Strategic Report - Group Strategy
Our ambition is to be the pre-eminent integrated brands and drinks distribution business serving the UK and Ireland hospitality industries. Our brand and distribution assets provide: an unrivalled range of ‘fabric’, premium and third-party brands; enhanced customer service; market insight, value and national coverage.
| Strategic pillars |
Medium term strategic goals |
Financial characteristics |
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1 Invest and grow our portfolio of leading local, super-premium and craft beer and cider brands. |
Brand and product investment to build value of key brands over the long-term. Leverage key brand strength and market position to grow our portfolio of super-premium and craft brands. |
Cash generation and conversion Balance Sheet strength EPS growth |
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2 Strengthen our position as the No.1 drinks distribution business in the British Isles. |
Margin expansion at Matthew Clark and Bibendum through simplification and optimisation programmes. Deliver unrivalled portfolio strength, value and service to the UK and Irish hospitality sectors. |
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3 Capital allocation to enhance growth and shareholder returns. |
Maintain medium term balance sheet leverage of circa 2.0x Net Debt/EBITDA. Selective acquisitions to fuel sustainable, profitable growth and/or cash returns to shareholders. |
Achievements during FY2020
FY2020 saw solid performance across our branded portfolio in the UK and Ireland. Despite tough comparatives following a very good summer in 2018, total C&C branded revenues were -1%, outperforming the wider beer and cider sectors.
Tennent’s and Magners improved margins in their respective markets with Bulmers margins slightly declining. A number of innovative brands extensions were launched during the year.
We saw growth in our super-premium and craft portfolio with volumes +2.6%. Our super-premium and craft portfolio now contributes 5.9% of Group branded volume and 8.4% of Group branded revenues, with revenues of €24.0m. We strengthened our portfolio of premium international agency brands, securing the exclusive distribution rights on Tsingtao, China’s leading beer brand, across the UK and Ireland. During the year we also secured the distribution rights for Budweiser on the Island of Ireland with effect from July 2020.
FY2020 was our first full year of Matthew Clark and Bibendum ownership. Having completed our stabilisation phase, we are well progressed into our simplification programme and delivered margins of 2.4%. As part of this phase, we closed our event management business, Elastic as well as disposing our festival business Peppermint during the year.
We entered into a long term distribution agreement with AB InBev, to distribute the Budweiser brand in Ireland. In doing so we have united the entire AB InBev portfolio of Beers into C&C’s Irish operations and added the #4 Long Alcoholic Drink (LAD) brand to our portfolio (Bulmers is #3 LAD brand in Ireland).
The Group delivered strong free cash flow of €136.5m in the year and cash conversion of 103.5% of Adjusted EBITDA (before exceptional items), assisted by an improving working capital performance at Matthew Clark and Bibendum.
Post year-end, we strengthened and diversified our capital structure by raising approximately €140m with a debut issue in US Private Placement (USPP) notes with maturities of between 10 and 12 years.
Committed to a number of ESG initiatives that will position us positively for the future. We sponsored the Footprint Sustainability Index and announced plans to invest €16m in sustainability capex over the coming years. Eliminating our use of one way plastics and becoming carbon neutral as a Group are our short term ambitions.
Strategic priorities
Our core strategic objective is to deliver earnings growth.
Existing Businesses
- continue to support our customers and consumers by providing quality, locally produced fabric brands and adding value through the supply of the largest range of products to the on-trade in the UK and Ireland;
- to strengthen and grow our portfolios of core, super-premium and craft brands through select brand investment, innovation and leveraging our route-to-market platforms across the UK and Ireland.
Capital Allocation
- maintain the strong cash conversion characteristics of the business;
- we will de-gear towards target leverage of 2x Net Debt/EBITDA.
Environmental, Social and Governance
- targeting further sustainability improvements across the Group;
- support of Deposit Return Scheme (DRS) in Scotland;
- focusing our social responsibility agenda and engagement in the community;
- continue to support MUP legislation in Scotland and Ireland;
- achieving a continuous improvement in workforce health and safety;
- continue to implement the UK Corporate Governance code.