C&c Group Plc · LSE:CCR
C&c — H1 2013 Earnings Presentation
29 slides from C&c's earnings presentation, October 2012
Slide 1: 2013 H1 Results
2013 H1 Results October, 2012
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares or other securities of C&C Group plc (the "Company"). The presentation contains forward‐looking statements, including statements about the Company's intentions,
Slide 3: 2013 H1 Review, International Growth, Investment Case & Outlook
2013 H1 Review International Growth Investment Case & Outlook
Slide 4: Performance Overview
Performance Overview Operating profit decline of 2.7% to €65.6m; constant currency decline of 6% Adjusted diluted EPS* down 2.4% to 16.1 cent Strong balance sheet; net cash of €79.6 million Resilient performance in tough trading environment ‐ challenging conditions in Ireland and GB cider
Slide 5: Acquisition
Acquisition Agreement to acquire Vermont Hard Cider Company LLC for US$305 million (subject to regulatory review) Delivering strong revenue and EBITDA growth and is immediately earnings accretive Vermont Hard Cider Company - Independent, premium craft cider company based in Vermont, USA - Owns
Slide 6: Strategic & Operating Highlights
Strategic & Operating Highlights 53% H1 international volume growth (including acquisitions) Successful launch of Tennent’s in international markets Integration and re‐launch of Hornsby’s New Magners & Gaymers fruit flavours Appointment of Joris Brams to Board of Directors Slide 6
Slide 7: 2013 H1 | ROI & UK Performance
2013 H1 | ROI & UK Performance ROI LAD market weak ‐ poor weather & challenged consumer Accelerated off‐trade price deflation Strong beer performance: Tennent’s and Caledonia Smooth volume +40% UK: Cider Cider consumption negative in the period; intense competition Magners volumes declined
Slide 8: 2013 H1 | Net Revenue
2013 H1 | Net Revenue €m 290 18 285 280 7.2 275 270 265 6.7 3.9 260 268.7 16.7 263.4 255 5.8 4.2 250 H1 2012 Currency ROI Magners UK Gaymers UK Tennent's UK Third Party Brands UK International H1 2013 Net revenue declined 2%; constant currency decline of 8.1% Total branded volumes declined 8.2%
Slide 9: 2013 H1 | Operating Profit
2013 H1 | Operating Profit €m 75 2.4 70 1.8 65 2.7 5.4 1.6 0.4 67.4 60 2.1 65.6 55 H1 2012 Currency ROI Magners UK Gaymers UK International Tennent's UK Third Party H1 2013 Brands UK H1 Operating margin of 24.9%; down 0.2 ppts Margin performance reflects resilient business model Slide 9
Slide 10: 2013 H1 | Free Cash Flow
2013 H1 | Free Cash Flow €m 90 80 10.8 0.5 70 60 65.6 50 25.5 40 7.1 30 12.8 3 2.6 20 2.7 10 22.2 0 H1 Op Profit Depreciation Unwind of disc Working Capital Trade Lending Capex Tax Finance Exceptionals Free cash flow on provns costs/other H1 conversion of 29.2% of EBITDA; FY conversion to be 50% t
Slide 11: 2013 H1 | Strong Balance Sheet
2013 H1 | Strong Balance Sheet €m 100 22.2 Net cash €79.6 million at 31 August 90 80 6.5 12.5 2.4 70 2.5 Proposed acquisition in H2 60 50 40 79.6 68.3 Pro forma FY net debt to EBITDA 30 expected to be < 1x 20 10 Defined Benefit Pension Deficit 0 31 August, 2012: €36.8m Net Cash 1 March 2012 Fr
Slide 12: 2013 H1 | FX, Tax & Financing Costs
2013 H1 | FX, Tax & Financing Costs FX: Translation benefit for H2 of c. €1 million at H1 average spot rates Tax: H1 effective rate of 15%; FY effective rate estimated to be c. 15% H1 finance costs: Net finance costs of €1.8 million H2 finance costs: Vermont Hard Cider Company funded out of
Slide 13: 2013 H1 Review, International Growth, Investment Case & Outlook
2013 H1 Review International Growth Investment Case & Outlook
Slide 14: C&C | International Growth
C&C | International Growth 53% volume growth in H1 (including acquisitions) ‐ now 9% of branded volume Tennent’s launched in Italy, Canada and Ukraine New distributors in Europe and Asia driving volume growth in cider and beer Hornsby’s integrated and re‐launched Vermont Hard Cider Company
Slide 15: C&C | International H1 Performance
