CHAIRMAN’S STATEMENT

chairmans statement


I am pleased to report continuing progress against the targets set out in our three year strategic plan established in December 2010. Increased operating profits are part of that success but importantly we are also building our business for the longer term both domestically and internationally. The initiatives taken have strengthened our brands and expanded our horizons. Whilst driving the business forward and facing tough macro-economic conditions, this is the third financial year that the Group has delivered consistent earnings growth in line with our investors’ expectations.


There have been well recognised difficult economic conditions in our core markets of the Republic of Ireland and the U.K. Despite these challenges, the team have delivered a very creditable performance. This is due to strong brand performance from brands which have both a local heritage and international potential and careful management of our production and distribution resources. Developing co-operative relationships has also contributed to our success both internationally and in our local markets.

We are anticipating a continuing period of political and financial uncertainty within Europe. This will inevitably have economic and commercial consequences but we are confident that our financial and brand strength coupled with our increasing international exposure provides us with a solid foundation for progress.

Consolidating and developing our core domestic brands has been and will remain a key objective but it has always been recognised that our brands and expertise have international potential. We are building momentum across several markets. New commercial relationships have been forged in Canada and Australia. Our financial strength also allows us to take advantage of opportunities as they arise. The acquisition of Hornsby’s in the US was one opportunity we were delighted to grasp. The global potential of cider and our business is increasingly being recognised.

People

It has been a year of change. At the end of December, John Dunsmore stepped down from his role as Group Chief Executive Officer. I would like to thank John for the contribution he has made to the Group. Under his leadership since 2008, the executive team has delivered a substantial turnaround of the Group transforming it and creating a stable earnings record during a period of worldwide economic turbulence.

The Board decided that Stephen Glancey, the Group Chief Operating Officer and the Group’s designated successor, was the right person to succeed John as Group Chief Executive Officer to lead the next phase of our development. Stephen has played a vital role within the Group over the past three years, including the successful acquisition and integration of the Tennent’s and Gaymers businesses. He has laid the foundation for the international development of the Group’s cider brands. The Board also decided that Kenny Neison, the Group’s former Strategy Director, should become Group Chief Financial Officer. With their considerable knowledge of the business, such moves emphasise that the changing of the guard represented an evolution. It has been a smooth transition and one that ensured continuity in the Group’s momentum, strategy and direction.

The year also saw the departure of Liam FitzGerald, a non-executive director since the Group’s flotation in 2004. The Group thanks him for his meaningful contribution on all fronts, especially the commercial perspective he brought to the business.

Two new non-executive directors have recently joined the Board: Tony Smurfit and Stewart Gilliland. Tony has strong experience in global markets, managing international operations serving a worldwide customer base. Stewart brings his experience of the food and beverages sectors and, in particular, long alcohol drinks in international markets. Their international market expertise will be valuable to the C&C Board as we focus on the growth and development of our business worldwide. The breadth of commercial and geographical experience of the non-executive directors is an appropriate governance counterpoint to the executive team in the international development of the business.

With the growing importance of the international side of the business, the Group has brought in Joris Brams to drive our international strategy. Joris brings considerable expertise, with sector and production experience from around the world.

Governance & Responsibility

The Board and senior management team are committed to maintaining the highest standards of governance and ethical behaviour throughout the business.

A statement of our main Governance principles and practice is provided on pages 37 to 46.

We continue to work under the requirements of the UK Corporate Governance Code and the Irish Corporate Governance Annex.

The Board also works to ensure its own effectiveness, by undertaking a regular evaluation of the performance of the Board and its committees.

Corporate Responsibility

We take corporate responsibility seriously and our Corporate Responsibility statement on pages 24 to 29 sets out our work this year. Being a part of our community is a key to our commercial success, as it gives us insight to meet our customers’ needs in a responsive manner.

We encourage responsible drinking and our views on minimum pricing are documented in this report. We seek to combine the interests of the industry with those of society at large. We support our customers in meeting the challenge of duty and regulation. We communicate with Government and regulators emphasising our community of interest in a healthy industry, in all senses.

Dividends

Recognising the financial strength and cash generation of the business, we intend to pursue a progressive dividend policy. It is proposed to pay a final dividend of 4.5 cent per share, subject to shareholder approval. If approved, this will bring the Group’s full year dividend to 8.17 cent per share. A scrip dividend alternative will also be available.

At the AGM we are also seeking the usual authority for the Company to purchase its own shares. Any authority given to the Company to purchase its own shares will only be exercised if the Board considers it would be in the best interests of the shareholders generally.

Bonus & Rewards

Our management and staff have performed well under difficult economic conditions. We believe in rewards only for performance and our track record demonstrates this. I am therefore glad to report that bonuses are being awarded this year, based on the performance and results achieved.

Our purpose is to optimise shareholder value and we have therefore restructured our employee incentives this year to ensure that they are aligned with the interests of our shareholders, particularly through long term equity participation. Some of our share incentive schemes need to be modified to align more closely with the interests of our shareholders and our intention is therefore to propose modifications at the AGM to further achieve this objective. Further details are contained in the notice of AGM.

Conclusion

Twelve months ago we said: ‘We have to be and are beginning to be on the front foot’. This year we can state we have definitely taken strides in the right direction and have built momentum to drive our evolution through the strength of our business and brands.

In a difficult environment the Group’s business has changed, results have been delivered and our opportunities are greater. This has been achieved through our responsiveness and adaptability. The Group has a fundamental belief in the attractiveness of cider, a growing product in markets around the world. We do not expect, however, that macro-economic conditions in the coming twelve months will be benign, given the significant political instabilities which will affect wider economic prospects. We are, however, in both a financial and commercial sense, in a good position to meet these challenges and for the Group to progress in both the immediate and longer term.


Sir Brian Stewart
Chairman

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