McBride plc
('McBride' or the 'Group')
Strong first half performance underpinned by continued consumer shift to private label
Full year profit expectations raised
27 February 2024
McBride, the leading European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning/hygiene markets, announces its unaudited interim results for the six months ended 31 December 2023 (the 'period').
Improved profitability, underpinned by continued volume growth
· Ongoing consumer and retailer shift to high-quality private label products supported further growth across the Group
· Total volume growth of 6.4%, with private label volumes increasing by 10.1%, taking further market share in a rising private label market
· Encouraging volume progress in strategic focus areas of
· Strong operational delivery supporting higher volumes, together with the impact of prior year pricing actions and raw material input costs stability driving margin recovery
· Profitable performance across all five divisions
· Transformation programme on track to deliver target of
· Group formally committed to the Science Based Targets initiative (SBTi) in December 2023 as part of its wider sustainability agenda
Financial highlights
· Group revenue of
· Adjusted operating profit(2) of
· Adjusted profit before taxation(2) of
· Profit before taxation of
· Net debt(2) decreased to
· Negotiated termination of the 'upside sharing' mechanism announced on 25 October 2023
Optimistic outlook underpinned by strong market dynamics
· Demand levels in early months of 2024 in line with the first half; favourable trends for private label markets expected to continue throughout 2024
· New contract wins expected to start deliveries in the second half of 2024
· Inflationary pressures remain, especially relating to employment, general supplies, financing costs and energy; geopolitical tensions create further inflationary and supply chain risks
· Full year adjusted operating profit now expected to be 10-15% ahead of previous internal expectations
· Net debt/adjusted EBITDA(2) now expected to be below 2x by 30 June 2024
Chris Smith, Chief Executive Officer, commented:
"McBride has continued with its positive momentum in the first half of this financial year. It is pleasing to see all five divisions continuing to grow on a constant currency basis, supporting our customers with high-quality products to meet the consumer shift to private label. This strong performance is a result of the commitment across all the business teams to provide our customers with highest quality, best value products and the strongest innovation options in the sector.
Our focus on operational delivery will see our second half year deliver ahead of our plan with full year adjusted operating profit now expected to be 10-15% ahead of previous internal expectations.
As we progress our Transformation programme, with specific initiatives to enhance McBride's capabilities and tools for the future, we remain focused on performance delivery today. This focus, together with our continued drive to reduce debt levels, will ensure McBride is well positioned to achieve further progress in the near and medium term and we look to the future with confidence."
|
Half year to |
Half year to |
|
Constant |
|
31 Dec |
31 Dec |
Reported |
currency |
£m unless otherwise stated |
2023 |
2022 |
change |
change(1) |
Group revenue |
468.0 |
426.3 |
9.8% |
9.9% |
Adjusted operating profit/(loss)(2) |
30.5 |
(1.3) |
31.8 |
32.0 |
Operating profit/(loss) |
29.5 |
(2.6) |
32.1 |
|
Adjusted profit/(loss) before taxation(2) |
22.4 |
(7.9) |
30.3 |
|
Profit/(loss) before taxation |
17.4 |
(20.0) |
37.4 |
|
Adjusted diluted earnings/(loss) per share(3) |
9.1p |
(4.2)p |
13.3p |
|
Diluted earnings/(loss) per share |
7.0p |
(9.7)p |
16.7p |
|
Net debt |
145.7 |
169.4 |
(23.7) |
|
Adjusted return on capital employed(2) |
22.8% |
(5.5)% |
28.3ppts |
|
(1)Comparatives translated at six months to 31 December 2023 exchange rates.
(2)Refer to note 2 for definition.
(3)See note 6.
Analyst and investor presentation
A presentation for analysts and investors will be held at 10.00am today at the office of Instinctif Partners.
Capital Markets Day
McBride will be hosting a Capital Markets Day for analysts and investors at 11.00am on Wednesday 13 March 2024 at the office of Instinctif Partners. To register your interest, please contact McBride@instinctif.com.
McBride plc |
0161 203 7401 |
Chris Smith, Chief Executive Officer |
|
Mark Strickland, Chief Financial Officer |
|
|
|
Instinctif Partners |
0207 457 2020 |
Guy Vivian Lai |
|
This announcement contains forward-looking statements about financial and operational matters. These statements are based on the current views, expectations, assumptions and information of management, and are based on information available to the management as at the date of this announcement. Because they relate to future events and are subject to future circumstances, these forward-looking statements are subject to unknown risks, uncertainties and other factors which may not have been in contemplation as at the date of the announcement. As a result, actual financial results, operational performance and other future developments could differ materially from those envisaged by the forward-looking statements. Neither McBride plc nor its affiliates assume any obligations to update any forward-looking statements.
McBride plc gives no express or implied warranty, representation, assurance or undertaking as to the impartiality, accuracy, completeness, reasonableness or correctness of the information, opinions or statements expressed in the announcement or any other information (whether written or oral) supplied as part of it. Neither McBride plc, its affiliates nor its officers, employees or agents will accept any responsibility or liability of any kind for any damage or loss arising from any use of this announcement or its contents. All and any such responsibilities and liabilities are expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation, warranty, assurance or undertaking is given as to the achievement or reasonableness of any future projections, forward-looking statements about financial and operational matters, or management estimates contained in the announcement.
This announcement does not constitute an offer or invitation to underwrite, subscribe for, or otherwise acquire or dispose of any McBride plc shares or other securities, or of any of the businesses or assets described in the announcement, and the information contained herein cannot be relied upon as a guide to future performance.
