NOTES

Forming part of the financial statements

 

26. GUARANTEES AND CONTINGENCIES

Where the Company enters into financial guarantee contracts to guarantee the indebtedness of companies within the Group, the Company considers these to be insurance arrangements and accounts for them as such. The Company treats the guarantee contract as a contingent liability until such time as it becomes probable that it will be required to make a payment under the guarantee.

As outlined in note 19, the Group has a multi-currency loan facility in place at year-end, which it entered into in February 2012. The Company, together with a number of its subsidiaries, gave a letter of guarantee to secure its obligations in respect of these loans. The actual loans outstanding at 28 February 2013 amounted to €246.6m (2012: €60.0m under the Group’s previous 2007 euro loan facility).

During the 2011 financial year, Tennent Caledonian Breweries UK Limited, entered into a guarantee with Clydesdale Bank plc whereby it guaranteed £250,000 plus interest and charges of the drawn debt of one of its customers. The guarantee expires on the earliest of: 10 years from the date on which the guarantee becomes effective, the secured liabilities are repaid, or by mutual agreement with Clydesdale Bank plc.

In previous periods, Enterprise Ireland funding of €0.9m was received towards the costs of implementing developmental projects. Scottish Enterprise Board funding of €0.3m (€nil in the current financial year) was received under the terms of its Regional Selective Assistance Scotland Scheme. These funds are fully repayable should the Company at any time during the term of the agreements be in breach of the terms and conditions of the agreements. The agreements terminate five years from inception.

Under the terms of the Sale and Purchase Agreements with respect to the disposal of the Wines and Spirits distribution businesses in the year ended to 28 February 2009, the Group had a maximum exposure of €9.6m with respect to the Republic of Ireland business and £1.9m with respect to the Northern Ireland business in relation to warranties undertaken. The time limit for all claims with respect to these warranties expired on 13 June 2010 and 26 August 2010 respectively, except for any claim relating to tax in Northern Ireland where the time limit is 7 years from the transaction date.

Under the terms of the Sale and Purchase Agreement with respect to the disposal of the Group’s Spirits & Liqueurs business to William Grant & Sons Holdings Limited in the year ended 28 February 2011, the Group had a maximum aggregate exposure of €300.0m in relation to warranties (€99.0m in relation to tax warranties). The time limit for the notification of all claims with respect to all warranties with the exception of tax claims expired in December 2011. The time limit for any claim relating to tax is 5 years from the transaction date and is due to expire in June 2015.

Under the terms of the Sale and Purchase Agreement with respect to the prior year disposal of the Group’s Northern Ireland wholesaling business, the Group has a maximum aggregate exposure of £4.3m in relation to warranties. The time limit for notification of all claims with respect to these warranties is 18 months from the transaction date, with the exception of any claim relating to tax where the time limit is 7 years from the transaction date.

Pursuant to the provisions of Section 17 of the Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of certain of its subsidiary companies incorporated in the Republic of Ireland for the financial year to 28 February 2013 and as a result such subsidiaries are exempt from the filing provisions of Section 7, Companies (Amendment) Act, 1986 (note 28).

27. RELATED PARTY TRANSACTIONS

The principal related party relationships requiring disclosure in the consolidated financial statements of the Group under IAS 24 Related Party Disclosures pertain to the existence of subsidiary undertakings and equity accounted investees, transactions entered into by the Group with these subsidiary undertakings and equity accounted investees and the identification and compensation of key management personnel.

(a) Group

Transactions

Transactions between the Group and its related parties are made on terms equivalent to those that prevail in arm’s length transactions.

Subsidiary undertakings

The consolidated financial statements include the financial statements of the Company and its subsidiaries and equity accounted investees. A listing of all subsidiaries is provided in note 28. Sales to and purchases from subsidiary undertakings, together with outstanding payables and receivables, are eliminated in the preparation of the consolidated financial statements in accordance with IAS 27 Consolidated Financial Statements.

Equity accounted investees

On 21 March, 2012, the Group acquired a 25% equity investment in Maclay Group plc, a leading independent Scottish operator of managed public houses. The business primarily includes operating 15 wholly owned managed houses and 11 managed houses owned by two separate Enterprise Investment Schemes. The total cost of the investment was £2.1m (€2.5m at date of payment). The investment secures Tennent Caledonian Breweries UK Limited (a 100% subsidiary of the Group) as the main beer supplier to the pub estate. Details of transactions with Maclay Group plc during the year and resulting balance at the year end are as follows:

Net Revenue Balance outstanding
2013 2012 2013 2012
€m €m €m €m
       

Sale of Goods to associate:

       

Maclay Group

0.8 - 0.1 -
       

0.8 - 0.1 -

All outstanding balances with the associate, which arose from arm’s length transactions are to be settled in cash within one month of the reporting date.

