C&C Group
Annual Report
2017
About C&C Group
C&C Group is a premium drinks company which
owns, manufactures, markets and distributes
branded cider, beer, wine, soft drinks and bottled
water.
C&C Group’s brands include: Bulmers, the
leading Irish cider brand; Tennent’s, the leading
Scottish beer brand; Magners, the premium
international cider brand; Tipperary Water;
Finches soft drinks; as well as a range of niche,
premium and craft ciders and beers.
C&C Group also owns and manufactures
Woodchuck, a leading craft cider brand in the
United States.
C&C Group manufactures and distributes a
number of 3rd party international beer brands in
Scotland, Ireland and Northern Ireland.
C&C is also a leading drinks wholesaler in
Scotland and Ireland, where it operates under the
Tennent’s and C&C Gleeson brands respectively.
C&C Group is headquartered in Dublin and
its manufacturing operations are based in Co.
Tipperary, Ireland; Glasgow, Scotland; and
Vermont, US. C&C Group plc is listed on the Irish
and London Stock Exchanges.
This report includes forward-looking statements, including statements concerning current
expectations about future financial performance and economic and market conditions which
C&C Group believes are reasonable. However, these statements are neither promises nor
guarantees, but are subject to risks and uncertainties, including those factors discussed on
pages 19 to 21 that could cause actual results to differ materially from those anticipated.
Business & Strategy
Governance
Financial Statements
04
06
12
14
16
18
19
22
37
42
52
54
58
70
90
92
96
97
98
99
100
101
102
103
116
177
179
The design of this annual report takes its inspiration
from the work of contemporary muralist and graffiti
artist James Earley and his packaging design for
Outcider – our new cider launched in the Republic of
Ireland in March 2017. Earley’s packaging design was
inspired by the contrasting environments of Dublin’s
Docklands; a landscape that blends man-made and
natural elements, with the colour palette influenced
by his family’s heritage in stained glass windows and
his own graffiti background.
Contents
Our Markets
Brand Portfolio
Chairman’s Statement
Strategic Report – Business Model
Strategic Report – Our Strategy
Strategic Report – Key Performance
Indicators
Strategic Report – Principal Risks and
Uncertainties
Group Chief Executive Officer’s 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 Statement of Changes In Equity
Statement of Accounting Policies
Notes Forming Part of the Financial
Statements
Financial Definitions
Shareholder and Other Information
View this report online
candcgroupplc.com or
candc.annualreport17.com
01
Financial Highlights
Profitability
Net Revenue
€559.5m
decreased by 15.6%
Operating Profit
€95.0m
before exceptional items down 7.9%
Operating Margin
17.0%
before exceptional items up 1.4 ppts
Adjusted Diluted Earnings Per Share
23.8 cent
per share down 1.7%
Cash
Free Cash Flow Conversion
53%
before exceptional items
Shareholder Return
Proposed Final Dividend
9.37 cent
per share an increase of 5%
delivering 5% growth in full year dividend
to 14.33 cent per share
▼
▼
▲
▼
▼
▲
Read more in the Group Chief Financial
Officer’s Review on page 37
02
C&C Group plcAnnual Report 2017
Business
& Strategy
The past 12 months have yet again
demonstrated the fundamental
strengths of your Company in the
face of challenging conditions both
in terms of the macro economic
environment and competitive activity.
Read more in the Chairman’s Statement on
page 12
After a challenging FY2016, the Group’s key
markets and trading performance was stable
over the course of this year. We returned
our three key brands to volume growth
of +2.6% (FY2016: -6.4%), successfully
completed a major rationalisation
programme and continued to grow our
Premium portfolio and Export business.
Read more in the Group Chief Executive
Officer’s Review on page 22
in this section
04
06
12
14
16
18
19
22
37
42
Our Markets
Brand Portfolio
Chairman’s Statement
Strategic Report – Business Model
Strategic Report – Our Strategy
Strategic Report – Key Performance
Indicators
Strategic Report – Principal Risks and
Uncertainties
Group Chief Executive Officer’s Review
Group Chief Financial Officer’s Review
Corporate Responsibility
03
Business & Strategy
Strong Positions in Home Markets...
Ireland
Scotland
England & Wales
No.1 cider
brand in
Ireland
No.1 drink
by sales in
Scotland
No. 2 apple
cider brand
in UK
Wellpark Brewery, Glasgow
Glasgow Office
Read more: Key Brands
page 08
Belfast Office
Dublin Corporate HQ
Clonmel Brewery
04
C&C Group plcAnnual Report 2017
...Global Opportunity
Woodchuck
Cidery
in Middlebury,
Vermont USA
● Home markets
● North America
● Countries we
export to
Exporting to over 60
markets globally
Albania
Andorra
Australia
Austria
Azerbaijan
Bahamas
Belgium
Bermuda
Brazil
Bulgaria
British Virgin Islands
Cambodia
Canada
Cayman Islands
China
Costa Rica
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Ghana
Gibraltar
Greece
Hong Kong
Hungary
India
Indonesia
Israel
Italy
Japan
Latvia
Lithuania
Malaysia
Malta
Myanmar
Netherlands
New Zealand
Norway
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russia
Singapore
South Africa
South Korea
Spain
Sri Lanka
St. Lucia
St. Maarten
Sweden
Switzerland
Taiwan
Thailand
Trinidad & Tobago
Turkey
UAE
Ukraine
United Kingdom
US
US Virgin Islands
Vietnam
05
Business & Strategy Brand Portfolio Highlights
Ireland
Scotland
C&C Brands
North America
Export
Key Brands
Read more
page 08
Premium &
Craft
Read more
page 09
Other Owned
Brands
Read more
page 10
Wholesale &
Distribution
Read more
page 11
Wines, spirits,
soft drinks
Read more
page 11
06
Including distribution rights
for certain AB InBev beer
brands such as Stella Artois,
Beck’s, Corona.
Including distribution rights
for certain AB InBev beer
brands such as Stella Artois,
Beck’s, Corona, Budweiser.
4,84113.1%32.2%6.9%47.1%0.7%4,57011.2%29.3%7.2%51.2%1.1%600*10.3%39%8.6%41.1%1.0%5608.3%37.7%9.3%43.2%1.5%4,84129.2%26.2%3.7%35.2%5.7%4,57030.5%26.7%4.0%35.0%3.8%600*33.1%15.1%4.0%42.2%5.6%56033.4%15.0%4.2%43.3%4.1%FY16FY16FY16FY17FY17FY16FY17FY17Volumes (khl)GeographicalVolumes (khl)BrandsNet Sales Revenues (€m)Net Sales Revenues (€m)* FY16 Net sales revenues adjusted for constant currency and US adjustment following the Pabst transaction.Core brandsPremium brandsOther owned brandsWholesale & distributionWines, spirits, soft drinksIrelandScotlandC&C BrandsNorth AmericaExportLegendLegendC&C Group plcAnnual Report 2017
Ireland
Scotland
C&C Brands
North America
Export
Read more: Operations Review
on page 28
Key Brands
Read more
page 08
Premium &
Craft
Read more
page 09
Other Owned
Brands
Read more
page 10
Wholesale &
Distribution
Read more
page 11
Wines, spirits,
soft drinks
Read more
page 11
Including distribution rights
for certain AB InBev beer
Including distribution rights
for certain AB InBev beer
brands such as Stella Artois,
brands such as Stella Artois,
Beck’s, Corona.
Beck’s, Corona, Budweiser.
Our Production Facilities
Clonmel Cidery, Ireland
Wellpark Brewery, Scotland
Woodchuck Cidery, USA
07
4,84113.1%32.2%6.9%47.1%0.7%4,57011.2%29.3%7.2%51.2%1.1%600*10.3%39%8.6%41.1%1.0%5608.3%37.7%9.3%43.2%1.5%4,84129.2%26.2%3.7%35.2%5.7%4,57030.5%26.7%4.0%35.0%3.8%600*33.1%15.1%4.0%42.2%5.6%56033.4%15.0%4.2%43.3%4.1%FY16FY16FY16FY17FY17FY16FY17FY17Volumes (khl)GeographicalVolumes (khl)BrandsNet Sales Revenues (€m)Net Sales Revenues (€m)* FY16 Net sales revenues adjusted for constant currency and US adjustment following the Pabst transaction.Core brandsPremium brandsOther owned brandsWholesale & distributionWines, spirits, soft drinksIrelandScotlandC&C BrandsNorth AmericaExportLegendLegendBusiness & Strategy
Brand Portfolio
Key Brands
Magners
Tennent’s
Bulmers
• Transformed cider in the UK in
2005
• No. 2 apple cider brand in GB
• No.1 drink by sales in Scotland
• On the bar in 8 out of 10 pubs
• Almost 2 in every 3 pints of
• No.1 cider brand in Ireland
• Available in 95% of Irish pubs
• 80 years of heritage and
market
lager sold in Scotland
provenance
• Now exported to over 50
• Highest rate of sale of any beer
• No. 3 LAD brand in ROI
countries worldwide
brand in the UK
Magners is a premium, traditional blend
of Irish cider with a crisp, refreshing flavour
and a natural authentic character. Also in the
range is Magners Dark Fruit which offers
cider drinkers a fruitier alternative to draught
apple. The 4% ABV fruit cider has notes of
jammy berries and sharp blackcurrants.
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.
Bulmers Original is a premium, traditional
blend of Irish cider with an authentic clean
and refreshing taste.
Outcider by Bulmers launched March
2017 is a new sweet cider with plenty of
edge and just the right balance of bitter and
sweet Irish apples.
Tennent’s Black T is a premium lager
using the finest natural ingredients, including
100% Scottish barley. It is a golden lager
with a well-rounded flavour and a distinct
smooth maltiness.
Core Brands
Volumes
(khl)
2
1
7
,
2
5
0
6
,
2
6
3
4
,
2
2
8
2
,
2
1
4
3
,
2
Core Brands
Net Sales
Values
(€m)*
6
1
3
8
9
2
2
7
2
7
4
2
2
4
2
FY13
FY14
FY15
FY16
FY17
FY13
FY14
FY15
FY16
FY17
08
* All numbers are on a constant currency basis and FY2016 is also restated for
the US adjustment (see Note (i) on page 36).
C&C Group plcAnnual Report 2017 Brand Portfolio
Premium and Craft
Our growing portfolio of Premium and Craft Beers and Ciders serves
the consumer’s increasing demand for diversity, newness and taste.
These are premium products commanding premium prices and
support our key brand propositions.
We are targeting that Premium and Craft represent 5% of branded
volumes over the medium-term (FY2017: 2%) through a combination of
in-house innovation and partnership with International and local/craft
brands.
In-house Innovation
International Agency
Local Craft
Core Brands
Volumes
(khl)
2
1
7
,
2
5
0
6
,
2
6
3
4
,
2
2
8
2
,
2
1
4
3
,
2
Core Brands
Net Sales
Values
(€m)*
6
1
3
8
9
2
2
7
2
7
4
2
2
4
2
FY13
FY14
FY15
FY16
FY17
FY13
FY14
FY15
FY16
FY17
Heverlee is a premium Belgian Beer, which
is endorsed by the Abbey of the order
of Prémontré, in the town of Heverlee in
Leuven.
Chaplin & Cork’s is an award winning
range of exquisite ciders made using pure
juice from the finest English cider apples.
The range includes Somerset Gold and
Somerset Reserve.
Menabrea is from Northern Italy and is
matured gently in the perfect temperature
of cave cellars for a taste of superior
clarity. This pale lager is well balanced
between citrus, bitter tones and floral, fruity
undertones giving a consistent and refined
flavour. It has a complicated malty, hoppy
taste with an exceptional head retention
due to the quality of our ingredients and
maturation process.
Pabst Blue Ribbon is brewed in the finest
traditions of an American Premium Lager
dating back to 1844.
Whitewater Brewery was established in
1996 on the third generation family farm
amidst the spectacular Mourne Mountain
range in the north of Ireland. Its range of
beers includes Maggie’s Leap, Belfast Ale
and Belfast Black.
The Five Lamps Dublin Brewery was
originally set up in early 2012 beside Dublin’s
iconic Five Lamps. Its first beer, 5 Lamps
Dublin Lager, was launched in September
2012. The range now includes Liberties Pale
Ale, Monto Red Ale and Blackpitts Stout.
Drygate is the UK’s first experiential Craft
Brewery and is situated beside the Wellpark
Brewery in Glasgow. The core Drygate
range includes Bearface Lager, Outaspace
Apple Ale, Gladeye IPA, Ax Man Rye IPA
and the recently launched gluten-free
Drygate Pilsner, as well as a regular series of
unique and experimental brews.
09
Business & Strategy Brand Portfolio
Other Owned Brands
Ireland Beer
Brands
Scottish Beer
Brands
English Cider
Brands
American
Cider Brands
10
Roundstone Irish Ale is a fine ale in the Irish tradition, brewed
from 100% malted barley and a blend of three types of hops to
deliver a gentle yet distinctive caramelly maltiness.
Clonmel 1650, named after one of the most historic events in the
town of Clonmel, is a fine example of a pilsner style lager with a
slightly fruity estery nose and a subtle hoppy character.
Caledonia Best is a modern, distinctive ale that is balanced,
sweet and smooth, with a malty roast flavour and a pleasant hoppy
bitterness.
Caledonia Premium Bottled ales are a range of ales designed
to meet a variety of drinking occasions. By combining the Highland
water of Loch Katrine with the finest Scottish malted barley, hops
and yeast we have created a family of beers that are unmistakably
Scottish.
Blackthorn is a West Country legend and one of the country’s
best known and widely drunk ciders due to its secret blend of
bittersweet English cider apples. The range includes Blackthorn
Gold, Blackthorn Dry and Black ‘n Black.
K cider is a full strength, premium cider expertly pressed with a
unique blend of English cider apples to deliver a full bodied flavour
and rich golden colour.
Ye Olde English is a traditional medium dry cider made using a
unique blend of dessert and cider apples to deliver a deliciously
refreshing taste.
Addlestones is a naturally cloudy premium cider that is twice
fermented but never filtered to deliver its unique, smooth taste.
Gaymers is a clean, crisp, easy drinking medium cider made using
the finest English apples.
Other English cider brands include Natch, Special VAT and
Taunton Traditional.
Woodchuck Hard Cider is a premium hard cider handcrafted
in Vermont from the highest quality ingredients while offering
an innovative range of ciders. Gumption is the newest style
in our Woodchuck family and pairs the fresh juice of common
eating apples with dry European bittersweet cider apples. The
bold packaging and active lifestyle delivers a new energy to the
Woodchuck brand family.
Wyder’s Hard Cider was formulated in 1987 by cider master Ian
Wyder and is now available throughout the central and western
United States.
C&C Group plcAnnual Report 2017 Brand Portfolio
Wholesale & Distribution
Brand-led wholesale in Ireland and Scotland
In common with other brewers, the Group
complements its branded business with third-party
drinks wholesaling, own-label and agency distribution
in its key domestic markets of Ireland and Scotland.
This wholesale and agency activity supports our branded
businesses by broadening the portfolio of drinks we can offer to our
on and off-trade customers and deepens our level of understanding
and engagement with the trade. Wholesale and agency also
leverage the Group’s existing procurement, sales, marketing and
distribution infrastructure to provide incremental revenue and profit
through overhead absorption.
Our principal agency business is the AB InBev beer portfolio which
we distribute in Ireland and Scotland (excluding Budweiser in the
Republic of Ireland). AB InBev’s range of World beers includes
Becks, Stella Artois, Budweiser, Bud Light and Corona and is highly
complementary to our Magners, Bulmers and Tennent’s brands
and our emerging Premium and Craft portfolio.
Brand Portfolio
Wines, Spirits And Soft Drinks
Wine & Spirit
Brands
Soft Drinks
The Group’s portfolio of wine and spirit brands sold in the on-
trade includes the Oliver & Greg’s and Moondarra wine brands,
Odessa Vodka and Squires Gin.
The Group also distributes a number of wine brands in the Republic
of Ireland including Santa Rita and Yellow Tail.
Tipperary Pure Irish Water is proudly bottled at source in
Tipperary.
Finches is a range of premium soft drinks in orange and other
flavours produced in Ireland with pure natural spring water.
JWV+ is made from natural mineral water. It contains a range of
health intrinsics and is targeted at consumers looking for tasty
refreshing alternatives to the traditional soft drink and bottled water
offering.
11
Business & Strategy Chairman’s Statement
OPERATING RESULTS
The past 12 months have
yet again demonstrated the
fundamental strengths of
your Company in the face
of challenging conditions
both in terms of the macro
economic environment
and competitive activity.
Clearly our trading and
financial performance has
been affected by a period
of considerable currency
volatility. Competition within
the International beverage
sector has impacted also
on our local markets with
increased pressure on
price and margin.
12
In spite of this, the Company has delivered
a solid set of results and has made
considerable progress in the volume
performance of its key brand franchises.
These, after all, are the income generators
of the future. We have also made strategic
progress through expanding our distribution
agreements with AB InBev.
In the year we up-weighted our investment
in the Magners brand in the UK, delivering
double-digit volume growth against a
market that was marginally down. In Ireland,
since the year end we have launched a
range extension to our Bulmers portfolio
and early indications are positive from this
initiative. Again provenance is at the heart of
that initiative, which is not an attribute that
can be readily emulated. Other initiatives
with Heverlee, Menabrea, Caledonia and
Five Lamps have illustrated our capacity
to innovate and broaden our appeal to
consumers of whatever age or background.
It is not a time to adopt a defensive posture
in the face of undoubted market challenge.
Our short-term financial results may be
pressured but there remains significant
opportunity for the business. Brand building
is at our core and premium portfolios will
continue to deliver, in our view, a real return
for shareholders over the longer term.
This can only be achieved however, from
an appropriately competitive base. As a
consequence, we took the difficult decision
to reduce our workforce across operations
in Ireland, Scotland and in the C&C Brands
business. We recognise these changes are
difficult for our people and have worked
hard to re-deploy affected employees in
Ireland at our Clonmel site. In securing a
buyer for our assets in Shepton there was
also an opportunity to sustain employment
for some of those affected. We now have a
manufacturing and sales infrastructure that
is well-invested, highly flexible and efficient
and capable of competing effectively in
today’s marketplace.
ECONOMIC AND INDUSTRY
BACKGROUND
It would be foolhardy not to expect the
volatility of market conditions to continue.
The political background in our markets
in Europe and indeed further afield is still
uncertain.
However, it cannot be much more volatile
than the conditions faced over the last 12
months and your business has navigated
these waters with a good degree of
resilience.
We will continue to invest in our brands
and the recently agreed partnership
arrangements in England and Wales with
AB InBev, the world’s largest brewer,
provides third-party validation of our brand
strategy. The continued consolidation
amongst our customers illustrates the merits
of such a partnership.
Long term consumer trends in our principal
markets are towards lower alcohol
consumption overall, but with increased
demand for diversity, choice and taste.
This can present challenges, but also
opportunities to drive value from brands
such as ours through premiumisation and
innovation.
CAPITAL ALLOCATION
Our capital allocation and dividend policy
are relatively well known. Recognising our
continued financial strength and strong
cash generation, we propose to pay a final
dividend of 9.37 cent per share subject to
shareholder approval. This will bring the
Group’s full year dividend to 14.33 cents, an
increase year on year of 5%.
Clearly our objective is to seek investment
opportunities which will enhance the return
for our shareholders and build upon the
strategic strength of the Group. If such
opportunities are not immediately in
prospect, then we have previously advised
that we would use available finance to buy
back shares, particularly where the price
was attractive. During the past year we have
spent €23.2 million buying back shares at
an average price of €3.73, contributing to
a 6.9% reduction in our weighted average
number of shares year on year. In addition,
we have purchased a further €18.7 million of
shares since the year end.
The Board’s intention is to continue this
philosophy given that it was established not
as a short term proposition but as part of
our longer term prospectus.
C&C Group plcAnnual Report 2017 PEOPLE
It is with much sadness that I have to report
that Rory Macnamara who joined the Board
in January 2016 passed away in December
after a short illness. Rory made an inimitable
and valued contribution to the Board during
his all too brief time as a Director.
As part of our commitment to Board
refreshment and development, Jim
Clerkin was appointed as a non-executive
Director in April 2017. Jim brings a wealth
of experience and knowledge of the global
drinks industry to the Board. We look
forward to his contribution in the years
ahead.
The programme of Board refreshment is an
ongoing one where the objective is not only
to balance skills but provide continuity and
fresh perspective.
CONCLUSION
We remain cautious about the consumer
environment in our key markets of the
UK and Ireland. Currency and political
volatility are a challenge for consumers and
companies alike. The volume momentum
regenerated in our core brands during the
past year does give us continuing impetus.
The major strategic decisions taken to
rationalise our manufacturing footprint,
increase brand investment in Ireland and
extend our partnership arrangements with
AB InBev should all bear fruit in the year and
years to come. Together with the continued
hard work, expertise and determination
of our people, we look forward to further
progress in the current year.
Sir Brian Stewart
Chairman
13
The major strategic
decisions taken
to rationalise our
manufacturing footprint,
increase brand investment
in Ireland and extend our
partnership arrangements
with AB InBev should all
bear fruit in the year and
years to come.
Read more about Governance
on pages 58 to 69
Our guidance is medium term target
leverage of 2x Net Debt/EBITDA. We
anticipate we will move towards this level
during the course of FY2018 through a
combination of our progressive dividend
policy, acquisitions and/or share buybacks.
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
58 to 69 and reflect the requirements of the
2014 UK Corporate Governance Code and
the Irish Corporate Governance Annex.
We take corporate responsibility seriously
and our Corporate Responsibility Statement
on pages 42 to 50 sets out our work
this year in this area. Recognising the
importance of shareholder engagement,
I have also recently completed a series of
meetings, focused principally on corporate
governance, with a number of the Group’s
largest institutional shareholders – a practice
which I now engage in annually. Consistent
with the principles of the UK Corporate
Governance Code, I have ensured that
feedback from these meetings has been
shared with the Board as a whole.
Business & Strategy
Business Model
C&C Group plc
Annual Report 2017
In Scotland and Ireland our ambition is to be the pre-eminent brand-led wholesale
drinks supplier to the licensed on and off-trade. Our platforms in both territories
provide: an unrivalled range across our Core, Premium, Agency and 3rd Party
Brands; enhanced customer service; and comprehensive geographic coverage.
We firmly believe this is the right model to meet the needs of both customers and
consumers, who are increasingly demanding authentic, differentiated local brands as
well as global reach.
Core
Brands
All own brands
Premium and Craft
Portfolio
Predominantly own
brands or craft JVs
Other Owned
Brands
Owned local and specialty
brands
World Premium
Brands
3rd party brands distributed
under contract, primarily AB
InBev brands
Meeting
customer
needs
“Must-have”
local brands
Craft and
premium
consumer
experimentation
Local, niche and
specialty brands
Access to global
brands
Wholesale
All 3rd party brands bought-in
Soft
Drinks
Wines
Spirits
Cider
Beer
“One-stop
shop”
14
Business & Strategy
Revenue Generation
and Earnings Growth
• In our core geographies of Ireland and Scotland, we seek revenue generation through a
full-service, brand-led wholesale model predominantly focused on our own range of brands
and meeting customers needs. In the rest of Great Britain we focus on cider market share
expansion and our growing premium portfolio. Internationally we focus on volume and value
growth in established markets and seeding new markets in Asia & Africa.
• We seek to make brand innovations at low cost and exploit niche and premium markets.
• We seek earnings growth through revenue generation, cost control and margin
improvement.
Cash Generation
Engagement
Strategic Capital
• Our core businesses are strongly cash generative. We therefore focus on cash. We
critically review the value for money of all brand and capital investment. Our current
emphasis is on investment in brands and innovation to drive revenue and market share.
Group management relentlessly drive to reduce costs – in production, distribution and
commercial overheads.
• We engage with our workforce and incentivise them to ensure alignment with
shareholders.
• Local management are incentivised with financial targets relevant to their local business
unit.
• Where necessary, we are prepared to buy in expertise on a margin-sharing basis.
• We seek local expansion in our core territories. Potential acquisitions must complement
our business and meet our strategic objectives.
• We are prepared to make larger transformational acquisitions, and we are ready to seize
opportunities as they arise due to the strength of our Balance Sheet.
• We will make disposals where they will enhance shareholder value.
• In the absence of capital investment opportunities we will return surplus cash to our
shareholders.
Social Responsibility
• Throughout the Group we seek to operate compliantly with the law and as good
corporate citizens.
15
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.
Strategic
pillars
Medium term
strategic goals
Financial
characteristics
Enhance value of key
brands
Brand and product investment to build
value of key brands over the long term
Grow Premium and
Craft portfolio
Leverage key brand strength and
market position to grow our portfolio of
Premium and Craft brands
Brand-led drinks
wholesaler in key
markets
Deliver unrivalled portfolio strength,
value and service to the Scottish and
Irish on-trade and off-trade
Rigorous focus on
costs and efficiencies
Ongoing commitment to delivering
operational efficiencies and cost control
International growth
Grow international volumes of our key
brands through strategic alliances
Capital allocation to
enhance growth and
shareholder returns
Selective acquisitions to fuel sustainable,
profitable growth and/or cash returns to
shareholders
Resilient high
margins
Cash generation
and Balance
Sheet strength
EPS growth and
cash returns
16
C&C Group plcAnnual Report 2017 Achievements during FY2017
• Up-weighted investment in our key brand assets of Magners, Bulmers and Tennent’s,
returning them to volume growth of +2.6% in their key markets. Direct brand marketing
across these three key brands rose to 9.5% (FY2016: 8.4%) of net sales value with a
further 4.0% (FY2016: 3.4%) invested in new founts.
• Re-launched and re-positioned the Magners Original brand in the UK with new packaging
and a comprehensive marketing campaign under the “Hold True” tag line. Launched
Outcider from Bulmers, a new sweeter tasting cider targeting a more youthful audience.
• The Premium and Craft portfolio (which includes Chaplin & Cork’s, Heverlee, Menabrea,
Pabst as well as our local craft businesses Five Lamps, Dowds Lane, Drygate and
Whitewater) grew volume by 60%.
• Premium and craft now accounts for 2% of our own brand volume, 3% of own brand
revenue and is starting to make a meaningful contribution to bottom-line given the
premium price points and attractive margins.
• The Group complements its branded business with third-party drinks wholesaling, own-
label and agency distribution in its key domestic markets of Ireland and Scotland.
• We are working through the challenges and complexities of running fully integrated
brand-led wholesale businesses and the increased focus delivered improved
performance in the second half of the year. Significant new client wins in Scotland
helped stabilise volume and customer numbers by the year end, giving increased
confidence for the year ahead.
• We closed our plant at Borrisoleigh in Ireland and sold our cidery and bottling operations
at Shepton Mallet in England. The activities at both sites were transferred to our Clonmel
site. These changes were essential for the Group, improving our utilisation rates at our key
sites to mid-70’s percent and ensuring the cost competitiveness of our products.
• The site rationalisation savings helped to successfully deliver the €15m of cost reductions
announced in March 2016. The cost savings facilitated incremental investment in marketing
and price support to further strengthen our core brand domestic positions.
• The Group enjoyed another good year of progress in its international business, with
volumes during the year up + 3.9% (FY2016: +14.8%).
• The International team delivered a strong performance in the more established markets
of Western Europe, with volumes +14% in the region. The Tennent’s brand performed
well in Export, increasing volume by +17% . It now accounts for c.30% of the Group’s
international division.
• Our Balance Sheet remains in robust health with a net debt to EBITDA ratio of 1.55x at
the year end. This is after paying out €66m in dividends and share buybacks, increased
net capex of €16m (including €17m on the new PET line at Clonmel) and investing an
additional €12m in our trade lending books in Northern Ireland.
• Our guidance is medium term target leverage of 2x Net Debt/EBITDA. We anticipate we
will move towards this level during the course of FY2018 through a combination of our
progressive dividend policy, acquisitions and/or share buybacks.
Strategic priorities
for FY2018
CORE OBJECTIVE
Our core strategic
objective is to deliver
earnings growth.
STRATEGIC PRIORITIES
Existing businesses
• to strengthen core brands and
develop a portfolio of differentiated
premium brands to capitalise
on niche, craft and specialist
opportunities
• to leverage integrated brand-led
wholesale platforms in Ireland and
Scotland to drive revenue growth
and reduce costs
• successfully imbed our new
distribution relationship with AB
InBev for our cider portfolio in the
UK, to grow volume and value in
our core cider brands
• to grow international volumes
and earnings through distribution
partnerships
Capital allocation
• after increased investment in
FY2017 maintain the strong cash
conversion characteristics of the
business
• to move towards target leverage
of 2x Net Debt/EBITDA which
provides flexibility to take advantage
of consolidation opportunities
• to return value to shareholders
in the absence of strategic
opportunities
Corporate responsibility
• targeting further sustainability
improvements across the Group
• focusing our social responsibility
agenda on engagement in the
community
• achieving a continuous
improvement in workforce health
and safety
17
Business & Strategy Key Performance Indicators
Strategic Priority
KPI
Definition (see also financial
definitions on pages 177 and 178)
FY2017 performance
FY2018 Focus
To enhance earnings
growth
Operating
Profit
Operating profit (before
exceptional items)
Operating
Margin
Operating profit (before
exceptional items), as a
percentage of net revenue
To enhance earnings
growth
Adjusted
diluted
earnings per
share
Attributable earnings before
exceptional items divided by the
average number of shares in
issue as adjusted for the dilutive
impact of equity share awards
To generate strong
cash flows
Free Cash
Flow
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
Conversion
Ratio
The conversion ratio is the
ratio of free cash flow as a
percentage of EBITDA before
exceptional items
To ensure the
appropriate level of
financial gearing and
profits to service
debt
Net debt:
EBITDA
The ratio of net debt (Net debt
comprises borrowings (net
of issue costs) less cash) to
Adjusted EBITDA
To deliver
sustainable
shareholder returns
Progressive
dividend/
return to
shareholders
Total dividend per share paid
and proposed in respect of the
financial year in question
Dividend
Payout Ratio
Dividend cover is Dividend/
Adjusted diluted EPS
To achieve the
highest standards
of environmental
management
Reduction
in CO²
emissions
To achieve the
highest standards
of environmental
management
Waste
recycling
Tonnes of CO² emissions¹
Tonnes of waste sent to landfill²
To ensure safe and
healthy working
conditions
Workplace
safety
accident rate
The number of injuries that
resulted in lost-work days, per
100,000 hours working time in
production facilities²
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
€115.0m
€103.2m
€95.0m
To seek continuing
growth, through revenue
enhancement, acquisition
synergies and cost control
Links to other
Disclosures
Group CFO
Review
page 37
16.8%
15.6%
17.0%
27.2c
24.2c
23.8c
€82.3m
€113.4m
€54.3m
58.8%
92.5%
49.4%
1.13x
1.33x
1.55x
11.50c
13.65c
14.33c
42.3%
56.4%
60.2%
To achieve adjusted
diluted EPS growth in real
terms
Group CFO
Review
page 37
To generate improved
operating cash flows
Group CFO
Review
page 39
Group CFO
Review
page 39
Move towards medium
term target of 2.0 times
Net Debt/EBITDA
Group CFO
Review
page 38
The Group will continue
to seek to enhance
shareholder returns
Chairman’s
Statement
page 12
37,955t
45,071t
41,228t
To achieve best practice
across the Group,
including acquired
businesses
Corporate
Responsibility
Report
page 47
27t
24t
16t
0.68
0.42
0.56
To achieve best practice
across the Group,
including acquired
businesses
To achieve best practice
across the Group,
including acquired
businesses
Corporate
Responsibility
Report
page 49
1. Clonmel, Wellpark and Vermont in FY2015. FY2016 and FY2017 includes the Gleeson and Wallaces Express businesses.
2. Clonmel, Wellpark and Shepton Mallet
18
C&C Group plcAnnual Report 2017 Principal Risks and Uncertainties
The principal risks and uncertainties which have the potential to have a material
impact upon the Group’s long-term performance and achievement of strategy are set
out below.
These represent the Board’s view of the principal risks at this point in time. There may
be other matters that are not currently known to the Board or are currently considered
of low likelihood which could arise and give rise to material consequences.
Risks and Uncertainties
Mitigation
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 management
risks and social and compliance risks.
The Group seeks to mitigate these risks through due diligence,
careful investment and continuing monitoring and management
post-acquisition.
Risks And Uncertainties Relating To Revenue And Profits
Consumers may shift away from larger brands towards more
localised, premium and niche products.
Seasonal fluctuations in demand, especially an unseasonably bad
summer in Ireland could materially affect demand for the Group’s
cider products.
Consumer preference may change in our core geographies, new
competing brands may be launched and competitors may increase
their marketing or change their pricing policies.
The GB off-trade and increasingly the GB on-trade continues to be
highly competitive, driven by consumer pressure, customer buying
power, consolidation and vertical integration of distribution channels
and the launch of heavily-invested competing products.
Customers, particularly in the on-trade where the Group has
exposure through advances to customers, may experience financial
difficulties.
The Group is reliant on the performance of its distribution partners for
the distribution of its products in international markets and the UK.
Through diversification, innovation and strategic partnerships,
we are developing our product portfolio to enhance our offering
of niche and premium products to satisfy changing consumer
requirements.
The Group seeks to mitigate this risk through geographical and
brand diversification.
The Group has a programme of brand investment, innovation and
product diversification to maintain and enhance the relevance of its
products in the market. For instance, as part of this programme,
Outcider was launched in Ireland in FY2017. The Group also
operates a brand-led model in our core geographies with a
comprehensive range to meet consumer needs.
The Group seeks to mitigate the impact on volumes and margins
through developing a focused portfolio approach, innovation,
strategic partnerships, such as the distribution arrangement
that the Group entered into with AB InBev in GB in FY2017, the
introduction of brand propositions that are in tune with shifting
consumer and customer needs and through seeking cost
efficiencies.
The Group monitors the level of its exposure carefully.
The Group mitigates these risks by continuously monitoring the
performance of its distribution partners and having agreements
with appropriate protections in place in relation to inadequate
performance.
19
Business & Strategy Principal Risks And Uncertainties
(continued)
Risks and Uncertainties
Mitigation
Risks and Uncertainties Relating to Revenue and Profits
Key strategic partnerships may not be renewed or may be renewed
on less favourable terms.
The Group seeks to mitigate this risk by managing its relationship
with its key strategic partners and by putting long-term
arrangements in place in relation to termination and renewal.
Risks and Uncertainties Relating to Costs, Systems and Operations
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.
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.
Increased levels of cybercrime represent a threat to the Group’s
businesses and may lead to business disruption or loss of data. The
Group is exposed to the risk of external parties gaining access to
Group systems to deliberately disrupt business, steal information
or commit fraud. Theft of data relating to employees, business
partners or customers may result in a regulatory breach and impact
the reputation of the Group.
Financial Risks and Uncertainties
The Group’s reporting currency is the Euro but it transacts in foreign
currencies and consolidates the results of non-Euro reporting
foreign operations. Fluctuations in value between the Euro and
these currencies including, in the case of Sterling, resulting from
the UK vote to leave the European Union, may affect the Group’s
revenues, costs and operating profits.
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 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.
The Group seeks to mitigate the operational impact of such an
event through business continuity plans, which are tested regularly
to ensure that interruptions to the business are prevented or
minimised and that data is protected from unauthorised access,
contingency planning, including involving the utilisation of third
party sites and the adoption of fire safety standards and disaster
recovery protocols. The Group seeks to mitigate the financial
impact of such an event through business interruption and other
insurances.
The Group has a number of IT security controls in place including
gateway firewalls, intrusion prevention systems, security incident
monitoring and virus scanning. The Group’s approach is one of
ongoing enhancement of controls as threats evolve with the target
being to align controls, and in particular to implement any new
services or changes to the environment, with reference to the
ISO 27001 international standard. The Group also has a suite of
information security policies in place.
The Group seeks to mitigate currency risks, where appropriate,
through hedging and structured financial contracts to hedge a
portion of its foreign currency transaction exposure. It has not
entered into structured financial contracts to hedge its translation
exposure on its foreign acquisitions.
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 an enhanced transfer value
exercise which the Group conducted in FY2016 and FY2017 in
relation to its Irish defined benefit pension schemes.
Fiscal, Regulatory and Political 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 seeks to mitigate this risk by playing an active role
in industry bodies and engaging with governmental tax and
regulatory authorities. In Ireland, we engage with the Government
in relation to excise duty reductions in support of domestic
producers. In the UK, the Group is a board member of the
National Association of Cider Makers and a steering committee
member of the all-party Parliamentary beer group. In the US, we
are active in the United States Association of Cider Makers.
20
C&C Group plcAnnual Report 2017 Risks and Uncertainties
Mitigation
Fiscal, Regulatory and Political Risks and Uncertainties
The Group may be adversely affected by changes in government
regulations affecting alcohol pricing, sponsorship or advertising,
and product types.
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 UK vote to leave the European Union has created significant
uncertainty about the near term outlook and prospects for the UK,
Ireland and European Union economies. While the economic effect
of the UK leaving the European Union is uncertain, it could have
the effect of negatively impacting the UK, Irish and European Union
economies and currencies and the financial performance of the
Group, reducing demand in the Group’s markets and increasing
business costs including through the application of additional tariffs
and transaction taxes on the Group’s products and raw materials.
With our reporting currency as the Euro, the Group is exposed to
the translation impact of a weaker Sterling.
The Board and management will continue to consider the impact
on the Group’s businesses, monitor developments and play a
role in influencing the UK, Irish and Scottish Governments to help
ensure a manageable outcome for our businesses. In FY2017, we
contributed to a House of Lords study on the implications of the
UK vote to leave the European Union on UK and Irish relations
and are also working closely with the Food and Drink Federation
in Ireland and the European Cider Association in relation to the
implications of the UK vote for our businesses. On an ongoing
basis, we seek, where appropriate, to mitigate currency risk
through hedging and structured financial contracts and take
appropriate action to help mitigate the consequences of any
decline in demand in its markets.
Liability-Related Risks and Uncertainties
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 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 in place a permanent legal and compliance
monitoring and training function and an extensive programme of
corporate responsibility.
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.
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 mitigate this risk through appropriate
remuneration policies and succession planning.
The Group seeks to ensure good employee relations through
engagement and dialogue.
21
Business & Strategy Group Chief Executive Officer’s Review
OVERVIEW
FY2017 has been a period
of significant activity for
the Group. While trading
remained tough, we
invested in and delivered
volume growth across our
core brands; completed
a major rationalisation of
our production foot print;
drove efficiencies across
the business; continued
to grow our Premium
portfolio and export
business; and secured an
important new long term
distribution arrangement
with AB InBev. After this
year of consolidation,
we are in materially
better shape to meet the
ongoing challenges and
opportunities within our
industry.
22
GROUP FINANCIAL PERFORMANCE
After a challenging FY2016, the Group’s
key markets and trading performance
was stable over the course of this year.
We returned our three key brands to
volume growth of +2.6% (FY2016:
-6.4%), successfully completed a major
rationalisation programme and continued
to grow our Premium portfolio and Export
business. Revenue from our key brands
was €242 million (FY2016: €247 million(i))
with the benefit of volume growth offset
by competitive pricing and mix pressures,
particularly for Magners. Total revenue
for the Group was €559m down -6.9%(i)
reflecting weakness in our wholesale, own
label and US activity. The Group returned
to operating profit growth in the second
half of the year on a constant currency
basis, benefiting from an improving trading
performance and the cost savings arising
from our site rationalisation programme.
Full year Group operating profits(iii) of €95
million (FY2016: €95 million(i)) were flat year-
on-year on a constant currency basis. The
devaluation of sterling following the UK’s
vote to leave the European Union had a
negative (€7.8m) impact on reported Group
operating profits year-on-year. Adjusted
diluted earnings per share was 23.8c
(FY2016: 21.9c) up 8.7%.
We continued to invest in our brands and
our manufacturing capabilities, with an up-
weighted marketing campaign for Magners
and a new PET line at our cidery in Clonmel.
Even with these investments, the balance
sheet remains strong, ending the year at
1.55x Net Debt(vi)/EBITDA(ii). Our preference
remains to invest in the business and
adjacent assets but in the absence of value
accretive deals during the year, we returned
€66 million capital to shareholders through
share buybacks and increased dividend.
The buyback activity reduced our weighted
average number of shares by 6.9% during
the year.
SECTOR BACKDROP
Globally, cider remains a relatively small but
fast growing category, a key beneficiary of
shifting consumer tastes towards sweeter,
natural, gluten free products and authentic,
local brands. Global cider volume growth is
running at 5% per annum(xiii).
The global beverages space is in a period
of profound structural change, both in
terms of evolving consumer tastes around
the world and the corporate landscape
addressing this market. In developed
markets, the consumer is shifting away
from global, homogeneous brands in
favour of local brands with provenance,
taste and quality. Increased consumer
experimentation is fuelling a proliferation
of craft brands, offering more established
brewers an opportunity to premiumise their
portfolios. We are well-placed to capitalise
on these trends through our authentic ‘Local
Champion’ brands – Tennent’s, Bulmers
and Magners – and our growing Premium
portfolio. The return of inflation in the UK,
whilst putting a squeeze on disposable
incomes, is presenting a firmer pricing
environment for the first time in many years.
The corporate sector remains in a
consolidation phase. With the completion
of the SAB Miller/AB InBev global merger
during the year, the focus has shifted
towards anti-trust divestitures attracting the
Asian brewers and other new bidders into
European beverages as well as smaller,
inter-regional combinations that can ally
high quality brand assets with strong market
positions.
STRATEGY
The Group is well placed to benefit from
the evolving trends in our sector and our
strategy in domestic and international
markets remains unchanged. In Scotland
and Ireland, we combine leading local
brands with unrivalled production and
distribution capabilities. These strong
brand/geographic combinations provide
the platform from which we can deliver long
term value from our key brand assets as well
as build out our portfolio through targeted
brand investment, product innovation,
agency wins and acquisitions.
Internationally, given our size and scale, our
model is to partner with local brewers and
distributors. In Magners we have one of
the truly international cider assets currently
sold in over 50 countries and growing in
territories as diverse as Russia, Spain and
Thailand. The export potential of Magners is
based on solid domestic foundations.
C&C Group plcAnnual Report 2017 The clear momentum
behind the Magners
brand in the UK, provided
the right foundations
for entering into a new
distribution partnership
with AB InBev.
Magners emerging as one of the clear
winners. Having consolidated our position
within the apple cider category in FY2017,
we launched Magners Dark Fruit in April
2017, appealing to consumers’ desire for
variety and innovation in the flavoured cider
segment.
The clear momentum behind the
Magners brand in the UK, provided the
right foundations for entering into a new
distribution partnership with AB InBev. The
cider relationship with AB InBev covers
our portfolio in Great Britain as of 1 March
2017. Whilst it is still early days in the
expanded relationship, we are confident that
Magners will continue to grow volume and
value within their strong beer portfolio and
distribution infrastructure.
Internationally, Magners saw continued
strong growth in Europe (+12%), opened
new markets in Africa and Asia and returned
to growth toward the end of the fourth
quarter in the US. Globally, Magners brand
volume growth was +7.5% for the year
(FY2016: -6%).
Bulmers
Bulmers returned to volume growth in
Ireland, up +3% for the year (FY2016:
-13%). in a LAD market that grew +2%(viii).
Cider is experiencing growth well-ahead
of the overall market with volumes +6%(viii),
boosted by better summer weather
and product innovation. Against this
market backdrop we are investing in
both new product development and a
re-enforcement of the core brand equity.
In March 2017, we launched Outcider
from Bulmers, a new sweeter tasting
cider targeting a more youthful audience.
We also are up-weighting our marketing
investment behind the Bulmers brand with
the new “100% Irish” advertising campaign,
supported by refreshed livery and
packaging. Competitor activity continues
to target Bulmers taps in high volume city
centre bars with a resultant loss of share in
the smaller draught segment, but Bulmers
remains in a very positive position, enjoying
a 62% share of the category (FY2016:
65%)(viii). The incremental investment this
year gives us reason to be confident in the
brand taking its fair share of the resurgent
interest in cider.
23
The brand is the Number 2 in apple cider
and gaining share in the UK, the world’s
largest cider market. It is a testament to
the quality of the Magners brand and the
interest in the international cider opportunity
that we have attracted some of the world’s
leading brewers and distributors to the
Magners stable. Our range of partners now
incorporates Thai Bev, San Miguel, Pabst
Brewing Company and, as of December
2016, AB InBev who are handling the sales
and marketing of Magners and our other
cider brands in Great Britain, alongside their
leading beer portfolio.
KEY BRANDS
During the year, we up-weighted investment
in our key brand assets of Magners,
Bulmers and Tennent’s, returning them to
volume growth in their key markets. Direct
brand marketing across these three key
brands rose to 9.5% (FY2016: 8.4%) of net
sales value, with a further 4.0% (FY2016:
3.4%) invested in new founts.
Magners
In Spring/Summer 2016 we re-launched
and re-positioned the Magners Original
brand in the UK with new packaging and
a comprehensive marketing campaign
under the “Hold True” tag line. Our activity
spanned across TV, Radio, Social Media
and Experiential. Brand volumes responded
positively, up 11% in the UK for the year
in a cider market that was (0.5%)(vii) lower.
After a period of intense competitor
activity in recent years, the cider category
showed evidence of rationalisation with
One apple productthat’s never needed an update True cider since 1935 Please Enjoy Magners ResponsiblyBusiness & Strategy Group Chief Executive Officer’s Review
(continued)
branded volumes over the medium term
through a combination of in-house product
development, new agency wins and
partnering with leading local craft brewers.
In Ireland & Scotland this Premium and
Craft portfolio complements our leading
brands, providing our on-trade and
off-trade customers with the breadth of
variety and choice demanded by modern
consumers. Equally, these fledgling
brands benefit from being part of the
Group’s unrivalled distribution footprint.
This distribution reach provides not only
broad market access but the customer
proximity and feedback that is vital to the
development of young exciting brands.
Heverlee, our premium Belgian lager,
reached the milestone of 20,000 HL per
annum across the UK and Ireland. It is the
No.1 imported beer in Northern Ireland(viii)
and the second fastest growing premium
beer in Scotland. Menabrea, our Italian
premium lager, continued its growth in
Ireland and Scotland and achieved major
UK-wide listings in both the national grocery
and casual dining segments. We also
launched the iconic US beer brand Pabst
Blue Ribbon in the UK, focused initially on
the student and Millennials market.
INTERNATIONAL GROWTH
The Group enjoyed another year of progress
in its international business, albeit enforced
distributor changes in Australia and India
held back overall export volume growth
during the year to +3.9% (FY2016: +14.8%).
The global growth opportunity in cider is
well documented and underpinned by its
fresh, natural image and its sweeter, “easy
to drink” taste. This combination is attracting
new consumers to the category, including
younger and female drinkers, and in markets
without a strong cider tradition. Global cider
volumes are estimated to have increased by
+5.8% CAGR(xiii) between 2010 – 2015 and are
forecast to grow at +4.7% CAGR(xiii) over the
subsequent 5 years. This year the International
team delivered a strong performance in the
more established markets of Western Europe,
with volumes +14% in the region.
The Tennent’s brand performed well in
export, increasing volume by +17%.
Tennent’s
In Scotland, the trends in LAD improved
following the prior year difficulties when
tighter drink driving legislation reduced
on trade consumption. Scottish beer
volumes were flat(vii) versus a GB beer
market that was -1%(vii). Global Tennent’s
volumes were level year-on-year and up
+0.4% in the Independent Free Trade (IFT)
channel in Scotland. The Tennent’s brand
affinity scores remain 13% ahead of its
nearest rival(ix) and it remains very much
at the heart of our brand-led wholesale
model. Our margin in Tennent’s improved
through the year after a weak start and
a more inflationary environment provides
opportunity for further progress in FY2018.
Tennent’s also enjoyed double-digit
volume growth in our export markets and
is becoming an increasingly important
contributor to our international story.
GROWING PREMIUM AND CRAFT
PORTFOLIO
The Group made further progress during
the year in growing and developing our
portfolio of Premium and Craft beers
and ciders. The portfolio (which includes
Chaplin & Cork’s, Heverlee, Menabrea and
Pabst as well as our local craft businesses
Five Lamps, Dowds Lane, Drygate and
Whitewater) grew volume by 60%. Premium
now accounts for 2% of our own brand
volume, 3% of own brand revenue and is
starting to make a meaningful contribution
to bottom-line given the premium price
points and attractive margins. Our ambition
is to grow this portfolio to 5% of Group
Premium now accounts
for 2% of our own
brand volume, 3% of
own brand revenue and
is starting to make a
meaningful contribution
to bottom-line given the
premium price points and
attractive margins.