Overall business performance
McBride delivered a much-improved performance for the first six months of the financial year, with all divisions profitable. At a Group level, revenue increased 9.8% to
The Group has built on the momentum in the second half of the last financial year with the current period benefitting from continued strong demand for McBride's high-quality private label products, as retailers look to support their customers as they continue to transition to better quality products to mitigate cost-of-living pressures. Private label share in the overall household cleaning products market in
Gross margin continued to recover as a result of pricing actions implemented in the last financial year, helping to offset the input cost inflation seen by the business in previous periods. During the period, raw material input costs remained relatively stable but inflationary pressures remain from employment, general supplies, energy and financing costs. The Group continues to monitor closely risks from global supply chain volatility arising from geopolitical tensions.
Service levels on customer deliveries have significantly improved year on year, following a series of targeted improvement areas, including supply route and carrier changes. Additionally, physical changes to the business' current warehouse network have been successfully completed and a review is in progress to ensure future alignment to strategic growth plans.
Reducing levels of debt is a key priority for the business and further progress was made in the period with net debt
McBride's Transformation agenda is progressing at pace, targeting
Outlook
The early part of the second half of the financial year has seen demand levels continue in line with trends seen in the first six months, and the Group expects to see the favourable trends for private label markets continue throughout 2024. In addition, a number of new contract wins are expected to commence during the next six months, adding further volumes. As a result the Group now expects full year adjusted operating profit to be ahead of previous internal expectations by 10-15%.
The rampant inflation seen in recent years is not expected to return at this stage, therefore the Group expects input costs to remain stable for the coming period. However, geopolitical tensions could present further inflationary and supply chain risks.
The Group now anticipates that net debt/adjusted EBITDA(1) will be below 2x by 30 June 2024.
(1)Refer to note 2 for definition.
Divisional performance review
|
Half year to |
Half year to |
|
Constant |
|
31 Dec |
31 Dec |
Reported |
currency |
|
2023 |
2022 |
change |
change |
Revenue |
£m |
£m |
% |
% |
Liquids |
266.4 |
237.7 |
12.1% |
11.8% |
Unit Dosing |
116.5 |
111.4 |
4.6% |
4.5% |
Powders |
47.2 |
42.7 |
10.5% |
10.5% |
Aerosols |
25.4 |
21.3 |
19.2% |
19.2% |
|
12.5 |
13.2 |
(5.3)% |
4.2% |
Group |
468.0 |
426.3 |
9.8% |
9.9% |
|
Half year to |
Half year to |
|
Constant |
|
31 Dec |
31 Dec |
Reported |
currency |
|
2023 |
2022 |
change |
change |
Adjusted operating profit/(loss) |
£m |
£m |
£m |
£m |
Liquids |
22.8 |
0.2 |
22.6 |
22.7 |
Unit Dosing |
7.9 |
2.2 |
5.7 |
5.4 |
Powders |
3.2 |
(1.2) |
4.4 |
4.5 |
Aerosols |
0.5 |
- |
0.5 |
0.6 |
|
0.7 |
0.8 |
(0.1) |
(0.1) |
Corporate |
(4.6) |
(3.3) |
(1.3) |
(1.1) |
Group |
30.5 |
(1.3) |
31.8 |
32.0 |
Liquids performance review
Liquids revenue grew by 11.8% on a constant currency basis, driven by private label volumes, which were up 10.7%. Strong demand for private label continues to be driven by consumers switching from branded products to high-quality private label products. This positive performance was also supported by net contract wins secured in the last financial year, particularly in the German market. Laundry and dishwash maintained good momentum reporting revenue growth of 20.0% and 11.1% respectively.
The division delivered an adjusted operating profit of
Service levels continued to improve, which aligned with retailers' primary focus on consistent supply and product availability.
Unit Dosing performance review
Unit Dosing revenue increased 4.5% on a constant currency basis to
The division made significant investments to deliver new product launches in the period, in addition to investing in new product launches anticipated for the first half of the next financial year. Furthermore, capacity increases for dishwasher tablets and laundry capsules are scheduled to go on stream in the second half of the current financial year, supporting growth and service improvements for specific product formats, in line with consumer demand.
The division will continue to focus on meeting the trend for higher doses per consumer unit with new product launches focusing on compacted products and leveraging sustainable packaging.
Powders performance review
Powders revenue grew by 10.5% on a constant currency basis to
In the period, Powders saw a decline in private label sales as a result of a sole supply account moving to dual supply, but these volumes were compensated by improved sales to contract manufacturing, primarily in the professional cleaning sector. Total volumes were lower in the period, but the impact of prior year pricing actions resulted in revenue growth.
While the market remains competitive, Powders' performance demonstrates the effectiveness of the division's strategy and its ability to adapt to customers' needs. Powders continues to be well placed to deliver volume growth and remains focused on achieving further efficiencies to offset potential cost inflation.
Aerosols performance review
Aerosols revenue grew by 19.2% on a constant currency basis to
This positive performance was driven by accelerating growth in
Aerosols remains committed to building on its existing strong relationships with customers and continuing to drive operational excellence.
Expanding volumes through the new site in
Group operating results
Operating profit of
Group EBITDA
Half-year adjusted EBITDA(1) of
|
Half year to 31 Dec 2023 |
Half year to 31 Dec 2022 |
Year ended 30 Jun 2023 |
|
£m |
£m |
£m |
Operating profit/(loss) |
29.5 |
(2.6) |
10.3 |
Exceptional items in operating profit/(loss) (note 4) |
- |
- |
0.8 |
Amortisation of intangibles (note 8) |
1.0 |
1.3 |
2.4 |
Adjusted operating profit/(loss) |
30.5 |
(1.3) |
13.5 |
Depreciation of property, plant and equipment (note 8) |
8.6 |
8.2 |
16.8 |
Depreciation of right-of-use assets (note 8) |
1.8 |
1.9 |
3.8 |
Adjusted EBITDA |
40.9 |
8.8 |
34.1 |
(1)Definition and reconciliation provided in note 16.