On 28 November 2012, the Group invested £0.3m (€0.4m at date of payment) in Thistle Pub Company Limited, a joint venture with Maclay Group plc. During the period, the Group earned total net revenue from the Thistle Pub Company of less than €0.1m. The balance outstanding with Thistle Pub Company Limited at the year-end was €nil.

Key management personnel

For the purposes of the disclosure requirements of IAS 24 Related Party Disclosures, the Group has defined the term ‘key management personnel’, as its executive and non-executive Directors. Executive Directors participate in the Group’s share option programmes (note 4). No other non-cash benefits are provided. Non-executive Directors do not receive share-based payments or post employment benefits.

Details of key management remuneration are as follows:-

2013 2012
Number Number
   

Number of individuals

9 10
   
€m €m
   

Salaries and other short term employee benefits

2.2 3.6

Post employment benefits

0.3 0.4

Equity settled share-based payments

1.0 0.3
   

Total

3.5 4.3

John Dunsmore, who resigned from the Board on 29 February 2012, has been included in the prior year headcount numbers and in the disclosure of remuneration charged to the income statement in the prior year. Joris Brams was included in the headcount numbers from the date of his appointment to the Board, 23 October 2012.

The relevant disclosure of Directors remuneration as required under the Companies Act, 1963 is as outlined above.

When an award is granted to an executive under the Group’s Joint Share Ownership Plan, its value is assessed for tax purposes with the resulting value being deemed to fall due for payment on the date of grant. Under the terms of the Plan, the executive must pay the Entry Price at the date of grant and, if the tax value exceeds the Entry Price, he must pay a further amount, equating to the amount of such excess, before a sale of the awarded Interests. The deferral of the payment of the further amount is considered to be an interest-free loan by the Company to the executive and a taxable benefit-in-kind arises, charged at the Revenue stipulated rates (Ireland 12.5% to 31 December 2012 and 13.5% from 1 January 2013, UK 4%). The balances of the loans outstanding to the executive Directors in the context of the above as at 28 February 2013 and 29 February 2012 are as follows:

28 February 29 February
2013 2012
€’000 €’000
   

Stephen Glancey

111 111

Kenny Neison

83 83

Total

194 194

The loans fall due for repayment on the exercise of their awarded interests.

(b) Company

The Company has a related party relationship with its subsidiary undertakings. Details of the transactions in the year between the Company and its subsidiary undertakings are as follows:

2013 2012
€m €m
   

Dividend income

- 100.0

Expenses paid on behalf of and recharged by subsidiary undertakings to the Company

(3.0) (7.1)

Equity settled share-based payments for employees of subsidiary undertakings

3.0 2.6

Funding of cash requirements of subsidiary undertakings

(5.3) -

Repayment of cash funding and other cash movements with subsidiary undertakings

71.3 9.4

28. SUBSIDIARY UNDERTAKINGS
Trading subsidiaries Nature of business Class of shares held
(100% unless stated)

Incorporated and registered in Republic of Ireland

   

* Bulmers Limited

Cider

Ordinary

#* C&C Financing Limited

Financing company

Ordinary

#* C&C Group International Holdings Limited

Holding company

Ordinary

#* C&C Group Irish Holdings Limited

Holding company

Ordinary

* C&C Group Sterling Holdings Limited

Holding company

Ordinary

* C&C (Holdings) Limited

Holding company

Ordinary

* C&C Management Services Limited

Provision of management services

Ordinary

* Cantrell & Cochrane Limited

Holding company

Ordinary

* Tennent’s Beer Limited

Beer distribution

Ordinary

* The Annerville Financing Company

Financing company

Ordinary

The Five Lamps Dublin Beer Company Limited

Beer

Ordinary (92.5%)

* Wm. Magner Limited

Cider

Ordinary

* Wm. Magner (Trading) Limited

Financing company

Ordinary
   

Incorporated and registered in Northern Ireland

   

C&C Holdings (NI) Limited

Holding company

Ordinary

Tennent’s NI Limited

Cider and beer distribution

Ordinary
   

Incorporated and registered in England and Wales

   

C&C Management Services (UK) Limited

Provision of management services

Ordinary

Magners GB Limited

Cider and beer

Ordinary
   

Incorporated and registered in Scotland

   

Tennent Caledonian Breweries UK Limited

Beer and cider

Ordinary

Wellpark Financing Limited

Financing Company

Ordinary
   

Incorporated and registered in Luxembourg

   

C&C IP Sàrl

Licensing activity

Ordinary

C&C IP (No. 2) Sàrl

Licensing activity

Ordinary

C&C Luxembourg Sàrl

Holding and financing company

Ordinary
   

Incorporated and registered in Delaware, USA

   

Green Mountain Beverages Management Corporation, Inc

Licensing activity

Common Stock

Vermont Hard Cider Company Holdings, Inc.

