the six specified elements of disclosures in the report to shareholders by the Board on directors’ remuneration.
Cliona Mullen
for and on behalf of
Chartered Accountants, Statutory Audit Firm
1 Stokes Place, St. Stephen’s Green, Dublin 2, Ireland
15 May 2013
C&C GROUP PLC - 2013 ANNUAL REPORT GROUP iNCOME STATEMENT
For the year ended 28 February 2013
6 5
Year ended 28 February 2013
Year ended 29 February 2012
Revenue
Excise duties
Net revenue
Operating costs
Operating profit
Finance income
Finance expense
Profit/(loss) before tax
Income tax (expense)/credit
Profit/(loss) from continuing operations
Discontinued operations
Loss from discontinued operations
Profit for the year attributable to
equity shareholders
Basic earnings per share (cent)
Diluted earnings per share (cent)
Continuing operations
Basic earnings per share (cent)
Diluted earnings per share (cent)
1
1
2
1
6
6
7
8
10
10
10
10
Before
exceptional
items
€m
Exceptional
items
(note 5)
€m
Notes
Before
exceptional
items
€m
Exceptional
items
(note 5)
€m
724.1
(247.2)
476.9
(363.0)
-
-
-
(4.6)
Total
€m
724.1
(247.2)
476.9
(367.6)
716.7
(235.9)
480.8
(369.6)
113.9
(4.6)
109.3
111.2
0.1
(5.0)
109.0
(16.0)
93.0
-
-
(4.6)
0.3
(4.3)
0.1
(5.0)
104.4
(15.7)
0.7
(5.8)
106.1
(13.8)
88.7
92.3
Total
€m
716.7
(235.9)
480.8
(364.8)
116.0
0.7
(5.8)
110.9
(13.4)
97.5
-
-
-
4.8
4.8
-
-
4.8
0.4
5.2
-
-
-
(0.1)
(1.7)
(1.8)
93.0
(4.3)
88.7
92.2
3.5
95.7
27.0c
26.4c
27.0c
26.4c
29.4c
28.7c
30.0c
29.2c
On behalf of the Board
Sir B Stewart
Chairman
S Glancey
Group Chief Executive Officer
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
6 6
GROUP STATEMENT OF COMPREHENSiVE iNCOME
For the year ended 28 February 2013
Other comprehensive income and expense:
Foreign currency translation differences arising on foreign currency borrowings
designated as net investment hedges
Foreign currency translation differences arising on the net investment in foreign operations
Foreign currency reserve recycled on disposal of Northern Ireland wholesale business
Net loss on revaluation of land and buildings
Net movement in cash flow hedging reserve
Deferred tax on cash flow hedges
Actuarial loss on retirement benefit obligations
Deferred tax on actuarial loss on retirement benefit obligations
Net loss recognised directly within other comprehensive income
Profit for the year attributable to equity shareholders
Comprehensive income for the year attributable to equity shareholders
Notes
6
6
6, 8
12
6
6, 21
22
21
2013
€m
2012
€m
(3.2)
(8.1)
-
-
2.0
(0.3)
(12.3)
1.6
1.7
3.6
0.7
(1.7)
1.4
(0.1)
(19.0)
2.4
(20.3)
(11.0)
88.7
68.4
95.7
84.7
On behalf of the Board
Sir B Stewart
Chairman
S Glancey
Group Chief Executive Officer
C&C GROUP PLC - 2013 ANNUAL REPORT
GROUP BALANCE SHEET
As at 28 February 2013
ASSETS
Non-current assets
Property, plant & equipment
Goodwill & intangible assets
Equity-accounted investees
Retirement benefit obligations
Deferred tax assets
Derivative financial instruments
Trade & other receivables
Current assets
Inventories
Trade & other receivables
Derivative financial assets
Cash & cash equivalents
TOTAL ASSETS
EQUiTY
Equity share capital
Share premium
Other reserves
Treasury shares
Retained income
Total equity
LiABiLiTiES
Non-current liabilities
Interest bearing loans & borrowings
Derivative financial liabilities
Retirement benefit obligations
Provisions
Deferred tax liabilities
Current liabilities
Interest bearing loans & borrowings
Derivative financial liabilities
Trade & other payables
Provisions
Current tax liabilities
Total liabilities
TOTAL EQUiTY & LiABiLiTiES
On behalf of the Board
Sir B Stewart
Chairman
S Glancey
Group Chief Executive Officer
6 7
Notes
2013
€m
2012
€m
12
13
14
22
21
14, 23
16
15
16
23
24
24
24
24
19
14, 23
22
18
21
19
23
17
18
183.6
707.2
2.4
0.5
6.2
1.4
31.3
932.6
48.9
96.1
1.7
121.0
267.7
181.8
484.9
-
0.2
6.5
-
19.5
692.9
46.1
93.4
0.1
128.3
267.9
1,200.3
960.8
3.4
107.9
48.6
(12.5)
632.3
779.7
244.4
1.2
22.0
9.4
7.8
284.8
-
-
124.1
2.8
8.9
135.8
3.4
92.0
57.8
(16.8)
577.8
714.2
-
-
15.3
11.5
7.2
34.0
60.0
0.9
141.9
5.8
4.0
212.6
420.6
246.6
1,200.3
960.8
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
6 8
GROUP CASH FLOW STATEMENT
For the year ended 28 February 2013
CASH FLOWS FROM OPERATiNG ACTiViTiES
Profit for the year attributable to equity shareholders
Finance income
Finance expense
Income tax expense
Depreciation of property, plant & equipment
Amortisation of intangible assets
Profit on disposal of property, plant & equipment
Revaluation loss on property, plant & equipment
Loss on disposal of businesses
Exceptional retirement benefit obligations gain - discontinued operations
Charge for share-based employee benefits
Pension contributions paid less amount charged to income statement
Increase in inventories
(Increase)/decrease in trade & other receivables
(Decrease)/increase in trade & other payables
Decrease in provisions
Interest received
Interest and similar costs paid
Income taxes paid
2013
€m
2012
€m
88.7
(0.1)
5.0
15.7
21.6
0.1
-
-
-
-
3.0
(5.9)
128.1
(0.7)
(14.8)
(18.4)
(4.9)
89.3
0.1
(2.0)
(8.5)
95.7
(0.7)
5.8
13.4
20.2
0.1
(0.3)
2.0
1.8
(0.1)
2.6
(19.1)
121.4
(4.5)
10.6
1.2
(0.1)
128.6
0.7
(4.6)
(4.4)
Net cash inflow from operating activities
78.9
120.3
CASH FLOWS FROM iNVESTiNG ACTiViTiES
Purchase of property, plant & equipment
Net proceeds on disposal of property, plant & equipment
Acquisition of brand/deferred consideration paid on acquisition of brand (note 13)
Acquisition of business (note 11)
Acquisition of equity accounted investee (note 14)
Proceeds on disposal of businesses
Net cash outflow from investing activities
CASH FLOWS FROM FiNANCiNG ACTiViTiES
Proceeds from exercise of share options
Proceeds from issue of new shares following acquisition of subsidiary
Proceeds from sale of shares held by Employee Trust
Proceeds from exercise of Interests under Joint Share Ownership Plan
Drawdown of debt
Repayment of debt
Payment of issue costs
Dividends paid
Net cash inflow/(outflow) from financing activities
Net (decrease)/increase in cash & cash equivalents
Cash & cash equivalents at beginning of year
Translation adjustment
(24.1)
-
(3.7)
(229.8)
(2.9)
-
(260.5)
3.5
5.3
6.6
-
251.2
(65.2)
(2.8)
(21.2)
177.4
(4.2)
128.3
(3.1)
(18.9)
1.2
(16.6)
-
-
4.7
(29.6)
1.5
-
-
0.1
-
(73.6)
-
(18.5)
(90.5)
0.2
128.7
(0.6)
Cash & cash equivalents at end of year
121.0
128.3
A reconciliation of cash & cash equivalents to net debt is presented in note 20 to the financial statements.
On behalf of the Board
Sir B Stewart
Chairman
S Glancey
Group Chief Executive Officer
C&C GROUP PLC - 2013 ANNUAL REPORT GROUP STATEMENT OF CHANGES iN EQUiTY
For the year ended 28 February 2013
Equity
share
capital premium
€m
Capital
Share redemption
reserve
€m
€m
Capital
reserve
€m
Cash flow
Share-
based
Currency
hedging payments translation Revaluation Treasury Retained
income
reserve
€m
€m
reserve
€m
reserve
€m
reserve
€m
shares
€m
6 9
Total
€m
3.4
86.3
0.5
24.9
(1.8)
7.5
15.9
5.9
(17.4)
518.5 643.7
At 28 February 2011
Profit for the year attributed
to equity shareholders
Other comprehensive
expense
-
-
-
-
-
-
-
-
Total
3.4
86.3
0.5
24.9
Dividend on ordinary shares
Exercised share options
Reclassification of share-
based payments reserve
Reclassification of
revaluation reserve on
disposal
Joint Share Ownership Plan
Equity settled share-
based payments
-
-
-
-
-
-
4.2
1.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.3
(0.5)
-
-
-
-
-
-
At 29 February 2012
3.4
92.0
0.5
24.9
(0.5)
Profit for the year attributed
to equity shareholders
Other comprehensive
expense
-
-
-
-
-
-
-
-
Total
3.4
92.0
0.5
24.9
Dividend on ordinary shares
Exercised share options
Issue of shares following
acquisition of subsidiary
Reclassification of share-
based payments reserve
Joint Share Ownership Plan
Sale of shares held by
Employee Trust
Equity settled share-
based payments
-
-
-
-
-
-
-
7.1
3.5
5.3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.7
1.2
-
-
-
-
-
-
-
At 28 February 2013
3.4
107.9
0.5
24.9
1.2
-
-
7.5
-
-
(2.5)
-
(0.4)
2.6
7.2
-
-
7.2
-
-
-
(2.2)
(0.4)
-
3.0
7.6
-
6.0
21.9
-
(1.7)
-
-
95.7
95.7
(16.6)
(11.0)
4.2
(17.4)
597.6 728.4
-
-
-
-
-
-
-
-
-
(0.4)
-
-
-
-
-
-
0.6
-
(22.7)
-
(18.5)
1.5
2.5
-
0.4
-
-
0.2
-
2.6
21.9
3.8
(16.8)
577.8 714.2
-
(11.3)
10.6
-
-
-
-
88.7
88.7
(10.7)
(20.3)
3.8
(16.8)
655.8 782.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.4
3.9
-
(28.4)
-
(21.3)
3.5
-
5.3
2.2
-
2.7
-
-
6.6
-
3.0
10.6
3.8
(12.5)
632.3 779.7
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
7 0
COMPANY BALANCE SHEET
As at 28 February 2013
ASSETS
Non-current assets
Financial assets
Trade & other receivables
Current assets
Cash & cash equivalents
TOTAL ASSETS
EQUiTY
Equity share capital
Share premium
Other reserves
Retained income
Total equity
Current liabilities
Interest bearing loans & borrowings
Trade & other payables
Total liabilities
TOTAL EQUiTY AND LiABiLiTiES
Notes
2013
€m
2012
€m
14
16
24
24
24
19
17
977.1
47.8
1,024.9
0.1
0.1
968.8
30.6
999.4
9.3
9.3
1,025.0
1,008.7
3.4
809.8
7.1
105.3
925.6
-
99.4
99.4
3.4
793.9
6.3
134.9
938.5
60.0
10.2
70.2
1,025.0
1,008.7
On behalf of the Board
Sir B Stewart
Chairman
S Glancey
Group Chief Executive Officer
C&C GROUP PLC - 2013 ANNUAL REPORT
7 1
2012
€m
96.8
0.4
(5.1)
4.4
(1.7)
94.8
(0.2)
(4.1)
90.5
-
-
9.4
1.5
-
(73.6)
(18.5)
(81.2)
9.3
-
9.3
2013
€m
(3.4)
-
-
1.8
-
(1.6)
0.4
(1.6)
(2.8)
(5.3)
(5.3)
71.3
3.5
5.3
(60.0)
(21.2)
(1.1)
(9.2)
9.3
0.1
COMPANY CASH FLOW STATEMENT
For the year ended 28 February 2013
CASH FLOWS FROM OPERATiNG ACTiViTiES
(Loss)/profit for the year
Income tax expense
Finance income
Finance expense
Loss on retranslation of foreign currency bank borrowings
Increase/(decrease) in other payables
Interest paid and similar costs
Net cash (outflow)/inflow from operating activities
CASH FLOWS FROM iNVESTiNG ACTiViTiES
Funding of cash requirements of subsidiary undertakings
Net cash outflow from investing activities
CASH FLOWS FROM FiNANCiNG ACTiViTiES
Movement in loans with subsidiary undertakings
Proceeds from exercise of share options
Proceeds from issue of shares following acquisition of subsidiary
Bank loans repaid
Dividends paid
Net cash outflow from financing activities
Net (decrease)/increase in cash & cash equivalents
Cash & cash equivalents at beginning of year
Cash & cash equivalents at end of year
On behalf of the Board
Sir B Stewart
Chairman
S Glancey
Group Chief Executive Officer
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT 7 2
COMPANY STATEMENT OF CHANGES iN EQUiTY
For the year ended 28 February 2013
Equity
share
capital
€m
Share
premium
€m
Capital
redemption
reserve
€m
Cash flow Share based
payment
reserve
€m
hedging
reserve
€m
Retained
income
€m
Total
€m
Company
At 28 February 2011
Profit for the year attributable to equity
shareholders
Other comprehensive income
Total
Dividend on ordinary shares
Exercised share options
Reclassification of share-based payments
reserve
Equity settled share-based payments
3.4
788.2
-
-
3.4
-
-
-
-
-
-
788.2
4.2
1.5
-
-
At 29 February 2012
3.4
793.9
Loss for the year attributable to equity
shareholders
Total
-
3.4
-
793.9
Dividend on ordinary shares
Exercised share options
Issue of shares following acquisition of
subsidiary
Reclassification of share-based payments
reserve
Equity settled share-based payments
-
-
-
-
-
7.1
3.5
5.3
-
-
0.5
-
-
0.5
-
-
-
-
0.5
-
0.5
-
-
-
-
-
At 28 February 2013
3.4
809.8
0.5
(1.8)
-
1.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.7
-
-
5.7
-
-
(2.5)
2.6
58.3
854.3
96.8
-
155.1
(22.7)
-
2.5
-
96.8
1.8
952.9
(18.5)
1.5
-
2.6
5.8
134.9
938.5
-
5.8
-
-
-
(2.2)
3.0
(3.4)
131.5
(28.4)
-
-
2.2
-
(3.4)
935.1
(21.3)
3.5
5.3
-
3.0
6.6
105.3
925.6
On behalf of the Board
Sir B Stewart
Chairman
S Glancey
Group Chief Executive Officer
C&C GROUP PLC - 2013 ANNUAL REPORT STATEMENT OF ACCOUNTiNG POLiCiES
7 3
SiGNiFiCANT ACCOUNTiNG POLiCiES
C&C Group plc (the ‘Company’) is a company incorporated and tax resident in Ireland. The Group’s financial statements for the
year ended 28 February 2013 consolidate the individual financial statements of the Company, its subsidiaries and equity-accounted
investees (together referred to as “the Group”).
The Company and Group financial statements, together the “financial statements”, were authorised for issue by the Directors on
15 May 2013.
The accounting policies applied in the preparation of the financial statements for the year ended 28 February 2013 are set out below.
These have been applied consistently for all periods presented in these financial statements and by all Group entities.
STATEMENT OF COMPLiANCE
The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), which
comprise standards and interpretations approved by the International Accounting Standards Board (IASB), as adopted by the EU. The
individual financial statements of the Company have been prepared in accordance with IFRSs as adopted by the EU and as applied
in accordance with the Companies Acts 1963 to 2012 which permits a company that publishes its company and group financial
statements together to take advantage of the exemption in section 148(8) of the Companies Act, 1963 from presenting its company
income statement which forms part of the approved company financial statements.
IFRSs as adopted by the EU applied by the Company and Group in the preparation of these financial statements are those that were
effective for accounting periods ending on or before 28 February 2013. The Group has adopted the following new and revised IFRSs in
respect of the year ending 28 February 2013:
- IAS 12 Income Taxes (amendment)
- IFRS 7 Financial Instruments: Disclosures (amendment)
The application of the above standards and interpretations did not result in material changes in the Group’s Consolidated Financial
Statements.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 28 February 2013,
and have not been applied in preparing these consolidated financial statements.
Amendment to iAS 19: Employee Benefits
IAS 19 Employee Benefits will be effective for the Group from 1 March 2013. Under the revised standard, the return on scheme assets
will now be measured using the same discount rate as is used in measuring scheme obligations impacting both the pension charge
in the income statement and the charge recognised in the statement of comprehensive income, where the discount rate is different to
the expected return on assets. The impact of this change for the year ended 28 February 2013, had the standard been applied, is set
out in note 22.
Other new standards
These following new standards, amendments and interpretations are either not expected to have a material impact on the consolidated
financial statements once applied or are still under assessment by the Group.
Accounting standard/ interpretation (Effective date^)
(a) Not expected to have a material impact on the consolidated financial statements
IAS 1 (Amendment) – Presentation of Financial Statements (1 July 2012)
•
• Annual improvements to IFRS 2009 – 2011 cycle – various standards (1 January 2013)
•
•
•
•
IAS 27 (Amendment) – Consolidated and Separate Financial Statements (1 January 2014)
IFRS 7 (Amendment) – Disclosures: offsetting financial assets and financial liabilities (1 January 2013)
IFRS 13 – Fair Value Measurement (1 January 2013)
Investment entities (Amendments to IFRS 10, 12 and IAS 27) (1 January 2014)*
(b) Subject to ongoing assessment by the Group
IFRS 10 – Consolidated and Separate Financial Statements (1 January 2014)
•
IFRS 11 – Joint Arrangements (1 January 2014)
•
•
IFRS 12 – Disclosure of Interests in Other Entities (1 January 2014)
• Transition guidance (amendments to IFRS 10, 11, 12) (1 January 2014)
•
•
•
IAS 28 (Amendment) – Investments in Associates and Joint Ventures (1 January 2014)
IAS 32 (Amendment) – Offsetting Financial Assets and Financial Liabilities (1 January 2014)
IFRS 9 – Financial Instruments (1 January 2015)*
* Not EU endorsed at the time of approval of financial statements
^ the effective dates relate to financial period beginning on and after those dates and are those applying to EU endorsed IFRS if later than the IASB effective dates.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT 7 4
STATEMENT OF ACCOUNTiNG POLiCiES - CONTINUED
BASiS OF PREPARATiON
The Group and the individual financial statements of the Company are prepared on the historical cost basis except for the
measurement at fair value of share options at date of grant, derivative financial instruments, retirement benefit obligations and the
revaluation of certain items of property, plant & equipment. The accounting policies have been applied consistently by Group entities
and for all periods presented.
The financial statements are presented in euro millions to one decimal place.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain critical accounting
estimates. In addition, it requires management to exercise judgement in the process of applying the Group and Company’s accounting
policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements relate primarily to:
• the valuation of share-based payments (note 4),
• the determination of the Group’s income tax charge (note 7),
• the determination of the fair value and the useful economic life of assets & liabilities, and intangible assets acquired on the
acquisition of a company or business (note 11),
• the determination of carrying value of land (note 12),
• the determination of carrying value or depreciated replacement cost, useful economic life and residual values in respect of the
Group’s buildings, plant & machinery (note 12),
• the determination of the fair value of intangible assets acquired and the assessment of goodwill and intangible assets for
impairment (note 13),
• the determination and valuation of provisions for future liabilities (note 18),
• accounting for retirement benefit obligations (note 22), and,
• the valuation and measurement of financial instruments (note 23).
These are discussed in more detail in the accounting policies and/or notes to the financial statements as referenced above.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. 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.
BASiS OF CONSOLiDATiON
The Group’s financial statements consolidate the financial statements of the Company and all subsidiary undertakings together with
the Group’s share of the results and net assets of equity-accounted investees for the period ending 28 February 2013.
(i) Subsidiaries
The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control over
the operating and financial decisions is obtained and cease to be consolidated from the date on which control is transferred out of
the Group. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an
entity so as to obtain economic benefits from its activities.
On 30 April 2004, the Group, previously headed by C&C Group International Holdings Limited, underwent a re-organisation by virtue
of which C&C Group International Holdings Limited’s shareholders in their entirety exchanged their shares for shares in C&C Group
plc, a newly formed company, which then became the ultimate parent company of the Group. Notwithstanding the change in the legal
parent of the Group, this transaction has been accounted for as a reverse acquisition and the consolidated financial statements are
prepared on the basis of the new legal parent having been acquired by the existing Group.
(ii) Investments in associates and jointly controlled entities (equity-accounted investees)
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and
operating policies. Significant influence is presumed to exist when the Group has greater than 20 percent and less than 50 percent
of the voting power of another entity. Jointly controlled entities are those entities over whose activities the Group has joint control,
established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions, except that
the capital structure shown is that of the legal parent.
Investments in associates and jointly controlled entities are accounted for under the equity method and are recognised initially at
cost. The cost of investment includes transaction costs.
The consolidated financial statements include the Group’s share of the profit and loss and other comprehensive income of equity-
accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant
influence or joint control commences until the date that significant influence or joint control ceases.
C&C GROUP PLC - 2013 ANNUAL REPORT 7 5
BASiS OF CONSOLiDATiON - CONTiNUED
Should the Group’s share of losses exceed its interest in an equity-accounted investee, the carrying amount of the investment,
including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued
except to the extent that the Group has an obligation or has made payments on behalf of the investee.
(iii) Transactions eliminated on consolidation
All inter-company balances and transactions, including recognised gains arising from inter-group transactions, have been eliminated
in full. Unrealised losses are eliminated in the same manner as recognised gains except to the extent that they provide evidence of
impairment.
(iv) Company Financial Statements
Investments in subsidiaries are carried at cost less provision for impairment. Dividend income is recognised when the right to receive
payment is established.
REVENUE RECOGNiTiON
Revenue comprises the fair value of goods supplied to external customers exclusive of inter-company sales and value added tax,
after allowing for discounts, rebates, allowances for customer loyalty and other pricing related allowances and incentives. Provision
is made for returns where appropriate. Revenue is recognised to the extent that it is probable that the economic benefits will flow to
the Group, that it can be reliably measured, and that the significant risks and rewards of ownership of the goods have passed to the
buyer. This is deemed to occur on delivery.
EXCiSE DUTY
Excise duty is levied at the point of production in the case of the Group’s manufactured products and at the point of importation in the
case of imported products in the relevant jurisdictions in which the Group operates. As the Group’s manufacturing and warehousing
facilities are Revenue approved and registered excise facilities, the excise duty liability generally crystallises on transfer of product
from duty in suspense to duty paid status which normally coincides with the point of sale.
NET REVENUE
Net revenue is defined by the Group as Revenue less Excise duty. 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, consequently
the Directors consider that the disclosure of Net revenue enhances the transparency and provides a more meaningful analysis of
underlying sales performance.
EXCEPTiONAL iTEMS
The Group has adopted an accounting policy and income statement format that seeks to highlight significant items of income and
expense within the Group results for the year. The Directors believe that this presentation provides a more helpful analysis. Such
items may include significant restructuring and integration costs, significant past service and curtailment gains/costs realised
under the Group’s defined benefit pension schemes, profits or losses on disposal or termination of operations, litigation costs and
settlements, profit or loss on disposal of investments, significant impairment of assets, acquisition related costs and unforeseen
gains/losses arising on derivative financial instruments. The Directors use judgement in assessing the particular items which by
virtue of their scale and nature are disclosed in the income statement and related notes as exceptional items.
FiNANCE iNCOME AND EXPENSES
Finance income comprises interest income on funds invested, gains on hedging instruments that are recognised in the income
statement and interest earned on customer advances. Interest income is recognised as it accrues in the income statement, using the
effective interest method.
Finance expenses comprise interest expense on borrowings, amortisation of borrowing issue costs, changes in the fair value of
financial assets or liabilities which are accounted for at fair value through the income statement, losses on hedging instruments that
are recognised in the income statement, gains or losses relating to the effective portion of interest rate swaps hedging variable rate
borrowings, ineffective portion of changes in the fair value of cash flow hedges, impairment losses recognised on financial assets and
unwinding the discount on provisions. All borrowing costs are recognised in the income statement using the effective interest method.
RESEARCH AND DEVELOPMENT
Expenditure on research that is not related to specific product development is recognised in the income statement as incurred.
Expenditure on the development of new or substantially improved products or processes is capitalised if the product or process is
technically feasible and commercially viable.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT 7 6
STATEMENT OF ACCOUNTiNG POLiCiES - CONTINUED
GOVERNMENT GRANTS
Grants are recognised at their fair value when there is a reasonable assurance that the grant will be received and all attaching
conditions have been complied with.
Capital grants received and receivable by the Group are credited to government grants and are amortised to the income statement on
a straight line basis over the expected useful lives of the assets to which they relate.
Revenue grants are recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is
intended to compensate.
DiSCONTiNUED OPERATiONS
A discontinued operation is a component of the Group’s business that represents a separate major line of business, geographical
area of operations or is material to Revenue, Net revenue or Operating profit and has been disposed of or is held for sale. When
an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation had been
discontinued from the start of the earliest period presented.
SEGMENTAL REPORTiNG
Operating segments are reported in a manner consistent with the internal organisational and management structure of the Group and the
internal financial information provided to the Chief Operating Decision-Maker (the executive directors comprising Stephen Glancey, Kenny
Neison and, from 23 October 2012, Joris Brams) who is responsible for the allocation of resources and the monitoring and assessment of
performance of each of the operating segments. The Group has determined that it has five reportable operating segments.
In the prior year the Group had six reportable operating segments. However, the Group has changed the manner in which information
is classified and reported to the Chief Operating Decision Maker (‘CODM’) for the current financial year. As a result, the basis of
segmentation differs from that presented in the prior year. However, it corresponds with the current year nature of reporting lines
to the CODM, and the Group’s internal reporting for the purpose of managing the business, assessing performance and allocating
resources. The impact of this change has been set out in further detail in note 1.
The analysis by segment includes both items directly attributable to a segment and those, including central overheads, that are
allocated on a reasonable basis to those segments in internal financial reporting packages.
FOREiGN CURRENCY TRANSLATiON
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in euro,
which is the presentation currency of the Group and both the presentation and functional currency of the Company.
