C&C Group plc (CCR) Earnings Call Transcript & Summary

Welcome to the Annual General Meeting for C&C Group plc. Please be aware that this meeting is being recorded. [Operator Instructions] I will now hand you over to Stewart Gilliland. Please proceed.

Good morning, ladies and gentlemen. I am Stewart Gilliland, Chair of the Board, and thank you for listening to the 2021 Annual General Meeting of C&C Group plc, which is taking place under constrained circumstances due to COVID-19. At Davy's office in Dublin are my fellow directors, David Forde, our Chief Executive; Patrick McMahon, our Chief Financial Officer; Vincent Crowley, our [Audio Gap] and Chair of our Audit Committee. As a consequence of the COVID-19 emergency measures introduced by the Irish government, we have asked the shareholders to refrain from attending the AGM this year. I myself, I'm also unable to attend the meeting being held in Dublin. Instead, I, together with Andrea Pozzi, our Chief Operating Officer; and Mark Chilton, our Company Secretary and Group General Counsel are connecting from the offices of Clifford Chance in London. Therefore, when it comes to formal business piece of the meeting, Vincent will act Chair of this meeting in accordance with the Articles of Association of the company. We are joined on the video and conference call facilities by other directors and many of you, our shareholders. Let me start by saying that we enjoy the opportunity the AGM provides each year to meet and communicate with you, our shareholders. But it's still not possible to have a meeting in the ordinary way. This year, we have asked that shareholders exercise their rights by voting in advance through the appointment of proxies. And we've also invited shareholders to follow the proceedings via the videocast or conference call facility. Shareholders have been given the opportunity to submit questions to the Board in advance of the meeting, and the shareholders joining today via the video webcast or conference call can ask questions at the end of the meeting. Let me then outline the question-and-answer procedure to be used. Shareholders, including any proxy or corporate representatives, are invited to submit written questions via the video webcast at any point, and those questions will be addressed by me at the end of the meeting. [Operator Instructions] Questions will be relayed to me by a moderator, and I will address those in a later portion of the meeting. Only shareholders, including proxies and/or corporate representatives, can use the question-and-answer functionality. The question-and-answer function on the video webcast facility is now open for this general annual meeting. In addition to this written Q&A facility, shareholders also have the opportunity to ask questions via the conference call facility at the end of the meeting. Instructions for the use of the conference call facility will be given by the conference call facilitator later in the meeting. Before we start, I'd also like to mention some recent changes to the Board. Upon the appointment of David Forde as Group CEO in November last year, I reverted to my role of non-exec chair. Patrick McMahon was appointed as Group CFO at the conclusion of our 2020 AGM in July last year. The company was also pleased to recently announce on the 27th of April the appointment of Vineet Bhalla as an independent non-exec director. I would now like to introduce David Forde, our Group CEO, at his first AGM. He's going to read out the trading update that was released to the market at 7 a.m. this morning and provide a brief review of the company's performance during the last year.

Thank you, Stewart, and good morning, ladies and gentlemen. I'm delighted this morning to be addressing you as the new CEO of C&C. Over my past 31 years in the industry, I have competed hard against this company but have always admired it from the outside. Upon joining C&C, I must say I'd be most impressed by the people and by our team and the remarkable resilience and agility that they have shown in what has no doubt been one of the most difficult years in C&C's history and, indeed, for our customers and broader society. Our teams, through this difficult year, have demonstrated their flexibility and adaptability to reengineer the company and to work with our customers to continue to try and grow their business. Regarding our business, I remain convinced by the business model. I am reassured that we have fantastic brands, and we have a last mile distribution system in the U.K. and Ireland that is simply unrivaled. Regarding trading, while still in the early stage of the reopening in our core markets, we have been encouraged by the way in which trade has recovered in the U.K. since the gradual reopening from April 2021 and in Ireland from the 7th of June 2021 as outdoor hospitality reopened. However, restrictions in both markets remain with the timing and nature of further easing still uncertain. The full reopening of hospitality in the U.K. was recently delayed by 4 weeks and is now anticipated over July and August 2021, whilst the reopening of indoor hospitality in Ireland has also recently delayed with the revised date yet to be announced. In the week ending Sunday, the 27th of June 2021, C&C is pleased to have delivered to 82% of the outlets in the comparative week in 2019. Given social distancing and indoor restrictions remain in place, volume throughput is adversely impacted through the customers that are currently operating. Nevertheless, we are encouraged by trading in recent weeks with good weather aiding outdoor trading over the period. Following the progressive easing of restrictions since April and the partial recovery in the on-trade, C&C recorded a modest trading profit in May, with this further improving in June. And finally, what I would like to say is having now successfully had our capital raise, I feel that the balance sheet and the position of the company is further strengthened and we remain in a strong position to continue to grow the C&C business, both in the U.K. and in Ireland into the future as a more normalized trading environment returns. Thank you, and I'd now like to hand it back to Stewart.

