Accelerating our vision for C&C

Transcription

1 Accelerating our vision for C&C Acquisition of Anheuser-Busch InBev s Irish, Northern Irish and Scottish Businesses 27 August 2009

2 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, beliefs and expectations. These statements are based on the Company's current plans, estimates and projections, as well as the Company's expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. The Company undertakes no duty to and will not necessarily update any such statements in light of new information or future events, except to the extent required by any applicable law or regulation. Recipients of this presentation are therefore cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. Recipients are referred to the circular being published to the Company's shareholders which contains further details in respect of matters discussed in the presentation. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. Any statement in this presentation which infers that the transaction may be earnings accretive does not constitute a profit forecast and should not be interpreted to mean that the Company s earnings or net assets in the first full financial year following the transaction, nor in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial year. 2

3 The C&C Team John Dunsmore CEO Stephen Glancey COO Kenny Neison Strategy & IR Noreen O Kelly Company Secretary Liz Hodgins Tax & Treasury 3

4 Agenda Background Transaction Rationale Trading Update Financial Overview Conclusion John Dunsmore John Dunsmore Stephen Glancey Stephen Glancey John Dunsmore Q&A 4

5 Deal Overview C&C is acquiring the Irish and Scottish businesses of AB InBev (ABI) Ownership of Tennent s brand 20 year distribution agreement for Stella Artois, Beck s and other premium ABI brands Wellpark Brewery Pub loan book of c. 27m Normalised net sales of 162.2m and normalised EBITDA of 23.9m ( 21.8m post royalty) in year to December 2008 Total consideration of 180m ( 205m 1 ) Of which 153m due on completion and 27m deferred to September m cost and revenue synergies Funded entirely from existing bank facility and cash reserves Immediately earnings accretive on a pro forma basis Returns exceed C&C s weighted average cost of capital in the first full financial year post acquisition Conditional on shareholder approval, competition clearance in Ireland and employee consultation 1. Consideration in Euros fixed at the closing spot exchange rate of 1EUR:0.877EUR on 26 August

6 Transaction Perimeter C&C Tennent s ABI distribution rights Other Assets Scotland Non-exclusive on-trade distribution rights Wellpark brewery Pub loan book Tennent s wholesale 3 year contract brewing agreement Pub loan book Northern Ireland Packaged Non-transnational on- and off-trade Republic of Ireland On- and non-transnational off-trade distribution rights Total acquired post royalty, normalised 2008 EBITDA: 21.8m 6

7 Our Vision To become a successful manager of premium and niche drinks brands in international markets.that don t rely on scale for success A first rate small company that punches above its weight 7

8 Key Strategic Initiatives presented on 3rd March 1 New Business Structure To allow quick, profit focused decision making Short- Term 2 Strengthen Brand Proposition To meet local consumer and customer needs 3 Improve Cost Position Reduce cost base and over-capacity 4 New Routes To Market Partnership approach in existing and new markets Medium- Term 5 Build Strategic Alliances Maximise the use of our assets to enhance profits 6 Innovation Make product and business innovation a core competency 8

9 Progress So Far New Business Structure Five business units established Leaner management structure Strengthen Brand Proposition Launch of Pear cider Country-specific marketing Appropriate market-by-market pricing strategies Improve Cost Position Reorganisation plan implemented Progress on procurement 9

10 Accelerating Our Vision From Here Ownership Distribution rights 1 New Routes to Market Strengthen Brand Proposition Build Strategic Alliances Improve Cost Position 1. With the exception of Budweiser in ROI and draught Budweiser in Northern Ireland 10

11 Transaction Rationale Strengthens route to market Route to market for developing Magners brand in Scotland Established route to market (through loan book) in Northern Ireland Extended footprint in Republic of Ireland New Routes to Market Enhances existing product portfolio position through ownership of an iconic brand and strategic alliance with ABI #1 LAD position in Scotland with iconic brand proposition #2 LAD position in Northern Ireland; improved market position #3 LAD player in Republic of Ireland; product proposition well suited for off-trade Identified synergies to be realised by FY 2012 Cost synergies of 5m Revenue synergies of 5m Strengthen Brand Proposition Build Strategic Alliances Improve Cost Position 11

12 Improved Route to Market Scotland Route to market for the Magners brand through existing Tennent's distribution network Range of specific initiatives identified for both on- and off-trade to enhance Magners distribution and rate of sale Northern Ireland Acquisition of ABI's loan book, with access to on-trade customer base, offering well established route to market Potential for enhanced sales of Tennent's and ABI brands through combining portfolio with Magners Republic of Ireland Portfolio diversification Ability to sell Tennent's and ABI brands through C&C's existing distribution network with significant volume growth benefits 12