Holding Company

Common Stock

Vermont Hard Cider Company, LLC

Cider

Membership Units

Wm. Magner, Inc.

Cider distribution

Common Stock
   
Trading subsidiaries Nature of business Class of shares held
(100% unless stated)
Non-trading subsidiaries
   

Incorporated and registered in Republic of Ireland

   

* Bestormel Limited

Non-trading

Ordinary

* Bouchel Limited

Non-trading

Ordinary

* C&C Agencies Limited

Non-trading

Ordinary

* C&C Brands Limited

Non-trading

Ordinary

* C&C Group Pension Trust (No. 2) Limited

Non-trading

Ordinary

* C&C Group Pension Trust Limited

Non-trading

Ordinary

* C&C Profit Sharing Trustee Limited

Non-trading

Ordinary

* Ciscan Net Limited

Non-trading

Ordinary

* Cravenby Limited

Non-trading

Ordinary

* Edward and John Burke (1968) Limited

Non-trading

Ordinary

* Findlater (Wine Merchants) Limited

Non-trading

Ordinary

* Fruit of the Vine Limited

Non-trading

Ordinary

* Magners Irish Cider Limited

Non-trading

Ordinary

* Sceptis Limited

Non-trading

Ordinary

* Showerings (Ireland) Limited

Non-trading

Ordinary

* Thwaites Limited

Non-trading

Ordinary

* Vandamin Limited

Non-trading

Ordinary
   

Incorporated and registered in Northern Ireland

   

C&C 2011 (NI) Limited

Non-trading

Ordinary

C&C Logistics (NI) Limited

Non-trading

Ordinary

C&C Profit Sharing Trustee (NI) Limited

Non-trading

Ordinary

Reihill McKeown Limited

Non-trading

Ordinary
   

Incorporated and registered in England and Wales

   

Gaymer Cider Company Limited

Non-trading

Ordinary
   

Incorporated and registered in Germany

   

Wm. Magner GmbH (in liquidation)

Non-trading

Ordinary

* Companies covered by Section 17 guarantees (note 26)

# Immediate subsidiary of C&C Group plc

All the above companies that are incorporated and registered in Republic of Ireland have their registered offices at Annerville, Clonmel, Co Tipperary with the exception of C&C Group plc, C&C Financing Limited, C&C Group Sterling Holdings Limited and The Five Lamps Dublin Beer Company Limited which have their registered offices at Block 71, The Plaza, Park West Business Park, Dublin12.

All the above companies that are incorporated and registered in Northern Ireland have their registered offices at Hawthorn House, 6 Wildflower Way, Belfast, Antrim BT12 6TA.

All the above companies that are incorporated in England and Wales have their registered offices at Kilver Street, Shepton Mallet, Somerset, BA4, 5ND.

All the above companies that are incorporated and registered in Scotland have their registered offices at Wellpark Brewery, 161 Duke Street, Glasgow, G31 1JD.

All the above companies that are incorporated and registered in Luxembourg have their registered offices at L-1232 Luxembourg, 18 avenue Marie-Thérèse.

C&C Management Services (UK) Limited and Magners GB Limited have their registered offices at The Communications Building, 48 Leicester Square, London, WC2H 7LT.

Wm Magner GmbH has its registered office at Hans-Steiberger-Straße 2b, 85540 Harr,Germany.

Wm Magner, Inc. has its registered office at 1013 Centre Road, Wilmington, Delaware 19805, County of New Castle.

Vermont Hard Cider Company, LLC and Green Mountain Beverages Management Corporation, Inc have their registered offices at 2711 Centerville Road, Suite 400 Wilmington, Delaware 19808.

Vermont Hard Cider Company Holdings, Inc has its registered office at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, 19801.