Thank you, David. Now to proceed with the formal business of the meeting. Let me hand over to Vincent Crowley, our Senior Independent Non-Exec Director, who will act as Chair of the meeting.

Good morning, ladies and gentlemen. I am Vincent Crowley, and welcome to the 2021 Annual General Meeting. A quorum is present, and I declare the meeting open. I would now like to commence the formal proceedings. Before we start, let me outline the voting procedure that we will follow today. This year, given the restrictions on shareholder attendance at the meeting and in accordance with the Articles of Association of the company, voting will be done by way of a poll, a written vote on each of the resolutions put to the meeting. We have encouraged shareholders to vote by proxy. Taking the vote by poll ensures that the votes of those shareholders not present at the AGM who have appointed a proxy are counted on the resolutions and in proportion to the number of shares they hold. We have appointed Link, the company's registrars, to act as scrutineers. Voting will take place after any questions have been addressed. For convenience, I will direct that the poll on all of the resolutions will be held at the end of this Annual General Meeting. I propose, with your consent, to take the notice of the meeting as read. If there are any objections, please press star 1 on your keypad now if you are on the conference call facility or send a message via the video webcast message box. Are there any objections?

No objections from the conference call.

No objections from the webcast.

Okay. Thank you. Moving on then to the resolutions. Resolution number 1, which is the adoption of the financial statements and the directors' report. We will now proceed to vote on the resolutions, which I will formally propose to the meeting. The full text of each of the resolutions is set out in the notice of the meeting, a copy of which you will have all received. I would now like to propose that the financial statements for the year ended 28th February 2021 and the reports of the directors and the auditors thereon be and are hereby received by the meeting. Poll on this resolution will be held at the end of the AGM. Resolutions number 2a to 2k, the reelection and reelection of retiring directors. I turn now to the election and reelection of directors. There are 11 resolutions in the notice of the meeting dealing on the election and the reelection of directors. In line with the provision of the U.K. Corporate Governance Code, C&C Group has adopted a policy of annual reelection for all our directors. Consequently, all of the continuing directors will offer themselves for reelection at this AGM. The polls on these resolutions will be held at the end of the meeting as before. Resolution 2a. I propose that David Forde, being a newly appointed director, be and is hereby elected as director of the company. Resolution 2b. I propose that Patrick McMahon, being a newly appointed director, be and is hereby elected a director of the company. Resolution 2c. I propose that Vineet Bhalla, being a newly appointed director, be and is hereby elected a director of the company. Resolution 2d. I propose that Jill Caseberry, being a retiring director, be and is hereby elected a director of the company. Resolution 2e. I propose that Jim Thompson, being a retiring director, be and is hereby elected a director of the company. Resolution 2f. I would now ask Emer Finnan to propose the next of these resolutions, which relates to my own reelection.

Thank you, Vincent. I propose that Vincent Crowley, being a retiring director, be and is hereby reelected a director of the company.

