Temporary working capital

C&C records a 56.1% decrease in net income and operating loss of 59.6 million euros for a 12-month period ending February 28, 2021

Cider maker Bulmers C&C Group released results for the 12-month period ended February 28, 2021, revealing that the company’s net sales fell 56.1% to 736.9 million euros during the 12-month period, and that he suffered an operating loss of € 59.6 million.

C&C said: “Net sales of 736.9 million euros decreased by 56.1% (compared to last year, generating an operating loss of 59.6 million euros in direct consequence of the impact of COVID-19. ”

The group recorded a growth in its net turnover of 14.2% in non-trade in fiscal year 2021 compared to last year and its available cash outflow was limited to 91.2 million. pre-exceptional euros due to the cost control measures put in place, the reduction in capital investments and marketing and capital management investments.

In addition, C&C recorded a current result before interest, taxes and depreciation (EBITDA) of 28.8 million euros for the year ended February 28, 2021, down from the amount of EBITDA of 150.7 million. euros recorded for the previous year.

C&C said: “The one-off charges incurred are mainly related to the impact of the extended restrictions of COVID-19, including the impairment of equity-accounted investments, costs of write-offs of shares, costs related to waivers of restrictive covenants and other costs directly related to the pandemic. Restructuring costs were also incurred. These costs are partially offset by the profit from the disposal of a non-essential asset. “

C&C declared that it “maintained effective management of liquidity and net debt, declaring respectively € 314.6 million and € 441.9 million at the end of fiscal 2021”, having “implemented various working capital initiatives, including negotiating temporary extensions to supplier payment terms and has entered into temporary deferrals with UK and Irish tax authorities valued at € 77.4 million at end-February 2021, of which 38 , 6 million euros to be paid in the first half of fiscal year 2022 “and that it” carried out a US private placement of approximately 140 million euros in March 2020 and then extended the repayment period of a term loan of 105 million euros. “

C&C said it “today separately announced a fully subscribed rights offering to raise approximately £ 151million in gross proceeds (the ‘Rights Matter’). The proceeds from the rights issue will be used to reduce the group’s leverage and provide sufficient liquidity to manage trading uncertainty in the short term.

C&C said: “The issue of rights also ensures that C&C will be able to emerge from the pandemic in a position of strength to execute its long-term strategy. This includes strengthening our brands and optimizing our distribution system as the hospitality industry emerges from the pandemic. “

C&C continued, “The waivers of the covenants for fiscal 2021 have been successfully negotiated and these have been extended to the test date of August 2022, but not including it. Subject to the completion of the rights issue, the covenants have been renegotiated for August 31, 2022, more details can be found in the financial review below.

“After the rights issue and the resumption of unrestricted trading, the board believes that a long-term leverage ratio of less than 2.0x is an appropriate target for the group, supported by the conversion rate of the flow of medium-term free cash flow of the group of 65-75. % and a stable target of medium to high single-digit earnings per share growth. “

Detailing operational highlights, C&C said: “The group returned to profitability and the underlying cash generation when the restrictions on transactions were relaxed in July, August and September 2020, demonstrating the effect operational leverage of the company on the reopening of markets.

“The strength of our brand was reflected in the growth in non-trade volume shares in fiscal 2021 for Tivent’s (ix), Bulmers (x) and Magners (xiv), with all three brands registering share gains. .

“Responding to growing consumer demand for ‘alcohol-free and low-alcohol’ alternatives: launch of Tivez’s Zero and Tivez’s Light brand extensions and our own hard seltzer brands in Ireland and Scotland.

“Since the Brexit transition period officially ended on December 31, 2020, we have had minimal disruption to our operations and supply chain to date.”

The group said it had taken “proactive measures to mitigate, to the extent possible, the negative financial and operational impacts of the COVID-19 pandemic,”

Detailing strategic developments, C&C said: “The strength of our last mile distribution continues to be reflected through new exclusive distribution agreements in fiscal 2021, including: Budweiser in Ireland; Tito’s Handmade Vodka in the United Kingdom, the best-selling brand of spirits in the United States (xii); and Innis & Gunn, Scotland’s # 1 craft beer (xiii), in the IFT (“independent free trade”) across the commercial market in the UK and Ireland.

