C&C has issued an update for the period 1 March 2023 to 30 June 2023 ahead of its Annual General Meeting (AGM), which will be held at 11am today.
“Our branded business has had an encouraging performance in early FY2024, building on growth achieved in FY2023, with Net Sales Revenue of our branded business up 10%(i) in the four months to the end of June. Net Sales Revenue of our core brands, principally Tennent’s and Bulmers were up 9%(i) in the same period, with each brand continuing to grow category share(ii).
“We are pleased to report progress in resolving the Enterprise Resource Planning (‘ERP’) system implementation issues in the Group’s GB distribution business outlined in the FY2023 Preliminary Results Announcement in May 2023, with service levels steadily improving.”
The statement continued: “While this progress is consistent with our immediate objectives, we continue to target further improvements to On Time in Full (‘OTIF’) metrics consistent with our aim to deliver outstanding service to our customers. The ERP system implementation is a key step in the digital transformation and optimisation of the business, which will enable the consolidation and standardisation of processes across the Group, drive efficiencies, improve automation, improve customer experience, and provide a platform for digital commerce.
“C&C’s strong balance sheet and free cash flow generation capabilities are reflected in the reinstatement of a dividend of 3.79 cents per share for FY2023, subject to shareholder approval at today’s AGM. FY2023 leverage(iii) was 1.3x at 28 February 2023. As previously communicated, while leverage will temporarily increase as a result of the ERP system implementation issues, it is expected to be within the Group’s leverage target range of 1.5x to 2x for the end of the financial year in February 2024. The potential for returns of capital will be kept under review having regard to a range of factors including wider economic indicators, market conditions and progress in restoring margins.”
Non-executive director appointment
C&C also announced the appointment of Angela Bromfield as an independent non-executive director, effective from the conclusion of today’s 2023 AGM. On joining the Board, Bromfield will succeed Helen Pitcher as chair of the Remuneration Committee.
Bromfield’s appointment follows a thorough search process led by the Nomination Committee, in conjunction with an independent executive search firm. Bromfield brings wide business strategy, communications and marketing experience to the Board, together with significant experience as an independent director and as Remuneration Committee Chair at several UK listed companies.
Bromfield is currently senior independent director, chair of the Remuneration and ESG Committees and a member of the Nominations Committee of Harworth Group plc. She is also a non-executive director; chair of the Remuneration Committee and a member of the Audit and Nominations Committees of Marshalls plc. Bromfield has previously been a Non-Executive Director and Chair of the Remuneration Committee at Churchill China plc and Zotefoams plc.
Separately, the Group’s process to recruit a new group chief financial officer continues and an update will be provided in due course.
Patrick McMahon, group chief executive officer, commented: “We are pleased with the start our branded business has made in FY2024. We are also reporting progress on the resolution of the ERP system implementation issues. However, the Group’s performance is not at the level we planned, because of the ERP issues, and resolving them fully including the permanent restoration of OTIF metrics, remains our immediate objective and focus”.
“Despite the challenges relating to the ERP system implementation, the performance of our brands, the strength of the Group’s balance sheet and our robust cash generating capability have enabled us to recommend a dividend to our shareholders,” said Ralph Findlay, executive chair. “Separately, I am delighted to welcome Angela Bromfield to the Board of C&C as a Non-Executive Director and Chair of the Remuneration Committee. I look forward to working with her in the years ahead. I also thank Helen Pitcher and Jim Thompson who step down from the Board today for their support and contributions to the Group.”
(i) Unaudited financials.
(ii) Bulmers: Ireland (NIQ) Off-Trade: Data is 12 weeks to 23.04.23. Ireland and NI (CGA) On-Trade Data is 12 weeks to end of April 2023.
Tennent’s and Magners Original: Data is 12 weeks to 20.05.23 for On-Trade and 14.05.23 for Off-Trade.
(iii) Leverage is defined as net debt to earnings before exceptional items, finance income, finance expense, tax, depreciation, amortisation and share of equity accounted investments profit after tax. Net debt comprises borrowings (net of issue costs), lease liabilities capitalised less cash.