Transactions in foreign currencies are translated into the functional currency of each entity at the foreign exchange rate ruling
at the date of the transaction. Non-monetary assets carried at historic cost are not subsequently retranslated. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are translated into functional currencies at the foreign
exchange rate ruling at that date. Foreign exchange movements arising on translation are recognised in the income statement with
the exception of all monetary items designated as a hedge of a net investment in a foreign operation, which are recognised in the
consolidated financial statements in other comprehensive income until the disposal of the net investment, at which time they are
recognised in the income statement for the year.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to
euro at the foreign exchange rates ruling at the reporting date. The revenues and expenses of foreign operations are translated to euro at
the average exchange rate for the financial period where that represents a reasonable approximation of actual rates. Foreign exchange
movements arising on translation of the net investment in a foreign operation, including those arising on long term intra group loans for
which settlement is neither planned nor likely to happen in the foreseeable future and as a consequence are deemed quasi equity in nature,
are recognised directly in other comprehensive income in the consolidated financial statements in the foreign currency translation reserve.
The portion of exchange gains or losses on foreign currency borrowings or derivatives used to provide a hedge against a net investment in
a foreign operation that is designated as a hedge of those investments, is recognised directly in other comprehensive income to the extent
that they are determined to be effective. The ineffective portion is recognised immediately in the income statement for the year.
Any movements that have arisen since 1 March 2004, the date of transition to IFRS, are recognised in the currency translation reserve
and are recycled through the income statement on disposal of the related business. Translation differences that arose before the date
of transition to IFRS as adopted by the EU in respect of all non-euro denominated operations are not presented separately.
C&C GROUP PLC - 2013 ANNUAL REPORT 7 7
BUSiNESS COMBiNATiONS
The purchase method of accounting is employed in accounting for the acquisition of subsidiaries by the Group. The fair value of
consideration for a business combination is measured as the aggregate of the fair value at the date of exchange of assets acquired
and liabilities incurred or assumed in exchange for control, together with the fair value of existing equity interests in the acquired
business and the recognised amount of any non-controlling interests. Costs directly attributable to the acquisition of a business as
defined by IFRS 3 (2008) Business Combinations are expensed in the period in which the costs are incurred and the services are
received. Where a business combination agreement provides for an adjustment to the consideration contingent on future events,
the amount of the estimate adjustment is included in the consideration at the acquisition date to the extent that it can be reliably
measured. To the extent that settlement of all or any part of the consideration for a business combination is deferred, the fair value of
the deferred component is determined through discounting the amounts payable to their present value at the date of exchange. The
discount component is unwound as an interest charge in the income statement over the life of the obligation.
Acquisitions prior to 1 March 2011
For acquisitions prior to 1 March 2011, transaction costs, other than those associated with the issue of debt or equity securities, that
the Group incurred in connection with business combinations were capitalised as part of the cost of the acquisition in line with IFRS 3
(2004) Business Combinations.
GOODWiLL
Goodwill is the excess of the consideration paid over the fair value of the identifiable assets, liabilities and contingent liabilities in
a business combination and relates to the future economic benefits arising from assets, that are not capable of being individually
identified and separately recognised.
Goodwill arising on acquisitions prior to the date of transition to IFRS as adopted by the EU has been retained, with the previous Irish
GAAP amount considered its deemed cost, subject to being tested for impairment. Goodwill written off to reserves under Irish GAAP
prior to 1998 has not been reinstated and will not be included in determining any subsequent profit or loss on disposal.
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the net fair value
of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is not amortised but is reviewed for impairment annually or more frequently if events or
changes in circumstances indicate that the carrying value may be impaired.
As at the date of acquisition any goodwill acquired is allocated to each operating segment (which may comprise more than one cash
generating unit) expected to benefit from the combination’s synergies. Impairment is determined by assessing the recoverable amount
of the operating segment to which the goodwill relates. These operating segments represent the lowest level within the Group at which
goodwill is monitored for internal management purposes in accordance with the requirements of IFRS 8, Operating Segments.
Where goodwill forms part of an operating segment and part of the operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the
proportion of the business segment retained.
iNTANGiBLE ASSETS (OTHER THAN GOODWiLL) ARiSiNG ON BUSiNESS COMBiNATiONS
An intangible asset, which is a non-monetary asset without a physical substance, is capitalised separately from goodwill as part of
a business combination at cost (fair value at date of acquisition) to the extent that it is probable that the expected future economic
benefits attributable to the asset will flow to the Group and that its fair value can be reliably measured. Acquired brands and other
intangible assets are deemed to be identifiable and recognised when they are controlled through contractual or other legal rights, or
are separable from the rest of the business, regardless of whether those rights are transferable or separable from the Group or from
other rights and obligations.
Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses. The carrying values of intangible assets considered to have an indefinite useful economic life are reviewed
for indicators of impairment regularly and are subject to impairment testing on an annual basis unless events or changes in
circumstances indicate that the carrying values may not be recoverable and impairment testing is required earlier.
The amortisation charge on intangible assets considered to have finite lives is calculated to write-off the book value of the asset over
its useful life on a straight line basis on the assumption of zero residual value.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT 7 8
STATEMENT OF ACCOUNTiNG POLiCiES - CONTINUED
PROPERTY, PLANT & EQUiPMENT
Property (comprising land and buildings) is recognised at estimated fair value with the changes in the value of the property reflected
in other comprehensive income, to the extent it does not reverse previously recognised losses, or as an impairment loss in the
income statement to the extent it does not reverse previously recognised revaluation gains. The fair value is based on estimated
market value at the valuation date, being the estimated amount for which a property could be exchanged in an arm’s length
transaction, to the extent that an active market exists. Such valuations are determined based on benchmarking against comparable
transactions for similar properties in similar locations as those of the Group or on the use of valuation techniques including the use
of market yields on comparable properties. If no active market exists fair value may be determined using a Depreciated Replacement
Cost approach.
Plant & machinery is carried at its revalued amount. In view of the specialised nature of the Group’s plant & machinery and the lack of
comparable market-based evidence of similar plant sold as a ‘going concern’ i.e. as part of a continuing business, upon which to base a
market approach of fair value, the Group uses a Depreciated Replacement Cost approach to determine a fair value for such assets.
Depreciated Replacement Cost is assessed, firstly, by the identification of the gross replacement cost for each class of plant &
machinery. A depreciation factor derived from both the physical and functional obsolescence of each class of asset, taking into
account estimated residual values at the end of the life of each class of asset, is then applied to the gross replacement cost to
determine the net replacement cost. An economic obsolescence factor, which is derived based on current and anticipated capacity
or utilisation of each class of plant & machinery as a function of total available production capacity, is applied to determine the
Depreciated Replacement Cost.
Motor vehicles & other equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant &
equipment have different useful lives, they are accounted for as separate items (major components) of property, plant & equipment.
Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group.
Property, plant & equipment, other than freehold land and assets under construction, which are not depreciated, were depreciated
using the following rates which are calculated to write-off the value of the asset, less the estimated residual value, over its expected
useful life:
Land and Buildings
Land
Buildings
Plant and Machinery
Storage tanks
Other plant & machinery
Motor vehicles and other equipment
Motor vehicles
Other equipment incl returnable bottles, cases and kegs
n/a
2% straight line
10% reducing balance
15-30% reducing balance
15% straight line
5-25% straight line
The residual value and useful lives of property, plant & equipment are reviewed and adjusted if appropriate at each reporting date to
take account of any changes that could affect prospective depreciation charges and asset carrying values. When determining useful
economic lives, the principal factors the Group takes into account are the intensity at which the assets are expected to be used,
expected requirements for the equipment and technological developments.
On disposal of property, plant & equipment the cost or valuation and related accumulated depreciation and impairments are removed
from the balance sheet and the net amount, less any proceeds, is taken to the income statement and any amounts included within
the revaluation reserve transferred to the retained income reserve.
The carrying amounts of the Group’s property, plant & equipment are reviewed at each balance sheet date to determine whether
there is any indication of impairment. An impairment loss is recognised when the carrying amount of an asset or its cash generation
unit exceeds its recoverable amount (being the greater of fair value less costs to sell and value in use). Impairment losses are debited
directly to equity under the heading of revaluation reserve to the extent of any credit balance existing in the revaluation reserve
account in respect of that asset with the remaining balance recognised in the income statement.
A revaluation surplus is credited directly to other comprehensive income and accumulated in equity under the heading of revaluation
reserve, unless it reverses a revaluation decrease on the same asset previously recognised as an expense, where it is first credited to
the income statement to the extent of the previous write down.
C&C GROUP PLC - 2013 ANNUAL REPORT 7 9
iNVENTORiES
Inventories are stated at the lower of cost and net realisable value. Cost includes all expenditure incurred in acquiring the inventories
and bringing them to their present location and condition and is based on the first-in first-out principle.
In the case of finished goods and work in progress, cost includes direct production costs and the appropriate share of production
overheads plus excise duties, where appropriate. Net realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and estimated costs necessary to complete the sale.
Provision is made for slow-moving or obsolete stock where appropriate.
PROViSiONS
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at
the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to
present value at an appropriate rate if the effect of the time value of money is deemed material. The carrying amount of the provision
increases in each period to reflect the passage of time and the unwinding of the discount and increase in the provision due to the
passage of time is recognised in the income statement within finance expense.
A contingent liability is not recognised but is disclosed where the existence of the obligation will only be confirmed by future events
or where it is not probable that an outflow of resources will be required to settle the obligation or where the amount of the obligation
cannot be measured with reasonable reliability. Contingent assets are not recognised but are disclosed where an inflow of economic
benefits is probable. Provisions are not recognised for future operating losses, however, provisions are recognised for onerous
contracts where the unavoidable cost exceeds the expected benefit.
Due to the inherent uncertainty with respect to such matters, the value of each provision is based on the best information available
at the time, including advice obtained from third party experts, and is reviewed by the Directors on a periodic basis with the potential
financial exposure reassessed. Revisions to the valuation of a provision are recognised in the period in which such a determination is
made and such revisions could have a material impact on the financial performance of the Group.
LEASES
Where the Group has entered into lease arrangements on land & buildings the lease payments are allocated between land &
buildings and each component is assessed separately to determine whether it is a finance or operating lease.
Finance leases, which transfer to the Group substantially all the risks and rewards of ownership of the leased asset, are recognised
in property, plant & equipment at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the
minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and a reduction of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are charged to the income statement as part of finance expense.
Leases where the lessor retains substantially all the risks and benefits of ownership of the assets are classified as operating leases.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
RETiREMENT BENEFiT OBLiGATiONS
The Group operates a number of defined contribution and defined benefit pension schemes.
Obligations to the defined contribution pension schemes are recognised as an expense in the income statement as the related
employee service is received. Under these schemes, the Group has no obligation, either legal or constructive, to pay further
contributions in the event that the fund does not hold sufficient assets to meet its benefit commitments.
The liabilities and costs associated with the Group’s defined benefit pension schemes, all of which are funded and administered
under trusts which are separate from the Group, are assessed on the basis of the projected unit credit method by professionally
qualified actuaries and are arrived at using actuarial assumptions based on market expectations at the reporting date. The discount
rates employed in determining the present value of the schemes’ liabilities are determined by reference to market yields, at the
reporting date, on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated post-
employment benefit obligations. The fair value of scheme assets is based on market price information, measured at bid value for
publicly quoted securities.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
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STATEMENT OF ACCOUNTiNG POLiCiES - CONTINUED
RETiREMENT BENEFiT OBLiGATiONS - CONTiNUED
The resultant defined benefit pension net surplus or deficit is shown within either non-current assets or non-current liabilities on
the face of the Group balance sheet and comprises the total for each plan of the present value of the defined benefit obligation less
the fair value of plan assets out of which the obligations are to be settled directly. The assumptions (disclosed in note 22) underlying
these valuations are updated at each reporting period date based on current economic conditions and expectations (changes
to strategic asset allocations to investment types, salary inflation and mortality rates) and reflect any changes to the terms and
conditions of the post retirement pension plans. The deferred tax liabilities and assets arising on pension scheme surpluses and
deficits are disclosed separately within deferred tax assets or liabilities, as appropriate.
When the benefits of a defined benefit scheme are improved, the portion of the increased benefit relating to the past service of
employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits
become vested. To the extent that the enhanced benefits vest immediately, the related expense is recognised immediately in the
income statement.
The expected increase in the present value of scheme liabilities arising from employee service in the current or prior periods is
recognised in arriving at operating profit or loss together with the expected returns on the scheme assets and the increase during
the period in the present value of the scheme liabilities arising from the passage of time. Differences between the expected and the
actual return on plan assets, experience gains and losses on scheme liabilities, together with the effect of changes in the current or
prior assumptions underlying the liabilities are recognised in other comprehensive income. The amounts recognised in the Income
statement and Statement of other comprehensive income and the valuation of the defined benefit pension net surplus or deficit
are sensitive to the assumptions used. While management believe that the assumptions used are appropriate, differences in actual
experience or changes in assumptions may affect the valuation of retirement benefit obligations and expenses recognised in future
accounting periods.
Company
The Company has no direct employees and is not the sponsoring employer for any of the Group’s defined benefit pension schemes.
There is no stated policy within the Group in relation to the obligations of Group companies to contribute to scheme deficits. Group
companies make contributions to the schemes as requested by the sponsoring employers.
SHARE-BASED PAYMENTS
The Group operates a number of Share Option Schemes and Performance Share Plans, listed below:-
• Executive Share Option Scheme (the ‘ESOS’),
• Long Term Incentive Plan (Part I) (the ‘LTIP (Part I)’),
• Joint Share Ownership Plan (the “JSOP”),
• Restricted Share Award Scheme,
• Recruitment and Retention Plan,
• Long Term Incentive Plan (Part II) (the ‘LTIP (Part II)’), and
• Partnership and Matching Share Schemes.
Equity settled share-based payment transactions
Group share schemes allow certain employees to acquire shares in the Company. The fair value of share entitlements granted is
recognised as an employee expense in the income statement with a corresponding increase in equity, while the cost of acquiring
shares on the open market to satisfy the Group’s obligations under the Partnership and Matching Share Schemes is recognised in
the income statement as incurred.
To date, share options granted by the Company under the ESOS and share entitlements (represented by nil-cost options) granted
under the LTIP (Part II) are subject to non-market vesting conditions only.
An element of the share entitlements (represented by nil-cost options) granted by the Company under the LTIP (Part I), the
Recruitment and Retention Plan and the Restricted Share Award Scheme and some of the shares granted under the Joint Share
Ownership Plan are subject to market vesting conditions with or without non-market vesting conditions whilst the remainder are
subject to non-market vesting conditions only, the details of which are set out in note 4. Market conditions are incorporated into
the calculation of fair value of share entitlements as at grant date. Non-market vesting conditions are not taken into account when
estimating such fair value.
The expense for the share entitlements shown in the income statement is based on the fair value of the total number of entitlements
expected to vest and is allocated to accounting periods on a straight line basis over the vesting period. The cumulative charge to the
income statement at each reporting date reflects the extent to which the vesting period has expired and the Group’s best estimate of
the number of equity instruments that will ultimately vest. It is reversed only where entitlements do not vest because all non-market
performance conditions have not been met or where an employee in receipt of share entitlements leaves the Group before the end
of the vesting period and forfeits those options in consequence i.e. awards are treated as vesting irrespective of whether or not the
market condition is satisfied, provided that all other performance and/or service conditions are satisfied. No reversal is recorded for
failure to vest as a result of market conditions not being met.
C&C GROUP PLC - 2013 ANNUAL REPORT 8 1
SHARE-BASED PAYMENTS - CONTiNUED
The proceeds received by the Company net of any directly attributable transaction costs on the vesting of share entitlements are
credited to share capital and share premium when the share entitlements are exercised. Amounts included in the share-based
payments reserve are transferred to retained income when vested options are exercised, forfeited post vesting or lapse.
The dilutive effect of outstanding options is reflected as additional share dilution in the determination of diluted earnings per share.
Cash settled share-based payment transactions
The fair value of the amount payable to employees in respect of share appreciation rights that are settled in cash is recognised
as an expense in the Income statement with a corresponding increase in liabilities, over the period that the employees become
unconditionally entitled to the payment. The liability is re-measured at each reporting date and at settlement date based on the fair
value of the share appreciation rights. Any changes are recognised as an employee benefit expense in the Income statement.
iNCOME TAX
Current tax
Current tax expense represents the expected tax amount to be paid in respect of taxable income for the current year and is based
on reported profit and the expected statutory tax rates, reliefs and allowances applicable in the jurisdictions in which the Group
operates. Current tax for the current and prior years, to the extent that it is unpaid, is recognised as a liability in the balance
sheet. The Group is subject to income tax in a number of jurisdictions, and judgement is required in determining the worldwide
provision for taxes. There are many transactions and calculations during the ordinary course of business, for which the ultimate tax
determination is uncertain and the complexity of the tax treatment may be such that the final tax charge may not be determined
until a formal resolution has been reached with the relevant tax authority which may take several years to conclude. The ultimate
tax charge may, therefore be different from that which initially is reflected in the Group’s consolidated tax charge and provision and
any such differences could have a material impact on the Group’s income tax charge and consequently financial performance. The
determination of the provision for income tax is based on management’s understanding of the relevant tax law and judgement as to
the appropriate tax charge, and management believe that all assumptions and estimates used are reasonable and reflective of the
tax legislation in jurisdictions in which the Group operates. Where the final tax charge is different from the amounts that were initially
recorded, such differences are recognised in the income tax provision in the period in which such determination is made.
Deferred tax
Deferred tax is provided on the basis of the balance sheet liability method on all temporary differences at the reporting date.
Temporary differences are defined as the difference between the tax bases of assets and liabilities and their carrying amounts in
the financial statements. Deferred tax assets and liabilities are not subject to discounting and are measured at the tax rates that are
expected to apply in the period in which the asset is recognised or the liability is settled based on tax rates and tax laws that have
been enacted or substantively enacted at the balance sheet date.
Deferred tax assets and liabilities are recognised for all temporary differences except where they arise from:-
•
•
the initial recognition of goodwill or the initial recognition of an asset or a liability in a transaction that is not a business
combination and affects neither the accounting profit or loss nor the taxable profit or loss at the time of the transaction, or,
temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary difference is
subject to the Group’s control and it is probable that a reversal will not be recognised in the foreseeable future.
Deferred tax assets in respect of deductible temporary differences are recognised only to the extent that it is probable that taxable
profits or taxable temporary differences will be available against which to offset these items. The recognition or non recognition of
deferred tax assets as appropriate also requires judgement as it involves an assessment of the future recoverability of those assets.
The recognition of deferred tax assets is based on management’s judgement and estimate of the most probable amount of future
taxable profits and taking into consideration applicable tax legislation in the relevant jurisdiction. The carrying amounts of deferred
tax assets are subject to review at each reporting date and are reduced to the extent that future taxable profits are considered to be
insufficient to allow all or part of the deferred tax asset to be utilised.
Deferred tax and current tax are recognised as a component of the tax expense in the income statement except to the extent that they
relate to items recognised directly in other comprehensive income (for example, certain derivative financial instruments and actuarial
gains and losses on defined benefit pension schemes), in which case the related tax is also recognised in other comprehensive income.
FiNANCiAL iNSTRUMENTS
Trade & other receivables
Trade receivables are initially recognised at fair value (which usually equals the original invoice value) and are subsequently
measured at amortised cost. A provision for impairment of trade receivables is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the
difference between the asset’s carrying amount and the present value of estimated future cash flows. Movements in provisions are
recognised in the income statement. Bad debts are written-off against the provision when no further prospect of collection exists.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT 8 2
STATEMENT OF ACCOUNTiNG POLiCiES - CONTINUED
FiNANCiAL iNSTRUMENTS - CONTiNUED
Cash & cash equivalents
Cash & cash equivalents in the balance sheet comprise cash at bank and in hand and short term deposits with an original maturity of
three months or less. Bank overdrafts that are repayable on demand and form part of the Group’s cash management are included as
a component of cash & cash equivalents for the purpose of the statement of cash flows.
Advances to customers
Advances to customers, which can be categorised as either an advance of discount or a repayment/annuity loan conditional
on the achievement of contractual sales targets, are initially recognised at fair value, amortised to the income statement (and
classified within sales discounts as a reduction in revenue) over the relevant period to which the customer commitment is made,
and subsequently carried at amortised cost less an impairment allowance. Where there is a volume target the amortisation of the
advance is included in sales discounts as a reduction to revenue. A provision for impairment is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the agreement with the
customer. The amount of the provision is determined by the difference between the asset’s carrying amount and the present value of
the estimated future cash flows or recognition of the estimated amortisation of advances.
Trade & other payables
Trade & other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
rate method, unless the maturity date is less than six months.
Interest-bearing loans & borrowings
Interest-bearing loans & borrowings are recognised initially at fair value less attributable transaction costs and are subsequently
measured at amortised cost with any difference between the amount originally recognised and redemption value being recognised
in the income statement over the period of the borrowings on an effective interest rate basis. Where the early refinancing of a loan
results in a significant change in the present value of the expected cash flows, the original loan is de-recognised and the replacement
loan is recognised at fair value.
Derivative financial instruments
The Group uses derivative financial instruments (principally interest rate swaps and forward foreign exchange contracts) to hedge its
exposure to interest rate and foreign exchange risks arising from operational and financing activities. The Group does not enter into
speculative transactions.
Derivative financial instruments are measured at fair value at each reporting date. The fair value of interest rate swaps is the
estimated amount that the Group would receive or pay to terminate the swap at the reporting date, taking into account current
market interest and currency exchange rates where relevant and the current creditworthiness of the swap counterparties. The fair
value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity
and credit profiles and equates to the market price at the balance sheet date.
Gains or losses on re-measurement to fair value are recognised immediately in the income statement except where derivatives are
designated and qualify for cashflow hedge accounting in which case recognition of any resultant gain or loss is recognised through
other comprehensive income.
Derivative financial instruments entered into by the Group are for the purposes of hedge accounting classified as cash flow hedges
which hedge exposure to fluctuations in future cash flows derived from a particular risk associated with a recognised asset, liability,
a firm commitment or a highly probable forecast transaction.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as
well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised liability, a firm
commitment or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument
is recognised as a separate component of other comprehensive income with the ineffective portion being reported in the income
statement. The associated gains or losses that had previously been recognised in other comprehensive income are transferred to
the income statement contemporaneously with the materialisation of the hedged transaction, except when a firm commitment or
forecast transaction results in the recognition of a non-financial asset or a non-financial liability, in which case the cumulative gain
or loss is removed from other comprehensive income and included in the initial measurement of the asset or liability.
C&C GROUP PLC - 2013 ANNUAL REPORT 8 3
FiNANCiAL iNSTRUMENTS - CONTiNUED
Hedge accounting is discontinued when the hedging instrument expires or is sold, is terminated or exercised, or no longer qualifies
for hedge accounting. For situations where the hedging instrument no longer qualifies for hedge accounting, the cumulative gain or
loss on the hedging instrument that remains recognised directly in equity from the period when the hedge was effective shall remain
separately recognised in equity until the expected forecast transaction occurs. If a hedged transaction is no longer expected to occur,
the net cumulative gain or loss recognised in other comprehensive income is transferred to the income statement in the period.
Net investment hedging
Any gain or loss on the effective portion of a hedge of a net investment in a foreign operation using a foreign currency denominated
monetary liability is recognised in other comprehensive income while the gain or loss on the ineffective portion is recognised
immediately in the income statement. Cumulative gains and losses remain in other comprehensive income until disposal of the net
investment in the foreign operation at which point the related differences are transferred to the income statement as part of the
overall gain or loss on disposal.
SHARE CAPiTAL/PREMiUM
Ordinary shares are classified as equity instruments. Incremental costs directly attributable to the issuance of new shares are shown
in equity as a deduction from the gross proceeds.
Treasury shares
Equity share capital issued under its Joint Share Ownership Plan, which is held in trust by an Employee Trust is classified as treasury
shares on consolidation until such time as the Interests vest and the participants acquire the shares from the Trust or the Interests
lapse and the shares are cancelled or disposed of by the Trust.
Own shares acquired under share buyback programme
The cost of ordinary shares purchased by the Company on the open market is recorded as a deduction from equity on the face of the
Group and Company balance sheet. When these shares are cancelled, an amount equal to the nominal value of any shares cancelled
is included within the capital redemption reserve fund and the cost is deducted from retained earnings.
Dividends
Final dividends on ordinary shares are recognised as a liability in the financial statements only after they have been approved at an
annual general meeting of the Company. Interim dividends on ordinary shares are recognised when they are paid.
COMPANY FiNANCiAL ASSETS
The change in legal parent of the Group on 30 April 2004, as disclosed in detail in that year’s annual report, was accounted for as a
reverse acquisition. This transaction gave rise to a financial asset in the Company’s accounts, which relates to the fair value at that
date of its investment in subsidiaries. Financial assets are reviewed for impairment if there are any indications that the carrying value
may not be recoverable.
Share options granted to employees of subsidiary companies are accounted for as an increase in the carrying value of the investment
in subsidiaries and the share-based payment reserve.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
8 4
NOTES
Forming part of the financial statements
1. SEGMENTAL REPORTiNG
The Group’s business activity is the manufacturing, marketing and distribution of alcoholic drinks and five reporting segments
have been identified in the current period; Republic of Ireland (‘ROI’), Cider United Kingdom (‘Cider UK’), Tennent’s United
Kingdom (‘Tennent’s UK’), International, and Third Party Brands United Kingdom (‘Third Party Brands UK’).
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’). As a
result, the basis of segmentation differs from that presented in the prior year however it corresponds with the current year nature
of reporting lines to the CODM (as defined in IFRS 8 Operating Segments), and the Group’s internal reporting for the purpose of
managing the business, assessing performance and allocating resources.
The CODM, identified as the executive directors comprising Stephen Glancey, Kenny Neison and, from 23 October 2012, Joris
Brams, assesses and monitors the operating results of segments separately via internal management reports in order to
effectively manage the business and allocate resources.
During the current financial year, the CODM reviewed the basis on which they received financial information to manage the
business and concluded that it was no longer wholly appropriate and consequently implemented a number of changes as
outlined in the paragraphs below. In all instances the changes were deemed necessary to better enable the CODM to evaluate the
results of the business and the economic environment in which the business operates. The operating segments that have been
aggregated all have similar economic characteristics and are similar in terms of product, production and distribution processes,
and customers. All comparative amounts have been restated to reflect the new basis of segmentation. The reclassification has no
impact on the Revenue, Net revenue or Operating profit reported by the Group.
The identified reporting segments are as follows:-
(i) ROI
This segment includes the financial results from sale of all products in the Republic of Ireland (‘ROI’), principally Bulmers,
Tennent’s, Caledonia Smooth and third party brands as permitted under the terms of a distribution agreement with AB InBev.
The continued challenging economic climate within which the ROI business operates changed the focus of the CODM from
the financial performance of cider in ROI to that of the total financial performance of the portfolio derived from the ROI
market. Previously the financial results from the sale of Tennent’s and third party brands in ROI were reported within the
Tennent’s and Third Party Brands segments.