Associates and joint ventures
Associate Name Nature of business Class of shares and % held

Maclay Group plc

Operator of managed public houses

B Ordinary, 25%

   
Joint Venture Name Nature of business Class of shares and % held

Thistle Pub Company Limited

Operator of public houses

B Ordinary, 50%

29. Post balance sheet events

Acquisition of Gleesons

The Group announced on 22 November 2012 that it had conditionally agreed to acquire M. & J. Gleeson (Investments) Limited (“Gleesons”) and its subsidiaries, a supplier and distributor of beverages in Ireland. The consideration for the acquisition was €12.4m payable in cash, of which €4.4m is deferred for one year. Existing debt of €45.6m implies an enterprise value of €58.0m. The acquisition was conditional upon clearance by the Irish Competition Authority, which was given on 27 February 2013. The acquisition was completed on 7 March 2013, whereupon the Group obtained control of the acquired group of companies. There were a number of significant substantive pre-completion steps which had to be undertaken upon which the ultimate completion was contingent, including the disposal of certain companies, the refinancing of external debt and the reorganising of inter-company indebtedness and shareholdings. Accordingly, C&C did not obtain control of the acquired group of companies until after the end of the financial year ended 28 February 2013 and consequently Gleesons has been excluded from the consolidated financial statements of the Group for the financial year ended 28 February 2013.

The initial accounting for the acquisition of Gleesons is currently in progress; the accounting for the carve out of the elements of the previous Gleeson Group that were not acquired by the C&C Group is ongoing. The Group has appointed external valuers who have yet to report on the valuation of all property, plant and equipment acquired. The Group has commenced a detailed review of the accounting policies to ensure consistency with the Group policies and procedures. Given the ongoing status of the accounting for this acquisition, the Directors are not in a position to make all of the disclosures required under IFRS 3 (2008) Business Combinations at this point.

Acquisition of 50% interest in Wallaces Express Limited

The Group announced on 22 March 2013 that it had acquired 50% of the equity share capital of Wallaces Express Limited, a wines and spirits wholesaler in Scotland, for an undisclosed consideration.

30. APPROVAL OF FINANCIAL STATEMENTS

These financial statements were approved by the Directors on 15 May 2013.

Adjusted earnings

Earnings 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 operating segments is restated to constant exchange rates for transactions by subsidiary undertakings in currencies other than their functional currency and for translation in relation to the Group’s non-euro denominated subsidiaries by revaluing the prior year figures using the current year effective foreign currency rates

DWT

Dividend withholding tax

EBITDA

Earnings before Interest, Tax, Depreciation and Amortisation charges

Adjusted EBITDA

EBITDA as adjusted for exceptional items

EBIT

Earnings before Interest and Tax

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.

EPS

Earnings per Share

EU

European Union

Exceptional

Significant items of income and expense within Group results for the year

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 highlights the underlying cash generating performance of the ongoing business

GB

Great Britain (i.e. England, Wales and Scotland)

Group

C&C Group plc and its subsidiaries

HL

Hectolitre (100 Litres)

kHl = kilo hectolitre (100,000 litres)

mHl = millions of hectolitres

(100 million litres)

IAS

International Accounting Standards

IASB

International Accounting Standards Board

IFRIC

International Financial Reporting Interpretations Committee

IFRS

International Financial Reporting Standards as adopted by the EU

Interest cover

Calculated by dividing the Group’s earnings before interest, tax, depreciation and amortisation charges (EBITDA) excluding exceptional items and discontinued activities of one period by the Group’s interest expense, excluding issue cost write-offs and unwind of discounts on provisions, of the same period

International

Sales in territories outside of the United Kingdom (UK) and Republic of Ireland (ROI)

LAD

Long Alcoholic Drinks

Net debt/(cash)

Net debt/(cash) comprises cash, borrowings net of issue costs

Net debt:EBITDA

A measurement of leverage, calculated as the Group’s interest-bearing liabilities and derivative financial liabilities less cash & cash equivalents, divided by its EBITDA excluding exceptional items and discontinued activities. The net debt to EBITDA ratio is a debt ratio that shows how many years it would take for the Group to pay back its debt if net debt and EBITDA are held constant

Net revenue

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

Off-trade

All venues where drinks are sold for off-premise consumption including shops, supermarkets and cash & carry outlets selling alcohol for consumption off the premises

On-trade

All venues where drinks are sold at retail for on-premise consumption including pubs, hotels and clubs selling alcohol for consumption on the premises

NI

Northern Ireland

Revenue

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

ROI

Republic of Ireland

TSR

Total Shareholder Return

UK

United Kingdom (Great Britain and Northern Ireland)

US

United States of America

(back to top)