Exceptional items
Total exceptional items of
Finance costs
At
(1)Total finance costs less finance costs relating to exceptional items.
Taxation
Reported profit before taxation is
The total tax charge is
Earnings per share
On an adjusted basis, basic earnings per share was
Payments to shareholders
Under the amended terms of the RCF, McBride plc may not, except with the consent of its lender group, declare, make or pay any dividend or distribution to its shareholders prior to an 'exit event', being a change of control; refinancing of the RCF in full; prepayment and cancellation of the RCF in full; or upon the termination date of the RCF, being May 2026. Hence, the Board is not recommending an interim dividend for the period.
Cash flow and balance sheet
|
Half year to 31 Dec 2023 |
Half year to 31 Dec 2022 |
Year ended 30 Jun 2023 |
|
£m |
£m |
£m |
Adjusted EBITDA |
40.9 |
8.8 |
34.1 |
Working capital excluding provisions and pensions |
8.6 |
12.2 |
7.1 |
Share-based payments and loss on disposal of property, plant and equipment |
0.9 |
0.5 |
0.8 |
Non-exceptional impairment of property, plant and equipment |
0.2 |
- |
- |
Pension deficit reduction contributions |
(2.0) |
(2.0) |
(4.0) |
Free cash flow(1) |
48.6 |
19.5 |
38.0 |
Exceptional items |
(0.5) |
(0.8) |
(1.4) |
Interest on borrowings and lease liabilities less interest receivable |
(6.2) |
(3.6) |
(11.4) |
Refinancing costs paid |
(5.6) |
(10.6) |
(12.3) |
Taxation (paid)/received |
(2.6) |
0.1 |
(1.8) |
Net cash generated from operating activities |
33.7 |
4.6 |
11.1 |
Net capital expenditure(2) |
(10.5) |
(6.8) |
(16.3) |
Debt financing activities |
(10.4) |
5.3 |
2.6 |
Settlement of derivatives |
(0.4) |
(0.1) |
0.4 |
Net increase/(decrease) in cash and cash equivalents |
12.4 |
3.0 |
(2.2) |
Free cash flow in the period was
Working capital inflows of
During the period, net capital expenditure was
The Group's net assets increased to
(1)Refer to note 16 for definition.
(2) Net capital expenditure is capital expenditure including capital payments on lease liabilities less proceeds from sale of fixed assets.
(3)Gearing represents net debt divided by the average of current and prior year year-end capital, being total equity plus net debt.
Bank facilities and net debt
Net debt at 31 December 2023 was
Throughout the period, the Group had a
At 31 December 2023, liquidity(1) was
At 31 December 2023, the net debt cover ratio as defined under the RCF funding arrangements was 1.2x (30 June 2023: 2.9x) and the interest cover was 4.7x (30 June 2023: 2.7x). The amount undrawn on the facility was
At 31 December 2023, the Group had a number of facilities whereby it could borrow against certain of its trade receivables. In the
(1)Refer to note 2 for definition.
Pensions
In the
The deficit in the Robert McBride Pension Fund ('the Fund') increased during the period to
Following the triennial valuation at 31 March 2021, the Group and Trustee agreed a new deficit reduction plan based on the scheme funding deficit of
Separately, the Group has agreed that, from 1 October 2024, conditional profit-related contributions of
The Group has other post-employment benefit obligations outside the
Environmental, social and governance (ESG)
McBride works to integrate the principles of long‑term environmental and social sustainability within its business strategy. The approach to sustainability is underpinned by an analysis of the ESG issues that are most relevant and important in the context of McBride's business activities. The Group recognises it must tackle climate change to remain viable and, as such, places ESG issues at the core of its approach to sustainability.
McBride continues to report progress via an ESG dashboard and deliver on the 2025 targets for operations and product sustainability. The Group continues to make progress on improving energy efficiency, reducing waste to landfill and increasing the proportion of renewable electricity used in its operations.
McBride's corporate carbon footprint has been measured for three consecutive years covering Scope 1, 2 and 3 emissions. During the period, the Group has established science-based targets and formally committed to the Science Based Target initiative (SBTi). These targets will guide efforts and ensure McBride's actions are aligned to the latest scientific understanding on climate change.
Key initiatives undertaken in the period to support the goal of creating a positive social impact for colleagues, stakeholders and local communities have been:
· running diversity, equity and inclusion workshops for senior leaders across the business;
· inviting all European colleagues to provide their feedback in an engagement survey;
· building programmes of social activities in all locations; and
· launching the 'McBride Gives' volunteering scheme in
During the period, McBride has also started its journey toward compliance with the forthcoming EU Corporate Sustainability Due Diligence Directive (CSDDD). The Group is building internal cross-functional alignment and understanding of CSDDD requirements and what this means for McBride and its supply chains. The aim is to achieve clarity on the high-level ESG risks and impacts that are the most significant to supply chains, and to carry out targeted supplier risk assessment and engagement. In relation to potential social and environmental issues known to affect specific raw material supply chains, McBride will conduct a deeper-dive risk assessment and due diligence. The results of such risk assessments and supplier screenings will be integrated into existing supplier management systems and processes.
Principal risks and uncertainties
The Group is subject to risk factors both internal and external to its business and has a well-established set of risk management procedures. The risks and uncertainties that the Directors believe could have the most significant impact on the Group's business are:
· changing market, customer and consumer dynamics;
· disruptions to systems and processes;
· financing risks;
· supply chain resilience;
· safe and high-quality products;
· health and safety;
· climate change and environmental concerns;
· challenges in attracting and retaining talent;
· increased regulation; and
· economic, political and macro environment instability.
Responsibility statement
The Directors confirm that to the best of their knowledge:
• The condensed set of financial statements has been prepared in accordance with
• The interim management report includes a fair review of the information required by:
(a) DTR 4.2.7 of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8 of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any material changes in the related party transactions described in the last annual report that could do so.
