Annual Report 2014

NOTES

Forming part of the financial statements

26 GUARANTEES AND CONTINGENCIES
27. RELATED PARTY TRANSACTIONS
28. SUBSIDIARY UNDERTAKINGS
29. Post balance sheet events
30. APPROVAL OF 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 2014 amounted to €309.6m (2013: €246.6m).

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.

During the 2014 financial year, C&C Group plc entered into a guarantee in favour of Bank of Scotland plc whereby it guaranteed repayment of a 5-year term loan facility of up to €1,000,000 made by Bank of Scotland plc to a customer of a subsidiary of C&C Group plc, together with interest and other charges due under the facility and account charges.

Enterprise Ireland funding of €1.0m (2014: €0.1m) 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 recipient subsidiary of the Group 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 date of the last receipt of funding which in the case of Enterprise Ireland funding is March 2018 and in the case of the Scottish Enterprise Board funding is July 2016.

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 and is due to expire in February 2016.

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 on 29 October 2011. The time limit for any claim relating to tax is 5 years from the transaction date and is due to expire on 29 June 2015.

Under the terms of the Sale and Purchase Agreement with respect to disposal of the Group’s Northern Ireland wholesaling business in the year ended 29 February 2012, 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 expired on 3 February 2013, with the exception of any claim relating to tax where the time limit is 7 years from the transaction date and is due to expire on 3 August 2018.

Pursuant to the provisions of Section 17 of the Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of certain of its subsidiary undertakings incorporated in the Republic of Ireland for the financial year to 28 February 2014 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 and transactions with 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. 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 22 March 2013, the Group acquired 50% of the equity share capital of Wallaces Express Limited, a wholesaler of beverages in Scotland, for a consideration of £10.0m (€11.8m at date of payment). Costs of €0.2m incurred in relation to this transaction were capitalised as part of the cost of the investment.

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.

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.

Loans extended by the Group to joint ventures and associates are considered trading in nature and are included within advances to customers in Trade & other receivables (note 16).

Details of transactions with equity accounted investees during the year and related outstanding balances at the year end are as follows:

 

Net revenue

Balance outstanding

 

2014

2013

2014

2013

 

€m

€m

€m

€m

 

Sale of Goods to Equity accounted investees:

Maclay Group plc

1.4

0.8

0.2

0.1

Thistle Pub Company Limited

0.2

-

-

-

Wallaces Express Limited

18.0

-

2.5

-

 

19.6

0.8

2.7

0.1

 

 

Balance outstanding

 

2014

2013

 

€m

€m

Loans to Equity accounted investees:

Thistle Pub Company Limited

1.3

-

 

Purchases

Balance outstanding

 

2014

2013

2014

2013

 

€m

€m

€m

€m

 

Purchase of Goods from Equity accounted investees:

Wallaces Express Limited

6.6

-

1.3

-

All outstanding balances with equity accounted investees, which arose from arm’s length transactions, are to be settled in cash within one month of the reporting date. The loan to Thistle Pub Company Limited is repayable by equal quarterly repayments over a period of fifteen years at an interest rate of 4.5% over the Bank of England base rate or notwithstanding the other provisions of the agreement on written demand by the Group.

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 equity share award schemes (note 5) and death in service insurance programme and in the case of UK resident executive Directors are covered under the Group’s permanent health insurance programme. The Group also provides private medical insurance for UK resident executive Directors. 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:-

 

2014

2013

 

Number

Number

 

Number of individuals

9

9

 

 

€m

Restated

€m

 

Salaries and other short term employee benefits

2.5

2.2

Post employment benefits

0.4

0.3

Equity settled share-based payments

0.3

1.0

Dividend income with respect of JSOP Interests (note 24)

0.4

0.4

Total

3.6

3.9

Joris Brams was appointed to the Board on 23 October 2012 and is included in the prior year numbers from the date of his appointment.

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

Two of the Group’s executive Directors were awarded Interests under the Group’s Joint Share Ownership Plan (JSOP). When an award is granted to an executive under the Group’s JSOP, 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 2014 and 28 February 2013 are as follows:

 

28 February

28 February

 

2014

2013

 

€’000

€’000

 

Stephen Glancey

111

111

Kenny Neison

83

83

Total

194

194

The loans fall due for repayment prior to the sale 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:

 

2014

2013

 

€m

€m

 

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

(4.0)

(3.0)

Equity settled share-based payments for employees of subsidiary undertakings

0.8

3.0

Funding of cash requirements of subsidiary undertakings

-

(5.3)

Repayment of cash funding and other cash movements with subsidiary undertakings

27.7

71.3

28. SUBSIDIARY UNDERTAKINGS

Trading subsidiaries

Notes

Nature of business

Class of shares held as at 28 February 2014

(100% unless stated)

Incorporated and registered in Republic of Ireland

 

Bavaria City Racing Limited

(a)

Promotion

Ordinary & A-E Non-Voting

Bulmers Limited

(b)(m)

Cider

Ordinary

C&C Financing Limited

(c) (m) (n)

Financing company

Ordinary

C&C Group International Holdings Limited

(b) (m) (n)