Thank you, Emer. And resolution 2g. I propose that Emer Finnan, being a retiring director, be and is hereby reelected a director of the company. Resolution 2h. I propose that Stewart Gilliland, being a retiring director, be and is hereby reelected a director of the company. Resolution 2i. I propose that Helen Pitcher, being a retiring director, be and is hereby elected a director of the company. Resolution 2j. I propose that Andrea Pozzi, being a retiring director, be and is hereby reelected a director of the company. Resolution 2k. I propose that Jim Thompson, being a retiring director, be and is hereby elected a director of the company. Resolution number 3, the remuneration of the auditors. Under resolution 3, I propose that the remuneration of our auditors, EY, be fixed by the directors in respect of the year ended 28th February 2022. Poll on this resolution will be held at the end of the meeting. Resolutions 4a and 4b, consideration of the report of the Remuneration Committee. Resolution 4a. C&C is not required to submit our remuneration report to a binding vote by shareholders. However, in line with company's commitments to good corporate governance, we are seeking shareholder approval on an advisory rather than a binding basis. Accordingly, resolution 4a is to receive and consider the report of the Remuneration Committee other than the director's remuneration policy report as set out in the annual report. In the absence of Helen Pitcher, I propose Resolution 4 be received and considered by the meeting. The poll on this resolution will be held at the end of the meeting. Resolution 4b. Resolution 4b is to receive and consider the directors' remuneration policy as set out in the annual report. We last submitted the director's remuneration policy to shareholders for approval at the Annual General Meeting the company held in 2018. In accordance with the commitment given to shareholders at that time, and as we are proposing some changes to the directors' remuneration policy as it was then approved by the shareholders, we are seeking a further advisory vote from shareholders in relation to the revised policy. In line with the company's commitment to good corporate governance, the Board will take due notice of shareholder feedback on the revised policy, and it is the Board's intention to operate in line with the approved policy. In the absence of Helen Pitcher, I propose resolution 4B that the directors' remuneration policy be received and considered by the meeting. Again, the poll on this resolution will be held at the end of the meeting. Resolution number 5, authorizing the directors to allot the authorized share capital. The purpose of this resolution is to authorize the directors to issue the authorized of unissued shares of the company on a limited basis. I now propose the resolution. The full text of the resolution is set out as Item 5 in the notice of the meeting. Again, the poll on this resolution will be held at the end of the meeting. Resolution number 6, preemption rights. The purpose of Resolution 6 is to renew until the next AGM the directors' power to allot shares for cash, otherwise than in accordance with statutory preemption rights, up to a limit of 5% of the nominal value of the issued share capital at the date of the notice. I now propose this resolution as a special resolution. Full text of the resolution is set out as Item 6 in the notice of the meeting. Poll on this resolution will be held at the end of the meeting. Resolution number 7, preemption rights in respect of an additional 5% of the company's issued share capital. The purpose of resolution 7 is to authorize the directors to allot further shares for cash, otherwise than in accordance with statutory preemption rights for the purpose of an acquisition or specified capital investment, up to a limit of an additional 5% of the nominal value of the issued share capital at the date of the notice. I now propose this resolution as a special resolution. Full text of the resolution is set out as Item 7 in the notice of the meeting. The poll on this resolution will be held at the end of the meeting. Resolution number 8, authorizing the purchase of own shares. Resolution 8 authorizes the company to make market purchases of its own shares, representing up to 10% of the aggregate nominal value of the issued share capital. I now propose this resolution as a special resolution. The full text of the resolution is set out as Item 8 in the notice of the meeting. The poll on this resolution will be held at the end of this meeting. Resolution number 9, authorizing the reissue of owned shares. Resolution 9 authorizes the company to reissue shares held as treasury shares within a range of prices. I now propose this resolution as a special resolution. The full text of the resolution is set out as Item 9 in the notice of the meeting. The poll on this resolution will be held at the end of the meeting. Resolution number 10, extension of C&C profit sharing scheme. The entire resource pursuant to Resolution 10 will allow the directors to continue to operate the company's profit sharing scheme for a further 10-year period. Accordingly, I now propose as an ordinary resolution the update of rules of C&C profit sharing scheme be approved. The full text of the resolution is set out as Item 10 in the notice of the meeting. Poll on this resolution will be held at the end of the meeting. Resolution number 11, the C&C 2015 long-term incentive plan. The final item of special business concerns the C&C 2015 long-term incentive plan, the LTIP. In November 2020, and in line with both the company's existing and proposed directors' remuneration policies, the company granted David Forde 2 awards to replace remuneration forfeited upon his departure of his former employer, the buyout awards. Resolution 11 seeks the parity to amend the rules of the LTIP by incorporation of the awards terms pursuant to which the buyout awards were granted to David on the 3rd of November 2020. I now propose this resolution as an ordinary resolution. Full text of the resolution is set out as Item 11 in the notice of the meeting. Poll on this resolution will be held at the end of this meeting.