Chris Smith Mark Strickland
Chief Executive Officer Chief Financial Officer
27 February 2024
Condensed interim consolidated income statement
|
|
Unaudited |
Unaudited |
Audited |
|
|
Half year to |
Half year to |
Year ended |
|
|
31 Dec |
31 Dec |
30 Jun |
|
|
2023 |
2022 |
2023 |
|
Note |
£m |
£m |
£m |
Revenue |
3 |
468.0 |
426.3 |
889.0 |
Cost of sales |
|
(297.1) |
(311.2) |
(625.4) |
Gross profit |
|
170.9 |
115.1 |
263.6 |
Distribution costs |
|
(40.8) |
(38.5) |
(77.9) |
Administrative costs |
|
(96.5) |
(77.7) |
(171.6) |
Impairment of trade receivables |
|
(3.6) |
(1.5) |
(3.5) |
Loss on disposal of property, plant and equipment |
|
(0.3) |
- |
(0.3) |
Impairment of property, plant and equipment |
|
(0.2) |
- |
- |
Operating profit/(loss) |
|
29.5 |
(2.6) |
10.3 |
Finance costs |
|
(12.1) |
(17.4) |
(25.4) |
Profit/(loss) before taxation |
|
17.4 |
(20.0) |
(15.1) |
Taxation |
5 |
(4.7) |
3.2 |
3.6 |
Profit/(loss) for the period |
|
12.7 |
(16.8) |
(11.5) |
Earnings/(loss) per ordinary share attributable to the owners of the parent during the period |
|
|
||
|
|
|
|
|
Basic earnings/(loss) per share |
6 |
7.3p |
(9.7)p |
(6.6)p |
Diluted earnings/(loss) per share |
6 |
7.0p |
(9.7)p |
(6.6)p |
Condensed interim consolidated statement of comprehensive income
|
Unaudited |
Unaudited |
Audited |
|
Half year to |
Half year to |
Year ended |
|
31 Dec |
31 Dec |
30 Jun |
|
2023 |
2022 |
2023 |
|
£m |
£m |
£m |
Profit/(loss) for the period |
12.7 |
(16.8) |
(11.5) |
Other comprehensive income/(expense) |
|
|
|
Items that may be reclassified to profit or loss: |
|
|
|
Currency translation differences of foreign subsidiaries |
1.0 |
2.6 |
(0.6) |
(Loss)/gain on net investment hedges |
(0.6) |
(0.5) |
0.4 |
(Loss)/gain on cash flow hedges in the period |
(1.5) |
3.4 |
3.7 |
Cash flow hedges transferred to profit or loss |
(0.8) |
(0.5) |
(1.4) |
Taxation relating to the items above |
0.6 |
(0.7) |
(0.4) |
|
(1.3) |
4.3 |
1.7 |
Items that will not be reclassified to profit or loss: |
|
|
|
Net actuarial loss on post-employment benefits |
(7.3) |
(10.3) |
(14.1) |
Taxation relating to item above |
1.8 |
2.6 |
3.5 |
|
(5.5) |
(7.7) |
(10.6) |
Total other comprehensive expense |
(6.8) |
(3.4) |
(8.9) |
Total comprehensive income/(expense) |
5.9 |
(20.2) |
(20.4) |
Condensed interim consolidated balance sheet
|
|
Unaudited |
Unaudited |
Audited |
|
|
As at |
As at |
As at |
|
|
31 Dec |
31 Dec |
30 Jun |
|
|
2023 |
2022 |
2023 |
|
Note |
£m |
£m |
£m |
Non-current assets |
|
|
|
|
Goodwill |
8 |
19.8 |
19.8 |
19.7 |
Other intangible assets |
8 |
6.1 |
6.5 |
6.5 |
Property, plant and equipment |
8 |
115.8 |
121.1 |
117.8 |
Derivative financial instruments |
9 |
1.6 |
3.8 |
4.5 |
Right-of-use assets |
8 |
8.7 |
9.9 |
8.5 |
Deferred tax assets |
|
45.3 |
32.9 |
41.6 |
|
|
197.3 |
194.0 |
198.6 |
Current assets |
|
|
|
|
Inventories |
|
109.4 |
128.2 |
121.5 |
Trade and other receivables |
|
147.7 |
131.1 |
145.7 |
Current tax asset |
|
2.0 |
5.3 |
2.3 |
Derivative financial instruments |
9 |
0.8 |
1.5 |
0.6 |
Cash and cash equivalents |
10 |
14.3 |
8.0 |
1.6 |
|
|
274.2 |
274.1 |
271.7 |
Total assets |
|
471.5 |
468.1 |
470.3 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
215.5 |
211.9 |
219.6 |
Borrowings |
9 |
63.2 |
47.5 |
49.3 |
Lease liabilities |
9 |
3.3 |
3.8 |
3.5 |
Derivative financial instruments |
9 |
0.1 |
0.2 |
1.8 |
Current tax liabilities |
|
10.3 |
4.0 |
6.7 |