24
GANG SIGN – ARTWORK @10% FINAL SIZE – 306865_PML Group_Metropole_2320 x 3150mmC&C Group plcAnnual Report 2017 It now accounts for c.30% of the Group’s
international division. The performance
reflects sustained growth in established
territories such as Italy and South Korea and
a promising first year for South Africa.
The cost savings facilitated incremental
investment in marketing and price support
to further strengthen our core brand
domestic positions.
Our export model of manufacturing in Ireland
and Scotland and partnering with high quality
local distribution partners remains unchanged.
Positioning as a premium import at premium
prices helps preserve 20%+ operating
margins in export markets. During the year,
new distributor relationships in Asia and Africa
helped seed these markets with the Magners
brand, albeit at a scale currently limited in
terms of Group volume.
OPERATIONAL EFFICIENCY AND COST
REDUCTION
We made important changes to our
production and distribution footprint during
the year as part of our ongoing commitment
to operational efficiency. We closed our
plant at Borrisoleigh in Ireland and sold
our cidery and bottling operations at
Shepton Mallet in England for €19m. The
activities at both sites were transferred to
our Clonmel site. We worked hard with
affected employees and were pleased to
be able to offer the majority continuing
employment both within and outside the
Group. However, some redundancies were
unavoidable and it is a credit to the hard-
work and professionalism of all colleagues
involved that the transition was completed
by December 2016 with minimal disruption
to production and client service. Overall
headcount reduced by 282 in the year.
These changes were essential for the
Group, improving our utilisation rates at our
key sites to mid-70’s percent and ensuring
the cost competitiveness of our products.
Manufactured volumes per head are up
24% in the year.
The site rationalisation programme and our
new distribution agreement with AB InBev
will enable us to increase over time the
proportion of direct supply to customers
and reduce our footprint of distribution
centres in the UK by the end of FY2018.
Together with the Group-wide overhead
reduction activity the site rationalisation
savings helped to successfully deliver the
€15m of cost reductions announced in
March 2016.
Our production site at Clonmel, Co.
Tipperary in Ireland is now amongst
the most flexible and well-invested
manufacturing and packaging facilities
in Europe. It is the centre for all our cider
production for Bulmers and Magners and
our portfolio of premium and secondary
cider brands. We also brew our Irish beer
brands on-site and manufacture our Finches
soft drinks range and Tipperary Water.
Following the investment of €17m in a new
PET line during the year, Clonmel now has
the full range of multi-beverage packaging
capabilities with keg, bottle, can and plastic
lines. The Tennent’s Brewery at Wellpark
in Glasgow remains the home of the
Group’s beer production in the UK. Again
utilisation and efficiency measures were
enhanced during the year. It is a testament
to the quality and efficiency of our brewing
operations at Wellpark that we secured
increased contract manufacturing and
packaging volumes from AB InBev under a
new 5-year deal and also from a number of
third parties. Our US operations completed
the move to new manufacturing facilities in
Vermont. Given the continued declines in
the cider category in the US a programme
is underway to attract additional contract
manufacturing and packaging volumes.
Having completed the extensive
rationalisation programme with minimal
disruption, we now look forward to a
period of operational stability where we can
enjoy the benefits from our well invested,
efficient and flexible manufacturing sites.
Our streamlined operational set-up should
ensure we are well positioned to innovate,
land new business, compete on price where
necessary and guarantee the quality of our
multi-beverage range.
WHOLESALE DISTRIBUTION AND
AGENCY
In common with other brewers, the Group
complements its branded business with
third-party drinks wholesaling, own-label
and agency distribution in its key domestic
territories of Ireland and Scotland.
This wholesale and agency activity supports
our branded businesses by broadening the
portfolio of drinks we can offer to our on and
off-trade customers and deepens our level
of understanding and engagement with the
trade. Wholesale and agency also leverage
the Group’s existing procurement, sales,
marketing and distribution infrastructure
to provide incremental revenue and profit
through overhead absorption.
Our principal agency business is the AB
InBev beer portfolio which we distribute in
Ireland and Scotland (excluding Budweiser
in the Republic of Ireland). AB InBev’s range
of world beers includes Beck’s, Stella Artois,
Budweiser, Bud Light and Corona and is
highly complementary to our Magners,
Bulmers and Tennent’s brands and our
emerging Premium and craft portfolio.
Trading in our wholesale and own-label
businesses was disappointing during the
year, particularly in the first half. Wholesaling
is highly competitive, price sensitive and
in both Ireland and Scotland we lost both
volume and accounts. Wholesale and own
label volume was down 194kHL (or 14%) in
the year and revenue declined by €23m (or
10%). Approximately half the drop is due to
the loss of some very low margin own-label
contracts in Ireland and in the UK, following
on from the closure of Shepton Mallet. We
are working through the challenges and
complexities of running fully integrated brand-
led wholesale businesses and the increased
focus improved performance in the second
half of the year. Significant new client wins
in Scotland helped stabilise volume and
customer numbers by the year end, giving
increased confidence for the year ahead.
Despite the complexities and the challenges
to date, we remain fully convinced that
brand-led wholesale models are right for
C&C in Scotland and Ireland. Our ambition
remains to be the pre-eminent brand-led
wholesaler in Scotland and Ireland with
unrivalled range, enhanced customer
service and geographic coverage. We aim
to be the supplier of choice to the licensed
on and off-trade. We have lost more
business than we would have liked in the
past few years but believe we now have the
stability and trading strategies in place to
regain share over time.
25
Business & Strategy Group Chief Executive Officer’s Review
(continued)
The AB InBev beers performed well for
C&C during the year with Corona once
again proving to be the star performer. The
extended AB InBev distribution partnership
signed in December 2016 reaffirms our
long-term distribution rights to their current
and future beer portfolio. As part of this
agreement, we traded some of the value
we derive from distributing their beer
brands in Ireland and Scotland for value
we will derive from AB InBev distributing
our cider brands in the UK. The reciprocal
commercial arrangement should work well
for both parties, playing to each other’s
mutual strengths across the territories
and the complementary nature of the
joint portfolio. The five year extension of
brewing arrangements for AB InBev brands
in our Glasgow site further cements the
relationship.
STRONG BALANCE SHEET AND
CAPITAL ALLOCATION
Our balance sheet remains in robust health
with a net debt(vi) to EBITDA(ii) ratio of 1.55x
at the year end. The Group finished the year
with a net debt(vi) position of €171 million
(FY2016: €163 million) marginally ahead of
last year. This is after returning €66 million
in dividends and share buybacks, increased
net capex (excluding exceptionals) of €16
million (including €17 million on the new PET
line at Clonmel) and investing an additional
€12 million in our trade-lending books in
Northern Ireland. The latter follows a drive
to raise awareness amongst our target
accounts of the Group’s lending product,
particularly in geographic areas where we
are currently under-represented. The trade
lending model is popular across the trade in
Scotland and Ireland. It provides publicans
with relatively cheap and accessible
finance and, for the brewer, the distribution
secured helps deliver attractive returns,
consumer visibility and traction for existing
and developing brands. Our returns hurdle
for trade loans is 15% RoIC. Actual returns
have been comfortably above this level in
recent years.
With trade lending and capex at such
elevated levels during the year, free cashflow
conversion (pre-exceptionals) at 53%
(FY2016: 103%) of EBITDA(ii) was below our
recent trends. With these items returning to
more normalised levels next year we expect
26
Our guidance is medium term target leverage
of 2x Net Debt(vi)/EBITDA(ii). We anticipate
we will move towards this level during the
course of FY2018 through a combination of
our progressive dividend policy, acquisitions
and/or share buybacks. Since the year end
we have made the acquisition of a small craft
cider business and spent €18.7m on share
buybacks.
Ultimately, the Group’s
balance sheet and
cash generation profile
provide the firepower
needed to invest in our
brands and assets and
the flexibility to acquire
assets or return capital as
appropriate.
a swift return to our long term guidance
range of 60 – 70%. Working capital was
a €1m inflow slightly behind the previous
years underlying position due to a partial
stock build in Ireland over the year end to
support our new packaging and product
launch activity in March 2017. As highlighted
at our Capital Markets Day in March 2016,
working capital and cash conversion in
FY2016 benefited from a €24m receivables
securitisation agreement and €16m of other
one-off working capital initiatives. While
there were no corresponding initiatives
in FY2017, we will explore further options
through the current financial year to optimise
balance sheet efficiency and release cash
for the benefit of shareholders. The Group’s
overall cash position benefited from the sale
in the year of the Shepton Mallet site and
bottling line in the year for c.€19m, as part
of our site rationalisation programme. These
cash receipts are treated as exceptional
and are excluded from the above cash
conversion analysis.
Ultimately, the Group’s balance sheet and
cash generation profile provide the firepower
needed to invest in our brands and assets
and the flexibility to acquire assets or return
capital as appropriate. Looking forward, our
production facilities are well-invested and we
do not anticipate annual capex requirements
beyond €10 – 15 million.
C&C Group plcAnnual Report 2017 PEOPLE
At C&C the model that we operate is that
the Board allocates resources and assesses
performance of the business divisions
with the support of a head office of not
more than 20 people, whilst each business
division is equipped with the relevant
people assets to ensure that we operate
effectively in the market. Accordingly, each
of our businesses has a local MD who has
the associated capability to implement
the agreed strategy and make day to day
operational decisions for that business.
In areas like procurement, planning and
manufacturing, we seek to optimise our
capability and run on a functional basis.
Our remuneration philosophy focuses on
stakeholder participation through equity
participation, to align employee interests
with those of shareholders. Management
remain largely incentivised through equity
and we have employee-wide schemes
in Ireland and the UK with significant
participation levels amongst eligible
employees. Bonus arrangements for
managers and employees focus on local
objectives that are relevant for the creation
of long term sustainable shareholder value.
All employees have the opportunity of
participating in performance related bonus
schemes.
During the year, we continued our
investment in the next generation of leaders
in the business by arranging for a small
number of high performing managers from
across the Group to undertake the London
Business School’s accelerated development
programme.
We punch well above our weight in terms
of leading public policy on responsible
drinking. During the year, we became the
first drinks company in the UK to include
the Chief Medical Officer’s new responsible
drinking guidelines on packaging. It is one
of our key principles that consumers should
be given information about our products
at the time of consumption in order to help
manage their relationship with alcohol.
We are proud of this initiative which we
launched jointly with the Scottish Chief
Medical Officer.
Based on our belief that consumers should
be given sufficient information about what
they are consuming, we took the decision to
voluntarily display calorie information on our
packaging in the UK and Ireland.
Another example of how we aim to help
communities is through our support of
minimum unit pricing. Governments now
have plans for this important initiative
in Scotland, Ireland and Northern
Ireland. We believe that minimum unit
pricing is an important step in tackling
irresponsible consumption of alcohol and,
as such, we remain highly supportive of its
implementation.
We focus our CSR efforts on activities
that benefit our local areas and work hard
to ensure we have a positive impact on
the communities in which we operate. A
significant part of this is our approach to
charitable activities where we support a
wide range of charities particularly those
that have a local impact in relation to our
operating facilities
On a sad note, our Director, Rory
Macnamara, passed away earlier this year.
While Rory was a director of C&C for an all
too brief period, he made a considerable
contribution to the Board during that time
and we will greatly miss his valuable insight.
CORPORATE RESPONSIBILITY
Over the last 12 months we have
continued to develop our Corporate Social
Responsibility (CSR) agenda. This includes
implementing a number of initiatives that are
industry-leading. Taking an active lead on
CSR and working with our communities and
stakeholders is essential to our business.
We are extremely proud of the work of the
Tennent’s Training Academy, which has now
provided over 34,000 courses having a very
positive impact on the quality and expertise
within the Scottish hospitality trade.
We support a wide range of charitable
causes across the Group, big and small.
These range from activities linked to our
brands such as the “Celtic Cash for Goals”
initiative and Tipperary Water partnering with
the Irish national child protection charity, the
ISPCC; to lower profile but equally important
charitable activity such as our support for
KidsOut, our partnership with CLIC Sargent
We are extremely
proud of the work of
the Tennent’s Training
Academy, which has now
provided over 34,000
courses having a very
positive impact on the
quality and expertise
within the Scottish
hospitality trade.
in Northern Ireland and our support of the
“Voice-Over” charity in Glasgow.
We also support a diverse range of
sporting events and activities through
our partnerships with the city marathons
in Dublin and Cork, our sponsorship
of the Tipperary hurling and football
championships, our partnership with the
Irish Football Association in Northern Ireland
and of course our partnership with Glasgow
Celtic FC.
The Group has also delivered a great range
of environmental initiatives. During the last
year we reduced our energy consumption at
our manufacturing sites by 3% per hectolitre
and, once again, our two largest production
sites sent no waste to landfill.
Our commitment to the environment is
central to our business. We are a producer
that relies on high-quality agricultural
products. We pressed 83,000 tonnes of fruit
last year across our manufacturing sites and
we continue to source all of our malt used in
our Wellpark Brewery from Scottish farmers.
I am personally very proud of the work
undertaken by employees to ensure
that we nurture our environment and the
communities in which we operate.
27
Business & Strategy
Group Chief Executive Officer’s Review
(continued)
Review by Operating Segment
Ireland
From a macro
perspective, key economic
measurements continued
to improve in Ireland during
the year.
After a strong start, growth in both the
overall LAD market and the cider category
in Ireland slowed in the second half of the
financial year. LAD volume for the full year
was +2% (H1: +5%) and the cider category
saw volume grow +6%(viii) (H1: +9%)(viii).
The performance of cider was buoyed by
better summer weather, as well as new
product development helping to expand
the category and bring in new millennial
consumers. Cider is now ahead of where it
was two years ago both in absolute scale
and as a percentage of LAD consumption.
Pricing was reasonably stable across both
on and off-trade channels.
Undoubtedly, the trade enjoyed a strong
early summer as both the Northern Ireland
and Republic of Ireland football teams
progressed from the group stages of the
European Championships.
By contrast, July was poor across the
industry. Volumes improved again in August,
helped by some better weather.
FY2017
€m
338.9
242.3
48.6
20.1%
1,599
409
FY2016
€m
Change
%
347.3
252.5
46.9
(2.4%)
(4.0%)
2.5%
(6.5%)
3.6%
18.6% 1.5 ppts
1,711
398
(6.5%)
2.8%
Constant Currency(i)
Revenue
Net revenue
— Price /mix impact
— Volume impact
Operating profit(iii)
Operating profit margin
Volume (kHL)
— of which Bulmers
28
C&C Group plcAnnual Report 2017 The second half was impacted by the
absence of the Rugby World Cup which
was in last year’s comparatives and trading
was more volatile through the key Christmas
trading period.
OPERATING PERFORMANCE
After a challenging FY2016, our priorities in
Ireland for FY2017 were to stabilise trading
and return our key brands to volume growth.
With Bulmers recording positive volume
growth of +2.8% and operating profits(iii) for
the Ireland segment up 3.6% in the period,
we succeeded in creating a stable platform
from which to launch our Brand and New
Product Development plans in FY2018.
The positive Bulmers volume performance
reflected category growth and was
principally driven by a strong performance
in packaged, especially pint bottle (+14%)
in the on-trade. The market share trends
of recent periods continued through this
year with Bulmers broadly holding share
in packaged in the on-trade and off-trade
but ceding some share in draught. On-
trade share is now at 85% (MAT – Feb16:
91%) and overall Bulmers share is 62%
(MAT – Feb16: 65%)(viii).
In the year, we completed an extensive
review of the Bulmers brand and the
competitive threat it is facing from new
entrants in Ireland. The results have given
us confidence in the underlying strength of
the brand and informed the investment we
are now making in both the Bulmers brand
equity and new product development.
Our key focus for FY2018 is to take
advantage of the growing popularity of cider
and re-build share, particularly amongst
the new generation of consumers entering
the category. Accordingly, in March 2017,
we launched Outcider from Bulmers, a
new sweeter-tasting cider targeting a
more youthful audience. Our distribution
network enabled us to quickly reach 90%+
distribution in the off-trade and we are
rolling out in the on-trade. We are also up-
weighting our marketing investment behind
the Bulmers brand with the new “100%
Irish” advertising campaign and refreshed its
branding and packaging from March 2017.
The Group’s premium portfolio made further
progress in Ireland with Heverlee volumes
up strongly (+44%) to over 10kHL, the brand
doing particularly well in Northern Ireland
where it consolidated its position as the
No.1 import lager(vii) and benefited from our
increased trade lending activity. Our craft
offerings within the Group (Five Lamps and
Whitewater) also continued to make good
progress.
Our premium mainstream brands Tennent’s
and Magners brands grew by +3% and
+4% respectively, cementing their positions
as the No.2 lager and No.1 cider brands, in
Northern Ireland(viii). Our Irish beers Clonmel
1650 and Roundstone Irish Ale also grew
strongly (+21%), again driven predominantly
by take-up in the North of Ireland, where
the benefits of expanded trade lending are
evident across the portfolio.
Wholesale volume was down 3.5%
on a like-for-like basis (excluding the
impact of two discontinued contracts).
As discussed above, this reflects the
price competitiveness in the market and
a reduction in active customer numbers
during the year. This masks a strong
performance in our wine distribution
business which grew by 8.9%, driven
primarily by the off-trade channel.
FINANCIAL PERFORMANCE
Year-on-year volume and revenue
performance in Ireland was adversely
impacted by discontinuation of two
low margin distribution and own label
contracts in FY2016. In aggregate, these
two contracts accounted for c. 100kHl of
volume, €10.6 million of revenue in FY2016
but with a limited contribution to operating
profits. Excluding these discontinued
contracts, the Irish segment’s total volume
would have been -1% and revenue flat
year-on-year. Bulmers revenue was up
year-on-year as a consequence of the
volume growth but unfavourable pack and
channel mix towards the off-trade limited
the margin benefit.
Overall operating profits(iii) in Ireland were
up 3.6% reflecting improved weighting in
favour of branded activity and cost savings
coming through in the second half of the
year enhancing margins.
29
Business & Strategy Group Chief Executive Officer’s Review
(continued)
Scotland
The Scottish economy
is lagging the rest of the
UK, with Scottish GDP
contracting in Q4 2016
and flat for the full year
compared to +1.8% growth
in the UK as a whole.
Unemployment is rising, partly due to
challenges in the oil sector and consumer
confidence is more subdued than in our
other domestic businesses. Beer volume
was flat in Scotland for the financial year,
having been +1% in the first half. This follows
the prior year’s high single digit decline
in on-trade consumption linked to the
tightening of drink-driving legislation.
OPERATIONAL PERFORMANCE
After a positive first half, Tennent’s brand
volume performance softened during the
second half of the year, in line with the
broader trade. In the Independent Free
Trade in Scotland Tennent’s was up 0.2%
in the year (H1: +2%) and still gaining share.
Including off-trade and national accounts,
overall volume for Tennent’s in the Scotland
segment was -1.3% year-on-year (H1: Flat).
FY2017
€m
285.0
186.6
32.6
17.5%
1,394
1,019
FY2016
€m
Change
%
296.6
198.5
33.3
(3.9%)
(6.0%)
(4.6%)
(1.4%)
(2.1%)
16.8%
0.7ppts
1,414
1,032
(1.4%)
(1.3%)
Constant Currency(i)
Revenue
Net revenue
— Price /mix impact
— Volume impact
Operating profit(iii)
Operating profit margin
Volume (kHL)
— of which Tennent’s
30
C&C Group plcAnnual Report 2017 profile and is available in 500ml bottles
across the UK and export markets.
In Premium, Heverlee and Menabrea had
another year of strong volume growth and
both brands are achieving real traction in the
Scottish on-trade. We launched Pabst into
the Scottish trade, targeted at the Millennials
market. Drygate, our joint venture with
local craft brewers, Williams Bros Brewing,
achieved 10kHL and is now exceeding
original brewery capacity.
As in Ireland, our Scottish wholesale
business lost some ground during the year
and was responsible for 7.7kHl and €5.5
million (£4.6 million) respectively, of the
volume and revenue declines experienced
across the Scotland segment. In the
year, we looked to rationalise the tail of
our smaller, uneconomic customers.
Accordingly, the number of outlets
purchasing wholesale products is down on
last year, but had stabilised and started to
move up by year end. Rate of sale remained
steady year-on-year. Several product and
pricing initiatives are underway which,
together with some major account wins
towards the end of the year, should stabilise
volume and value performance in FY2018.
FINANCIAL PERFORMANCE
Net revenue was down 6.0% to €186.6
million reflecting our weaker rate
performance in Tennent’s in H1 and
wholesale volume and value tracking below
last year. Operating margin was up 2.3ppts
in the second half as the benefit of cost
savings flowed through. Margin for the year
was 17.5%, delivering operating profit(iii) of
€32.6m, 2.1% down on last year.
31
Rate performance in Tennent’s, however,
improved significantly in the second half
reflecting a moderation in the competitive
pricing pressures as the volatility caused
by the drink-driving legislation annualised
and pricing firmed. We have continued this
momentum on rate in Tennent’s into the new
financial year.
Brand affinity scores for Tennent’s were
up again over the course of the year to
57% (MAT Feb16: 56%), some 13%(ix)
ahead of the nearest rival. We continued
to invest in the brand through our digital
media “Wellpark” campaign, T5 five-
a-side football and our various sports
sponsorship platforms. Brand salience
scores, particularly amongst the 18 – 24 age
group, have responded encouragingly. The
broad appeal of Tennent’s is underscored
by its success and enduring popularity even
in Scotland’s high-end ‘Platinum’ outlets,
where it has outsold by a 2-to-1 ratio Craft
and World lagers combined.
To address consumers growing appetite
for a range of high-quality and distinctive
ale flavours we launched a range of
‘Caledonia’ premium bottled beers,
including Outpost IPA, Double Hop and
Hopscotch. Each of the great tasting 5%
ABV brews has its own unique flavour
Business & Strategy Group Chief Executive Officer’s Review
(continued)
C&C Brands
The macroeconomic
backdrop in the United
Kingdom was broadly
positive during the
year with consumer
confidence and spending
remaining robust despite
the uncertainty caused
by the European Union
referendum result.
More recently this picture has started to
change. The return of inflation has not
been matched by wage growth and is
expected to put a squeeze on disposable
incomes over the next 12 – 18 months. Retail
spending fell in Q1-2017 for the first time
since 2013. The overall cider category was
down in the period with volume -0.5%(x). The
on-trade was in moderate growth, buoyed
by city-centres and growth in casual dining
The GB cider market remains the largest
in the world, with London a key opinion
forming city from a global perspective. The
continued success of Magners in the UK is
therefore important not just to our domestic
business, but our international ambitions for
the brand.
FY2017
€m
145.9
83.8
FY2016
€m
Change
%
154.5
90.6
(5.6%)
(7.5%)
(3.0%)
(4.5%)
7.3
8.7%
1,216
485
9.3
(21.5%)
10.3% (1.6ppts)
1,273
430
(4.5%)
12.8%
Constant Currency(i)
Revenue
Net revenue
— Price /mix impact
— Volume impact
Operating profit(iii)
Operating margin
Volume (kHL)
— of which Magners
32
C&C Group plcAnnual Report 2017 OPERATIONAL PERFORMANCE
Over the past five years, the Magners brand
has demonstrated its consumer resilience
through a period of significant and disruptive
competitor brand launches. The more
recent backdrop is one of retailer led range
rationalisation in LAD and a lessening of
competitor activity in cider. Against this
backdrop, we took the decision to up-
weight our investment behind Magners
in FY2017 to build positive momentum in
volume and share. The market response
to the Magners “Hold True” campaign has
been impressive with brand family volume
+12.8% within the C&C Brands segment
and +11% across the UK as a whole. Our
share of cider is up 59bpts at 6.4% for the
full year (MAT Feb16: 5.8%)(xi). Magners
Original consolidated its position as the No.2
brand in apple(vii), gaining share alongside
other local brands at the expense of the
market leader and the international brewers.
Our brand health check data suggests that
our marketing investment this year has put
the brand back on the radar of our target
audience and instilled our core message of
Magners’ authenticity.
The momentum behind Magners was
helpful in our discussions with AB InBev
regarding distribution rights for the C&C
cider portfolio in the UK. This agreement
was concluded and announced in
December 2016 and marks an exciting next
stage in the development of the Magners
brand. Magners and our other cider brands
will benefit greatly from AB InBev’s best-in-
class distribution capabilities in the UK off-
trade and from being marketed alongside
AB InBev’s leading portfolio of beers. The
ongoing consolidation activity currently
taking place across retailers in the on and
off-trade further reinforces the strategic
rationale for the AB InBev partnership.
Our premium propositions in cider and beer
(Chaplin & Cork’s, Menabrea and Heverlee)
more than increased volume by 60% in the
year. Menabrea made good progress in
the licensed restaurant trade and secured
its first grocery multiple listing. This should
help underpin brand awareness and volume
growth going forward.
The performance of our portfolio of local
English cider brands was more challenging
with price deflation and retailer-led range
rationalisation impacting more heavily on
these secondary and tertiary brands. The
transfer of cider production from Shepton
Mallet to Clonmel also resulted in the
discontinuation of certain low margin,
own-label contracts. Taken together these
two issues account for 120kHl of lost
volume and c.€6 million (£5 million) of lost
revenue within the C&C Brands division.
FINANCIAL PERFORMANCE
The brand re-positioning of Magners
through the ‘Hold True’ campaign
successfully delivered volume and share
gains. However, the associated investment
in price support and shift in pack mix, as
we came more in line with the competitive
set having previously over-indexed in glass,
had a negative impact on yield and margin.
Together with the incremental investment
in marketing, this meant the strong volume
performance in Magners did not translate
through to revenue or profit growth in
the year under review. Net revenue and
operating profit(iii) were down in the period,
at €83.8 million and €7.3 million respectively.
Looking forward, with continued volume
momentum, pack mix more in line with
consumption trends, marketing spend
returning to normalised levels and the
benefits of the AB InBev partnership, we
are confident in stronger profit conversion in
FY2018.
33
Business & Strategy Group Chief Executive Officer’s Review
(continued)
North America
Constant Currency and adjusted
for the Pabst transaction(i)
FY2017
€m
FY2016
€m
Revenue
Net revenue
— Price /mix impact
— Volume impact
Operating profit(iii)
Operating margin
Volume (kHL)
24.5
23.1
36.9
34.7
0.7
3.0%
176
0.6
1.7%
265
Change
%
(33.6%)
(33.4%)
0.2%
(33.6%)
16.7%
1.3ppts
(33.6%)
After a period of explosive growth and
competitor activity between 2010 – 2015
(CAGR: +44%), the cider category in the
US started to reverse in mid-2015(xii).
The negative trend continued through the
current financial year with cider volume
down 17.6%(xii) over calendar year 2016.
More recent data suggests the negative
run-rate has moderated to c.10 – 11% and
cider is maintaining its share of the overall
beer category at c.1.3%(xii). It is clear that
the focus for many consumers, retailers
and distributors has switched into new
adjacent categories of alcoholic soft drinks,
flavoured malt beverages and fruit beer. The
sweetness of these propositions has no
doubt taken some consumers, temporarily
at least, out of the cider category. Another
feature of the market is the relative success
of imports and local/regional brands over
national US brands.
OPERATING PERFORMANCE
The long term distribution partnership
between our US subsidiary, the re-named,
Green Mountain Beverages (“GMB”) and
the Pabst Brewing Company (“PBC”), took
effect from 1 March 2016. Focus in the first
six months was on transitioning GMB’s
sales and marketing operations into the
Pabst distribution platform and integrating
our domestic US and import cider brands
into their broader portfolio. We also jointly
developed a new regional, super premium
brand –Vermont Cider Co. for the New
England market and introduced new
34
branding and packaging for existing brands
in the portfolio. We are satisfied that we now
have the partner and infrastructure in place
to deliver long term market share recovery,
but FY2017 was a period of transition
for C&C against a backdrop of negative
category trends. Those trends are unlikely
to change in the short term and visibility on
recovery of the category is low at this point.
of the Vermont assets, we have prudently
decided to review the carrying values of our
US business. As a result of this review an
impairment charge of €129.4 million was
taken with respect of the Group’s tangible
and intangible assets in the US. Following
this impairment, the carrying value of our
Vermont business is €45m.
It has been a challenging period for the
category and our business but it is not
unreasonable to believe that once the
category is through these short term cyclical
challenges, it will resume its long term
growth trend. Past experiences in both the
UK and the US suggests that the ‘sweet’
fads will run their course and the attributes
that draw consumers to cider – natural,
authentic, fruit based, craft – will ensure a
return to positive territory.
Operationally, we are focused on building
our pipeline of contract manufacturing
and packaging opportunities to improve
utilisation rates and reduce manufacturing
variances.
FINANCIAL PERFORMANCE
Total volume was down 33.6% in the year
reflecting the overall declines in the US
cider market and the inevitable disruption
from moving to the new partnership
arrangements with PBC. Despite the
decline in volume and revenue in the period,
reported operating profit(iii) was broadly flat
at €0.7m (FY2016: €0.6m), with PBC sharing
in the downsides from reduced activity. The
near term volatility in the category pushes
out the prospects of Pabst being able to
deliver a meaningful recovery in the short
to medium term. While there is no loss
of belief or enthusiasm for the long term
prospects of cider in the US or in the quality
C&C Group plcAnnual Report 2017 Export
Constant Currency (i)
Revenue
Net revenue
— Price /mix impact
— Volume impact
Operating profit(iii)
FY2017
€m
FY2016
€m
Change
%
23.8
23.7
24.4
24.4
5.8
5.3
(2.5%)
(2.9%)
(6.8%)
3.9%
9.4%
Operating profit margin
24.5%
21.7% 2.8ppts
Volume (kHL)
— of which Magners
— of which Tennent’s
185
100
54
178
99
46
3.9%
1.0%
17.4%
Export markets for C&C are all markets
outside of the UK, Ireland and North
America.
Our strategy is to build volume through our
portfolio of authentic British and Irish cider
and beer brands across Europe, Asia/
Pacific and Africa. The model is to partner
with local distributors, to position the brands
as premium/import and retain all production
in our domestic manufacturing facilities,
utilising surplus capacity and reducing
capital employed.
We enjoyed another strong year in EMEA,
our largest and most established sales
territory. The region delivers c.82% of the
division’s volume and was up +14% with
good performances from more established
markets such as Spain and France where
Magners was +5% and +21% respectively,
and Tennent’s was up +43% and +105%.
Tennent’s continues to perform well in Italy
as a speciality/premium lager (32kHL).
New territories also performed well with
Eastern Europe now over 10kHl, including
Magners as the first draft cider available in
the nascent but fast growing Russian cider
market. We continued to seed selected
African markets, reaching 12kHL in only our
second year with Tennent’s quickly gaining
traction in South Africa.
In Asia/Pacific, our new agreements
with ThaiBev in Singapore, San Miguel
in Thailand and Taiwan and San Miguel
Mahou in India are bedding in and are
delivering growth. These are still nascent
cider markets and the contribution to
Group volume and revenue remains
small. However, our partners are sizeable,
high quality regional players, with a
demonstrable interest and understanding
of the category. Our opportunity and focus
rests in extending these arrangements to
other fast growth markets in the region.
Distributor disruption in Australia and with
a previous distributor in India resulted in
the loss of 13.1kHL (7.1%) of cider volumes,
dragging back volume, revenue and profit
performance for the region and the Export
division.
Our Export volume is now 185 kHL. We
distribute to 60 markets around the world
delivering an operating margin of 24.5%.
We see opportunities for growth in all
regions through building on our existing
relationships and establishing a presence in
new territories. We have seen real traction
in both the Magners and Tennent’s brands
in a broad range of overseas markets. Both
brands have the key attributes of heritage,
provenance and quality and carry excellent
export potential as premium import
propositions.
35
Business & Strategy Group Chief Executive Officer’s Review
(continued)
CURRENT TRADING AND OUTLOOK
The current financial year has started
satisfactorily. The outlook for consumer
spending is moderating across all our
territories but the return of inflation is
presenting a firmer pricing opportunity. We
believe the enduring nature of our brands
and products, plus the quality and efficiency
of our operations ensure we can trade
successfully in this environment. Each of
our three key brands has had its challenges
in recent years, but through continued
investment and hard work they have
weathered these storms. We believe they
are now in a position to build on the robust
volume performance of last year to deliver
revenue and value growth in FY2018.
It is early days in the launch of Outcider in
Ireland and the Bulmers brand re-fresh, but
we are pleased with the market reception
to both campaigns so far. We have had a
positive reaction from the off-trade and are
in roll-out to the on-trade, before the next
phase of marketing focused on outdoor,
social media and activation. Subject to
satisfactory weather through Spring/Summer
we expect another good year for the cider
category in Ireland and our additional €4
million investment behind Bulmers is a
margin investment in the current year to build
further momentum and an improved share
performance for the brand.
In Scotland, we are cautious on overall
consumption and anticipate volume in
the IFT will remain in modest decline for
the year. Our opportunity in FY2018 is
to continue to deliver an improved value
performance in Tennent’s and further grow
our premium portfolio. We have made a
solid start on both fronts with new client
wins and the new Tennent’s founts having
an impact.
In C&C Brands, our cider brands transferred
to AB InBev in two tranches on 1st February
and 1st March, with minimal disruption.
Initial feedback from the market is positive
and the strategic logic for the combination
is stronger than ever. Collectively, we have
set ourselves ambitious targets for the
partnership, but are confident the Magners
brand can continue the volume momentum
achieved last year. The amended terms of
our distribution agreement for AB InBev’s
beers in Scotland and Ireland came into
effect from 1st January 2017. These will
inevitably take some of our AB InBev agency
volume and associated revenue and margin
out of Scotland and Ireland in FY2018,
but will be compensated by an improving
contribution from cider in C&C Brands.
We have chosen to delay the full transfer
of physical distribution until the end of this
year, which will push some of the synergistic
benefits of the partnership into FY2019.
In North America, the Magners brand is
showing signs of recovery but the continued
declines in the overall cider category will
limit the progress we can expect from the
Pabst partnership in the near term. The
business is stable and the increased focus
on contract opportunities will help cover
overheads. The brighter spots within the
US cider market are Import and Regional
and our portfolio is well placed to take
advantage of these. We remain convinced
of the strength and commercial logic of our
combined PBC/GMB platform and its ability
to recover share and volume when the
category stabilises.
Export has made a satisfactory start to
the year. We are nearing completion of
the switch of our Australian distributor
to Coca-Cola Amatil (our existing New
Zealand distributor). We are seeing good
category development progress in Asia
Pacific, Europe and Africa and it is clear
we have a brand portfolio that resonates
with international audiences. The long term
prospects therefore remain very positive.
Our priorities will be to consolidate our
distribution network on larger high quality
regional players that can help us reduce
volatility and drive sustainable growth in
volumes across multiple territories.
Stephen Glancey
Group Chief Executive Officer
Notes to the Group Chief Executive Officer’s Review
(i)
FY2016 comparative adjusted for constant currency (FY2016 translated at FY2017 F/X rates) and North America revenues to be on a like for like basis with the
current financial year (as though the Pabst arrangement had also been in operation for the whole of FY2016). The like-for-like adjustment on North American
revenues is arising from Pabst partnership: Under the terms of the trading arrangement with Pabst Brewing company (“PBC”) which came into effect on 1st
March 2016, C&C’s reported revenues now comprise Cost of Goods Sold at production cost plus a royalty payment representing one-third of the gross profit of
the partnership. C&C contributes one-third of marketing spend. All sales costs are borne by PBC. The like-for-like adjustment for our US revenues would have
the effect of reducing our reported revenues for the comparative period (FY2016) by €10.6m had the partnership been in effect from 1st March 2015.
(ii)
EBITDA is earnings before exceptional items, finance income, finance expense, tax, depreciation, amortisation charges and equity accounted investees’ loss
after tax. A reconciliation of the Group’s operating (loss)/ profit to EBITDA is set out on page 38.
(iii) Operating profit and profit/finance expense for the year attributable to equity shareholders is before exceptional items.
(iv) Adjusted basic/diluted earnings per share (‘EPS’) excludes exceptional items. Please also see note 9 of the financial statements.
(v)
Free Cash Flow (‘FCF’) is a non GAAP measure that comprises cash flow from operating activities net of capital investment cash outflows which form part of
investing activities. FCF highlights the underlying cash generating performance of the ongoing business. A reconciliation of FCF to Net Movement in Cash &
Cash Equivalents per the Group’s Cash Flow Statement is set out on page 39.
(vi) Net debt comprises borrowings (net of issue costs) less cash & cash equivalents.
(vii) Off-trade: Nielsen Scantrack 52wks to 27.02.17; on-trade: CGA OPMS MAT to 20.02.17.
(viii) Nielsen Ireland databases to End Feb17.
(ix) Rolling MAT February 2017 Brand Affinity Scores (“Drunk by people like me” – Total sample).
(x) GB Total Cider Off-trade: Nielsen Scantrack 52wks to 27.02.17; on-trade: CGA OPMS MAT to 20.02.17.
(xi) UK apple cider market by volume – MAT to Feb17 (Nielsen Scantrack 52wks to 27.02.17; on-trade: CGA OPMS MAT to 20.02.17).
(xii) The Beer Institute Quarterly Cider Domestic & Import Volumes – calendar 2016.
(xiii) Canadean: Global Cider Data – June 2015
36
C&C Group plcAnnual Report 2017 Group Chief Financial Officer’s Review
RESULTS FOR THE YEAR
C&C is reporting net
revenue of €559.5 million,
operating profit(i) of €95.0
million and adjusted
diluted EPS(ii) of 23.8 cent.
On a constant currency
basis and after adjusting
our North America prior
year results to be on a
like for like basis with
the current financial year
(as though the Pabst
arrangement had been
operational in FY2016)(iii),
net revenue decreased
6.9% and operating profit(i)
decreased 0.4%.
The Group revenue decline of 6.9%(iii) was
influenced by the loss of lower margin
wholesale and own label activity and the
restructured partnership arrangements
with Pabst Brewing Company in the US.
Revenue from our key brands stabilised in
the year with the benefit of volume growth
broadly offset by varied negative pricing
dynamics. Collectively, our three core
brands of Bulmers, Magners and Tennent’s
returned to volume growth and the own
brand portfolio performance was further
boosted by good growth in our Super
Premium range.
Operating profit(i) for the Group at €95.0m
was down 0.4% on a constant currency
basis. Operating profit in the second half of
the year benefited from improved trading
performance and the impact of cost savings
arising from our rationalisation programme
came through. We continued to invest in our
brands and our manufacturing capabilities,
with an up-weighted marketing campaign
for Magners and a new PET line at our
cidery in Clonmel.
EPS(ii) of 23.8c was up 8.7%(iii) on FY2016.
EPS also reflected the impact of the share
buyback activity in both this and the prior
financial year.
The key financial performance indicators are
set out on page 18.
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 Stock Exchange and the UK Listing
Authority. Details of the basis of preparation
and the significant accounting policies are
outlined on pages 103 to 115.
FINANCE COSTS, INCOME TAX AND
SHAREHOLDER RETURNS
Net finance cost was €7.8 million for the
year (2016: €8.6 million). The finance cost
benefited from favourable interest rates
and the pricing structure of the existing
multi-currency debt facility. Net finance
costs included the unwind of a discount on
provisions charge of €0.8 million (2016: €0.8
million).
an effective tax rate of 14.9%, an increase
of 0.3 percentage points on the prior year.
The Group is established in Ireland and as
a result it benefits from the 12.5% tax rate
on profits generated in Ireland. The increase
in the effective tax rate was as a result of a
greater proportion of overall profits subject
to taxation coming from outside of Ireland in
FY2017.
Subject to shareholder approval, the
proposed final dividend of 9.37 cent per
share will be paid on 14 July 2017 to
ordinary shareholders registered at the
close of business on 26 May 2017. The
Group’s full year dividend will therefore
amount to 14.33 cent per share, a 5%
increase on the previous year. The proposed
full year dividend per share will represent a
pay-out of 60.2% (FY2016: 56.4%) of the full
year reported adjusted diluted earnings per
share(ii). This increase in both the dividend
per share and payout ratio reflects our
confidence in the cash generation capability
of the business and the underlying stability
of core earnings.
A scrip dividend alternative will be
available. Total dividends paid to ordinary
shareholders in FY2017 amounted to €43.0
million, of which €34.9 million was paid in
cash and €8.1 million or 18.8% (FY2017:
12.1%) was settled by the issue of new
shares.
The income tax charge in the year was
€13.0 million. This excludes the credit in
relation to exceptional items and represents
In addition to increased dividends, we
invested €23.2 million (including commission
and related costs) in market share
37
Business & Strategy Group Chief Financial Officer’s Review
(continued)
buybacks, purchasing 6.14 million of our
own shares at an average price of €3.73.
Our stockbrokers, Investec, conducted
the share buyback programme. All shares
acquired during the current financial year
were subsequently cancelled.
Exceptional items
Costs of €150.1 million were charged in
FY2017 which, due to their nature and
materiality, were classified as exceptional
items for reporting purposes. In the opinion
of the Board, this presentation provides
a more helpful analysis of the underlying
performance of the Group.
The main items which were classified as
exceptional include:-
(a) Impairment of intangible asset
To ensure that goodwill and brands
considered to have an indefinite useful
economic life are not carried at a value
above their recoverable amount, impairment
reviews are performed annually or more
frequently if there is an indication that their
carrying amount(s) may not be recoverable.
The reviews compare the carrying value of
the assets with their recoverable amount
using value-in-use computations. In the
current financial year, the review resulted in
an impairment of €106.6 million in the value
of our intangible assets with respect to the
North American business segment. In the
US, the cider category remains in double
digit decline and the Group’s US cider brands
are lagging behind the category. Whilst
we believe that the category will recover in
the long-term and we remain committed
to being part of the recovery story, recent
performance has been disappointing. In the
short to medium term the outlook is negative
with a lack of visibility on when momentum
will return. As a consequence we have
rebased our profit expectations and terminal
growth rate for the US business, leading to
the impairment charge in the current financial
year. All other segments had sufficient
headroom in their carrying values.
(b) Restructuring costs
Restructuring costs of €12.7 million were
incurred in the year. This comprised
of severance costs of €7.2 million and
other costs of €5.5 million. Severance
costs primarily arose from the reduction
in headcount as a consequence of the
rationalisation of the Group’s manufacturing
footprint and other smaller reorganisation
programmes. Other costs of €5.5 million
are directly associated with the restructure
of the Group’s production sites and include
site closure costs.
(c) Revaluation/impairment of property,
plant & equipment
In the current financial year we engaged
external valuers to value our properties in
Vermont, resulting in an revaluation loss
of €17.7 million in respect to the land and
buildings and a revaluation loss of €5.1 million
with respect to the plant and equipment which
were accounted for in the Income Statement.
In addition we took the decision to market
value some of our assets in Borrisoleigh,
Ireland (€1.5 million) that were deemed surplus
to requirements and impair an element of
the Group’s IT system (€1.5 million) post the
closure of Shepton Mallet.
(d) Onerous lease
A review was completed of the carrying
value of our onerous lease obligations
during the year. The onerous lease provision
carried forward relates to two leases for
warehousing facilities acquired as part of the
acquisition of the Gaymers cider business in
2010. The review took into account updated
discount rates and the latest estimate of
remaining associated costs less economic
value. This resulted in an increase in the
provision of €6.8 million with respect to
the two pre-existing onerous leases. The
relevant leases will expire in 2017 and
2026. A further onerous lease provision of
€0.2 million was recognised in the current
financial year in relation to our US business.
This lease will expire in 2018.
(e) Acquisition related expenditure
We incurred costs of €0.9 million associated
with the assessment and consideration of
strategic opportunities during the year.
(f) Net profit on disposal of property,
plant & equipment
Disposal of land & buildings and plant &
machinery realised a net profit of €2.9
million during the year. The disposals
related to assets that were surplus to
requirement post the site rationalisation and
consolidation programme.
BALANCE SHEET STRENGTH, DEBT
MANAGEMENT AND CASHFLOW
GENERATION
Balance sheet strength provides the Group
with the financial flexibility to pursue its
strategic objectives. It is our policy to ensure
that a medium/long-term debt funding
structure is in place to provide us with the
financial capacity to promote the future
development of the business and to achieve
its strategic objectives.
The Group has a €450 million multi-currency
five year syndicated revolving loan facility.
The facility agreement provides for a further
€100 million in the form of an uncommitted
accordion facility and permits the Group to
have additional indebtedness to a maximum
of €150 million, giving the Group debt
capacity of €700 million. The debt facility
matures on 22 December 2019. At 28
February 2017 net debt(iv) was €170.6 million,
representing a net debt:EBITDA(v) ratio of
1.55:1.
Cash generation
Management reviews the Group’s cash
generating performance by measuring
the conversion of EBITDA(v) to Free Cash
Flow(vi) as we consider that this metric best
highlights the underlying cash generating
performance of the continuing business.
The Group’s performance during the year
resulted in an EBITDA(v) to Free Cash Flow(vi)
conversion ratio pre exceptional costs
of 53%. A reconciliation of EBITDA(v) to
operating (loss)/profit is set out below.
A summary cash flow statement is set out in
Table 2 on page 39.
Table 1 – Reconciliation of EBITDA(v) to
Operating (loss)/profit
Operating (loss)/
profit
Exceptional items
Operating profit
before exceptional
items
Amortisation/
depreciation
EBITDA(v)
2017
€m
(55.1)
150.1
2016
€m
64.8
38.4
95.0
103.2
15.0
110.0
19.4
122.6
38
C&C Group plcAnnual Report 2017
Table 2 – Cash flow summary
EBITDA(v)
Working capital
Advances to customers
Net finance costs
Tax paid
Pension contributions paid
Capital expenditure
Disposal proceeds property plant & equipment
Exceptional disposal proceeds property plant & equipment
Exceptional items paid
Other*
Free cash flow(vi)
Free cash flow conversion ratio
Free cash flow(vi)
— Exceptional cash outflow
— Exceptional cash inflows
— Exceptional cash net outflow
Free cash flow excluding exceptional cash outflow
Free cash flow conversion ratio excluding exceptional cash outflow
Reconciliation to Group Condensed Cash Flow Statement
Free cash flow(vi)
Net proceeds from exercise of share options/equity Interests
Shares purchased under share buyback programme
Drawdown of debt
Repayment of debt
Acquisition of business/deferred consideration paid
Net cash outflow re acquisition of equity accounted investees
Dividends paid
Net increase in cash & cash equivalents
2017
€m
110.0
0.6
(12.4)
(6.5)
(6.9)
(3.4)
(22.7)
6.9
18.7
(22.7)
(7.3)
54.3
49.4%
54.3
22.7
(18.7)
4.0
58.3
53.0%
54.3
0.8
(23.2)
138.7
(134.0)
-
(1.5)
(34.9)
0.2
2016
€m
122.6
50.1
(1.1)
(5.7)
(10.2)
(6.5)
(9.7)
0.5
-
(13.0)
(13.6)
113.4
92.5%
113.4
13.0
-
13.0
126.4
103.1%
113.4
0.5
(76.6)
25.0
(0.1)
(3.3)
-
(34.8)
24.1
* Other relates to share options add back, pensions credited to operating profit, net profit on disposal of property, plant & equipment and recovery of previously
impaired investment in equity accounted investee.
Notes to the Group Chief Financial Officer’s Review
(i) Operating profit for the year attributable to equity shareholders is before exceptional items.
(ii)
(iii)
Adjusted basic/diluted earnings per share (‘EPS’) excludes exceptional items. Please also see note 9 of the financial statements.
FY2016 comparative adjusted for constant currency (FY2016 translated at FY2017 F/X rates) and North America revenues to be on a like for like basis with the
current financial year (as though the Pabst arrangement had also been in operation for the whole of FY2016). The like-for-like adjustment on North American
revenues is arising from Pabst partnership: Under the terms of the trading arrangement with Pabst Brewing company (“PBC”) which came into effect on 1st March
2016, C&C’s reported revenues now comprise Cost of Goods Sold at production cost plus a royalty payment representing one-third of the gross profit of the
partnership. C&C contributes one-third of marketing spend. All sales costs are borne by PBC. The like-for-like adjustment for our US revenues would have the effect
of reducing our reported revenues for the comparative period (FY2016) by €10.6m had the partnership been in effect from 1st March 2015. See table above.
(iv) Net debt comprises borrowings (net of issue costs) less cash & cash equivalents.