(ii) Cider UK
This segment includes the results from sale of the Group’s cider products in the UK, with Magners, Gaymers and Blackthorn
the principal brands. Previously the results from the sale of the Group’s cider products in the UK were shown within two
segments, Cider GB (cider sales in Great Britain (‘GB’)) and Cider NI (cider sales in Northern Ireland (‘NI’)).
As permitted under IFRS 8 Operating Segments, the Group has aggregated the Cider NI operating segment with the Cider
GB operating segment as the nature of the products are identical, profit margins are aligned, both operating segments are
managed by the same segment manager, the strategic objectives and the type of customers in both jurisdictions are similar
as is the method of distribution, the market in which they operate, and the regulatory environment.
In addition, in updating the manner in which the CODM wished to monitor and assess financial performance of the Group, a
decision was taken that the financial performance of the element of the Group’s business concerned with the production and
sale of ‘private-label’ cider products in the UK was better managed and controlled as part of the operating segment Third
Party Brands UK. This decision was taken on the basis that the operating margins of this business component are similar
to those earned from other third party brands; the strategic objectives are more aligned with those of the Group’s third
party distribution business and the inclusion of this business within the operating segment Cider UK distorts the financial
information which the CODM uses to decide on the allocation of resources.
(iii) Tennent’s UK
This segment includes the results from sale of the Group’s ‘owned’ beer brand – Tennent’s in the UK and sales of Caledonia Best
in the UK. This differs from that previously presented where the financial results from sale of Tennent’s across all territories was
disclosed within the Tennent’s segment.
(iv) International
This segment includes the results from sale of the Group’s cider and beer products, principally Magners, Blackthorn, Hornsby’s,
Woodchuck and Tennent’s in all territories outside of the ROI and the UK. This differs from that previously presented where
the financial results from sale of Tennent’s across all territories was previously disclosed within the Tennent’s segment.
Accordingly, the Group renamed the segment ‘International’ from ‘Cider Export’; this aligns with the internal structure where a
segment manager was appointed during the year with responsibility for the new International segment.
C&C GROUP PLC - 2013 ANNUAL REPORT
8 5
1. SEGMENTAL REPORTiNG - CONTiNUED
(v) Third Party Brands UK
This segment relates to the distribution of third party brands and the production and distribution of private label products in the
UK. Previously, results from the sale of third party brands in ROI were included within the operating segment Third Party Brands
but for reasons outlined above are now included in the ROI segment.
Information regarding the results of each reportable segment is disclosed below for the Group’s continuing business while the relevant
information in relation to the prior year disposal of the Group’s wholesaling business in Northern Ireland (Quinns of Cookstown) is
disclosed in note 8.
The 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.
Segment capital expenditure is the total amount incurred during the year to acquire segment assets, excluding those assets acquired in
business combinations that are expected to be used for more than one accounting period.
(a) Reporting segment disclosures
ROI
Cider UK
Tennent’s UK
International
Third party brands UK
Continuing operations
Discontinued operations (note 8)
Total before unallocated items
Unallocated items:
Exceptional items (note 5)
2013
Net
revenue
€m
92.2
137.8
108.9
47.8
90.2
476.9
-
Operating
profit
€m
Revenue
€m
38.5
30.9
30.3
9.1
5.1
113.9
-
142.5
218.6
209.9
30.7
115.0
716.7
5.2
2012
(restated)
Net
revenue
€m
101.4
162.1
95.8
30.6
90.9
480.8
5.2
Operating
profit
€m
44.4
35.2
21.2
6.8
3.6
111.2
(0.1)
Revenue
€m
133.8
195.8
229.3
48.5
116.7
724.1
-
724.1
476.9
113.9
721.9
486.0
111.1
-
-
(4.6)*
-
-
4.9**
Total
724.1
476.9
109.3
721.9
486.0
116.0
*
**
Of the exceptional loss in the current year, €1.3m gain relates to ROI, €0.8m loss to Cider UK, €2.6m loss to International, €0.5m loss to Tennent’s UK,
and €2.0m loss remains unallocated.
Of the exceptional items in the prior year, €4.8m gain relates to ROI, €1.4 m gain to Cider UK, €1.3m gain to International, a €2.7m loss to Tennent’s and
a €0.1m gain to discontinued operations.
In the prior year, the unallocated exceptional items excluded the loss on disposal of discontinued activities of €1.1m and a loss of €0.7m
on the recycling of a foreign currency reserve to the income statement following the disposal of the Group’s NI wholesaling business.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
8 6
NOTES - CONTINUED
Forming part of the financial statements
1. SEGMENTAL REPORTiNG - CONTiNUED
The impact of the reclassification of the FY2012 financial results as previously described is outlined below. This reclassification has no
impact on the Revenue, Net revenue or Operating profit reported by the Group:-
Revenue Net revenue
€m
€m
Operating
profit
€m
ROi
Previously reported - Cider ROI
Impact of change
Current classification
Cider UK
Previously reported - Cider GB
Impact of change
Current classification
Tennent’s UK
Previously reported - Tennent’s
Impact of change
Current classification
international
Previously reported - Cider Export
Impact of change
Current classification
Third party brands UK
Previously reported - Third party brands
Impact of change
Current classification
Cider Ni
Previously reported
Impact of change
Current classification
(b) Other operating segment information
ROI
Cider UK
Tennent’s UK
International
Third party brands UK
Total
126.8
15.7
91.5
9.9
142.5
101.4
249.8
(31.2)
172.8
(10.7)
218.6
162.1
216.8
(6.9)
100.1
(4.3)
209.9
95.8
30.3
0.4
30.7
77.9
37.1
115.0
30.2
0.4
30.6
74.0
16.9
90.9
15.1
(15.1)
12.2
(12.2)
-
-
42.2
2.2
44.4
29.5
5.7
35.2
22.3
(1.1)
21.2
6.6
0.2
6.8
7.1
(3.5)
3.6
3.5
(3.5)
-
2013
Capital
expenditure Depreciation
€m
€m
2012
(restated)
Capital
expenditure
€m
Depreciation
€m
2.2
10.3
8.7
3.1
-
24.3
3.3
8.6
8.3
1.2
0.2
1.4
8.8
7.4
0.6
0.4
3.8
8.3
7.2
0.6
0.3
21.6
18.6
20.2
C&C GROUP PLC - 2013 ANNUAL REPORT
1. SEGMENTAL REPORTiNG - CONTiNUED
(c) Geographical analysis of revenue and net revenue (continuing operations)
Republic of Ireland
United Kingdom
Rest of Europe
North America
Rest of World
Total
8 7
Revenue
Net revenue
2013
€m
133.8
541.8
14.2
29.9
4.4
2012
€m
142.5
543.5
10.4
14.5
5.8
2013
€m
92.2
336.9
14.2
29.2
4.4
2012
€m
101.4
348.8
10.4
14.4
5.8
724.1
716.7
476.9
480.8
The geographical analysis of revenue and net revenue is based on the location of the third party customers.
(d) Geographical analysis of non-current assets
28 February 2013
Property, plant & equipment
Goodwill & intangible assets
Equity-accounted investees
Retirement benefit obligations
Deferred tax assets
Derivative financial instruments
Trade & other receivables
ROi
€m
54.1
120.3
-
-
5.2
-
0.5
UK
€m
123.9
322.8
2.4
0.5
-
1.4
30.8
Total
180.1
481.8
29 February 2012
Property, plant & equipment
Goodwill & intangible assets
Retirement benefit obligations
Deferred tax assets
Trade & other receivables
ROi
€m
56.6
120.3
-
6.5
-
UK
€m
124.6
325.8
0.2
-
19.5
Total
183.4
470.1
Rest of
Europe
€m
North
America
€m
Rest of
World
€m
-
7.1
-
-
-
-
-
7.1
5.6
251.4
-
-
1.0
-
-
258.0
-
5.6
-
-
-
-
-
5.6
Rest of
Europe
€m
North
America
€m
Rest of
World
€m
-
7.1
-
-
-
7.1
0.6
26.1
-
-
-
26.7
-
5.6
-
-
-
5.6
Total
€m
183.6
707.2
2.4
0.5
6.2
1.4
31.3
932.6
Total
€m
181.8
484.9
0.2
6.5
19.5
692.9
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 application of IFRS 8 Operating Segments or date of acquisition, if later.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
8 8
NOTES - CONTINUED
Forming part of the financial statements
2. OPERATiNG COSTS
Before
exceptional
items
€m
2013
Exceptional
items
(note 5)
€m
Raw material cost of goods sold
Inventory write-down/(recovered) (note 15)
Employee remuneration (note 3)
Direct brand marketing
Other operating, selling and administration costs
Depreciation
Amortisation
Research and development costs
Revaluation of property, plant & machinery (note 12)
Auditors remuneration (note a)
Operating lease rentals:
- land & buildings
- plant & machinery
- other
Total
Relating to discontinued operations (note 8)
Relating to continuing operations
177.5
0.8
62.1
37.8
55.9
21.6
0.1
0.3
-
0.8
4.4
0.8
0.9
363.0
-
363.0
-
(1.0)
1.2
-
4.4
-
-
-
-
-
-
-
-
4.6
-
4.6
Before
exceptional
items
€m
2012
Exceptional
items
(note 5)
€m
176.2
0.3
70.3
48.2
53.2
20.2
0.1
0.5
-
0.6
4.0
0.4
0.9
-
(0.7)
(10.2)
-
4.0
-
-
-
2.0
-
-
-
-
Total
€m
176.2
(0.4)
60.1
48.2
57.2
20.2
0.1
0.5
2.0
0.6
4.0
0.4
0.9
374.9
(5.3)
(4.9)
0.1
370.0
(5.2)
Total
€m
177.5
(0.2)
63.3
37.8
60.3
21.6
0.1
0.3
-
0.8
4.4
0.8
0.9
367.6
-
367.6
369.6
(4.8)
364.8
(a) Auditor remuneration: The remuneration of the Group’s statutory auditor, being the Irish firm of the principal auditor of the
Group, KPMG, Chartered Accountants is as follows:
Audit of the Group financial statements
Other assurance services
Tax advisory services
Total
2013
€m
0.4
-
0.4
0.8
2012
€m
0.3
0.1
0.2
0.6
The audit fee for the audit of the financial statements of the Company was less than €0.1m in the current and prior financial year.
3. EMPLOYEE NUMBERS & REMUNERATiON COSTS
The average number of persons employed by the Group (including executive Directors) during the year, analysed by category, was
as follows:-
Sales & marketing
Production & distribution
Administration
Total
2013
Number
2012
Number
300
529
121
950
295
524
135
954
The actual number of persons employed by the Group as at 28 February 2013 was 1,001 (29 February 2012: 926).
C&C GROUP PLC - 2013 ANNUAL REPORT
3. EMPLOYEE NUMBERS & REMUNERATiON COSTS - CONTiNUED
The aggregate remuneration costs of these employees can be analysed as follows:-
Wages, salaries and other short term employee benefits
Restructuring costs (note 5)
Social welfare costs
Retirement benefit obligations – defined benefit schemes (note 22)
Retirement benefit obligations – defined contribution schemes
Equity settled share-based payments (note 4)
Cash settled share-based payments (note 4)
Partnership & matching share schemes (note 4)
Charged to the income statement
Actuarial loss on retirement benefit obligations recognised in other comprehensive income (note 22)
Total employee benefits
4. SHARE-BASED PAYMENTS
8 9
2012
€m
54.8
4.6
5.6
(13.3)
5.7
2.6
-
0.1
60.1
19.0
79.1
2013
€m
47.5
1.2
5.3
1.3
4.5
3.0
0.2
0.3
63.3
12.3
75.6
Equity settled awards
In April 2004, the Group established an equity settled Executive Share Option Scheme (ESOS) under which options to purchase
shares in C&C Group plc are granted to certain executive Directors and members of management. Under the terms of the
scheme, the options are exercisable at the market price prevailing at the date of the grant of the option. The maximum grant that
can normally be made to any individual in any one year is an award of 150% of base salary in that year. Options have been granted
under this scheme in each year since 2004.
Under this scheme, options will not normally be exercisable until three years after the date of grant and are subject to meeting
a specific performance target relating to growth in earnings per share (EPS). EPS is calculated using earnings per share before
exceptional items, as disclosed in the Company’s financial statements, adjusted for any other adjustments approved by the
Remuneration Committee. This performance target requires that the Group’s aggregate EPS in the three financial years to be not
less than the aggregate that would have been achieved had base-year earnings per share grown by 5% per annum in excess of the
change in the Irish Consumer Price Index (Irish CPI) during the period, in order for options to vest. If after the relevant three-year
period (i.e. 3 years from date of grant) the performance target is not met, the options lapse.
In April 2004, the Group established a Long Term incentive Plan (LTiP (Part i)) under the terms of which options to purchase shares
in C&C Group plc are granted at nil cost to certain executive Directors and members of management. Under this plan, awards of up
to 100% of base salary may normally be granted and up to 200% of base salary in exceptional circumstances.
Options under this scheme were granted in January 2006, in June of each year from 2006 through to 2008, in June 2011, February
2012 and in May 2012. All awards granted prior to 2011 were forfeited, lapsed or did not vest. The Remuneration Committee has
adopted performance conditions for the options awarded during FY2012 and FY2013 as follows:
• With regard to 50% of the award, a performance condition relating to total shareholder return (TSR) applies with an underpin
as mentioned below. 30% of this part of the award vests if the Group’s TSR over a three-year period equals the median TSR of a
comparator group; 100% of this part of the award vests if the Group’s TSR over a three-year period equals or exceeds the TSR of
the upper quartile of the comparator group; for performance between the median and the upper quartile there is straight-line
pro-rating between 30% and 100%. None of this part of the award vests if the Group’s TSR over a three-year period is less than
the median TSR of a comparator group. In respect of the TSR condition, an underpin applies; the growth in the Group’s earnings
per share (EPS) over the three-year period must be 5% or more per annum in real terms (compared with Irish CPI) over the
same period; alternatively the Remuneration Committee must be satisfied that the Group’s underlying financial performance
warrants that level of vesting; otherwise the award lapses. EPS is calculated using the adjusted earnings per share as
disclosed in the Company’s financial statements, subject to any further adjustments approved by the Remuneration Committee.
• With regard to the remaining 50% of the award, a performance condition relating to growth in EPS applies. 30% of this part of
the award vests if the Group’s aggregate EPS in a three year period achieves 4% per annum compound growth in real terms
(compared with Irish CPI). 100% of this part of the award vests if the Group’s aggregate EPS in a three year period achieves 10%
per annum compound growth in real terms. There is straight-line pro-rating between 30% and 100% for performance between
4% and 10% per annum. None of this part of the award vests if the real growth in the Group’s aggregate EPS in a three-year
period is less than 4% per annum.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
9 0
NOTES - CONTINUED
Forming part of the financial statements
4. SHARE-BASED PAYMENTS - CONTiNUED
In December 2008, the Group established a Joint Share Ownership Plan (JSOP) whereby certain executive Directors and
members of management were eligible to participate in the Plan at the discretion of the Remuneration Committee. Under this
plan, Interests in the form of a restricted interest in ordinary shares in the Company were awarded to executive Directors and
key members of senior management on payment upfront to the Company of an amount equal to 10% of the initial issue price of
the shares on the acquisition of the Interest. The participants are also required to pay a further amount if the tax value of their
interest exceeds the price paid. When the further amount is paid, the Company compensates the participant for the obligation
to pay this further amount by paying him an equivalent amount, which is, however, subject to income tax in the hands of the
participant.
The vesting of Interests granted was subject to the following conditions. All of the Interests were subject to a time vesting
condition with one-third of the Interest in the shares vesting on each of the first, second and third anniversary of acquisition.
In addition, half of the Interests in the shares were subject to a pre-vesting share price target. In order to benefit from those
Interests the Company’s share price must be greater than €2.50 for 13,800,000 of the Interests initially awarded, and €4.00 for
2,200,000 of the Interests initially awarded, for at least 20 days out of 40 consecutive dealing days during the five-year period
commencing on the date of acquisition of the Interest. All the Interests currently outstanding have now vested.
When an Interest vests, the trustees may, at the request of the participant and on payment of the further amount, if relevant,
transfer shares to the participant of equal value to the participant’s Interest or the shares may be sold by the trustees, who will
account to the participant for the difference between the sale proceeds (less expenses) and the Hurdle Value (balancing 90% of
the acquisition price on the acquisition of the Interest).
In February 2010, the Group established a Restricted Share Award Scheme under the terms of which options to purchase shares
in C&C Group plc at nil or nominal cost were granted to certain members of management, excluding Directors. The vesting
conditions for these awards were similar to those for the JSOP award.
In June 2010, the Group established a Recruitment and Retention Plan under the terms of which options to purchase shares in
C&C Group plc at nil or nominal cost are granted to certain members of management, excluding Directors.
The performance conditions and/or other terms and conditions for awards granted under this plan are specifically approved by the
Board of Directors at the time of each individual award, following a recommendation by the Remuneration Committee. The Board
approved the award of 81,000 options under this plan in June 2010 and an award of 33,166 options in August 2011, in each case
subject to time vesting conditions only so as to normally vest in three equal tranches, on the first, second and third anniversaries of
grant and a further award of 31,791 options granted in August 2011 are also subject to time vesting conditions only, so as to normally
vest on the third anniversary of grant. In the current financial year an award of 1,036,255 was granted in May 2012. The vesting
of awards for grants made in 2012 under the Recruitment and Retention Plan are subject to the performance condition that the
Company’s total shareholder return (“TSR”) must grow by not less than 25% between 17 May 2012 and 16 May 2014. Awards vest
in full if the growth in TSR is at least 50% over that period. Where TSR growth is between 25% and 50% the percentage of the award
that vests is calculated on a straight line basis between 25% and 100% subject to continued employment and the achievement of the
performance conditions, awards will rest in two equal tranches in May 2014 and May 2015.
Obligations arising under the Restricted Share Award Scheme and the Recruitment and Retention Plan will be satisfied by the purchase
of existing shares on the open market. On settlement any difference between the amount included in the Share-based payment reserve
account and the cash paid to purchase the shares is recognised in retained income via the statement of changes in equity.
In May 2011, the Group established a deferred equity settled share bonus scheme, Long Term incentive Plan (LTiP (Part ii)), under
which shares are awarded to certain employees (excluding executive directors and senior management) at nil cost, at the end of the
financial year in which the award is granted, if the performance conditions set by the Remuneration Committee are achieved and
subject to a two year time vesting period post the end of the relevant financial year. In the prior financial year, the Remuneration
Committee agreed three levels of award linked to operating profit targets. Based on the actual results to 29 February 2012, a right to
receive shares at nil cost equating to 23% of salary was granted to certain employees and a right to receive shares at a cost equating
to 5% of salary was granted to other employees. The maximum number of shares over which awards were granted under the LTIP
(Part II) in the financial year ended 29 February 2012 was set by reference to a share price of €3.55, being the closing share price on 18
May 2011, the date the results for the financial year ended 28 February 2011 were announced. Awards will vest in May 2014 subject to
continued employment only. Obligations will be satisfied by the purchase of existing shares on the open market.
C&C GROUP PLC - 2013 ANNUAL REPORT
9 1
4. SHARE-BASED PAYMENTS - CONTiNUED
In November 2011, the Group set up Partnership and Matching Share Schemes for all ROI and UK based employees of the Group
under the approved profit sharing schemes referred to below. Under these schemes, employees can invest in shares in C&C Group
plc (“contributory/partnership” shares) that will be matched on a 1:1 basis by the Company (“matching shares”) subject to Revenue
approved limits. Both the contributory and matching shares are held on behalf of the employee by the Scheme trustee, Capita
Corporate Trustees Limited. The shares are purchased on the open market on a monthly basis at the market price prevailing at the
date of purchase with any remaining cash amounts carried forward and used in the next share purchase. The shares are held in
trust for the participating employee, who has full voting rights and dividend entitlements on both partnership and matching shares.
Matching shares may be forfeited and/or tax penalties may apply if the employee leaves the Group or removes their contributory
shares within the Revenue-stipulated vesting period. The Revenue stipulated vesting period for matching shares awarded under the
ROI scheme is three years and under the UK scheme is five years.
The Group held 125,563 matching shares (251,126 partnership and matching) in Trust at 28 February 2013 (2012: 33,047 matching
shares and 66,094 partnership and matching shares held).
In December 2011 the Group set up a discretionary Share Matching Plan under which invitations to participate were made to certain
international (non ROI and UK) employees. Awards of shares (being a right to acquire shares at nil cost) were made in February
2012, conditional on the participant agreeing to buy in advance and hold an equivalent number of ordinary shares in the Company
(investment shares) in accordance with the plan. The maximum award was 325 shares per participant. Each award will vest on the
second anniversary of the grant date provided that the participant remains employed in the Group and retains his investment shares
acquired in relation to the matching award. Matching share awards are not entitled to dividends during the vesting period. Qualifying
leavers remain entitled to their matching awards, which vest either on the date of cessation or on the normal vesting date, as the
Company may decide. Awards made to other leavers are forfeited.
The Group held 1,625 matching shares (3,250 partnership and matching) in Trust at 28 February 2013 (2012: nil).
In 2001, the Group entered into an agreement with trade unions representing the majority of its then employees, which provided for
the establishment of an approved profit sharing schemes (APSS) in ROI and the UK and an approved save as you earn share option
scheme (SAYE scheme). A discretionary APSS scheme was put in place for the year ended 28 February 2007. Under this scheme
189,061 shares were purchased at a cost of €2.5m and placed in Irish/UK Revenue approved employee trusts where they were held
in trust on behalf of each employee. The relevant vesting period has now expired, all remaining shares have now been transferred
out of the employee trusts and into the participants’ individual names. The SAYE scheme has been established but not implemented.
Cash-settled awards
In May 2012 the Group granted 114,522 cash-settled awards on terms equivalent to the LTIP (Part I). The awards, on vesting will be
settled by way of a cash payment calculated based on the Group’s closing share price on the dealing day before the settlement date.
In January 2012, the Group granted 98,600 cash-settled awards on terms equivalent to the rules of the Recruitment and Retention
Plan and subject to time vesting conditions only so as to normally vest on the third anniversary of date of grant. The award, on
vesting will be settled by way of cash payment, calculated based on the closing price of the Group’s shares on the dealing day
before the settlement date.
In December 2012, the Group granted 150,786 cash-settled awards on terms equivalent to the rules of the Recruitment
and Retention Plan. The awards are subject to the following vesting conditions, namely: (a) continued employment; and (b)
performance conditions as follows: 25% of the award will vest if the business unit related to the participant achieves a pre-
approved operating profit target in FY2014; 25% will vest on the achievement of a pre-approved operating profit target in FY2015;
with the remaining 50% vesting on the achievement of a pre-approved operating profit target in FY2016. Each award, on vesting
will be settled by way of a cash payment calculated based on the Group’s closing share price on the dealing day before the
settlement date.
Award valuation
The fair values assigned to the ESOS options granted were computed in accordance with a binomial valuation methodology; the
fair value of options awarded under the LTIP (Part I) were computed in accordance with the stochastic model for the TSR element
and the binomial model for the EPS element; the fair value of options awarded under the Recruitment and Retention Plan and
LTIP (Part II) were computed in accordance with a binomial model; and the fair value of the Interests awarded under the Joint
Share Ownership Plan and the Restricted Share Award Plan were computed using a Monte Carlo simulation model. As per IFRS
2 Share-based Payment, market based vesting conditions, such as the LTIP (Part I) TSR condition and the share price target
conditions in the Joint Share Ownership Plan and the Restricted Share Award Plan, have been taken into account in establishing
the fair value of equity instruments granted. Non-market or performance related conditions were not taken into account in
establishing the fair value of equity instruments granted, instead these non-market vesting conditions are taken into account
by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately the
amount recognised for time and services received as consideration for the equity instruments granted is based on the number of
equity instruments that eventually vest, unless the failure to vest is due to failure to meet a market condition.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
9 2
NOTES - CONTINUED
Forming part of the financial statements
4. SHARE-BASED PAYMENTS - CONTiNUED
The main assumptions used in the valuations for equity settled share based payment awards were as follows:-
Recruitment
& Retention
plan
May 2012
LTiP (Part i)
options
granted
options
granted
May 2012 May 2012
ESOS LTiP (Part i) Recruitment LTiP (Part i)
options
options & Retention
granted
plan
granted
Feb 2012 August 2011
options
granted
June 2011 May 2011
ESOS LTiP (Part ii)
options
granted
May 2011
Exercise price
-
-
€3.525
-
-
-
€3.61
-
Risk free interest rate
Expected volatility
Expected life
Dividend yield
0.06%-0.14%
24.0%
2-3 years
2.35%
0.14%
30.2%
3 years
2.35%
0.46%
53.5%
5 years
2.35%
0.27%
26.0%
3 years
1.90%
-
-
1-3 years
2.16%
1.66%
51.1%
3 years
1.87%
2.37%
55.1%
5 years
1.82%
-
-
3 years
1.86%
The main assumptions used in the valuations of cash-settled share based payment awards were as follows:-
Exercise price
Expected life
Dividend yield
Granted
December
2012
-
3 years
1.88%
Granted
May
2012
-
3 years
2.35%
Granted
January
2012
-
3 years
1.90%
C&C GROUP PLC - 2013 ANNUAL REPORT
9 3
4. SHARE-BASED PAYMENTS - CONTiNUED
Details of the share entitlements and share options granted under these schemes together with the share option expense are
as follows:
Grant date
Executive Share Option
Scheme (ESOS)
15 June 2006
13 June 2007
13 June 2008
13 May 2009
26 May 2010
2 June 2010
21 July 2010
24 May 2011
17 May 2012
Long Term incentive
Plan (Part i)
29 June 2011
29 February 2012
17 May 2012
Long Term incentive
Plan (Part ii)
18 May 2011
Joint Share Ownership
Plan (JSOP)
18 December 2008
03 June 2009
17 December 2009
Restricted Share
Award Scheme
26 February 2010
Recruitment &
Retention Plan
29 June 2010
31 August 2011
17 May 2012
Cash-settled awards
30 January 2012
17 May 2012
21 December 2012
Partnership and
Matching Share Schemes
Number of
options/
equity
interests
granted
Outstanding
at 28
February 13
846,900
318,500
1,013,700
4,336,300
803,900
127,200
2,944,400
658,930
534,239
38,300
-
-
1,060,820
374,600
127,200
1,930,100
386,908
534,239
Vesting
period
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
192,662
328,448
614,360
169,588
328,448
614,360
3 years
154,993
129,938
Grant
price
€
6.52
11.53
5.11
1.94
3.21
3.21
3.32
3.61
3.525
-
-
-
-
Market
value at
date of
grant
€
6.52
11.53
5.11
1.94
3.21
3.21
3.32
3.61
3.525
1.24
2.76
0.98
0.72
1.21
1.14
1.16
1.56
1.30
3.53
3.61
3.525
2.18 - 3.34
1.84 - 3.46
1.97 - 3.24
Fair value
at date
of grant
€
Expense in
income statement
2012
€m
2013
€m
-
-
-
0.1
0.2
-
0.8
0.2
0.2
0.2
0.3
0.4
-
-
-
0.5
-
-
1.1
0.2
-
0.1
-
-
3.55
3.36
0.1
0.1
1-3 years
1-3 years
1-3 years
12,800,000
1,000,000
2,200,000
5,973,334
1,000,000
750,000
1.15
1.15
2.47
1.315
2.32
2.76
0.16 - 0.21
1.01 - 1.09
0.11 - 0.16
-
-
-
0.2
0.2
-
1-3 years
429,148
71,525
1-3 years
1-3 years
1-3 years
81,000
64,957
1,036,255
27,000
64,957
976,681
30,485,892 14,557,998
3 years
3 years
1-3 years
98,600
114,522
150,786
98,600
114,522
150,786
254,376*
254,376*
31,104,176 15,176,282
-
-
-
-
-
-
-
2.70
2.26
0.1
0.1
3.20
3.05
3.525
2.94
2.89 - 2.99
0.58 - 0.59
3.67
3.525
4.52
3.47
1.97 - 3.24
4.24
0.1
0.1
0.2
3.0
0.1
0.1
-
0.3
3.5
0.1
-
-
2.6
-
-
-
0.1
2.7
* includes both partnership and matching shares
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
9 4
NOTES - CONTINUED
Forming part of the financial statements
4. SHARE-BASED PAYMENTS - CONTiNUED
The amount charged to the income statement in respect of the above award grants assumes that all outstanding options granted
during FY2012 and FY2013 will vest and all qualifying conditions will be achieved. Options granted under the ESOS during FY2007
and FY2008 did not achieve the related performance condition and consequently all outstanding options lapsed. As the Directors
considered the likelihood of achieving the non-market vesting conditions remote no charge had been taken to the income
statement in prior years in respect of these awards.