Provisions |
|
2.2 |
2.8 |
2.7 |
|
|
294.6 |
270.2 |
283.6 |
Non-current liabilities |
|
|
|
|
Borrowings |
9 |
87.6 |
119.3 |
109.8 |
Lease liabilities |
9 |
5.9 |
6.8 |
5.5 |
Pensions and other post-employment benefits |
11 |
32.6 |
24.7 |
26.6 |
Provisions |
|
2.6 |
3.9 |
2.6 |
Deferred tax liabilities |
|
4.6 |
5.9 |
5.1 |
|
|
133.3 |
160.6 |
149.6 |
Total liabilities |
|
427.9 |
430.8 |
433.2 |
Net assets |
|
43.6 |
37.3 |
37.1 |
|
|
|
|
|
Equity |
|
|
|
|
Issued share capital |
|
17.4 |
17.4 |
17.4 |
Share premium account |
|
68.6 |
68.6 |
68.6 |
Other reserves |
|
77.6 |
81.5 |
78.9 |
Accumulated losses |
|
(120.0) |
(130.2) |
(127.8) |
Total equity |
|
43.6 |
37.3 |
37.1 |
Condensed interim consolidated cash flow statement
|
|
Unaudited Half year to 31 Dec 2023
|
Unaudited Half year to 31 Dec 2022 (restated)(1) |
Audited Year ended 30 Jun 2023
|
|
Note |
£m |
£m |
£m |
Operating activities |
|
|
|
|
Profit/(loss) before taxation |
|
17.4 |
(20.0) |
(15.1) |
Finance costs |
|
12.1 |
17.4 |
25.4 |
Exceptional items excluding finance costs |
4 |
- |
- |
0.8 |
Share-based payments charge |
|
0.6 |
0.5 |
0.5 |
Depreciation of property, plant and equipment |
8 |
8.6 |
8.2 |
16.8 |
Depreciation of right-of-use assets |
8 |
1.8 |
1.9 |
3.8 |
Loss on disposal of property, plant and equipment |
|
0.3 |
- |
0.3 |
Amortisation of intangible assets |
8 |
1.0 |
1.3 |
2.4 |
Impairment of property, plant and equipment |
|
0.2 |
- |
- |
Operating cash flow before changes in working capital and exceptional items |
|
42.0 |
9.3 |
34.9 |
(Increase)/decrease in receivables |
|
(0.6) |
17.6 |
(1.3) |
Decrease/(increase) in inventories |
|
13.5 |
(5.7) |
(2.7) |
(Decrease)/increase in payables |
|
(4.3) |
0.3 |
11.1 |
Operating cash flow after changes in working capital before exceptional items |
|
50.6 |
21.5 |
42.0 |
Additional cash funding of pension schemes |
|
(2.0) |
(2.0) |
(4.0) |
Cash generated from operations before exceptional items |
|
48.6 |
19.5 |
38.0 |
Cash outflow in respect of exceptional items |
|
(0.5) |
(0.8) |
(1.4) |
Cash generated from operations |
|
48.1 |
18.7 |
36.6 |
Interest paid |
|
(6.2) |
(3.6) |
(11.4) |
Refinancing costs paid |
|
(5.6) |
(10.6) |
(12.3) |
Taxation (paid)/received |
|
(2.6) |
0.1 |
(1.8) |
Net cash generated from operating activities |
|
33.7 |
4.6 |
11.1 |
|
|
|
|
|
Investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(7.8) |
(4.0) |
(10.3) |
Purchase of intangible assets |
|
(0.6) |
(0.5) |
(1.7) |
Settlement of derivatives used in net investment hedges |
|
(0.4) |
(0.1) |
0.4 |
Net cash used in investing activities |
|
(8.8) |
(4.6) |
(11.6) |
|
|
|
|
|
Financing activities |
|
|
|
|
Drawdown/(repayment) of overdrafts |
10 |
9.9 |
(4.1) |
(6.2) |
Drawdown/(repayment) of other loans |
10 |
3.0 |
(10.6) |
(4.9) |
(Repayment)/drawdown of bank loans |
10 |
(23.3) |
20.0 |
13.7 |
Repayment of IFRS 16 lease obligations |
10 |
(2.1) |
(2.3) |
(4.3) |
Net cash (used in)/generated from financing activities |
|
(12.5) |
3.0 |
(1.7) |
|
|
|
|
|
Increase/(decrease) in net cash and cash equivalents |
|
12.4 |
3.0 |
(2.2) |
Net cash and cash equivalents at the start of the period |
|
1.6 |
4.5 |
4.5 |
Currency translation differences |
|
0.3 |
0.5 |
(0.7) |
Net cash and cash equivalents at the end of the period |
|
14.3 |
8.0 |
1.6 |
(1)Refinancing costs paid reclassified as operating activities, reported previously under financing activities.