(v)
(vi)
EBITDA is earnings before exceptional items, finance income, finance expense, tax, depreciation, amortisation charges and equity accounted investees’ profit
after tax. A reconciliation of the Group’s operating (loss)/ profit to EBITDA is set out on page 38.
Free Cash Flow (‘FCF’) is a non GAAP measure that comprises cash flow from operating activities net of capital investment cash outflows which form part of
investing activities. FCF highlights the underlying cash generating performance of the ongoing business. A reconciliation of FCF to Net Movement in Cash &
Cash Equivalents per the Group’s Cash Flow Statement is set out above.
39
Business & Strategy Group Chief Financial Officer’s Review
(continued)
RETIREMENT BENEFITS
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(R) Employee Benefits, are
included on the face of the Group Balance
Sheet as retirement benefits.
In the prior financial year, the Group
commenced an offering to deferred
members of its two ROI defined benefit
pension schemes to transfer out of the
schemes, giving the deferred member
greater control and flexibility over their
pension arrangements. This offering
concluded in the current financial year. In
total 119 deferred members availed of the
offer and have transferred out of the scheme.
The closing liability of the two ROI defined
benefit schemes as at 28 February 2017 is a
deficit of €22.3 million. The NI defined benefit
pension scheme is reporting a surplus of
€4.5 million as at 28 February 2017.
We finalised the actuarial valuations of
the defined benefit schemes in FY2016.
As a result of these updated valuations,
new funding arrangements were put in
place. For the staff defined benefit pension
scheme, these arrangements committed
the Group to funding contributions at 22%
of pensionable salaries per annum to meet
the cost of future service benefits for active
members in addition to a lump sum deficit
funding contribution of €1.2 million per
annum until the next valuation date. There is
no funding requirement with respect to the
Group’s Executive defined benefit pension
scheme in 2017. The funding requirement
will be reviewed again as part of the next
triennial valuation in January 2018. The 2014
actuarial valuation of the NI defined benefit
pension scheme confirmed it was in surplus
and the scheme remains in surplus.
There are 4 active members in the NI
scheme and 62 active members (less
than 10% of total membership) in the ROI
schemes.
schemes and a €4.5m surplus with respect
to the NI scheme) and €15.9 million net of
deferred tax (FY2016: €28.0 million gross
and €24.9 million net of deferred tax).
the results of non-Euro reporting foreign
operations, it is exposed to both transaction
and translation currency risk.
The movement in the deficit is as follows:
Deficit at 1 March 2016
Employer contributions paid
Actuarial gain
Credit to the Income Statement
FX adjustment on retranslation
Net deficit at 28 February 2017
€m
28.0
(3.4)
(3.6)
(3.6)
0.4
17.8
The decrease in the deficit from €28.0
million to €17.8 million is primarily driven by
the employer contributions of €3.4 million,
a credit to the Income Statement of €3.6
million primarily arising from a settlement
gain with respect to deferred members who
opted to transfer out of the defined benefit
pension schemes, and a €3.6 million net
gain arising from favourable returns on plan
assets partially offset by the negative effects
of lower discount rates on liabilities. All
other significant assumptions applied in the
measurement of pension obligations at 28
February 2017 are broadly consistent with
those as applied at 29 February 2016.
FINANCIAL RISK MANAGEMENT
The most significant financial market risks
facing the Group continue 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 are monitored by
the Audit Committee. There has been no
significant change during 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 22 to the financial statements.
Currency transaction exposures primarily
arise on the Sterling, US, Canadian and
Australian Dollar denominated sales of our
Euro subsidiaries. We seek to minimise this
exposure, when economically viable to do
so, by maximising the value of subsidiary
foreign currency input costs and creating
a natural hedge. When the remaining net
exposure is material, we manage it by
hedging an appropriate portion for a period
of up to two years ahead. Forward foreign
currency contracts may be used to manage
this risk in a non-speculative manner when
the Group’s net exposure exceeds certain
limits as set out in the Group’s treasury
policy. There were no outstanding forward
foreign currency contracts as at the year
end date.
The effective rate for the translation of
results from Sterling currency operations
was €1:£.8342 (year ended 29 February
2016: €1:£0.7281) and from US Dollar
operations was €1:$1.1011 (year ended 29
February 2016: €1:$1.1018).
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 FY2017 effective
rates.
We have also restated our FY2016 North
America prior year results to be on a like
for like basis with the current financial year
(as though the Pabst arrangement had
been operational in FY2016). The Pabst
arrangement changes fundamentally the
revenue and net revenue of the North
America segment and therefore for
transparency we are restating FY2016 on a
like for like basis.
At 28 February 2017, the retirement benefits
computed in accordance with IAS 19(R)
Employee Benefits amounted to a net
deficit of €17.8 million gross of deferred
tax (€22.3m deficit with respect to the ROI
Currency risk management
The reporting currency and the currency
used for all planning and budgetary purposes
is the Euro. However, as the Group transacts
in foreign currencies and consolidates
40
C&C Group plcAnnual Report 2017
Applying the realised FY2017 foreign currency rates to the reported FY2016 revenue, net revenue and operating profit(iii) and restating
North America’s FY2016 revenue and net revenue figures as outlined above rebases the comparatives as shown below.
Table 3 – Constant Currency Comparatives
Year ended
29 February 2016
€m
FX transaction
€m
FX translation
€m
Adjustment re
North America
€m
Year ended
29 February 2016
adjusted
comparative
€m
Revenue
Ireland
Scotland
C&C Brands
North America
Export
Total
Net revenue
Ireland
Scotland
C&C Brands
North America
Export
Total
Operating profit(i)
Ireland
Scotland
C&C Brands
North America
Export
Total
358.1
339.8
177.0
47.5
24.5
946.9
261.6
227.4
103.8
45.3
24.5
662.6
49.0
37.9
10.5
0.6
5.2
103.2
-
-
-
-
(0.1)
(0.1)
-
-
-
-
(0.1)
(0.1)
0.5
0.2
0.1
-
0.1
0.9
(10.8)
(43.2)
(22.5)
-
-
(76.5)
(9.1)
(28.9)
(13.2)
-
-
(51.2)
(2.6)
(4.8)
(1.3)
-
-
(8.7)
-
-
-
(10.6)
-
(10.6)
-
-
-
(10.6)
-
(10.6)
-
-
-
-
-
-
We have over 60 long-term apple supply
contracts with farmers in the west of
England and have 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
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. We
do 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. Our policy is
to fix the cost of a certain level of 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.
347.3
296.6
154.5
36.9
24.4
859.7
252.5
198.5
90.6
34.7
24.4
600.7
46.9
33.3
9.3
0.6
5.3
95.4
41
Business & Strategy
Corporate Responsibility
HIGHLIGHTS
We are supporting the implementation of minimum unit pricing
in Scotland, the Republic of Ireland and Northern Ireland.
We display calorie information on our packaging in the UK and
Ireland.
We became the first and are currently the only drinks
company in the UK to communicate the Chief Medical
Officer’s new responsible drinking guidelines on packaging.
We are working with Governmental bodies, Drinkaware and
police forces on initiatives to improve the safety of the night
time economy.
The Tennent’s Training Academy provides high quality
hospitality industry training, now having trained over 34,000
people.
We have made significant charitable contributions at local and
national level.
Efficiencies at our manufacturing sites have meant that our
energy consumption per hectolitre fell by 3%.
Our two largest production sites, Clonmel and Wellpark, sent
zero waste to landfill.
Health and Safety programmes have delivered a significant
reduction in the number of injuries resulting in lost-work days.
Our commitment to the environment and agriculture is
extremely high. During the last 12 months we pressed over
83,000 tonnes of fruit.
We pay the appropriate and required level of tax in the
different countries we operate in and remit substantial
amounts of alcohol duty.
42
C&C Group plcAnnual Report 2017 INTRODUCTION
Ensuring that the
Group operates in an
environmentally and
socially responsible way
is one of our key values.
We operate a range of
policies that ensure we
deliver the demands of our
stakeholders.
COMMUNITY ENGAGEMENT
It is important to us that we operate as good
citizens in our communities. We focus our
efforts on activities that benefit our local
areas. We work hard to ensure we have a
positive impact on the communities in which
we operate. A significant part of this is our
approach to charitable activities where we
support a wide range of charities particularly
those that have a local impact in relation to
our operating facilities.
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 an Irish company,
established in the Republic of Ireland’s
low tax environment, with our major cider
production unit located in Clonmel and
the Group headquartered in Dublin. The
majority of the Group’s profits are earned in
the Republic of Ireland and the UK, which
both have competitive corporation tax rates
compared with the European average. In
the Republic of Ireland and the UK we remit
substantial amounts of duty on alcohol
production.
IRELAND
We support a diverse range of sporting and
live music events as well as charities and
community projects across Ireland.
Our partnerships with sporting events
include horse racing, endurance events
and the city marathons in Dublin and Cork.
In 2016, we also became the sponsor
of the Tipperary hurling and football
championships, covering all adult grades.
In the Republic of Ireland, our presence at
music festivals is widespread including the
Bulmers Forbidden Fruit Festival, Body &
Soul and Metropolis along with more local
events such as Beatyard, the Kilkenny Trad
Festival, the Junction Festival in Clonmel
and Bulmers Live at Leopardstown.
Tennent’s has also partnered with the Irish
Football Association in Northern Ireland
supporting football at both a national and
local level. We also support a number of live
music events including Belsonic and Vital,
which is Northern Ireland’s biggest music
festival. The annual sponsorship of this and
other live music events by Tennent’s helps
bring world-class musicians to Northern
Ireland.
In the Republic of Ireland, we continue
to use our brands to raise money for
local charities. Tipperary Kidz water has
partnered with the ISPCC (the Irish Society
for the Prevention of Cruelty to Children),
Ireland’s national child protection charity.
Tipperary Kidz water is providing a crucial
platform for the ISPCC, putting the ISPCC
Childline phone number into the hands of
children by incorporating it on our Tipperary
Kidz water bottles. We will donate €20,000
to the charity this year to support their
freephone number, text number, online chat
system, school outreach programme and
their campaigning for children’s rights, all
run by professionally trained ISPCC staff
and volunteers.
In Northern Ireland, we have partnered
with CLIC Sargent (Cancer & Leukemia in
Children). CLIC Sargent is the UK’s leading
cancer charity for children, young people
and their families. Their care teams have
been providing specialist support across the
UK for many years. This partnership runs
until August 2017 with a targeted fundraising
amount of £20,000. We have organised
numerous activities throughout the year
including donating 2,000 of our limited
edition Irish Football Association glasses
to CLIC Sargent to sell on their charity
eBay shop. To date, the glasses have
raised over £12,000 for the charity. Other
revenue streams include our drinks fridge
in the office and numerous raffles over the
Christmas period. There will be more activity
coming through the year, including a charity
sky dive.
43
Business & Strategy Corporate Responsibility
(continued)
We are extremely proud to support the Tony
O’Brien scholarship in honour of our late
Chairman, Tony O’Brien. This scholarship
helps young people from Tony’s home
county of Kilkenny to attend the Quinn
School of Business in University College
Dublin and has been an outstanding
success with the tenth Tony O’Brien
scholarship having been awarded in
September 2016.
We support a number of local schools
by providing student work experience
opportunities at our Clonmel production site
for students in technical and manufacturing
subjects as well as places in our marketing,
finance and customer service departments
in Dublin and Belfast.
SCOTLAND
We have a broad range of charitable
activities including KidsOut Scotland where
we organised a charitable dinner that raised
over £50,000 and our support of PUBAID
which highlights the charitable work carried
out by UK pubs and which sees £100m
raised annually. A key charitable initiative is
the Goals for Charity campaign between
Glasgow Celtic FC and Magners Irish
cider where we donated £150 to the Celtic
Charity Foundation for every goal scored by
Celtic, which raised approximately £18,500
in the 2016/2017 season. This donation
enabled Magners, the Tennent’s Training
Academy and the Celtic Charity Foundation
to develop a programme to support 12
long-term unemployed adults to take part in
a 10-week course focussed on developing
skills in the hospitality industry as a gateway
to securing future employment.
In conjunction with the Celtic Charity
Foundation, we also have selected schools
from disadvantaged areas in Glasgow, such
as St. Mungo’s Primary School in Glasgow’s
East End, to help encourage learning
with outside activities. Through the Celtic
Foundation, we funded a trim trail for their
playground to help children interact during
their school breaks. Working with KidsOut
Scotland, we also helped fund a school trip
for the children this summer to visit Blair
Drummond Safari Park. Our intention is to
develop this programme further with other
schools across Glasgow. We also assisted
local parishes in the East End of Glasgow,
with funding for a visit to a Christmas
pantomime for children in the parishes and
a dinner for the elderly including supplying
soft drinks.
We recently pledged support to a charity
called “Voice-Over”, based in Glasgow,
which supports immigrants by embarking
upon the social enterprise of providing
translation services. We are helping this
charity with funding, advice and translation
requests. Our work with “Voice-Over”
is an example of how we aim to use our
charitable activity to help those affected
by poverty and inequality in the local
community.
We provide valuable support to those
setting out on a career in the pub and
hospitality industry. The Tennent’s Training
Academy, which offers a wide range
of training programmes with nationally
recognised qualifications in all aspects of
the hospitality industry, has now trained
over 35,000 people. The Tennent’s Training
Academy has expanded its operations and
now provides a wider range of courses
than ever before. We also have four modern
apprentices currently working at Wellpark.
The Tennent’s Training Academy also
supports dozens of initiatives that underpin
Tennent’s ongoing commitment to benefit
the community in which we operate.
Examples include: the Yes Chef programme
training six ex-offenders to become chefs;
and Chefs For Christmas, which is a two
week training programme in the Cookery
School to help unemployed people access
jobs as chefs and also to help address
the shortage of chefs in the industry. We
also supported the Together with Assisted
Support Needs Schools Programme,
which is a 35 week programme focusing on
cooking and food safety, and provided front
of house and customer service to Wellpark
Picnic where we hosted local families at the
Wellpark Brewery for a free picnic.
ENGLAND
While we ceased operation at the cider mill
in Shepton Mallet during the last 12 months,
we arranged for the sale of the facility as
a going concern safeguarding the jobs of
24 employees. Our commitment to the
agricultural environment and apple growers
A key charitable initiative
is the Goals for Charity
campaign between
Glasgow Celtic FC and
Magners Irish cider
where we donated £150
to the Celtic Charity
Foundation for every goal
scored by Celtic, which
raised approximately
£18,500 in the 2016/2017
season.
44
C&C Group plcAnnual Report 2017
of England is undiminished and we support
Somerset Orchards by participating in the
“Keep Somerset Orchards Alive” project.
NORTH AMERICA
In FY2017, we donated over $20,000 to
local charities and provided in-kind services
to several non-profit industry associations.
Survivorship NOW, a cancer survivor and
supporter organisation, received our largest
contribution at $10,000. We also donated
$5,000 to the Vermont Foodbank by
participating in a “pick for your neighbour”
event, where our staff pick apples for the
Foodbank and we reimbursed the orchard
to cover the cost of the apples. Additionally
we contributed $3,000 to the apples to
iPods campaign which encourages Vermont
children to search Vermont orchards for a
chance to find an iPod, encouraging both
healthy outdoor activities and healthy eating.
We have also upheld our commitment to our
local orchard partners as well as the State
and National Cider Associations. We sit and
volunteer on the board of directors for the
Vermont Tree Fruit Growers Association,
the Vermont Cider Makers Association
and the United States Association of Cider
Makers. We host annual meetings for the
University of Vermont’s outreach to apple
growers, and provide in-kind donations
of marketing materials, digital marketing,
consumer education and technical expertise
to promote overall cider awareness.
We have a long term commitment to
sourcing local apples. We are two years
into a three year study to promote the
sustainable growth of cider specific apples
in Vermont by using less inputs and sprays
on the orchard and paying a fair price to
farmers to grow cider specific apples. The
study involves 40 acres of orchard that is
managed using cider specific techniques.
We have provided funding for this initiative
through $200,000 in payments per year for
these specialty cider apples and through a
$200,000 loan to the orchard to purchase
additional cider acreage.
BUSINESS SUPPORT
When it comes to obtaining finance as a
licensed trade operator, going through the
traditional avenues of banks and building
societies is becoming increasingly difficult.
Nurturing and maintaining the on-trade is
a key priority in particular for our business
and we offer a range of financial supports
in this regard. We can provide everything
from small loans for repairs all the way up
to larger sums for major refurbishments or
to purchase new premises. Over the last six
years, we have invested over £45m into the
Scottish on-trade and over £31m into the
on-trade in Northern Ireland.
Over the last five years, the Group has also
demonstrated its willingness to support
local entrepreneurs and job creation though
the provision of seed capital for a number of
small breweries and businesses such as the
Whitewater Brewery and Five Lamps.
HEVERLEE
Heverlee is created in association with the
Abbey of the Order of Premontre (known
as Park Abbey) and is inspired by the beers
first brewed by the monks in medieval times.
The Abbey lies just outside Leuven and is
the largest of its kind in Belgium, founded
in 1129. Today, every pint of Heverlee
sold supports the major multi-million Euro
restoration of Park Abbey ensuring Heverlee
is as bound to the Abbey’s future as we are
indebted to its past.
RESPONSIBLE DRINKING
Public Policy Leadership
For a relatively small drinks company, we
punch well above our weight in terms
of leading public policy on responsible
drinking. We have influenced at a local,
national and international level in relation
to minimum unit pricing. We are currently
the only drinks organisation carrying the
UK Chief Medical Officer’s new responsible
drinking guidelines on our packaging in the
UK. We also offer zero alcohol alternatives
to all our main brands in the UK. The
need to ensure that communities are well
educated and protected in terms of their
relationship with our products is central to
our business.
We are members of the National Association
of Cider Makers (NACM), which works
closely with apple growers and the
agricultural communities in cider regions
in the UK, and we have a seat on the
board of the organisation. This working
relationship puts us at the heart of many
In January 2016, the
Chief Medical Officer
of the UK published
new responsible
drinking guidelines. To
date, we are the only
drinks company in
the UK to include the
new guidelines on our
packaging.
45
Business & Strategy Corporate Responsibility
(continued)
UK Government discussions relating to
the responsible use of alcohol. The NACM
is also engaged with tax and regulatory
departments and opinion-forming bodies
having an interest in cider and alcohol
generally.
Within Europe, we are corporate members
and 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.
UK Chief Medical Officer Drinking
Guidelines
In January 2016, the Chief Medical Officer
of the UK published new responsible
drinking guidelines. To date, we are the
only drinks company in the UK to include
the new guidelines on our packaging. It is
one of our key principles that consumers
should be given information about alcohol
products at the time of consumption in
order to help manage their relationship with
alcohol. We launched the new responsible
drinking guidelines on our packaging in a
joint announcement with the Scottish Chief
Medical Officer.
Nutrition
Stemming from our belief that consumers
should be given information about what they
are consuming in order to make their own
informed choices, we took the decision to
voluntarily display calorie information on our
packaging in the UK and Ireland.
Our products are relatively low in sugar
content with our leading cider brands
containing less sugar than their key
competitors and with Tennent’s lager only
containing trace levels of sugar. In Australia,
Magners Blonde, a low carb version of
Magners, has 85% lower carbohydrates
than other ciders and no added sugar.
These pioneering initiatives are further
proof of our commitment to ensuring a
sustainable relationship between ourselves,
our products and our communities.
Drinkaware
We are funders of Drinkaware, which
performs the valuable role of equipping
consumers with information about their
drinking. We also promote Drinkaware on
our packaging and advertising materials. For
the last 12 months, we have been leading
Drinkaware’s “devolved nations group” in
order to ensure that Drinkaware messaging
remains relevant to the differing health
agenda of the devolved parts of the UK.
Best Bar None
As part of our strategy of focusing on local
customers and consumers with responsible
drinking messages and activity, we are a
member of the Best Bar None scheme. The
aim of this scheme is to improve the night
time economy of many Scottish high streets,
making them safer and more enjoyable
places to be.
Business Rates
Our Scottish business has entered into a
partnership with one of Scotland’s leading
chartered surveyors to seek to protect, as
much as possible, the licensed trade from
the impact of the recent rating revaluation
in the UK. We have secured a preferential
fee scale from the consultancy to assist any
customers who wish to pursue an appeal
against a rates increase. The feedback from
our customers has been very positive and
they welcome the support Tennent’s has
facilitated for them.
Minimum Unit Pricing
The Scottish Government has passed
legislation to introduce minimum pricing for
alcohol. During 2016, this legislation was
the subject of a Scottish Court of Session
ruling whereby the judges confirmed that
the introduction of minimum unit pricing
was compatible with EU law. However,
following an appeal by the Scotch Whisky
Association to the High Court in London,
the implementation of this legislation has
been delayed. We believe that minimum
unit pricing is an important step in tackling
irresponsible consumption of alcohol and,
as such, we remain highly supportive of its
implementation.
We are also supporting the Republic of Ireland
and Northern Ireland Governments in their
plans to implement minimum unit pricing.
46
Brexit
Over the next couple of years, we will play
a role in influencing UK, Irish and Scottish
Governments and the EU to help ensure a
manageable outcome for our businesses
resulting from Brexit. In FY2017, we
contributed to a House of Lords study on
the implications of Brexit for UK and Irish
relations and are also working closely with
the Food and Drink Federation in Ireland
and the European Cider Association in
relation to the implications of Brexit for our
businesses.
Responsible Drinking Initiatives
We are committed to promoting responsible
drinking in all the markets in which we
operate. In addition to adhering to the
relevant guidelines and legislation, we have
also implemented a number of additional
programmes to promote responsible
drinking.
The Irish Government is finalising its new
Alcohol Bill, which includes many far-
reaching initiatives to tackle the harm
created by the misuse of alcohol in Ireland.
This includes the introduction of minimum
unit pricing, restrictions on advertising and
improvements in health labelling. We have
welcomed these initiatives as we believe
that it is important to balance consumers’
relationships with alcohol in order to
maintain a sustainable business.
We also expanded the distribution for our
0% version of Tennent’s, Hee Haw, and,
as part of our plan to have a wide range
of alcohol free alternatives, we launched
Magners 0% alcohol cider during the year.
We have further developed our non-
alcoholic product range, with increased
marketing and promotion behind the
Finches, Tipperary and JWV+ brands in
Ireland.
C&C Group plcAnnual Report 2017 ENVIRONMENTAL IMPACT & ENERGY
Our operations teams in each of the
Group’s manufacturing facilities continue
to actively work on reducing our impact on
the environment. Their focus is to reduce
the consumption of energy, water and other
raw materials as well as the amount of
waste going to landfill and greenhouse gas
(GHG) emissions. We also actively continue
to review mechanisms whereby we can
increase transportation efficiency.
FY2017 was a year of major restructuring
of our manufacturing facilities and footprint.
The rationalisation of our manufacturing
footprint brought increased activity in
both Wellpark and Clonmel during the
peak production season. The process of
commissioning across multiple production
lines did impact the overall level of energy
consumption in our Clonmel facility but this
must be viewed in the light of the increased
level of activity.
Despite these challenges, the total electricity
used per hectolitre of product produced
in our manufacturing sites reduced by a
further 3% from FY2016, and similarly water
consumption reduced by 10% year-on-
year. This was as a result of the continuing
benefits from our significant investment in
the cooling plant vessels at Wellpark, the
upgrading of the lighting in a number of
areas to more energy efficient units and the
consolidation of production within our two
main production sites. The consumption of
natural gas per hl produced did increase
by 10% in the year. This was despite
improvements in performance at Clonmel,
Wellpark and Borrisoleigh with the rundown
of production activities at Shepton Mallet
negatively impacting the overall Group
performance.
Our manufacturing site at Clonmel continues
to be accredited with the Environmental
Management Standard ISO 14001; and to
the Irish Energy Management Standard IS
EN 16001:2009, the ISO 50001:2011 Energy
Management Standard 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 GHG
emissions. Our environmental management
systems at Wellpark are aligned with
The €1 million investment we
made at Wellpark in FY2015
to improve energy efficiency is
continuing to deliver year-on-year
improvements and to reduce GHG
emissions.
Clonmel and continued to meet their
regulatory targets in FY2017. In the UK, we
continue to avail of the Government’s small
emitters opt out scheme. This resulted in
the site receiving a silver award from Keep
Scotland Beautiful, who audit public and
private sector sites on their impact on the
environment and contribution to the local
community.
CARBON CONSUMPTION
The Group continuously monitors the
impact of its operations on the climate and
we look to reduce our GHG 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. The Group has historically scored
highly in the CDP Ireland Report, showing
disclosure scores which are amongst
the best in its sector. Scope 1 and 2 CO2
emissions in FY2017 are broken down
across our manufacturing sites as follows:
Clonmel:
Shepton Mallet:
Wellpark:
Vermont:
Others:
9,191 tonnes
5,022 tonnes
17,204 tonnes
3,182 tonnes
6,629 tonnes
These emissions figures include the impact
of the increased production volumes at our
Wellpark and Clonmel facilities in FY2017.
The €1 million investment we made at
Wellpark in FY2015 to improve energy
efficiency is continuing to deliver year-on-
year improvements and to reduce GHG
emissions. Further investment has been
made to the distribution fleet in Scotland
with replacement trucks being equipped
with new Euro 6 compliant diesel engines,
which will ensure a further reduction in GHG
emissions in the years to come.
In Ireland and the UK, through our
commitment to rural development, we
support orchard growers who manage over
2,000 hectares of orchards for apples used
directly in the production of our cider.
We ensure compliance with national
packaging regulations for our products
placed into the marketplace. In Ireland, we
also continue to recover and recycle CO2
produced by the cider fermentation process
and use it to carbonate our products.
WASTE
We have systems in place across all
manufacturing sites working towards
maximising the recycling of waste we
produce and hence minimise what we send
to landfill.
In FY2017, both Clonmel and Wellpark sent
zero process waste to landfill. This was
due to general waste reduction, increased
waste stream segregation allowing more
recycling, manual sorting of residual general
waste to remove any recyclable materials
and then sending the residue to a Refuse
Derived Fuel (RDF) facility where electricity
is generated.
47
Business & Strategy Corporate Responsibility
(continued)
WATER
At all the Group’s manufacturing sites,
water preservation and management is an
important business consideration and we
continue to monitor the usage of water per
hectolitre of finished product from each
manufacturing facility and across our supply
chain. Each year the Group participates in
the CDP Water Disclosure initiative in the
Republic of Ireland and the UK.
In FY2017, our total water usage at our
Clonmel, Shepton Mallet and Wellpark sites
reduced by 10% compared with FY2016.
This is equivalent to 3.2 hectolitres of
water used per hectolitre (hl/hl) of product
produced, which is significantly better than
the recognised industry benchmark of 4 hl/
hl. In Clonmel, a number of initiatives were
implemented during the year resulting in
a 40% improvement in water usage per
hectolitre of product produced.
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. We also
recover biogas from our anaerobic waste
water treatment plant in Clonmel for use as
fuel in our boilers.
PROCUREMENT
Our procurement and technical services
teams actively review and assess our
suppliers’ track record in environmental
management, health and safety, sustainability
and corporate social responsibility through
our tendering processes and ongoing
supplier reviews. This ensures that corporate
social responsibility is part of sourcing
decisions and sourcing strategies for new
suppliers. This also allows us to develop
a consistent approach to relationship
management and supplier segmentation
on supplier diversity, with an open dialogue
encouraging best practice sharing and
innovation that can be applied more widely.
We do not condone and will not
knowingly participate in any form of
human exploitation, including slavery and
people trafficking. We refuse to work with
any suppliers or service providers who
knowingly participate in such practices or
who cannot demonstrate to us sufficient
controls to ensure that such practices are
not taking place in their supply chains. Our
approach is reflected in our Sustainable
and Ethical Procurement Policy, which
we circulate to suppliers. We also carry
out diligence audits and checks on our
suppliers to ensure that they have in place
and adhere to appropriate ethical policies.
In particular, we work with all of our growers
to ensure that appropriate methods are
used to harvest apples. In FY2017, we
commenced the process of repeated
annualised audits of our contracted growers
to ensure standards are being applied.
We seek to support suppliers of our key raw
materials such as barley and wheat through
entering into long-term supply arrangements
with them. We take account of broader
outputs such as the impact on sustainability,
profit, cash flow, reputation, environmental
and social impacts in order to create shared
value across the supply chain.
We also leverage the expertise and
capabilities of our suppliers to ensure C&C
optimises the materials we use and reduces
our impact on the environment.
GREEN PRODUCTION
During the year, we processed 80,000
tonnes of apples and 3,600 tonnes of pears
in our milling operations across the Group,
which level of production was in line with the
previous year.
We have long term contractual
arrangements to continue to process fruit in
the UK at the Shepton Mallet facility. During
the year, the last phase of our five year
orchard planting scheme was concluded.
We encourage sustainable agricultural
practices and the preservation of
biodiversity. In the UK, we are actively
involved in the 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. The NACM is the first
drinks trade body to work with Business
in the Community (BITC) to address
sustainability, and we have worked with
the pomology and technical experts in the
NACM to develop our sustainability agenda.
In particular, we work
with all of our growers to
ensure that appropriate
methods are used
to harvest apples. In
FY2017, we commenced
the process of repeated
annualised audits of our
contracted growers to
ensure standards are
being applied.
48
C&C Group plcAnnual Report 2017
During the year, we
undertook major
expansion at our Clonmel
site, with a 35,000 man
hour construction project
being successfully
achieved with no lost
time accidents reported.
truck refresher training was also maintained
at Borrisoleigh and Shepton Mallet during a
challenging period at these sites.
At Wellpark, we re-launched our
safety programme, which encourages
safety interventions and resulted in a
net improvement in safety behaviours
overall. Our team manager safety training
programme was recognised by the
accrediting body (REHIS) as being best
in Scotland for the second year running.
Wellpark also commenced a programme
of improving the working environment by
fitting new technology lighting into the small
pack warehouse and improving equipment
access using bespoke platforms in the
bottling hall. These developments will
bring increased benefits in terms of safety,
hygiene and a reduction in energy use.
The continuation of our health and safety
days has had a significant impact regarding
the engagement of employees. The key
driver for this initiative is to ensure that
employees are aware of the extent to
which they can positively contribute to
manufacturing health and safety and that
they also have responsibility in this regard.
This has partly been driven through the use
of external health and safety consultants
whose lives have all unfortunately been
materially impacted by significant health and
safety incidents. These sessions are being
followed up at local level with interventions
to keep this key message front of mind.
This increased level of engagement is also
resulting in many more hazards being
identified (and hence remedied) within the
workplace, which helps with longer term
performance improvements.
At our cider mill in Vermont we take part
in “cow power” which means that we pay
a premium on the electricity used and this
premium is used to help dairy farmers
install methane digesters turning manure
into power. We also use a “solar orchard”
which is a 26 array solar project providing
sustainable electricity and diversification
for local farmers. Both of these projects are
good examples of how we are working in
an innovative manner to safeguard energy
supply.
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
the 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
While, in comparison to FY2016, the total
number of lost time accidents increased
during FY2017, the trend demonstrates a
positive reduction over a longer timeframe.
The consolidation of our operating facilities
brought increased activity to our facilities
at Wellpark and Clonmel during the peak
production season. During the year, we
undertook major expansion at our Clonmel
site, with a 35,000 man hour construction
project being successfully achieved with
no lost time accidents reported. The site
achieved zero lost time accidents for the last
five months of FY2017. Safety performance,
training in safe manual handling and fork lift
49
Business & Strategy There has been a
focus on the continued
development of
management capability
within the commercial
and operations
areas where various
programmes have
been undertaken to
develop both people
management and
leadership skills.
Corporate Responsibility
(continued)
representatives have advanced to become
key account managers.
On the Operations side of our business in
Ireland, FY2017 was a period of transition
in relation to the movement of product and
people from the Borrisoleigh site to the
Clonmel manufacturing facility. All affected
employees in Borrisoleigh were given the
opportunity to transfer to our Clonmel site
and a significant investment has been made
in training those who wished to transfer
for their new roles in our state of the art
manufacturing facility.
In the UK, there have been a range of
training and development activities across
the business over the past 12 months.
There has been a focus on the continued
development of management capability
within the commercial and operations
areas where various programmes have
been undertaken to develop both people
management and leadership skills. There
has also been investment in various
industry relevant training initiatives for sales,
marketing and our operations population.
In addition, the business has supported
the development of graduates through the
CIMA accountancy qualification as well as a
number of apprenticeship programmes.
Employee Support
We aim to develop and lead highly
motivated teams who have relevant and up
to date skills. In FY2017, we undertook a
range of activities to support the continued
development of our employees.
As part of our continuing commitment to
leadership development, during the year
we arranged for a small number of high
performing managers from across the Group
to undertake the London Business School’s
accelerated development programme.
In our C&C Gleeson business in Ireland,
there were a number of areas of focus.
An employee communications forum was
established and meets quarterly. This
forum facilitates two way communication
and dialogue on key messages, strategy
and performance as well as creating an
opportunity for ideas and suggestions
from employees to be heard. Feedback
from our employees is positive and they
believe it has resulted in an improvement
in communications in the business. In
addition, we have sought to establish
a high performance culture through
increased emphasis on the line of sight
between business objectives and individual
KPIs and targets for our employees with
appropriate rewards for achievement. This
is supported by the provision of training to
our people managers. We also encourage
our employees to realise their full potential
and have created various advancement
opportunities, in particular within our
sales team where a number of our sales
50
C&C Group plcAnnual Report 2017 Governance
We, as a Board, and a Company, take corporate
governance very seriously, and consider that good
conduct is the basis of good performance.
Read more in the Directors’ Statement of
Corporate Governance on page 58
in this section
52
54
58
70
90
Board of Directors
Directors’ Report
Directors’ Statement of Corporate
Governance
Report of the Remuneration Committee on
Directors’ Remuneration
Statement of Directors’ Responsibilities
51
Governance
Board of Directors
1
2
3
4
5
6
7
8
9
10
BOARD COMMITTEES
Audit Committee
Emer Finnan
(Chairman)
Vincent Crowley
Richard Holroyd
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
52
1. SIR BRIAN STEWART*
Chairman
Brian Stewart (72) was appointed as a
non-executive Director of the Group and as
a member of the Nomination Committee
in March 2010. He was appointed as
Chairman of the Group in August 2010. He is
a former Chairman of Standard Life plc and
of Miller Group plc and a former Chairman
and former Chief Executive of Scottish &
Newcastle plc.
2. STEPHEN GLANCEY
Group Chief Executive Officer
Stephen Glancey (56) was appointed Group
Chief Executive Officer in 2012. Prior to that,
he was appointed Chief Operating Officer in
November 2008 and Group Finance Director
in May 2009. He qualified as a chartered
accountant and was previously the Group
Operations Director of Scottish & Newcastle
plc.
3. KENNY NEISON
Group Chief Financial Officer
Kenny Neison (47) was appointed Chief
Financial Officer in 2012. He joined the Group
in November 2008 and was appointed to the
Board as Group Strategy Director and Head
of Investor Relations in November 2009. He
qualified as a chartered accountant and has
previously held a number of senior financial
positions in Scottish & Newcastle plc,
including UK Finance Director and Finance
Director for Western Europe.
4. JORIS BRAMS
Managing Director, International
division
Joris Brams (48) was appointed as Managing
Director of the Group’s International division
in 2012 and was appointed to the Board
in October 2012. He was previously 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 construction company.
C&C Group plcAnnual Report 2017 7. EMER FINNAN*
Emer Finnan (48) was appointed as a
non-executive Director of the Company
in May 2014 and became Chairman of
the Audit Committee in July 2015. She is
a Partner and Senior Managing Director
of Kildare Partners, a private equity firm
based in London and Dublin, where she is
responsible for investment origination. After
qualifying as a chartered accountant with
KPMG, she worked in investment banking
at Citibank and ABN AMRO in London and
then NCB Stockbrokers in Dublin. In 2005
she joined EBS Building Society in Ireland,
becoming its Finance Director in early 2010.
In September 2012, Emer re-joined NCB
Stockbrokers to lead a financial services
team in Ireland. She joined Kildare Partners
in 2013. She brings considerable financial
expertise to the Board.
8. STEWART GILLILAND*
Stewart Gilliland (60) was appointed as a
non-executive Director of the Company and
a member of the Remuneration Committee
in April 2012. From 2006 to 2010 he was
Chief Executive Officer of Müller Dairy
(UK) Ltd. Prior to that, he held positions at
Whitbread Beer Company and at Interbrew
SA in markets including the UK and Ireland,
Europe and Canada. He is currently
Chairman of Booker Group plc and Curious
Drinks Limited and Senior Independent
Director of Mitchells & Butlers plc. He is also
a Director of Nature’s Way Foods Limited.
He brings significant experience of the
long alcohol drinks sector in international
markets.
5. JIM CLERKIN*
Jim Clerkin (62) was appointed as a non-
executive Director of the Company in April
2017. Jim has over 30 years’ experience
in the beer, wine and spirits industries and
is the President and Chief Executive of
Moët Hennessy North America. Jim joined
Moët Hennessy in 2008 as Executive Vice
President and Chief Operating Officer USA.
Prior to joining Moët Hennessy, Jim held
roles in Guinness and Diageo, including
terms as Managing Director of Gilbeys of
Ireland, President of Diageo North America’s
Western Division, and President of Allied
Domecq North America. Jim’s career
began in Ireland where he progressed
through the ranks at Guinness to become
Executive Sales Director and a member of
the Board of Directors. Jim brings a wealth
of experience and knowledge of the global
drinks industry to the Board.
6. VINCENT CROWLEY*
Vincent Crowley (62) was appointed as a
non-executive Director of the Company
in January 2016 and as a member of
the Audit Committee in March 2016. He
was previously both COO and CEO of
Independent News and Media plc, a leading
media company which, during his tenure,
had operations and investments in Australia,
India, Ireland, New Zealand, South Africa
and the UK. He also served as CEO and
subsequently as a non-executive Director
of APN News & Media, a media company
listed in Australia and New Zealand. He
initially worked with KPMG in Ireland. He
is currently Executive Chairman of Altas
Investments plc, Chairman of Newsbrands
Ireland and a non-executive Director
of Grafton Group plc. Vincent brings
considerable domestic and international
business experience across a number of
sectors to the Board.
9. RICHARD HOLROYD*
Richard Holroyd (70) 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.
10. BREEGE O’DONOGHUE*
Breege O’Donoghue (72) was appointed as
a non-executive Director of the Company in
2004. She was appointed the Chairman of
the Remuneration Committee in December
2012 and is a member of the Nomination
Committee. Breege retired as an executive
director of Penneys/Primark in September
2016 and continues to represent that
company in an ambassadorial role. She
is Chair of the Design & Crafts Council
of Ireland, a member of the Outside
Appointments Board of the Code of
Standards and Behaviour for the Civil
Service, a trustee of IBEC and a non-
executive Director of Shaws Department
Store, and was previously Chair of the
Labour Relations Commission and a
Director of An Post and Aer Rianta. Breege
has many years’ experience in the Irish and
international retail sector.
For information on independence of the
Directors, please see Directors’ Statement
of Corporate Governance on pages 58 to
69.
* Non-executive Director
DAVID JOHNSTON
Company Secretary
David Johnston joined the Group in November 2014 as Company
Secretary. Prior to that, he was Group General Counsel and
Company Secretary for Paddy Power plc. After qualifying as a
solicitor, David worked initially for McCann FitzGerald, one of
Ireland’s leading law firms and subsequently for O2 Ireland, where
he was Chief Legal Counsel and Company Secretary.
53
Governance Directors’ Report
The Directors present the annual report and
audited consolidated financial statements of
the Group for the year ended 28 February
2017.
PRINCIPAL ACTIVITIES
The Group’s principal trading activity is the
production, marketing and selling of cider
and beer, wine, soft drinks and bottled
water.
There has been no material change in the
nature of the business of the Group.
RESULTS
For the year ended 28 February 2017, the
Group reported Revenue of €818.1 million
(2016: €946.9 million) and Net Revenue
of €559.5 million (2016: €662.6 million).
Operating profit before exceptional items
amounted to €95 million (2016: €103.2
million).
The financial results for the year ended
28 February 2017 are set out in the
Group Income Statement on page 96.
Comprehensive reviews of the financial and
operating performance of the Group are set
out in the Group Chief Executive Officer’s
Review on pages 22 to 36.
DIVIDENDS
An interim dividend of 4.96 cent per share
for the year ended 28 February 2017 was
paid on 16 December 2016. Subject to
approval at the Annual General Meeting, it
is proposed to pay a final ordinary dividend
of 9.37 cent per share for the year ended
28 February 2017 to shareholders who are
registered at close of business on 26 May
2017.
54
BOARD OF DIRECTORS
The names, functions and date of appointment of the current Directors, who give the
responsibility statement on page 90, are as follows:
Director
Function
Appointment
Sir Brian Stewart
Stephen Glancey
Kenny Neison
Joris Brams
Jim Clerkin
Vincent Crowley
Emer Finnan
Stewart Gilliland
Richard Holroyd
Breege O’Donoghue
Chairman
Group Chief Executive Officer
Group Chief Financial Officer
Executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
2010
2008
2009
2012
2017
2016
2014
2012
2004
2004
Jim Clerkin was appointed as a Director of the Company with effect from 1 April 2017. Rory
Macnamara was a Director until 17 December 2016.
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 2017 is contained within the
Report of the Remuneration Committee on
Directors’ Remuneration on page 77.
(c) the key performance indicators relevant
to the business of the Group, including
environmental and employee matters, are
set out in the Strategic Report on page 18
and in the Group Chief Financial Officer’s
review on pages 37 to 41; and further
information in respect of environmental and
employee matters is set out in the Report on
Corporate Responsibility on pages 42 to 50;
RESEARCH AND DEVELOPMENT
Certain Group undertakings are engaged in
ongoing research and development aimed
at improving processes and expanding
product ranges.
FURTHER INFORMATION ON THE
GROUP
The information required by section 327 of
the Companies Act, 2014 to be included in
this report with respect to:
(a) the review of the development and
performance of the business and future
developments is set out in the Group Chief
Executive Officer’s Review on pages 22 to
36 and the Strategic Report on pages 14
to 21;
(b) the principal risks and uncertainties
which the Company and the Group faces
are set out in the Strategic Report on pages
19 to 21;
(d) the financial risk management objectives
and policies of the Company and the Group,
including the exposure of the Company and
the Group to financial risk, are set out in the
Group Chief Financial Officer’s Review on
pages 37 to 41 and note 22 to the financial
statements.
The Group’s Viability Statement is contained
in the Directors’ Statement on Corporate
Governance on page 69.
ACCOUNTING RECORDS
The measures taken by the Directors to
secure compliance with the requirements
of Sections 281 to 285 of the Companies
Act, 2014 with regard to the keeping of
adequate accounting records 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 Bulmers
House, Keeper Road, Crumlin, Dublin 12,
D12 K702.
C&C Group plcAnnual Report 2017 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.
As far as the Company is aware, other
than as stated below, no other person or
company had at 28 February 2017 or 17
May 2017 an interest in 3% or more of the
Company’s share capital carrying voting
rights.
CORPORATE GOVERNANCE
In accordance with Section 1373 of the
Companies Act, 2014, 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 58 to 69.
AUDIT COMMITTEE
In accordance with Section 167 of the
Companies Act, 2014, the Company has
an established Audit Committee. Further
information on the Audit Committee, is
contained in the Directors’ Statement on
Corporate Governance on pages 58 to 69.
DIRECTORS’ REMUNERATION
The Report of the Remuneration Committee
on Directors’ Remuneration, including
the Company’s policy on Directors’
remuneration, is set out on pages 70 to 89.
SUBSTANTIAL HOLDINGS
As at 28 February 2017 and 17 May 2017,
details of interests over 3% in the ordinary
share capital carrying voting rights which
have been notified to the Company are:
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 2017
was €3.87 (29 February 2016: €3.446). The
price of the Company’s ordinary shares
ranged between €3.415 and €4.18 during
the year.
AUDITOR
During the year, a formal external audit
tender process was undertaken by the Audit
Committee on the Board’s behalf, following
which the Board selected EY as the external
auditor for the Group for the year ending
28 February 2018. A resolution to formally
approve the appointment of EY as external
auditors will be put to Shareholders at the
AGM on 6 July 2017. KPMG, Chartered
Accountants will resign as external auditors
to the Group.
ISSUE OF SHARES AND PURCHASE
OF OWN SHARES
At the Annual General Meeting held on 7
July 2016, 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 6 July 2017 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, resolutions 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, and a
further 5% of the nominal value of the
issued share capital of the Company for the
purposes of an acquisition or a specified
capital investment. If granted, these
authorities will expire at the conclusion of
the Annual General Meeting in 2018 and
the date 18 months after the passing of the
resolution, 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. At
the Annual General Meeting held on 7 July
2016 authority was granted to purchase up
to 10% of the Company’s Ordinary Shares
(the “Repurchase Authority”). As at the date
No. of ordinary shares
held as notified at
28 February 2017
% at
28 February 2017
No. of ordinary shares held
as notified at
17 May 2017
Southeastern Asset Management, Inc.
Brandes Investment Partners, L.P.
Franklin Templeton Institutional, LLC
FMR LLC
Investec Asset Management Limited
Wellington Management Company, LLP
Setanta Asset Management Limited
LSV Asset Management
47,619,717
22,220,337
22,010,380
21,941,431
16,403,623
15,772,229
15,056,875
9,961,411
15.04%
7.02%
6.95%
6.93%
5.18%
4.98%
4.76%
3.15%
53,896,229
25,136,335
15,334,980
21,941,431
16,403,623
10,776,402
15,056,875
8,888,058
% at
17 May 2017
17.31%
8.07%
4.92%
7.05%
5.27%
3.46%
4.83%
Less than 3%
55
Governance
Directors’ Report
(continued)
of this Report, the Group has purchased
1.87% of the Company’s Ordinary Shares
pursuant to the Repurchase Authority.
The Group spent €23.2m (2016: €76.6m)
(including commission and related costs)
in the year under review in purchasing
6,139,438 of the Company’s Ordinary
Shares.
Special resolutions will be proposed at the
Annual General Meeting to be held on 6 July
2017 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 2018 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.
As at the date of this report, options to
subscribe for a total of 4,163,226 Ordinary
Shares are outstanding, representing 1.34%
of the Company’s total voting rights. If the
authority to purchase Ordinary Shares were
used in full, the options would represent
1.49% of the Company’s total voting rights.
DILUTION LIMITS AND TIME LIMITS
All employee 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 (a) under any discretionary
or executive share scheme adopted by
the Company (other than the Joint Share
56
Ownership Plan) to exceed 5%, and (b)
under any employees’ share scheme
adopted by the Company (other than the
Joint Share Ownership Plan) to exceed
10%, of the ordinary share capital of the
Company in issue at that time.
In the ten year period up to the date of this
report, 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) amounted to 2.40% of the
Company’s issued ordinary share capital
as at the date of this report. No additional
commitments to issue shares have been
made under non-discretionary schemes.
THE EUROPEAN COMMUNITIES
(TAKEOVER BIDS (DIRECTIVE 2004/25/
EC)) REGULATIONS 2006
Structure of the Company’s share
capital
At 17 May 2017 the Company has an issued
share capital of 320,467,301 ordinary shares
of €0.01 each and an authorised share
capital of 800,000,000 ordinary shares of
€0.01 each.
At 28 February 2017, the trustee of the C&C
Employee Trust held 2,911,545 ordinary
shares of €0.01 each in the capital of the
Company, including shares held jointly by
it under the terms of the C&C Joint Share
Ownership Plan (further information on
which is contained in note 4 (Share-Based
Payments) to the financial statements).
Shares held by the trustee of the C&C
Employee Trust are accounted for as if they
were treasury shares. 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 (“TVR Calculation”).
As at 28 February 2017, a subsidiary of
the Group held 9,025,000 shares in the
Company, which were acquired under the
authority granted to the Company and its
subsidiaries to purchase up to 10% of the
Company’s ordinary shares approved at the
2016 Annual General Meeting. These shares
are not included in the TVR Calculation and
are accounted for as treasury shares.
Details of employee share schemes, and
the rights attaching to shares held in these
schemes, can be found in note 4 (Share-
Based Payments) to the financial statements
and the Report of the Remuneration
Committee on Directors’ Remuneration
on pages 70 to 89. Details of the rights
attaching to shares issued under the Joint
Share Ownership Plan are set out in note
4 (Share-Based Payments) to the financial
statements.
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 55.
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
C&C Group plcAnnual Report 2017 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.
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”.