Thank you, Vincent. Now we'll move on to the Q&A section, facilitated by written questions through the video webcast platform and any questions submitted through the conference call facility. I will take questions when they've been submitted via the video webcast first. This will either be answered by myself or redirected to one of my colleagues on the board.

Thank you. There is only one question on the video webcast platform so far. It's from [ Kieran McMahon ] who asks, regarding the company's IT landscape, there was a plan to consolidate the 4 different legacies' ERP systems into a single system to reduce TCO and make the company more agile. How is this coming along?

Okay. I'll ask David to comment in a little bit more detail on this. But I think the first thing to say is really the last year has shown how important the whole IT platform is in terms of internal communications, the growth for Zoom and Teams as a vehicle for communication. But equally, increasingly, more and more of our customers are ordering and communicating with us on an online platform. So the whole IT landscape is extremely important. I think that's increased over the last 12 months. David, would you like to add anything to that?

I would just say that these plans are trained, and we have migrated some of our operations on to all we would consider to be the most up-to-date solution. There are further plans to integrate and streamline our back office, particularly in the U.K., which we will be executing in the following weeks, months ahead. So again, I think that, that is ongoing. The work has started and will continue in that direction to try and build a stronger C&C in future that, as Stewart alludes to, will facilitate even more streamlined interaction with customers and potentially consumers moving forward.

Okay. Thank you, David. [ Luisa ], any other questions?

No, there are no further questions on the video webcast.

Okay. Thank you. I would now like to invite questions from shareholders on the conference call. Please direct your questions to me, and I will either answer them or redirect them to one of my colleagues on the Board. If you do have a question, I'd ask that you state your name and if you are a proxy, the name of the shareholder that you represent to the call operator. If you have more than one question, please state all your questions. Operator, please proceed in explaining how shareholders can ask questions.

[Operator Instructions] There are no questions over the conference call at this time.

Thank you. As there are no further questions, I'll now turn back to Vincent for the voting procedures.

Thank you, Stewart. Before the voting procedure is commenced, it is worth highlighting that the proxy votes cast in advance of the meeting are more than 85% in favor of each resolution. Therefore, it is expected that each resolution will be passed. I now direct that a poll be taken on each of the resolutions which has been put to the meeting. The procedure for conducting a poll will be as follows: votes may be given by registered holders of ordinary shares present here in person or by proxy and entitled to vote. Every such holder has 1 vote for every ordinary share held. I will also vote on behalf of those holders who have sent a proxy instruction to the company appointing the Chair of the meeting to vote on their behalf. After the poll has been conducted, the votes cast will be verified under the scrutiny of Link by reference to the register of members and the list of authenticated proxies received by the company. Link will report the totals of the votes cast for and against the resolutions and the number of votes withheld. The results of the poll will be announced on the company's website following the meeting. Ladies and gentlemen, subject to the poll results explained earlier, that concludes the business of this meeting. As there is no other business, I shall now bring the formal business of the AGM to a close. I would like to thank you for joining us today. Stay safe, and the Board hopes to meet you in person at the AGM next year.

This concludes today's meeting. Thank you for your participation. You may now disconnect.