Condensed interim consolidated statement of changes in equity
|
|
|
Other reserves |
|
|
||||||
|
Issued share capital £m |
Share premium account £m |
Cash flow hedge reserve £m |
Currency translation reserve £m |
Capital redemption reserve £m |
Accumulated losses £m |
Total equity £m |
||||
At 1 July 2023 |
17.4 |
68.6 |
3.7 |
(2.0) |
77.2 |
(127.8) |
37.1 |
||||
Profit for the period |
- |
- |
- |
- |
- |
12.7 |
12.7 |
||||
Other comprehensive income/(expense) |
|
|
|
|
|
|
|
||||
Items that may be reclassified to profit or loss: |
|
|
|
|
|
|
|
||||
Currency translation differences of foreign subsidiaries |
- |
- |
- |
1.0 |
- |
- |
1.0 |
||||
Loss on net investment hedges |
- |
- |
- |
(0.6) |
- |
- |
(0.6) |
||||
Loss on cash flow hedges in the period |
- |
- |
(1.5) |
- |
- |
- |
(1.5) |
||||
Cash flow hedges transferred to profit or loss |
- |
- |
(0.8) |
- |
- |
- |
(0.8) |
||||
Taxation relating to the items above |
- |
- |
0.6 |
- |
- |
- |
0.6 |
||||
|
- |
- |
(1.7) |
0.4 |
- |
- |
(1.3) |
||||
Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
||||
Net actuarial loss on post‑employment benefits |
- |
- |
- |
- |
- |
(7.3) |
(7.3) |
||||
Taxation relating to item above |
- |
- |
- |
- |
- |
1.8 |
1.8 |
||||
|
- |
- |
- |
- |
- |
(5.5) |
(5.5) |
||||
Total other comprehensive (expense)/income |
- |
- |
(1.7) |
0.4 |
- |
(5.5) |
(6.8) |
||||
Total comprehensive (expense)/income |
- |
- |
(1.7) |
0.4 |
- |
7.2 |
5.9 |
||||
Transactions with owners of the parent |
|
|
|
|
|
|
|
||||
Share-based payments |
- |
- |
- |
- |
- |
0.6 |
0.6 |
||||
At 31 December 2023 |
17.4 |
68.6 |
2.0 |
(1.6) |
77.2 |
(120.0) |
43.6 |
||||
|
|
|
Other reserves |
|
|
||||||
|
Issued share capital £m |
Share premium account £m |
Cash flow hedge reserve £m |
Currency translation reserve £m |
Capital redemption reserve £m |
Accumulated losses £m |
Total equity £m |
||||
At 1 July 2022 |
17.4 |
68.6 |
1.8 |
(1.8) |
77.2 |
(106.2) |
57.0 |
||||
Loss for the period |
- |
- |
- |
- |
- |
(16.8) |
(16.8) |
||||
Other comprehensive income/(expense) |
|
|
|
|
|
|
|
||||
Items that may be reclassified to profit or loss: |
|
|
|
|
|
|
|
||||
Currency translation differences of foreign subsidiaries |
- |
- |
- |
2.6 |
- |
- |
2.6 |
||||
Gain on net investment hedges |
- |
- |
- |
(0.5) |
- |
- |
(0.5) |
||||
Gain on cash flow hedges in the period |
- |
- |
3.4 |
- |
- |
- |
3.4 |
||||
Cash flow hedges transferred to profit or loss |
- |
- |
(0.5) |
- |
- |
- |
(0.5) |
||||
Taxation relating to the items above |
- |
- |
(0.7) |
- |
- |
- |
(0.7) |
||||
|
- |
- |
2.2 |
2.1 |
- |
- |
4.3 |
||||
Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
||||
Net actuarial loss on post‑employment benefits |
- |
- |
- |
- |
- |
(10.3) |
(10.3) |
||||
Taxation relating to item above |
- |
- |
- |
- |
- |
2.6 |
2.6 |
||||
|
- |
- |
- |
- |
- |
(7.7) |
(7.7) |
||||
Total other comprehensive income/(expense) |
- |
- |
2.2 |
2.1 |
- |
(7.7) |
(3.4) |
||||
Total comprehensive income/(expense) |
- |
- |
2.2 |
2.1 |
- |
(24.5) |
(20.2) |
||||
Transactions with owners of the parent |
|
|
|
|
|
|
|
||||
Share-based payments |
- |
- |
- |
- |
- |
0.5 |
0.5 |
||||
At 31 December 2022 |
17.4 |
68.6 |
4.0 |
0.3 |
77.2 |
(130.2) |
37.3 |
||||
|
|
|
Other reserves |
|
|
||||||
|
Issued share capital £m |
Share premium account £m |
Cash flow hedge reserve £m |
Currency translation reserve £m |
Capital redemption reserve £m |
Accumulated losses £m |
Total equity £m |
||||
At 1 July 2022 |
17.4 |
68.6 |
1.8 |
(1.8) |
77.2 |
(106.2) |
57.0 |
||||
Loss for the year |
- |
- |
- |
- |
- |
(11.5) |
(11.5) |
||||
Other comprehensive income/(expense) |
|
|
|
|
|
|
|
||||
Items that may be reclassified to profit or loss: |
|
|
|
|
|
|
|
||||
Currency translation differences of foreign subsidiaries |
- |
- |
- |
(0.6) |
- |
- |
(0.6) |
||||
Gain on net investment hedges |
- |
- |
- |
0.4 |
- |
- |
0.4 |
||||
Gain on cash flow hedges in the year |
- |
- |
3.7 |
- |
- |
- |
3.7 |
||||
Cash flow hedges transferred to profit or loss |
- |
- |
(1.4) |
- |
- |
- |
(1.4) |
||||
Taxation relating to the items above |
- |
- |
(0.4) |
- |
- |
- |
(0.4) |
||||
|
- |
- |
1.9 |
(0.2) |
- |
- |
1.7 |
||||
Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
||||
Net actuarial loss on post‑employment benefits |
- |
- |
- |
- |
- |
(14.1) |
(14.1) |
||||
Taxation relating to item above |
- |
- |
- |
- |
- |
3.5 |
3.5 |
||||
|
- |
- |
- |
- |
- |
(10.6) |
(10.6) |
||||
Total other comprehensive income/(expense) |
- |
- |
1.9 |
(0.2) |
- |
(10.6) |
(8.9) |
||||
Total comprehensive income/(expense) |
- |
- |
1.9 |
(0.2) |
- |
(22.1) |
(20.4) |
||||
Transactions with owners of the parent |
|
|
|
|
|
|
|
||||
Share-based payments |
- |
- |
- |
- |
- |
0.5 |
0.5 |
||||
At 30 June 2023 (audited) |
17.4 |
68.6 |
3.7 |
(2.0) |
77.2 |
(127.8) |
37.1 |
||||
Notes to the consolidated financial information
1. Corporate information
McBride plc ('the Company') is a public company limited by shares incorporated and domiciled in the United Kingdom and registered in England and Wales. The Company's ordinary shares are listed on the London Stock Exchange. The registered office of the Company is Middleton Way, Middleton, Manchester M24 4DP. For the purposes of DTR 6.4.2R, the Home State of McBride plc is the United Kingdom.
The Company and its subsidiaries (together, 'the Group') is Europe's leading provider of private label and contract manufactured products for the domestic household and professional cleaning/hygiene markets. The Company develops and manufactures products for the majority of retailers and major brand owners throughout Europe and the Asia-Pacific region.