DIRECTORS COMPLIANCE
STATEMENT (MADE IN ACCORDANCE
WITH SECTION 225 OF THE
COMPANIES ACT, 2014)
The Directors acknowledge that they are
responsible for securing compliance by
the Company with its relevant obligations
as are defined in the Companies Act, 2014
(the ‘Relevant Obligations’). The Directors
confirm that they have drawn up and
adopted a compliance policy statement
setting out the Company’s policies that, in
the Directors’ opinion, are appropriate to the
Company with respect to compliance by the
Company with its relevant obligations. The
Directors further confirm the Company has
put in place appropriate arrangements or
structures that are, in the Directors’ opinion,
designed to secure material compliance
with its relevant obligations including
reliance on the advice of persons employed
by the Company and external legal and tax
advisers as considered appropriate from
time to time and that they have reviewed
the effectiveness of these arrangements or
structures during the financial year to which
this report relates.
RELEVANT AUDIT INFORMATION
In accordance with Section 330 of the
Companies Act, 2014, the Directors confirm
that, so far as they are each aware, there
is no relevant audit information of which
the Company’s auditor is unaware; and
each Director has taken all the steps that
they ought to have taken as a Director to
make themselves aware of any relevant
audit information and to establish that
the Company’s auditor is aware of that
information.
MISCELLANEOUS
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. 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 in excess of their normal
contractual entitlement.
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
17 May 2017
Stephen Glancey
Group Chief
Executive Officer
57
Governance Directors’ Statement of Corporate Governance
COMPLIANCE STATEMENT
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 listing in the Premium Listing
segment of the Official List of the United Kingdom Listing Authority
(‘UKLA’) and its shares are quoted on the ISE and the London
Stock Exchange (‘LSE’). C&C Group plc also has a Level 1
American Depository Receipt (ADR) programme.
The Directors are committed to maintaining high standards of
corporate governance and to reviewing governance best-practice
on a continuing basis to ensure that we adapt and evolve in what is
an environment of constant change.
The Group has complied with the provisions of the UK Code and
Irish Annex throughout the period under review. This Corporate
Governance statement describes the Group’s policy on corporate
governance during the financial year ended 28 February 2017.
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 contracts and capital expenditure items,
major acquisitions and disposals, changes to capital structure,
circulars, Board appointments, and the review of the Group’s
corporate governance arrangements and system of internal
control, and approval of policies including corporate responsibility
and health and safety. The Board is also responsible for instilling
the appropriate culture, values and behaviour throughout the
Group. The Directors acknowledge that they are responsible for
the proper stewardship of the Group’s affairs, both on an individual
and collective basis. The matters and agenda reserved for Board
consideration reflect this responsibility.
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 Chairman has responsibility for the management
of the Board, the performance of Directors and their induction,
development and performance evaluation, ensuring there are
effective relations with shareholders and for the AGM. The Chief
Executive is responsible, within the authority limits delegated by
the Board, for business strategy and management, investment and
financing, risk management and controls, timely reporting, making
recommendations on remuneration policy and on the appointment
of executive directors, setting Group HR policies and leading the
communications programme with shareholders.
Dear Shareholder
We, as a Board, and a Company, take corporate governance
very seriously and consider that good conduct is the basis of
good performance. The Board sets the tone for the rest of the
Company. We believe that effective governance is the foundation
of a successful and sustainable organisation and should be based
upon an appropriate level of oversight, clear communication and a
commitment to transparency. Governance is the framework within
which we focus on the health and growth of the business.
In this report we provide an overview of our corporate governance
practices, describing how the main principles of the UK Corporate
Governance Code and Irish Annex are applied throughout the year.
Information is given about the Board, its members and committees,
and their work. An overview of the Company’s internal controls is
also given.
We have continued our focus on Board succession in the year and,
in that context, Jim Clerkin was appointed to the Board in April
2017. In considering Board appointments, we continue to have
regard to the degree of diversity of experience and background of
the Board.
Rory Macnamara who joined the Board in January 2016 sadly
passed away on 17 December 2016. Rory made an inimitable and
valued contribution to the Board during his all too brief time as a
Director.
We are complying this year with the edition of the UK Corporate
Governance Code published by the Financial Reporting Council
in September 2014 (the ‘UK Code’) and the Irish Corporate
Governance Annex (the ‘Irish Annex’). The UK Code is publicly
available from the Financial Reporting Council’s website,
www.frc.co.uk.
Sir Brian Stewart
Chairman
17 May 2017
58
C&C Group plcAnnual Report 2017 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 below.
The Chief Executive 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 own
specific 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 primary purpose of the Board is to
help create and maintain the conditions
which promote the long term success
of the business for the benefit of both
shareholders and the wider stakeholder
base. In order to do so effectively, the Board
requires members with a broad range of
skills and experience and the ability to
both support and challenge the executive
management.
The Board believes that the current
Directors bring the necessary range of
skills, knowledge and experience so as to
provide leadership, control and oversight
of management while contributing to the
development and implementation of the
Group’s strategy. The biographical details
of the current Directors are set out on
pages 52 and 53. The Board regards the
number of non-executive Directors currently
appointed to the Board as sufficient to
ensure effective oversight of the Group’s
management and to enable its Committees
to operate without undue reliance on
individual non-executive Directors.
While the Board’s current composition
includes a strong balance of skills and
experience, the Board recognises the
positive impact new appointments can
bring to the Group. As such, the Board is
committed to an ongoing programme for
Board refreshment and renewal, with a
particular focus on diversity and industry
experience. In pursuing its programme
for Board refreshment, the Nomination
Committee is cognisant that finding and
recruiting Directors with the skills and
experience needed to challenge the breadth
of the Group’s business can require a longer
lead time.
Consistent with that commitment to
Board refreshment and development, Jim
Clerkin was appointed as a non-executive
Director in April 2017. Jim brings a wealth
of experience and knowledge of the global
drinks industry to the Board. This follows
the appointment of Vincent Crowley
and Rory Macnamara as non-executive
Directors in 2016 and the retirement of John
Hogan and Anthony Smurfit in 2016 as
part of the ongoing programme of Board
refreshment. Our Board continues to include
an appropriate balance of longer serving
and more recently appointed Directors,
with diverse backgrounds and experience.
This serves to bring fresh thinking to the
Board yet preserves a proportion of the
membership with an in-depth understanding
of the challenges and opportunities facing
the business, all of which provides the
platform for fruitful discussions with the
management team.
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
its composition and has determined that of
the Directors as at the date of this report,
Emer Finnan, Richard Holroyd, Breege
O’Donoghue, Stewart Gilliland, Jim Clerkin
and Vincent Crowley are independent.
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
judgment. The Board considers that each
of the non-executive Directors brings
independent judgment to bear.
Given their length of service, the Board
conducted a particularly thorough review
of the continued independence of Richard
Holroyd and Breege O’Donoghue.
Subsequent to that assessment, the
Board is satisfied that neither Richard’s
nor Breege’s independence has been
compromised by their length of service.
As part of this assessment, the Board
considered their concurrent tenure with
the executive directors, as well as their
continuing performance in scrutinising
management decisions. The Board
also recognises that their professional
59
Governance Directors’ Statement of Corporate Governance
(continued)
experience and long-term perspective on
the Group’s business is hugely valuable to
the work of the Board.
As set out in the table below, each has
served on the Board concurrently with the
Group’s Chief Executive Officer, the longest
serving executive Director, for 8.5 years. The
Board recognises the principles of the Code
and guidelines on tenure but is satisfied that
the objectivity, judgment and independence
of each of the Directors, and the Board
as a whole, is not compromised by any
individual’s tenure on the Board.
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. As part of this
process, the Chairman partakes annually
in a series of meetings, focused solely on
corporate governance, with a number of the
Group’s largest institutional shareholders.
Sir Brian Stewart
Jim Clerkin
Vincent Crowley
Joris Brams
Emer Finnan
Stewart Gilliland
Stephen Glancey
Richard Holroyd
Kenny Neison
Breege O’Donoghue
Independent/Non-Independent
Independent (Chairman)
Independent
Independent
Non-Independent (Executive)
Independent
Independent
Non-Independent (Executive)
Independent
Non-Independent (Executive)
Independent
Tenure
(Years)
Concurrent
Tenure*
(Years)
7
0.1
1.5
4.5
3
5
8.5
13
7.5
13
7
0.1
1.5
4.5
3
5
8.5
8.5
7.5
8.5
*Note: Concurrent tenure means tenure on the Board concurrently with the Group’s Chief Executive Officer, the longest
serving executive Director.
Senior Independent Director
Richard Holroyd is the Group’s Senior
Independent Director. 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
shareholders on request.
Audit Committee Financial Expert
The Audit Committee has determined
that Emer Finnan, who also chairs the
Committee, is the Audit Committee financial
expert. Emer is a qualified chartered
accountant and has recent and relevant
financial expertise.
Company Secretary
David Johnston 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.
60
C&C Group plcAnnual Report 2017 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 its 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
operations facilities is normally 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.
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
During the period under review there were
seven scheduled meetings of the Board and
a further two short notice meetings. Details
of Directors’ attendance at these meetings
are set out in the table on page 67. Several
ad hoc meetings without notice were held
during the year for share allotment and
other administrative matters in accordance
with the Board’s procedures. In addition,
the members of the Board met 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 any
recommendations.
In 2015, the Board also engaged an external
advisor to complete an independent
evaluation of the performance and
effectiveness of the Board and each of
the Committees. This evaluation is in line
with the recommendations of the UK Code
which requires an external Board evaluation
to be conducted at least once every three
years. The company engaged to perform
the evaluation has no business connection
or relationship with the Group, its directors
or senior management.
Accountability
The Board is committed to providing a fair,
balanced and understandable assessment
of the Company’s position and prospects.
Responsibility for reviewing the Group’s
internal financial control, financial risk
management systems and risk evaluation
procedures and monitoring the integrity
of the Group’s financial statements has
been delegated by the Board to the
Audit Committee. Details of how these
responsibilities were discharged is set out
in the Audit Committee Report on pages 63
to 66.
The Board receives regular updates from
the Chair of the Audit Committee.
61
Governance The Board has also established a Disclosure
Committee comprising the Chairman, the
Group Chief Executive Officer, the Group
Chief Financial Officer and the Company
Secretary. The Head of Investor Relations
may also participate where required. The
main responsibilities of the Disclosure
Committee include:
• determining whether information
constitutes inside information;
• determining if information requires
immediate disclosure or if disclosure can
be legitimately delayed;
• determining a consistent approach and
policy to disclosure;
• reviewing and approving material
announcements;
• monitoring leaks, rumours, speculation
and market expectations, and taking
appropriate action;
• monitoring the materiality of any variance
between the Group’s performance and its
own forecasts.
Ad hoc committees are formed from time to
time to deal with other specific matters.
Directors’ Statement of Corporate Governance
(continued)
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 70 to
89.
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
Chairmen 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 €1,000,000, pursuant to
a resolution passed at the 2013 Annual
General Meeting.
The report of the Remuneration Committee
will be presented to shareholders for the
purposes of a non-binding advisory vote
at the Annual General Meeting on 6 July
2017. 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 recognises that such
resolutions are now considered good
governance practice.
Share ownership and dealing
The Company has share ownership
guidelines for the executive Directors to
ensure the interests of executive Directors
are aligned with those of shareholders. In
summary, the guidelines are that the current
market value of shares in the Company
held by the relevant Director should be at
least two times salary for the Group Chief
Executive Officer and one times salary for
other executive Directors. If share ownership
guidelines are not met, then individuals must
retain up to 50% of vested share awards
(net of tax). Further information including
details of Directors’ shareholdings is set out
on page 77.
The Group has a policy on dealing in
shares that applies to all Directors. 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 are prohibited from dealing in the
Company’s shares during closed periods
and at any other time when the individual is
in possession of inside information.
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 52. Attendance at meetings held is
set out in the table on page 67.
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.
62
C&C Group plcAnnual Report 2017 THE AUDIT COMMITTEE
Message from the Chairman of the Audit Committee
Dear Shareholder
On behalf of the Board, I am pleased to report on the work of the
Audit Committee for the financial year ended 28 February 2017.
During the year, the Committee oversaw the tender of the
Company’s external audit contract. Due to EU transition rules,
KPMG’s length of tenure prevented them from acting as auditors
beyond FY2017. Following the tender process, the Board, on the
recommendation of the Committee, appointed EY as the Group’s
external auditor from FY2018 onwards. On behalf of the Committee,
I would like to acknowledge and thank KPMG for their contribution
to the Group, as external auditors since 2004.
The Committee also received and reviewed a number of internal
audit reports, reviewed and approved reports in relation to the
Group’s financial performance and engaged with the external
auditor. One of our principal duties is to review the report of the
external auditor on the year end audit and to consider and approve
key accounting treatments together with underlying financial
judgments and assumptions. Full details are included later in this
report.
The members of the Committee, all independent non-executive
Directors, each contribute their own financial experience to the
Committee’s work. We are glad to record the full and continuing co-
operation of the executive team in support of the Committee’s work.
Yours sincerely
Emer Finnan
Chairman of the Audit Committee
Composition and Meetings
The constitution of the Audit Committee requires that its
membership shall consist only of independent, non-executive
Directors. The members are Emer Finnan (Chairman), Richard
Holroyd and Vincent Crowley. As set out on page 60, the Audit
Committee has determined that Emer Finnan, who also chairs the
Committee, is the Audit Committee financial expert.
The Committee meets a minimum of four times a year. During the
period under review it met eight times. Attendance at meetings held
is set out in the table on page 67.
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 Group Head of Finance is the secretary
of the Audit Committee.
Constitution and terms of reference
The role, responsibilities, authority and duties of the Audit
Committee are set out in written terms of reference. The current
terms of reference are available under the Board Committees
section of the Group’s website at www.candcgroupplc.com.
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, and reviewing significant financial reporting
judgements contained in them;
• ensuring that the information presented in the financial
statements of the Group and other announcements is fair,
balanced and understandable and provides the information
necessary for the Company’s shareholders to assess the Group’s
performance, business model and strategy and advising the
Board accordingly;
• monitoring the statutory audit of the annual and consolidated
accounts;
• 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, the Group’s systems and controls for
the prevention of bribery, and the Group’s whistleblowing
arrangements;
63
Governance Directors’ Statement of Corporate Governance
(continued)
• making recommendations to the Board in
relation to the appointment and removal
of the Group’s external auditor, their
remuneration and terms of engagement;
• 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;
• reporting to the Board on how it has
discharged its responsibilities; and
• reviewing the annual financial statements
of the pension funds where not reviewed
by the Board as a whole.
The Committee undertakes, in conjunction
with the Chairman of the Board, an annual
assessment of its performance and a review
of the Committee’s constitution and terms of
reference.
The activities undertaken by the Committee
in fulfilling its key responsibilities in respect
of the year ended 28 February 2017 are set
out below.
Financial Statements
In respect of the year ended 28 February
2017 the Audit Committee reviewed:
• the Trading Update issued in July 2016;
• the Financial Report for the six months
ended 31 August 2016;
• the trading update for the twelve months
to 28 February 2017, issued in March
2017;
• the preliminary results announcement
and the Annual Report and financial
statements for the year ended 28
February 2017.
In particular the Committee addressed
the going concern status of the Company
and the matters referred to in the Financial
Review contained in the 2017 Annual
Report. It reviewed the audit plan and
post-audit report from the external auditor
identifying any accounting or judgemental
issues requiring its attention.
In carrying out these reviews, the
Committee considered:
• the consistency of, and any changes to,
accounting policies both on a year-on-
year basis and across the Group;
• whether the Group had applied
appropriate accounting policies and
practices and made appropriate
estimates and judgements, taking into
account the views of the external auditor;
• the methods used to account for
significant or unusual transactions where
different approaches are possible;
• whether the Annual Report, taken
as a whole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess the Group’s performance,
business model and strategy;
• the clarity and completeness of
disclosures and compliance with relevant
financial reporting standards and
corporate governance and regulatory
requirements; and
• the significant areas in which judgement
had been applied in preparation of the
financial statements in accordance with
the accounting policies.
The significant issues considered by the
Committee in relation to the accounts for
the year to 28 February 2017 and how these
were addressed are outlined below. Each of
these areas received particular focus from
the external auditor, who provided detailed
analysis and assessment of the matter in
their report to the Committee.
Goodwill & intangible assets
impairment testing
The Committee considered the carrying
value of goodwill and intangible assets as
at the year end date to assess whether or
not it exceeded the expected recoverable
amounts for these assets. In particular
the Committee considered the value-in-
use financial models, including sensitivity
analysis, used to support the valuation
and the key assumptions and judgments
used by management underlying these
models. The key assumptions used in the
financial models and consequently the key
focus areas for the Committee relate to
future volume, net revenue and operating
profit, the growth rate in perpetuity and
the discount rate applied to the resulting
cash flows. The Committee considered
the outcome of the financial models and
found the methodology to be robust, and in
all instances concluded that the outcome
was appropriate, including the recognition
and magnitude of an impairment charge
with respect to the capitalised brands in
the US business. In all other segments
the Committee considered the level of
headroom and the sensitivity analysis
applied to the key assumptions and
concluded that the carrying values were
appropriate.
Valuation of property, plant &
equipment
The Group values its land and buildings and
plant machinery at market value/depreciated
replacement cost (DRC) and consequently
carries out an annual valuation. The Group
engages external valuers to value the
Group’s property, plant and machinery at
a minimum every three years or as at the
date of acquisition for assets acquired as
part of a business acquisition. The Group
completed an external valuation in the
current financial year at its Vermont site. An
internal assessment was completed for the
remainder of the Group’s assets.
In assessing the reasonableness of the
external and internal valuations, the
Committee reviewed the key assumptions
and judgments underlying the valuations, in
particular, focus was given to the impact of
gross replacement cost price movements,
depreciation rates reflecting age of asset
and physical and functional obsolescence
and forecast utilisation levels across the
Group’s production sites included in the
valuation. The Committee is satisfied that
the carrying values are appropriate.
Internal control and risk management
systems
The Group’s system of internal control and
risk management is described below.
The terms of reference of the Audit
Committee require it to conduct an annual
assessment of internal financial controls and
financial risk management systems. The
risks facing the Group are reviewed regularly
by the Audit Committee with executive
management. Specific annual reviews
of the risks and fundamental controls of
64
C&C Group plcAnnual Report 2017 each business unit are undertaken. The
results and recommendations are reported
to and analysed by the Audit Committee
and a programme for action agreed
with the business units. In carrying out
these responsibilities during the year, the
Committee reviewed reports issued by both
the internal audit function and the external
auditor and held regular discussions
with the Head of Internal Audit and
representatives of the external auditor. The
Committee also reviewed the outcome of an
assessment of the Group’s internal financial
controls which had been coordinated by the
internal audit function.
Internal Audit
The Committee is responsible for
monitoring and reviewing the operation and
effectiveness of the internal audit function
including its focus, plans, activities and
resources.
The Group’s internal audit function reports
to the Audit Committee and the Audit
Committee has approved its terms of
reference. The Group’s internal auditor is
engaged on a programme of work, which
includes, inter alia, maintaining the Group’s
risk register and examining the fundamental
controls of the Group. During the year, the
Committee reviewed and approved the
internal audit plan for the year.
The Committee received regular reports
from the Head of Internal Audit summarising
findings of the team’s work and the
responses from management to deal with
the findings. The Committee monitors
progress on the implementation of the
action plans on significant findings to ensure
these are completed satisfactorily.
External Auditor
The Committee manages the relationship
with the Group’s external auditors on behalf
of the Board. The Committee carries out
an annual assessment of the external
auditor including a review of the external
auditor’s internal policies and procedures for
maintaining independence and objectivity
and consideration of their approach to audit
quality. The external auditor is professionally
required to rotate the audit partner
responsible for the Group audit every five
years and this rotation took place in FY2017
with a new partner being appointed to the
Group.
External audit process
The Committee also reviewed and approved
the external audit plan as presented
by the external auditor and assessed
the qualifications and expertise of their
resources. The Committee also reviewed
the external auditor’s engagement letter and
recommended the level of remuneration
of the external auditor to the Board having
reviewed the scope and nature of the work
to be performed. The Committee assessed
the effectiveness of the external audit
process by monitoring performance against
the agreed audit plan and noting the results
of post-audit interviews with management
and the Audit Committee Chairman.
Length of service of auditors
KPMG has been the external auditor of
the Company and the Group since the
Company’s formation and flotation in 2004.
In line with guidance within the UK Code
and the recent EU Directive 2014/56/EU
of the European Parliament and Council
passed by the European Parliament and
transposed into Irish Law in 2016 in respect
of audit reforms and audit tendering, the
Group conducted a formal tender process
in FY2017. As a result of the transition
rules under the EU Directive, KPMG’s
length of tenure prevented them from
acting as auditors beyond the year ended
28 February 2017. The Board following
a recommendation from the Committee,
decided to appoint a new audit firm to
complete the Group audit for the financial
year ended 28 February 2018. The tender
process concluded with a recommendation
by the Committee to the Board to appoint
EY as the Group’s external auditor from
FY2018 onwards. This recommendation
was accepted by the Board. A resolution
proposing the appointment of EY will be
presented to shareholders at the Group’s
AGM in July 2017. The tender process
undertaken to appoint a new auditor was
rigorous and involved written submissions
and presentations from each of the invited
firms.
Hiring of former employees of auditor
In order to ensure the independence and
objectivity of the external auditor, the prior
approval of the Audit Committee is required
before any individual is appointed to a
senior managerial position in the Group,
if such individual has within three years
prior to such proposed appointment been
employed by the external auditor.
Non-Audit Services by auditor
The Group has a policy in place governing
the provision of non-audit services by
the external auditor in order to ensure
that the external auditor’s objectivity and
independence is safeguarded.
Under this policy the auditor is prohibited
from providing non-audit services if the
auditor:
• may, as a result, be required to audit its
own firm’s work;
• would participate in activities that would
normally be undertaken by management;
• would be remunerated through a
“success fee” structure or have some
other mutual financial interest with the
Group;
• would be acting in an advocacy role for
the Group.
Other than above, the Company does not
impose an automatic ban on the external
auditor providing non-audit services.
However, the external auditor is only
permitted to provide non-audit services
that are not, or are not perceived to be,
in conflict with auditor independence and
objectivity, if it has the skill, competence
and integrity to carry out the work and
it 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 to provide non-audit services must
be approved in advance by the Audit
Committee or entered into pursuant to
pre-approved policies and procedures
established by the Audit Committee and
approved by the Board.
The nature, extent and scope of non-
audit services provided to the Group by
the external auditor and the economic
65
Governance
Directors’ Statement of Corporate Governance
(continued)
importance of the Group to the external
auditor are also monitored to ensure
that the external auditor’s independence
and objectivity is not impaired. 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 not exceed 100% of audit fees in any
one financial year.
During the year, KPMG provided non-
audit advisory services, being advice on
taxation and other related matters. In
approving KPMG to provide these services
the Committee was of the opinion that
KPMG’s knowledge of the Group was an
important factor. The Committee was also
satisfied that the fees paid to KPMG for
non-audit work did not compromise their
independence or integrity. Details of the
amounts paid to KPMG during the year for
audit and other services are set out in note
2 to the financial statements.
Whistle-blowing procedures
In line with best practice, the Group
supports an independent and confidential
whistle-blowing service which allows all
employees to raise any concerns about
business practice in a confidential manner.
THE NOMINATION COMMITTEE
Composition and Meetings
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), Breege O’Donoghue
and Richard Holroyd.
• reviewing the structure, size and
composition of the Board (including
the balance of skills, experience,
independence, knowledge and
diversity (including gender)) and making
recommendations regarding any
changes;
• overseeing succession planning for the
Board and senior management and the
leadership needs of the organisation;
• responsibility for the identification of
suitable candidates for appointment to
the Board;
• making recommendations to the Board
on membership of Board Committees.
Main activities during the year
During the period under review the
Nomination Committee considered:
• potential candidates for recruitment
as non-executive Directors and
recommended the appointment of Jim
Clerkin to the Board;
• 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;
• succession plans for executive Directors
and senior management.
Diversity
The Nomination Committee and the Board
recognise the importance of ensuring
diversity (including gender) and the key role
that a diversified Board plays in ensuring
effectiveness. Suitable candidates are
selected on the basis of their relevant
experience, employment background, skills,
knowledge and insight, having due regard
for the benefits of diversity to the Board.
The Committee meets a minimum of twice
a year and met twice in the year ended 28
February 2017. Attendance at meetings
held is set out in the table on page 67. In
addition, several ad hoc meetings were held
to progress initiatives.
The Committee and the Board further
realise that diversity extends beyond the
Board and in this regard seeks to ensure
that all recruitment decisions are fair and
non-discriminatory.
Independent consultants
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.
Constitution and terms of reference
The Nomination Committee’s current
terms of reference are available under the
Board Committees section of the Group’s
website at www.candcgroupplc.com. The
Nomination Committee’s responsibilities
include:
66
During the year, Spencer Stuart, an
independent executive search firm, assisted
in the search process for non-executive
Director candidates with relevant experience
and skills and provided assistance in relation
to the appointment of Jim Clerkin. Spencer
Stuart has no other connection with the
Group.
THE REMUNERATION COMMITTEE
The Remuneration Committee comprises
solely of independent, non-executive
Directors. The Chairman was Breege
O’Donoghue, and the other members were
Richard Holroyd and Stewart Gilliland.
The Remuneration Committee meets at
least twice a year. During the period under
review the Remuneration Committee met
four times. Attendance at meetings held is
set out in the table on page 67.
The Remuneration Committee’s terms of
reference, which are available on the C&C
website www.candcgroupplc.com, include:
• determining and agreeing with the Board
the framework or broad policy for the
remuneration packages of the Chairman,
Group Chief Executive Officer and
other executive Directors, the Company
Secretary and any other designated
members of the executive management.
• within the terms of the agreed policy
and in consultation with the Chairman
and/or Group Chief Executive Officer,
as appropriate, determining the total
individual remuneration package of each
of the above persons, including bonuses,
incentive payments and share options or
other share awards;
• reviewing and having regard to the
remuneration trends across the Group;
• approving the design of, and determining
targets for, any performance related pay
schemes and the total annual payments
made under such schemes;
• reviewing the design of all share incentive
plans and the performance targets to be
used;
• ensuring that contractual terms on
termination, and any payments made,
are fair, that failure is not rewarded and
that the duty to mitigate loss is fully
recognised;
• overseeing any major changes in
employee benefits structures throughout
the Group.
C&C Group plcAnnual Report 2017
ATTENDANCE AT MEETINGS OF THE
BOARD AND ITS COMMITTEES
Attendance at Board meetings and Board
committee meetings during the year was as
set out in the table below.
COMMUNICATIONS WITH
SHAREHOLDERS
The Group attaches considerable
importance to shareholder communications
and has an established investor relations
programme.
In the attendance table below 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
administrative matters in accordance with
the Board’s procedures.
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. A trading update
was issued in July 2016 and a trading
statement was issued in March 2017. The
Group also hosted a Capital Markets Day
for investors in March 2016. The Board
is briefed regularly on the views and
concerns of institutional shareholders. The
Chairman has recently completed a series
of meetings, focused solely on corporate
governance, with a number of the Group’s
largest institutional shareholders.
Scheduled
Board
Meetings
Short Notice
Board
Meetings
Audit
Committee
Meetings
Nomination
Committee
Meetings
Remuneration
Committee
Meetings
7/7
7/7
7/7
7/7
7/7
7/7
7/7
1/6
7/7
6/7
0/1
2/2
1/2
2/2
2/2
2/2
2/2
2/2
1/1
2/2
2/2
6/7
8/8
8/8
3/6
1/1
2/2
2/2
4/4
4/4
2/2
4/4
Sir Brian Stewart
Joris Brams
Vincent Crowley
Emer Finnan
Stewart Gilliland
Stephen Glancey
Richard Holroyd
Rory Macnamara
Kenny Neison
Breege O’Donoghue
Anthony Smurfit
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 Companies Act, 2014 provides 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 7 July 2016,
and this year’s AGM will be held on 6 July
2017. The Directors may at any time call an
EGM. EGMs may also be convened on the
requisition of members holding not less than
five per cent of the voting share capital of
the Company.
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.
Resolutions of the general meeting must
be passed by the majority of votes cast
(ordinary resolution) unless the Companies
Act, 2014 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.
67
Governance Directors’ Statement of Corporate Governance
(continued)
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 or her 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.
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.
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 and up to the date the financial
statements were approved accords with
the FRC Guidance published in September
2014 and involves the Board considering the
following:
• the nature and extent of the key risks
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 42 to
50 and the Group’s corporate responsibility
report is available on the Group’s website
www.candcgroupplc.com.
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 business 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 monitor the
effectiveness of the Group’s internal financial
controls and risk management systems and
68
C&C Group plcAnnual Report 2017 at least annually carry out a review of the
effectiveness of these systems. The risks
facing the Group are reviewed regularly by
the Audit Committee with the executive
management team. 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.
The preparation and issue of financial
reports, including consolidated annual
financial statements is managed by the
Group Finance function 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 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 review 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.
The Directors also confirm that they have
carried out a robust assessment of the
principal risks facing the company, including
those that would threaten its business
model, future performance, solvency or
liquidity. As description of the Principal Risks
and Uncertainties faced by the Group and
how these risks are being managed and
mitigated is set out on pages 19 to 21.
VIABILITY STATEMENT
For the purposes of assessing the future
prospects of the Group, the Directors
have selected a three year timeframe
and have carried out a forward looking
assessment of the Group’s viability based
on this timeframe. The assessment has
been made with reference to the Group’s
current position and prospects, the Group’s
strategy, the Board’s risk appetite and the
Group’s Principal Risks and Uncertainties
and how these are identified, managed and
mitigated.
This assessment is based on a number of
cautious assumptions concerning macro
growth and stability in our key markets
particularly in the context of forecasted
volume growth and margins. It will be
reviewed regularly by the Board through
presentations from senior management
on the performance of the respective
business units, the assessment of market
opportunities and the consideration by
the Board of its ability to fund its strategic
ambitions.
In making this assessment, the Directors
have considered the resilience of the Group,
taking account of its current position and the
Group’s Principal Risks and Uncertainties
and the Group’s ability to manage those
risks. The risks have been identified using
a top down and bottom up approach, and
their potential impact was assessed having
regard to the effectiveness of controls in
place to manage each risk. The Directors
also noted that borrowings under the five
year syndicated revolving loan facility will fall
due for repayment in December 2019 and
that, as part of standard practice, the Board
will consider refinancing options in advance
of this date.
Based on this assessment the Directors
have a reasonable expectation that the
Group will be able to continue in operation
and meet its liabilities as they fall due over
the three year period of their assessment.
GOING CONCERN
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 37
to 41. A description of the business of
the Group is set out in the Group Chief
Executive Officer’s Review on page 22 to
36. The principal risks and uncertainties
facing the Group are set out in this report on
pages 19 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 22 to 36. A
statement of the Group’s strategy is set
out on pages 16 and 17. 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, being twelve months from the date
of approval of the financial statements.
Consequently they continue to adopt
the going concern basis in preparing the
financial statements
69
Governance Report of the Remuneration Committee
on Directors’ Remuneration
Dear Shareholder
On behalf of the Board, I am pleased to present the Report on
Directors’ remuneration for the financial year ended 28 February
2017. As we included the full Policy Report in the FY2015 report
and accounts and no changes are proposed to that policy, we
have included those aspects of the Policy Report that we think
shareholders will find most useful; the full Policy Report is included
on pages 66 to 78 of the FY2015 annual report and accounts,
which is available on www.candcgroupplc.com. We will again be
submitting the Annual Report on Remuneration to shareholders
for an advisory vote at the Company’s 2017 AGM. Last year, the
Annual Report on Remuneration received the support of over 80%
of the votes cast. We hope that shareholders will demonstrate their
support again this year.
FY2017 KEY DECISIONS AND INCENTIVE OUT-TURN
Salaries for the executive Directors were increased by 1% for
FY2017, although shareholders will recall that prior to FY2017, the
Group Chief Executive Officer and Group Chief Financial Officer did
not receive a salary increase for the seven previous years.
The executive Directors’ incentive remuneration opportunities for
FY2017 were determined in accordance with the policy adopted
at the 2015 AGM, with the first awards being made during FY2017
under the new incentive plans approved by shareholders at the
2015 AGM as follows:
Opportunity
Performance Measures
Out-turn
Annual Bonus
80% of salary
(compared to a
maximum under the
policy of 100%)
LTIP: 100% of salary
Long-Term
Incentives
awarded in the
year
ESOS: 150% of salary
Long term
incentives
vesting in
respect of
performance in
FY2017
LTIP (Part 1): 100%
of salary for Stephen
Glancey and Kenny
Neison
200% of salary for
Joris Brams
The threshold level of performance for
both the adjusted operating profit and
the cash conversion element of the
bonus was not achieved and no bonus is
therefore payable.
Further details are included on page 76.
Performance will be assessed over the
three year period ending with FY2019.
When setting the bonus targets for
FY2017, as set out on page 76, the
Committee included two targets, stretching
adjusted operating profit (75% of the
opportunity) and cash conversion (25%
of the opportunity). This is in line with the
previous year and continues to recognise
the importance of cash generation, which
provides us with the flexibility to make
appropriate investments for growth, to
maintain our progressive dividend policy
and to return cash to shareholders.
As set out on page 78:
EPS growth (33% of the opportunity)
Free Cash Flow Conversion (33% of the
opportunity)
Return on Capital Employed (33% of the
opportunity)
As set out on page 78, EPS growth.
As set out on page 78, 25% based on
relative TSR and 75% on EPS growth.
The performance measures for the
awards granted in June 2014 were not
met and the awards did not vest.
ESOS: 150% of salary
As set out on page 78, EPS growth.
70
C&C Group plcAnnual Report 2017 FY2018 ARRANGEMENTS
We have set out below a summary of our remuneration arrangements for FY2018. Further
detail is included in the implementation section on pages 73 to 74.
During the year the Committee considered the ongoing appropriateness of the
remuneration arrangements and specifically the performance targets. The Committee
has made some adjustments to the performance targets for the ESOS to ensure they
continued to be stretching and relevant in a challenging environment. The Committee in
particular reviewed the vesting schedule for the ESOS and, having taken into account
the views expressed by some shareholders in this regard, reduced the level of vesting at
threshold from 50% to 25% whilst balancing this against the stretch in the EPS targets. The
Committee considers that this change, together with the change to performance targets,
maintains an appropriate balance between performance and reward.
At a glance summary of our executive Director remuneration arrangements for FY2018
Salary
Benefits and Pensions
Bonus
• The executive Directors’ salaries have
• No changes are proposed to the type of
• The maximum bonus opportunity will
been increased by 1% for FY2018, which
is in line with the average increase across
the wider workforce.
benefits provided.
• No changes will be made to the level of
pension provision.
be 80% of salary, compared to a policy
maximum of 100%.
• Vesting will be based on stretching
performance conditions based on
adjusted operating profit (75%) and cash
conversion (25%).
• See page 73.
Long term incentives
• Awards will be granted in the form of LTIP (100% of salary) and ESOS (150% of salary).
• Vesting will be subject to performance measures based on EPS, ROCE and cash conversion, and subject to an additional performance
underpin. Targets are set by reference to challenging internal budgets and external forecasts.
• A vesting schedule, rather than cliff vesting, will continue to apply to the ESOS awards.
• See page 74.
I hope you will find this directors’ remuneration report clear in showing our responsible
approach to executive remuneration and the way in which it reflects our overall strategy.
Yours sincerely
Breege O’Donoghue
Chairman of the Remuneration Committee
71
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
INTRODUCTION
COMMITTEE AND ADVISERS
Composition
The Committee of the Board consists solely of independent non-executive Directors.
During the year ended 28 February 2017 the Chairman of the Committee was Breege
O’Donoghue. Other members of the Committee were Richard Holroyd and Stewart
Gilliland.
Terms of reference of Committee
The Committee’s terms of reference are available on the Company’s website
www.candcgroupplc.com and are summarised on page 66.
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 Committee has access to external advice from remuneration consultants on
compensation when necessary. During the year ended 28 February 2017 the Committee
obtained advice from Deloitte LLP who were appointed by the Committee. Deloitte’s fees
for this advice amounted to £14,040 charged on a time or fixed fee basis.
Deloitte is a member of the UK Remuneration Consultants Group and, as such, voluntarily
operates under its code of conduct. To safeguard objectivity, protocols are established
to cover the basis for contact with executive management and to avoid potential conflict
arising from other client relationships. The Committee is satisfied that the remuneration
advice provided by Deloitte is objective and independent. Deloitte did not provide any
other services during the year.
The Committee has also obtained advice from:
David Johnston, Company Secretary
Sarah Riley, Group Director of Human Resources.
SHAREHOLDERS’ VIEWS
The Committee is committed to open and transparent dialogue with shareholders and
consults with shareholders and governance bodies on proposals relating to remuneration
structures.
72
C&C Group plcAnnual Report 2017 The base salaries are as follows:
Year ended February
Stephen Glancey
Kenny Neison
Joris Brams
* At the average exchange rate in FY2017.
2017
2018
£590,850 (€708,283*)
£424,200 (€508,511*)
€369,822
£596,759 (€715,367*)
£428,442 (€513,596*)
€373,520
The Company is not disclosing the actual
Group bonus profit and cash conversion
targets prospectively as, in the opinion of
the Board, these targets are commercially
sensitive. The Board believes that disclosure
of this commercially sensitive information
could adversely impact the Company’s
competitive position by providing
competitors with insight into the Company’s
business plans and expectations. However,
the Company will disclose how the bonus
pay out delivered relates to performance
against targets on a retrospective basis
when the details of the performance targets
are no longer considered commercially
sensitive, as shown on page 76 in relation to
the FY2017 annual bonus.
Benefits
The executive Directors receive a cash
allowance of 7.5% of base salary in lieu of
benefits such as a company car. The Group
provides death-in-service cover of four
times’ annual base salary and permanent
health insurance (or reimbursement of
premiums paid into a personal policy).
Directors may also benefit from medical
insurance under a Group policy (or the
Group will reimburse premiums).
Annual bonus
The Committee has reviewed the
performance measures and targets for the
annual bonus to ensure that they remain
appropriately stretching in the current
environment and continue to be aligned with
the business strategy.
For FY2018, the Committee has approved
a bonus scheme for executive Directors by
reference to Group adjusted operating profit
(75% of the overall opportunity) and cash
conversion (25% of the overall opportunity),
under which executive Directors will be
entitled to a bonus of 30% of salary for on
target performance, and a further bonus on
a tapering basis in respect of performance
above this level up to a maximum of 80% of
base salary.
IMPLEMENTATION OF THE
REMUNERATION POLICY
FOR THE YEAR ENDING 28
FEBRUARY 2018
The full Policy Report is included on pages
66 to 78 of the FY2015 annual report and
accounts, which is available on www.
candcgroupplc.com, and we have included
on pages 83 to 89 those aspects of the
Policy Report that we think shareholders
will find most useful. Information on how the
Company intends to implement the policy
for the financial year ending 28 February
2018 is set out below.
EXECUTIVE DIRECTORS
Structure
The fundamental structure of the
remuneration of Stephen Glancey, Kenny
Neison and Joris Brams remains unchanged
from the previous year. There are no
changes to the maximum rate of the annual
bonus, the ESOS and LTIP opportunity
or the rate of the cash allowance in lieu of
pension or benefits in kind.
Base salaries
The Company’s approach on base
salary continues to be to provide a fixed
remuneration component which reflects the
experience and capabilities of the individual
in the role, the demonstrated performance
of the individual in the role, and which is
competitive in the markets in which the
Company operates.
Under their service contracts, the base
salaries of Stephen Glancey and Kenny
Neison are expressed and payable in
pounds Sterling. The base salary of Joris
Brams is expressed and payable in Euro.
The salary levels of executive Directors are
normally reviewed together with those of
senior management annually. The salary
levels were reviewed in respect of FY2018
and an increase of 1% has been awarded,
reflecting the average increase across the
wider workforce.
73
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
Long Term Incentives
Long term incentive awards for FY2018, will be granted on the following basis.
Element
Quantum
Performance Measure*
ESOS
150% of base
salary
Compound Annual Growth in Underlying EPS over the
three year performance period FY2018, FY2019 and
FY2020
LTIP
100% of base
salary
Compound Annual Growth in Underlying EPS over the
three year performance period FY2018, FY2019 and
FY2020 (33% of the award)
Free Cash Flow Conversion (33% of the award)
Return On Capital Employed (33% of the award)
Performance Targets
Compound Annual
Growth in Underlying EPS
2% per annum
6% per annum
Compound Annual
Growth in Underlying EPS
3% per annum
8% per annum
Free Cash Flow
Conversion
65%
75%
ROCE
9.3%
10%
Vesting
25%
100%
Vesting
25%
100%
Vesting
25%
100%
Vesting
25%
100%
* Notwithstanding the extent to which the performance targets set out above are satisfied, an award or option will only vest to the extent the Committee is satisfied that the
improvement in the underlying financial performance of the Company over the performance period warrants the degree of vesting.
For the purposes of these performance conditions, the measures will be determined as follows.
Underlying EPS
Free Cash Flow Conversion
Adjusted earnings per share as disclosed in the Company’s annual report and accounts.
Free Cash Flow: cash from operating activities net of capital investment cash outflows which form part
of investing activities.
Free Cash Flow Conversion: Free Cash Flow / EBITDA excluding exceptional items. Measured as an
average over the three years.
Return On Capital Employed Operating Profit / Asset Base
Asset Base: Net assets (total assets less total liabilities) excluding debt (based on an average of the
start of the financial year and end of the financial year figures). Based on achievement in the final year
of the performance period.
Pensions
No executive Director accrues any benefits under a defined benefit pension scheme. Under their service contracts executive Directors
other than Joris Brams will receive a cash payment of 25% of base salary, in order to provide their own pension benefits.
NON-EXECUTIVE DIRECTORS
The fees paid to non-executive Directors are set at a level to attract individuals with the necessary experience and ability to make a
significant contribution to the Group. The annual fees for the Non-executive Directors including additional fees for the Senior Independent
Director and Committee Chairmen, all of which are unchanged from FY2017, are as follows:
Chairman
Non-executive Director
Senior Independent Director
Chairman of the Audit Committee
Chairman of the Remuneration Committee
74
Year ended 28
February 2018
€230,000
€65,000
€10,000
€25,000
€20,000
C&C Group plcAnnual Report 2017 ANNUAL REPORT ON
REMUNERATION FOR THE
YEAR ENDED 28 FEBRUARY
2017
The following parts of the Remuneration
Report are subject to audit and have been
audited.
DIRECTORS’ REMUNERATION
Details of the remuneration for each
Director who served during the year ended
28 February 2017 are given below. The
comparative figures included for last year
have been presented on a consistent basis
with the current year.
The valuation methodologies used in this
report are those required by the 2013 UK
Regulations on remuneration disclosure,
which we have chosen to apply on a
voluntary basis, and are different from those
applied within the financial statements,
which have been prepared in accordance
with International Financial Reporting
Standards (“IFRS”).
Further details on the valuation
methodologies applied are set out in the
notes relating to columns (a) to (f) below.
Details of the overall Directors’ remuneration
charged to the Group income statement
are shown in notes 3 and 26 to the financial
statements.
SINGLE TOTAL FIGURE OF
REMUNERATION (AUDITED)
The table below reports the total
remuneration receivable in respect of
qualifying services by each Director during
the year ended 28 February 2017 and the
prior year.
Salary/fees
(a)
Further amount
(b)
Taxable benefits
(c)
Annual Bonus
(d)
Long term
incentives (e)
Pension related
benefits (f)
Total
Year ended February
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
Executive Directors
Joris Brams
Stephen Glancey*
Kenny Neison*
Sub-total
370
708
509
366
803
576
1,587 1,745
0
111
83
194
0
0
0
0
28
56
40
124
27
65
47
139
0
0
0
0
73
161
115
349
0
0
0
0
0
0
0
0
*The remuneration for Stephen Glancey and Kenny Neison was translated from Sterling using the average exchange rate for the relevant year.
Non-executive Directors
Vincent Crowley
Emer Finnan*
Stewart Gilliland
John Hogan**
Richard Holroyd
Rory Macnamara***
Breege O’Donoghue
Anthony Smurfit**
Sir Brian Stewart
Sub-total
Total
65
90
65
0
75
54
85
4
230
668
11
82
65
73
75
11
85
65
230
697
2,255 2,442
0
0
0
0
0
0
0
0
0
0
194
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
124
0
0
0
0
0
0
0
0
0
0
139
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
349
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
177
127
304
0
0
0
0
0
0
0
0
0
0
304
0
466
398
201 1,052 1,230
144
882
759
345 2,209 2,578
0
0
0
0
0
0
0
0
0
0
11
65
82
90
65
65
73
0
75
75
11
54
85
85
65
4
230
230
697
668
345 2,877 3,275
* The fees paid to Emer Finnan for the year ending 29 February 2016 reflect her appointment as Chairman of the Audit Committee from July 2015.
** John Hogan resigned as a Director 29 February 2016 and Anthony Smurfit resigned on 23 March 2016.
***Rory Macnamara was a Director until December 2016 and his fees for the year ending 28 February 2017 reflect his acting as a director from March to December 2016.
75
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
NOTES TO THE REMUNERATION
TABLE
Column (a) Salaries and fees
(1) The amounts shown are the amounts
earned in respect of the financial year.
(2) In addition to the amounts shown above,
pursuant to a contract for services effective
as of 1 April 2014 between C&C IP Sàrl
(‘CCIP’) and Joris Brams BVBA (‘JBB’), (a
company wholly owned by Joris Brams and
family), CCIP paid fees in FY2017 of €91,550
to JBB in respect of brand development
services provided by JBB to CCIP in relation
to Belgian products.
Column (b) Further amount
This reflects the amount paid to
Stephen Glancey and Kenny Neison (the
“Participating Directors”) in respect of their
interests under the Joint Share Ownership
Plan (“JSOP”) as referenced in column (c)
below.
In addition, as referred to on page 75 of
the FY2016 Report of the Remuneration
Committee on Directors’ Remuneration, in
order to allow for the orderly wind-up of the
JSOP and the continued alignment of the
interests of the Participating Directors with
the interests of shareholders, during the
year the Participating Directors received a
dividend equivalent payment in respect of
the FY2016 final dividend and the FY2017
interim dividend on their JSOP shares. The
dividend equivalent payments were in lieu
of real dividends paid to the Participating
Directors in previous years in relation to their
JSOP shares. The payment of dividend
equivalents in lieu of real dividends does
not result in any increase in the overall cost
to the Company. The total amount of the
payments to the Participating Directors
in FY2017 was €343,537 in the case of
Mr Glancey and € 257,652 in the case of
Mr Neison. As their JSOP interests were
realised by the Participating Directors in
December 2016, there will be no further
dividend equivalent payments to them.
Column (c) Benefits
(1) The executive Directors received a cash
allowance of 7.5% of base salary. The Group
provided death-in-service cover of four
times annual base salary and permanent
health insurance (or reimbursement of
76
premiums paid into a personal policy). Stephen Glancey and Kenny Neison also availed of
medical insurance under a Group policy.
(2) When an award is granted to an executive under the JSOP, 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 paid 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 UK HM Revenue and Customs stipulated rates (4.0% for
the period up to and including 5 April 2014, 3.25% for the period from 6 April 2014 to 5 April
2015 and 3.0% for the period from 6 April 2015). The resulting loans by the Company to
the executive Directors are required to be disclosed under the Companies Act 2014. The
balances of the loans outstanding to the executive Directors as at 28 February 2017 and 29
February 2016 are as follows:
Stephen Glancey
Kenny Neison
Total
28 February 2017
€’000
29 February 2016
€’000
Nil
Nil
Nil
111
83
194
Under the terms of the Plan, 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. During the financial year ended 28 February 2017, Stephen Glancey paid a
further amount of €110,934 and Kenny Neison paid a further amount of €83,200, so that
each of them repaid the full balance of his loan which was outstanding at 29 February
2016. The Company compensated Mr Glancey and Mr Neison by paying an amount
(subject to deductions of tax and social security) equal to the applicable further amount.
The compensation is disclosed under Further Amount in column (b) of the table.
Column (d) Annual Bonus
(1) The amounts shown are the total bonus earned under the annual bonus scheme in
respect of the financial year.
(2) For the year ended 28 February 2017, the annual bonus for executive Directors was
based on performance against a Group adjusted operating profit target (75%) and a cash
conversion target (25%). The maximum bonus opportunity was 80% of salary. Target bonus
was 30% of salary (37.5% of the maximum opportunity). Further details of how the bonuses
earned relate to performance are provided in the table below. As the adjusted operating
profits targets are considered to be commercially sensitive, and recognising that no bonus
was earned in respect of that element, the Company has not disclosed details of these
targets. However, in future if a bonus is earned by reference to the adjusted operating profit
measure, the Company will disclose details of the targets on a retrospective basis.