Holding company

Ordinary & Convertible

C&C Group Irish Holdings Limited

(b) (m) (n)

Holding company

Ordinary

C&C Group Sterling Holdings Limited

(c) (m)

Holding company

Ordinary

C&C (Holdings) Limited

(b) (m)

Holding company

Ordinary

C&C Management Services Limited

(b) (m)

Provision of management services

6% Cumulative Preference, 5% Second Non-Cumulative Preference & Ordinary Stock

Cantrell & Cochrane Limited

(b) (m)

Holding company

Ordinary

Crystal Springs Water Company Limited

(a)

Property holding company

Ordinary

Gleeson Logistic Services Limited

(a)

Logistics

Ordinary

Gleeson Wines & Spirits Limited

(a)

Wines & spirits

Ordinary

Greensleeves Confectionery Limited

(a)

Soft drinks

Ordinary, 12% Cumulative Convertible Redeemable Preference and 3% Cumulative Redeemable Convertible Preference

Latin American Holdings Limited

(c)

Holding Company

Ordinary

M&J Gleeson & Co

(a)

Wholesale of drinks

Ordinary

M.& J. Gleeson (Investments) Limited

(a)

Holding company

Ordinary

M. and J. Gleeson (Manufacturing) Company

(a)

Soft drinks

Ordinary

M and J Gleeson (Manufacturing) Company Holdings Limited

(a)

Holding Company

Ordinary & Non-Voting Ordinary

M & J Gleeson Property Developments Limited

(a)

Property holding company

Ordinary

Tennent’s Beer Limited

(b) (m)

Beer

Ordinary

The Annerville Financing Company

(b) (m)

Financing company

Ordinary

The Five Lamps Dublin Beer Company Limited

(c) (r)

Beer

Ordinary (90%)

Tipperary Natural Mineral Water Company

(d)

Water

Ordinary

Tipperary Natural Mineral Water (Sales)

(a)

Water

Ordinary

Tipperary Natural Mineral Water (Sales) Holdings Limited

(a)

Holding Company

Ordinary

Wm. Magner Limited

(b) (m)

Cider

Ordinary

Wm. Magner (Trading) Limited

(b) (m)

Financing company

Ordinary

 

Incorporated and registered in Northern Ireland

 

C&C Holdings (NI) Limited

(e)

Holding company

Ordinary

Gleeson N.I. Limited

(e)

Wholesale of drinks

Ordinary

Tennent’s NI Limited

(e)

Cider and beer

Ordinary & 3.25% Cumulative Preference

 

Incorporated and registered in England and Wales

 

C&C Management Services (UK) Limited

(f)

Provision of management services

Ordinary

Magners GB Limited

(f)

Cider and beer

Ordinary

 

Incorporated and registered in Scotland

Tennent Caledonian Breweries UK Limited

(g)

Beer and cider

Ordinary

Wellpark Financing Limited

(g)

Financing company

Ordinary

 

Incorporated and registered in Luxembourg

 

C&C IP Sàrl

(h)

Licensing activity

Class A to J Units

C&C IP (No. 2) Sàrl

(h)

Licensing activity

Class A to J Units

C&C Luxembourg Sàrl

(h)

Holding and financing company

Class A to J Units

 

Incorporated and registered Portugal

 

Biofun - Produtos Biológicos Do Fundão Limitada

(i)

Ingredients

Ordinary

 

Incorporated and registered in Delaware, USA

 

Green Mountain Beverages Management Corporation, Inc

(j)

Licensing activity

Common Stock

Vermont Hard Cider Company Holdings, Inc.

(j)

Holding company

Common Stock

Vermont Hard Cider Company, LLC

(j)

Cider

Membership Units

Wm. Magner, Inc.

(j)

Cider

Common Stock

Non-trading subsidiaries

Incorporated and registered in Republic of Ireland

Bestormel Limited

(b) (m) (o)

Non-trading

Ordinary

Bouchel Limited

(b) (m) (o)

Non-trading

Ordinary

C&C Agencies Limited

(b) (m)

Non-trading

Ordinary

C&C Brands Limited

(b) (m)

Non-trading

Ordinary

C&C Group Pension Trust Limited

(b) (m)

Non-trading

Ordinary

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

(b) (m)

Non-trading

Ordinary

C&C Profit Sharing Trustee Limited

(b) (m)

Non-trading

Ordinary

Ciscan Net Limited

(b) (m)

Non-trading

Ordinary & A Ordinary

Cooney & Co.