2. Accounting policies
Basis of preparation
The interim financial information for the six months period ended 31 December 2023 has been prepared on the basis of the accounting policies set out in the 2023 Annual Report and Accounts and in accordance with UK adopted IAS 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority.
This interim financial information should be read in conjunction with the annual consolidated financial statements for the year ended 30 June 2023, which were prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006. The financial statements have been prepared under the historical cost convention, modified in respect of financial assets and liabilities (derivative financial instruments) at fair value through profit or loss, assets held for sale and defined benefit pension plan assets.
The results for each half year are unaudited and do not represent the Group's statutory accounts within the meaning of section 434 of the Companies Act 2006. The interim financial information has not been reviewed or audited. The Group's statutory accounts were approved by the Directors on 18 September 2023 and have been reported on by PricewaterhouseCoopers LLP and delivered to the Registrar of Companies. The report of PricewaterhouseCoopers LLP was (i) unqualified and (ii) did not contain a statement under section 498 of the Companies Act 2006.
Going concern
In determining the appropriate basis of preparation of the financial statements for the six months to 31 December 2023, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.
The Group meets its funding requirements through internal cash generation and bank credit facilities. The Group has access to a
In assessing the going concern assumptions, the Board has reviewed the Group's base case scenario and considered severe but plausible downside scenarios.
The Group's base case scenario to 30 June 2025 assumes:
· revenue growth driven predominantly by volume increases resulting from net contract wins;
· interest rates remaining unchanged from current levels; and
· Sterling: Euro exchange rate of £1:
The Directors have considered severe but plausible downside scenarios to stress test the Group's financial forecasts, with the following assumptions:
· revenue growth halved for the remainder of 2024;
· revenue growth reducing to half of that assumed in the latest view for 2025;
· interest rates increasing by a further 100 basis points; and
· Sterling appreciating significantly against the Euro to £1:
If such a severe but plausible downside risk scenario occurs, the Group would remain compliant with current banking covenants.
After reviewing the current liquidity position, financial forecasts, stress testing of potential risks and considering the uncertainties described above, and based on the currently committed funding facilities, the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence and without significant curtailment of operations for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis of accounting in preparing the Group financial statements.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements from which this preliminary announcement is derived, requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 30 June 2023.
Alternative performance measures (APMs)
The performance of the Group is assessed using a variety of adjusted measures that are not defined under IFRS and are therefore termed non-GAAP measures.
APM |
|
Definition |
|
Source |
Adjusted operating profit |
|
Operating profit before amortisation of intangible assets and exceptional items |
|
Consolidated income statement |
Adjusted EBITDA |
|
Adjusted operating profit before depreciation |
|
Consolidated income statement |
Adjusted profit before taxation |
|
Adjusted profit before taxation is based on adjusted operating profit less adjusted finance costs |
|
Consolidated income statement |
Adjusted profit for the period |
|
Adjusted profit for the period is based on adjusted profit before taxation less taxation relating to non-adjusting items |
|
Consolidated income statement |
Adjusted earnings per share |
|
Adjusted earnings per share is based on the Group's profit for the period adjusted for the items excluded from operating profit in arriving at adjusted operating profit |
|
Note 6 Consolidated income statement |
Free cash flow |
|
Free cash flow is defined as cash generated before exceptional items |
|
Consolidated cash flow statement |
Cash conversion % |
|
Cash conversion % is defined as free cash flow as a percentage of adjusted EBITDA |
|
Consolidated income statement Consolidated cash flow statement |
Adjusted return on capital employed (ROCE) |
|
Adjusted ROCE is defined as rolling twelve months total adjusted operating profit divided by the average of the past two years' capital employed. Capital employed is defined as the total of goodwill and other intangible assets, property, plant and equipment, right-of-use assets, inventories, trade and other receivables less trade and other payables. |
|
Consolidated income statement Consolidated balance sheet |
Liquidity |
|
At any time, without double counting, the aggregate of: (a) cash; (b) cash equivalents; (c) the available facility at that time, which comprises the headroom available in the RCF and other committed facilities; and (d) the aggregate amount available for drawing under uncommitted facilities. |
|
Consolidated cash flow statement Note 16 |
Net debt |
|
Net debt consists of cash and cash equivalents, overdrafts, bank and other loans and lease liabilities. |
|
Consolidated balance sheet |
The APMs used may not be directly comparable with similarly titled measures used by other companies.
Adjusted measures exclude specific items that are considered to hinder comparison of the trading performance of the Group's businesses either year on year or with other businesses. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and Executive Committee and is used for internal performance analysis and in relation to employee incentive arrangements. The Directors present these measures in the financial statements in order to assist investors in their assessment of the trading performance of the Group. Directors do not regard these measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with IFRS.
During the years under review, the items excluded from operating profit in arriving at adjusted operating profit were the amortisation of intangible assets and exceptional items. Exceptional items and amortisation are excluded from adjusted operating profit because they are not considered to be representative of the trading performance of the Group's businesses during the year.
See note 16 'Additional information' for further information on alternative performance measures.
3. Segment information
Background
Financial information is presented to the Board by product technology for the purposes of allocating resources within the Group and assessing the performance of the Group's businesses. There are five separately managed and accountable business divisions:
· Liquids;
· Unit Dosing;
· Powders;
· Aerosols; and
· Asia Pacific.
Intra-group revenue from the sale of products is agreed between the relevant customer-facing units and eliminated in the segmental presentation that is presented to the Board, and therefore excluded from the below figures. Most overhead costs are directly attributed within the respective divisions' income statements. Central overheads are allocated to a reportable segment proportionally using an appropriate cost driver. Corporate costs, which include the costs associated with the Board and the Executive Leadership Team, governance and listed company costs and certain central functions (mostly associated with financial disciplines such as treasury), are reported separately. Exceptional items are detailed in note 4 and are not allocated to the reportable segments as this reflects how they are reported to the Board. Net finance costs are not allocated to the reportable segments, as the central treasury function manages this activity, together with the overall net debt position of the Group.