Measure
‘Target’
‘Maximum’
Performance Targets
Actual
Performance Bonuses earned (percentage of salary)
Adjusted Operating
Profit
Budget
110% of
Budget
Below
Target
Cash Conversion
65%
75%
53.0%
The Operating Profit element of
the bonus is not payable as the
target has not been achieved
The Cash Conversion element of
the bonus is not payable as the
target has not been achieved.
C&C Group plcAnnual Report 2017 Column (e) Long term incentives
(1) The amounts shown in respect of long
term incentives are the values of awards
where final vesting is determined as a
result of the achievement of performance
measures or targets relating to the financial
year and is not subject to achievement
of further measures or targets in future
financial years.
(2) For the year ended 28 February 2017, no
amounts will vest in respect of the LTIP (Part
I) and ESOS awards granted in June 2014 to
Stephen Glancey, Kenny Neison and Joris
Brams. The performance conditions for
these awards are detailed in note 4 (Share-
Based Payments) and the Remuneration
Committee has determined that threshold
performance has not been met under any of
the measures and accordingly the awards
have lapsed.
Column (f) Pensions related benefits
No executive Director accrued any benefits
under a defined benefit pension scheme.
Under their service contracts, executive
Directors, other than Joris Brams, received
a cash payment of 25% of base salary in
order to provide their own pension benefits
as disclosed in column (f) of the table.
FORMER DIRECTORS AND PAYMENTS
FOR LOSS OF OFFICE
No payments were made to past Directors
during the year ended 28 February 2017
in respect of services provided to the
Company as a Director.
There were no payments made to Directors
for loss of office during the year ended 28
February 2017.
DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS
Shareholding guidelines
The Company has introduced a shareholding guideline for the current executive Directors.
The Group Chief Executive Officer is expected to maintain a personal shareholding of at
least two times’ salary. For the other executive Directors, this has been set at one times’
salary. Executive Directors are expected to retain 50% of the after tax value of vested share
awards until at least the shareholding guideline has been met.
Stephen Glancey’s and Kenny Neison’s shareholdings in the Company, as set out below,
currently represents as at the date of this report approximately 21 times and 13 times their
respective base salary. Joris Brams’ shareholding in the Company, as set out below,
represents as at the date of this report approximately 86% of salary.
Directors’ Interests in Share Capital of the Company (Audited)
The interests of the Directors and the Company Secretary in office at 28 February 2017 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:
Directors
Joris Brams
Vincent Crowley
Emer Finnan
Stephen Glancey
Stewart Gilliland
Richard Holroyd
Kenny Neison
Breege O’Donoghue
Sir Brian Stewart
Total
Company Secretary
David Johnston
1 March 2016
(or date of
appointment if
later)
Total
91,477
0
0
5,120,0001
12,000
48,646
2,561,5301
64,957
200,000
8,098,610
28 February 2017
Total
91,477
10,000
0
4,170,603
12,000
50,093
1,849,482
65,967
200,000
6,449,622
0
0
1 The interests of Stephen Glancey and Kenny Neison at 1 March 2016 include Interests in shares acquired and jointly
held with the trustees of the C&C Employee Benefit Trust under the Company’s Joint Share Ownership Plan (“JSOP”),
which at 1 March 2016 comprised 3,413,334 shares in respect of Stephen Glancey and 2,560,000 shares in respect
of Kenny Neison. Stephen Glancey and Kenny Neison realised their interests under the Joint Share Ownership Plan in
December 2016. In respect of Stephen Glancey, 2,463,937 of the shares held in co-ownership transferred to his sole
ownership and 949,397 shares representing the trustee’s interest in the shares held in co-ownership in accordance
with the terms of the JSOP transferred to the trustees of the JSOP. In respect of Kenny Neison 1,847,952 shares of
the shares previously held in co-ownership transferred to his sole ownership and 712,048 shares representing the
trustee’s interest in the shares held in co-ownership in accordance with the terms of the JSOP transferred to the
trustees of the JSOP.
There was no movement in the Directors’ or the Company Secretary’s interests in C&C Group plc ordinary shares
between 28 February 2017 and 17 May 2017.
77
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
SHARE INCENTIVE SCHEME INTERESTS AWARDED DURING YEAR
The table below sets out the scheme interests awarded to executive Directors’ and the Company Secretary during the year ended 28
February 2017, each of which is subject to performance conditions as set out below measured over a performance period from 1 March
2016 to 28 February 2019.
Executive Director
Type of award
Maximum opportunity
Number of shares
Face value (at date of
grant)3
% of maximum
opportunity vesting at
threshold
Stephen Glancey
Stephen Glancey
Kenny Neison
Kenny Neison
Joris Brams
Joris Brams
ESOS1
LTIP2
ESOS1
LTIP2
ESOS1
LTIP2
150% of base salary
100% of base salary
150% of base salary
100% of base salary
150% of base salary
100% of base salary
268,337
178,891
192,652
128,435
132,711
88,474
€1,084,350
€722,899
€778,507
€519,006
€536,285
€357,523
N/A1
25%
N/A1
25%
N/A1
25%
(1) The ESOS awards were granted in the form of market value share options over €0.01 ordinary shares in C&C Group plc. The ESOS
awards have an exercise price of €4.18 per share being the closing price on the dealing day before the date of grant and are subject to the
following performance condition.
Performance condition
Compound annual growth in Underlying EPS over the three year performance period FY2017, FY2018 and
FY2019
Performance
target
% of element
vesting
3%
6%
50%
100%
(2) The LTIP awards were granted in the form of nil cost options over €0.01 ordinary shares in C&C Group plc. The LTIP awards are subject
to the following three performance conditions:
Performance condition
Compound annual growth in Underlying EPS over the three year performance period
FY2017, FY2018 and FY2019
Free Cash Flow Conversion
Return on Capital Employed
Weighting
Performance
target
% of element
vesting
33%
33%
33%
3%
8%
65%
75%
9.3%
10%
25%
100%
25%
100%
25%
100%
Notwithstanding the extent to which the performance targets set out above are satisfied, an award or option will only vest to the extent the Committee is satisfied that the
improvement in the underlying financial performance of the Company over the performance period warrants the degree of vesting.
Definitions are in line with those provided on page 74.
(3) The face value of awards is based on the number of shares under award multiplied by the closing share price on the date of grant being
€4.041.
78
C&C Group plcAnnual Report 2017 DIRECTORS’ INTERESTS IN OPTIONS (AUDITED)
Interests in options over ordinary shares of €0.01 each in C&C Group plc
Total at 1 March
Date of grant
Exercise price
Scheme Exercise period
2016 Awarded in year
Exercised in
year
Lapsed in year
Total at 28
February 2017
27/6/14
€ 0.00
LTIP (Part I)
27/6/14
€4.621
ESOS
2/7/15
€0.00
LTIP (Part I)
2/7/15
€3.483
ESOS
12/5/16
€ 0.00
LTIP
12/5/16
€4.18
ESOS
Directors
Joris Brams
Stephen Glancey
26/5/10
€ 3.205
ESOS
29/2/12
€ 0.00
LTIP (Part I)
27/6/14
€ 0.00
LTIP (Part I)
27/6/14
€4.621
ESOS
2/7/15
€0.00
LTIP (Part I)
2/7/15
€3.483
ESOS
12/5/16
€ 0.00
LTIP
12/5/16
€4.18
ESOS
27/6/17 -
26/6/20
27/6/17 -
26/6/21
2/7/18 -
1/7/21
2/7/18 -
1/7/22
12/5/19-
11/5/26
12/5/19-
11/5/26
Total
26/5/13 -
25/5/17
1/3/15 -
28/2/18
27/6/17 -
26/6/20
27/6/17 -
26/6/21
2/7/18 -
1/7/21
2/7/18 -
1/7/22
12/5/19-
11/5/26
12/5/19-
11/5/26
Total
158,476
118,857
105,127
157,691
Nil
Nil
88,474
132,711
(158,476)
(118,857)
Nil
Nil
105,127
157,691
88,474
132,711
540,151
221,185
(277,333)
484,003
234,100
28,773
158,443
237,664
237,028
355,543
Nil
Nil
178,891
268,337
(158,443)
(237,664)
234,100
28,773
Nil
Nil
237,028
355,543
178,891
268,337
1,251,551
447,228
(396,107)
1,302,672
79
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
Date of grant
Exercise price
Scheme Exercise period
2016 Awarded in year
Total at 1 March
Exercised in
year
Lapsed in year
Total at 28
February 2017
Kenny Neison
26/5/10
€ 3.205
ESOS
29/2/12
€ 0.00
LTIP (Part I)
27/6/14
€ 0.00
LTIP (Part I)
27/6/14
€4.621
ESOS
2/7/15
€0.00
LTIP (Part I)
2/7/15
€3.483
ESOS
12/5/16
€ 0.00
LTIP
12/5/16
€4.18
ESOS
26/5/13 -
25/5/17
1/3/15 -
28/2/18
27/6/17 -
26/6/20
27/6/17 -
26/6/21
2/7/18 -
1/7/21
2/7/18 -
1/7/22
12/5/19-
11/5/26
12/5/19-
11/5/26
Total
140,500
20,658
113,753
170,630
170,174
255,261
Nil
Nil
128,435
192,652
(113,753)
(170,630)
140,500
20,658
Nil
Nil
170,174
255,261
128,435
192,652
870,976
321,087
(284,383)
907,680
David Johnston
2/7/15
€0.00
LTIP (Part I)
2/7/18 -
1/7/21
Total
45,937
45,937
45,937
45,937
Key: ESOS - Executive Share Option Scheme; LTIP (Part I) - Long Term Incentive Plan (Part I); LTIP – Long Term Incentive Plan approved in
2015
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 2017 was €3.87 (29 February 2016 €3.446). The price of the Company’s ordinary shares ranged
between €3.415 and €4.18 during the year.
There was no movement in the interests of the Directors in options over C&C Group plc ordinary shares between 28 February 2017 and 17
May 2017.
The following sections of the Remuneration Report are not subject to audit.
80
C&C Group plcAnnual Report 2017 PERFORMANCE GRAPH AND TABLE
This graph shows the value, at 28 February 2017, of €100 invested in the Company on 28 February 2009 compared to the value of €100
invested in the ISEQ General Index. The relevant index has been selected as a comparator because the Company is a member of that
index.
Total shareholder return
700
600
500
400
300
200
100
C&C Group
ISEQ General Index
Source: Thomson Reuters Datastream
28.02.2009
28.02.2010
28.02.2011
29.02.2012
28.02.2013
28.02.2014
28.02.2015
29.02.2016
28.02.2017
CHIEF EXECUTIVE OFFICER
Eight Year Record
The following table sets out information on the remuneration of the Chief Executive Officer for the eight years to 28 February 2017:
FY2010
FY2011
FY2012
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
John Dunsmore (note)
John Dunsmore
John Dunsmore (to 31/12/11)
Stephen Glancey (from 1/1/12)
Stephen Glancey
Stephen Glancey
Stephen Glancey
Stephen Glancey
Stephen Glancey
Total Remuneration
€’000
Annual Bonus
(as % of maximum
opportunity)
Long term incentives
vesting
(as % of maximum number
of shares)
5,525
989
1,126
956
1,321
1,152
980
1,230
1,052
Nil
Nil
75%
75%
Nil
18.75%
Nil
25%
Nil
100%
100%
100%
100%
100%
7%
Nil
Nil
Nil
The amounts set out in the above table were translated from Sterling based on the average exchange rate for the relevant year
Note: FY2010 includes vesting of awards over a number of years
John Dunsmore retired as Chief Executive Officer on 31 December 2011 and Stephen Glancey was appointed with effect from 1 January
2012, having previously been Chief Operating Officer. The salary, benefits and bonus figures are calculated for the period in office.
Change in CEO’s remuneration
The table below sets out in relation to salary, taxable benefits and annual bonus the percentage change in remuneration for the Chief
Executive Officer for the financial year ended 28 February 2017 compared with the previous financial year.
Change in Total
Remuneration
Change in Base
Salary
Change in Taxable
Benefits
Change in Annual
Bonus
Chief Executive Officer
(15%)
1%
Nil%
See note*
* The Chief Executive Officer received a bonus of 20% of salary in FY2016 and no bonus in FY2017.
81
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
Employees’ Pay Comparison
Information on employee remuneration is given in note 3 to the financial statements. The ratio of the average remuneration of executive
Directors to the average remuneration of the employees of the Group (excluding Directors) was 16:1 (FY2016: 19.1).
External appointments
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 FY2017 in respect of this role.
Service contacts and letters of appointment
Service Contracts
Each of the executive Directors is employed on a service contract. Details of the service contracts of the executive Directors in office
during the year are as follows:
Contract date
Stephen Glancey
Kenny Neison
Joris Brams
9 November 2008, amended 28 February 2012
9 November 2008, amended 28 February 2012
1 September 2012, amended as of 1 April 2014
Notice period
Unexpired term of
contract
12 months
12 months
12 months
n/a
n/a
n/a
C&C IP Sàrl (‘CCIP’) entered into a contract for services effective as of 1 April 2014 with Joris Brams BVBA (‘JBB’), (a company wholly
owned by Joris Brams and family), under which JBB agreed to provide to CCIP brand development services in relation to Belgian
products and CCIP agreed to pay monthly fees totaling €91,550 on an annual basis.
Letters of appointment
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 letters of appointment for each non-executive Director who will be proposed for re-appointment at the 2017 AGM are dated as
follows:
Non-executive Director
Sir Brian Stewart
Emer Finnan
Stewart Gilliland
Richard Holroyd
Breege O’Donoghue
Vincent Crowley
Jim Clerkin
Date of letter of appointment
10 February 2010
4 April 2014
17 April 2012
26 April 2004
26 April 2004
23 November 2015
1 April 2017
The letters of appointment are each agreed to be 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.
82
C&C Group plcAnnual Report 2017 DIRECTORS’ REMUNERATION
POLICY
This part of the report sets out extracts
from the Group’s policy on Directors’
remuneration, as included in the FY2015
Annual Report and Accounts and approved
by shareholders on an advisory basis at
the 2015 AGM (from when it took effect).
We have included in this part of the report
those aspects of the policy that we think
shareholders will find most useful; the full
Policy Report is included on pages 66 to 78
of the FY2015 annual report and accounts,
which is available on www.candcgroupplc.
com. We have also amended the text of
the policy as included in the FY2015 Annual
Report and Accounts to update date
specific references and remove references
to legacy arrangements such as the old
ESOS and LTIP (Part 1) under which awards
will no longer be granted.
GENERAL STATEMENT OF POLICY
The main aim of the Group’s policy on
Directors’ remuneration is to attract, retain
and motivate Directors of the calibre
required to promote the long term success
of the Group. The Committee therefore
seeks to ensure that Directors are properly,
but not excessively, remunerated and
motivated to perform in the best interests of
shareholders, commensurate with ensuring
shareholder value.
The Committee seeks to ensure that
executive Directors’ remuneration is aligned
with shareholders’ interests and the Group’s
strategy. Share awards are therefore
seen as the principal method of long term
incentivisation. Executive Directors are
incentivised on a range of equity share
structures, notably the significant share
ownership held by Stephen Glancey and
Kenny Neison facilitated in part by their
interests in the JSOP, which have now been
realised. Similar principles are applied for
senior management, several of whom have
material equity holdings in the Company.
Annual performance-related rewards aligned
with the Group’s key financial, operational
and strategic goals and based on stretching
targets are a further component of the total
executive remuneration package. For senior
management, mechanisms are tailored to
local requirements.
The Group seeks to bring transparency
to executive Directors’ reward structures
through the use of cash allowances in place
of benefits in kind. In setting executive
Directors’ remuneration, the Committee
has regard to pay levels and conditions
applicable to other employees across the
Group.
FUTURE POLICY TABLE
Executive Directors’ remuneration
Element
Salary
Purpose and link
to strategy
Operation
Purpose is to attract, recruit and retain Directors of the necessary calibre.
Salary levels are determined by the Committee taking into account factors including:
• scope and responsibilities of the role;
• experience and individual performance;
• overall business performance;
• prevailing market conditions;
• pay in comparable companies, principally in the global beverage sector; and
• overall risk of non-retention.
Opportunity
Executive Directors are entitled to an annual review of their salary, but there is no entitlement to receive any
increase.
The Committee may award salary increases to take account of individual circumstances such as:
• increases or changes in scope and responsibility;
• to reflect the executive Director’s development and performance in the role; or
• alignment to market level.
In awarding increases, the Committee will have regard to the outcome of pay reviews for employees as a whole.
Performance
metrics
Not applicable.
83
Governance
Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
Element
Benefits/cash allowance in lieu
Purpose and link
to strategy
Operation
Purpose is to attract, recruit, and retain Directors of the necessary calibre.
The Group seeks to bring transparency to Directors’ reward structures through the use of cash allowances in place
of benefits in kind. The cash allowance can be applied to benefits such as a company car and health benefits.
Group benefits such as death in service insurance are also made available. Other benefits may be provided
based on individual circumstances including housing or relocation allowances, travel allowance or other expatriate
benefits. Benefits and allowances are reviewed alongside salary.
Opportunity
The Committee has not set an absolute maximum on the levels of benefits that may be awarded since this will
depend upon the circumstances applicable to the relevant Director as well as the cost of any third party suppliers.
The value of the cash allowance/benefit is set at a level which the Committee considers appropriate against the
market and provides sufficient level of benefit based on individual circumstances.
Performance
metrics
Not applicable.
Element
Pension/cash allowance in lieu
Purpose and link
to strategy
Operation
Purpose is to attract, recruit and retain Directors of the necessary calibre.
The Group seeks to bring transparency to Directors’ reward structures through the use of cash allowances in
place of pension scheme participation, the allowance being either paid direct or into a personal pension plan. No
executive Director accrues any benefits under a defined benefit pension scheme. All cash allowances are reviewed
alongside salary.
Opportunity
Maximum cash allowance is 30% of salary. The value awarded is set at a level which the Committee considers
appropriate against the market and provides sufficient level of benefit based on individual circumstances.
Performance
metrics
Not applicable.
84
C&C Group plcAnnual Report 2017 Element
Annual bonus
Purpose and link
to strategy
Rewards performance against annual financial, operational and strategic business targets which support the
strategic direction of the Company and align the interests of executives with shareholders.
Operation
A discretionary scheme under which executive Directors are entitled to receive a variable reward contingent upon
the achievement of performance targets.
The structure and value of the bonus scheme and the applicable performance measures are subject to
annual approval by the Committee. Any pay-out is determined by the Committee after the year end, based on
performance against the relevant targets.
The Committee has discretion to vary the bonus pay-out should any formulaic output not reflect the Committee’s
assessment of overall business performance.
The Committee has discretion to apply deferral to part of any bonus earned in the year and for such amount to be
deferred into shares for a period of up to two years.
Malus and clawback provisions will apply to the annual bonus. See the ‘Malus and clawback’ section below for
more details.
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.
Opportunity
Maximum opportunity is 100% of base salary.
However, for FY2018 executive Directors are entitled to a maximum bonus opportunity of 80% of base salary.
Performance
metrics
Measures and targets are set annually reflecting the Company’s strategy and aligned with key financial,
operational, strategic and/or individual objectives.
Targets, whilst stretching, do not encourage inappropriate business risks to be taken.
The relevant measures and the respective weightings may vary each year based upon the Company’s priorities.
If applicable, as the bonus is subject to performance measures, any deferred bonus is not subject to further
performance conditions.
Element
Share-based rewards – new long term incentive plans
Purpose and link to
strategy
To incentivise executive Directors to execute the Group’s business strategy over the longer term and align their
interests with those of shareholders to achieve a sustained increase in shareholder value.
Operation
A new Long Term Incentive Plan (“LTIP”) and a new Executive Share Option Scheme (“ESOS”) were adopted
following shareholder approval at the 2015 AGM.
Subject to the plan limits set out below the Committee has the discretion to determine the appropriate mix of LTIP
and ESOS awards each year in the context of the Company’s business cycle and its future growth plans save
where the executive has a contractual entitlement. Malus and clawback provisions will apply to both the LTIP and
the ESOS. See the “Malus and clawback” section below for more details.
Awards are usually made annually by the Committee following the release of full year financial results but can be
made after release of the interim results and exceptionally at other times.
85
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
Element
Share-based rewards – new long term incentive plans
Opportunity
Performance
metrics
If awards are made under both the LTIP and the ESOS in respect of the same financial year the overall maximum,
other than in exceptional circumstances, will be capped at 250% of salary. In exceptional circumstances the
maximum combined LTIP and ESOS award in respect of any financial year is 500% of salary.
The vesting of awards is subject to the satisfaction of performance conditions set by the Committee. Performance
conditions are selected that are aligned to the Company’s strategy and with shareholders’ interests. The
performance measures chosen are reviewed regularly to ensure they remain relevant. The relevant measures,
targets and weightings may vary each year based upon the Company’s priorities. Options lapse if the performance
target threshold is not met in the relevant testing period and there is no retesting.
Element
(a) ESOS
Purpose and link
to strategy
To incentivise executive Directors to execute the Group’s business strategy over the longer term and align their
interests with those of shareholders to achieve a sustained increase in shareholder value.
Operation
The Committee may grant options to acquire shares in the Company at a market related exercise price. The
Committee has discretion to grant ESOS awards to reward sustained value creation by averaging the value of the
shares at grant and the point of exercise across an extended period of up to six months.
The vesting of options is subject to meeting a specific performance target set by the Committee and measured
over a period of three years. Options will not normally be exercisable until after the assessment of the performance
condition following the end of the performance period.
Options vest early on a change of control (or other relevant event), taking into account the performance conditions.
Options may be adjusted in the event of a variation of share capital in accordance with the scheme rules.
The Committee has the discretion to grant ESOS options as tax-advantaged options, as permitted by the UK
Revenue authorities, and allows grants of options over shares with a market value of up to the value prescribed
by the applicable tax legislation (currently £30,000) to be made on a tax efficient basis to employees who are UK
taxpayers. Tax-advantaged options will be subject to the same performance conditions as non-tax-advantaged
options.
Opportunity
The maximum ESOS award is 150% of base salary in respect of any financial year if granted in combination with a
LTIP award equal to 100% of salary.
Other than in exceptional circumstances the limit on ESOS awards would be 300% of salary if no LTIP awards are
granted in respect of the same financial year.
This is subject to the overall exceptional circumstances limit set out above.
Performance
metrics
See page 78 and note 4 to the financial statements for details of the performance conditions for FY2017.
86
C&C Group plcAnnual Report 2017 Element
(b) LTIP
Purpose and link
to strategy
To incentivise executive Directors to execute the Group’s business strategy over the longer term and align their
interests with those of shareholders to achieve a sustained increase in shareholder value.
Operation
Under the LTIP, awards of conditional shares, restricted stock or nil cost or nominal cost options (or similar cash
equivalent) can be made.
The vesting of awards is subject to meeting specific performance targets set by the Committee and measured
over a period of three years. Awards will not normally vest until after the assessment of the performance condition
following the end of the performance period.
The Committee may decide that a participant has a right to ‘dividend equivalents’ whereby the participant receives
additional value equivalent to that which accrues to shareholders by way of dividends that would have been paid
on the underlying shares during the vesting period. This value can be paid as cash or shares.
Awards vest early on a change of control (or other relevant event) taking into account the performance conditions
and pro-rating for time, although the Committee has discretion not to apply time pro-rating. Awards may be
adjusted in the event of a variation of share capital in accordance with the scheme rules.
Opportunity
The maximum LTIP award is 100% of base salary in respect of any financial year if granted in combination with an
ESOS award equal to 150% of salary.
The maximum LTIP award is 150% of base salary in respect of any financial year if no ESOS award is granted in
respect of the same financial year.
This is subject to the overall exceptional circumstances limit set out above.
Performance
metrics
See page 78 and note 4 to the financial statements for details of the performance conditions for FY2017.
Performance conditions will be attached to the LTIP awards by taking into account the business priorities prevailing
at the time of grant and the Company’s strategy. Such conditions may include, but are not limited to, EPS growth
and cash conversion and return on capital.
Element
Share-based rewards – all-employee plans
Purpose and link
to strategy
To align the interests of eligible employees with those of shareholders through share ownership.
Operation
(See schemes described below)
Opportunity
For tax-advantaged plans the maximum opportunity set by the rules or adopted by the Committee will be in line
with or below the statutory limits.
Performance
metrics
No performance conditions would usually be required in tax-advantaged plans.
87
Governance Report of the Remuneration Committee
on Directors’ Remuneration
(continued)
Element
(a) Irish APSS/ UK SIP
Purpose and link
to strategy
Operation
Opportunity
Performance
metrics
To align the interests of eligible employees with those of shareholders through share ownership.
The C&C Profit Sharing Scheme is an all-employee share scheme and has two parts. Part A relates to employees
in ROI and has been approved by the Irish Revenue Commissioners (the Irish APSS). Part B relates to employees
in the UK and is a HMRC qualifying plan of free, partnership, matching or dividend shares (or cash dividends) with
a minimum three year vesting period for matching shares (the UK SIP). UK resident executive Directors are eligible
to participate in Part B only.
There is currently no equivalent plan for Directors resident outside of Ireland or the UK.
Under the Company’s UK SIP the current maximum subscription is £750 per annum with entitlement to matching
shares of £750 per annum. However, the Committee reserves the right to increase the maximum to the statutory
limits.
No performance conditions are attached to awards under the Irish APSS or the UK SIP.
Non-executive Directors’ remuneration
Element
Non-executive Director fees
Purpose and link
to strategy
Sole element of non-executive Director remuneration is set at a level that reflects market conditions and is sufficient
to attract individuals with appropriate knowledge and experience.
Operation
Fees paid to non-executive Directors are determined and approved by the Board as a whole. The Committee
recommends the remuneration of the Chairman to the Board.
Fees are reviewed from time to time and adjusted to reflect market positioning and any change in responsibilities.
Non-executive Directors receive a basic fee and an additional fee for further duties (for example chairmanship of a
committee or senior independent Director responsibilities).
Non-executive Directors are not eligible to participate in the annual bonus plan or share-based schemes and do
not receive any benefits (including pension) other than fees in respect of their services to the Company.
Non-executive Directors may be eligible to receive certain benefits as appropriate such as the use of secretarial
support, travel costs or other benefits that may be appropriate.
Opportunity
Fees are based on the level of fees paid to non-executive Directors serving on Boards of similar-sized Irish and UK-
listed companies and the time commitment and contribution expected for the role.
The Articles of Association provide that the ordinary remuneration of Directors (i.e. Directors’ fees, not including
executive remuneration) 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 2013, when it was
increased to €1.0 million in aggregate.
Performance
metrics
Not applicable.
88
C&C Group plcAnnual Report 2017 Legacy payments
The Committee reserves the right to make
any remuneration payment or any payment
for loss of office without the need to consult
with shareholders or seek their approval,
notwithstanding that it is not in line with the
policy set out above, where the terms of the
payment were agreed either:
• before the policy came into effect; or
• at a time when the relevant individual was
not a Director of the Company and, in the
opinion of the Committee, the payment
was not in consideration for the individual
becoming a Director of the Company.
For these purposes: the term ‘payment’
includes any award of variable remuneration;
in relation to an award over shares, the
terms of the payment are ‘agreed’ at the
time the award is granted.
Minor changes
The Committee may, without the need to
consult with shareholders or seek their
approval, make minor changes to this policy
to aid in its operation or implementation
taking into account the interests of
shareholders.
This report was approved by the Board and
signed on its behalf by
Breege O’Donoghue
Chairman of the Remuneration Committee
17 May 2017
Malus and clawback
In line with the UK Corporate Governance
Code malus and clawback provisions
will apply to all elements of performance-
based variable remuneration (i.e. annual
bonus, the ESOS and LTIP approved by
shareholders at the 2015 AGM) for the
executive Directors with effect from 1 March
2016. The circumstances in which malus
and clawback will be applied are if there
has been in the opinion of the Committee
a material mis-statement of the Group’s
published accounts; or the Committee
reasonably determines that a participant
has been guilty of gross misconduct.
The clawback provisions will apply for a
period of two years following the end of the
performance period.
DISCRETION TO DEPART FROM
POLICY
Share schemes and other incentives
The Committee recognises the importance
of ensuring that the outcomes of the
Group’s executive pay arrangements
properly reflect the Group’s overall
performance over the performance period.
It is the Committee’s intention that the
mechanistic application of performance
conditions relating to awards will routinely
be reviewed to avoid outcomes which
could be seen as contrary to shareholders’
expectations.
To the extent provided for in accordance
with any relevant amendment power
under the rules of the share plans or in
the terms of any performance condition,
the Committee may alter the performance
conditions relating to an award or option
already granted if an event occurs (such
as a material acquisition or divestment or
unexpected event) which the Committee
reasonably considers means that the
performance conditions would not,
without alteration, achieve their original
purpose. The Committee will act fairly and
reasonably in making the alteration so that
the performance conditions achieve their
original purpose and the thresholds remain
as challenging as originally imposed. The
Committee will explain and disclose any
such alteration in the next remuneration
report.
89
Governance • 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; and
• The annual report and financial
statements, taken as a whole, provides
the information necessary to assess
the Group’s performance, business
model and strategy and is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the company’s position and
performance, business model and
strategy.
Signed
On behalf of the Board
Sir Brian Stewart
Chairman
Stephen Glancey
Group Chief
Executive Officer
Statement of Directors’ Responsibilities
principal risks and uncertainties facing the
Group.
The Directors are responsible for adequate
accounting records which disclose with
reasonable accuracy at any time the assets,
liabilities, financial position and profit or
loss of the Company, and which will enable
them to ensure that the financial statements
of the Group are prepared in accordance
with applicable IFRS as adopted by the
European Union and comply with the
provisions of the Companies Act 2014,
and, as regards to the Group financial
statements, Article 4 of the European
Communities (International Financial
Reporting Standards and Miscellaneous
Amendments) Regulations 2005 (the ‘IAS
Regulation’). They are also responsible for
safeguarding the assets of the Company
and 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 (‘www.candcgroupplc.
com’). Legislation in Ireland concerning the
preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
RESPONSIBILITY STATEMENT AS
REQUIRED BY THE TRANSPARENCY
DIRECTIVE AND UK CORPORATE
GOVERNANCE CODE
Each of the Directors, whose names and
functions are listed on pages 52 and 53 of
this Annual Report, confirm that, to the best
of each person’s knowledge and belief:
• The Group Financial Statements,
prepared in accordance with IFRS as
adopted by the European Union and the
Company financial statements prepared
in accordance with FRS 101, as applied
in accordance with the Companies Act
2014, give a true and fair view of the
assets, liabilities, financial position of the
Group and Company at 28 February 2017
and of the profit or loss of the Group for
the year then ended;
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 the requirements of
the Companies Act 2014 and Financial
Reporting Standard 101 ‘Reduced
Disclosure Framework’ (‘FRS 101’), issued
by the Financial Reporting Council in the
UK and promulgated by the Institute of
Chartered Accountants in Ireland.
The Group financial statements are required
by law and IFRSs as adopted by the EU
to present fairly the financial position and
performance of the Group. The Company
financial statements are required by law to
give a true and fair view of the state of affairs
of the Company.
In preparing each of the Group and
Company financial statements the Directors
are required to:
• select suitable accounting policies and
apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• state that the Group financial statements
comply with IFRS as adopted by the
EU and as regards the Company,
comply with FRS 101 together with the
requirements of the Companies Act 2014;
and
• prepare the financial statements on
the going concern basis, unless it is
inappropriate to presume that the Group
and Company will continue in business.
The Directors are also required by the
Transparency (Directive 2004/109/
EC0 Regulations 2007) and the interim
Transparency Rules of the Irish Financial
Services Regulatory Authority to include a
management report containing a fair review
of the business and a description of the
90
C&C Group plcAnnual Report 2017 Financial Statements
in this section
92
96
97
98
99
100
101
102
103
116
177
179
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 Statement of Changes In Equity
Statement of Accounting Policies
Notes Forming Part of the Financial
Statements
Financial Definitions
Shareholder and Other Information
91
Financial Statements Independent Auditor’s Report
to the Members of C&C Group plc
C&C Group plc
Annual Report 2017
OPINIONS AND CONCLUSIONS ARISING FROM OUR AUDIT
1. OUR OPINION ON THE FINANCIAL STATEMENTS IS UNMODIFIED
We have audited the financial statements of C&C Group plc for the year ended 28 February 2017 set out on pages 96 to 176 which
comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group and Company Balance Sheets, the
Group Cash Flow Statement, the 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 (IFRS) as adopted by
the European Union, and, as regards the Company financial statements, as applied in accordance with FRS 101 Reduced Disclosure
Framework (“FRS 101”) and the provisions of the Companies Act 2014. Our audit was conducted in accordance with International
Standards on Auditing (ISAs) (UK & Ireland).
In our opinion:
• the Group financial statements give a true and fair view of the assets, liabilities and financial position of the Group as at 28 February
2017 and of its loss for the year then ended;
• the Company statement of financial position gives a true and fair view of the assets, liabilities and financial position of the Company as at
28 February 2017;
• the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
• the Company financial statements have been properly prepared in accordance with FRS 101 as applied in accordance with the
provisions of the Companies Act 2014; and
• the Group financial statements and Company financial statements have been properly prepared in accordance with the requirements of
the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
2. OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
In arriving at our audit opinion above on the Group financial statements, the risks of material misstatement that had the greatest effect on
our Group audit were as follows:
Impairment assessment of intangible assets contained in the Group’s North America operating segment – Year end
balance of €35.4 million after impairment charge of €106.6m (2016: Year end balance of €147.1million)
Refer to page 64 (Audit Committee Report), page 108 (accounting policy) and note 12 to the financial statements.
The risk
As detailed in the accounting policy note on page 108, impairment testing of intangible assets and goodwill is performed annually by the
Group or more frequently if there is an indication that the carrying amount may not be recoverable.
During the current year, an impairment charge of €106.6 million was recorded against the carrying value of these assets. There is a risk
that the impairment charge has not been appropriately calculated and that the carrying value of the remaining assets assigned to the
Group’s North American operating segment may not be recovered from future cashflows.
There is inherent uncertainty involved in preparing forecasts and discounted future cash flow reports for this purpose and significant
judgement is involved in relation to the assumptions used in the Group’s impairment model for the purposes of assessing the carrying
value of the assets.
Our response
In this area, our audit procedures included, amongst others,
• assessing the appropriateness of management’s identification of cash generating units (“CGUs”) within the Group’s North American
operating segment and the allocation of intangible assets, which are largely brands arising from acquisitions, to these CGUs;
• evaluating the key assumptions and methodologies used by the Group, in particular those relating to volumes, revenue, operating profit
and the discount rate and terminal growth rate applied to the forecasted cash flows in the model;
• considering the appropriateness of management’s key assumptions based on the FY2018 budget, most recent financial results and
other external data;
• checking the mathematical accuracy of management’s model;
• considering the historical accuracy of the Group’s forecasts;
We also performed similar procedures, to those outlined above, in relation to management’s assessment of the carrying value of intangible
assets and goodwill allocated to the Group’s other operating segments and the related disclosures.
92
Financial Statements
We considered, at an overall level, the difference between the market capitalisation of the Group and the book value of its net assets
which indicated that the market capitalisation exceeded the book value by €686 million at 28 February 2017.
Carrying value of Property, Plant and Equipment (‘PP&E’) – €146.2 million (2016: €190.3 million)
Refer to page 64 (Audit Committee Report), pages 108 to 109 (accounting policy) and note 11 to the financial statements.
The risk
The Group carries its land and buildings and plant and machinery at fair value. The freehold land and buildings in Ireland, Portugal and the
US and certain assets in Scotland are valued using a market approach. The Group’s remaining land and buildings assets in the UK, and
its plant and machinery in Ireland, the UK and the US are valued using the Depreciated Replacement Cost (DRC) method.
During the current year, the US land and buildings and plant and equipment were subject to independent expert valuations. The valuation
of the Group’s remaining assets were determined internally by management and significant judgement is exercised in determining the
appropriate assumptions underlying the valuation, including amongst others, market based assumptions, plant replacement costs and
plant utilisation levels. The majority of these assets were last subject to external valuations as at 28 February 2015.
There is inherent uncertainty involved in preparing valuations when there is a lack of comparable transactions in the market and
benchmark data for similar assets in similar locations given the specialised nature of the Group’s assets.
Our response
In relation to the external valuation performed on the US land and buildings, we inspected the valuation report in order to assess the
integrity of the data and key assumptions underpinning the valuation. We considered whether the key assumptions were consistent with
external market information. We also assessed the independence and qualification of the valuer.
In relation to the remaining land and buildings and plant and equipment, which was internally valued by management, our audit
procedures included assessing and challenging the key input assumptions underpinning the valuations. We considered whether the
assumptions were consistent with external market information, where available and the basis for changes to the assumptions since the
date of the last external valuation.
3. OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The materiality for the Group financial statements as a whole was set at €4 million (2016: €4.75 million). This has been calculated using a
benchmark of 5% of Group profit before taxation excluding exceptional items, which we have determined, in our professional judgement,
to be one of the principal benchmarks within the financial statements relevant to members of the Company in assessing financial
performance.
We report to the Audit Committee all corrected and uncorrected misstatements identified through our audit in excess of €200,000 (2016:
€250,000), in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
The structure of the Group’s finance function is such that certain transactions and balances are accounted for by the Group finance team,
with the remainder accounted for in the operating units. We performed audit procedures, including those in relation to the significant risks
set out above, on those transactions and balances accounted at operating unit and Group level. In relation to the Group’s operating units,
audits for Group reporting purposes were performed at each of the key operating units of the Group. These audits covered 99.9% of
Group revenue, 99.8% of Group loss before tax and 99.8% of Group total assets.
The audits undertaken for Group reporting purposes at the key operating units of the Group were all performed to component materiality
levels set by the Group audit team. These component materiality levels were set individually and ranged from €0.7 million to €3 million.
Detailed audit instructions were sent by the Group audit team to the auditors in all of the Group’s key operating units. These instructions
covered the significant audit areas that should be covered by these audits (which included the relevant risks of material misstatement
detailed above) and set out the information required to be reported to the Group audit team. Members of the Group audit engagement
team, including the Group Engagement Partner, attended the closing meetings for each of the significant operating components in person
or by telephone at which the findings from the business unit audit were discussed with local and Group management. Members of the
Group audit engagement team and the Group Engagement Partner attended the closing meeting at which the findings from all operating
unit audits were discussed with the Group’s Chief Financial Officer and senior members of the Group finance team as well as findings
arising from procedures performed by the Group audit team.
93
Independent Auditor’s Report
to the Members of C&C Group plc
(continued)
4. WE HAVE NOTHING TO REPORT ON THE DISCLOSURES OF PRINCIPAL RISKS
Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:
• the Directors’ statement of Principal Risks and Uncertainties on pages 19 to 21, concerning the principal risks, their management, and
based on that, the directors assessment and expectations of the Group’s continuing operations over 3 years to 2020; and
• the disclosures in the accounting policies to the financial statements concerning the use of the going concern basis of accounting.
5. WE HAVE NOTHING TO REPORT IN RESPECT OF THE MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY
EXCEPTION
ISAs (UK and Ireland) require that we report to you if, based on the knowledge we acquired during our audit, we have identified information
in the annual report and financial statements as a whole that contains a material inconsistency with either that knowledge or the financial
statements, a material misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified any inconsistencies between the knowledge we acquired during our audit and the directors’ statement that they
consider the annual report is fair, balanced and understandable and provides the information necessary for shareholders to assess the
entity’s position and performance, business model and strategy; or
• the Report of the Audit Committee does not appropriately disclose those matters that we communicated to the Audit Committee.
The Listing Rules of the Irish Stock Exchange require us to review:
• the directors’ statement, set out on page 69, in relation to going concern and longer-term viability;
• the part of the Directors’ Statement on Corporate Governance on pages 58 to 62 relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code and the provisions of the Irish Corporate Governance Annex specified for our review;
and
• certain elements of disclosures to shareholders by the Board in the Report on Directors’ Remuneration.
In addition, the Companies Act requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions
specified by law are not made.
6. OUR CONCLUSIONS ON OTHER MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY THE COMPANIES ACT 2014
ARE SET OUT BELOW
We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited
and the financial statement are in agreement with the accounting records.
In our opinion, the information given in the Directors’ Report is consistent with the financial statements and the description in the Directors’
Statement of Corporate Governance 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.
In addition, we report in relation to information given in the Corporate Governance statement on pages 58 to 69 that:
• based on knowledge and understanding of the Company and its environment obtained in the course of the audit, no material
misstatements in the information identified above have come to our attention.
• based on our work undertaken in the course of our audit, in our opinion:
- the description of the main features of the internal control and risk management systems in relation to the voting rights and other
matters required by the European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006, and specified by the
Companies Act 2014 for our consideration, are consistent with the financial statements and have been prepared in accordance with
the Companies Act 2014.
- The Corporate Governance statement contains the information required by the Companies Act 2014.
94
C&C Group plcAnnual Report 2017 BASIS OF OUR REPORT, RESPONSIBILITIES AND RESTRICTIONS ON USE
As explained more fully in the Statement of Directors’ Responsibilities set out on page 90, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express
an opinion on the Group and Company financial statements in accordance with applicable law and International Standards on Auditing
(ISAs) (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s Ethical Standards for Auditors.
An audit undertaken in accordance with ISAs (UK and Ireland) 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 Group’s 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing our audit. If we become aware of any apparent material misstatements or
inconsistencies, we consider the implications for our report.
Whilst an audit conducted in accordance with ISAs (UK and Ireland) is designed to provide reasonable assurance of identifying material
misstatements or omissions it is not guaranteed to do so. Rather the auditor plans the audit to determine the extent of testing needed to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements does not exceed
materiality for the financial statements as a whole. This testing requires us to conduct significant audit work on a broad range of assets,
liabilities, income and expenses as well as devoting significant time of the most experienced members of the audit team, in particular the
engagement partner responsible for the audit, to subjective areas of accounting and reporting.
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. 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.
17 May 2017
Colm O’Sé
for and on behalf of
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
95
Financial Statements
Group Income Statement
For the year ended 28 February 2017
Revenue
Excise duties
Net revenue
Operating costs
Operating profit/(loss)
Finance income
Finance expense
Share of equity accounted investees’ profit after tax
Profit/(loss) before tax
Income tax (expense)/credit
Profit/(loss) for the year attributable to equity
shareholders
Basic earnings per share (cent)
Diluted earnings per share (cent)
Year ended 28 February 2017
Year ended 29 February 2016
Before Exceptional
Before Exceptional
exceptional
items
exceptional
items
items
(note 5)
Notes
€m
€m
Total
€m
items
(note 5)
€m
€m
Total
€m
1
1
2
1
6
6
5
7
9
9
818.1
(258.6)
-
-
818.1
(258.6)
946.9
(284.3)
559.5
(464.5)
-
(150.1)
559.5
(614.6)
662.6
(559.4)
95.0
0.1
(7.9)
-
(150.1)
-
-
-
87.2
(13.0)
(150.1)
3.0
(55.1)
0.1
(7.9)
-
(62.9)
(10.0)
103.2
0.2
(8.8)
-
94.6
(13.8)
-
-
-
(38.4)
(38.4)
-
-
0.1
(38.3)
4.9
946.9
(284.3)
662.6
(597.8)
64.8
0.2
(8.8)
0.1
56.3
(8.9)
74.2
(147.1)
(72.9)
80.8
(33.4)
47.4
(23.5)
(23.5)
14.4
14.2
96
C&C Group plcAnnual Report 2017
Group Statement of Comprehensive Income
For the year ended 28 February 2017
Other Comprehensive Income:
Items that may be reclassified to Income Statement in subsequent years:
Foreign currency translation differences arising on the net investment in foreign operations
Foreign currency reserve recycled to Income Statement on deemed disposal of equity
accounted investee
Reversal of previously recognised gain on revaluation of property, plant and equipment
6
6
11
(17.8)
-
(2.1)
(20.9)
(0.1)
-
Notes
2017
€m
2016
€m
Items that will not be reclassified to Income Statement in subsequent years:
Actuarial gain/(loss) on retirement benefits
Deferred tax (charge)/credit on actuarial gain/(loss) on retirement benefits
21
20
3.6
(0.4)
(5.1)
0.6
Net loss recognised directly within Other Comprehensive Income
(Loss)/profit for the year attributable to equity shareholders
Comprehensive (expense)/income for the year attributable to equity shareholders
(16.7)
(25.5)
(72.9)
(89.6)
47.4
21.9
97
Financial Statements
Group Balance Sheet
As at 28 February 2017
ASSETS
Non-current assets
Property, plant & equipment
Goodwill & intangible assets
Equity accounted investees
Retirement benefits
Deferred tax assets
Trade & other receivables
Current assets
Assets held for resale
Inventories
Trade & other receivables
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
Retirement benefits
Provisions
Deferred tax liabilities
Current liabilities
Interest bearing loans & borrowings
Retirement benefits
Trade & other payables
Provisions
Current tax liabilities
Total liabilities
TOTAL EQUITY & LIABILITIES
S Glancey
Chief Executive Officer
On behalf of the Board
Sir B Stewart
Chairman Group
98
Notes
2017
€m
2016
€m
11
12
13
21
20
15
11
14
15
23
23
23
23
18
21
17
20
18
21
16
17
144.5
530.3
2.4
4.5
3.2
49.6
734.5
1.7
85.8
78.5
187.6
353.6
180.0
644.1
0.3
4.7
4.4
46.0
879.5
10.3
85.9
94.1
197.3
387.6
1,088.1
1,267.1
3.3
136.9
99.1
(38.0)
337.1
538.4
358.6
22.3
7.7
6.0
394.6
-
-
144.1
6.5
4.5
155.1
549.7
3.3
127.8
121.0
(39.2)
471.8
684.7
361.1
22.7
6.3
5.5
395.6
0.2
10.0
160.9
12.6
3.1
186.8
582.4
1,088.1
1,267.1
17 May 2017
C&C Group plcAnnual Report 2017
Group Cash Flow Statement
For the year ended 28 February 2017
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit for the year attributable to equity shareholders
Finance income
Finance expense
Income tax expense
Profit on share of equity accounted investee
Revaluation/impairment of property, plant & equipment
Recovery of previously impaired investment in equity accounted investee
Impairment of intangible assets
Depreciation of property, plant & equipment
Amortisation of intangible assets
Net profit on disposal of property, plant & equipment
Charge for equity settled share-based payments
Pension contributions paid plus amount credited to Income Statement
(Increase)/decrease in inventories
Decrease in trade & other receivables
Decrease in trade & other payables
(Decrease)/increase in provisions
Interest received
Interest and similar costs paid
Income taxes paid
Net cash inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant & equipment
Net proceeds on disposal of property, plant & equipment
Acquisition of business
Net cash outflow re acquisition of equity accounted investees
Notes
10
13
2017
€m
(72.9)
(0.1)
7.9
10.0
-
25.8
(0.5)
106.6
14.7
0.3
(3.9)
0.7
(7.0)
81.6
(2.9)
4.0
(13.3)
(4.6)
64.8
0.1
(6.6)
(6.9)
51.4
(22.7)
25.6
-
(1.5)
2016
€m
47.4
(0.2)
8.8
8.9
(0.1)
16.0
-
-
19.1
0.3
(0.2)
0.5
(11.0)
89.5
4.3
45.9
(8.2)
7.0
138.5
0.2
(5.9)
(10.2)
122.6
(9.7)
0.5
(3.3)
-
Net cash inflow/(outflow) from investing activities
1.4
(12.5)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of share options/equity Interests
Drawdown of debt
Repayment of debt
Shares purchased to satisfy share option entitlements
Shares purchased under share buyback programme
Dividends paid
Net cash outflow from financing activities
Net increase in cash & cash equivalents
Cash & cash equivalents at beginning of year
Translation adjustment
1.0
138.7
(134.0)
(0.2)
(23.2)
(34.9)
(52.6)
0.2
197.3
(9.9)
0.5
25.0
(0.1)
-
(76.6)
(34.8)
(86.0)
24.1
181.9
(8.7)
Cash & cash equivalents at end of year
187.6
197.3
A reconciliation of cash & cash equivalents to net debt is presented in note 19 to the financial statements.