13 Enhanced Portfolio Proposition: Tennent s Strong market position #1 in Scotland; accounting for one in three pints of beer sold #2 in Northern Ireland; 12% share by volume #5 in United Kingdom Outright ownership of Tennent s brand Tennent's Super and Pilsner to be licensed back to ABI C&C has no economic interest in Super or Pilsner Unique consumer proposition Tennent s bridges the generation gap from father to son, successfully spanning city centre business and working men s clubs - BrandCentrics 2008 Key sponsorships including the Scottish national football team and T in the Park enhance consumer preferences and loyalty An iconic drinks brand in Scotland with a rich history dating back to the 19th Century 13

14 Enhanced Portfolio Proposition: ABI Brands C&C has the exclusive on-trade and off-trade distribution rights for ABI brands in NI and ROI for the next 20 years¹, and non-exclusive on-trade distribution rights for ABI brands in Scotland 2 Share and marketing spend commitments C&C incentivised to grow the brands Quality premium brands; together with C&C s existing brands creates a powerful brand portfolio in Scotland and Ireland Strategic partnership established with the world s largest brewer 1. With the exception of Budweiser in ROI and draught Budweiser in Northern Ireland 2. Subject to certain carve outs for national multiples and other entities 14

15 Financial Overview Stephen Glancey COO 15

16 Trading update to 31 July Revenue Revenue declined by 5% on a constant currency basis in 5 months to 31 July Cider revenue declined 4% Spirits and Liqueurs revenue declined 22% Cider volumes increased by 3% in the five months to July Bulmers volumes in Ireland increased by 3% Volumes Magners volumes in Great Britain increased by 1% Spirits & Liqueurs volumes declined by 17% during the period attributable to continuing de-stocking in major markets There are some indications that this de-stocking process may be drawing to an end Re-affirm existing business operating profit at the top end of the previously stated range of 77m to 82m 16

17 Financial Overview Carve-out numbers 1 Normalised 2,3 m Net sales EBITDA Margin 12.6% 14.7% EBIT Margin 4.7% 6.7% Capex % net sales 6.2% 6.2% 1. Carve-out numbers have been prepared according to C&C s accounting policies 2. EBITDA and EBIT were calculated after deducting certain charges that will cease to be incurred following the Acquisition. These include, inter alia, ABI intra-group management fees and ABI intra-group royalties payments totalling 3.7m in The carve-out financials include revenue and costs associated with a brand, Dutch Gold, that was sold by ABI but is not part of the Acquisition, so are deducted from the normalised financials 17

18 Pro forma EBITDA Going forward C&C will be paying a royalty to ABI in line with market rates 23.9m 21.8m 10.0m 31.8m Mutually beneficial royalty level (2.1)m Revenue and cost synergies totaling 10m by FY 2012 Normalised 2008 EBITDA Royalty Pro forma normalised EBITDA Run rate synergies Synergised pro forma EBITDA 18

19 Synergies: Cost Cost synergies of 5m by FY 2012 Split between sourcing optimisation and efficiency and overlap benefits Sourcing optimisation Procurement benefits Sourcing and transport Efficiency and overlap Sales, marketing and administrative savings in Great Britain Northern Ireland overlap reduction 19

20 Synergies: Revenue Revenue synergies of 5m by FY 2012 Based on improved routes to market for the Magners brand in Scotland and further potential for Tennent s brands in Northern Ireland Scotland Selling Magners using the Tennent s distribution network Northern Ireland Selling Magners through the Tennent s pub loan book Republic of Ireland Combining ABI brands (except Budweiser) and Tennent s with Bulmers to create a strengthened network 20

21 Phasing and Cash Costs 50% of total synergies delivered in FY 2011 and full run rate in FY m cash cost of delivery in FY 2011 Net trade loan investment growth expected to be 5m in FY 2011 and 7m in FY

22 Financing and other Current net debt of 180m Upfront consideration of 174m and deferred consideration of 31m to be financed from the existing 430m bank facility Net debt of c. 354m immediately after the acquisition leaves comfortable headroom on key financial covenants and liquidity Combined pro forma business is strongly cash generative Leverage ratios expected to return to current levels by FY 2012 Expected tax rate of 15% for the acquired business Commitment to maintain current dividend policy 22

23 Transaction structure Structured as an asset purchase Historic pension liabilities are excluded Audited carve-out financials for shareholder circular 23

24 Integration Plan These are well run businesses which are complementary Intention to maintain business units Maintain operational focus and synergy delivery ABI will provide transitional services for twelve months Integration team with internal and external resource 24

25 Timeline to Completion 28 August: C&C Group plc AGM Mid September: Late September / early October: Late September / October: Shareholder circular posted EGM Deal completion (subject to applicable clearances including receipt of competition clearance from Irish Competition Authority) 25

26 Conclusion John Dunsmore CEO 26

27 Summary 1 Strengthens our cider business 2 Acquisition of a fantastic beer brand 3 Creates a broad portfolio of strong brands 4 An important strategic alliance 5 Excellent returns A highly attractive opportunity for C&C 27

28 Accelerating our vision for C&C Acquisition of Anheuser-Busch InBev s Irish, Northern Irish and Scottish Businesses 27 August 2009