C&C | International H1 Performance Strong volume growth +53% International H1 Change 2013 Const Curr. Net revenue €23.6m +39.6% Cider volumes up 32.7% in period Operating profit €4.2m +10.5% Magners NA volumes up 16% and volumes in other markets continue to show solid growth Operating margin 1
Slide 16: US Cider Category
US Cider Category Growing interest from domestic and US Cider Category million gallons international brewers in cider 14 2011 +20% New entrants accelerating category growth 12 Domestic Cider Import Cider H1 ‘12 Category grew 20% in 2011 and 57% in the 10 +57% first six months of 2012 1 8 Cid
Slide 17: Vermont Hard Cider Company
Vermont Hard Cider Company Agreement to acquire Vermont Hard Cider Company for US$305 million “C&C is delighted to announce its agreement to acquire the Vermont Hard Cider Company. This Transaction transforms our international cider business and accelerates our growth prospects. We intend to inves
Slide 18: Transaction Rationale
Transaction Rationale Transforms international cider business and Cider & Craft Beer Share of LAD Markets accelerates growth prospects 16% 15% Increased exposure to high growth cider 14% category 12% 10% VTHCC delivered annual volume growth of 10% 25%+ over past 3 years 8% 7% Compelling stra
Slide 19: Transaction Financing
Transaction Financing Cash consideration US$305m including normalised working capital ‐ debt‐free/cash‐ free basis Normalised EBITDA $15m for current financial year Funded in US$ using senior credit facility CEO and CFO to become shareholders in C&C Pro‐forma net debt to EBITDA post acquis
Slide 20: Strategic & Cultural Fit
Strategic & Cultural Fit Compelling fit between businesses Shared heritage, values and brand attributes Premium, craft cider Product innovation Made with natural juice Refreshing & naturally gluten free Strong brand loyalty and authenticity Slide 20
Slide 21: Investment Case & Outlook
Investment Case & Outlook Strong brand market combinations Authentic, local brands Accelerating international growth Multi‐beverage platforms Strong balance sheet ‐ FY net debt to EBITDA < 1x Highly cash generative; progressive dividend policy Confirming guidance to lower end of stated
Slide 22: Appendix
Appendix TENNENT'S
Slide 23: Segmental Analysis
Segmental Analysis Republic of Ireland (ROI) LAD market weak in Ireland ROI H1 Change – poor weather & challenged consumer 2013 Const Curr. Net revenue €51.3m (12.3%) Cider under‐performed LAD market Operating profit €21.9m (19.8%) Increased off‐trade promotional activity ‐ accelerated price d
Slide 24: Segmental Analysis
Segmental Analysis UK: Cider Cider consumption impacted by poor summer weather UK: Cider H1 Change 2013 Const Curr. UK cider category volume decline of 1%* Net revenue €82.6m (21.4%) ‐ off‐trade volumes down 5%* Operating profit €19.9m (15.7%) Competition intense ‐ increased promotional activi
Slide 25: Segmental Analysis
Segmental Analysis UK: Tennent’s Scottish LAD volume decline of 4%* UK: Tennent’s H1 Change ‐ value increase of 5%* 2013 Const Curr. Net revenue €57.2m +7.3% Strong revenue performance Operating profit €16.1m 20.1% Price/mix lifted by renegotiated loss‐making contracts and higher % premium pro
Slide 26: Segmental Analysis
Segmental Analysis UK: Third Party Brands Segment includes Agency and Private Label Brands UK: Third Party H1 Change 2013 Const Curr. Net revenue €48.7m (7.9%) Agency Operating profit €3.5m +105.9% Volumes declined 10.8% but price improved 0.7% Scotland: lower margin brands no longer distribut
Slide 27: Risk Factors
Risk Factors Competitive threat Shift from on to off‐trade Alcohol duty risk Exchange rate risk Weak business conditions in core markets Transaction specific risk Slide 27
Slide 28: Manufacturing Assets
C&C Group plc Distributed Cider Wellpark Facility Manufacturing Assets Clonmel Facility Beer Shepton Mallet Facility Slide 28
Slide 29: www.candcgroupplc.com
www.candcgroupplc.com