99
Financial Statements Group Statement of Changes in Equity
For the year ended 28 February 2017
Equity
Other
based
Currency
Share-
share
Share undenominated
Capital
payments translation Revaluation
Treasury
Retained
capital
premium
reserve
reserve
reserve
reserve
reserve
shares
income
€m
€m
€m
€m
€m
€m
€m
€m
€m
Total
€m
At 28 February 2015
3.5
122.5
0.5
24.9
6.4
100.9
9.1
(39.8)
545.2
773.2
Profit for the year attributable to
equity shareholders
Other comprehensive expense
Total comprehensive
(expense)/income
Dividend on ordinary shares
Exercised share options
Reclassification of share-based
payments reserve
Joint Share Ownership Plan
Shares purchased under share
buyback programme and
subsequently cancelled
Equity settled share-based
payments
Total transactions with
owners
-
-
-
-
-
-
-
(0.2)
-
-
-
4.8
0.5
-
-
-
-
(0.2)
5.3
-
-
-
-
-
0.2
-
0.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(0.5)
-
-
0.5
-
-
(21.0)
(21.0)
-
-
-
-
-
-
-
47.4
(4.5)
47.4
(25.5)
42.9
21.9
(39.6)
-
(34.8)
0.5
-
-
-
-
-
-
0.6
0.5
(0.6)
-
-
-
-
(76.6)
(76.6)
-
0.5
0.6
(116.3)
(110.4)
-
-
-
-
-
-
-
-
-
-
At 29 February 2016
3.3
127.8
0.7
24.9
6.4
79.9
9.1
(39.2)
471.8
684.7
Loss for the year attributable to
equity shareholders
Other comprehensive (expense)/
income
Total comprehensive
expense
Dividend on ordinary shares
Exercised share options
Reclassification of share-based
payments reserve
Joint Share Ownership Plan
Shares purchased under share
buyback programme and
subsequently cancelled
Equity settled share-based
payments
Total transactions with
owners
-
-
-
-
-
-
-
-
-
-
-
-
-
8.1
0.8
-
0.2
-
-
9.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2.0)
(0.7)
-
0.7
(2.0)
-
(17.8)
(17.8)
-
(2.1)
(2.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(72.9)
(72.9)
3.2
(16.7)
(69.7)
(89.6)
(43.0)
-
(34.9)
0.8
-
1.2
2.0
(0.8)
-
(0.1)
-
-
(23.2)
(23.2)
-
0.7
1.2
(65.0)
(56.7)
At 28 February 2017
3.3
136.9
0.7
24.9
4.4
62.1
7.0
(38.0)
337.1
538.4
100
C&C Group plcAnnual Report 2017 Company Balance Sheet
As at 28 February 2017
ASSETS
Non-current assets
Financial assets
Trade & other receivables
Current assets
Trade & other receivables
Cash & cash equivalents
TOTAL ASSETS
EQUITY
Equity share capital
Share premium
Other reserves
Retained income
Total equity
LIABILITIES
Current liabilities
Trade & other payables
Total liabilities
TOTAL EQUITY & LIABILITIES
On behalf of the Board
Sir B Stewart
Chairman Group
S Glancey
Chief Executive Officer
Notes
2017
€m
2016
€m
13
15
15
23
23
23
979.3
0.7
980.0
335.5
-
335.5
978.6
1.2
979.8
238.7
-
238.7
1,315.5
1,218.5
3.3
838.6
3.8
188.4
1,034.1
3.3
829.7
6.2
105.5
944.7
16
281.4
273.8
281.4
273.8
1,315.5
1,218.5
17 May 2017
101
Financial Statements
Company Statement of Changes in Equity
For the year ended 28 February 2017
Company
At 28 February 2015
Loss for the year attributable to equity
shareholders
Total
Dividend on ordinary shares
Exercised share options
Shares purchased under share buyback
programme and subsequently cancelled
Reclassification of share-based payments
reserve
Equity settled share-based payments
Total
At 29 February 2016
Profit for the year attributable to equity
shareholders
Total
Dividend on ordinary shares
Exercised share options
Shares purchased under share buyback
programme and subsequently cancelled
Reclassification of share-based payments
reserve
Equity settled share-based payments
Total
Equity
share
capital
€m
Other
Share-based
Share
undenominated
payments
Retained
premium
€m
reserve
€m
reserve
€m
income
€m
Total
€m
3.5
824.4
0.5
5.5
221.9
1,055.8
-
-
-
-
(0.2)
-
-
(0.2)
3.3
-
-
-
-
-
-
-
-
-
-
4.8
0.5
-
-
-
5.3
829.7
-
-
8.1
0.8
-
-
-
8.9
-
-
-
-
0.2
-
-
0.2
0.7
-
-
-
-
-
-
-
-
-
-
-
-
-
(0.5)
0.5
-
5.5
-
-
-
-
-
(3.1)
0.7
(2.4)
3.1
(0.7)
(0.7)
(39.6)
-
(76.6)
0.5
-
(0.7)
(0.7)
(34.8)
0.5
(76.6)
-
0.5
(115.7)
(110.4)
105.5
944.7
146.0
146.0
(43.0)
-
146.0
146.0
(34.9)
0.8
(23.2)
(23.2)
3.1
-
-
0.7
(63.1)
(56.6)
188.4
1,034.1
At 28 February 2017
3.3
838.6
0.7
102
C&C Group plcAnnual Report 2017 Statement of Accounting Policies
For the year ended 28 February 2017
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 2017 consolidate the individual financial statements of the Company and all subsidiary undertakings (together referred
to as “the Group”) together with the Group’s share of the results and net assets of equity accounted investees for the period ended 28
February 2017.
The Company and Group financial statements, together the “financial statements”, were authorised for issue by the Directors on 17 May
2017.
The accounting policies applied in the preparation of the financial statements for the year ended 28 February 2017 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 and as
applied in accordance with Companies Acts 2014. The individual financial statements of the Company have been prepared in accordance
with FRS 101 Reduced Disclosure Framework (“FRS 101”) which permits a company that publishes its Company and Group financial
statements together to take advantage of the exemption in Section 304 of the Companies Act 2014 from presenting its individual profit and
loss account and cash flow statement to the Annual General Meeting and from filing it with the Register of Companies.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• A cash flow statement and related notes;
• Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs; and
• Disclosures in respect of Key Management Personnel.
As the consolidated financial statements of the Company include the equivalent disclosures, the Company has also taken exemptions
under FRS 101 available in respect of the following disclosures:
• IFRS 2 ‘Share-Based Payments’ in respect of group settled share-based payments;
• Certain disclosures required by IAS 36 ‘Impairment of Assets’ in respect of the impairment of goodwill and indefinite life intangible
assets; and
• Certain disclosures required by IFRS 3 ‘Business Combinations’ in respect of business combinations undertaken by the Company.
Changes in accounting policies and disclosures
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 2017. The IASB have issued the following standards, policies,
interpretations and amendments which were effective for the Group for the first time in the year ended 28 February 2017:
• Annual Improvements to IFRSs 2012-2014 cycle
• IFRS 11: Accounting for acquisitions of interests in Joint Operations;
• IAS 16 & IAS 38: Acceptable methods of depreciation/ amortization;
• IAS 16: Property, Plant and Equipment and IAS 41: Bearer Plants;
• IAS 27: Equity method in Separate Financial Statements;
• IAS 1: Disclosure initiative ;
• IFRS 10, IFRS 12 and IAS 28: Investment entities: Applying the consolidation exception.
The adoption of the above and interpretations and amendments did not have a significant impact on the Group’s Consolidated Financial
Statements.
103
Financial Statements Statement of Accounting Policies
For the year ended 28 February 2017
(continued)
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 2017, and
have not been applied in preparing these consolidated financial statements.
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:
• Annual Improvements to IFRSs 2014-2016 cycle* (effective for the Group’s 2018 Consolidated Financial Statements)
• IFRS 2: Classification and measurement of share based payments* (effective for the Group’s 2019 Consolidated Financial Statements)
• IAS 7: Disclosure initiative* (effective for the Group’s 2018 Consolidated Financial Statements)
• IAS 12: Recognition of deferred tax assets for unrealised losses* (effective for the Group’s 2018 Consolidated Financial Statements)
(b) Subject to ongoing assessment by the Group:
• IFRS 15, Revenue from Contracts with Customers (effective for the Group’s 2019 Consolidated Financial Statements)
• IFRS 9, Financial Instruments (effective for the Group’s 2019 Consolidated Financial Statements)
• IFRS 16 Leases* (effective for the Group’s 2020 Consolidated Financial Statements)
* Not yet EU Endorsed
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 2017. The accounting policies adopted are consistent with those of the
previous year except for the new and amended IFRS and IFRIC interpretations adopted by the Group and Company in these financial
statements.
BASIS OF PREPARATION
The Group and the individual financial statements of the Company are prepared on the going concern and historical cost basis except
for the measurement at fair value of intangible assets acquired on the acquisition of a company or business, retirement benefits, the
revaluation of certain items of property, plant & equipment, share options at date of grant and derivative financial instruments. 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 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 10),
• the determination of carrying value of land (note 11),
• 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 11),
• the assessment of goodwill and intangible assets for impairment (note 12), and
• accounting for retirement benefits (note 21).
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.
104
C&C Group plcAnnual Report 2017 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 ended 28 February 2017.
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements
of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which
control ceases.
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 except that the capital structure shown is that of the legal parent.
(ii) Investments in associates and jointly controlled entities (equity accounted investees)
The Group’s interests in equity accounted investees comprise interests in associates. Associates are those entities in which the Group has
significant influence, but not control or joint control, over the financial and operating policies.
Interests in associates are accounted for using the equity method. They are initially recognised at cost, which includes transaction
costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and Other
Comprehensive Income of equity accounted investees, until the date on which significant influence or joint control ceases.
(iii) Transactions eliminated on consolidation
All inter-company balances and transactions, including unrealised gains arising from inter-group transactions, have been eliminated in full.
Unrealised losses are eliminated in the same manner as unrealised 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 normally
deemed to occur on delivery except in the case of international customers where it is normally deemed to occur on despatch.
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.
105
Financial Statements
Statement of Accounting Policies
For the year ended 28 February 2017
(continued)
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 and gains on hedging instruments that are recognised in the Income
Statement. Interest income is recognised as it accrues in the Income Statement, using the effective interest method.
Finance expenses comprise interest expense on borrowings, interest expense on sale of trade receivables, bank guarantee fees,
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.
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, the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which; represents a separate major line of business or geographic area of operations; is part of a single
co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or is a subsidiary acquired exclusively
with a view to re-sale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified
as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and Other
Comprehensive Income is re-presented as if the operation had been discontinued from the start of the comparative year.
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 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.
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.
106
C&C Group plcAnnual Report 2017
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.
BUSINESS COMBINATIONS
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration
transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is
tested annually for impairment or more frequent if there is an indication that the carrying amount may not be recoverable. Any gain on a
bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of
debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that
meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity.
Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of
the contingent consideration are recognised in profit or loss.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements
of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which
control ceases.
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other
components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured
at fair value when control is lost.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
107
Financial Statements Statement of Accounting Policies
For the year ended 28 February 2017
(continued)
GOODWILL
Goodwill is the excess of the fair value 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.
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.
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. The useful lives of the Group’s intangible assets are as follows:
• ABI Distribution rights
• Trade relationship re Wallaces
20 years
10 years
acquisition
• Trade relationship re Gleeson
15 years
acquisition
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 or there are no other observable comparative transactions, the fair value may be determined using a valuation
technique known as 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, 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.
108
C&C Group plcAnnual Report 2017 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 - ROI, US, Portugal, Wallaces Express
Buildings – UK (excluding Wallaces Express)
Plant and Machinery
Storage tanks
Other plant & machinery
n/a
2% straight-line
2% reducing balance
10% reducing balance
15-30% reducing balance
Motor vehicles and other equipment
Motor vehicles
Other equipment incl returnable bottles, cases and kegs
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.
109
Financial Statements
Statement of Accounting Policies
For the year ended 28 February 2017
(continued)
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. The 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 BENEFITS
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.
110
C&C Group plcAnnual Report 2017
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.
The resultant defined benefit pension net surplus or deficit is shown within either current liabilities, 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 21)
underlying these valuations are updated at each reporting period date based on current economic conditions and expectations (discount
rates, 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 immediately in the Income Statement.
The expected increase in the present value of scheme liabilities arising from employee service in the current period is recognised in
arriving at operating profit or loss together with the net interest expense/(income) on the net defined benefit liability/(asset). Differences
between the actual return on plan assets and the interest income, 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 benefits 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, Performance Share Plans and cash settled award schemes, 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.
111
Financial Statements Statement of Accounting Policies
For the year ended 28 February 2017
(continued)
To date, share options granted by the Company under the ESOS and share entitlements (represented by nominal cost options) granted
under the LTIP (Part II) are subject to non-market vesting conditions only.
An element of the share entitlements (represented by nominal-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 Interests 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/Interest entitlements as at the 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. Awards with market based performance conditions 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.
The proceeds received by the Company net of any directly attributable transaction costs on the vesting of share entitlements met by the
issue of new shares 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, to the extent that they are to be settled by the issue of new shares and to the extent that the
vesting conditions would have been satisfied if the end of the reporting period was the end of the contingency period, 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 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.
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 recovered 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.
112
C&C Group plcAnnual Report 2017 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 or equity (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 or equity.
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 extended time periods 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.
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.
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.
113
Financial Statements
Statement of Accounting Policies
For the year ended 28 February 2017
(continued)
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
Where deemed appropriate, 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 cash flow 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.
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.
114
C&C Group plcAnnual Report 2017
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 a subsidiary of the Group on the open market is recorded as a deduction from equity on the
face of the Group Balance Sheet. When these shares are cancelled, an amount equal to the nominal value of any shares cancelled is
included within other undenominated capital 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.
115
Financial Statements Notes forming part of the financial statements
1. SEGMENTAL REPORTING
The Group’s business activity is the manufacturing, marketing and distribution of alcoholic and soft drinks. Five operating segments have
been identified in the current and prior financial periods; Ireland, Scotland, C&C Brands, North America and Export.
The Group continually reviews and updates the manner in which it monitors and controls its financial operations resulting in changes in
the manner in which information is classified and reported to the Chief Operating Decision Maker (“CODM”). The CODM, identified as
the executive Directors comprising Stephen Glancey, Kenny Neison and 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.
The identified business segments are as follows:-
(i) Ireland
This segment includes the financial results from sale of own branded products in the Island of Ireland, principally Bulmers, Tennent’s,
Magners, Clonmel 1650, Heverlee, Roundstone Irish Ale, Finches and Tipperary Water. It also includes the financial results from beer
and wines and spirits distribution and wholesaling following the acquisition of Gleeson, and the results from sale of third party brands as
permitted under the terms of a distribution agreement with AB InBev.
(ii) Scotland
This segment includes the results from sale of the Group’s own branded products in Scotland, with Tennent’s, Heverlee, Caledonia
Premium Bottled Ales, Caledonia Best and Magners the principal brands. It also includes the financial results from third party brand
distribution and wholesaling in Scotland following the acquisition of the Wallaces Express wholesale business.
(iii) C&C Brands
This segment includes the results from sale of the Group’s own branded products in England & Wales, principally Magners, Tennent’s,
Chaplin & Cork’s and K Cider. It also includes the distribution of the Italian lager Menabrea and the production and distribution of private
label cider products.
(iv) North America
This segment includes the results from sale of the Group’s cider and beer products, principally Woodchuck, Wyders, Magners,
Blackthorn, Hornsby’s and Tennent’s in the United States and Canada.
(v) Export
This segment includes the sale and distribution of the Group’s own branded products, principally Magners, Gaymers, Blackthorn,
Hornsby’s and Tennent’s outside of Ireland, Great Britain and North America. It also includes the sale of some third party brands.
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.
116
C&C Group plcAnnual Report 2017 1. SEGMENTAL REPORTING (CONTINUED)
(a) Reporting segment disclosures
Ireland
Scotland
C&C Brands
North America
Export
Total before exceptional items
Exceptional items (note 5)
2017
2016
Net
Operating
Net
Operating
Revenue
revenue
€m
€m
338.9
285.0
145.9
24.5
23.8
818.1
-
242.3
186.6
83.8
23.1
23.7
559.5
-
profit
€m
48.6
32.6
7.3
0.7
5.8
95.0
(150.1)*
Revenue
revenue
€m
€m
358.1
339.8
177.0
47.5
24.5
946.9
-
261.6
227.4
103.8
45.3
24.5
662.6
-
profit
€m
49.0
37.9
10.5
0.6
5.2
103.2
(38.4)**
Total
818.1
559.5
(55.1)
946.9
662.6
64.8
* Of the exceptional loss in the current year, €10.3m relates to Ireland, €1.2m relates to Scotland, €7.9m relates to C&C Brands, €129.8m relates to North America and €0.9m
remains unallocated.
** Of the exceptional loss in the prior year, €12.9m relates to Ireland, €4.5m relates to Scotland, €19.7m relates to C&C Brands, €1.1m relates to North America and €0.2m relates
to Export.
Total assets for the period ended 28 February 2017 amounted to €1,088.1m (2016: €1,267.1m).
(b) Other operating segment information
Ireland
Scotland
C&C Brands
North America
Export
Total
(c) Geographical analysis of revenue and net revenue
Ireland
Scotland
England and Wales*
US and Canada**
Other***
Total
2017
Capital
expenditure
2016
Depreciation
/amortisation /
impairment
Capital
expenditure
Depreciation /
amortisation /
impairment
€m
€m
20.3
2.1
-
2.8
0.6
25.8
Revenue
2017
€m
338.9
285.0
145.9
24.5
23.8
8.1
5.3
2.2
108.4
0.6
124.6
2016
€m
358.1
339.8
177.0
47.5
24.5
€m
6.0
1.7
0.2
0.4
0.5
8.8
Net revenue
2017
€m
242.3
186.6
83.8
23.1
23.7
€m
7.5
6.7
2.7
2.0
0.5
19.4
2016
€m
261.6
227.4
103.8
45.3
24.5
818.1
946.9
559.5
662.6
* England and Wales reflects the C&C Brands segment.
** US and Canada reflects the North America segment.
***Other reflects the Export segment, being all other geographical locations excluding Ireland, Great Britain, the US and Canada.
The geographical analysis of revenue and net revenue is based on the location of the third party customers.
117
Financial Statements Notes forming part of the financial statements
(continued)
1. SEGMENTAL REPORTING (CONTINUED)
(d) Geographical analysis of non-current assets
Ireland
Scotland
England and
Wales*
US and Canada**
Other***
€m
€m
€m
€m
€m
28 February 2017
Property, plant & equipment
Goodwill & intangible assets
Equity accounted investees
Retirement benefits
Deferred tax assets
Trade & other receivables
70.3
156.1
0.3
4.5
3.2
20.6
58.0
126.4
0.3
-
-
25.6
0.3
187.2
-
-
-
1.2
Total
255.0
210.3
188.7
9.9
44.6
1.8
-
-
1.8
58.1
6.0
16.0
-
-
-
0.4
22.4
Ireland
Scotland
England and
Wales*
US and Canada**
Other***
€m
€m
€m
€m
€m
29 February 2016
Property, plant & equipment
Goodwill & intangible assets
Equity accounted investees
Retirement benefits
Deferred tax assets
Trade & other receivables
60.3
156.2
-
4.7
4.4
15.0
67.1
135.6
0.3
-
-
29.7
16.1
189.2
-
-
-
1.3
30.8
147.1
-
-
-
-
Total
240.6
232.7
206.6
177.9
* England and Wales reflects the C&C Brands segment.
** US and Canada reflects the North America segment.
***Other reflects the Export segment, being all other geographical locations excluding Ireland, Great Britain, the US and Canada.
5.7
16.0
-
-
-
-
21.7
Total
€m
144.5
530.3
2.4
4.5
3.2
49.6
734.5
Total
€m
180.0
644.1
0.3
4.7
4.4
46.0
879.5
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.
118
C&C Group plcAnnual Report 2017 2. OPERATING COSTS
2017
2016
Before
Exceptional
Before
Exceptional
Raw material cost of goods sold/bought in
finished goods
Inventory write-down/(recovered) (note 14)
Employee remuneration (note 3)
Direct brand marketing
Other operating, selling and administration
costs
Depreciation (note 11)
Amortisation (note 12)
Net profit on disposal of property, plant &
equipment
Research and development costs
Auditors remuneration
Impairment of intangible assets (note 12)
Revaluation/impairment of property, plant &
machinery (note 11)
Operating lease rentals:
- land & buildings
- plant & machinery
- other
exceptional
items
€m
274.4
2.9
65.7
28.2
64.0
14.7
0.3
(1.0)
0.1
0.9
-
-
5.2
1.1
8.0
items
(note 5)
€m
-
-
7.2
-
13.4
-
-
(2.9)
-
-
106.6
25.8
-
-
-
Total
€m
exceptional
items
€m
items
(note 5)
€m
Total
€m
274.4
335.7
-
335.7
2.9
72.9
28.2
77.4
14.7
0.3
(3.9)
0.1
0.9
106.6
25.8
5.2
1.1
8.0
3.8
85.2
34.6
65.6
19.1
0.3
(0.2)
0.1
0.9
-
-
5.8
1.0
7.5
-
14.5
-
7.9
-
-
-
-
-
-
16.0
-
-
-
3.8
99.7
34.6
73.5
19.1
0.3
(0.2)
0.1
0.9
-
16.0
5.8
1.0
7.5
Total operating expenses
464.5
150.1
614.6
559.4
38.4
597.8
(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
Tax advisory services
Total
2017
€m
0.4
0.3
0.7
2016
€m
0.4
0.3
0.7
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. Amounts
paid to other KPMG offices in relation to subsidiary undertakings in the current financial year was €0.2m (2016: €0.2m).
119
Financial Statements Notes forming part of the financial statements
(continued)
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
2017
2016
Number
Number
238
848
239
385
1,090
260
1,325
1,735
The actual number of persons employed by the Group as at 28 February 2017 was 1,201 (29 February 2016: 1,483).
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 benefits – defined benefit schemes (note 21)
Retirement benefits – defined contribution schemes, including pension related expenses
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 (gain)/loss on retirement benefits recognised in Other Comprehensive Income (note 21)
Total employee benefits
Directors’ remuneration
Directors’ remuneration (note 26)
2017
€m
59.4
7.2
6.4
(3.6)
2.7
0.7
-
0.1
72.9
(3.6)
2016
€m
77.7
14.5
7.3
(4.5)
4.1
0.5
(0.1)
0.2
99.7
5.1
69.3
104.8
2017
€’m
2016
€’m
3.6
3.6
In addition to the amounts disclosed above, during the year, a Group subsidiary paid fees for services to Joris Brams BVBA (a company
wholly owned by Joris Brams and family) see further details disclosed in note 26 Related Party Transactions.
120
C&C Group plcAnnual Report 2017 4. SHARE-BASED PAYMENTS
Equity settled awards
In April 2004, the Group established an equity settled Executive Share Option Scheme (ESOS 2004) 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 were exercisable at the market price prevailing at the date of the grant of the option. Options have been granted under this
scheme in each year between 2004 and 2015. A number of options granted under the scheme in FY2011 have vested but have not yet
been exercised. In the current financial year options awarded in June 2014 were deemed to be not capable of achieving their performance
targets and consequently they were deemed to have lapsed in accordance with IFRS 2 Share-Based Payment. Options granted in July
2015 will be exercisable in July 2018 subject to meeting the following performance conditions. In addition to continued employment,
the options 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 financial statements of the Group, subject to any further adjustments
approved by the Remuneration Committee. If adjusted EPS growth is 3% per annum over the performance period, 50% of the awards
vest and if adjusted EPS growth is 6% per annum or more over the performance period (i.e. 3 years from date of grant), the award vests in
full. There will be straight-line vesting between both points and no reward for below threshold performance. 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 July 2015 a new Executive Share Option Scheme (ESOS 2015) was adopted following shareholder approval at the AGM. Options
were granted in May 2016 under this new scheme. The vesting of the May 2016 awards, in addition to continuous employment, is based
on compound annual growth in underlying EPS over the three year performance period FY2017-FY2019. If compound annual growth in
underlying EPS over the performance period is 3% per annum then 50% of the awards vest. If the compound annual growth in underlying
EPS over the performance period is 6% per annum then 100% of the awards vest. There is straight-line vesting between both points and
no reward for below threshold performance.
In April 2004, the Group established a Long-Term Incentive Plan (Part I) (LTIP 2004 (Part I)) under the terms of which options to
purchase shares in C&C Group plc are granted at nominal cost to certain executive Directors and members of management. A number
of options granted under the scheme in FY2012 have vested but have not yet been exercised. In the current financial year the options
granted in June 2014 were deemed to be not capable of achieving their performance targets and consequently they were deemed to
have lapsed in accordance with IFRS 2 Share-Based Payment. Options granted in July 2015 are subject to the following performance
conditions:
• With regard to 25% of the award, a performance condition relating to total shareholder return (“TSR”) applies and achievement of a
financial 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, a financial underpin applies; the growth in the Group’s earnings per
share (EPS) over the three year period must be 4% or more per annum 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 earnings per share before exceptional items, as disclosed in the financial statements of the Group, subject to any
further adjustments approved by the Remuneration Committee.
• With regard to the remaining 75% 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. 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. There is straight-line pro-rating
between 30% and 100% vesting for performance between 4% and 10% per annum compound growth. None of this part of the award
vests if the growth in the Group’s aggregate EPS in a three year period is less than 4% per annum.
In July 2015 a new Long-Term Incentive Plan (Part I) (LTIP 2015 (Part I)) was adopted following shareholder approval at the AGM.
Options were granted in May 2016 and October 2016 under this new scheme. The awards are subject to the following three performance
conditions:
• 33% of the award is subject to the performance condition that the average annual EPS growth is 3% in which case 25% of this element
of the award would vest. If the average annual EPS growth is 8% then 100% of this element of the award would vest.
• 33% of the award is subject to the performance condition that the Free Cash Flow Conversion ratio (‘FCF’) of the Group (excluding the
impact of exceptional items) would be 65% conversion at which case 25% of this element of the award would vest. If the FCF was 75%
then 100% of this element of the award would vest.
• 33% of the award is subject to a Return on Capital Employed (‘ROCE’) target. If the ROCE is 9.3% then 25% of this element of the award
would vest. If the ROCE was 10% then 100% of this element of the award would vest.
121
Financial Statements Notes forming part of the financial statements
(continued)
4. SHARE-BASED PAYMENTS (CONTINUED)
In all three components of the award above there is straight-line vesting between both points and no reward for below threshold
performance.
If awards are made under both the ESOS 2015 and the LTIP 2015 (Part I) in respect of the same financial year the overall maximum award,
other than in exceptional circumstances, will be capped at 250% of salary. In exceptional circumstances the maximum combined ESOS
2015 and LTIP 2015 (Part I) award in respect of any financial year is 500% of salary.
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 were subject to the following conditions. All of the Interests were subject to a time and service vesting
condition with one-third of the Interest in the shares vesting on each of the first, second and third anniversary of acquisition, subject
to continued employment only. 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 have been greater than €2.50 for 13,800,000 of the Interests initially
awarded, and €4.00 for an additional 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 have now vested or lapsed.
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 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 nominal cost are granted to certain members of management, excluding executive 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.
In May 2012 and May 2013, awards of 1,036,255 and 252,672 respectively, were granted under the Recruitment and Retention Plan
subject to continuous employment and the performance condition that the Company’s TSR must grow by not less than 25% between
17 May 2012 and 16 May 2014 for the May 2012 awards and between 16 May 2013 and 15 May 2015 for the May 2013 awards. Awards
would have vested in full if the growth in TSR was at least 50% over that period and the Remuneration Committee were satisfied that
the extent to which the award vested was appropriate given the general financial performance of the Group over the performance
period. Where TSR growth was between 25% and 50% the percentage of the award that vested was calculated on a straight-line basis
between 25% and 100%. Options awarded in May 2012 were deemed to have only partially achieved their performance conditions and
consequently 65% of the outstanding awards lapsed. Options granted in May 2013 were deemed to be not capable of achieving their
performance conditions and consequently the outstanding awards have now lapsed in accordance with IFRS 2 Share-Based Payment.
In May 2014 awards of 823,233 were granted under the Recruitment and Retention Plan subject to continuous employment. Of these
awards, 547,382 are subject to continued employment and the achievement of annual performance targets related to the business unit to
which each recipient is aligned to. Options will vest in May 2017 on achievement of these conditions. Also in May 2014, an award of 92,111
was made subject to continued employment only and this award vested in May 2016 and an award of 183,740 was also made subject to
continued employment only to vest in May 2017.
122
C&C Group plcAnnual Report 2017
4. SHARE-BASED PAYMENTS (CONTINUED)
In July 2015, 74,956 awards were granted and 490,387 awards were granted in October 2015 under the Recruitment and Retention
plan. Of the July 2015 awards, all are subject to continued employment and the achievement of annual performance targets related to
the business unit to which each recipient is aligned to. On achievement of both conditions the awards granted will vest in June 2017. Of
the October 2015 awards, all are subject to continued employment and the achievement of specific performance targets related to the
business unit to which each recipient is aligned to and also specific performance targets related to the specific role of each recipient. Each
award has its own vesting period ranging from May 2016 to October 2018.
In the current financial year, 193,817 awards were granted in May 2016 under the Recruitment and Retention plan. All of these awards
are subject to continued employment and the achievement of performance targets relating to the business unit to which each recipient is
aligned to. Each award has its own vesting period ranging from October 2017 to October 2018.
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 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
(partnership shares) that will be matched on a 1:1 basis by the Company (“matching shares”) subject to Revenue approved limits. Both
the partnership 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 partnership 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 227,275 matching shares (454,550 partnership and matching) in trust at 28 February 2017 (2016: 298,202 matching
shares (596,404 partnership and matching shares held)).
Cash-settled awards
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 were subject to continued employment and performance conditions linked to the achievement of annual performance
targets with respect to the business unit to which the participant is aligned to. The operating profit targets were deemed not to have been
achieved however and consequently the awards have now lapsed in accordance with IFRS 2 Share-Based Payment.
In July 2013, the Group granted 28,279 cash-settled awards on terms equivalent to the rules of the Recruitment and Retention Plan but
subject to a time and service vesting condition only. The awards vested in July 2016.
In May 2014, the Group granted 16,723 cash-settled awards on terms equivalent to the rules of the Recruitment and Retention Plan. The
awards are subject to continued employment and performance conditions linked to the achievement of performance targets with respect
to the business unit to which the participant is aligned to. These awards will vest in May 2017 on the achievement of these conditions.
Award valuation
The fair values assigned to the ESOS options granted were computed in accordance with a Black Scholes valuation methodology; the fair
value of options awarded under the LTIP (Part I) and Recruitment and Retention Plan were computed in accordance with the stochastic
model for the TSR element and the Black Scholes model for the EPS element; and the fair value of the Interests awarded under the JSOP
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) and Recruitment and Retention Plan
TSR condition and the share price target conditions in the JSOP 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.
123
Financial Statements
Notes forming part of the financial statements
(continued)
4. SHARE-BASED PAYMENTS (CONTINUED)
The main assumptions used in the valuations for equity settled share-based payment awards were as follows:-
LTIP (Part I)
Recruitment
LTIP (Part I)
ESOS
Recruitment
Recruitment
LTIP (Part I)
options
& Retention
granted
Plan
options
granted
options
& Retention
& Retention
granted
Plan
Plan
options
granted
ESOS
options
granted
Oct 2016
May 2016
May 2016
May 2016
October 2015
July 2015
July 2015
July 2015
Fair value at date of grant
€3.48
Exercise price
Risk free interest rate
Expected volatility
Expected term until
exercise
Dividend yield
-
-
-
3 years
-
€3.71 -
€3.84
-
0.33%-
0.44%
21.53%-
23.5%
1.5 -
2.5years
3.38%
€4.041
€0.4245 €3.27-€3.53
€3.159
-
-
-
€4.18
0.5%
23.68%
-
-
-
-
-
-
€1.7131 -
€3.435
-
-
€0.4904
€3.483
1.46%
-
23.77%
3 years
3 years
0.6-3 years
2.5 years
3 years
5 years
-
3.38%
3.19%
3.35%
-
3.35%
Expected volatility is calculated by reference to historic share price movements prior to the date of grant over a period of time
commensurate with the expected term until exercise. The dividends which would be paid on a share reduces the fair value of an award
since, in not owning the underlying shares, a recipient does not receive the dividend income on these shares. For LTIP (Part I) awards, the
participants are entitled to receive dividends, and therefore the dividend yield has been set to zero to reflect this.
The main assumptions used in the valuations of cash-settled share-based payment awards were as follows:-
Fair value at date of grant
Exercise price
Main assumptions used in determining the fair value at date of grant:
Expected term until exercise
Dividend yield
Granted
May
2014
€4.04
-
3 years
2.31%
124
C&C Group plcAnnual Report 2017 Executive Share Option Scheme
(ESOS 2004)
26 May 2010
21 July 2010
27 June 2014
2 July 2015
Executive Share Option Scheme
(ESOS 2015)
12 May 2016
Long-Term Incentive Plan 2004
(Part I)
29 February 2012
27 June 2014
2 July 2015
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:-
Number of
Number
options/ outstanding
Market
equity
at 28
value at
Fair value
Expense / (income) in
Grant date
Vesting
Interests
February
period
granted
2017
Grant
price
€
3.21
3.32
4.621
3.48
date of
at date
Income Statement
Grant
of grant
€
€
2017
€m
2016
€m
3.21
3.32
4.56
3.48
1.21
1.16
1.01
0.4904
-
-
-
(0.1)
-
-
(0.1)
0.1
3 years
803,900
3 years 2,944,400
527,151
3 years
768,495
3 years
374,600
369,700
527,151
768,495
3 years
593,700
593,700
4.18
4.041
0.4245
0.1
-
3 years
3 years
3 years
328,448
539,894
558,266
49,431
539,894
558,266
3.61
4.56
3.48
1.84-3.46
2.53-4.56
1.71-3.44
-
-
(0.4)
-
(0.4)
0.4
-
-
-
-
-
Long-Term Incentive Plan 2015 (Part I)
12 May 2016
28 Oct 2016
3 years
3 years
395,800
41,389
395,800
41,389
4.041
3.48
4.041
3.48
0.4
-
Joint Share Ownership Plan (JSOP)
18 December 2008
03 June 2009
17 December 2009
Recruitment & Retention Plan
17 May 2012
16 May 2013
21 May 2014
2 July 2015
30 October 2015
12 May 2016
Cash-settled awards
21 December 2012
21 May 2014
Partnership and Matching Share Schemes
* Includes both partnership and matching shares.
-
1-3 years 12,800,000
1-3 years 1,000,000 1,000,000
250,000
1-3 years 2,200,000
1.15
1.15
2.47
1.315
2.32
2.76
0.16-0.21
1.01-1.09
0.11-0.16
2-3 years 1,036,255
252,672
2-3 years
823,233
1-3 years
74,956
0.6-3 years
490,387
2 years
193,817
1.5-2.5years
49,953
-
233,757
-
84,274
193,817
26,372,763 6,030,227
1-3 years
3 years
150,786
16,723
167,509
-
16,723
16,723
454,550*
-
-
-
-
-
-
-
-
3.525
4.76
4.34
3.435
3.60
4.041
0.58-0.59
0.96
1.91-4.19
3.16
3.27-3.53
3.71-3.84
4.52
4.34
4.24
4.04
-
-
-
-
-
-
0.1
0.2
0.4
0.7
-
-
-
0.1
-
-
-
-
-
-
(0.2)
0.5
0.1
0.1
-
0.5
(0.1)
-
(0.1)
0.2
125
Financial Statements
Notes forming part of the financial statements
(continued)
4. SHARE-BASED PAYMENTS (CONTINUED)
The amount charged to the Income Statement includes a credit of €0.8m (2016: €0.7m), being the reversal of previously expensed charges
on equity settled option schemes where the non-market performance conditions were deemed no longer likely to be achieved.
A summary of activity under the Group’s equity settled share option schemes and JSOP together with the weighted average exercise
price of the share options is as follows:-
Outstanding at beginning of year
Granted
Exercised
Forfeited/lapsed
2017
2016
Weighted
Number of
average
Number of
options/
equity
Interests
12,110,887
1,224,706
(6,499,177)
(806,189)
exercise
price
€
1.38
2.03
1.07
0.76
options/
equity
Interests
12,473,849
1,892,104
(260,732)
(1,994,334)
Outstanding at end of year
6,030,227
1.93
12,110,887
Weighted
average
exercise
price
€
1.33
1.41
1.76
1.03
1.38
The aggregate number of share options/equity Interests exercisable at 28 February 2017 was 2,093,685 (2016: 8,421,621).
The unvested share options/equity Interests outstanding at 28 February 2017 have a weighted average vesting period outstanding of 1.2
years (2016: 1.5 years). The weighted average contractual life of vested and unvested share options/equity Interests is 2.7 years (2016: 2.0
years).
The weighted average market share price at date of exercise of all share options/equity Interests exercised during the year was €3.73
(2016: €3.69); the average share price for the year was €3.76 (2016: €3.63); and the market share price as at 28 February 2017 was €3.87
(29 February 2016: €3.45).
126
C&C Group plcAnnual Report 2017
5. EXCEPTIONAL ITEMS
Operating costs
Impairment of intangible asset
Restructuring costs
Revaluation/impairment of property, plant & equipment
Onerous lease
Acquisition related expenditure
Net profit on disposal of property, plant & equipment
Integration costs
Other
Foreign currency reclassified on deemed disposal of equity accounted investee
Total loss before tax
Income tax credit
Total loss after tax
2017
Total
€m
106.6
12.7
25.8
7.0
0.9
(2.9)
-
-
150.1
-
150.1
(3.0)
147.1
2016
Total
€m
-
18.2
16.0
-
0.7
-
3.0
0.5
38.4
(0.1)
38.3
(4.9)
33.4
(a) Impairment of intangible asset
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 annually or more frequently if there is an indication that their carrying amount(s) may not be
recoverable, comparing the carrying value of the assets with their recoverable amount using value-in-use computations. In the current
financial year, as a result of such a review, the Group impaired the value of its intangible assets with respect to the Group’s North American
business segment by €106.6m as outlined in more detail in note 12.
(b) Restructuring costs
Restructuring costs of €12.7m were incurred in the current financial year (2016: €18.2m). These restructuring costs comprised of
severance costs of €7.2m (2016: €14.5m) primarily arising from the Group’s previously announced consolidation of its production sites in
Borrisoleigh and Shepton Mallet into the Group’s manufacturing site in Clonmel and the consequential reduction in staff numbers as a
result of this consolidation and other smaller reorganisation programmes during the year across the Group. Other costs of €5.5m (2016:
€3.7m) are directly associated with the restructure of the Group’s production sites and included costs from the closure of the Group’s
operations in Borrisoleigh and Shepton Mallet until their final disposal and other costs directly associated with the closures.
(c) Revaluation/impairment of property, plant & equipment
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 current financial year, the Group engaged external valuers, Lawrence K. Martin, MAI, Certified General Real Estate Appraiser -
Martin Appraisal Services, Inc. to value the land and buildings at the Group’s Vermont site and John Coto, Certified Machine & Equipment
Appraiser, Alliance Machinery & Equipment Appraisals to value the plant and machinery at the Group’s Vermont site. Using the valuation
methodologies as outlined in note 11, this resulted in a revaluation loss of €17.7m with respect to the land and buildings and a revaluation
loss of €5.1m with respect to the plant and machinery which was accounted for in the Income Statement. Also during the current
financial year the Group took the decision to market value some of our assets at Borrisoleigh, Ireland, which resulted in the booking of an
impairment charge of €1.5m and we took a decision to impair an element of the Group’s IT system by €1.5m post the closure of Shepton
Mallet.
127
Financial Statements Notes forming part of the financial statements
(continued)
5. EXCEPTIONAL ITEMS (CONTINUED)
During the prior financial year, the Group engaged external valuers Timothy Smith, BSc MRICS, RICS Registered Valuer and Daniel
Tompkinson BSc MRICS RICS Registered Valuer - Gerald Eve LLP to value the land and buildings at the Shepton Mallet site; Derek Elston
FRCIS RICS Registered Valuer - Elston Sutton Industrial Appraisal Limited to value the plant and equipment at the Shepton Mallet site;
Ronan Diamond RICS Registered Valuer (VRS) BSc (Hons) Dip MSCSI MRICS and Brian Gilson RICS Registered Valuer (VRS) Dip Prop
Inv MSCSI MRICS FCI Arb - Lisney to value the freehold property at the Borrisoleigh site; and Don Meghen - Lisney to value the plant &
machinery at Borrisoleigh. This resulted in a revaluation loss of €16.0m accounted for in the Income Statement.
(d) Onerous lease
During the current financial year the Group reviewed the carrying value of its onerous lease provision to take into account the latest
estimate of associated costs less economic value with regard to the two pre-existing onerous leases up until their final disposal. The
discount rate applied to the liability was also re-assessed. This resulted in an increase in the provision of €6.8m. This element of the
onerous lease provision relates to two onerous leases in relation to warehousing facilities acquired as part of the acquisition of the
Gaymers cider business in 2010. These onerous leases will expire in 2017 and 2026 respectively.
The Group also recognised an onerous lease with regard to a surplus facility at its US business of €0.2m in the current financial year. This
lease will expire in 2018.
(e) Acquisition related expenditure
In the current financial year the Group incurred professional fees of €0.9m (2016:€0.7m) associated with the assessment and consideration
of strategic opportunities by the Group during the year.
(f) Net profit on disposal of property, plant & equipment
In the current financial year the Group disposed of land & buildings and plant & machinery which were surplus to requirements arising from
the Group’s consolidation of its production facilities realising a net profit of €2.9m.
(g) Integration costs
During the prior financial year the Group incurred costs of €3.0m primarily in relation to the continued integration of the previously acquired
Wallaces Express with the Group’s existing Scottish business.
(h) Other
During the prior financial year the Group incurred costs of €0.5m in relation to a one-off shortage in a key process gas. The business was
forced to limit production for a period and incur additional costs in sourcing gas due to a plant failure at its key supplier.
(i) Foreign currency reclassified on deemed disposal of equity accounted investee
In the prior financial year, on 3 August 2015, the Group acquired the remaining equity share capital of Thistle Pub Company Limited. This
purchase followed the acquisition of an initial stake in the business in November 2012. Under IAS 28 Investments in Associates and Joint
Ventures this necessitated the deemed disposal of the Group’s initial investment which was classified as an equity accounted investee and
the recognition of the acquisition of control of the business under IFRS 3 Business Combinations. The Group recognised a cumulative gain
of €0.1m in the foreign currency reserve from date of initial investment which was recycled to the Income Statement following the deemed
disposal.
128
C&C Group plcAnnual Report 2017
6. FINANCE INCOME AND EXPENSE
Recognised in Income Statement
Finance income:
Interest income
Total finance income
Finance expense:
Interest expense
Other finance expense
Unwinding of discount on provisions
Total finance expense
Net finance expense
Recognised directly in Other Comprehensive Income
Foreign currency translation differences arising on the net investment in foreign operations
Foreign currency reserve recycled to Income Statement on deemed disposal of equity accounted investee
Net expense recognised directly in Other Comprehensive Income
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
Adjustment in respect of previous years
Total income tax expense recognised in Income Statement
Relating to continuing operations
- continuing operations before exceptional items
- continuing operations exceptional items
Total
2017
€m
(0.1)
(0.1)
6.5
0.6
0.8
7.9
7.8
2017
€m
(17.8)
-
(17.8)
2017
€m
3.2
6.1
(0.9)
8.4
0.5
0.5
0.6
1.6
10.0
13.0
(3.0)
10.0
2016
€m
(0.2)
(0.2)
7.6
0.4
0.8
8.8
8.6
2016
€m
(20.9)
(0.1)
(21.0)
2016
€m
1.7
6.9
(0.1)
8.5
1.4
(1.0)
-
0.4
8.9
13.8
(4.9)
8.9
129
Financial Statements
Notes forming part of the financial statements
(continued)
7. INCOME TAX (CONTINUED)
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.
(Loss)/profit before tax
Less: Group’s share of equity accounted investees’ profit after tax
Adjusted (loss)/profit before tax
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
Income taxed at rates other than the standard rate of tax
Other differences
Non-recognition of deferred tax assets
Total income tax
(b) Deferred tax recognised directly in Other Comprehensive Income
Deferred tax arising on movement in retirement benefits
2017
€m
(62.9)
-
(62.9)
(7.9)
16.7
(0.3)
(0.5)
1.0
1.0
10.0
2017
€m
0.4
2016
€m
56.3
(0.1)
56.2
7.0
0.7
(0.1)
(0.7)
0.4
1.6
8.9
2016
€m
(0.6)
(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.
130
C&C Group plcAnnual Report 2017 8. DIVIDENDS
Dividends paid:
Final: paid 8.92c per ordinary share in July 2016 (2016: 7.0c paid in July 2015)
Interim: paid 4.96c per ordinary share in December 2016 (2016: 4.73c paid in December 2015)
Total equity dividends
Settled as follows:
Paid in cash
Scrip dividend
2017
€m
27.7
15.3
43.0
34.9
8.1
43.0
2016
€m
23.6
16.0
39.6
34.8
4.8
39.6
The Directors have proposed a final dividend of 9.37 cent per share (2016: 8.92 cent), to ordinary shareholders registered at the close of
business on 26 May 2017, which is subject to shareholder approval at the Annual General Meeting, giving a proposed total dividend for the
year of 14.33 cent per share (2016: 13.65 cent). Using the number of shares in issue at 28 February 2017 and excluding those shares for
which it is assumed that the right to dividend will be waived, this would equate to a distribution of €29.5m.
Total dividends of 13.88 cent per ordinary share were recognised as a deduction from the retained income reserve in the year ended 28
February 2017 (2016: 11.73 cent).
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.
9. EARNINGS PER ORDINARY SHARE
Denominator computations
Number of shares at beginning of year
Shares issued in lieu of dividend
Shares issued in respect of options exercised
Share repurchased and subsequently cancelled
Number of shares at end of year
Weighted average number of ordinary shares (basic)*
Adjustment for the effect of conversion of options
2017
2016
Number
Number
‘000
‘000
329,158
2,209
318
(6,139)
348,547
1,312
146
(20,847)
325,546
329,158
310,431
995
329,044
5,316
Weighted average number of ordinary shares, including options (diluted)
311,426
334,360
* Excludes 11.9m treasury shares (2016: 16.4m).
131
Financial Statements
Notes forming part of the financial statements
(continued)
9. EARNINGS PER ORDINARY SHARE (CONTINUED)
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
2017
€m
(72.9)
147.1
74.2
2016
€m
47.4
33.4
80.8
Cent
Cent
(23.5)
23.9
(23.5)*
23.8
14.4
24.6
14.2
24.2
* Due to the reported loss for the year the basic and adjusted earnings per share are the same.
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 accounted for as treasury
shares (at 28 February 2017: 11.9m shares; at 29 February 2016: 16.4m shares).
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion
of all potential dilutive ordinary shares. The average market value of the Company’s shares for purposes of calculating the dilutive effect of
share options was based on quoted market prices for the period of the year that the options were outstanding.
Employee share awards (excluding awards which were granted under plans where the rules stipulate that obligations must be satisfied by
the purchase of existing shares (note 4)), 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 and continuous employment. In
accordance with IAS 33 Earnings per Share, these contingently issuable shares 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 (3,424,695 at 28 February 2017 and
2,244,908 at 29 February 2016). If dilutive other contingently issuable ordinary shares are included in diluted EPS based on the number of
shares that would be issuable if the end of the reporting period was the end of the contingency period.
10. BUSINESS COMBINATIONS
Acquisition of businesses
During the prior financial year, on 3 August 2015, the Group announced the acquisition of the remaining equity share capital of Thistle
Pub Company Limited. This purchase followed the acquisition of an initial stake in the business in November 2012. As outlined in further
detail in note 13, under IAS 28 Investments in Associates and Joint Ventures this necessitated the deemed disposal of the Group’s initial
investment which was classified as an equity accounted investee and the recognition of the acquisition of control of the business under
IFRS 3 Business Combinations.