The amount charged to the income statement includes an accelerated charge of €0.1m (2012: €0.5m), in relation to employees
leaving the Group as part of a restructuring programme, for share options granted under the executive share option scheme
where the underlying conditions were deemed to have been met at the date of departure. These employees were deemed
‘qualifying leavers’ under the terms of the scheme, with all share options granted deemed to have vested and the exercise period
reduced from 4 years to 6 months.
A summary of activity under the Group’s equity settled share option schemes and Joint Share Ownership Plan together with the
weighted average exercise price of the share options is as follows:
2013
2012
Outstanding at beginning of year
Granted
Exercised
Forfeited/lapsed
Number of
options/
equity
interests
18,244,324
2,184,854
(5,159,221)
(711,959)
Weighted
average
exercise
price
€
Number of
options/
equity
interests
Weighted
average
exercise
price
€
1.73 20,342,023
0.85
1,399,990
1.38
(952,143)
2.63 (2,545,546)
1.79
1.71
2.02
3.53
1.73
Outstanding at end of year
14,557,998
1.54 18,244,324
The aggregate number of share options/equity Interests exercisable at 28 February 2013 was 8,939,835 (2012: 10,663,116).
The unvested share options/equity Interests outstanding at 28 February 2013 have a weighted average vesting period outstanding
of 1.2 years (2012: 1.0 years). The weighted average contractual life of vested and unvested share options/equity Interests is 3.6
years (4.2 years).
The weighted average market share price at date of exercise of all share options/equity Interests exercised during the year was
€3.64 (2012: €3.22); the average share price for the year was €3.86 (2012: €3.22); and the market share price as at 28 February
2013 was €4.895 (29 February 2012: €3.665).
5. EXCEPTiONAL iTEMS
Restructuring costs
Acquisition costs
Recovery of previously impaired inventory
IT systems implementation and integration costs
Retirement benefit obligations
Revaluation of property, plant & equipment (note 12)
Loss from discontinued operations (note 8)
Foreign currency reserve recycled to the income
statement on disposal
Total loss/(profit) before tax
Income tax credit
Total loss/(profit) after tax
2013
Continuing Discontinued
operations
operations
€m
€m
1.2
3.3
(1.0)
1.1
-
-
-
-
4.6
(0.3)
4.3
-
-
-
-
-
-
-
-
-
-
-
2012
Continuing Discontinued
operations
operations
€m
€m
4.6
-
(0.7)
4.0
(14.7)
2.0
-
-
(4.8)
(0.4)
(5.2)
-
-
-
-
(0.1)
-
1.1
0.7
1.7
-
1.7
Total
€m
1.2
3.3
(1.0)
1.1
-
-
-
-
4.6
(0.3)
4.3
Total
€m
4.6
-
(0.7)
4.0
(14.8)
2.0
1.1
0.7
(3.1)
(0.4)
(3.5)
C&C GROUP PLC - 2013 ANNUAL REPORT
9 5
5. EXCEPTiONAL iTEMS - CONTiNUED
(a) Restructuring costs
Restructuring costs, comprising severance and other initiatives arising from cost cutting initiatives and the consolidation of
the Group’s offices in the UK and the US, resulted in an exceptional charge before taxation of €1.2m (2012: €4.6m).
(b) Acquisition costs
During the current financial year, the Group completed the acquisition of the Vermont Hard Cider Company, LLC (VHCC)
in the US and had entered into a contractual arrangement to acquire M. & J. Gleeson (Investments) Limited and its
subsidiaries (the Gleeson Group), which had not completed at year-end. Costs incurred that were directly attributable to
these acquisitions of €3.3m were charged to the Income Statement in the period.
(c) Recovery of previously impaired inventory
During the financial year ended 28 February 2009, the Group’s stock holding of apple juice at circa 36 months of forecasted future
sales was deemed excessive in light of anticipated future needs, forward purchase commitments and useful life of the stock
on hand. Accordingly the Group recorded an impairment charge in relation to excess apple juice stocks. During the current and
previous financial year, some of the previously impaired juice stocks were recovered and used by the Group. As a result this stock
was written back to operating profit at its recoverable value resulting in a gain of €1.0m (2012: €0.7m). The Group has recovered
total juice inventory of €1.9m for which an impairment charge was recognised in FY2009.
(d) IT systems implementation and integration costs
During the current financial year, the Group incurred external consultant fees and other costs associated with the
integration of the previously acquired Hornsby’s brand with the Group’s existing business.
In the prior year the Group had commenced the process of integrating the acquired Hornsby’s brand and also had
incurred costs associated with the completion of the second phase of the IT systems implementation project with respect
to the migration of the Gaymers cider business onto a new IT system, allowing the business to fully integrate with the
existing Magners business. These costs primarily related to external consultant fees and other costs associated with the
implementation of the new IT systems platform and which, in accordance with IAS 16 Property, Plant and Equipment, were
not appropriate for capitalisation within Property, plant & equipment in the balance sheet.
(e) Retirement benefit obligations
In the prior financial year the Group recognised an exceptional gain of €14.8m relating to:
• the recognition of a past service gain, net of expenses, of €14.7m following the conclusion of the Group’s pension
reform programme and the receipt of a Pensions Board direction under Section 50 of the Pensions Act 1990, removing
guaranteed pension increases and replacing them with a reduced level of guaranteed increase for three years
commencing 2012 and thereafter for all future pension increases to be on a discretionary basis, resulting in a positive
impact on the valuation of the Group’s retirement benefit obligations; and,
• a curtailment gain of €0.1m arising from the Group’s disposal of the Northern Ireland wholesale business and the
reclassification of these employees from active to deferred members.
The past service gain referred to above represents the difference between liabilities valued using a pension increase
assumption of 3% per annum versus 2.25% per annum, assumed to be the average discretionary increase rate.
(f) Revaluation of property, plant & machinery
Property (comprising land and buildings) and plant & machinery are valued at fair value on the balance sheet and reviewed
for impairment on an annual basis. During the prior financial year, the Group engaged external valuers Ronan Diamond
BSc (Hons) MSCSI MRICS and Brian Gilson, BSc (Surv) MSCSI MRICS MCI Arb - Lisney to value its freehold properties
in the Republic of Ireland; David Fawcett, FRICS RICS Registered Valuer - Sanderson Weatherall to value its plant &
machinery in the Republic of Ireland, and, Timothy Smith BSc MRICS RICS Registered Valuer and Joseph ML Funtek BSc
MRICS RICS Registered Valuer - Gerald Eve to value both its freehold properties and plant & machinery in the United
Kingdom. Using the valuation methodologies outlined in note 12, this resulted in a net revaluation loss of €2.0m accounted
for in the income statement and a further net loss of €1.7m accounted for within other comprehensive income on the basis
that it reduced a revaluation surplus previously recognised in respect of an asset in Clonmel and created a revaluation
surplus in respect of the Group’s Scottish buildings. The current year valuations, carried out by management, did not result
in a material variation to the valuation at 29 February 2012.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
9 6
NOTES - CONTINUED
Forming part of the financial statements
5. EXCEPTiONAL iTEMS - CONTiNUED
(g) Loss from discontinued operations, net of tax/Recycling of Foreign Currency Reserve on disposal
The loss on discontinued operations in the prior financial year of €1.1m relates to a €0.1m profit arising on the disposal of
the Group’s Northern Ireland wholesaling business (Quinns of Cookstown) to Britvic Northern Ireland Limited on 30 June
2011 for a gross consideration of €4.8m (£4.3m) and a loss of €1.2m in relation to a working capital settlement to reflect
‘normalised working capital’ as set out in the Sale and Purchase Agreement following the FY2011 disposal of the Group’s
Spirits & Liqueurs business. The Group also recognised a loss of €0.7m on the recycling of a foreign currency reserve to the
income statement following the disposal of the Group’s NI wholesaling business.
6. FiNANCE iNCOME AND EXPENSE
Recognised in income statement
Finance income:
Interest income on bank deposits
Total finance income
Finance expense:
Interest expense on interest bearing bank borrowings
Expense arising on interest rate swaps designated as cash flow hedges against interest exposure
Ineffective portion of change in fair value of cash flow hedges
Unwinding of discount on provisions
Total finance expense
Net finance expense
Recognised directly in other comprehensive income
Effective portion of change in fair value of cash flow hedges
Fair value of foreign exchange cash flow hedges transferred to income statement
Fair value of interest rate swap cash flow hedges transferred to income statement
Deferred tax on cash flow hedges recognised directly in other comprehensive income
Foreign currency translation differences arising on foreign currency borrowings
designated as net investment hedges
Foreign currency translation differences arising on the net investment in foreign operations
Foreign currency reserve recycled to income statement on disposal of foreign currency subsidiary (note 8)
Net (expense)/income recognised directly in other comprehensive income
2013
€m
2012
€m
(0.1)
(0.1)
4.0
-
-
1.0
5.0
4.9
2013
€m
0.3
1.7
-
(0.3)
(3.2)
(8.1)
-
(9.6)
(0.7)
(0.7)
2.4
2.5
(0.1)
1.0
5.8
5.1
2012
€m
(1.1)
0.1
2.4
(0.1)
1.7
3.6
0.7
7.3
C&C GROUP PLC - 2013 ANNUAL REPORT
7. iNCOME TAX
(a) Analysis of charge in year recognised in the income statement
Current tax:
Irish corporation tax
Foreign corporation tax
Adjustment in respect of previous years
Deferred tax:
Irish
Foreign
Total income tax expense recognised in income statement
Relating to continuing operations
- continuing operations before exceptional items
- continuing operations exceptional items
Total
9 7
2012
€m
5.3
2.6
(0.2)
7.7
4.5
1.2
5.7
13.4
13.8
(0.4)
13.4
2013
€m
5.2
8.6
(0.3)
13.5
2.8
(0.6)
2.2
15.7
16.0
(0.3)
15.7
The tax assessed for the year is different from that calculated at the standard rate of corporation tax in the Republic of Ireland,
as explained below.
Profit before tax from continuing operations
Foreign currency reserve recycled to the income statement (note 8)
Loss on disposal of discontinued operations (note 8)
Tax at standard rate of corporation tax in the Republic of Ireland of 12.5%
Actual tax charge is affected by the following:
Expenses not deductible for tax purposes
Adjustments in respect of prior years
Differences in effective tax rates on overseas earnings
Non tax deductible loss
Other differences
Total income tax
2013
€m
104.4
-
-
2012
€m
110.9
(0.7)
(1.1)
104.4
109.1
13.1
13.6
1.0
(0.3)
1.5
-
0.4
0.7
(0.2)
0.8
0.2
(1.7)
15.7
13.4
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
9 8
NOTES - CONTINUED
Forming part of the financial statements
7. iNCOME TAX - CONTiNUED
(b) Deferred tax recognised directly in other comprehensive income
Deferred tax arising on movement in defined benefit pension obligations
Deferred tax arising on movement in derivatives designated as cash flow hedges
2013
€m
(1.6)
0.3
(1.3)
2012
€m
(2.4)
0.1
(2.3)
(c) Factors that may affect future charges
Future income tax charges may be impacted by changes to the corporation tax rates and/or changes to corporation tax legislation
in force in the jurisdictions in which the Group operates. One such example is the proposed reduction in the UK corporation tax
rate to 20% on 1 April 2015. Future income tax charges may be affected by any adoption or implementation of the current draft
EU Directive and proposal in relation to the Common Consolidated Corporate Tax Base “CCCTB” which seeks to alter the existing
system of allocating a group’s taxable profits between different territories.
8. DiSCONTiNUED OPERATiONS
During the prior financial year, on 30 June 2011, the Group completed the disposal of its Northern Ireland wholesaling business
(Quinns of Cookstown) to Britvic Northern Ireland Limited for a consideration of €4.8m (£4.3m). The directors, exercising
judgement, and having considered IFRS 5 Non-current Assets Held for Sale and Discontinued Operations para 32, classified the
Group’s disposed Northern Ireland wholesaling business as a discontinued operation.
In line with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, depreciation was not charged on property,
plant & equipment held in this business from the date the assets were classified as ‘held for sale’ and the business was
presented as a discontinued operation and shown separately from continuing operations.
Results of discontinued operations
Revenue
Net revenue
Expenses, net
Operating (loss)/profit
Income tax expense
(Loss)/profit from discontinued operations
Foreign currency reserve recycled to the income
statement on disposal
Loss on sale of discontinued operations
Loss from discontinued operations
Before
exceptional
items
€m
2013
Exceptional
items
(note 5)
€m
Before
exceptional
items
€m
Total
€m
2012
Exceptional
items
(note 5)
€m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.2
5.2
(5.3)
(0.1)
-
(0.1)
-
-
(0.1)
-
-
0.1
0.1
-
0.1
(0.7)
(1.1)
(1.7)
Total
€m
5.2
5.2
(5.2)
-
-
-
(0.7)
(1.1)
(1.8)
The exceptional operating profit before tax of €0.1m in the prior year related to a curtailment gain following the disposal of the
Group’s Northern Ireland wholesaling business (Quinns of Cookstown) while the loss on discontinued operations of €1.1m related
to a €0.1m profit arising on the disposal of the Group’s Northern Ireland wholesaling business to Britvic Northern Ireland Limited
on 30 June 2011 for a gross consideration of €4.8m (£4.3m) and a loss of €1.2m in relation to a working capital settlement to
reflect ‘normalised’ working capital’ as set out in the Sale and Purchase Agreement following the FY2011 disposal of the Group’s
Spirits & Liqueurs business.
C&C GROUP PLC - 2013 ANNUAL REPORT
8. DiSCONTiNUED OPERATiONS - CONTiNUED
Cash flows from discontinued operations
Net cash outflow from operating activities
Net cash inflow from investing activities
Net cash inflow from discontinued operations
Effect of disposal on the financial position of the Group
Property, plant & equipment
Inventories
Trade & other receivables
Net assets and liabilities disposed of
Consideration receivable
Costs of disposal payable
Net proceeds receivable
Profit on disposal of net assets and liabilities
Gain on sale of discontinued operations
Working capital settlement - Spirits & Liqueurs
Loss from discontinued operations
9. DiViDENDS
Dividends paid:
Final: paid 4.5c per ordinary share in July 2012 (2012: 3.3c paid in July 2011)
Interim: paid 4.0c per ordinary share in December 2012 (2012: 3.67c paid in December 2011)
Total equity dividends
Settled as follows:
Paid in cash
Accrued with respect to LTIP (Part I) dividend entitlements
Scrip dividend
9 9
2012
€m
(1.0)
4.7
3.7
Ni
wholesaling
business
2012
€m
0.9
1.2
2.5
4.6
4.8
(0.1)
4.7
0.1
0.1
(1.2)
(1.1)
2012
€m
10.7
12.0
22.7
18.5
-
4.2
22.7
2013
€m
-
-
-
2013
€m
-
-
-
-
-
-
-
-
-
-
-
2013
€m
15.0
13.4
28.4
21.2
0.1
7.1
28.4
The Directors have proposed a final dividend of 4.75 cent per share (2012: 4.5 cent), to ordinary shareholders registered at the close
of business on 24 May 2013, which is subject to shareholder approval at the Annual General Meeting, giving a proposed total dividend
for the year of 8.75 cent per share (2012: 8.17 cent). Using the number of shares in issue at 28 February 2013 and excluding those
shares for which it is assumed that the right to dividend will be waived, this would equate to a distribution of €16.2m.
Dividends of 8.5 cent per ordinary share were recognised as a deduction from the retained income reserve in the year ended
28 February 2013 (2012: 6.97 cent).
Dividends declared after the balance sheet date are not recognised as a liability at the balance sheet date.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 0 0
NOTES - CONTINUED
Forming part of the financial statements
10. EARNiNGS PER ORDiNARY SHARE
Denominator computations
Number of shares at beginning of year
Shares issued in lieu of dividend
Issue of new shares following acquisition of subsidiary
Shares issued in respect of options exercised
Number of shares at end of year
Weighted average number of ordinary shares (basic)*
Adjustment for the effect of conversion of options
Weighted average number of ordinary shares, including options (diluted)
* excludes 8.3m treasury shares (2012: 12.4m)
Profit attributable to ordinary shareholders
Earnings as reported
Adjustment for exceptional items, net of tax (note 5)
Earnings as adjusted for exceptional items, net of tax
Basic earnings per share
Basic earnings per share
Adjusted basic earnings per share
Diluted earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
Continuing operations
Earnings from continuing operations as reported
Adjustment for exceptional items, net of tax (note 5)
Earnings from continuing operations as adjusted for exceptional items, net of tax
Basic earnings per share
Basic earnings per share
Adjusted basic earnings per share
Diluted earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
Discontinued operations
Earnings from discontinued operations as reported
Adjustment for exceptional items, net of tax (note 5)
Earnings from discontinued operations as adjusted for exceptional items, net of tax
Basic earnings per share
Basic earnings per share
Adjusted basic earnings per share
Diluted earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
Number
‘000
Number
‘000
339,275
1,934
1,422
1,701
337,196
1,370
-
709
344,332
339,275
329,067
7,135
325,509
8,294
336,202
333,803
2013
€m
88.7
4.3
93.0
Cent
27.0
28.3
26.4
27.7
€m
88.7
4.3
93.0
Cent
27.0
28.3
26.4
27.7
€m
-
-
-
Cent
-
-
-
-
2012
€m
95.7
(3.5)
92.2
Cent
29.4
28.3
28.7
27.6
€m
97.5
(5.2)
92.3
Cent
30.0
28.3
29.2
27.6
€m
(1.8)
1.7
(0.1)
Cent
(0.6)
-
(0.5)
-
C&C GROUP PLC - 2013 ANNUAL REPORT
1 0 1
10. EARNiNGS PER ORDiNARY SHARE- CONTiNUED
Basic earnings per share is calculated by dividing the profit attributable to the ordinary shareholders by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares purchased/issued by the Company and held as
treasury shares (at 28 February 2013: 8.3m shares; at 29 February 2012: 12.4m shares).
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential 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 options, 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
Earnings per Share, these contingently issuable shares (totalling 1,927,156 at 28 February 2013 and 53,643 at 29 February 2012)
are excluded from the computation of diluted earnings per share where the vesting conditions would not have been satisfied as
at the end of the reporting period. Vesting of certain Interests awarded under the Joint Share Ownership Plan (totalling nil at 28
February 2013 and 375,000 at 29 February 2012) are also contingent upon satisfaction of specified performance conditions and
these have also been excluded from the computation of diluted earnings per share.
11. BUSiNESS COMBiNATiONS
Vermont Hard Cider Company LLC
The Group completed the acquisition of the Vermont Hard Cider Company, LLC (VHCC) in the United States for a consideration of
€230.9m ($305.0m). The transaction was completed on 21 December 2012.
VHCC owns and operates the trademarks for the Vermont portfolio of brands including the Woodchuck and Wyder’s cider brands.
It also owns a 400,000 hectolitre cidery and warehouse facilities in Vermont and a new freehold site on which the Group plans to
expand the cidery and to build a visitor centre. After the transaction completed, a total of 1,422,099 ordinary shares were issued, at
fair value, to two former stakeholders and existing members of the VHCC management team for a consideration of €5.3m ($7.0m).
The assets and liabilities acquired as a result of this acquisition, together with the fair value adjustments made to those carrying
values, were as follows:-
initial fair
value
assigned
€m
Adjustment
to initial
fair value
€m
Revised
fair
value
€m
Property, plant & equipment
Brands & other intangible assets
Financial asset
Inventories
Trade & other receivables – current
Cash and cash equivalents
Trade & other payables
Deferred tax liability
Net identifiable assets and liabilities acquired
Goodwill arising on acquisition
Consideration transferred/transferable:
Cash consideration paid
Working capital - initial payment
Working capital settlement accrued
Total consideration
Net cash outflow arising on acquisition
Cash consideration paid and working capital settlement paid
Less: cash and cash equivalents acquired
Total
3.0
1.2
0.2
2.8
3.0
3.4
(2.6)
-
0.7
157.8
(0.2)
-
-
-
-
(0.2)
11.0
158.1
3.7
159.0
-
2.8
3.0
3.4
(2.6)
(0.2)
169.1
64.6
233.7
230.9
2.3
0.5
233.7
233.2
(3.4)
229.8
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 0 2
NOTES - CONTINUED
Forming part of the financial statements
11. BUSiNESS COMBiNATiONS - CONTiNUED
The working capital settlement of $3.7m (€2.8m at date of transaction) reflects an amount payable over and above the contractual
purchase price reflecting ‘normalised working capital’ as set out in the purchase agreement.
All the goodwill arising on acquisition is tax deductible.
The Five Lamps Dublin Beer Company Limited
The Group also acquired a 92.5% equity holding in The Five Lamps Dublin Beer Company Limited, an Irish craft brewer. The initial
investment, and the profit earned since acquisition were all less than €0.1m. The transaction was completed on 4 September 2012.
Acquisition costs
Acquisition costs of €3.3m, have been shown in exceptional operating costs in the Income Statement. These costs relate to
the acquisition of VHCC in the US and the contractual arrangement to acquire M. & J. Gleeson (Investments) Limited and its
subsidiaries, which had not completed at year-end (note 5).
The post-acquisition impact of acquisitions completed during the year on Group profit for the financial year was as follows:
Revenue
Excise duties
Net revenue
Operating costs
Operating profit
Income tax expense
Results from acquired businesses
2013
€m
6.7
(0.3)
6.4
(4.6)
1.8
-
1.8
The net revenue and operating profit of the Group for the financial year determined in accordance with IFRS as though the
acquisitions effected during the year had been at the beginning of the year would have been as follows:
Net revenue
Group operating profit for the financial year attributable to equity shareholders
Pro Forma
2013
€m
512.9
118.3
C&C GROUP PLC - 2013 ANNUAL REPORT
12. PROPERTY, PLANT & EQUiPMENT
Group
Cost or valuation
At 1 March 2011
Translation adjustment
Additions
Disposals
Disposal of Northern Ireland wholesaling business
Revaluation of property, plant & machinery
At 29 February 2012
Translation adjustment
Additions
Acquisition of business VHCC
At 28 February 2013
Depreciation
At 1 March 2011
Translation adjustment
Charge for the year
Disposals
Disposal of Northern Ireland wholesaling business
At 29 February 2012
Translation adjustment
Charge for the year
At 28 February 2013
Net book value
At 28 February 2013
At 29 February 2012
1 0 3
Total
€m
311.0
2.5
18.6
(1.2)
(1.9)
(3.7)
Freehold
land &
buildings
€m
Plant &
machinery
€m
Motor
vehicles
& other
equipment
€m
75.1
0.6
0.2
-
(0.8)
(2.8)
156.1
0.9
6.2
(0.3)
-
(0.9)
79.8
1.0
12.2
(0.9)
(1.1)
-
72.3
162.0
91.0
325.3
(1.9)
2.1
-
(2.3)
8.0
3.7
(2.3)
14.2
-
(6.5)
24.3
3.7
72.5
171.4
102.9
346.8
6.4
-
1.1
-
-
7.5
(0.2)
1.2
73.4
0.2
9.7
(0.1)
-
83.2
(0.5)
10.7
44.0
0.6
9.4
(0.2)
(1.0)
123.8
0.8
20.2
(0.3)
(1.0)
52.8
143.5
(1.2)
9.7
(1.9)
21.6
8.5
93.4
61.3
163.2
64.0
64.8
78.0
78.8
41.6
38.2
183.6
181.8
No depreciation is charged on freehold land, which had a book value of €10.8m at 28 February 2013 (29 February 2012: €9.3m).
Valuation of freehold land, buildings and plant & machinery – 29 February 2012
During the year ended 29 February 2012, the Group engaged external valuers Ronan Diamond BSc (Hons) MSCSI MRICS and
Brian Gilson, BSc (Surv) MSCSI MRICS MCI Arb - Lisney to value its freehold properties in ROI; David Fawcett, FRICS RICS
Registered Valuer - Sanderson Weatherall to value its plant & machinery in ROI, and, Timothy Smith BSc MRICS RICS Registered
Valuer and Joseph ML Funtek BSc MRICS RICS Registered Valuer - Gerald Eve to value both its freehold properties and plant
& machinery in the UK as at 29 February 2012. The valuations were in accordance with the requirements of the RICS Valuation
Standards, seventh edition and the International Valuation Standards.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 0 4
NOTES - CONTINUED
Forming part of the financial statements
12. PROPERTY, PLANT & EQUiPMENT - CONTiNUED
The valuation of ROI property was on the basis of market value, defined as ‘the estimated amount for which a property should
exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction, after proper
marketing wherein the parties had acted knowledgeably, prudently and without compulsion’ and was subject to the assumption
that the property be sold at its highest and best use value. IAS 16 Property, Plant and Equipment prescribes that where there is
no market based evidence of Fair Value because of the specialist nature of the item of property, plant and equipment and the item
is rarely sold, except as part of a continuing business, an entity may need to estimate Fair Value using an income or a Depreciated
Replacement Cost approach to valuation. The valuer’s opinion of Fair Value of the ROI properties was primarily derived using
comparable recent market transactions on an arm’s-length basis while the Fair Value of those in the UK was derived based on
the Depreciated Replacement Cost approach to valuation in light of the lack of comparative recent market transactions.