“As part of the Innis & Gunn deal, C&C was awarded a long-term production contract for our Wellpark brewery and received an 8% stake as well as a long-term incentive program that will put a number actions available to the Group on the basis of performance objectives.

“Optimization of distribution networks on trade in Great Britain, Matthew Clark and Bibendum to increase continued efficiency and improve future margins.

“The pandemic has accelerated the adoption of technology and the Group has responded by continuing to develop our e-commerce platforms, by creating new features to further improve the journey for our customers.

“Non-strategic asset disposal program underway, including the Tipperary Water Cooler activity in October 2020 for an initial consideration of 7.4 million euros and the Vermont Hard Cider Company in April 2021 for a total consideration of 20 millions of dollars.”

Explaining in detail the current business environment, C&C said: “With the reopening of restricted outdoor and indoor hospitality in the UK, C&C has been able to respond quickly to rapidly changing demand with redesigned outlets. for the week ending May 16, 2021 at 65%. the same week in 2019. In addition, Irish Hospitality is expected to reopen from early June 2021.

“The Ggroup has completed the consolidation of the on-trade distribution network, moving all of our English distribution in-house. In addition, a new 50,000 square foot Edinburgh depot was opened in May 2021 and resulted in the subsequent closure of 4 depots in the existing Scottish network.

“The group communicated on April 19, 2021 an IT security incident that was isolated within our activities Matthew Clark and Bibendum. The incident underscored the need to continue focusing on information security and the group began a detailed review of its information security and cyber preparedness policies and processes. “

C&C Group CEO David Forde said: “FY2021 presented an extraordinary set of circumstances that challenged our company and our industry at every level. With around 80% of C&C net sales before COVID-19 coming from the hospitality sector, the pandemic has had an unprecedented impact on the Group. Thanks to the swift and decisive action of our team and our resilient business model, we have succeeded in meeting these challenges to date. We have implemented responses to short-term challenges to maximize liquidity, support clients, reduce costs and meet the off-market demand of the immediate change in consumption dynamics. Our top priority remains the protection of all our stakeholders. Their health and well-being are of paramount importance to the success of C&C. As the hospitality industry recovers from COVID-19, we will continue to be flexible in our approach and work with our customers who will face challenges as the business reopens and support them through the collaboration with our suppliers and partners.

Our business model has proven successful in fiscal 2021 as, during times of easing trade restrictions, we have reverted to profit and cash generation. The strength of the C&C brand has been demonstrated by the increase in the share of our core non-commerce brands, reflecting their special relationship with the consumers they serve. We will build on this as the hospitality sector reopens, targeting growth in the share of cider and increasing our share in premium beer which we continue to see as a significant market opportunity. The development and evolution of our brand portfolio will remain essential for growth and we will strengthen our broader portfolio with new branches or actions for growth brands. We will continue to optimize the strength of our system through cost rationalization and infrastructure consolidation, in addition to accelerating technology adoption and efficiency gains. We believe that the strength of our brand and our system will allow us to increase our market share, which will be secured by committed and inspired colleagues committed to our sustainability agenda.

We are confident in our business model and our growth strategy, the Group continues to face uncertainty with the continued impact of COVID-19 in the hospitality sector. Today we also announced a rights offering to generate gross proceeds of approximately £ 151million, which will strengthen the balance sheet and ensure C&C is better positioned to achieve sustained growth and pursue its strategy as the hospitality sector is emerging from the pandemic.

We look to fiscal 2022 with optimism and C&C continues to play a vital role in the UK and Irish beverage market with our brand and distribution assets valued by consumers, customers and brand owners. We are confident that C&C will emerge from the pandemic stronger, more streamlined and ready to deliver on our ambition to be the leading brand-driven beverage distributor in our key markets, which will ensure long-term value for our shareholders.

© 2021 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click Subscribe to subscribe to the Hospitality Ireland printed edition.

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