132
C&C Group plcAnnual Report 2017
10. BUSINESS COMBINATIONS (CONTINUED)
The book values of the assets and liabilities acquired, together with the fair value adjustments made to those carrying values, were as
follows:-
Thistle Pub Company Limited - year ended 29 February 2016
Property, plant & equipment
Inventories
Trade & other receivables
Trade & other payables
Interest bearing loans & borrowings
Net identifiable assets and liabilities acquired
Satisfied by:
Cash consideration (paid in prior financial year)
Initial value
Adjustment to
initial
assigned
fair value
€m
€m
6.2
0.1
0.2
(3.6)
(2.4)
0.5
-
-
(0.2)
(0.2)
-
(0.4)
Revised fair
value
€m
6.2
0.1
-
(3.8)
(2.4)
0.1
0.1
Post acquisition impact
The post acquisition impact of the Thistle Pub Company Limited acquisition completed during the prior financial year on Group operating
profit for the prior financial year was as follows:-
Revenue
Excise duties
Net revenue
Operating costs
Operating profit
Finance expense
Profit before tax
Income tax expense
Result from acquired business
2016
€m
2.9
-
2.9
(2.5)
0.4
(0.2)
0.2
-
0.2
The Thistle Pub Company business was acquired on 3 August 2015. The business made a profit of €0.2m in the period since acquisition
to 29 February 2016. The revenue, net revenue and operating profit of the Group for the financial year ended 29 February 2016 determined
in accordance with IFRS as though the acquisitions effected during that year had been at the beginning of that year would therefore not
have been materially different from that reported.
All intra group balances, transactions, income and expenses are eliminated on consolidation in accordance with IFRS 10 Consolidated
Financial Statements.
Also in the prior financial year the Group paid €3.2m with respect to Green Light Brands which the Group had acquired in FY2015.
Acquisition of equity accounted investees
Details of the Group’s investments in equity accounted investees in the current and prior financial year are outlined in note 13.
133
Financial Statements Notes forming part of the financial statements
(continued)
11. PROPERTY, PLANT & EQUIPMENT
Group
Cost or valuation
At 1 March 2015
Translation adjustment
Additions
Disposals
Revaluation/impairment of property, plant & equipment
Acquisition of business Thistle Pub Company (note 10)
Freehold
land &
Plant &
Motor
vehicles
& other
buildings
machinery
equipment
€m
€m
€m
121.2
(4.4)
0.4
-
(6.9)
5.1
211.4
(7.0)
4.0
-
(9.1)
1.1
73.5
(4.1)
4.4
(2.2)
-
-
Total
€m
406.1
(15.5)
8.8
(2.2)
(16.0)
6.2
At 29 February 2016
115.4
200.4
71.6
387.4
Translation adjustment
Additions
Disposals
Revaluation/impairment of property, plant & equipment
At 28 February 2017
Depreciation
At 1 March 2015
Translation adjustment
Disposals
Charge for the year
At 29 February 2016
Translation adjustment
Disposals
Charge for the year
At 28 February 2017
Net book value
At 28 February 2017
At 29 February 2016
Classified within:
Non-current assets: Property, plant and equipment
Current assets: Assets held for resale
(3.0)
0.1
(11.5)
(18.2)
(5.1)
19.3
(22.5)
(6.1)
(3.8)
6.4
(2.0)
(1.5)
(11.9)
25.8
(36.0)
(25.8)
82.8
186.0
70.7
339.5
12.9
(0.6)
-
2.1
14.4
(0.6)
(2.7)
1.6
122.7
(3.9)
-
10.3
51.6
(2.8)
(1.9)
6.7
187.2
(7.3)
(1.9)
19.1
129.1
53.6
197.1
(2.7)
(8.1)
7.5
(3.0)
(1.4)
5.6
(6.3)
(12.2)
14.7
12.7
125.8
54.8
193.3
70.1
101.0
60.2
15.9
146.2
71.3
18.0
190.3
2017
2016
144.5
1.7
146.2
180.0
10.3
190.3
No depreciation is charged on freehold land which had a book value of €12.9m at 28 February 2017 (29 February 2016: €16.2m).
134
C&C Group plcAnnual Report 2017 11. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
Valuation of freehold land, buildings and plant & machinery - 28 February 2017
In the current financial year, the Group engaged the following external valuers to value the Group’s land & buildings and plant & machinery
at Exchange street, Middlebury, Vermont, U.S.A.;
• Lawerence K. Martin, MAI, Certified General Real Estate Appraiser - Martin Appraisal Services, Inc. to value the land and buildings, and;
• John Coto, Certified Machinery/Equipment Appraiser, Alliance Machinery & Equipment Appraisals, to value the Plant & Machinery.
The “Appraisal” reports were completed in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP).
The result of the external valuations as at 28 February 2017, was a revaluation loss with respect to the Group’s land and buildings of
€17.7m and a revaluation loss with respect to the Group’s plant and machinery of €5.1m. Both were recognised as an expense to the
Income Statement as there was no previously recognised gain in the revaluation reserve against which to offset.
In addition the Group impaired an element of its IT equipment that became redundant as a consequence of the rationalization of the
Group’s manufacturing footprint resulting in an impairment of €1.5m and the Group also took the decision to market value some of our
assets in Ireland resulting in an impairment of €1.5m.
For all other freehold land & buildings and plant & machinery assets held by the Group an internal valuation was completed by the
Directors as at 28 February 2017. As part of their valuation assessment, the Directors considered the following factors and their impact in
determining year end valuation of the Group’s property, plant & equipment:-
• market fluctuations of land and industrial property prices since the date of the last external valuation,
• fluctuations driven by market commodity prices, of the gross replacement cost of property, plant & machinery,
• projected asset utilisation rates based on FY2018 budgeted/forecasted production volumes,
• changes to functional and physical obsolescence of plant & machinery beyond that which would normally be expected, and continued
appropriateness of the assumed useful lives of property, plant & machinery.
Having considered the above variables, the Directors estimate that the changes arising from market fluctuations and anticipated utilisation
rates would not result in a material change to the valuation of the carrying value of these items of property, plant & equipment and hence
no adjustment to their carrying value was deemed necessary.
Also in the current financial year, the Group disposed of assets which had a previously recognised revaluation gain in the revaluation
reserve of €2.1m. The loss on disposal in the current financial year was offset in the first instance again this previously recognised
revaluation gain and the remaining loss was booked in operating profit.
Valuation of freehold land, buildings and plant & machinery - 29 February 2016
In the prior financial year, the Group engaged the following external valuers to value the land & buildings and plant & machinery at the
Group’s facilities in Shepton Mallet, UK and Borrisoleigh, Ireland;
• Timothy Smith, BSc MRICS, RICS Registered Valuer and Daniel Tompkinson BSc MRICS RICS Registered Valuer - Gerald Eve LLP to
value the land and buildings at the Shepton Mallet site;
• Derek Elston FRCIS RICS Registered Valuer - Elston Sutton Industrial Appraisal Limited to value the plant and equipment at the Shepton
Mallet site;
• Ronan Diamond RICS Registered Valuer (VRS) BSc (Hons) Dip MSCSI MRICS and Brian Gilson RICS Registered Valuer (VRS) Dip Prop
Inv MSCSI MRICS FCI Arb - Lisney to value the freehold property at the Borrisoleigh site; and
• Don Meghen - Lisney to value the plant & machinery at Borrisoleigh.
135
Financial Statements Notes forming part of the financial statements
(continued)
11. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
These valuations were in accordance with the requirements of the RICS Valuation - Professional Standards, January 2014 edition and the
International Valuation Standards.
The Fair Value of operational land & buildings and plant & machinery in Shepton Mallet was based on the Depreciated Replacement Cost
approach in light of the lack of comparative market transactions and on the market approach for the non-operational land & buildings and
plant & machinery. The valuation of the land & buildings and plant & machinery in Borrisoleigh was on the basis of market value. Market
value is defined as ‘the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date’. The market approach was considered to be the most appropriate valuation approach for the non-
operational assets in Shepton Mallet, and the assets held in Borrisoleigh, as the Group has announced consolidation of its production
sites in Borrisoleigh and Shepton Mallet into the Group’s manufacturing site in Clonmel.
In view of the specialised nature of Shepton Mallet operational land & buildings and plant & machinery, a Depreciated Replacement
Cost approach was used to assess as Fair 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 result of these external valuations, as at 29 February 2016, was a decrease in the value of land and buildings of €6.9m which was
expensed to the Income Statement as there was no previously recognised gain in the revaluation reserve against which to offset. The
value of plant and machinery decreased by €9.1m as a result of this valuation which was expensed to the Income Statement as there was
no previously recognised gain in the revaluation reserve against which to offset.
On the acquisition of Thistle Pub Company the valuation of the land and buildings was on the basis of market value. In April 2016, land and
buildings were disposed of for a value consistent with their carrying value as at 29 February 2016.
For all other freehold land & buildings and plant & machinery assets held by the Group an internal valuation was completed by the
Directors as at 29 February 2016 and no adjustment to their carrying value was deemed necessary as a result of this internal valuation.
Useful Lives
The following useful lives were attributed to the assets:-
Asset category
Tanks
Process equipment
Bottling & packaging equipment
Process automation
Buildings
Useful life
30 - 35 years
20 years
15 - 20 years
10 years
50 years
Net book value
Carrying value at 28 February 2017 post revaluation
Carrying value at 28 February 2017 pre revaluation
Loss on revaluation
Classified within:
Income Statement
136
Land &
Plant & Motor vehicles &
buildings
machinery
other equipment
€m
€m
€m
70.1
88.3
(18.2)
60.2
66.3
(6.1)
15.9
17.4
(1.5)
Total
€m
146.2
172.0
(25.8)
(18.2)
(6.1)
(1.5)
(25.8)
C&C Group plcAnnual Report 2017
11. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
Net book value
Carrying value at 29 February 2016 post revaluation
Carrying value at 29 February 2016 pre revaluation
Loss on revaluation
Classified within:
Income Statement
Land &
Plant & Motor vehicles &
buildings
machinery
other equipment
€m
€m
€m
101.0
107.9
(6.9)
71.3
80.4
(9.1)
18.0
18.0
-
Total
€m
190.3
206.3
(16.0)
(6.9)
(9.1)
(16.0)
Fair value hierarchy
The valuations of land & buildings and plant & machinery are derived using data from sources which are not widely available to the public
and involve a degree of judgement. For these reasons, the valuations of the Group’s land & buildings and plant & machinery are classified
as ‘Level 3’ as defined by IFRS 13 Fair Value Measurement, and as illustrated below:
Recurring measurements
Freehold land & buildings measured at market value
Freehold land & buildings measured at depreciated replacement cost
Plant & machinery
At 28 February 2017
Carrying amount
Quoted prices
Level 1
Significant
observable
Level 2
Significant
unobservable
Level 3
€m
€m
€m
€m
39.9
30.2
60.2
130.3
-
-
-
-
-
-
-
-
39.9
30.2
60.2
130.3
Measurement techniques
The Group used the following techniques to determine the fair value measurements categorised in Level 3:
• Land & buildings in Ireland, US, Wallaces Express and Portugal and plant & machinery located in Portugal and Borrisoleigh, and all
assets held for resale, are valued using a market value approach. The market value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date.
• Land & buildings and plant & machinery in the UK, and plant & machinery located in Ireland and the US have been valued using
the depreciated replacement cost approach. Depreciated replacement cost is assessed, firstly, by the identification of the gross
replacement cost for each class of asset at each of the Group’s plants. 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 plant and machinery asset, at each of the Group’s plants, as a
function of total available production capacity, is applied to determine the depreciated replacement cost.
137
Financial Statements Notes forming part of the financial statements
(continued)
11. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
Unobservable inputs
The significant unobservable inputs used in the market value measurement of land and buildings is as follows:
Valuation technique
Significant unobservable inputs
Range of unobservable inputs -
Land (‘000)
Range of unobservable inputs
- Buildings
Relationship of unobservable
inputs to fair value
Comparable market
transactions
Price per square foot/acre
The higher the price per
square foot/acre, the
higher the fair value.
Republic of Ireland
€13 – €29 per hectare
United States
United Kingdom
$25 – $70 per acre
£300 to £350 per acre
€47 – €257 per square
meter
$7– $50 per square foot
£10 to £65 per square foot
The significant unobservable inputs used in the depreciated cost measurement of land & buildings and plant & machinery are as follows:-
Gross replacement cost
adjustment
Increase in gross replacement cost of plant and machinery of 0% (2016: 0%), based on management’s
judgment supported by discussions with valuers
Economic obsolescence
adjustment factor
Economic obsolescence, considered on an asset by asset basis, for each plant, ranging from 0% to 100%
(2016: 0% to 100%). The weighted average obsolescence factor by site is as follows: Cidery, Ireland - 59%;
Brewery Scotland - 64% and Cidery, United States - 54%
Physical and functional
obsolescence adjustment
factor
Adjustment for changes to physical and functional obsolescence - nil (2016: nil)
The carrying value of plant & machinery in the Group which is valued on the depreciated replacement cost basis, would increase/
(decrease) by €3.0m if the economic obsolescence adjustment factor was increased/(decreased) by 5%. If the gross replacement cost
was increased/(decreased) by 2% the carrying value of the Group’s plant & machinery would increase/(decrease) by €1.2m.
The carrying value of freehold land & buildings which is valued on the depreciated replacement cost basis, would increase/(decrease) by
€1.5m if the economic obsolescence adjustment factor was increased/(decreased) by 5%. The estimated carrying value of the same land
& buildings would increase/(decrease) by €0.6m if the gross replacement cost was increased/(decreased) by 2%.
The carrying value of freehold land & buildings located in Ireland, the US, Wallaces Express and Portugal would increase/(decrease) by
€2.0m if the comparable open market value increased/(decreased) by 5%.
Assets held for resale
As at 28 February 2017, the Group holds property, plant and equipment of €1.7m (FY2016: €10.3m) as assets held for resale which is
comprised of land & buildings of €1.0m and plant & machinery of €0.7m.
Company
The Company has no property, plant & equipment.
138
C&C Group plcAnnual Report 2017 12. GOODWILL & INTANGIBLE ASSETS
Cost
At 28 February 2015
Translation adjustment
At 29 February 2016
Translation adjustment
At 28 February 2017
Amortisation and impairment
At 28 February 2015
Amortisation charge for the year
At 29 February 2016
Amortisation charge for the year
Impairment charge for the year
At 28 February 2017
Net book value
At 28 February 2017
At 29 February 2016
Goodwill
€m
487.1
(3.4)
483.7
Brands
€m
310.9
(4.2)
306.7
Other
intangible
assets
€m
5.0
(0.2)
4.8
Total
€m
803.0
(7.8)
795.2
(3.3)
(3.4)
(0.2)
(6.9)
480.4
303.3
4.6
788.3
76.2
-
76.2
-
-
73.8
-
73.8
-
106.6
76.2
180.4
404.2
122.9
407.5
232.9
0.8
0.3
1.1
0.3
-
1.4
3.2
3.7
Export
€m
16.0
-
16.0
150.8
0.3
151.1
0.3
106.6
258.0
530.3
644.1
Total
€m
410.9
(3.4)
407.5
-
(3.3)
16.0
404.2
Goodwill
Goodwill has been attributed to reporting segments (as identified under IFRS 8 Operating Segments) as follows:-
Cost
At 28 February 2015
Translation adjustment
At 29 February 2016
Translation adjustment
Ireland
Scotland
€m
€m
154.5
-
154.5
-
54.6
(2.4)
52.2
(2.4)
C&C
Brands
€m
176.6
(1.0)
175.6
(0.9)
At 28 February 2017
154.5
49.8
174.7
North
America
€m
9.2
-
9.2
-
9.2
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 subsequently at fair value 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.
139
Financial Statements
Notes forming part of the financial statements
(continued)
12. GOODWILL & INTANGIBLE ASSETS (CONTINUED)
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 combination 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 annual impairment
testing.
Brands
Brands have been attributed to reporting segments (as identified under IFRS 8 Operating Segments) as follows:-
At 28 February 2015
Translation adjustment
At 29 February 2016
Translation adjustment
Impairment charge for the year
C&C
North
Scotland
Brands
America
€m
€m
€m
88.1
(6.7)
81.4
(6.4)
-
14.7
(1.1)
13.6
(1.1)
-
134.3
3.6
137.9
4.1
(106.6)
Total
€m
237.1
(4.2)
232.9
(3.4)
(106.6)
At 28 February 2017
75.0
12.5
35.4
122.9
Capitalised brands include the Tennent’s beer brands and the Gaymers cider brands acquired during the financial year ended 28 February
2010 and the Vermont Hard Cider Company cider brands and Waverley wine brands acquired during the financial year ended 28 February
2013.
The Tennent’s, Gaymers and Vermont Hard Cider Company 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 Waverley wine brands were valued at
cost.
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.
140
C&C Group plcAnnual Report 2017
12. GOODWILL & INTANGIBLE ASSETS (CONTINUED)
Other intangible assets
Other intangible assets have been attributed to reporting segments (as identified under IFRS 8 Operating Segments) as follows:-
Ireland
Scotland
Cost
At 28 February 2015
Translation adjustment
At 29 February 2016
Translation adjustment
At 28 February 2017
Amortisation
At 28 February 2015
Amortisation charge for the year
At 29 February 2016
Amortisation charge for the year
At 28 February 2017
Net book value
At 28 February 2017
At 29 February 2016
€m
2.0
-
2.0
-
2.0
0.2
0.1
0.3
0.1
0.4
1.6
1.7
€m
3.0
(0.2)
2.8
(0.2)
2.6
0.6
0.2
0.8
0.2
1.0
1.6
2.0
Total
€m
5.0
(0.2)
4.8
(0.2)
4.6
0.8
0.3
1.1
0.3
1.4
3.2
3.7
Other intangible assets comprise the fair value of trade relationships acquired as part of the acquisition of Wallaces Express during
FY2015, the Gleeson trade relationships acquired during FY2014 and 20 year distribution rights for third party beer products acquired as
part of the acquisition of the Tennent’s business during FY2010. 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. The intangible assets have a finite
life and are subject to amortisation on a straight-line basis. The amortisation charge for the year ended 28 February 2017 with respect to
intangible assets was €0.3m (2016: €0.3m).
Impairment testing
To ensure that goodwill and brands that are considered to have an indefinite useful economic life are not carried at above their recoverable
amount, impairment testing is performed comparing the carrying value 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. Where the value-in-use exceeds the carrying value of the asset, the asset is not impaired.
As permitted by IAS 36 Impairment of Assets, the value of the Group’s intangible assets (goodwill and brands) has been allocated
to groups of cash generating units (referred to in this note as a business segment), which are not larger than an operating segment
determined in accordance with IFRS 8 Operating Segments. These business segments represent the lowest levels within the Group at
which the associated goodwill and indefinite life brands are monitored for management purposes.
The recoverable amount is calculated in respect of each business segment using value-in-use computations based on estimated future
cash flows discounted to present value using a discount rate appropriate to each cash generating unit and terminal values calculated on
the assumption that cash flows continue in perpetuity.
141
Financial Statements
Notes forming part of the financial statements
(continued)
12. GOODWILL & INTANGIBLE ASSETS (CONTINUED)
The key assumptions used in the value-in-use computations are:-
• Expected volume, net revenue and operating profit growth rates - cash flows for each business segment are based on detailed financial
budgets and plans, formally approved by the Board, for years one to three; these cash flows are extrapolated out for years four and five;
• Long-term growth rate - cash flows after the first five years were extrapolated using a long-term growth rate, on the assumption that
cash flows for the first five years will increase at a nominal growth rate in perpetuity;
• Discount rate.
The key assumptions were based on management assessment of anticipated market conditions for each business segment. A terminal
growth rate of 0% -1.75% (2016: 1.25%-1.75%) in perpetuity was assumed based on an assessment of the likely long-term growth
prospects for the sectors and geographies in which the Group operates. The resulting cash flows were discounted to present value using
a range of discount rates between 6.1%-8.5% (2016: 6.5%-9.8%); these rates are in line with the Group’s estimated pre-tax weighted
average cost of capital for the three main geographies in which the Group operates (Ireland, Great Britain and North America), arrived at
using the Capital Asset Pricing Model as adjusted for asset and country specific factors.
In formulating the budget and three year plan the Group takes into account historical experience, an appreciation of its core strengths
and weaknesses in the markets in which it operates and external factors such as macro economic factors, inflation expectations by
geography, regulation and expected changes in regulation (such as expected changes to duty rates and minimum pricing), market growth
rates, sales price trend, competitor activity, market share targets and strategic plans and initiatives.
The Group has performed the detailed impairment testing calculations by business segment with the following discount rates being
applied:
Market
Ireland
Scotland
C&C Brands
North America
Export
Discount rate
2017
Discount rate
2016
Terminal growth
rate 2017
Terminal growth
rate 2016
8.5%
6.5%
6.1%
6.7%
6.7%
9.8%
6.5%
6.5%
6.7%
6.7%
1.25%
1.25%
1.25%
0.00%
1.75%
1.25%
1.25%
1.25%
1.75%
1.75%
The impairment testing carried out at 28 February 2017 identified headroom in the recoverable amount of all of the Group’s Goodwill &
intangible assets excluding North America. The impairment testing carried out at 29 February 2016 identified headroom in the recoverable
amount of all of the Group’s Goodwill & intangible assets.
In the current financial year, the impairment testing carried out by the Group led to an impairment charge of €106.6m with respect to the
Group’s North American business segment. This has resulted in the write-down of the carrying value of the associated brand of €106.6m.
In the US, the cider category remains in double digit decline and the Group’s US cider brands are lagging behind the category. The
outcome of the “Spring Sets” negotiations were not as originally envisaged with new account wins significantly behind expectation. As
a consequence the Group has rebased its profit expectations and terminal growth rate for the US business and this has resulted in the
impairment charge in the current financial year. All other segments had sufficient headroom in the current and prior financial year.
In the current financial year the Group commenced a long-term partnership agreement in the US with Pabst Brewing Company (“Pabst”)
for the sale and distribution of the Group’s cider brands within the US. Under the terms of the partnership, Pabst has an option to acquire
C&C Group’s US Cider Brands and related assets, subject to any shareholder and regulatory approval. The option is exercisable from
2017. Consideration, which is not to be below US$150.0m, will be determined at the time of the exercise of the option.
Sensitivity analysis
In the current financial year the impairment testing carried out as at 28 February 2017 identified headroom in the recoverable amount of
the brands and goodwill compared to their carrying values in all business segments excluding North America. The testing identified an
impairment charge in North America of €106.6m.
The key sensitivities for the impairment testing are net revenue and operating profit assumptions, discount rates applied to the resulting
cash flows and the expected long-term growth rates.
142
C&C Group plcAnnual Report 2017
12. GOODWILL & INTANGIBLE ASSETS (CONTINUED)
The value-in-use calculations indicate significant headroom in respect of the Ireland, Scotland and Export operating segments. In the case
of the C&C Brands, the level of headroom is in excess of €80m.
For C&C Brands, an increase and a decrease in the operating profit assumption applied by 2.5% would impact the headroom by €7.7m.
An increase in the discount rate assumption by 0.25% would decrease the headroom by €16.3m and a decrease by 0.25% would increase
the headroom by €18.1m. An increase in the terminal growth rate assumption by 0.25% would increase the headroom by €14.9m and a
decrease by 0.25% would decrease the headroom by €13.5m.
The Group concludes that no reasonable movement in any of the underlying assumptions would result in a further material impairment in
any of the Group’s business segments except for North America as noted below.
For North America segment, an increase and a decrease in the operating profit assumption applied by 2.5% would impact the headroom/
impairment charge by €1.3m. An increase in the discount rate assumption by 0.25% would increase the impairment by €1.8m and a
decrease in the discount rate by 0.25% would increase the headroom by €2m. An increase in the terminal growth rate assumption by
0.25% would increase the headroom by €1.5m and a decrease in the terminal value growth rate by 0.25% would increase the impairment
charge by €1.4m.
13. EQUITY ACCOUNTED INVESTEES/FINANCIAL ASSETS
(a) Equity accounted investees - Group
Investment in equity accounted investees
Carrying amount at 1 March 2015
Reclassification of loan note
Share of (loss)/profit after tax
Impairment of financial liability on disposal
Carrying amount at 29 February 2016
Purchase price paid
Translation adjustment
Carrying amount at 28 February 2017
Drygate Brewing
Company Limited
Thistle Pub
Company
Canadian
Investment
Whitewater
Brewing
Company
Limited
Total
€m
€m
€m
€m
€m
0.4
-
(0.1)
-
0.3
-
-
0.3
0.5
(0.4)
0.1
(0.2)
-
-
-
-
-
-
-
-
-
1.7
0.1
1.8
-
-
-
-
-
0.3
-
0.3
0.9
(0.4)
-
(0.2)
0.3
2.0
0.1
2.4
Whitewater Brewing Company Limited
In the current financial year, on 20 December 2016, the Group acquired 25% of the equity share capital of Whitewater Brewing Company
Limited, an Irish Craft brewer for £0.3m (€0.3m).
Canadian Investment
Also in the current financial year, on 11 May 2016, the Group acquired 14% of the equity share capital of a Canadian Company, for
CAD$2.5m (€1.7m euro equivalent on date of investment, €1.8m euro equivalent at balance sheet date).
Drygate Brewing Company Limited
In FY2015, the Group entered into a joint venture arrangement with Heather Ale Limited, run by the Williams brothers who are recognised
as leading family craft brewers in Scotland, to form a new entity Drygate Brewing Company Limited. The joint venture, which is run
independently of the joint venture partners existing businesses, operates a craft brewing and retail facility adjacent to Wellpark brewery.
The financial result for the current financial year attributable to the Group was less than €0.1m (2016: loss of €0.1m).
Maclay Group plc
On 21 March 2012, the Group acquired a 25% equity investment in Maclay Group plc. The Maclay Group plc went into administration
during FY2015 and accordingly the Group fully impaired its investment and related derivative financial instruments in this entity as at 28
February 2015. During the current financial year the Group recovered €0.5m as part of the administration process.
143
Financial Statements Notes forming part of the financial statements
(continued)
13. EQUITY ACCOUNTED INVESTEES/FINANCIAL ASSETS (CONTINUED)
Thistle Pub Company Limited
On 3 August 2015, the Group acquired the remaining equity share capital of Thistle Pub Company Limited. This purchase followed
the acquisition of an initial stake in the business in November 2012. Under IAS 28 Investments in Associates and Joint Ventures this
necessitated, in the prior financial year, the deemed disposal of the Group’s initial investment which was classified as an equity accounted
investee and the recognition of the acquisition of control of the business under IFRS 3 Business Combinations.
The Group had recognised a profit of €0.1m being the financial result for the prior financial year, to date of deemed disposal, attributable
to the Group. Also in the prior financial year the Group reclassified €0.4m of loan notes which inadvertently had been classified as part
of the initial investment and derecognized the Group’s financial liability of €0.2m with respect to its initial investment in the business on
its deemed disposal. In addition the Group had recognised €0.1m in the foreign currency reserve which was recycled to the Income
Statement following the deemed disposal.
Other
The Group also has an equity investment in Shanter Inns Limited, Beck & Scott (Services) Limited (Northern Ireland) and The Irish Brewing
Company Limited (Ireland). The value of these investments is less than €0.1m in the current and prior financial year.
(b) Financial Assets - Company
Equity investment in subsidiary undertakings at cost
At beginning of year
Capital contribution in respect of share options granted to employees of subsidiary undertakings
At end of year
2017
€m
978.6
0.7
2016
€m
978.1
0.5
979.3
978.6
The total expense of €0.7m (2016: €0.5m) attributable to equity settled awards 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 27.
14. INVENTORIES
Group
Raw materials & consumables
Finished goods & goods for resale
Total inventories at lower of cost and net realisable value
2017
€m
39.7
46.1
85.8
2016
€m
36.9
49.0
85.9
Inventory write-down recognised as an expense within operating costs amounted to €2.9m (2016: €3.8m). The level of inventory write-
down in the current financial year is primarily as a result of the write off of raw materials and packaging stocks that became obsolete in
the process of consolidating the Group’s production sites. The inventory write-down in the prior financial year is primarily as a result of the
write-off of finished goods and packaging stocks in the Group’s US business due to rebranding which took place during the prior financial
year, and the write-off of obsolete stock in various locations.
144
C&C Group plcAnnual Report 2017
15. TRADE & OTHER RECEIVABLES
Amounts falling due within one year:
Trade receivables
Amounts due from Group undertakings
Advances to customers
Prepayments and other receivables
Amounts falling due after one year:
Advances to customers
Prepayments and other receivables
Group
2017
€m
49.4
-
9.1
20.0
78.5
49.2
0.4
49.6
2016
€m
69.6
-
7.0
17.5
94.1
46.0
-
46.0
Company
2017
€m
-
335.1
-
0.4
335.5
-
0.7
0.7
2016
€m
-
238.2
-
0.5
238.7
-
1.2
1.2
Total
128.1
140.1
336.2
239.9
Amounts due from Group undertakings includes a combination of interest free and interest bearing loans and receivables are all repayable
on demand.
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 2017 and 29 February 2016 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
Impairment
Gross
Impairment
2017
€m
95.0
5.5
6.3
5.2
11.4
2017
€m
2016
€m
-
102.2
(0.1)
(0.1)
(4.1)
(11.4)
9.4
8.5
8.2
8.2
2016
€m
-
(0.3)
(2.0)
(3.4)
(8.2)
123.4
(15.7)
136.5
(13.9)
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 with respect to trade and other receivables 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. An
impairment provision is created in relation to advances to customers considered receivable in a period outside that originally contracted.
Balances included in the impairment provision are generally written off when there is no expectation of recovery.
Trade receivables are on average receivable within 26 days (2016: 30 days) of the balance sheet date, are unsecured and are not interest
bearing.
145
Financial Statements
Notes forming part of the financial statements
(continued)
15. TRADE & OTHER RECEIVABLES (CONTINUED)
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
Written off during the year
Translation adjustment
At end of year
16. TRADE & OTHER PAYABLES
Trade payables
Payroll taxes & social security
VAT
Excise duty
Accruals
Amounts due to Group undertakings
2017
€m
13.9
(1.6)
5.6
(1.6)
(0.6)
15.7
Company
2017
€m
-
-
-
-
0.3
281.1
2016
€m
12.6
(2.1)
5.2
(1.1)
(0.7)
13.9
2016
€m
-
-
-
-
0.5
273.3
Group
2017
€m
61.9
4.0
6.3
16.0
55.9
-
2016
€m
72.4
2.9
6.5
15.7
63.4
-
Total
144.1
160.9
281.4
273.8
Amounts due to Group undertakings include a combination of interest free and interest bearing loans and are payable on demand.
The Group’s exposure to currency and liquidity risk related to trade & other payables is disclosed in note 22.
Company
The Company has entered into financial guarantee contracts to guarantee the indebtedness of the liabilities of certain of its subsidiary
undertakings. As at 28 February 2017, 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 25.
146
C&C Group plcAnnual Report 2017 17. PROVISIONS
At beginning of year
Translation adjustment
Charged during the year
Unwind of discount on provisions
Utilised during the year
At end of year
Classified within:
Current liabilities
Non-current liabilities
Restructuring
2017
€m
10.7
-
12.7
-
(21.9)
Onerous
lease
2017
€m
8.0
(0.7)
7.0
0.8
(2.7)
1.5
12.4
Other
2017
€m
0.2
-
0.1
-
-
0.3
Total
2017
€m
18.9
(0.7)
19.8
0.8
(24.6)
14.2
6.5
7.7
14.2
Total
2016
€m
12.2
(1.2)
18.3
0.8
(11.2)
18.9
12.6
6.3
18.9
Restructuring
The restructuring provision utilised and charged during the current financial year primarily relates to severance costs arising from the prior
year announcement of the Group’s consolidation of its production sites in Borrisoleigh and Shepton Mallet into the Group’s manufacturing
site in Clonmel and the consequential reduction in head count as a result of this consolidation and other smaller reorganisation
programmes during the year across the Group. Also included were costs incurred from the closure of the Group’s operations in
Borrisoleigh and Shepton Mallet until their final disposal and other costs directly associated with the closure.
Onerous leases
The onerous lease provision carried forward relates to two onerous leases in relation to warehousing facilities acquired as part of the
acquisition of the Gaymers cider business in 2010. In the current financial year the provision was reassessed to take into account the
latest estimate of associated costs less economic value with regard to these two existing onerous leases up until their final disposal. The
discount rate applied to the liability was also re-assessed. This resulted in an increase in the provision of €6.8m. These onerous leases will
expire in 2017 and 2026 respectively.
The Group also recognised an onerous lease with regard to a surplus facility at its US business of €0.2m in the current financial year. This
lease will expire in 2018.
Other
Other provisions relate to 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.
147
Financial Statements
Notes forming part of the financial statements
(continued)
18. INTEREST BEARING LOANS & BORROWINGS
Group
Current assets
Unsecured bank loans repayable by one repayment on maturity
Non-current liabilities
Unsecured bank loans repayable by one repayment on maturity
Secured bank loans repayable in instalments*
Total non-current liabilities
Current liabilities
Secured bank loans repayable in instalments*
Total borrowings
2017
€m
2016
€m
(0.4)
(1.0)
358.6
-
358.6
359.3
1.8
361.1
-
0.2
358.2
360.3
* Acquired in the prior financial year on acquisition of Thistle Pub Company Limited and the outstanding balance was repaid in full in the current financial year.
Outstanding non-current unsecured bank loans are net of unamortised issue costs which are being amortised to the Income Statement
over the remaining life of the Group’s multi-currency facility. The value of unamortised issue costs at 28 February 2017 was €1.1m (2016:
€2.1m) of which €0.7m is netted against non-current unsecured liabilities (2016: €1.1m) and €0.4m is shown as a current asset on the
Balance Sheet (2016: €1.0m).
Terms and debt repayment schedule
Nominal
rates of
interest
2017
2016
Carrying
Carrying
Year of
maturity
value
€m
value
€m
Currency
Unsecured bank loans repayable by one
repayment on maturity
Secured bank loan repayable in instalments*
Multi
Euribor/Libor + 1.2%
2019
359.3
360.4
GBP
Libor + 3.0 %
-
-
2.0
* Acquired in the prior financial year on acquisition of Thistle Pub Company Limited and the outstanding balance was repaid in full in the current financial year.
359.3
362.4
Borrowing facilities
The Group manages its borrowing requirements by entering into committed loan facility agreements.
In December 2014, the Group amended and updated its committed €450m multi-currency five year syndicated revolving loan facility with
seven banks, namely Bank of Ireland, Bank of Scotland, Barclays Bank, Danske Bank, HSBC, Rabobank, and Ulster Bank, repayable in
a single instalment on 22 December 2019. The facility agreement provides for a further €100m in the form of an uncommitted accordion
facility and permits the Group to avail of further financial indebtedness, excluding working capital and guarantee facilities, to a maximum
value of €150m, 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 €700m of which €359.3m was drawn at 28 February 2017 (2016: €360.4m).
148
C&C Group plcAnnual Report 2017
18. INTEREST BEARING LOANS & BORROWINGS (CONTINUED)
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.
All non-current bank loans drawn under the Group’s multi-currency revolving loan facility are guaranteed by a number of the Group’s
subsidiary undertakings. The facility agreement allows the early repayment of debt without incurring additional charges or penalties.
All such non-current bank loans under the Group’s multi-currency revolving loan facility are repayable in full on change of control of the
Group.
The Group’s multi-currency 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
The Group complied with both covenants throughout the current and prior financial year.
In addition during the prior financial year, the Group acquired debt of €2.0m following the acquisition of Thistle Pub Company Limited. This
was repaid in full in the current financial year.
Further information about the Group’s exposure to interest rate, foreign currency and liquidity risk is disclosed in note 22.
19. ANALYSIS OF NET DEBT
1 March
Translation
Debt arising
Cash
Non-cash
28 February
Group
Interest bearing loans & borrowings
Cash & cash equivalents
2016
€m
360.3
(197.3)
163.0
adjustment
on acquisition
Flow, net
changes
€m
€m
€m
€m
(7.8)
9.9
2.1
-
-
-
4.7
(0.2)
4.5
1.0
-
1.0
2017
€m
358.2*
(187.6)
170.6
*Interest bearing loans & borrowings at 28 February 2017 are net of unamortised issue costs of €1.1m of which €0.4m is classified on the balance sheet as a current asset.
Group
Interest bearing loans & borrowings
Cash & cash equivalents
1 March
Translation
Debt arising
Cash
Non-cash
29 February
2015
€m
339.7
(181.9)
157.8
Adjustment
on acquisition
Flow, net
changes
€m
€m
€m
€m
(7.7)
8.7
1.0
2.4
-
2.4
24.9
(24.1)
0.8
1.0
-
1.0
2016
€m
360.3*
(197.3)
163.0
*Interest bearing loans & borrowings at 29 February 2016 are net of unamortised issue costs of €2.1m of which €1.0m is classified on the balance sheet as a current asset.
The non-cash change to the Group’s interest bearing loans and borrowings in the current and prior financial years relate to the
amortisation of issue costs of €1.0m (2016: €1.0m).
149
Financial Statements
Notes forming part of the financial statements
(continued)
19. ANALYSIS OF NET DEBT (CONTINUED)
Company
Prepaid issue costs
Cash & cash equivalents
1 March
2016
€m
(1.6)
-
(1.6)
*Prepaid issues costs at 28 February 2017 amounted to €1.1m of which €0.4m is classified as a current asset on the balance sheet.
Company
Prepaid issue costs
Cash & cash equivalents
1 March
2015
€m
(2.0)
-
(2.0)
Cash
Flow
€m
-
-
-
Cash
Flow
€m
-
-
-
Non-cash
28 February
changes
€m
0.5
-
0.5
2017
€m
(1.1)*
-
(1.1)
Non-cash
29 February
changes
€m
0.4
-
0.4
2016
€m
(1.6)
-
(1.6)
The Company is an original borrower under the terms of the Group’s revolving credit facility but is not a borrower in relation to the Group’s
drawn debt as at 28 February 2017 or 29 February 2016. As outlined in further detail in note 25, the Company, together with a number of
its subsidiaries, gave a letter of guarantee to secure its obligations in respect of debt drawn by the Group under the terms of the Group’s
revolving credit facility agreement. The Company‘s prepaid issue costs relate to issue costs with respect to the Group’s 2014 revolving
credit facility; the amortisation of such issue costs was €0.5m in the current financial year (2016: €0.4m).
20. RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Group
Property, plant & equipment
Intangible assets
Retirement benefits
Trade related items & losses
2017
2016
Net assets/
Net assets/
Assets
Liabilities
(liabilities)
Assets
Liabilities
(liabilities)
€m
-
-
2.7
0.5
3.2
€m
€m
(2.2)
(3.0)
(0.8)
-
(6.0)
(2.2)
(3.0)
1.9
0.5
(2.8)
€m
-
-
4.0
0.4
4.4
€m
€m
(1.3)
(3.3)
(0.9)
-
(5.5)
(1.3)
(3.3)
3.1
0.4
(1.1)
The Group has not recognised deferred tax in relation to temporary differences applicable to investments in subsidiaries on the basis that
the Group can control the timing and the realisation of these temporary differences and it is unlikely that the temporary differences will
reverse in the foreseeable future. The aggregate amount of temporary differences applicable to investments in subsidiaries and equity
accounted investees in respect of which deferred tax liabilities have not been recognised is immaterial on the basis that the participation
exemptions and foreign tax credits should be available such that no material temporary differences arise. There are no other unrecognised
deferred tax liabilities.
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C&C Group plcAnnual Report 2017
20. RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
In addition, no deferred tax asset has been recognised in respect of certain tax losses incurred by the Group on the basis that the
recovery is considered unlikely in the foreseeable future. The cumulative value of such tax losses is €21.1m. In the event that sufficient
taxable profits arise in the relevant jurisdictions in future years, these losses may be utilised. The vast majority of these losses are due to
expire in 2035.
Company
The company had no deferred tax assets or liabilities at 28 February 2017 or at 29 February 2016.
Analysis of movement in net deferred tax assets/(liabilities)
Group
Property, plant & equipment: ROI
Property, plant and equipment: other
Provision for trade related items
Intangible assets
Retirement benefits
Group
Property, plant & equipment: ROI
Property, plant and equipment: other
Provision for trade related items
Intangible assets
Retirement benefits
1 March
Recognised in
Income
Recognised in
Other
Translation
28 February
2016
Statement
Comprehensive
Income
adjustment
€m
€m
€m
(0.6)
(0.7)
0.4
(3.3)
3.1
(1.1)
0.3
(1.3)
0.1
0.1
(0.8)
(1.6)
-
-
-
-
(0.4)
(0.4)
€m
-
0.1
-
0.2
-
0.3
2017
€m
(0.3)
(1.9)
0.5
(3.0)
1.9
(2.8)
1 March
Recognised in
Income
Recognised in
Other
Translation
29 February
2015
Statement
Comprehensive
Income
adjustment
€m
€m
(0.6)
(2.3)
0.4
(3.1)
3.9
(1.7)
-
1.5
-
(0.5)
(1.4)
(0.4)
€m
-
-
-
-
0.6
0.6
€m
-
0.1
-
0.3
-
0.4
2016
€m
(0.6)
(0.7)
0.4
(3.3)
3.1
(1.1)
21. RETIREMENT BENEFITS
The Group operates a number of defined benefit pension schemes for certain employees, past and present, in the Republic of Ireland
(ROI) and in Northern Ireland (NI), all of which provide pension benefits based on final salary and the assets of which are held in separate
trustee administered funds. The Group closed its defined benefit pension schemes to new members in March 2006 and provides only
defined contribution pension schemes for employees joining the Group since that date. The Group provides permanent health insurance
cover for the benefit of certain employees and separately charges this to the Income Statement.
The defined benefit 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.
151
Financial Statements
Notes forming part of the financial statements
(continued)
21. RETIREMENT BENEFITS (CONTINUED)
There are no active members remaining in the Executive defined benefit pension scheme (2016: no active members). There are 62 active
members, representing less than 10% of total membership, in the ROI Staff defined benefit pension scheme (2016: 63 active members)
and 4 active members in the NI defined benefit pension scheme (2016: 4 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 2015 and thereafter for
all future pension increases to be awarded on a discretionary basis.
In the prior financial year, the Group offered deferred members of its two ROI defined benefit pension schemes an opportunity to transfer
out of the schemes, giving the deferred member greater control and flexibility over their pension arrangements. This offer concluded in
the current financial year. In total 119 deferred members availed of the offer and have transferred out of the scheme. The closing liability
of the two ROI defined benefit pension schemes as at 28 February 2017 is a deficit of €22.3m. The NI defined benefit pension scheme is
reporting a surplus of €4.5m as at 28 February 2017.
Actuarial valuations – funding requirements
Independent actuarial valuations of the defined benefit pension schemes are carried out on a triennial basis using the attained age
method. The most recent actuarial valuations of the ROI defined benefit pension schemes were carried out with an effective date of 1
January 2015 while the date of the most recent actuarial valuation of the NI defined benefit pension scheme was 31 December 2014. The
actuarial valuations are not available for public inspection; however the results of the valuations are advised to members of the various
schemes.
The funding requirements in relation to the Group’s ROI defined benefit pension 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 the Group
has committed to contributions of 22% of pensionable salaries along with a deficit contribution of €1.2m per annum until the next valuation
date for the Group’s Staff defined benefit pension scheme. There is no funding requirement with respect to the Group’s Executive defined
benefit pension scheme in 2017. The funding requirement will be reviewed again as part of the next triennial valuation in January 2018. The
2014 actuarial valuation of the NI defined benefit pension scheme confirmed it was in surplus and the scheme remains in surplus.
The Group is exposed to a number of risks in relation to the funding position of these schemes, namely:-
Asset volatility: It is the Group’s intention to pursue a long-term investment policy that emphasises investment in secure monetary assets
to provide for the contractual benefits payable to members. The investment portfolio has exposure to equities, other growth assets and
fixed interest investments, the returns from which are uncertain and may fluctuate significantly in line with market movements. Assets held
are valued at fair value using bid prices where relevant.
Discount rate: The discount rate is the rate of interest used to discount post-employment benefit obligations and is determined by
reference to market yields at the balance sheet date on high quality corporate bonds with a currency and term consistent with the
currency and estimated term of the Group’s post employment benefit obligations. Movements in discount rates have a significant impact
on the value of the schemes’ liabilities.
Longevity: The value of the defined benefit obligations is influenced by demographic factors such as mortality experience and retirement
patterns. Changes to life expectancy have a significant impact on the value of the schemes’ liabilities.
Method and assumptions
The schemes’ independent actuary, Mercer (Ireland) Limited, has 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 inflation/salary increase. These and other assumptions used
to determine the retirement benefits and current service cost under IAS19(R) Employee Benefits are set out below.
152
C&C Group plcAnnual Report 2017
21. RETIREMENT BENEFITS (CONTINUED)
Mortality rates also have a significant impact on the actuarial valuations, 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 S2PMA CMI 2013 (males) and S2PFA CMI 2013 (females) for the ROI schemes and SPA07M year of
birth tables with CMI 2014 projections for the NI 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
No. of years
No. of years
No. of years
No. of years
ROI
2017
2016
NI
2017
2016
Current retirees – no allowance for future improvements
Future retirees – with allowance for future improvements
Male
Female
Male
Female
23.8
25.8
25.0
27.1
23.7
25.7
24.9
26.9
22.9
25.0
25.0
27.3
22.8
24.9
24.9
27.2
Scheme liabilities:-
The average age of active members is 47 and 52 years for the ROI Staff and the NI defined benefit pension schemes respectively (the
Executive defined benefit pension scheme has no active members), while the average duration of liabilities ranges from 15 to 23 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 2017 and 29 February 2016 are as follows:-
Salary increases
Increases to pensions in payment
Discount rate
Inflation rate
2017
ROI
NI
2016
ROI
0.00%-2.5%
1.5%
1.70%-1.95%
1.5%
3.7% 0.0%-2.5%
1.5%
1.8%
2.6% 1.95%-2.15%
1.5%
3.3%
NI
3.4%
1.7%
3.9%
3.0%
A reduction in discount rate used to value the schemes’ liabilities by ¼% would increase the valuation of liabilities by €10.2m while an
increase in inflation/salary increase expectations of ¼% would increase the valuation of liabilities by €10.1m. The sensitivity is calculated by
changing the individual assumption while holding all other assumptions constant.
The pension assets and liabilities on the following pages have been prepared in accordance with IAS19(R) Employee Benefits.
153
Financial Statements
Notes forming part of the financial statements
(continued)
21. RETIREMENT BENEFITS (CONTINUED)
a. Impact on Group Income Statement
Analysis of defined benefit pension
expense:
Current service cost
Past service gain
Gain on settlement
Interest cost on scheme liabilities
Interest income on scheme assets
Total income recognised in Income
Statement
ROI
€m
1.1
-
(5.1)
4.0
(3.4)
2017
NI
€m
-
-
-
0.2
(0.4)
Total
€m
1.1
-
(5.1)
4.2
(3.8)
ROI
€m
1.0
(0.8)
(5.4)
4.2
(3.5)
2016
NI
€m
0.1
-
-
0.3
(0.4)
Total
€m
1.1
(0.8)
(5.4)
4.5
(3.9)
(3.4)
(0.2)
(3.6)
(4.5)
-
(4.5)
Analysis of amount recognised in Other Comprehensive Income:
Actual return on scheme assets
Expected interest income on scheme assets
Experience gains and losses on scheme
liabilities
Effect of changes in assumptions on
scheme liabilities
Total (income)/expense
Scheme assets
Scheme liabilities
Deficit in scheme
Surplus in scheme
ROI
€m
(13.2)
3.4
(1.8)
7.7
(3.9)
176.7
(199.0)
(22.3)
-
2017
NI
€m
(2.3)
0.4
-
2.2
0.3
11.8
(7.3)
-
4.5
Total
€m
(15.5)
3.8
(1.8)
9.9
(3.6)
188.5
(206.3)
(22.3)
4.5
ROI
€m
4.4
3.5
7.5
(9.7)
5.7
184.8
(217.5)
(32.7)
-
2016
NI
€m
0.1
0.4
(0.5)
(0.6)
(0.6)
10.3
(5.6)
-
4.7
Total
€m
4.5
3.9
7.0
(10.3)
5.1
195.1
(223.1)
(32.7)*
4.7
*Prior year pension liability of €32.7m is classified on the face of the Balance Sheet in current liabilities (€10.0m) and non-current liabilities (€22.7m).