In view of the specialised nature of the Group’s plant & machinery assets and the lack of comparable market evidence of similar
plant being sold as a ‘going concern’, a Depreciated Replacement Cost approach was used to assess a Fair Value of the Group’s
plant & machinery assets. This methodology takes a gross current replacement cost for each class of plant & machinery and
applies a depreciation factor to reflect both physical and functional obsolescence. An economic obsolescence factor is then
applied to the net current replacement cost. This factor takes into account the anticipated capacity utilisation of plant relative to
total available production capacity. The significant additional assumptions applied in valuing the plant & machinery include useful
lives and asset utilisations, the following useful lives were attributed to the assets:-
Asset category
Tanks
Process equipment
Bottling & packaging equipment
Process automation
Useful life
30 - 35 years
20 years
15 - 20 years
10 years
Following the valuation exercise, the carrying value of land was reduced as outlined below and the resulting loss of €3.4m was
debited directly to a revaluation reserve within equity (€3.0m) to the extent that it reduced a previously recognised gain and to the
income statement (€0.4m) to the extent it arose on revaluation and there were no previously recognised gains in the revaluation
reserve in respect of previous revaluations of that asset.
An increase in the carrying value of buildings in Glasgow of €1.3m was credited directly to a revaluation surplus reserve within
equity while the reduction in the carrying value of buildings in Clonmel and Shepton Mallet of (€0.7m) was recognised directly
in the income statement as there were no previously recognised gains in the revaluation reserve by which to offset. The carrying
value of plant & machinery was reduced and the resulting loss of (€0.9m) was recognised in the income statement.
Carrying value at 29 February 2012 post revaluation
Carrying value at 29 February 2012 pre revaluation
(Loss)/gain on revaluation
Classified within:
Income statement
Other comprehensive income
(Loss)/gain on revaluation
Land
€m
9.3
12.7
(3.4)
(0.4)
(3.0)
(3.4)
Buildings
€m
Plant &
machinery
€m
55.5
54.9
0.6
(0.7)
1.3
0.6
78.8
79.7
(0.9)
(0.9)
-
(0.9)
Total
€m
143.6
147.3
(3.7)
(2.0)
(1.7)
(3.7)
Valuation of freehold land, buildings and plant & machinery – 28 February 2013
An internal valuation was completed as at 28 February 2013. The Directors considered fluctuations in the property market since
the last external valuation was completed twelve months ago. The carrying value of all plant and machinery valued under the
depreciated replacement method in the prior year was also reviewed. As part of this valuation the Directors considered projected
asset utilisations, changes in useful lives and obsolescence. The current year valuations did not result in a material variation to
the current value of property, plant & equipment and hence no adjustment was deemed necessary.
In the current financial year following the acquisition of VHCC the Group engaged external valuer, John Coto, Certified Machine &
Equipment Appraiser, Alliance Machinery & Equipment Appraisals to value the plant & machinery acquired using the depreciated
replacement cost method of valuation. This valuation increased the carrying value of plant & machinery acquired by $1.0m
(€0.7m euro equivalent at date of acquisition).
Company
The Company has no property, plant & equipment.
C&C GROUP PLC - 2013 ANNUAL REPORT
1 0 5
Total
€m
466.4
2.1
16.6
485.1
(2.9)
223.6
1.3
0.4
707.5
0.1
0.1
0.2
0.1
0.3
707.2
484.9
Total
€m
378.1
0.4
378.5
(0.7)
64.6
13. GOODWiLL & iNTANGiBLE ASSETS
Cost
At 1 March 2011
Translation adjustment
Acquisition of Hornsby’s cider brand
At 29 February 2012
Translation adjustment
Acquisition of VHCC (note 11)
Acquisition of Waverley brands
Additional consideration re prior year acquisition of Hornsby’s cider brand
At 28 February 2013
Amortisation
At 1 March 2011
Charge for the year
At 29 February 2012
Charge for the year
At 28 February 2013
Net book value
At 28 February 2013
At 29 February 2012
Goodwill
€m
Brands
€m
Other
intangible
assets
€m
378.1
0.4
-
86.6
1.6
16.6
378.5
104.8
(0.7)
64.6
-
-
(2.1)
159.0
1.3
0.4
442.4
263.4
-
-
-
-
-
-
-
-
-
-
442.4
263.4
378.5
104.8
1.7
0.1
-
1.8
(0.1)
-
-
-
1.7
0.1
0.1
0.2
0.1
0.3
1.4
1.6
Goodwill
Goodwill has been attributed to reporting segments (as identified under IFRS 8 Operating Segments) as follows:-
Cost
At 1 March 2011
Translation adjustment
At 29 February 2012
Translation adjustment
Acquisition of VHCC
At 28 February 2013
ROi
€m
120.3
-
120.3
-
-
Cider
UK
€m
217.6
0.2
217.8
(0.5)
-
Tennent’s
UK international
€m
€m
18.3
0.2
18.5
(0.6)
-
21.9
-
21.9
0.4
64.6
120.3
217.3
17.9
86.9
442.4
Goodwill consists both of goodwill capitalised under Irish GAAP which at the transition date to IFRS was treated as deemed
cost and goodwill that arose on the acquisition of businesses since that date which was capitalised at cost and represents the
synergies arising from cost savings and the opportunity to utilise the extended distribution network of the Group to leverage the
marketing of acquired products.
In line with IAS 36 Impairment of Assets, goodwill is allocated to each operating segment (which may comprise more than one
cash generating unit) which is expected to benefit from the combinations synergies. These operating segments represent the
lowest level within the Group at which goodwill is monitored for internal management purposes.
All goodwill is regarded as having an indefinite life and is not subject to amortisation under IFRS but is subject to an annual
impairment assessment.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 0 6
NOTES - CONTINUED
Forming part of the financial statements
13. GOODWiLL & iNTANGiBLE ASSETS - CONTiNUED
Brands
As detailed in note 11 the Group completed the acquisition of the Vermont Hard Cider Company, LLC on 21 December 2012, which
included the acquisition of a portfolio of brands, including the Woodchuck and Wyder’s cider brands. The value attributed to the
acquisition of this portfolio of brands was €159.0m.
Hornsby’s brand
On 8 November 2011, the Group completed the acquisition of the Hornsby’s cider brand from E & J Gallo Winery comprising the
global intellectual property rights to the Hornsby’s brand, which did not constitute a business combination under IFRS 3 (2008)
Business Combinations. In addition, the Group acquired inventory valued at €1.7m. The Group entered into a Transitional Services
Arrangement with E & J Gallo Winery for the production and distribution of the brand for a period of one year and for the provision
of all sales, commercial, accounting and back office services for a period of seven months.
The transaction was completed for an initial cash consideration of €16.4m ($22.5m). Costs totalling €0.2m were incurred in
acquiring the brand. In addition, contingent consideration of up to €3.6m (US$5.0m) was payable subject to the performance
of the brand during a transitional period. In the prior year this was assumed by the Directors to amount to a payable of $2.4m
(€1.7m euro equivalent at acquisition date, €1.8m euro equivalent at prior year-end date) based on their expectation of
performance in the transitional period.
Performance exceeded expectation and the final settlement in the current year was $3.0m (€2.4m euro equivalent at date of payment
€2.1m euro equivalent at acquisition rate), resulting in an increase in the value of the brand in the current year of $0.6m (€0.4m).
Hornsby’s cider brand
Brand
Inventories
Total consideration
Satisfied by:
Cash
Contingent consideration
Acquisition costs paid
Total consideration
Waverley wine brands
2012
€m
Adjustment
€m
16.6
1.7
18.3
16.4
1.7
0.2
18.3
0.4
-
0.4
-
0.4
-
0.4
2013
€m
17.0
1.7
18.7
16.4
2.1
0.2
18.7
On 5 November 2012, the Group completed the acquisition of wine brands from Waverley TBS Limited for a consideration of
£1.0m (€1.3m).
Brands have been attributed to reporting segments (as identified under IFRS 8 Operating Segments) as follows:-
Tennent’s
UK international
€m
€m
Third Party
Brands UK
€m
At 1 March 2011
Translation adjustment
Acquisition of Hornsby’s brands
At 29 February 2012
Translation adjustment
Acquisition of Vermont brands
Acquisition of Waverley wine brands
Additional consideration re prior year acquisition of Hornsby’s brands
Cider
UK
€m
11.4
0.2
-
11.6
(0.5)
-
-
-
75.2
1.1
-
76.3
(2.4)
-
-
-
-
0.3
16.6
16.9
0.9
159.0
-
0.4
At 28 February 2013
11.1
73.9
177.2
Total
€m
86.6
1.6
16.6
104.8
(2.1)
159.0
1.3
0.4
263.4
-
-
-
-
(0.1)
-
1.3
-
1.2
C&C GROUP PLC - 2013 ANNUAL REPORT
1 0 7
13. GOODWiLL & iNTANGiBLE ASSETS - CONTiNUED
Capitalised brands include the Tennent’s beer brands and the Gaymers cider brands acquired during the financial year ended 28
February 2010, the Hornsby’s cider brand acquired during the year ended 29 February 2012 and the Vermont cider brands and
Waverley wine brands acquired in the current financial year. The Tennent’s and Gaymers brands were valued at fair value on the
date of acquisition in accordance with the requirements of IFRS 3 (2004) Business Combinations by independent professional
valuers. The Hornsby’s cider brand was valued at cost. The Vermont cider brands acquired in the current year were valued at fair
value on the date of acquisition in accordance with the requirements of IFRS 3 (2008) Business Combinations.
Capitalised brands are regarded as having indefinite useful economic lives and therefore have not been amortised. The brands
are protected by trademarks, which are renewable indefinitely in all major markets where they are sold and it is the Group’s policy
to support them with the appropriate level of brand advertising. In addition, there are not believed to be any legal, regulatory or
contractual provisions that limit the useful lives of these brands. Accordingly, the Directors believe that it is appropriate that the
brands be treated as having indefinite lives for accounting purposes.
No intangible assets were acquired by way of government grant, there is no title restriction on any of the capitalised intangible
assets and no intangible assets are pledged as security. There are no contractual commitments in relation to the acquisition of
intangible assets at year-end.
Other intangible assets
Other intangible assets comprise 20 year distribution rights for third party beer products. These were valued at fair value on the
date of acquisition in accordance with the requirements of IFRS 3 (2004) Business Combinations by independent professional
valuers. Other intangible assets have finite lives and are subject to amortisation on a straight line basis over the length of the
distribution arrangements. The amortisation charge for the year ended 28 February 2013 is €0.1m (2012: €0.1m).
impairment testing
To ensure that goodwill and brands considered to have an indefinite useful economic life are not carried at above their
recoverable amount, impairment reviews are performed comparing the carrying value (‘value-in-use’) of the assets with their
recoverable amount using value-in-use computations. Impairment testing is performed annually or more frequently if there is an
indication that the carrying amount may not be recoverable.
For goodwill and brands, the recoverable amount is calculated in respect of each operating segment (which may comprise
of more than one cash generating unit). These operating segments represent the lowest levels within the Group at which the
associated goodwill and indefinite life brands are monitored for management purposes and are not larger than the operating
segments determined in accordance with IFRS 8 Operating Segments.
Value-in-use is calculated on the basis of estimated future cash flows discounted to present value and terminal values calculated
on the assumption that cash flows continue in perpetuity. The key assumptions used in the value-in-use computations are:-
• Expected volume, net revenue and operating profit growth rates - cash flows for each operating segment are based on detailed
financial budgets and plans, formally approved by the Board, for years one to three,
• Long term growth rate - cash flows after the first three years were extrapolated using a long term growth rate, on the
assumption that cash flows for the first three years will increase at a nominal growth rate in perpetuity,
• Discount rate.
The key assumptions used in the value-in-use computations were based on management assessment of anticipated market
conditions for each operating segment. A terminal growth rate of 2.5% (2012: 2.5%) in perpetuity was assumed based on an
assessment of the likely long term growth prospects for the sectors in which the Group operates. The resulting cash flows were
discounted to present value using a range of discount rates between 8-12% (2012: 8-12%).
In formulating the budget and three year plan the Group takes into account external factors such as macro economic factors,
inflation expectations by geography, regulation and expected changes in regulation (duty rates, minimum pricing etc), sales price
trend, competitor activity, market share targets and strategic plans and initiatives.
The Group has performed the detailed impairment testing calculations by operating segment with the following discount rates
being applied:
Operating segment
ROI
Tennent's GB
Tennent's NI
Cider GB
Cider NI
International Brands
Hornsby
Third Party Brands - UK
No impairment losses were recognised by the Group in the current or previous financial year.
Discount rate
8%
10%
10%
10%
10%
12%
8%
9%
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 0 8
NOTES - CONTINUED
Forming part of the financial statements
13. GOODWiLL & iNTANGiBLE ASSETS - CONTiNUED
Sensitivity analysis
The impairment testing carried out at 28 February 2013 identified significant headroom in the recoverable amount of the brands
and goodwill compared to their carrying values in all business segments. The key sensitivities for the impairment testing are net
revenue and operating profit growth assumptions, discount rates applied to the resulting cashflows and the expected long term
growth rates. No material adjustments to the assumptions underlying the impairment testing models applied would result in any
foreseeable risk of an impairment arising.
14. EQUiTY ACCOUNTED iNVESTEES/FiNANCiAL ASSETS
(a) investment in equity accounted investees - Group
Investment in equity accounted investees
Purchase price paid
Less derivative financial assets
Add derivative financial liabilities
Share of profit
Translation adjustment
Carrying amount at end of year
Maclay Group plc
Maclay
Group plc
€m
Thistle Pub
Company
€m
2.5
(1.4)
1.0
-
(0.2)
1.9
0.4
-
0.2
-
(0.1)
0.5
2013
€m
2.9
(1.4)
1.2
-
(0.3)
2.4
2012
€m
-
-
-
-
-
-
On 21 March, 2012, the Group acquired a 25% equity investment in Maclay Group plc, a leading independent Scottish operator of
managed public houses. The business primarily includes the operation of 15 wholly owned managed houses and 11 managed
houses owned by two separate Enterprise Investment Schemes.
The total cost of the investment was £2.1m (equivalent to €2.5m at date of investment) of which €2.1m related to the value of the
investment, (€1.9m value at year end date) €1.4m related to the value of a contracted derivative financial asset less €1.0m relating
to the value of a contracted derivative financial liability. The derivative financial asset relates to a put option granted to the Group
enabling it to sell its equity stake back to Maclay Group plc at a predetermined price at any time after the fifteenth anniversary of the
acquisition, while the derivative financial liability relates to the granting of a call option to Maclay Group plc enabling it to buy back
the Group’s equity interest at a predetermined price at any time in the first fifteen years after the acquisition date. The movement in
the fair value of these derivatives from date of acquisition to 28 February 2013 was less than €0.1m.
The Group is in a position to exercise significant influence over the operating and financial policies of the investment and
accordingly has accounted for it as an associate. Associates are included in the financial statements of the Group using the equity
method from the date of which significant influence is deemed to arise until such a time as such significant influence ceases
to exist. Under the equity method, the Group Income Statement reflects the Group’s share of profit after tax of the associate.
Investment in associates are carried in the Group Balance Sheet at cost and subsequently adjusted in respect of post-acquisition
changes in the Group’s share of net assets, less any impairment in value. Unrealised gains arising from transactions with
associates are eliminated to the extent of the Group’s interest in the equity. Unrealised losses are eliminated in the same manner
as unrealised gains, but only to the extent that there is no evidence of impairment in the Group’s interest in the entity. The profit
for the period attributable to the Group was less than €0.1m.
Thistle Pub Company Limited
On 28 November 2012, the Group invested £0.3m (€0.4m at date of payment, €0.3m at year-end rate) in a joint venture with Maclay
Group plc in Thistle Pub Company Limited. As part of the joint venture agreement, the Group granted Thistle Pub Company Limited
and the Maclay Group plc a call option enabling either of them to purchase the Group’s share of the equity at a fixed price at any time
in the first 15 years after the date the joint venture was formed. This call option has been valued at the acquisition date and resulted
in the recognition of a £0.2m (€0.2m) financial liability. The movement in fair value of this derivative to 28 February 2013 was less
then €0.1m. The joint venture purchased one public house in the current year since its formation.
(b) investment in subsidiary undertakings - Company
Equity investment in subsidiary undertakings at cost
At beginning of year
Investment in subsidiary undertakings
Capital contribution in respect of share options granted to employees of subsidiary undertakings
At end of year
2013
€m
2012
€m
968.8
5.3
3.0
977.1
966.2
-
2.6
968.8
C&C GROUP PLC - 2013 ANNUAL REPORT
1 0 9
14. EQUiTY ACCOUNTED iNVESTEES/FiNANCiAL ASSETS - CONTiNUED
The total expense of €3.0m (2012: €2.6m) attributable to share options granted to employees of subsidiary undertakings has been
included as a capital contribution in financial assets.
In the opinion of the Directors, the shares in the subsidiary undertakings are worth at least the amounts at which they are stated
in the balance sheet. Details of subsidiary undertakings are set out in note 28.
15. iNVENTORiES
Group
Raw materials & consumables
Finished goods & goods for resale
Total inventories at lower of cost and net realisable value
2013
€m
28.7
20.2
48.9
2012
€m
29.0
17.1
46.1
Inventory write-down recognised as an expense within operating costs amounted to €0.8m (2012: €0.3m). Previously impaired
inventory recovered during the financial year and recognised as exceptional income (note 5) amounted to €1.0m (2012: €0.7m).
16. TRADE & OTHER RECEiVABLES
Group
Company
Amounts falling due within one year:
Trade receivables
Advances to customers
Prepayments and other receivables
Amounts falling due after one year:
Advances to customers
Amounts due from Group undertakings
2013
€m
78.0
6.9
11.2
96.1
31.3
-
31.3
2012
€m
79.8
5.2
8.4
93.4
19.5
-
19.5
Total
127.4
112.9
2013
€m
2012
€m
-
-
-
-
-
47.8
47.8
47.8
-
-
-
-
-
30.6
30.6
30.6
The aged analysis of trade receivables and advances to customers analysed between amounts that were neither past due nor
impaired and amounts past due at 28 February 2013 and 29 February 2012 were as follows:
Group
Neither past due nor impaired
Past due
Past due 0-30 days
Past due 31-120 days
Past due 121-365 days
Past due more than one year
Total
Gross
2013
€m
impairment
2013
€m
Gross
2012
€m
impairment
2012
€m
113.7
-
101.8
-
3.0
2.4
1.2
2.2
122.5
(0.8)
(2.1)
(1.2)
(2.2)
(6.3)
1.9
3.0
1.1
4.3
112.1
(0.8)
(1.8)
(1.1)
(3.9)
(7.6)
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 1 0
NOTES - CONTINUED
Forming part of the financial statements
16. TRADE & OTHER RECEiVABLES - CONTiNUED
All trade & other receivables and advances to customers are monitored on an on-going basis for evidence of impairment and
assessments are undertaken for individual accounts. A provision for impairment is created where the Group expects it may not be
able to collect all amounts due in accordance with the original terms of the agreement with the customer. Balances included in the
impairment provision are generally written off when there is no expectation of recovery.
Trade receivables are on average receivable within 42 days (2012: 41 days) of the balance sheet date, are unsecured and are not
interest-bearing. All advances to customers acquired on acquisition of the Tennent’s business were recorded at fair value. An
impairment provision is created in relation to advances to customers considered receivable in a period outside that originally
contracted. The movement in the allowance for impairment in respect of trade receivables and advances to customers during the
year was as follows:-
Group
At beginning of year
Recovered during the year
Provided during the year
De-recognised on disposal
Written off during the year
Translation adjustment
At end of year
17. TRADE & OTHER PAYABLES
Trade payables
Payroll taxes & social security
VAT
Excise duty
Accruals
Amounts due to Group undertakings
2013
€m
7.6
(0.2)
2.0
-
(2.9)
(0.2)
6.3
Group
Company
2013
€m
42.6
2.4
5.3
13.3
60.5
-
2012
€m
44.3
1.9
4.8
11.7
79.2
-
2013
€m
-
-
-
-
0.7
98.7
99.4
2012
€m
2.9
(0.3)
6.3
(0.2)
(1.2)
0.1
7.6
2012
€m
-
-
-
-
0.2
10.0
10.2
Total
124.1
141.9
The Group’s exposure to currency and liquidity risk related to trade & other payables is disclosed in note 23.
Company
The Company has guaranteed the liabilities of certain of its subsidiary companies incorporated in the Republic of Ireland. As at
28 February 2013, the Directors consider these to be in the nature of insurance contracts and do not consider it probable that the
Company will have to make a payment under these guarantees and as such discloses them as a contingent liability as detailed in
note 26.
C&C GROUP PLC - 2013 ANNUAL REPORT
18. PROViSiONS
At beginning of year
Translation adjustment
Additional cost of brand
Charged during the year
Released during the year
Utilised during the year
At end of year
Current
Non-current
Restructuring
2013
€m
Onerous
lease
2013
€m
2.0
-
-
1.6
(0.4)
(2.8)
0.4
12.6
(0.3)
-
-
-
(1.3)
11.0
Other
2013
€m
2.7
0.1
0.4
-
-
(2.4)
0.8
1 1 1
Total
2012
€m
15.7
0.2
1.7
5.2
(0.2)
(5.3)
17.3
5.8
11.5
17.3
Total
2013
€m
17.3
(0.2)
0.4
1.6
(0.4)
(6.5)
12.2
2.8
9.4
12.2
Restructuring
The restructuring provision relates to severance costs arising from the Group’s ongoing reorganisation programme and the
Group’s decision to consolidate offices in the UK and in the US. The provision is expected to be utilised in the next financial year.
Onerous leases
The onerous lease provision relates to both an onerous lease agreement to which the Group remains committed following the
consolidation of the Group’s Dublin offices into a single location in 2009, and two onerous leases in relation to warehousing facilities
acquired as part of the acquisition of the Gaymers cider business in 2010. The onerous leases expire in 2013, 2017 and 2026
respectively. Included in the above table, within utilised during the year, is an unwind of discount on provisions charge of €1.0m
(2012: €1.0m).
Other
In the prior year other provisions contained a provision for contingent consideration of €1.8m payable to E & J Gallo Winery on
the seven month anniversary of the completion of the acquisition of the Hornsby’s brand. The contingent consideration was
payable based on the performance of the brand during the transitional period and the Directors assumed at 29 February 2012 an
amount payable of €1.8m based on their expectation of performance in the transitional period at that point in time. The brand
however outperformed expectation in the transitional period and the amount ultimately paid in the current year was €2.4m (euro
equivalent of $3.0m on date of payment).
Other provisions also include a litigation provision of €0.6m and a provision for the Group’s exposure to employee and third party
insurance claims. Under the terms of employer and public liability insurance policies, the Group bears a portion of the cost of
each claim up to the specified excess. The provision is calculated based on the expected portion of settlement costs to be borne
by the Group in respect of specific claims arising before the balance sheet date.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 1 2
NOTES - CONTINUED
Forming part of the financial statements
19. iNTEREST BEARiNG LOANS & BORROWiNGS
Group
Non-current liabilities
Unsecured bank loans repayable by one repayment on maturity
Current liabilities
Unsecured bank loans repayable by one repayment on maturity
Total borrowings
Company
Current liabilities
Unsecured bank loans repayable by one repayment on maturity
Total borrowings
2013
€m
2012
€m
244.4
-
-
60.0
244.4
60.0
2013
€m
-
-
2012
€m
60.0
60.0
Unamortised issue costs are netted against outstanding bank loans and are being amortised to the income statement on an
effective interest rate basis. The value of unamortised issue costs at 28 February 2013 was €2.2m (2012: €nil)
Terms and debt repayment schedule
Currency
Nominal
rates of
interest
Unsecured bank loans
Unsecured bank loans
Multi
Euro
Euribor/Libor + 1.70%
Euribor + 0.35%
Year of
maturity
2017
2012
2013
Carrying
value
€m
246.6
-
246.6
2012
Carrying
value
€m
-
60.0
60.0
Borrowing facilities
The Group manages its borrowing ability by entering into committed loan facility agreements.
In February 2012, the Group entered into a committed €250.0m multi-currency five year syndicated revolving loan facility with
seven banks, including Bank of Ireland, Bank of Scotland, Barclays Bank, Danske Bank, HSBC, Rabobank, and Ulster Bank,
repayable in a single instalment on 28 February 2017. The facility agreement provided for a further €100.0m in the form of an
uncommitted accordion facility which the Group successfully negotiated with the banks as committed in December 2012. The
facility agreement permits the Group to avail of further financial indebtedness, excluding working capital and guarantee facilities,
to a maximum value of €150.0m, subject to agreeing the terms and conditions with the lenders. Consequently the Group is
permitted under the terms of the agreement, to have debt capacity of €500.0m, of which €246.6m was drawn at 28 February 2013
(2012: no drawn funds under this facility, €60.0m drawn under the 2007 euro facility).
Under the terms of the agreement, the Group must pay a commitment fee based on 40% of the applicable margin on undrawn
committed amounts and variable interest on drawn amounts based on variable Euribor/Libor interest rates plus a margin, the
level of which is dependent on the net debt:EBITDA ratio, plus a utilisation fee, the level of which is dependent on percentage
utilisation. The Group may select an interest period of one, two, three or six months.
In the prior year there were no drawn funds under the 2012 multi-currency facility however there were outstanding funds of
€60.0m under the Group’s 2007 euro facility. During the current financial year, the Group, using surplus cash resources, repaid
and cancelled all funds (€60.0m) drawn under its maturing 2007 euro facility, it also repaid €5.2m ($7m) in January 2013 under
its 2012 multi-currency facility.
All bank loans are guaranteed by a number of the Group’s subsidiary undertakings. The loan facility agreements allow the early
repayment of debt without incurring additional charges or penalties. All bank loans are repayable in full on change of control of
the Group.
C&C GROUP PLC - 2013 ANNUAL REPORT
1 1 3
19. iNTEREST BEARiNG LOANS & BORROWiNGS - CONTiNUED
The Group’s debt facilities incorporate two 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
At year-end the Group had net debt of €123.4m, with a Net debt/ EBITDA ratio of 0.9:1
Further information about the Group’s exposure to interest rate, foreign currency and liquidity risk is disclosed in note 23.