(a)

Non-trading

Ordinary

Cravenby Limited

(b) (m)

Non-trading

Ordinary

Dowd’s Lane Brewing Company Limited

(b) (m)

Non-trading

Ordinary

Edward and John Burke (1968) Limited

(b) (m)

Non-trading

Ordinary & A Ordinary

Findlater (Wine Merchants) Limited

(b) (m)

Non-trading

Ordinary & A Ordinary

Fruit of the Vine Limited

(b) (m)

Non-trading

Ordinary

Gleeson Management Services

(a)

Non-trading

Ordinary

J.L. O’Brien Clonmel

(a)

Non-trading

Ordinary

M and J Gleeson and Company Holdings Limited

(a)

Non-trading

Ordinary

M&J Gleeson Nominees Limited

(a)

Non-trading

Ordinary & Preference

Magners Irish Cider Limited

(b) (m)

Non-trading

Ordinary

Sceptis Limited

(b) (m)

Non-trading

Ordinary

Showerings (Ireland) Limited

(b) (m)

Non-trading

Ordinary

Thwaites Limited

(b) (m)

Non-trading

A & B Ordinary

Tipperary Natural Mineral Water Company Holdings Limited

(a)

Non-trading

Ordinary

Vandamin Limited

(b) (m)

Non-trading

A & B Ordinary

Incorporated and registered in Northern Ireland

C&C 2011 (NI) Limited

(e)

Non-trading

Ordinary

C&C Profit Sharing Trustee (NI) Limited

(e)

Non-trading

Ordinary

 

Incorporated and registered in England and Wales

Gaymer Cider Company Limited

(f)

Non-trading

Ordinary

Incorporated and registered in Germany

Wm. Magner GmbH

(k) (p)

Non-trading

Ordinary

 

Incorporated and registered in Singapore

 

C&C International (Asia) Pte. Ltd.

(I)

Non-trading

Ordinary

Notes

(a) - (I)

The address of the registered office of each of the above companies is as follows:

(a) Greenlawn, Coolatagle, Borrisoleigh, Co Tipperary, Ireland.

(b) Annerville, Clonmel, Co Tipperary, Ireland.

(c) Block 71, The Plaza, Parkwest Business Park, Dublin 12, Ireland.

(d) Pallas Street, Borrisoleigh, Co Tipperary, Ireland.

(e) Hawthorn House, 6 Wildflower Way, Belfast, Antrim BT12 6TA, Northern Ireland.

(f) Kilver Street, Shepton Mallet, Somerset, BA4, 5ND, England.

(g) Wellpark Brewery, 161 Duke St, Glasgow G31 1JD, Scotland.

(h) L-2132 Luxembourg, 18 Avenue Marie-Therese, Luxembourg.

(i) Quinta Ferreira De Baxio, Castelo Branco, Fundão Parish, 6230 610 Salgueiro, Portugal.

(j) 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, USA.

(k) Hans-Stießberger-Strae 2b, 885540 Haar, Germany.

(l) 143, Cecil Street, #03-01, GB Building, Singapore – 069542.

(m) Companies covered by Section 17 guarantees (note 26).

(n) Immediate subsidiary of C&C Group plc.

(o) Bestormel Limited and Bouchel Limited were both dissolved post year end.

(p) Wm Magner GmbH is in liquidation.

(q) Reihill McKeown Limited and C&C Logistics NI Limited were voluntarily struck off the Register of Companies and dissolved on 30 August 2013.

(r) Post year end C&C Group’s ownership reduced to 87.5% as outlined in note 11.

Equity accounted investees

Company Name

Nature of business

Class of shares and % held

Class of shares and % held

Beck & Scott (Services) Limited

(a)

Wholesale of drinks

Ordinary, 50%

B Ordinary, 50%

Maclay Group plc

(b)

Operator of managed public houses

B Ordinary, 25%

B Ordinary, 50%

The Irish Brewing Company Limited

(c)

Non-trading

Ordinary, 45.61%

Thistle Pub Company Limited

(b)

Operator of public houses

B Ordinary, 50%

Ordinary, 45.61%

Wallaces Express Limited

(d)

Wholesale of drinks

B Ordinary, 50%

The address of the registered office of each of the above companies is as follows:

(a) Unit 1, Ravenhill Business Park, Ravenhill Road, Belfast, BT6 8AW Northern Ireland.

(b) Unit 2/4 The E-Centre, Cooperage Way Business Village, Alloa,FK10 3LP, Scotland.

(c) Greenlawn, Coolatagle, Borrisoleigh, Co. Tipperary, Ireland.

(d) Crompton Way, North Newmoor Industrial Estate, Irvine, Strathclyde, KA11 4HU, Scotland.

29. Post balance sheet events

Acquisition of remaining shares in Wallaces Express Limited

On 18 March 2014, the Group announced it acquired the remaining 50% equity share capital of Wallaces Express Limited, a wholesaler of beverages in Scotland. This purchase follows the acquisition of a 50% stake in the business in March 2013. The consideration for the acquisition of the remaining 50% was £10.0m (€12.0m euro equivalent at date of acquisition).

The assets and liabilities of Wallaces Express Limited, on 18 March 2014, date of acquisition were as follows:-

Wallaces

Book

 

value

 

€m

 

Property, plant & equipment

3.9

Brands & other intangible assets

0.3

Inventories

10.5

Trade & other receivables – current

9.4

Cash & cash equivalents

3.4

Trade & other payables

(10.7)

Corporation tax liability

(0.1)

 

Net identifiable assets and liabilities on date of acquisition

16.7

Total consideration paid to acquire remaining 50%

12.0

The preliminary assessment of the financial position of Wallaces as at 18 March 2014 indicates that no fair value adjustments are required.

30. APPROVAL OF FINANCIAL STATEMENTS

These financial statements were approved by the Directors on 20 May 2014.