154
C&C Group plcAnnual Report 2017 21. RETIREMENT BENEFITS (CONTINUED)
b. Impact on Group Balance Sheet
The retirement benefits (deficit)/surplus at 28 February 2017 and 29 February 2016 is analysed as follows:-
Analysis of net pension deficit:
Bid value of assets at end of year:
Equity*
Bonds
Property
Cash
Alternatives
ROI
€m
49.4
86.5
11.5
0.5
28.8
2017
NI
€m
5.9
5.9
-
-
-
Total
€m
55.3
92.4
11.5
0.5
28.8
ROI
€m
49.1
84.5
10.6
0.2
40.4
2016
NI
€m
5.3
5.0
-
-
-
Total
€m
54.4
89.5
10.6
0.2
40.4
176.7
11.8
188.5
184.8
10.3
195.1
Actuarial value of scheme liabilities
(199.0)
(7.3)
(206.3)
(217.5)
(Deficit)/surplus in the scheme
Related deferred tax asset/(liability)
Net pension (deficit)/surplus
(22.3)
2.7
(19.6)
4.5
(0.8)
3.7
(17.8)
1.9
(15.9)
(32.7)
4.0
(28.7)
* The defined benefit pension schemes have a passive self investment in C&C Group plc of €nil (2016: €nil).
(5.6)
4.7
(0.9)
3.8
(223.1)
(28.0)
3.1
(24.9)
The alternative investment category includes investments in various asset classes including equities, commodities, currencies and funds.
The investments are managed by fund managers.
Reconciliation of scheme assets
ROI
€m
2017
NI
€m
Total
€m
ROI
€m
2016
NI
€m
Total
€m
Assets at beginning of year
184.8
10.3
195.1
192.6
10.7
203.3
Movement in year:
Translation adjustment
Expected interest income on scheme
assets, net of pension levy
Actual return less interest income on
scheme assets
Employer contributions
Member contributions
Benefit payments
-
3.4
9.8
3.1
0.2
(24.6)
(0.9)
0.4
1.9
0.3
-
(0.2)
(0.9)
3.8
11.7
3.4
0.2
(24.8)
-
3.5
(7.9)
5.8
0.2
(9.4)
(0.8)
0.4
(0.5)
0.7
-
(0.2)
(0.8)
3.9
(8.4)
6.5
0.2
(9.6)
Assets at end of year
176.7
11.8
188.5
184.8
10.3
195.1
The expected employer contributions to fund defined benefit scheme obligations for year ending 28 February 2018 is €1.4m.
155
Financial Statements Notes forming part of the financial statements
(continued)
21. RETIREMENT BENEFITS (CONTINUED)
The scheme assets had the following investment profile at the year end:-
Equities
Bonds
Property
Cash
Alternatives
2017
ROI
28%
49%
7%
-
16%
NI
50%
50%
-
-
-
2016
ROI
26%
46%
6%
-
22%
NI
51%
49%
-
-
-
100%
100%
100%
100%
Reconciliation of actuarial value of scheme liabilities
Liabilities at beginning of year
Movement in year:
Translation adjustment
Current service cost
Past service gain
Gain on settlement
Interest cost on scheme liabilities
Member contributions
Actuarial loss/(gain) immediately recognised
in equity
Benefit payments
ROI
€m
217.5
-
1.1
-
(5.1)
4.0
0.2
5.9
(24.6)
2017
NI
€m
5.6
(0.5)
-
-
-
0.2
-
2.2
(0.2)
Total
€m
ROI
€m
223.1
229.9
(0.5)
1.1
-
(5.1)
4.2
0.2
8.1
(24.8)
-
1.0
(0.8)
(5.4)
4.2
0.2
(2.2)
(9.4)
Liabilities at end of year
199.0
7.3
206.3
217.5
2016
NI
€m
7.0
(0.5)
0.1
-
-
0.3
-
(1.1)
(0.2)
5.6
Total
€m
236.9
(0.5)
1.1
(0.8)
(5.4)
4.5
0.2
(3.3)
(9.6)
223.1
156
C&C Group plcAnnual Report 2017
22. 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
and summarises the risk management strategy for managing these risks. The note is presented as follows:-
(a) Overview of the Group’s risk exposures and management strategy
(b) Financial assets and liabilities as at 28 February 2017/29 February 2016 and determination of fair value
(c) Market risk
(d) Credit risk
(e) Liquidity risk
(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. The most significant change during the financial year to the
financial risks faced by the Group is the potential impact of Brexit and the Group and the Board continues to monitor and manage this and
all financial risks faced by the Group very closely.
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 them 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. The Board had no derivative financial instruments in the current or prior financial
periods.
(b) Financial assets and liabilities
The carrying and fair values of financial assets and liabilities by measurement category were as follows:-
Group
28 February 2017
Financial assets:
Cash & cash equivalents
Trade receivables
Advances to customers
Financial liabilities:
Interest bearing loans & borrowings
Trade & other payables
Provisions
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
Fair
value
€m
187.6
49.4
58.3
-
-
-
295.3
-
-
-
(358.2)
(144.1)
(14.2)
(516.5)
187.6
49.4
58.3
(358.2)
(144.1)
(14.2)
(221.2)
187.6
49.4
58.3
(359.3)
(144.1)
(14.2)
(222.3)
157
Financial Statements Notes forming part of the financial statements
(continued)
22. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
Fair
value
€m
197.3
69.6
53.0
-
-
-
-
-
-
(360.3)
(160.9)
(18.9)
197.3
69.6
53.0
(360.3)
(160.9)
(18.9)
197.3
69.6
53.0
(362.4)
(160.9)
(18.9)
319.9
(540.1)
(220.2)
(222.3)
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
Fair
value
€m
335.1
-
335.1
335.1
-
-
(281.1)
(0.3)
(281.1)
(0.3)
(281.1)
(0.3)
335.1
(281.4)
53.7
53.7
Other
financial
assets
€m
Other
financial
liabilities
€m
Carrying
value
€m
Fair
value
€m
238.2
-
238.2
238.2
-
-
(273.3)
(0.5)
(273.3)
(0.5)
(273.3)
(0.5)
238.2
(273.8)
(35.6)
(35.6)
Group
29 February 2016
Financial assets:
Cash & cash equivalents
Trade receivables
Advances to customers
Financial liabilities:
Interest bearing loans & borrowings
Trade & other payables
Provisions
Company
28 February 2017
Financial assets:
Amounts due from Group undertakings
Financial liabilities:
Amounts due to Group undertakings
Trade & other payables
Company
29 February 2016
Financial assets:
Amounts due from Group undertakings
Financial liabilities:
Amounts due to Group undertakings
Trade & other payables
158
C&C Group plcAnnual Report 2017
22. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Determination of Fair Value
Set out below are the main 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.
Advances to customers
The nominal amount of all advances to customers, after provision for impairment, is considered to reflect fair value.
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 after more than one year which are discounted to
fair value.
Interest bearing loans & borrowings
The fair value of all interest bearing loans & borrowings has been calculated by discounting all future cash flows to their present value using
a market rate reflecting the Group’s cost of borrowing at the balance sheet date. All loans bear interest at floating rates.
(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, when deemed economically viable to do so, 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. The Group had
no derivative financial instruments in the current or prior financial periods.
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
apple concentrate, glass, barley, aluminium, polymer, wheat and sugar/glucose. 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. The Group is exposed to currency risk in relation to sales and purchase
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 (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.
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 of which 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.
159
Financial Statements
Notes forming part of the financial statements
(continued)
22. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
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 operations are reported separately within Other Comprehensive
Income.
The currency profile of the Group and Company’s financial instruments subject to transactional exposure as at 28
February 2017 is as follows:-
CAD/AUD
Not at risk
Group
Cash & cash equivalents
Trade receivables
Advances to customers
Interest bearing loans & borrowings
Trade & other payables
Provisions
Gross currency exposure
Euro
€m
1.1
-
-
-
(0.4)
-
0.7
Sterling
€m
3.9
0.8
-
-
(4.5)
-
0.2
USD
€m
1.0
0.2
-
-
(0.1)
-
1.1
€m
0.6
0.5
-
-
-
-
1.1
€m
181.0
47.9
58.3
(358.2)
(139.1)
(14.2)
Total
€m
187.6
49.4
58.3
(358.2)
(144.1)
(14.2)
(224.3)
(221.2)
The Group had no outstanding forward foreign currency contracts in place at 28 February 2017 (2016: €nil).
Company
Net amounts due to Group undertakings
Accruals
Total
Sterling
Not at risk
€m
€m
(20.4)
-
(20.4)
74.4
(0.3)
74.1
Total
€m
54.0
(0.3)
53.7
The currency profile of the Group and Company’s financial instruments subject to transactional exposure as at 29 February 2016 is as
follows:-
Group
Cash & cash equivalents
Trade & other receivables
Advances to customers
Interest bearing loans & borrowings
Trade & other payables
Provisions
Gross currency exposure
Euro
€m
4.6
1.8
-
-
(0.7)
-
5.7
Sterling
€m
2.8
1.0
-
-
(7.0)
-
(3.2)
USD
€m
0.7
0.2
-
-
-
-
0.9
CAD/AUD
Not at risk
€m
€m
2.8
0.5
-
-
(0.1)
-
186.4
66.1
53.0
(360.3)
(153.1)
(18.9)
Total
€m
197.3
69.6
53.0
(360.3)
(160.9)
(18.9)
3.2
(226.8)
(220.2)
160
C&C Group plcAnnual Report 2017
22. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Company
Net amounts due to Group undertakings
Accruals
Total
Sterling
Not at risk
€m
€m
(10.5)
(0.5)
(24.6)
-
(24.6)
Total
€m
(35.1)
(0.5)
(11.0)
(35.6)
A 10% strengthening in the Euro against Sterling and the Australian, Canadian and US Dollars, based on outstanding financial assets
and liabilities at 28 February 2017, would have a €0.3m negative impact on the Income Statement. A 10% weakening in the Euro against
Sterling, and the Australian, Canadian and US Dollars would have a €0.3m positive effect on the Income Statement. 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
2017
€m
2016
€m
Company
2017
€m
(359.3)
187.6
(362.4)
197.3
(171.7)
(165.1)
-
-
-
2016
€m
-
-
-
The Group and Company’s exposure to interest rate risk arises principally from its long-term debt obligations.
Financial instruments: Cash flow hedges
The Group had no outstanding cash flow hedges as at 28 February 2017 or 29 February 2016.
(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 IFRS 8 Operating Segments.
161
Financial Statements
Notes forming part of the financial statements
(continued)
22. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
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/advance to customer. The Group also
manages credit risk through the use of a receivables purchase arrangement, for an element of its trade receivables. Under the terms of
this arrangement, the Group transfers the credit risk, late payment risk and control of the receivables sold. The total receivables sold at 28
February 2017 was €53.4m.
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 customers 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 primarily 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 25.
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
Group
Company
2017
€m
49.4
58.3
-
187.6
2016
€m
69.6
53.0
-
197.3
2017
€m
-
-
335.1
-
2016
€m
-
-
238.2
-
295.3
319.9
335.1
238.2
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 15. 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 December 2014, the Group updated and amended its committed €450m multi-currency five year syndicated revolving loan facility with
seven banks, namely Bank of Ireland, Bank of Scotland, Barclays Bank, Danske Bank, HSBC, Rabobank, and Ulster Bank, repayable in
a single instalment on 22 December 2019. The facility agreement provides for a further €100m in the form of an uncommitted accordion
facility and permits the Group to avail of further financial indebtedness, excluding working capital and guarantee facilities, to a maximum
value of €150m, 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 €700m of which €359.3m was drawn at 28 February 2017 (2016: €360.4m).
162
C&C Group plcAnnual Report 2017
22. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
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, however this risk is considered low at year end given the current facility extends to
December 2019 as outlined above.
At the year end, the Group had net debt, net of unamortised issue costs, of €170.6m (29 February 2016: €163.0m), with a Net debt/
EBITDA ratio of 1.55:1.
The following are the contractual maturities of financial liabilities, including interest payments-
Group
Carrying
Contractual
6 months
6-12
Greater than
amount
cash flows
€m
€m
or less
€m
months
1-2 years
€m
€m
2 years
€m
2017
Interest bearing loans & borrowings
Trade & other payables
Provisions
(358.2)
(144.1)
(14.2)
(374.3)
(144.1)
(15.4)
(2.7)
(144.1)
(3.8)
Total contracted outflows
(516.5)
(533.8)
(150.6)
2016
Interest bearing loans & borrowings
Trade & other payables
Provisions
(360.3)
(160.9)
(18.9)
(384.4)
(160.9)
(22.6)
(3.0)
(160.9)
(12.2)
Total contracted outflows
(540.1)
(567.9)
(176.1)
Company
2017
Amounts due to Group undertakings
Trade & other payables
(281.1)
(0.3)
(281.1)
(0.3)
(281.1)
(0.3)
Total contracted outflows
(281.4)
(281.4)
(281.4)
2016
Amounts due to Group undertakings
Trade & other payables
(273.3)
(0.5)
(273.3)
(0.5)
(273.3)
(0.5)
Total contracted outflows
(273.8)
(273.8)
(273.8)
(2.7)
-
(2.8)
(5.5)
(3.0)
-
(1.1)
(4.1)
-
-
-
-
-
-
(5.3)
-
(0.9)
(363.6)
-
(7.9)
(6.2)
(371.5)
(6.0)
-
(0.9)
(6.9)
(372.4)
-
(8.4)
(380.8)
-
-
-
-
-
-
-
-
-
-
-
-
163
Financial Statements Notes forming part of the financial statements
(continued)
23. SHARE CAPITAL AND RESERVES SHARE CAPITAL
At 28 February 2017
Ordinary shares of €0.01 each
At 29 February 2016
Ordinary shares of €0.01 each
At 28 February 2015
Ordinary shares of €0.01 each
* Inclusive of 11.9m treasury shares.
** Inclusive of 16.4m treasury shares.
*** Inclusive of 16.5m treasury shares.
Allotted and
Allotted and
Authorised
called up
Authorised
called up
number
Number
€m
€m
800,000,000 325,546,201*
800,000,000 329,157,714**
800,000,000 348,547,138***
8.0
8.0
8.0
3.3
3.3
3.5
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 2017, dividends of less than €0.1m were paid to Plan participants (2016: €0.4m).
Reserves
Group
As at 1 March
Shares issued in lieu of dividend
Shares issued in respect of options exercised
Shares cancelled following share buyback programme
Shares disposed of or transferred to Participants
Allotted and called up Ordinary
Shares
Ordinary Shares held by the Trustee
of the Employee Trust*
2017
‘000
2016
‘000
329,158
2,209
318
(6,139)
-
348,547
1,312
146
(20,847)
-
2017
‘000
7,354
-
-
-
(4,442)
2016
‘000
7,473
-
-
-
(119)
As at 28 (29) February
325,546**
329,158**
2,912
7,354
*1.7m shares are held in the sole name of the Trustee of the Employee Trust (2016: 0.1m).
** Includes 9.025m shares bought by the Group during the financial year ended 28 February 2015 which continue to be held as Treasury shares.
Movements in the year ended 28 February 2017
In July 2016, 1,067,162 ordinary shares were issued to the holders of ordinary shares who elected to receive additional ordinary shares
at a price of €3.95476 per share, instead of part or all the cash element of their final dividend entitlement for the year ended 29 February
2016. In December 2016, 1,142,613 ordinary shares were issued to the holders of ordinary shares who elected to receive additional
ordinary shares at a price of €3.44324 per share, instead of part or all the cash element of their interim dividend entitlement for the year
ended 28 February 2017. During the current financial year 318,150 ordinary shares were issued on the exercise of share options for a net
consideration of €0.8m.
164
C&C Group plcAnnual Report 2017
23. SHARE CAPITAL AND RESERVES SHARE CAPITAL (CONTINUED)
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 2017 continue to be included in the treasury share reserve. During the financial year,
130,513 shares were sold by the Trustees and are no longer accounted for as treasury shares and 4,311,889 shares were transferred to
participants on exercise of their entitlements under the Group’s Joint Share Ownership Plan and therefore are also no longer accounted
for as treasury shares.
Also during the current financial year, as part of the Group’s capital management strategy, the Group invested €23.2m in an on-market
share buyback programme (inclusive of commission and related costs) in which it repurchased and subsequently cancelled 6,139,438
of the Group’s shares. This was in accordance with shareholder authority granted at the Group’s AGM, in July 2016, to make market
purchases of up to 10% of its own shares.
Movements in the year ended 29 February 2016
In July 2015, 663,539 ordinary shares were issued to the holders of ordinary shares who elected to receive additional ordinary shares at a
price of €3.68 per share, instead of part or all the cash element of their final dividend entitlement for the year ended 28 February 2015. In
December 2015, 647,937 ordinary shares were issued to the holders of ordinary shares who elected to receive additional ordinary shares
at a price of €3.67 per share, instead of part or all the cash element of their interim dividend entitlement for the year ended 29 February
2016. During the financial year 146,000 ordinary shares were issued on the exercise of share options for a net consideration of €0.5m.
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 29 February 2016 continue to be included in the treasury share reserve. During the financial year, 119,244
shares were sold by the Trustees and therefore are no longer accounted for as treasury shares.
Also during the prior financial year, as part of the Group’s capital management strategy, the Group invested €76.6m (inclusive of
commission and related costs) in an on-market share buyback programme in which it repurchased and subsequently cancelled
20,846,900 of the Group’s 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
€838.6m as at 28 February 2017 (2016: €829.7m). The current financial year movement relates to the exercise of share options, and the
issuance of a scrip dividend to those who elected to receive additional ordinary shares in place of a cash dividend.
Other undenominated 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. The current and prior financial year movement relates to the on-market share buyback
programme undertaken by the Group during both periods as outlined in further detail below.
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 and 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 and are therefore part of the Group’s net investment in foreign
operations.
165
Financial Statements Notes forming part of the financial statements
(continued)
23. SHARE CAPITAL AND RESERVES SHARE CAPITAL (CONTINUED)
Revaluation reserve
Since 2009 the Group has completed a number of external valuations on its property, plant and equipment. Gains arising from such
revaluations are posted to the Group’s revaluation reserve. Any decreases in the value of the Group’s property, plant and equipment as a
result of external or internal valuations are recognised in the Income Statement except where there had been a previously recognised gain
in the revaluation reserve as a result of the same asset, in which case, the gain is eliminated from the revaluation reserve to offset the loss
in the first instance.
The movement in the current financial year is the removal of a previously recognised gain on an element of the Group’s property, plant and
equipment which was disposed of during the year.
Treasury shares
Included in this reserve is where 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. Also
included in the reserve is the purchase of 9,025,000 of the Company’s own shares in the financial year ended 28 February 2015 at an
average price of €3.29 per share under the Group’s share buyback programme.
The current year movement in the reserve relates to Interests under the Joint Share Ownership Plan being acquired by participants from
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 buyback shares. In respect of
the financial year ended 28 February 2017, the Company paid an interim dividend on ordinary shares of 4.96c per share (2016: 4.73c per
share) and the Directors propose, subject to shareholder approval, that a final dividend of 9.37c per share (2016: 8.92c per share) be paid,
bringing the total dividend for the year to 14.33c per share (2016: 13.65c per share).
In addition, as part of the Group’s capital management strategy, the Group participated in a share buyback programme during the
financial year. At the AGM held on 7 July 2016, shareholders granted the Group authority to make market purchases of up to 10% of its
own shares.
The Group invested €22.9m (€23.2m including commission and related fees) as part of this on-market buyback programme, purchasing
6,139,438 of the Company’s shares at an average price of €3.73. The Group’s stockbrokers, Investec, conducted the share buyback
programme. All shares acquired as part of the share buyback programme in the current financial year were subsequently cancelled by
the Group. In the prior financial year, the Group invested €75.7m (€76.6m including commission and related fees) as part of this on-market
share buyback programme, purchasing 20,846,900 of the Company’s shares at an average price of €3.63. All shares acquired were
subsequently cancelled by the Group. In the financial year ended 28 February 2015, a subsidiary of the Group invested €30.0m as part
of an on-market share buyback programme, purchasing 9,025,000 of the Company’s shares at an average price of €3.29. All shares
acquired as part of this share buyback programme in the prior financial year are held as Treasury shares.
The Group monitors debt capital on the basis of interest cover and by the ratio of Net debt:EBITDA before exceptional items. In December
2014, the Group updated and amended its committed €450m multi-currency five year syndicated revolving facility with 7 banks which is
repayable in a single instalment on 22 December 2019.
166
C&C Group plcAnnual Report 2017
23. SHARE CAPITAL AND RESERVES SHARE CAPITAL (CONTINUED)
Company Income Statement
In accordance with Section 304 of the Companies Act 2014, the Income Statement of the Company has not been presented separately
in these consolidated financial statements. A profit of €146.0m (2016: €0.7m loss) was recognised in the individual Company Income
Statement of C&C Group plc.
24. 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:-
Contracted
Not contracted
2017
€m
0.3
12.9
13.2
2016
€m
11.8
10.1
21.9
The contracted capital commitments at 28 February 2017 primarily relates to improvements to the Wellpark visitor centre. Commitments
at 29 February 2016 primarily relate to commitments at the Group’s manufacturing facilities in Clonmel as a result of the announced
consolidation of production sites across the Group during the prior financial year and the consequential announced investment in
enhancing packaging and logistics capabilities at the Group’s Clonmel site.
(b) Commitments under operating leases
Future minimum rentals payable under non-cancellable operating leases at the year end are as follows:-
Payable in less than one year
Payable between 1 and 5 years
Payable greater than 5 years
2017
Land &
Plant &
buildings
machinery
€m
€m
3.9
7.0
7.6
18.5
0.6
1.2
-
1.8
Other
€m
10.0
22.7
1.3
14.5
30.9
8.9
5.5
8.2
9.7
34.0
54.3
23.4
2016
Land &
Plant &
Total
buildings
machinery
€m
€m
€m
Other
€m
6.2
15.3
-
Total
€m
12.5
25.5
9.7
21.5
47.7
0.8
2.0
-
2.8
The land & buildings operating lease commitments primarily relate to two leases of warehousing facilities in the UK acquired as part of the
acquisition of the Gaymers cider business in 2010. These leases are due to expire in 2017 and 2026 respectively. A related onerous lease
provision is included in Provisions – note 17. The other operating lease commitments primarily relate to on trade assets across the Group.
167
Financial Statements
Notes forming part of the financial statements
(continued)
24. COMMITMENTS (CONTINUED)
(c) Other commitments
At the year end, the value of contracts placed for future expenditure was:-
Apple
concentrate
Glass Marketing
Barley
Aluminium
Polymer
Wheat
Sugar/
glucose
Natural gas
Total*
2017
€m
€m
€m
€m
€m
€m
€m
€m
Payable in less than one year
Payable between 1 and 5
years
0.7
-
4.5
-
2.2
3.5
6.9
13.2
1.6
-
0.3
-
0.7
-
10.2
-
0.8
-
€m
27.9
16.7
*Commitment obligations range from between 1 month to 60 months.
0.7
4.5
5.7
20.1
1.6
0.3
0.7
10.2
0.8
44.6
Apple
concentrate
Glass Marketing
Barley
Aluminium
Polymer
Wheat
Sugar/
glucose
Natural gas
Total
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
2016
Payable in less than one year
Payable between 1 and 5
years
1.7
0.4
5.0
-
3.8
3.3
7.2
21.1
7.5
-
2.1
5.0
7.1
28.3
7.5
-
-
-
0.3
-
11.8
1.6
0.3
13.4
-
-
-
37.3
26.4
63.7
25. GUARANTEES AND CONTINGENCIES
Where the Group or subsidiaries enters into financial guarantee contracts to guarantee the indebtedness of other companies or joint
ventures and associates within the Group, the Group/subsidiaries considers these to be insurance arrangements and accounts for them
as such. The Group/subsidiary 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 18, the Group has a multi-currency loan facility in place at year end, which it re-negotiated in December 2014. 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 2017 amounted to €359.3m (2016: €360.4m).
During the financial year ended 28 February 2015, a subsidiary of the Group entered into guarantees in favour of HSBC Bank plc, HSBC
Asset Finance (UK) Limited and HSBC Equipment Finance Limited whereby it guaranteed drawn debt plus interest charges by Drygate
Brewing Company Limited to HSBC Bank PLC of up to £540,000 and to HSBC Asset Finance (UK) and HSBC Equipment Finance Limited
of up to £225,000 in aggregate. The guarantees reduce on a pound for pound basis to the extent of capital repayments in respect of the
drawn debt and any amounts realised by the bank pursuant to any security provided in respect of the debt. The Guarantee with respect
to HSBC Bank plc expires on the earlier of eleven years and three months from the date on which the guarantee became effective, the
secured liabilities are repaid, or by mutual agreement with HSBC Bank plc. The Guarantees with HSBC Asset Finance (UK) Limited and
HSBC Equipment Finance Limited expire after the secured liabilities are repaid, or by mutual agreement with HSBC Asset Finance (UK)
Limited and HSBC Equipment Finance Limited respectively.
168
C&C Group plcAnnual Report 2017
25. GUARANTEES AND CONTINGENCIES (CONTINUED)
Also during the financial year ended 28 February 2015, a subsidiary of the Group entered into a guarantee with Ulster Bank Limited
whereby it guaranteed repayment of a loan plus interest and charges, to a maximum value of €1,150,000, which was drawn by one of
its customers. The guarantee expires on the earlier of three years from the date of the first drawdown or the date on which the customer
discharges its liability in its entirety.
During the 2014 financial year, a subsidiary of the Group entered into a guarantee in favour of Bank of Scotland plc whereby it guaranteed
repayment of a five year term loan facility of up to €1,000,000 made by Bank of Scotland plc to a customer of a subsidiary of C&C Group
plc, together with interest and other charges due under the facility and account charges.
During the 2011 financial year, a subsidiary of the Group 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 earlier of: 10 years from the
date on which the guarantee becomes effective; or the secured liabilities are repaid; or by mutual agreement with Clydesdale Bank plc.
Invest Northern Ireland funding, in the form of an employment grant of €0.2m was received during the 2015 financial year. Enterprise
Ireland funding of €1.0m has previously been received towards the costs of implementing developmental projects. Scottish Enterprise
Board funding of €0.3m had previously been received under the terms of its Regional Selective Assistance Scotland Scheme. All of these
funds are fully repayable should the recipient subsidiary of the Group 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 date of the last receipt of funding which in the case of
Invest Northern Ireland funding is September 2019 and Enterprise Ireland funding is March 2018. The Scottish Enterprise Board funding
terms and conditions expired in July 2016.
Under the terms of the Sale and Purchase Agreement with respect to disposal of the Group’s Northern Ireland wholesaling business in
the year ended 29 February 2012, 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 expired on 3 February 2013, with the exception of any claim relating to tax where
the time limit is seven years from the transaction date and is due to expire on 3 August 2018.
Pursuant to the provisions of Section 357 of the Companies Act 2014, the Company has guaranteed the liabilities of certain of its
subsidiary undertakings incorporated in the Republic of Ireland for the financial year to 28 February 2017 and as a result such subsidiaries
are exempt from certain filing provisions.
26. 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 and transactions
with 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. A listing of all subsidiaries
is provided in note 27. 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 IFRS 10 Consolidated Financial Statements.
Equity accounted investees
In the current financial year, on 20 December 2016, the Group acquired 25% of the equity share capital of Whitewater Brewing Company
Limited (“Whitewater”), an Irish Craft brewer for £0.3m (€0.3m euro equivalent at date of transaction). Also in the current financial year, on
11 May 2016, the Group acquired 14% of the equity share capital of a Canadian Company, for CAD$2.5m (€1.7m euro equivalent on date
of investment). Details of transactions between the Group and both Whitewater and the Canadian Company, from date of investment, are
disclosed below.
169
Financial Statements
Notes forming part of the financial statements
(continued)
26. RELATED PARTY TRANSACTIONS (CONTINUED)
During the financial year ended 28 February 2015, the Group entered into a joint venture arrangement with Heather Ale Limited, run by the
Williams brothers who are recognised as leading family craft brewers in Scotland, to form a new entity Drygate Brewing Company Limited.
The joint venture, which is run independently of the joint venture partners existing businesses, operates a craft brewing and retail facility
adjacent to Wellpark brewery. Details of transactions during the current and prior financial year and outstanding year end balances are
disclosed below.
The Group also holds a 50% investment in Beck & Scott (Services) Limited (Northern Ireland) and a 45.61% investment in The Irish
Brewing Company Limited (Ireland) following its acquisition of Gleeson. Transactions between the Group and Beck & Scott (Services)
Limited (Northern Ireland) are disclosed below. The Group had no transactions with The Irish Brewing Company Limited (Ireland) which is
a non-trading entity.
A subsidiary of the Group holds a 33% investment in Shanter Inns Limited. Transactions between the Group and Shanter Inns are
disclosed below.
On 28 November 2012, the Group acquired an equity investment in Thistle Pub Company Limited, a joint venture with Maclay Group plc.
The Group subsequently acquired the remaining equity share capital of the Thistle Pub Company Limited business in the prior financial
year on 3 August 2015. The Group therefore accounted for Thistle Pub Company Limited as a related party in the prior financial year up
to the date of the deemed disposal of its initial investment and subsequent acquisition of 100% Thistle Pub Company Limited on 3 August
2015.
On 21 March 2012, the Group acquired a 25% equity investment in Maclay Group plc. The Maclay Group plc went into administration
during the financial year ended 28 February 2015 and the Group consequently impaired its investment in this entity. The Group continued
to trade with Maclay Inns Limited (in administration), a 100% owned subsidiary of the Maclay Group plc (in administration) in the prior
financial year and details of transactions are disclosed below. In the current financial year the Group did not trade with Maclay Inns Limited
however did receive an interim distribution of €0.5m as part of the administration process.
Loans extended by the Group to equity accounted investees are considered trading in nature and are included within advances to
customers in Trade & other receivables (note 15).
Details of transactions with equity accounted investees during the year and related outstanding balances at the year end are as follows:-
Sale of goods to equity accounted investees:
Beck & Scott (Services) Limited (Northern Ireland)
Drygate Brewing Company Limited
Maclay Group plc
Thistle Pub Company Limited
Shanter Inns Limited
Net revenue
Balance outstanding
2017
€m
0.2
0.2
-
n/a
-
0.4
2016
€m
-
0.3
0.8
0.4
0.3
1.8
2017
€m
-
0.1
-
n/a
-
0.1
2016
€m
-
0.1
-
-
-
0.1
170
C&C Group plcAnnual Report 2017
26. RELATED PARTY TRANSACTIONS (CONTINUED)
Loans to equity accounted investees:
Canadian Investment
Whitewater Brewing Company Limited
Drygate Brewing Company Limited
Shanter Inns Limited
Purchase of goods from equity accounted investees:
Whitewater Brewing Company Limited
Drygate Brewing Company Limited
Balance outstanding
2017
€m
1.8
0.7
0.7
-
3.2
Purchases
Balance outstanding
2017
€m
0.1
0.6
0.7
2016
€m
-
0.1
0.1
2017
€m
-
0.2
0.2
2016
€m
-
-
2.1
0.1
2.2
2016
€m
n/a
0.1
0.1
All outstanding trading balances with equity accounted investees, which arose from arm’s length transactions, are to be settled in cash
within one month of the reporting date.
Key management personnel
For the purposes of the disclosure requirements of IAS 24 Related Party Disclosures, the Group has defined the term ‘key management
personnel’, as its executive and non-executive Directors. Executive Directors participate in the Group’s equity share award schemes
(note 4) and death in service insurance programme and in the case of UK resident executive Directors are covered under the Group’s
permanent health insurance programme. The Group also provides private medical insurance for UK resident executive Directors. 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
Further amount re exercise of JSOP Interests
Dividend equivalent payment with respect to JSOP Interests
Dividend income with respect of JSOP Interests (note 23)
Total
2017
2016
Number
Number
10
€m
2.4
0.3
0.1
0.2
0.6
-
3.6
10
€m
2.9
0.3
-
-
-
0.4
3.6
171
Financial Statements Notes forming part of the financial statements
(continued)
26. RELATED PARTY TRANSACTIONS (CONTINUED)
Two of the Group’s executive Directors were awarded Interests under the Group’s Joint Share Ownership Plan (JSOP). When an award
is granted to an executive under the Group’s JSOP, 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 an exercise/sale of the
awarded Interests. The deferral of the payment of the further amount was considered to be an interest-free loan by the Company to the
executive and a taxable benefit-in-kind arose, charged at the Revenue stipulated rates (Ireland 13.5% from 1 January 2013 and UK 3.25%
to 5 April 2015 and 3.0% from 6 April 2015). In the current financial year the Group’s executive Directors exercised their JSOP Interests
and paid the further amount on exercise. Under the terms of the Plan, 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. This compensation is disclosed in the table above under Further amount.
The balances of the loans outstanding to the executive Directors in the context of the above as at 28 February 2017 and 29 February 2016
are as follows:-
Stephen Glancey
Kenny Neison
Total
28 February
29 February
2017
€’000
-
-
-
2016
€’000
111
83
194
The highest amount due during the year, with respect to these loans, were the amounts outstanding as at 29 February 2016.
Also during the year and pursuant to a contract for services effective as of 1 April 2014 between C&C IP Sàrl (‘CCIP’) and Joris Brams
BVBA (‘JBB’), (a company wholly owned by Joris Brams and family), CCIP paid fees of €91,550 to JBB in respect of brand development
services provided by JBB to CCIP in relation to Belgian products.
(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:-
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
Drawdown of cash funding and other cash movements with subsidiary undertakings
2017
€m
149.0
(3.1)
0.7
(89.1)
2016
€m
-
(2.9)
0.5
(111.1)
172
C&C Group plcAnnual Report 2017
27. SUBSIDIARY UNDERTAKINGS
Trading subsidiaries
Notes
Nature of business
Class of shares held as at 28 February 2017
(100% unless stated)
Incorporated and registered in Republic of Ireland
Bulmers Limited
C&C Financing DAC
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
Latin American Holdings Limited
M&J Gleeson & Co u.c.
Tennent’s Beer Limited
The Annerville Financing Company u.c.
The Five Lamps Dublin Beer Company Limited
Tipperary Pure Irish Water (Sales) u.c. (formerly Tipperary
Natural Mineral Water (Sales))
Wm. Magner Limited
Wm. Magner (Trading) Limited
Incorporated and registered in Northern Ireland
C&C Holdings (NI) Limited
Gleeson N.I. 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
Macrocom (1018) Limited
Tennent Caledonian Breweries UK Limited
Tennent Caledonian Breweries Wholesale Limited
Wallaces Express Limited
Wellpark Financing Limited
Incorporated and registered in Luxembourg
C&C IP Sàrl
C&C IP (No. 2) Sàrl
C&C Luxembourg Sàrl
Incorporated and registered Portugal
Biofun - Produtos Biológicos Do Fundão Limitada
Frontierlicious Limitada
Incredible Prosperity Limitada
Cider
(a) (n)
Ordinary
(b) (n) (o) Financing company Ordinary
Ordinary & Convertible
(a) (n) (o) Holding company
Ordinary
(a) (n) (o) Holding company
Ordinary
Holding company
(b) (n)
Ordinary
Holding company
(a) (n)
6% Cumulative Preference, 5% Second Non-
Provision of
(a) (n)
Cumulative Preference & Ordinary Stock
management services
Ordinary
Holding company
Holding company
Ordinary
Wholesale of drinks Ordinary
Beer
Ordinary
Financing company Ordinary
Beer
Water
(a) (n)
(b) (n)
(b) (n)
(a) (n)
(a) (n)
(b)
(b) (n)
Ordinary (87.5%)
Ordinary
(a) (n)
(a) (n)
Cider
Ordinary
Financing company Ordinary
(c)
(c)
(c)
(e)
(e)
(g)
(f)
(g)
(g)
(f)
(h)
(h)
(h)
(i)
(i)
(i)
Holding company
Ordinary
Wholesale of drinks Ordinary
Cider and beer
Ordinary & 3.25% Cumulative Preference
Provision of
management services
Cider and beer
Ordinary
Ordinary
Investment
Ordinary
Ordinary
Beer and cider
Wholesale of drinks Ordinary
Holding company
Ordinary
Financing company Ordinary
Licensing activity
Licensing activity
Holding and financing
company
Class A to J Units
Class A to J Units
Class A to J Units
Ordinary
Ingredients
Orchard management Ordinary
Orchard management Ordinary
173
Financial Statements Notes forming part of the financial statements
(continued)
27. SUBSIDIARY UNDERTAKINGS (CONTINUED)
Trading subsidiaries
Notes
Nature of business
Class of shares held as at 28 February 2017
(100% unless stated)
Incorporated and registered in Delaware, US
Green Mountain Beverages Management Corporation, Inc (j)
(j)
Vermont Hard Cider Company Holdings, Inc.
(j)
Vermont Hard Cider Company, LLC
(j)
Wm. Magner, Inc.
Licensing activity
Holding company
Cider
Cider
Common Stock
Common Stock
Membership Units
Common Stock
Incorporated and registered in Singapore
C&C International (Asia) Pte. Ltd.
(l)
Sales & Marketing
Ordinary
Non-trading subsidiaries
Incorporated and registered in Republic of Ireland
C&C Agencies Limited
C&C Brands Limited
C&C Gleeson Group Pension Trust Limited
C&C Group Pension Trust Limited
C&C Group Pension Trust (No. 2) Limited
C&C Profit Sharing Trustee Limited
Ciscan Net Limited
Cooney & Co. u.c.
Cravenby Limited
Crystal Springs Water Company Limited
Dowd’s Lane Brewing Company Limited
Edward and John Burke (1968) Limited
Findlater (Wine Merchants) Limited
Fruit of the Vine Limited
Gleeson Logistic Services Limited
Gleeson Management Services u.c.
Gleeson Wines & Spirits Limited
Greensleeves Confectionery Limited
(a) (n)
(a) (n)
(b)(n)
(a) (n)
(a) (n)
(a) (n)
(a) (n)
(b) (n)
(a) (n)
(b) (n)
(a) (n)
(a) (n)
(a) (n)
(a) (n)
(b) (n)
(b) (n)
(b) (n)
(b) (n)
(b) (n)
(b) (n)
(b) (n)
(b) (n)
(b) (n)
J.L. O’Brien Clonmel u.c.
M.& J. Gleeson (Investments) Limited
M&J Gleeson Nominees Limited
M. and J. Gleeson (Manufacturing) Company u.c.
M and J Gleeson (Manufacturing) Company Holdings
Limited
M and J Gleeson and Company Holdings Limited
M & J Gleeson Property Development Limited
Magners Irish Cider Limited
Sceptis Limited
Showerings (Ireland) Limited
Tennmel Limited
Thwaites Limited
Tipperary Natural Mineral Water Company Holdings
Limited
Tipperary Natural Mineral Water (Sales) Holdings Limited (b) (n)
(a) (n)
Tipperary Pure Irish Water u.c.
(a) (n)
Vandamin Limited
(b) (n)
(b) (n)
(a) (n)
(a) (n)
(a) (n)
(b) (n)
(a) (n)
(b) (n)
174
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
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary & A Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary & A Ordinary
Ordinary & A Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary, 12% Cumulative Convertible
Redeemable Preference & 3% Cumulative
Redeemable Convertible Preference
Ordinary
Ordinary
Ordinary & Preference
Ordinary
Ordinary & Non-Voting Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary & A-E Non-Voting
A & B Ordinary
Ordinary
Ordinary
Ordinary
A & B Ordinary
C&C Group plcAnnual Report 2017 27. SUBSIDIARY UNDERTAKINGS (CONTINUED)
Trading subsidiaries
Notes
Nature of business
Class of shares held as at 28 February 2017
(100% unless stated)
Incorporated and registered in Northern Ireland
C&C 2011 (NI) Limited
C&C Profit Sharing Trustee (NI) Limited
Incorporated and registered in Scotland
Thistle Pub Company Limited
(c)
(c)
(d)
Non-trading
Non-trading
Ordinary
Ordinary
Non-trading
Ordinary
Incorporated and registered in England and Wales
Gaymer Cider Company Limited
Green Light Brands Limited
Monuriki Drinks Limited
Monuriki Sales & Marketing Limited
(e)
(m) (p)
(m) (p)
(m) (p)
Non-trading
Dissolved
Dissolved
Dissolved
Ordinary
Ordinary
Ordinary
Ordinary
Incorporated and registered in Germany
Wm. Magner GmbH
(k) (q)
Dissolved
Ordinary
Notes
(a) - (q)
The address of the registered office of each of the above companies is as follows:
(a) Annerville, Clonmel, Co. Tipperary, E91 NY79, Ireland.
(b) Bulmers House, Keeper Road, Crumlin, Dublin 12, D12 K702, Ireland.
(c) 15 Dargan Road, Belfast, BT3 9LS, Northern Ireland.
(d) Argyll House, Quarrywood Court, Livington, West Lothian, EH54 6AX, Scotland.
(e) Ashford House, Grenadier Road, Exeter, Devon EX1 3LH, England.
(f) Wellpark Brewery, 161 Duke St, Glasgow, G31 1JD, Scotland.
(g) Crompton Way, North Newmoor Industrial Estate, Irvine, Strathclyde, KA11 4HU, Scotland.
(h) L-2132 Luxembourg, 18 Avenue Marie-Therese, Luxembourg.
(i) Quinta Da Ferreira De Baxio, Castelo Branco, Fundão Parish, 6230 610 Salgueiro, Portugal.
(j) 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, US.
(k) Hans-Stießberger-Strae 2b, 885540 Haar, Germany.
(l) 143, Cecil Street, #03-01, GB Building, Singapore – 069542.
(m) Kilver Street, Shepton Mallet, Somerset, BA4 5ND, England.
(n) Companies covered by Section 357, Companies Act 2014 guarantees (note 25).
(o) Immediate subsidiary of C&C Group plc.
(p) Dissolved on 6 December 2016.
(q) Wm Magner GmbH was liquidated on 12 April 2016.
EQUITY ACCOUNTED INVESTEES
Company Name
Nature of business
Class of shares and % held
Beck & Scott (Services) Limited (Northern Ireland)
Canadian Investment (Canada)
Drygate Brewing Company Limited (Scotland)
Maclay Group plc (Scotland)
The Irish Brewing Company Limited (Ireland)
Shanter Inns Limited (Scotland)
Whitewater Brewing Co. Limited (Northern Ireland)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Wholesale of drinks
Brewing
Brewing
In Administration
Non-trading
Public houses
Brewing
Ordinary, 50%
14%
B Ordinary, 49%
B Ordinary & B Preference, 25%
Ordinary, 45.61%
Ordinary, 33%
25%
(a) - (g)
The address of the registered office of each of the above equity accounted investees is as follows:
(a) Unit 1, Ravenhill Business Park, Ravenhill Road, Belfast, BT6 8AW, Northern Ireland.
(b) Ontario, Canada.
(c) 85 Drygate, Glasgow, G4 0UT, Scotland.
(d) G1 Building, 5 George Square, Glasgow, G2 1DY, Scotland.
(e) Bulmers House, Keeper Road, Crumlin, Dublin 12, D12 K702, Ireland.
(f) 230 High Street, Ayr, KA7 1RQ, Scotland.
(g) 40 Tullyframe Road, Kilkeel, Newry, County Down, BT34 4RZ.
175
Financial Statements Notes forming part of the financial statements
(continued)
28. POST BALANCE SHEET EVENTS
No significant events affecting the Group have occurred since the year end which would require disclosure or amendment of the financial
statements.
29. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were approved by the Directors on 17 May 2017.
176
C&C Group plcAnnual Report 2017 Financial Definitions
Financial Statements
Adjusted earnings
Profit for the year attributable to equity shareholders as adjusted for exceptional items
Company
C&C Group plc
Constant Currency
Prior year revenue, net revenue and operating profit for each of the Group’s reporting 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
DWT
EBITDA
Dividend Withholding Tax
Earnings before Interest, Tax, Depreciation and Amortisation charges excluding the Group’s share of
equity accounted investees’ profit/(loss) after tax
Adjusted EBITDA
EBITDA as adjusted for exceptional items
EBIT
Earnings before Interest and Tax
Adjusted EBIT
EBIT as adjusted for exceptional items
Effective tax rate (%)
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
and excluding the Group’s share of equity accounted investees’ profit/(loss) after tax
EPS
EU
Exceptional
Free Cash Flow
GB
Group
HL
IAS
IASB
IFRIC
IFRS
Interest cover
Export
LAD
Earnings per share
European Union
Significant items of income and expense within the Group results for the year which by virtue of their
scale and nature are disclosed in the income statement and related notes as exceptional items
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 EBITDA excluding exceptional items and discontinued activities by
the Group’s interest expense, excluding issue cost write-offs, fair value movements with respect to
derivative financial instruments and unwind of discounts on provisions, of the same period
Sales in territories outside of Ireland, Great Britain and North America
Long Alcoholic Drinks
177
Financial Definitions
(continued)
Net debt/(cash)
Net debt/(cash) comprises cash and borrowings net of unamortised issue costs
A measurement of leverage, calculated as the Group’s interest-bearing debt 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
Profit earned from the Group’s core business operations before net financing and income tax costs
and excluding the Group’s share of equity accounted investees’ profit/(loss) after tax. In line with
the Group’s accounting policies certain items of income and expense are separately classified as
exceptional items on the face of the Income Statement
Property, plant & equipment
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
FY2016 North America revenues have been restated to be on a like for like basis with the current
financial year (as though the Pabst arrangement had also been in operation for the whole of FY2016).
The like-for-like adjustment on North American revenue and net revenue is arising from Pabst
partnership: Under the terms of the trading arrangement with Pabst Brewing company (“PBC”) which
came into effect on 1st March 2016, C&C’s reported revenues and net revenues now comprise Cost
of Goods Sold at production cost plus a royalty payment representing one-third of the gross profit of
the partnership. C&C contributes one-third of marketing spend. All sales costs are borne by PBC. The
like-for-like adjustment for our US revenues and net revenues would have the effect of reducing our
reported revenues/net revenues for the comparative period (FY2016) by €10.6m had the partnership
been in effect from 1st March 2015.
Net debt/EBITDA
Net revenue
NI
Off-trade
On-trade
Operating profit
PPE
Revenue
ROI
TSR
UK
US
US Adjustment
178
C&C Group plcAnnual Report 2017 Shareholder and Other Information
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 2017 was ordinary 800,000,000 ordinary shares at €0.01 each. The issued
share capital at 28 February 2017 was 325,546,201 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 capitalization
Share price movement during the financial year
-high
-low
2017
2016
€3.870
€3.446
Number
Number
325,546,201
€1,225m
329,157,714
€1,103m
€4.180
€3.415
€4.071
€3.310
DIVIDEND PAYMENTS
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 4.96 cent per share was paid in respect of ordinary shares on 16 December 2016.
A final dividend of 9.37 cent, if approved by shareholders at the 2017 Annual General Meeting, will be paid in respect of ordinary shares on
14 July 2017 to shareholders on the record on 26 May 2017. 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. DWT exemption forms may be obtained
from the Irish Revenue Commissioners website: http://www.revenue.ie/en/tax/dwt/forms/index.html. 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.
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.
179
Shareholder and Other Information
(continued)
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
Date
6 July 2017
25 May 2017
26 May 2017
28 June 2016
14 July 2017
October 2017
December 2017
28 February 2018
COMPANY SECRETARY AND REGISTERED OFFICE
David Johnston, C&C Group plc
Bulmers House, Keeper Road, Crumlin, Dublin 12, D12 K702
Tel: +353 1 506 3900
REGISTRARS
Shareholders with queries concerning their holdings, dividend
information or administrative matters should contact the
Company’s registrars:
Capita Asset Services, Shareholder solutions (Ireland)
2 Grand Canal Square, Dublin 2, D02 A342
Tel: +353 1 553 0050
Fax: +353 1 224 0700
Email: enquiries@capita.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, 6201 15th Avenue,
Brooklyn, NY 11219.
Tel: Toll free +1 866 706 8374
International +1 718 921 8137
Email: DB@amstock.com
PRINCIPAL BANKERS
Bank of Ireland
Bank of Scotland
Barclays Bank
Danske Bank
HSBC
Rabobank
Ulster Bank
SOLICITORS
McCann FitzGerald
Riverside One, Sir John Rogerson’s Quay, Dublin 2, D02 X576
STOCKBROKERS
Davy
49 Dawson Street, Dublin 2, D02 PY05
Investec Bank plc
2 Gresham Street, London, EC2V 7QP
AUDITOR
KPMG
Chartered Accountants
1 Stokes Place, St. Stephen’s Green, Dublin 2, D02 DE03
INVESTOR RELATIONS
FTI Consulting
10 Merrion Square, Dublin 2, D02 DW94
WEBSITE
Further information on C&C Group plc is available at
www.candcgroupplc.com
180
C&C Group plcAnnual Report 2017 www.sourcedesign.ie
Bulmers House, Keeper Road, Crumlin, Dublin 12, D12 K702.
www.candcgroupplc.com