20. ANALYSiS OF NET DEBT
Group
Interest bearing loans & borrowings
Cash & cash equivalents
Group
Interest bearing loans & borrowings
Cash & cash equivalents
Interest rate swaps
1 March
2012
€m
Translation
adjustment
€m
Cash
flow
€m
Non-cash
changes
€m
28 February
2013
€m
60.0
(128.3)
(68.3)
0.6
3.1
3.7
1 March
2011
€m
Translation
adjustment
€m
135.0
(128.7)
6.3
2.0
8.3
(1.7)
0.6
(1.1)
-
(2.4)
(1.1)
(76.2)
183.2
4.2
187.4
Cash
flow
€m
(73.6)
(0.2)
(73.8)
0.6
-
0.6
244.4
(121.0)
123.4
Non-cash
changes
€m
29 February
2012
€m
0.3
-
0.3
0.4
0.7
60.0
(128.3)
(68.3)
-
(68.3)
The non-cash change to the Group’s interest bearing loans and borrowings relate to the amortisation of issue costs.
1 March
2012
€m
Translation
adjustment
€m
Cash
flow
€m
Non-cash
changes
€m
28 February
2013
€m
Company
Interest bearing loans & borrowings
Cash & cash equivalents
Company
Interest bearing loans & borrowings
Cash & cash equivalents
60.0
(9.3)
50.7
-
-
-
1 March
2011
€m
Translation
adjustment
€m
135.0
-
135.0
(1.7)
-
(1.7)
(60.0)
9.2
(50.8)
Cash
flow
€m
(73.6)
(9.3)
(82.9)
Interest rate swaps
2.0
-
(2.4)
137.0
(1.7)
(85.3)
-
-
-
-
(0.1)
(0.1)
Non-cash
changes
€m
29 February
2012
€m
0.3
-
0.3
0.4
0.7
60.0
(9.3)
50.7
-
50.7
The non-cash changes to the Company’s interest bearing loans and borrowings relate to the amortisation of issue costs.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 1 4
NOTES - CONTINUED
Forming part of the financial statements
21. RECOGNiSED DEFERRED TAX ASSETS AND LiABiLiTiES
Group
Property, plant & equipment
Intangible assets
Retirement benefit obligations
Derivative financial instruments
Trade related items & losses
2013
2012
(restated)*
Assets
€m
Liabilities
€m
Net assets/
(liabilities)
€m
Assets
€m
Liabilities
€m
Net assets/
(liabilities)
€m
2.3
-
2.8
-
1.1
6.2
(5.0)
(2.5)
(0.1)
(0.2)
-
(7.8)
(2.7)
(2.5)
2.7
(0.2)
1.1
(1.6)
4.5
-
1.9
0.1
-
6.5
(6.0)
(1.2)
-
-
-
(7.2)
(1.5)
(1.2)
1.9
0.1
-
(0.7)
* The classification headings for deferred tax were amended in the current year to show separately the deferred tax balance
related to intangible assets. This resulted in a reclassification of the prior year deferred tax balances previously contained
under the heading titled “Provision for UK trade related items” (€7.2m liability) and which are now restated to the revised 2013
classification headings “Property, plant and equipment” (€6.0m liability) and “Intangible assets” (€1.2m liability).
The aggregate amount of temporary differences associated with investments in subsidiaries and equity accounted investees for
which deferred tax liabilities have not been recognised is nil in the current financial year.
Company
The company had no deferred tax assets or liabilities at 28 February 2013 or 29 February 2012.
Analysis of movement in net deferred tax assets/(liabilities)
1 March
2012
€m
Recognised
in income
statement
€m
Recognised
on
acquisition
€m
Recognised
in other
Translation comprehensive
income
adjustment
€m
€m
28 February
2013
€m
4.5
(6.0)
-
(1.2)
1.9
0.1
(0.7)
(2.2)
1.1
1.1
(1.4)
(0.8)
-
(2.2)
-
(0.2)
-
-
-
-
(0.2)
-
0.1
-
0.1
-
-
0.2
-
-
-
-
1.6
(0.3)
1.3
2.3
(5.0)
1.1
(2.5)
2.7
(0.2)
(1.6)
Group
Property, plant & equipment: ROI
Property, plant and equipment: other
Trade related items & losses
Intangible assets
Retirement benefit obligations
Derivative financial instruments
There are no unrecognised deferred tax liabilities.
C&C GROUP PLC - 2013 ANNUAL REPORT
21. RECOGNiSED DEFERRED TAX ASSETS AND LiABiLiTiES - CONTiNUED
1 1 5
Group
Property, plant & equipment: ROI
Property, plant and equipment: other
Provision for ROI trade related items
Intangible assets
Retirement benefit obligations
Derivative financial instruments
Company
Derivative financial instruments
Interest free loans fair value adjustment
1 March
2011
€m
Recognised
in income
statement
€m
Recognised
in other
Translation comprehensive
income
adjustment
€m
€m
29 February
2012
€m
5.9
(5.3)
0.6
(0.6)
2.0
0.2
2.8
(1.4)
(0.6)
(0.6)
(0.6)
(2.5)
-
(5.7)
1 March
2011
€m
0.2
0.4
0.6
-
(0.1)
-
-
-
-
(0.1)
-
-
-
-
2.4
(0.1)
2.3
4.5
(6.0)
-
(1.2)
1.9
0.1
(0.7)
Recognised
Recognised
in other
in income comprehensive
income
statement
€m
€m
29 February
2012
€m
-
(0.4)
(0.4)
(0.2)
-
(0.2)
-
-
-
22. RETiREMENT BENEFiT OBLiGATiONS
The Group operates a number of defined benefit pension schemes for certain employees in the Republic of Ireland (ROI) and in
the United Kingdom (UK), all of which provide pension benefits based on final salary and the assets of which are held in separate
trustee administered funds. The Group provides permanent health insurance cover for the benefit of its employees and separately
charges this to the income statement.
The pension scheme assets are held in separate trustee administered funds to meet long-term pension liabilities to past and
present employees. The trustees of the funds are required to act in the best interest of the funds’ beneficiaries. The appointment
of trustees to the funds is determined by the schemes’ trust documentation. The Group has a policy in relation to its principal
staff pension fund that members of the fund should nominate half of all fund trustees.
All schemes are closed to new members since April 2007. There are now no active members remaining in the Executive defined
benefit pension scheme (2012: no active members), while active members of the ROI Staff defined benefit pension scheme
represent less than 10% of total membership. There are 8 active members of the UK scheme (2012: 9 active members). The
Group’s ROI defined benefit pension reform programme concluded during the financial year ended 29 February 2012 with the
Pensions Board issuing a directive under Section 50 of the Pensions Act 1990 to remove the mandatory pension increase rule,
which guaranteed 3% per annum increase to certain pensions in payment, and to replace it with guaranteed pension increases of
2% per annum for each year 2012 to 2014 and thereafter for all future pension increases to be awarded on a discretionary basis.
Actuarial valuations – funding requirements
Independent actuarial valuations of the defined benefit schemes are carried out on a triennial basis using the attained age
method. The funding requirements in relation to the Group’s ROI defined benefit schemes are assessed at each valuation date
and are implemented in accordance with the advice of the actuaries. Arising from the formal actuarial valuations of the main
schemes on 1 January 2009 the actuary, Mercer (Ireland) Limited, submitted Actuarial Funding Certificates to the Pensions
Board confirming that the Schemes did not satisfy the Minimum Funding Standard at that date. Given that the removal of
guaranteed pension increases would not correct this situation, Funding Proposals were submitted to, and approved by the
Pensions Board on 23 February 2012, which the Directors believe will enable the schemes to meet the Minimum Funding
Standard by 31 December 2016. The most recent actuarial valuation of the ROI scheme was carried out with an effective date of
1 January 2012 while the most recent actuarial valuation of the UK scheme was 20 December 2012. The actuarial valuations are
not available for public inspection; however the results of the valuations are advised to members of the various schemes.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 1 6
NOTES - CONTINUED
Forming part of the financial statements
22. RETiREMENT BENEFiT OBLiGATiONS - CONTiNUED
The Trustees were required to update the actuarial valuations and funding requirements of both ROI pension schemes for the
Funding Proposal submissions. The Funding Proposals commit the Group to contributions of 14% of Pensionable Salaries to fund
future pension accrual of benefits (previously 38.1% of Pensionable Salaries), a deficit contribution of €3.4m and an additional
supplementary deficit contribution of €1.9m for which the Group reserves the right to reduce or terminate if on consultation with
the Trustees, and if the Scheme Actuary advises that it is no longer required due to a correction in market conditions. Funding
Proposals cover the period to 31 December 2016. However, they will cease at an earlier date if the scheme funding target is met
before then.
Method and assumptions
Independent actuaries, Mercer (Ireland) Limited, have employed the projected unit credit method to determine the present value
of the defined benefit obligations arising and the related current service cost.
The financial assumptions that have the most significant impact on the results of the actuarial valuations are those relating to
the discount rate used to convert future pension liabilities to current values and the rate of increase in salaries. These and other
assumptions used to determine the retirement benefits obligations and service cost under IAS 19 Employee Benefits are set out below.
Mortality rates also have a significant impact on the actuarial valuations, and as the number of deaths within the scheme have been too
small to analyse and produce any meaningful scheme-specific estimates of future levels of mortality, the rates used have been based
on the most up-to-date mortality tables, (the PNL00 62% (males) and PNL00 70% (females) for the ROI schemes and S1NA year of birth
tables with CMI 2011 projections for the UK scheme) with age ratings and loading factors to allow for future mortality improvements.
These tables conform to best practice. The growing trend for people to live longer and the expectation that this will continue has been
reflected in the mortality assumptions used for this valuation as indicated below. This assumption will continue to be monitored in light
of general trends in mortality experience. Based on these tables, the assumed life expectations on retirement are:
Future life expectations at age 65
Current retirees – no allowance for future improvements Male
Female
Future retirees – with allowance for future improvements Male
Female
ROi
UK
2013
No of years
2012
No of years
2013
No of years
2012
No of years
23.3
24.7
24.8
25.9
23.2
24.6
24.7
25.8
22.8
25.3
25.6
28.1
21.2
24.0
23.6
26.4
Scheme liabilities:
The average age of active members is 43 and 45 years for the ROI Staff and the UK defined benefit pension schemes respectively (the
executive defined benefit pension scheme has no active members), while the average duration of liabilities ranges from 16 to 27 years.
The principal long-term financial assumptions used by the Group’s actuaries in the computation of the defined benefit liabilities
arising on pension schemes as at 28 February 2013 and 29 February 2012 are as follows:
Salary increases
Increases to pensions in payment
Discount rate
Inflation rate
2013
2012
ROi
UK
ROi
UK
0.0% - 3.0%
2.0%
3.8% - 4.25%
2.0%
3.7% 0.0% - 3.0%
2.5% 2.0% - 2.25%
4.4% 4.7% - 4.9%
3.3%
2.0%
3.7%
2.5%
4.75%
3.0%
During the year the Group’s actuary expanded the population of corporate bonds used in recommending an appropriate discount
rate for the ROI schemes as a result of changes in the corporate bond market. This has been treated as a change in accounting
estimate in the year.
C&C GROUP PLC - 2013 ANNUAL REPORT
1 1 7
22. RETiREMENT BENEFiT OBLiGATiONS - CONTiNUED
Scheme assets:
The long-term rates of return expected at 28 February 2013 and 29 February 2012, determined in conjunction with the Group’s
actuaries and based on market expectations at the beginning of the financial year for investment returns over the entire life of the
related obligation, analysed by the class of investments in which the schemes’ assets are invested, are as follows:
Equity
Bonds
Property
Cash
Alternatives
2013
2012
ROi
UK
ROi
UK
6.00%
3.50%
5.00%
1.00%
5.00%
6.25%
3.25%
-
0.50%
-
6.90%
4.40%
5.90%
2.50%
5.90%
6.25%
3.25%
-
0.50%
-
The assumption used is the average of the above assumptions, appropriate to the individual asset classes, weighted by the
proportion of the assets in the particular asset class. The investment return on bonds has been based on market yield of the bond
fund’s benchmark index at the balance sheet date. The assumed investment return on the ROI equities allows for a 3.7% (2012:
3.8%) equity risk premium over the 30 year euro government bond yield.
The pension assets and liabilities on the following pages have been prepared in accordance with IAS 19 Employee Benefits.
Certain revisions to IAS 19 will be effective from 1 March 2013. The Group’s actuary has advised that these revisions will not
impact on the assets and liabilities as at 28 February 2013. However, the charge recognised in the income statement would have
decreased by €0.7m, with a corresponding increase in the amount recognised in the statement of comprehensive income, had the
revised standard been applied for the year ended 28 February 2013.
a. impact on Group income statement
Analysis of defined benefit pension expense:
Current service cost
Past service gain
Curtailment gain
Interest on scheme liabilities
Expected return on scheme assets, net of pension levy
Total expense/(income) recognised in income statement
ROi
€m
0.7
(0.5)
-
7.3
(6.3)
1.2
2013
UK
€m
0.1
-
-
0.3
(0.3)
0.1
Total
€m
ROi
€m
0.8
(0.5)
-
7.6
(6.6)
0.6
(14.8)
-
8.1
(7.1)
1.3
(13.2)
2012
UK
€m
0.1
-
(0.1)
0.2
(0.3)
(0.1)
Total
€m
0.7
(14.8)
(0.1)
8.3
(7.4)
(13.3)
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 1 8
NOTES - CONTINUED
Forming part of the financial statements
22. RETiREMENT BENEFiT OBLiGATiONS - CONTiNUED
Analysis of amount recognised in other comprehensive income
2013
ROi
UK
€m €m
Total
€m
2012
ROi
UK
€m €m
Total
€m
2011
ROi
UK
€m €m
Total
€m
2010
ROi
UK
€m €m
Total
€m
2009
ROi
UK
€m €m
Total
€m
Actual return less
expected return on
scheme assets
Experience gains and
losses on scheme
liabilities
Effect of changes in
assumptions on value
of liabilities
5.1
0.2
5.3
(0.8) 0.3
(0.5)
(0.9) 0.2
(0.7)
15.3
0.6
15.9
(44.0)
(0.8)
(44.8)
0.7
0.4
1.1
(0.8)
-
(0.8)
1.1
-
1.1
3.2
0.4
3.6
0.1 (0.2)
(0.1)
(17.9) (0.8)
(18.7)
(17.3)
(0.4)
(17.7)
(0.1)
(0.1)
(0.2)
(2.0)
(0.8)
(2.8)
3.2
0.1
3.3
Total
(12.1) (0.2)
(12.3)
(18.9)
(0.1)
(19.0)
0.1
0.1
0.2
16.5
0.2
16.7
(40.7)
(0.9)
(41.6)
Scheme assets
155.2
6.2 161.4 142.9
5.3
148.2 136.9
4.3
141.2 131.5
3.1
134.6 107.3
2.2
109.5
Scheme liabilities
(177.2) (5.7) (182.9) (158.2)
(5.1) (163.3) (151.9)
(4.6) (156.5) (151.9)
(3.9) (155.8) (151.8)
(3.2) (155.0)
Deficit in scheme
(22.0)
-
(22.0)
(15.3)
-
(15.3)
(15.0)
(0.3)
(15.3)
(20.4)
(0.8)
(21.2)
(44.5)
(1.0)
(45.5)
Surplus in scheme
-
0.5
0.5
-
0.2
0.2
-
-
-
-
-
-
-
-
-
b. impact on Group balance sheet
The net pension liability at 28 February 2013 and 29 February 2012 are analysed as follows:
Analysis of net pension deficit
Bid value of assets at end of year:
Equity(i)
Bonds
Property
Cash
Alternatives
ROi
€m
36.6
67.3
4.1
27.7
19.5
155.2
2013
UK
€m
3.1
3.1
-
-
-
6.2
Total
€m
39.7
70.4
4.1
27.7
19.5
ROi
€m
36.6
66.1
4.9
20.3
15.0
161.4
142.9
2012
UK
€m
2.6
2.6
-
0.1
-
5.3
Total
€m
39.2
68.7
4.9
20.4
15.0
148.2
Actuarial value of scheme liabilities
(177.2)
(5.7)
(182.9)
(158.2)
(5.1)
(163.3)
(Deficit)/surplus in the scheme
Related deferred tax asset /(liability)
(22.0)
2.8
0.5
(0.1)
(21.5)
2.7
(15.3)
1.9
Net pension (deficit)/surplus
(19.2)
0.4
(18.8)
(13.4)
(i) The defined benefit pension schemes have a passive self investment in C&C Group plc of €nil (2012: €nil).
0.2
-
0.2
(15.1)
1.9
(13.2)
The alternative investment category includes investments in various asset classes including equities, commodities, currencies
and hedge funds. The investments are managed by fund managers.
C&C GROUP PLC - 2013 ANNUAL REPORT
22. RETiREMENT BENEFiT OBLiGATiONS - CONTiNUED
Reconciliation of scheme assets
Assets at beginning of year
Movement in year:
Translation adjustment
Expected return on scheme assets
Actual return less expected return on scheme
assets
Employer contributions
Member contributions
Benefit payments
Assets at end of year
Return on scheme assets
Actual return on scheme assets
Expected return on scheme assets
Actual return less expected return
on scheme assets
1 1 9
Total
€m
141.2
0.1
7.4
(0.5)
5.9
0.3
(6.2)
148.2
Total
€m
6.9
(7.4)
ROi
€m
142.9
-
6.3
5.1
6.6
0.3
(6.0)
155.2
ROi
€m
11.4
(6.3)
2013
UK
€m
5.3
(0.1)
0.3
0.2
0.6
-
(0.1)
6.2
2013
UK
€m
0.5
(0.3)
Total
€m
ROi
€m
148.2
136.9
(0.1)
6.6
5.3
7.2
0.3
(6.1)
-
7.1
(0.8)
5.4
0.3
(6.0)
161.4
142.9
Total
€m
11.9
(6.6)
ROi
€m
6.3
(7.1)
2012
UK
€m
4.3
0.1
0.3
0.3
0.5
-
(0.2)
5.3
2012
UK
€m
0.6
(0.3)
5.1
0.2
5.3
(0.8)
0.3
(0.5)
The expected employer contributions to defined benefit schemes for year ending 28 February 2014 is €6.3 m.
The scheme assets had the following investment profile at the year-end:
Equities
Bonds
Property
Cash
Alternatives
2013
2012
ROi
24%
43%
3%
18%
12%
Ni
50%
50%
-
-
-
ROi
26%
46%
3%
14%
11%
Ni
49%
49%
-
2%
-
100%
100%
100%
100%
Reconciliation of actuarial value of liabilities
Liabilities at beginning of year
Movement in year
Translation adjustment
Current service cost
Past service gain
Curtailment gain
Interest cost on scheme liabilities
Member contributions
Actuarial loss immediately recognised in equity
Benefit payments
Liabilities at end of year
ROi
€m
158.2
-
0.7
(0.5)
-
7.3
0.3
17.2
(6.0)
177.2
2013
UK
€m
5.1
(0.1)
0.1
-
-
0.3
-
0.4
(0.1)
5.7
Total
€m
ROi
€m
163.3
151.9
(0.1)
0.8
(0.5)
-
7.6
0.3
17.6
(6.1)
-
0.6
(14.8)
-
8.1
0.3
18.1
(6.0)
182.9
158.2
2012
UK
€m
4.6
0.1
0.1
-
(0.1)
0.2
-
0.4
(0.2)
5.1
Total
€m
156.5
0.1
0.7
(14.8)
(0.1)
8.3
0.3
18.5
(6.2)
163.3
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 2 0
NOTES - CONTINUED
Forming part of the financial statements
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT
The Group’s multinational operations expose it to various financial risks in the ordinary course of business that include credit
risk, liquidity risk, commodity price risk, currency risk and interest rate risk. This note discusses the Group’s exposure to each of
these financial risks, summarises the risk management strategy for managing these risks and details the accounting treatment
applied to the Group’s derivative financial instruments and hedging activities. The note is presented as follows:-
Financial assets and liabilities as at 28 February 2013/29 February 2012 and determination of fair value
(a) Overview of the Group’s risk exposures and management strategy
(b)
(c) Market risk
(d) Credit risk
(e)
(f)
Liquidity risk
Accounting for derivative financial instruments and hedging activities
(a) Overview of the Group’s risk exposures and management strategy
The most significant financial market risks that the Group is exposed to include foreign currency exchange rate risk, commodity
price fluctuations, interest rate risk and financial counterparty creditworthiness. There has been no significant change during the
financial year to either the financial risks faced by the Group or the Board’s approach to the management of these risks.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
This is executed through various committees to which the Board has delegated appropriate levels of authority. An essential part
of this framework is the role undertaken by the Audit Committee, supported by the internal audit function, and the Group Chief
Financial Officer. The Board, through its Committees, has reviewed the internal control environment and the risk management
systems and process for identifying and evaluating the significant risks affecting the business and the policies and procedures by
which these risks will be managed effectively. The Board has embedded these structures and procedures throughout the Group and
considers these to be a robust and efficient mechanism for creating a culture of risk awareness at every level of management.
The Group’s risk management programme seeks to minimise the potential adverse effects, arising from fluctuations in financial
markets, on the Group’s financial performance in a non speculative manner at a reasonable cost when economically viable to
do so. The Group achieves the management of these risks in part, where appropriate, through the use of derivative financial
instruments. All derivative financial contracts entered into in this regard are in liquid markets with credit rated parties. Treasury
activities are performed within strict terms of reference that have been approved by the Board.
(b) Financial assets and liabilities
The carrying and fair values of financial assets and liabilities by measurement category were as follows:
Group
28 February 2013
Financial assets:
Cash & cash equivalents
Derivative financial assets - foreign currency contracts
Other derivative contracts
Trade receivables
Advances to customers
Financial liabilities:
Interest bearing loans & borrowings
Other derivative contracts
Trade payables & accruals
Provisions
Derivative
financial
instruments
€m
-
1.7
1.4
-
-
-
(1.2)
-
-
1.9
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
121.0
-
-
78.0
38.2
-
-
-
-
-
-
-
-
-
(244.4)
-
(124.1)
(12.2)
121.0
1.7
1.4
78.0
38.2
(244.4)
(1.2)
(124.1)
(12.2)
Fair
value
€m
121.0
1.7
1.4
78.0
38.2
(244.4)
(1.2)
(124.1)
(12.2)
237.2
(380.7)
(141.6)
(141.6)
C&C GROUP PLC - 2013 ANNUAL REPORT
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
1 2 1
Fair
value
€m
128.3
0.1
79.8
24.7
(60.0)
(0.9)
(141.9)
(17.3)
Fair
value
€m
0.1
47.8
Derivative
financial
instruments
€m
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
-
0.1
-
-
-
(0.9)
-
-
(0.8)
-
-
-
-
-
128.3
-
79.8
24.7
-
-
-
-
-
-
-
-
(60.0)
-
(141.9)
(17.3)
128.3
0.1
79.8
24.7
(60.0)
(0.9)
(141.9)
(17.3)
232.8
(219.2)
12.8
12.8
Derivative
financial
instruments
€m
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
0.1
47.8
-
-
0.1
47.8
-
-
(98.7)
(0.7)
(98.7)
(0.7)
(98.7)
(0.7)
47.9
(99.4)
(51.5)
(51.5)
Derivative
financial
instruments
€m
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
-
-
-
-
-
-
9.3
30.6
-
-
-
39.9
-
-
(60.0)
(10.0)
(0.2)
(70.2)
9.3
30.6
(60.0)
(10.0)
(0.2)
(30.3)
Fair
value
€m
9.3
30.6
(60.0)
(10.0)
(0.2)
(30.3)
Group
29 February 2012
Financial assets:
Cash & cash equivalents
Derivative financial assets - foreign currency contracts
Trade receivables
Advances to customers
Financial liabilities:
Interest bearing loans & borrowings
Derivative financial liabilities - foreign currency contracts
Trade payables & accruals
Provisions
Company
28 February 2013
Financial assets:
Cash & cash equivalents
Amounts due from Group undertakings
Financial liabilities:
Amounts due to Group undertakings
Trade payables & accruals
Company
29 February 2012
Financial assets:
Cash & cash equivalents
Amounts due from Group undertakings
Financial liabilities:
Interest bearing loans & borrowings
Amounts due to Group undertakings
Trade payables & accruals
Determination of Fair Value
Set out below are the major methods and assumptions used in estimating the fair values of the Group’s financial assets and
liabilities. There is no material difference between the fair value of financial assets and liabilities falling due within one year and
their carrying amount as due to the short term maturity of these financial assets and liabilities their carrying amount is deemed
to approximate fair value.
Short term bank deposits and cash & cash equivalents
The nominal amount of all short-term bank deposits and cash & cash equivalents is deemed to reflect fair value at the balance
sheet date.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 2 2
NOTES - CONTINUED
Forming part of the financial statements
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
Advances to customers
The nominal amount of all advances to customers, after provision for impairment, is considered to reflect fair value. The commercial
rationale for such advances is to develop good customer relations rather than to make financial investments.
Trade & other receivables/payables
The nominal amount of all trade & other receivables/payables after provision for impairment is deemed to reflect fair value at the
balance sheet date with the exception of provisions and amounts due from Group undertakings which are discounted to fair value.
Derivatives (forward currency contracts, put/call options in equity accounted investees)
The fair values of forward currency contracts, put/call options and interest rate swaps are based on market price calculations using
financial models.
The Group has adopted the following fair value measurement hierarchy for financial instruments that are measured in the balance
sheet at fair value:
• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities.
The fair value of financial instruments that are not traded in an active market (e.g. over the counter derivatives) are determined using
valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as
possible on entity specific estimates.
• Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly (i.e.
as prices) or indirectly (i.e. derived from prices).
• Level 3: techniques that use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.
The carrying values of all forward currency contracts held by the Group at 28 February 2013 and 29 February 2012 were based on fair
values arrived at using Level 2 inputs.
The carrying value of the put and call options in relation to equity accounted investees entered into during the year were valued based
on Level 3 inputs, with the fair values being arrived at through the use of a Black-Scholes model. As set out further in note 14, as part of
the Group’s equity investment during the year in Maclay Group plc the Group entered into;
I. a put option agreement enabling it to sell the equity stake to Maclay Group plc at a predetermined price at any time after the fifteenth
anniversary of the acquisition, resulting in the recognition of a derivative asset of €1.4m; and
II. a call option agreement with Maclay Group plc enabling the latter to re-acquire the Group’s equity interest at a predetermined price
at any time in the first fifteen years after the acquisition date, resulting in the recognition of a derivative liability of €1.0m.
The movement in the fair value of these derivatives to 28 February 2013 was less than €0.1m.
As part of the joint venture agreement in Thistle Pub Company Limited with Maclay Group plc, as set out further in note 14, the Group
granted Thistle Pub Company Limited and Maclay Group plc a call option enabling either of them to purchase the Group’s share of
equity at a fixed price at any time in the first 15 years after the date the joint venture was formed. This call option has been valued at the
acquisition date and resulted in the recognition of a €0.2m financial liability. The movement in fair value of this derivative to 28 February
2013 was less then €0.1m.
Interest bearing loans & borrowings
The fair value of all interest bearing loans and 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. All loans bear interest at floating rates. At
28 February 2013, the nominal amount of drawn debt is deemed to reflect fair value due to the close proximity to date of drawdown.
