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Wed 28th Oct 2015 - C&C Group reviews acquisition opportunities as revenues slip
C&C Group reviews acquisition opportunities as revenues slip: Drinks producer C&C Group has reported it is reviewing acquisition opportunities a the brewing landscape evolves – revenues down by 2.6% to €58.6m in the six months to 31 August. Operating profit slipped 9.5% to €62.6m. Chief executive Stephen Glancey said: “Our performance in the first half reflects difficult trading conditions in our core markets of Ireland and Scotland. Many of the factors contributing to this are one-off or transitional, including poor weather; the transition to a brand led wholesale model; and, legislative change in Scotland. In aggregate, the headwinds will adversely impact profitability by €10 million in the financial year. Positively, the reception to our new brands such as Heverlee and Menebrea, access to the Drygate range and the launch of our new craft cider, Dowds Lane Big Vat cider to complement our Five Lamps craft beer in Ireland has been good. In C&C Brands, earnings showed modest growth in the first half in line with our stated objective to stabilise performance. The business successfully executed a sizeable cost reduction plan, providing the capability for a stronger share performance from Magners Original. This provides a better platform for brand investment in FY ‘17 and a continuation of the recovery. In the US, we are driving changes to improve profitability in FY ‘17 and we are exploring new ways of strengthening market access. Performance in our Export business was excellent, with 31% earnings growth fuelled by Magners, Tennent’s and Shepton brands. Our well invested domestic asset base enables the Group to capitalise on these volume opportunities with minimal incremental cost. We see the cider category continuing to accelerate growth internationally through increased penetration and new market development. Asia Pacific, Europe and Africa all performed well. Margins are attractive, even at high levels of marketing investment. We have put in place new distribution arrangements for Poland, South Korea and Nigeria with further countries to follow in the second half. We have generated excellent free cash in the first half and expect full year cash conversion of c.70% of Ebitda. The Group’s balance sheet is strong, and as highlighted in July, provides the Board with the flexibility to invest in the business as well as return capital to shareholders. We are intending to re-initiate share buy backs with a view to returning up to €100 million to shareholders by our AGM in July 2016. Over the last six months there has been a lot of M&A activity in our sector with valuations reflecting both availability of liquidity and asset scarcity. We believe that the landscape will continue to evolve in the next twelve months. We have and will continue to review acquisition opportunities to optimise value for shareholders but only if they deliver superior and sustainable long term returns which are in keeping with our return parameters. Looking ahead, we expect improved operational performance in Ireland and Scotland as we move through the second half and into FY’17 underpinned by ongoing cost saving initiatives, sustained investment behind our brands and increased emphasis on niche and premium. We are assuming that market conditions will continue to be testing particularly in our core markets in the coming months but we are confident that we are taking the right actions to build durable, long-term value for all shareholders and this is reflected in a 5.1% increase in our interim dividend.”

SABMiller and AB InBev request deadline extension: SABMiller and AB InBev has requested an extension to their takeover talks deadline. The board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of £44.00 per SABMiller share to SABMiller shareholders. A stock market announcement by SABMiller this morning added: “AB InBev has now completed its confirmatory due diligence review of SABMiller and reconfirmed the financial and other terms of the possible offer. AB InBev has also confirmed that facilities which will allow AB InBev to provide certain funds in support of the cash components of the possible offer have been negotiated and can be executed at short notice. In order to allow SABMiller and AB InBev to continue their discussions with respect to other aspects of the transaction, the Board of SABMiller has requested the Panel on Takeovers and Mergers to extend the relevant “put up or shut up” deadline until 5.00pm on 4 November 2015.”

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