(c) Market risk
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates and interest rates, will affect
the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return on risk.
The Group enters into derivative financial contracts to mitigate risks arising in the ordinary course of business from foreign exchange
rate and interest rate movements, and also incurs financial liabilities, in order to manage these market risks. The Group carries
out all such transactions within the Treasury policy as set down by the Board of Directors. Generally the Group seeks to apply hedge
accounting in order to manage volatility in the income statement.
C&C GROUP PLC - 2013 ANNUAL REPORT
1 2 3
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
Commodity price risk
The Group is exposed to variability in the price of commodities used in the production or in the packaging of finished products, such
as barley, sugar, apple concentrate and aluminium. Commodity price risk is managed, where economically viable, through fixed
price contracts with suppliers incorporating appropriate commodity hedging and pricing mechanisms. The Group does not directly
enter into commodity hedge contracts. The cost of production is also sensitive to variability in the price of energy, primarily gas and
electricity. It is Group policy to fix the cost of a certain level of its energy requirement through fixed price contractual arrangements
directly with its energy suppliers.
Currency risk
The Company’s functional and reporting currency and that of its share capital is euro. The euro is also the Group’s reporting
currency and the currency used for all planning and budgetary purposes. However, as the Group both transacts in foreign currencies
and consolidates the results of a number of subsidiary entities with functional currencies other than euro, namely sterling and US
dollar, it is exposed to currency risk. The Group’s primary currency exposures relate to sales transactions by Group companies in
currencies other than their functional currency (transaction risk), and fluctuations in the euro value of the Group’s net investment in
foreign currency (primarily sterling and US dollar) denominated subsidiary undertakings (translation risk). Currency exposures for
the entire Group are managed and controlled centrally.
The Group seeks to minimise its foreign currency transaction exposure when economically viable by maximising the value of its
foreign currency input costs and creating a natural hedge. Group policy is to manage its remaining net exposure by hedging a portion
of the projected non-euro forecast sales revenue up to a maximum of two years ahead. Forward foreign currency contracts are used
to manage this risk. The Group does not enter into such derivative financial instruments for speculative purposes. All such derivative
contracts entered into are in liquid markets with credit-approved counterparties. Treasury operations are controlled within strict
terms of reference that have been approved by the Board.
The Group seeks to partially manage foreign currency translation risk through borrowings denominated in US dollar. Part of the
Groups multi-currency debt facility (note 19), was designated as a net investment hedge of its US dollar subsidiaries. In addition,
the Group has a number of long term US dollar and sterling intra group loans for which settlement is neither planned nor likely to
happen in the foreseeable future, and as a consequence are deemed quasi equity in nature and are therefore part of the Group’s net
investment in its foreign operations. The Group does not hedge the translation exposure arising on the translation of the profits of
foreign currency subsidiaries.
The net currency gains and losses on transactional currency exposures are recognised in the income statement and the changes
arising from fluctuations in the euro value of the Group’s net investment in foreign currency subsidiaries are reported separately
within other comprehensive income.
The currency profile of the Group’s financial instruments subject to transactional exposure as at 28 February 2013 is as follows:-
Group
Cash & cash equivalents
Trade receivables
Advances to customers
Derivative financial assets - foreign currency contracts
Other derivative financial assets and liabilities
Interest bearing loans & borrowings
Trade payables & accruals
Provisions
Gross currency exposure
Designated as a net investment hedge
Designated as part of the Group’s net investment in foreign operations
Net currency exposure
Euro
€m
1.0
-
-
-
-
-
(0.4)
-
0.6
-
-
0.6
Sterling
€m
USD/CAD
€m
Not at risk
€m
0.7
0.7
-
1.7
-
-
(4.2)
-
3.1
3.1
-
-
-
(224.4)
(0.8)
-
116.2
74.2
38.2
-
0.2
(20.0)
(118.7)
(12.2)
Total
€m
121.0
78.0
38.2
1.7
0.2
(244.4)
(124.1)
(12.2)
(1.1)
(219.0)
77.9
(141.6)
-
-
44.9
179.5
(44.9)
(179.5)
-
-
(1.1)
5.4
(146.5)
(141.6)
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 2 4
NOTES - CONTINUED
Forming part of the financial statements
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
The currency profile of the Group’s financial instruments subject to transactional exposure as at 29 February 2012 was as follows:-
Sterling
€m
USD/CAD
€m
Not at risk
€m
Group
Cash & cash equivalents
Trade receivables
Advances to customers
Derivative financial assets and liabilities
Interest bearing loans & borrowings
Trade payables & accruals
Provisions
Total
Euro
€m
0.7
0.1
-
-
-
(0.6)
-
0.2
13.5
1.0
-
(0.8)
-
(6.3)
-
7.4
3.4
3.0
-
-
-
(0.8)
-
5.6
(0.4)
12.8
The currency profile of the Company’s financial instruments as at 28 February 2013 is as follows:-
Total
€m
128.3
79.8
24.7
(0.8)
(60.0)
(141.9)
(17.3)
Total
€m
0.1
(50.9)
(0.7)
Total
€m
9.3
20.6
(60.0)
(0.2)
110.7
75.7
24.7
-
(60.0)
(134.2)
(17.3)
-
(34.8)
(0.7)
9.3
74.3
(60.0)
(0.2)
Euro
€m
Sterling
€m
USD/CAD
€m
Not at risk
€m
-
-
-
-
0.1
(16.1)
-
(16.0)
-
-
-
-
(35.5)
(51.5)
Euro
€m
Sterling
€m
USD/CAD
€m
Not at risk
€m
-
-
-
-
-
-
(53.7)
-
-
(53.7)
-
-
-
-
-
23.4
(30.3)
Company
Cash & cash equivalents
Net amounts due to subsidiary undertakings
Trade payables & accruals
Total
Company
Cash & cash equivalents
Net amounts due to subsidiary undertakings
Interest bearing loans & borrowings
Trade payables & accruals
Total
The currency profile of the Company’s financial instruments as at 29 February 2012 was as follows:-
Foreign currency contracts in place at 28 February 2013 to sell fixed amounts of sterling and US dollars for contracted euro
amounts can be summarised as follows:-
USD
Average
$m forward rate
Sterling
£m
Average
forward rate
Year ended 28 February 2014
1.0
1.238
20.0
0.808
A 10% strengthening in the euro against sterling, the US dollar and the Canadian dollar, based on outstanding financial assets
and liabilities at 28 February 2013, would have a €0.2m negative impact on the income statement and a €2.2m positive impact
on the cashflow hedging reserve. A 10% weakening in the euro against sterling, Canadian dollar and the US dollar would have
a €0.2m positive effect on the income statement and a €2.7m negative impact on the cash flow hedging reserve. This analysis
assumes that all other variables, in particular interest rates, remain constant.
interest rate risk
The interest rate profile of the Group and Company’s interest-bearing financial instruments at the reporting date is summarised
as follows:
Variable rate instruments
Interest bearing loans & borrowings
Cash & cash equivalents
Group
Company
2013
€m
2012
€m
(246.6)
121.0
(60.0)
128.3
(125.6)
68.3
2013
€m
-
0.1
0.1
2012
€m
(60.0)
9.3
(50.7)
C&C GROUP PLC - 2013 ANNUAL REPORT
1 2 5
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
The Group and Company’s exposure to interest rate risk arises principally from its long-term debt obligations. It is Group policy to
manage interest cost and exposure to market risk centrally by using interest rate swaps, where deemed appropriate, to give the
desired mix of fixed and floating rate debt. The Group has no outstanding interest rate swap contracts at 28 February 2013.
Financial instruments: Cash flow hedges
The following table indicates the periods in which cash flows associated with derivatives that are cash flow hedges are expected
to occur:-
Group
28 February 2013
Forward exchange contracts
- assets
29 February 2012
Forward exchange contracts
- assets
- liabilities
Carrying
amount
€m
Expected
cash flows
€m
6 months
or less
€m
6-12
months
€m
1-2
years
€m
More than
2 years
€m
1.7
1.7
0.1
(0.9)
(0.8)
1.7
1.7
0.1
(1.0)
(0.9)
1.2
1.2
0.1
(0.3)
(0.2)
0.5
0.5
-
(0.7)
(0.7)
-
-
-
-
-
-
-
-
-
-
The following table indicates the periods in which cash flows associated with derivatives that are cash flow hedges are expected
to impact the income statement:-
Group
28 February 2013
Forward exchange contracts
- assets
29 February 2012
Forward exchange contracts
- assets
- liabilities
Carrying
amount
€m
Expected
cash flows
€m
6 months
or less
€m
6-12
months
€m
1-2
years
€m
More than
2 years
€m
1.7
1.7
0.1
(0.9)
(0.8)
1.5
1.5
0.1
(0.7)
(0.6)
1.1
1.1
0.1
(0.3)
(0.2)
0.4
0.4
-
(0.4)
(0.4)
-
-
-
-
-
-
-
-
-
-
The Company had no derivatives at 28 February 2013 or 29 February 2012.
(d) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s trade receivables, its cash advances to customers, cash & cash
equivalents including deposits with banks and derivative financial instruments contracted with banks. The Group has an indirect
exposure to European Sovereigns via its defined benefit pension scheme investment portfolio. In the context of the Group’s
operations, credit risk is mainly influenced by the individual characteristics of individual counterparties and is not considered
particularly concentrated as it primarily arises from a wide and varied customer base, there are no material dependencies or
concentrations of individual customers which would warrant disclosure under IFRS8.
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables and advances to
customers based on experience, customer track records and historic default rates. Generally, individual ‘risk limits’ are set by
customer and risk is only accepted above such limits in defined circumstances. A strict credit assessment is made of all new
applicants who request credit-trading terms. The utilisation and revision, where appropriate, of credit limits is regularly monitored.
Impairment provision accounts are used to record impairment losses unless the Group is satisfied that no recovery of the amount
owing is possible. At that point, the amount is considered irrecoverable and is written off directly against the trade receivable.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 2 6
NOTES - CONTINUED
Forming part of the financial statements
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
Advances to customers are generally secured by, amongst others, rights over property or intangible assets, such as the right to take
possession of the premises of the customer. Interest rates calculated on repayment/annuity advances are generally based on the risk-
free rate plus a margin, which takes into account the risk profile of the customer and value of security given. The Group establishes an
allowance for impairment of advances that represents its estimate of potential future losses.
From time to time, the Group holds significant cash balances, which are invested on a short-term basis and disclosed under cash &
cash equivalents in the balance sheet. Risk of counterparty default arising on short term cash deposits is controlled within a framework
of dealing with banks who are members of the Group’s banking syndicate, and by limiting the credit exposure to any one of these banks
or institutions. Management does not expect any counterparty to fail to meet its obligations.
The Company also bears credit risk in relation to amounts owed by Group undertakings and from guarantees provided in respect of the
liabilities of wholly owned subsidiaries as disclosed in note 28.
The carrying amount of financial assets, net of impairment provisions represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was:-
Trade receivables
Advances to customers
Amounts due from Group undertakings
Cash & cash equivalents
Derivative financial assets - foreign currency contracts
Other derivative contracts
Group
Company
2013
€m
78.0
38.2
-
121.0
1.7
1.4
240.3
2012
€m
79.8
24.7
-
128.3
0.1
-
232.9
2013
€m
-
-
47.8
0.1
-
-
47.9
2012
€m
-
-
30.6
9.3
-
-
39.9
The ageing of trade receivables and advances to customers together with an analysis of movement in the Group impairment provisions
against these receivables are disclosed in note 16. The Group does not have any significant concentrations of risk.
(e) Liquidity risk
Liquidity risk is the risk that the Group or Company will not be able to meet its financial obligations as they fall due. Liquid resources
are defined as the total of cash & cash equivalents. The Group finances its operations through cash generated by the business and
medium term bank credit facilities; the Group does not use off-balance sheet special purpose entities as a source of liquidity or
financing.
The Group’s policy is to ensure that sufficient resources are available either from cash balances, cash flows or committed bank facilities
to meet all debt obligations as they fall due. To achieve this, the Group (a) maintains adequate cash or cash equivalent balances; (b)
prepares detailed 3 year cash projections; and (c) keeps refinancing options under review. In addition, the Group maintains an overdraft
facility that is unsecured.
In February 2012, the Group entered into a committed €250.0m multi-currency five year syndicated revolving loan facility with seven
banks, including Bank of Ireland, Bank of Scotland, Barclays Bank, Danske Bank, HSBC, Rabobank and Ulster Bank, repayable in a
single instalment on 28 February 2017. The facility agreement provides for a further €100.0m in the form of an uncommitted accordion
facility which was successfully negotiated with the banks as committed in December 2012. The Group can also avail of further financial
indebtedness, excluding working capital and guarantee facilities, to a maximum value of €150.0m. Consequently, the Group is
permitted, under the terms of the agreement, to have debt capacity of €500.0m. At the year-end the Group had drawn down €246.6m of
these facilities.
The Group’s debt facility incorporates two 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
Compliance with these debt covenants is monitored continuously.
The Group’s main liquidity risk relates to maturing debt. The strong cash generative nature of the business significantly reduces this risk.
The Directors consider the risk low at the year-end date as the Group ended the year reporting cash of €121.0m and, has a committed
€350.0m five year multi-currency syndicated facility, as set out in note 19, of which €246.6m was drawn down at 28 February 2013. At the
year-end the Group had net debt, including issue costs, of €123.4m, with a Net debt/ EBITDA ratio of 0.9:1.
C&C GROUP PLC - 2013 ANNUAL REPORT
1 2 7
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
The following are the contractual maturities of financial liabilities, including interest payments and derivatives and excluding the
impact of netting arrangements:-
Group
2013
Interest bearing loans & borrowings
Trade payables & accruals
Provisions
Other derivative contracts
Carrying
amount
€m
Contractual
cash flows
€m
(244.4)
(124.1)
(12.2)
(1.2)
(276.2)
(124.1)
(18.0)
-
6 mths
or less
€m
(3.7)
(124.1)
(2.2)
-
Total contracted outflows
(381.9)
(418.3)
(130.0)
2012
Interest bearing loans & borrowings
FX forward contracts – gross cash outflows
FX forward contracts – gross cash inflows
Trade payables & accruals
Provisions
(60.0)
(0.9)
-
(141.9)
(17.3)
(60.0)
(35.7)
34.8
(141.9)
(21.0)
(60.0)
(11.9)
11.6
(141.9)
(5.5)
Total contracted outflows
(220.1)
(223.8)
(207.7)
Company
2013
Amounts due to Group undertakings
Trade payables & accruals
Carrying
amount
€m
Contractual
cash flows
€m
(98.7)
(0.7)
(98.7)
(0.7)
6 mths
or less
€m
(98.7)
(0.7)
Total contracted outflows
(99.4)
(99.4)
(99.4)
2012
Interest bearing loans & borrowings
Amounts due to Group undertakings
Trade payables & accruals
Total contracted outflows
(60.0)
(10.0)
(0.2)
(70.2)
(60.0)
(10.0)
(0.2)
(70.2)
(60.0)
(10.0)
(0.2)
(70.2)
6-12
months
€m
(3.7)
-
(1.5)
-
(5.2)
-
(23.8)
23.2
-
(0.9)
(1.5)
6-12
months
€m
-
-
-
-
-
-
-
1-2 years
€m
>2 years
€m
(7.4)
-
(1.9)
-
(9.3)
-
-
-
-
(2.2)
(2.2)
(261.4)
-
(12.4)
-
(273.8)
-
-
-
-
(12.4)
(12.4)
1-2 years
€m
>2 years
€m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(f) Accounting for derivative financial instruments and hedging activities
Group
Company
Group
Financial assets: current
Forward exchange contracts
Financial assets: non-current
Other derivative contract
Financial liabilities: current
Forward exchange contracts
Financial liabilities: non-current
Other derivative contracts
2013
€m
1.7
1.7
1.4
1.4
-
-
(1.2)
(1.2)
2012
€m
0.1
0.1
-
-
(0.9)
(0.9)
-
-
2013
€m
2012
€m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 2 8
NOTES - CONTINUED
Forming part of the financial statements
23. FiNANCiAL iNSTRUMENTS AND FiNANCiAL RiSK MANAGEMENT - CONTiNUED
Derivatives are initially recorded at fair value on the date the contract is entered into and subsequently re-measured to fair
value at reporting dates. The gain or loss arising on re-measurement is recognised in the income statement except where the
instrument is a designated hedging instrument under the cash flow hedging model.
Cash flow hedges
The Group also enters into forward exchange contracts designated as cash flow hedges to manage short term foreign currency
exposures to expected future sales. As at 28 February 2013, the notional amount of these contracts was Stg£20.0m and US$1.0m
(29 February 2012: Stg£35.0m and US$1.0m).
In order to qualify for hedge accounting, the Group is required to document the relationship between the item being hedged and
the hedging instrument and demonstrate, at inception, that the hedge relationship will be highly effective on an ongoing basis.
The hedge relationship must also be tested for effectiveness retrospectively and prospectively on subsequent reporting dates.
Gains and losses on cash flow hedges that are determined to be highly effective are recognised in other comprehensive income and
then reflected in a cash flow hedging reserve within equity to the extent that they are actually effective. When the related forecasted
transaction occurs, the deferred gains or losses are reclassified from other comprehensive income to the income statement.
Ineffective portions of the gain or loss on the hedging instrument are recognised immediately in the income statement.
The Group ordinarily seeks to apply the hedge accounting model to all forward currency contracts.
At 28 February 2013, the effective portion of gains and losses arising on derivative financial contracts has been deferred in
other comprehensive income only to the extent that they relate to highly probable forecast transactions and where all the hedge
accounting criteria in IAS 39 Financial Instruments: Recognition and Measurement have been met.
24. SHARE CAPiTAL AND RESERVES
Share capital
At 28 February 2013
Ordinary shares of €0.01 each
At 29 February 2012
Ordinary shares of €0.01 each
At 28 February 2011
Ordinary shares of €0.01 each
*
**
inclusive of 8.3m treasury shares.
inclusive of 12.4m treasury shares.
***
inclusive of 12.6m treasury shares.
Authorised
Number
Allotted and
called up
Number
Authorised
€m
Allotted and
called up
€m
800,000,000
344,331,716*
800,000,000
339,274,722**
800,000,000
337,196,128***
8.0
8.0
8.0
3.4
3.4
3.4
All shares in issue carry equal voting and dividend rights.
Following shareholder approval at the Annual General Meeting on 27 June 2012, where Interests under the Joint share Ownership
Plan have vested and if the participant is a continuing employee and so agrees, the participant is entitled to dividends on the
relevant Plan Shares in proportion to his economic interest. The Trustees of the Employee Trust are entitled to the dividends
otherwise but have waived their entitlement. In the year to 28 February 2013, dividends of €0.4m were paid to Plan participants
(2012: nil).
C&C GROUP PLC - 2013 ANNUAL REPORT
24. SHARE CAPiTAL AND RESERVES - CONTiNUED
Reserves
Group
As at 1 March
Shares issued in lieu of dividend
Shares issued in respect of options exercised
Shares issued following acquisition of subsidiary
Shares disposed of or transferred to Participants
1 2 9
Allotted and called up
Ordinary Shares
Ordinary Shares held
by the Trustee of the
Employee Trust
2013
‘000
2012
‘000
2013
‘000
339,275
1,934
1,701
1,422
-
337,196
1,370
709
-
-
12,363
-
-
-
(4,053)
2012
‘000
12,587
-
-
-
(224)
As at 28/(29) February
344,332
339,275
8,310*
12,363*
* 587,082 (2012:1,226,669) shares are held in the sole name of the Trustee of the Employee Trust.
Movements in the year ended 28 February 2013
In July 2012, 686,404 ordinary shares were issued to the holders of ordinary shares who elected to receive additional ordinary
shares at a price of €3.44 per share, instead of part or all the cash element of their final dividend entitlement for the year ended
29 February 2012. In December 2012, 1,247,485 ordinary shares were issued to the holders of ordinary shares who elected to
receive additional ordinary shares at a price of €3.78 per share, instead of part or all the cash element of their interim dividend
entitlement for the year ended 28 February 2013. Also during the financial year, 1,701,006 ordinary shares were issued on the
exercise of share options for a net consideration of €3.5m. Following the acquisition of Vermont Hard Cider Company, LLC a total
of 1,422,099 ordinary shares were issued to two of the sellers, being continuing members of it’s management team for a total
consideration of €5.3m ($7.0m). The subscribers have undertaken to retain these shares until 7 July 2013.
During the financial year, 760,413 vested Interests awarded under the Joint Share Ownership Plan and held by a participant who
had left the Group were acquired by Kleinwort Benson (Guernsey) Trustees Limited as trustees of the C&C Employee Trust and
held in trust. 4,052,921 shares were either sold by the Trustees or transferred to participants on the vesting of Interests and are
no longer accounted for as treasury shares. All shares held by Kleinwort Benson (Guernsey) Trustees Limited as trustees of the
C&C Employee Trust which were neither cancelled nor disposed of by the Trust at 28 February 2013 continue to be included in the
treasury share reserve.
Movements in the year ended 29 February 2012
In July 2011, 316,818 ordinary shares were issued to the holders of ordinary shares who elected to receive additional ordinary
shares at a price of €3.59 per share, instead of part or all the cash element of their final dividend entitlement for the year ended
28 February 2011. In December 2011, 1,053,176 ordinary shares were issued to the holders of ordinary shares who elected to
receive additional ordinary shares at a price of €2.89 per share, instead of part or all the cash element of their interim dividend
entitlement for the year ended 29 February 2012. Also during the financial year, 708,600 ordinary shares were issued on the
exercise of share options for a net consideration of €1.5m.
During the financial year, 625,000 unvested Interests and 175,000 vested Interests awarded under the Joint Share Ownership Plan
and held by participants who had left the Group were acquired by Kleinwort Benson (Guernsey) Trustees Limited as trustees of
the C&C Employee Trust and held in trust on behalf of employees. 223,431 shares were either sold by the Trustees or transferred
to participants on the vesting of Interests and are no longer accounted for as treasury shares.
Share premium - Group
The change in legal parent of the Group on 30 April 2004, as disclosed in detail in that year’s annual report, was accounted for
as a reverse acquisition. This transaction gave rise to a reverse acquisition reserve debit of €703.9m, which, for presentation
purposes in the Group financial statements, has been netted against the share premium in the consolidated balance sheet.
Share premium - Company
The share premium, as stated in the Company balance sheet, represents the premium recognised on shares issued and amounts
to €809.8m as at 28 February 2013 (2012: €793.9m). The current year movement relates to the exercise of share options, the
issuance of a scrip dividend to those who elected to receive additional ordinary shares in place of a cash dividend and the issue of
1,422,099 ordinary shares following the Group’s acquisition of Vermont Hard Cider Company, LLC, as described above.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 3 0
NOTES - CONTINUED
Forming part of the financial statements
24. SHARE CAPiTAL AND RESERVES - CONTiNUED
Capital redemption reserve and capital reserve
These reserves initially arose on the conversion of preference shares into share capital of the Company and other changes and
reorganisations of the Group’s capital structure. These reserves are not distributable.
Cash flow hedging reserve
The hedging reserve includes the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions that have not yet occurred as set out in note 23, together with any deferred gains or losses on
hedging contracts where hedge accounting was discontinued but the forecast transaction was still anticipated to occur.
Share-based payment reserve
The reserve relates to amounts expensed in the income statement in connection with share option grants falling within the scope
of IFRS 2 Share-Based Payment, plus amounts received from participants on award of Interests under the Group’s Joint Share
Ownership Plan, less reclassifications to retained income following exercise/forfeit post vesting or lapse of such share options
and Interests, as set out in note 4.
Currency translation reserve
The translation reserve comprises all foreign exchange differences from 1 March 2004, arising from the translation of the
Group’s net investment in its non-euro denominated operations, including the translation of the profits of such operations from
the average exchange rate for the year to the exchange rate at the balance sheet date, as adjusted for the translation of foreign
currency borrowings designated as net investment hedges.
Revaluation reserve
This reserve originally comprised the gain which arose on the revaluation of land by external valuers during the financial year
ended 28 February 2009. A subsequent external valuation of freehold properties and plant & machinery was completed as at
29 February 2012. The carrying value of land was reduced by €3.4m as a result of the revaluation; of which €3.0m was debited
directly to this revaluation reserve to the extent that it reduced a previously recognised gain on the same asset and €0.4m to
the income statement as there were no previously recognised gains in this revaluation reserve by which to offset. In addition, an
increase in the carrying value of buildings in Glasgow of €1.3m was credited directly to the revaluation reserve as a result of this
external valuation.
In the prior period, the component of the original gain relating to land disposed of as part of the disposal of the Group’s Northern
Ireland wholesaling business (Quinns of Cookstown) was transferred from the revaluation reserve to retained income within the
Statement of Changes in Equity.
Treasury shares
This reserve arises when the Company issues equity share capital under its Joint Share Ownership Plan, which is held in trust
by the Group’s Employee Trust. The consideration paid, 90% by a Group company and 10% by the participants, in respect of
these shares is deducted from total shareholders’ equity and classified as treasury shares on consolidation until such time as
the Interests vest and the participant acquires the shares from the Trust or the Interests lapse and the shares are cancelled or
disposed of by the Trust.
Capital management
The Board’s policy is to maintain a strong capital base so as to safeguard the Group’s ability: to continue as a going concern for
the benefit of shareholders and stakeholders; to maintain investor, creditor and market confidence; and, to sustain the future
development of the business through the optimisation of the value of its debt and equity shareholding balance.
The Board considers capital to comprise long-term debt and equity. There are no externally imposed requirements with respect
to capital with the exception of a financial covenant in the Group’s debt facilities which limits the net debt:EBITDA ratio to a
maximum of 3.5 times. This financial covenant was complied with throughout the year.
The Board periodically reviews the capital structure of the Group, considering the cost of capital and the risks associated with
each class of capital. The Board approves any material adjustments to the capital structure in terms of the relative proportions of
debt and equity. In order to maintain or adjust the capital structure, the Group may issue new shares, dispose of assets to reduce
debt, alter dividend policy by increasing or reducing the dividend paid to shareholders, return capital to shareholders and/or buy
back shares. In respect of the financial year ended 28 February 2013, the Company paid an interim dividend on ordinary shares
of 4.0c per share (2012: 3.67c per share) and the Directors propose, subject to shareholder approval, that a final dividend of 4.75c
per share (2012: 4.50c per share) be paid, bringing the total dividend for the year to 8.75c per share (2012: 8.17c per share).
C&C GROUP PLC - 2013 ANNUAL REPORT
1 3 1
24. SHARE CAPiTAL AND RESERVES - CONTiNUED
The Group monitors debt capital on the basis of interest cover and by the ratio of Net debt:EBITDA before exceptional items. In
February 2012, the Group entered into a committed €250.0m multi-currency 5 year syndicated revolving facility with 7 banks
which is repayable in a single instalment on 28 February 2017. The facility provided for a further €100.0m in the form of an
uncommitted accordion facility which the Group successfully negotiated with the banks as committed in December 2012. Also
in the current year, the Group, using surplus cash resources, repaid and cancelled all amounts outstanding (€60.0m) under its
previous Euro facility which matured in May 2007.
Company income statement
In accordance with Section 148(8) of the Companies (Amendment) Act, 1963, the income statement of the Company has not been
presented separately in these consolidated financial statements. A loss of €3.4m (2012: €96.8m profit) was recognised in the
individual Company income statement of C&C Group plc.
25. COMMiTMENTS
(a) Capital commitments
At the year-end, the following capital commitments authorised by the Board had not been provided for in the financial statements:-
2012
€m
2013
€m
Contracted
Not contracted
1.5
17.7
19.2
3.7
6.7
10.4
The contracted capital commitments at 28 February 2013 primarily relate to the expansion of the cider facility in Vermont while
those at 29 February 2012 primarily relate to capital expenditure associated with the bottling line at Shepton Mallet.
(b) Commitments under operating leases
Future minimum rentals payable under non-cancellable operating leases at the year-end are as follows:
2013
2012
Land &
Plant &
buildings machinery
€m
€m
Payable in less than one year
Payable between 1 and 5 years
Payable greater than 5 years
4.0
12.4
13.5
29.9
0.6
1.2
0.3
2.1
Other
€m
0.8
1.5
-
2.3
Total
€m
5.4
15.1
13.8
34.3
Land &
Plant &
buildings machinery
€m
€m
4.0
14.8
15.6
34.4
0.4
1.1
0.1
1.6
Other
€m
0.4
1.2
0.2
1.8
(c) Other commitments
At the year-end, the value of contracts placed for future expenditure was:-
Apple
Concentrate
€m
Glass
€m
Marketing
€m
Barley
€m
Aluminium Distribution
€m
€m
2013
Payable in less than one year
Payable between 1 and 5 years
3.0
-
3.0
9.6
-
9.6
3.7
5.7
9.4
3.8
11.4
15.2
6.5
2.2
8.7
4.7
7.4
12.1
2012 (restated)
Payable in less than one year
Payable between 1 and 5 years
Apple
Concentrate
€m
Glass
€m
Marketing
€m
Barley
€m
Aluminium Distribution
€m
€m
-
-
-
5.2
-
5.2
12.2
2.6
14.8
2.9
5.8
8.7
7.4
2.8
4.0
6.3
10.2
10.3
Total
€m
4.8
17.1
15.9
37.8
Total
€m
31.3
26.7
58.0
Total
€m
31.7
17.5
49.2
The prior year numbers now incorporate an inadvertent omission of financial commitments of €8.7m relating to barley contracts.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 3 2
NOTES - CONTINUED
Forming part of the financial statements
25. COMMiTMENTS - CONTiNUED
The commitments are principally due within a period of twenty four months.
26. GUARANTEES AND CONTiNGENCiES
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of companies within the Group, the
Company considers these to be insurance arrangements and accounts for them as such. The Company treats the guarantee contract
as a contingent liability until such time as it becomes probable that it will be required to make a payment under the guarantee.
As outlined in note 19, the Group has a multi-currency loan facility in place at year-end, which it entered into in February 2012. The
Company, together with a number of its subsidiaries, gave a letter of guarantee to secure its obligations in respect of these loans. The
actual loans outstanding at 28 February 2013 amounted to €246.6m (2012: €60.0m under the Group’s previous 2007 euro loan facility).
During the 2011 financial year, Tennent Caledonian Breweries UK Limited, entered into a guarantee with Clydesdale Bank plc whereby
it guaranteed £250,000 plus interest and charges of the drawn debt of one of its customers. The guarantee expires on the earliest
of: 10 years from the date on which the guarantee becomes effective, the secured liabilities are repaid, or by mutual agreement with
Clydesdale Bank plc.
In previous periods, Enterprise Ireland funding of €0.9m was received towards the costs of implementing developmental projects.
Scottish Enterprise Board funding of €0.3m (€nil in the current financial year) was received under the terms of its Regional Selective
Assistance Scotland Scheme. These funds are fully repayable should the Company at any time during the term of the agreements be in
breach of the terms and conditions of the agreements. The agreements terminate five years from inception.
Under the terms of the Sale and Purchase Agreements with respect to the disposal of the Wines and Spirits distribution businesses
in the year ended to 28 February 2009, the Group had a maximum exposure of €9.6m with respect to the Republic of Ireland business
and £1.9m with respect to the Northern Ireland business in relation to warranties undertaken. The time limit for all claims with respect
to these warranties expired on 13 June 2010 and 26 August 2010 respectively, except for any claim relating to tax in Northern Ireland
where the time limit is 7 years from the transaction date.
Under the terms of the Sale and Purchase Agreement with respect to the disposal of the Group’s Spirits & Liqueurs business
to William Grant & Sons Holdings Limited in the year ended 28 February 2011, the Group had a maximum aggregate exposure
of €300.0m in relation to warranties (€99.0m in relation to tax warranties). The time limit for the notification of all claims with
respect to all warranties with the exception of tax claims expired in December 2011. The time limit for any claim relating to tax is
5 years from the transaction date and is due to expire in June 2015.
Under the terms of the Sale and Purchase Agreement with respect to the prior year disposal of the Group’s Northern Ireland
wholesaling business, the Group has a maximum aggregate exposure of £4.3m in relation to warranties. The time limit for notification
of all claims with respect to these warranties is 18 months from the transaction date, with the exception of any claim relating to tax
where the time limit is 7 years from the transaction date.
Pursuant to the provisions of Section 17 of the Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of
certain of its subsidiary companies incorporated in the Republic of Ireland for the financial year to 28 February 2013 and as a result
such subsidiaries are exempt from the filing provisions of Section 7, Companies (Amendment) Act, 1986 (note 28).
27. RELATED PARTY TRANSACTiONS
The principal related party relationships requiring disclosure in the consolidated financial statements of the Group under IAS 24
Related Party Disclosures pertain to the existence of subsidiary undertakings and equity accounted investees, transactions entered
into by the Group with these subsidiary undertakings and equity accounted investees and the identification and compensation of key
management personnel.
(a) Group
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 consolidated financial statements include the financial statements of the Company and its subsidiaries and equity accounted
investees. A listing of all subsidiaries is provided in note 28. Sales to and purchases from subsidiary undertakings, together with
outstanding payables and receivables, are eliminated in the preparation of the consolidated financial statements in accordance
with IAS 27 Consolidated Financial Statements.
C&C GROUP PLC - 2013 ANNUAL REPORT
1 3 3
27. RELATED PARTY TRANSACTiONS - CONTiNUED
Equity accounted investees
On 21 March, 2012, the Group acquired a 25% equity investment in Maclay Group plc, a leading independent Scottish operator of
managed public houses. The business primarily includes operating 15 wholly owned managed houses and 11 managed houses
owned by two separate Enterprise Investment Schemes. The total cost of the investment was £2.1m (€2.5m at date of payment).
The investment secures Tennent Caledonian Breweries UK Limited (a 100% subsidiary of the Group) as the main beer supplier to
the pub estate. Details of transactions with Maclay Group plc during the year and resulting balance at the year end are as follows:
Sale of Goods to associate:
Maclay Group
Net Revenue
2013
€m
0.8
0.8
2012
€m
-
-
Balance outstanding
2012
2013
€m
€m
0.1
0.1
-
-
All outstanding balances with the associate, which arose from arm’s length transactions are to be settled in cash within one
month of the reporting date.
On 28 November 2012, the Group invested £0.3m (€0.4m at date of payment) in Thistle Pub Company Limited, a joint venture with
Maclay Group plc. During the period, the Group earned total net revenue from the Thistle Pub Company of less than €0.1m. The
balance outstanding with Thistle Pub Company Limited at the year-end was €nil.
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 share option
programmes (note 4). No other non-cash benefits are provided. Non-executive Directors do not receive share-based payments or
post employment benefits.
Details of key management remuneration are as follows:-
Number of individuals
Salaries and other short term employee benefits
Post employment benefits
Equity settled share-based payments
Total
2013
Number
2012
Number
9
€m
2.2
0.3
1.0
3.5
10
€m
3.6
0.4
0.3
4.3
John Dunsmore, who resigned from the Board on 29 February 2012, has been included in the prior year headcount numbers and
in the disclosure of remuneration charged to the income statement in the prior year. Joris Brams was included in the headcount
numbers from the date of his appointment to the Board, 23 October 2012.
The relevant disclosure of Directors remuneration as required under the Companies Act, 1963 is as outlined above.
When an award is granted to an executive under the Group’s Joint Share Ownership Plan, its value is assessed for tax purposes
with the resulting value being deemed to fall due for payment on the date of grant. Under the terms of the Plan, the executive
must pay the Entry Price at the date of grant and, if the tax value exceeds the Entry Price, he must pay a further amount,
equating to the amount of such excess, before a sale of the awarded Interests. The deferral of the payment of the further amount
is considered to be an interest-free loan by the Company to the executive and a taxable benefit-in-kind arises, charged at the
Revenue stipulated rates (Ireland 12.5% to 31 December 2012 and 13.5% from 1 January 2013, UK 4%). The balances of the loans
outstanding to the executive Directors in the context of the above as at 28 February 2013 and 29 February 2012 are as follows:
Stephen Glancey
Kenny Neison
Total
The loans fall due for repayment on the exercise of their awarded interests.
28 February
2013
€’000
29 February
2012
€’000
111
83
194
111
83
194
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 3 4
NOTES - CONTINUED
Forming part of the financial statements
27. RELATED PARTY TRANSACTiONS - CONTiNUED
(b) Company
The Company has a related party relationship with its subsidiary undertakings. Details of the transactions in the year between the
Company and its subsidiary undertakings are as follows:
2013
€m
2012
€m
Dividend income
Expenses paid on behalf of and recharged by subsidiary undertakings to the Company
Equity settled share-based payments for employees of subsidiary undertakings
Funding of cash requirements of subsidiary undertakings
Repayment of cash funding and other cash movements with subsidiary undertakings
28. SUBSiDiARY UNDERTAKiNGS
Trading subsidiaries
Nature of business
incorporated and registered in Republic of ireland
* Bulmers Limited
#* C&C Financing Limited
#* C&C Group International Holdings Limited
#* C&C Group Irish Holdings Limited
* C&C Group Sterling Holdings Limited
* C&C (Holdings) Limited
* C&C Management Services Limited
* Cantrell & Cochrane Limited
* Tennent’s Beer Limited
* The Annerville Financing Company
The Five Lamps Dublin Beer Company Limited
* Wm. Magner Limited
* Wm. Magner (Trading) Limited
incorporated and registered in Northern ireland
C&C Holdings (NI) Limited
Tennent’s NI Limited
incorporated and registered in England and Wales
C&C Management Services (UK) Limited
Magners GB Limited
incorporated and registered in Scotland
Tennent Caledonian Breweries UK Limited
Wellpark Financing Limited
incorporated and registered in Luxembourg
C&C IP Sàrl
C&C IP (No. 2) Sàrl
C&C Luxembourg Sàrl
Cider
Financing company
Holding company
Holding company
Holding company
Holding company
Provision of management services
Holding company
Beer distribution
Financing company
Beer
Cider
Financing company
Holding company
Cider and beer distribution
Provision of management services
Cider and beer
Beer and cider
Financing Company
Licensing activity
Licensing activity
Holding and financing company
-
(3.0)
3.0
(5.3)
71.3
100.0
(7.1)
2.6
-
9.4
Class of shares held
(100% unless stated)
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary (92.5%)
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
incorporated and registered in Delaware, USA
Green Mountain Beverages Management Corporation, Inc
Vermont Hard Cider Company Holdings, Inc.
Vermont Hard Cider Company, LLC
Wm. Magner, Inc.
Licensing activity
Holding Company
Cider
Cider distribution
Common Stock
Common Stock
Membership Units
Common Stock
C&C GROUP PLC - 2013 ANNUAL REPORT
28. SUBSiDiARY UNDERTAKiNGS - CONTiNUED
Trading subsidiaries
Nature of business
Non-trading subsidiaries
incorporated and registered in Republic of ireland
* Bestormel Limited
* Bouchel Limited
* C&C Agencies Limited
* C&C Brands Limited
* C&C Group Pension Trust (No. 2) Limited
* C&C Group Pension Trust Limited
* C&C Profit Sharing Trustee Limited
* Ciscan Net Limited
* Cravenby Limited
* Edward and John Burke (1968) Limited
* Findlater (Wine Merchants) Limited
* Fruit of the Vine Limited
* Magners Irish Cider Limited
* Sceptis Limited
* Showerings (Ireland) Limited
* Thwaites Limited
* Vandamin Limited
incorporated and registered in Northern ireland
C&C 2011 (NI) Limited
C&C Logistics (NI) Limited
C&C Profit Sharing Trustee (NI) Limited
Reihill McKeown Limited
incorporated and registered in England and Wales
Gaymer Cider Company Limited
incorporated and registered in Germany
Wm. Magner GmbH (in liquidation)
*
#
Companies covered by Section 17 guarantees (note 26)
Immediate subsidiary of C&C Group plc
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
1 3 5
Class of shares held
(100% unless stated)
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
All the above companies that are incorporated and registered in Republic of Ireland have their registered offices at Annerville, Clonmel,
Co Tipperary with the exception of C&C Group plc, C&C Financing Limited, C&C Group Sterling Holdings Limited and The Five Lamps
Dublin Beer Company Limited which have their registered offices at Block 71, The Plaza, Park West Business Park, Dublin12.
All the above companies that are incorporated and registered in Northern Ireland have their registered offices at Hawthorn
House, 6 Wildflower Way, Belfast, Antrim BT12 6TA.
All the above companies that are incorporated in England and Wales have their registered offices at Kilver Street, Shepton Mallet,
Somerset, BA4, 5ND.
All the above companies that are incorporated and registered in Scotland have their registered offices at Wellpark Brewery, 161
Duke Street, Glasgow, G31 1JD.
All the above companies that are incorporated and registered in Luxembourg have their registered offices at L-1232 Luxembourg,
18 avenue Marie-Thérèse.
C&C Management Services (UK) Limited and Magners GB Limited have their registered offices at The Communications Building,
48 Leicester Square, London, WC2H 7LT.
SHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT
1 3 6
NOTES - CONTINUED
Forming part of the financial statements
28. SUBSiDiARY UNDERTAKiNGS - CONTiNUED
Wm Magner GmbH has its registered office at Hans-Steiberger-Straße 2b, 85540 Harr,Germany.
Wm Magner, Inc. has its registered office at 1013 Centre Road, Wilmington, Delaware 19805, County of New Castle.
Vermont Hard Cider Company, LLC and Green Mountain Beverages Management Corporation, Inc have their registered offices at
2711 Centerville Road, Suite 400 Wilmington, Delaware 19808.
Vermont Hard Cider Company Holdings, Inc has its registered office at Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware, 19801.
Associates and joint ventures
Associate Name
Maclay Group plc
Nature of business
Operator of managed public houses
Class of shares and % held
B Ordinary, 25%
Joint Venture Name
Thistle Pub Company Limited
Nature of business
Operator of public houses
Class of shares and % held
B Ordinary, 50%
29. POST BALANCE SHEET EVENTS
Acquisition of Gleesons
The Group announced on 22 November 2012 that it had conditionally agreed to acquire M. & J. Gleeson (Investments) Limited
(“Gleesons”) and its subsidiaries, a supplier and distributor of beverages in Ireland. The consideration for the acquisition was
€12.4m payable in cash, of which €4.4m is deferred for one year. Existing debt of €45.6m implies an enterprise value of €58.0m.
The acquisition was conditional upon clearance by the Irish Competition Authority, which was given on 27 February 2013. The
acquisition was completed on 7 March 2013, whereupon the Group obtained control of the acquired group of companies. There
were a number of significant substantive pre-completion steps which had to be undertaken upon which the ultimate completion
was contingent, including the disposal of certain companies, the refinancing of external debt and the reorganising of inter-
company indebtedness and shareholdings. Accordingly, C&C did not obtain control of the acquired group of companies until
after the end of the financial year ended 28 February 2013 and consequently Gleesons has been excluded from the consolidated
financial statements of the Group for the financial year ended 28 February 2013.
The initial accounting for the acquisition of Gleesons is currently in progress; the accounting for the carve out of the elements of
the previous Gleeson Group that were not acquired by the C&C Group is ongoing. The Group has appointed external valuers who
have yet to report on the valuation of all property, plant and equipment acquired. The Group has commenced a detailed review of
the accounting policies to ensure consistency with the Group policies and procedures. Given the ongoing status of the accounting
for this acquisition, the Directors are not in a position to make all of the disclosures required under IFRS 3 (2008) Business
Combinations at this point.
Acquisition of 50% interest in Wallaces Express Limited
The Group announced on 22 March 2013 that it had acquired 50% of the equity share capital of Wallaces Express Limited, a wines
and spirits wholesaler in Scotland, for an undisclosed consideration.
30. APPROVAL OF FiNANCiAL STATEMENTS
These financial statements were approved by the Directors on 15 May 2013.
C&C GROUP PLC - 2013 ANNUAL REPORT
1 3 7
Adjusted earnings
Company
Constant Currency
DWT
EBITDA
Adjusted EBITDA
EBIT
Effective tax rate (%)
EPS
EU
Exceptional
Free cash flow
GB
Group
HL
IAS
IASB
IFRIC
IFRS
Interest cover
International
LAD
Net debt/(cash)
Net debt:EBITDA
Net revenue
NI
Off-trade
On-trade
Revenue
ROI
TSR
UK
US
Earnings as adjusted for exceptional items
C&C Group plc
Prior year revenue, net revenue and operating profit for each of the Group’s operating segments is
restated to 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 revaluing the prior year figures using the current year effective foreign currency rates
Dividend withholding tax
Earnings before Interest, Tax, Depreciation and Amortisation charges
EBITDA as adjusted for exceptional items
Earnings before Interest and Tax
Income and deferred tax charges relating to continuing activities before the tax impact of exceptional
items calculated as a percentage of Profit before tax for continuing activities before exceptional items.
Earnings per Share
European Union
Significant items of income and expense within Group results for the year
Free Cash Flow is a non-GAAP measure that comprises cash flow from operating activities net of
capital investment cash outflows which form part of investing activities. Free Cash Flow highlights the
underlying cash generating performance of the ongoing business
Great Britain (i.e. England, Wales and Scotland)
C&C Group plc and its subsidiaries
Hectolitre (100 Litres)
kHl = kilo hectolitre (100,000 litres)
mHl = millions of hectolitres
(100 million litres)
International Accounting Standards
International Accounting Standards Board
International Financial Reporting Interpretations Committee
International Financial Reporting Standards as adopted by the EU
Calculated by dividing the Group’s earnings before interest, tax, depreciation and amortisation charges
(EBITDA) excluding exceptional items and discontinued activities of one period by the Group’s interest
expense, excluding issue cost write-offs and unwind of discounts on provisions, of the same period
Sales in territories outside of the United Kingdom (UK) and Republic of Ireland (ROI)
Long Alcoholic Drinks
Net debt/(cash) comprises cash, borrowings net of issue costs
A measurement of leverage, calculated as the Group’s interest-bearing liabilities and derivative
financial liabilities less cash & cash equivalents, divided by its EBITDA excluding exceptional items and
discontinued activities. The net debt to EBITDA ratio is a debt ratio that shows how many years it would
take for the Group to pay back its debt if net debt and EBITDA are held constant
Net revenue is defined by the Group as Revenue less Excise duty. 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, consequently the Directors consider that the disclosure
of Net Revenue enhances the transparency and provides a more meaningful analysis of underlying
sales performance
Northern Ireland
All venues where drinks are sold for off-premise consumption including shops, supermarkets and cash
& carry outlets selling alcohol for consumption off the premises
All venues where drinks are sold at retail for on-premise consumption including pubs, hotels and clubs
selling alcohol for consumption on the premises
Revenue comprises the fair value of goods supplied to external customers exclusive of intercompany
sales and value added tax, after allowing for discounts, rebates, allowances for customer loyalty and
other pricing related allowances and incentives
Republic of Ireland
Total Shareholder Return
United Kingdom (Great Britain and Northern Ireland)
United States of America
TiTle hereSHAREHOLDER INFORMATIONFINANCIAL STATEMENTSBUSINESS REVIEWCORPORATE GOVERNANCEC&C GROUP PLC - 2013 ANNUAL REPORT 1 3 8
SHAREHOLDER AND OTHER iNFORMATiON
C&C Group plc is an Irish registered company. Its ordinary shares are quoted on the Irish and London Stock Exchanges (ISIN: IE00B010DT83
SEDOL: B010DT8).
C&C Group plc also has a Level 1 American Depository Receipts (ADR) programme for which Deutsche Bank acts as depository (symbol
CCGGY). Each ADR share represents three C&C Group plc ordinary shares.
The authorised share capital of the Company at 28 February 2013 was 800,000,000 ordinary shares at €0.01 each. The issued share capital at
28 February 2013 was 344,331,716 ordinary shares of €0.01 each.
CREST
C&C Group plc is a member of the CREST share settlement system. Therefore transfers of the Company’s shares takes place through
the CREST settlement system. Shareholders have the choice of holding their shares in electronic form or in the form of share certificates.
Shareholders should consult their stockbroker if they wish to hold their shares in electronic form.
SHARE PRICE DATA
Share price at 28/(29) February
No of Shares in issue at 28/(29) February
Market capitalisation
Share price movement during the financial year
-high
-low
DiViDEND PAYMENTS
2013
€4.895
2012
€3.665
Number
344,331,716
Number
339,274,722
€1,686m
€1,243m
€4.94
€3.17
€3.69
€2.70
The Company may, by ordinary resolution declare dividends in accordance with the respective rights of shareholders, but no dividend shall
exceed the amount recommended by the Directors. The Directors may also declare and pay interim dividends if they believe they are justified
by the profits of the Company available for distribution.
An interim dividend of 4.00 cent per share was paid in respect of ordinary shares on 17 December 2012.
A final dividend of 4.75 cent, if approved by shareholders at the 2013 Annual General Meeting, will be paid in respect of ordinary shares on
12 July 2013 to shareholders on the record on 24 May 2013. A scrip alternative will be offered to shareholders.
Dividend Withholding Tax (‘DWT’) must be deducted from dividends paid by an Irish resident company, unless a shareholder is entitled to an
exemption and has submitted a properly completed exemption form to the Company’s Registrars. DWT applies to dividends paid by way of
cash or by way of shares under a scrip dividend scheme and is deducted at the standard rate of income tax (currently 20%). Non-resident
shareholders and certain Irish companies, trusts, pension schemes, investment undertakings, companies resident in any member state of
the European Union and charities may be entitled to claim exemption from DWT and have been sent the relevant exemption form. Further
copies of the form may be obtained from the Company’s Registrars. Shareholders should note that DWT will be deducted from dividends in
cases where a properly completed exemption form has not been received by the relevant record date. Individuals who are resident in Ireland
are not entitled to an exemption.
Shareholders who wish to have their dividend paid direct to a bank account, by electronic funds transfer, should contact Capita Registrars to
obtain a mandate form. Tax vouchers will be sent to the shareholder’s registered address under this arrangement.
CREST members
Shareholders who hold their shares via CREST will automatically receive dividends in euro unless they elect otherwise.
Non-CREST members
Shareholders who hold their shares in certificate form will automatically receive dividends in euro with the following exceptions:
• Shareholders with an address in the United Kingdom (UK) will automatically receive dividends in sterling,
• Shareholders who had previously elected to receive dividends in a particular currency will continue to receive dividends in that currency.
Shareholders who wish to receive dividends in a currency other than that which will be automatically used should contact the Company’s
Registrars.
C&C GROUP PLC - 2013 ANNUAL REPORT
SHAREHOLDER AND OTHER iNFORMATiON - CONTINUED
1 3 9
ELECTRONiC COMMUNiCATiONS
Following the introduction of the Transparency Regulations 2007, and in order to promote a more cost effective and environmentally friendly
approach, the Company provides the Annual Report electronically to shareholders via the Group’s website and only sends a printed copy to
those who specifically request one. Shareholders who wish to alter the method by which they receive communications should contact the
Company’s registrar. All shareholders will continue to receive printed proxy forms, dividend documentation, shareholder circulars, and,
where the Company deems it appropriate, other documentation by post.
FiNANCiAL CALENDAR
Annual General Meeting
Ex-dividend date
Record date for dividend
Latest date for receipt of elections and mandates
Payment date for final dividend
Interim results announcement
Interim dividend payment
Financial year-end
COMPANY SECRETARY AND REGiSTERED OFFiCE
Paul Walker
C&C Group plc
Block 71, The Plaza, Park West Business Park, Dublin 12.
Tel: +353 1 616 1100
Fax: +353 1 654 6272
REGiSTRARS
Date
3 July 2013
22 May 2013
24 May 2013
25 June 2013
12 July 2013
October 2013
December 2013
28 February 2014
Shareholders with queries concerning their holdings, dividend information or administrative matters should contact the Company’s
registrars:
Capita Registrars (Ireland) Limited
2 Grand Canal Square, Dublin 2
Tel: +353 1 553 0050
Fax: +353 1 224 0700
Email: enquiries@capitaregistrars.ie
AMERiCAN DEPOSiTARY RECEiPTS (ADR)
Shareholder with queries concerning their ADR holdings should contact:
Deutsche Bank Trust Company Americas
C/o American Stock Transfer & Trust Company, Peck Slip Station, P.O. Box 2050, New York, NY 10272-2050.
Tel: Toll free +1 866 249 2593
International +1 718 921 8137
Email: DB@amstock.com
iNVESTOR RELATiONS
FTI Consulting
10 Merrion Square, Dublin 2
PRiNCiPAL BANKERS
AIB
Bank of Ireland
Bank of Scotland
Barclays Bank
Danske Bank
HSBC
Rabo bank
Ulster Bank
SOLiCiTORS
McCann FitzGerald
Riverside One, Sir John Rogerson’s Quay, Dublin 2
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C&C GROUP PLC - 2013 ANNUAL REPORT
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C&C GROUP PLC - 2013 ANNUAL REPORT
STOCKBROKERS
Davy
49 Dawson Street, Dublin 2
Goldman Sachs International
Peterborough Court, 133 Fleet Street, London, EC4A 2BB
AUDiTOR
KPMG
Chartered Accountants
1 Stokes Place, St. Stephen’s Green, Dublin 2
WEBSiTE
Further information on C&C Group plc is available at
www.candcgroupplc.com.
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C&C GROUP PLC - 2013 ANNUAL REPORT
TiTLE HERE
Block 71, The Plaza,
Parkwest Business Park, Dublin 12
www.candcgroupplc.com