The Board uses adjusted operating profit to measure the profitability of the Group's businesses. Adjusted operating profit is, therefore, the measure of segment profit presented in the Group's segment disclosures. Adjusted operating profit represents operating profit before specific items that are considered to hinder comparison of the trading performance of the Group's businesses either year on year or with other businesses. During the years under review, the items excluded from operating profit in arriving at adjusted operating profit were the amortisation of intangible assets and exceptional items.
|
Liquids |
Unit Dosing |
Powders |
Aerosols |
Asia Pacific |
Corporate |
Group |
Period ended 31 December 2023 (unaudited) |
|
|
|
|
|
|
|
Segment revenue |
266.4 |
116.5 |
47.2 |
25.4 |
12.5 |
- |
468.0 |
Adjusted operating profit/(loss) |
22.8 |
7.9 |
3.2 |
0.5 |
0.7 |
(4.6) |
30.5 |
Amortisation of intangible assets |
|
|
|
|
|
|
(1.0) |
Operating profit |
|
|
|
|
|
|
29.5 |
Finance costs |
|
|
|
|
|
|
(12.1) |
Profit before taxation |
|
|
|
|
|
|
17.4 |
|
|
|
|
|
|
|
|
Inventories |
60.1 |
24.7 |
13.3 |
8.9 |
2.4 |
- |
109.4 |
Capital expenditure |
2.5 |
3.1 |
0.5 |
0.1 |
- |
- |
6.2 |
Amortisation and depreciation |
6.7 |
3.0 |
0.7 |
0.3 |
0.7 |
- |
11.4 |
|
Liquids |
Unit Dosing |
Powders |
Aerosols |
Asia Pacific |
Corporate |
Group |
Period ended 31 December 2022 (unaudited) |
|
|
|
|
|
|
|
Segment revenue |
237.7 |
111.4 |
42.7 |
21.3 |
13.2 |
- |
426.3 |
Adjusted operating profit/(loss) |
0.2 |
2.2 |
(1.2) |
- |
0.8 |
(3.3) |
(1.3) |
Amortisation of intangible assets |
|
|
|
|
|
|
(1.3) |
Operating loss |
|
|
|
|
|
|
(2.6) |
Finance costs |
|
|
|
|
|
|
(17.4) |
Loss before taxation |
|
|
|
|
|
|
(20.0) |
|
|
|
|
|
|
|
|
Inventories |
62.6 |
36.2 |
15.5 |
10.3 |
3.6 |
- |
128.2 |
Capital expenditure |
1.6 |
1.3 |
0.3 |
0.1 |
0.1 |
- |
3.4 |
Amortisation and depreciation |
6.5 |
3.1 |
0.7 |
0.3 |
0.8 |
- |
11.4 |
|
Liquids |
Unit Dosing |
Powders |
Aerosols |
Asia Pacific |
Corporate |
Group |
Year ended 30 June 2023 (audited) |
|
|
|
|
|
|
|
Segment revenue |
497.9 |
234.2 |
85.9 |
46.2 |
24.8 |
- |
889.0 |
Adjusted operating profit/(loss) |
10.5 |
10.0 |
(0.7) |
0.3 |
1.1 |
(7.7) |
13.5 |
Amortisation of intangible assets |
|
|
|
|
|
|
(2.4) |
Exceptional items (note 4) |
|
|
|
|
|
|
(0.8) |
Operating profit |
|
|
|
|
|
|
10.3 |
Finance costs |
|
|
|
|
|
|
(25.4) |
Loss before taxation |
|
|
|
|
|
|
(15.1) |
|
|
|
|
|
|
|
|
Inventories |
59.4 |
33.8 |
15.8 |
9.6 |
2.9 |
- |
121.5 |
Capital expenditure |
5.9 |
4.9 |
1.7 |
0.4 |
0.3 |
- |
13.2 |
Amortisation and depreciation |
13.2 |
6.3 |
1.4 |
0.6 |
1.5 |
- |
23.0 |
4. Exceptional items
|
Unaudited |
Unaudited |
Audited |
|
Half year to |
Half year to |
Year ended |
|
31 Dec |
31 Dec |
30 Jun |
|
2023 £m |
2022 £m |
2023 £m |
Environmental remediation |
- |
- |
0.8 |
Total charged to operating profit/(loss) |
- |
- |
0.8 |
Group refinancing: |
|
|
|
Independent business review and refinancing costs |
4.0 |
10.8 |
12.2 |
Total charged to finance costs |
4.0 |
10.8 |
12.2 |
Total exceptional items |
4.0 |
10.8 |
13.0 |
During the period, exceptional costs of
Costs of
5. Taxation
Reported profit before taxation was
The tax charge on adjusted profit before taxation for the year is
The Group forecasts an adjusted effective tax rate for the full year of 30%, before discrete items, which is higher than the UK corporation tax rate of 25% due to non-UK tax rates, non-deductible items and local taxes payable.
6. Earnings/(loss) per ordinary share
Basic earnings/(loss) per ordinary share is calculated by dividing the profit/(loss) for the period attributable to owners of the Company by the weighted average number of the Company's ordinary shares in issue during the financial period. The weighted average number of the Company's ordinary shares in issue excludes 501,172 shares (2022: 629,200 shares), being the weighted average number of own shares held during the year in relation to employee share schemes.
|
|
Unaudited |
Unaudited |
Audited |
|
|
Half year to |
Half year to |
Year ended |
|
|
31 Dec |
31 Dec |
30 Jun |
|
Reference |
2023 |
2022 |
2023 |
Weighted average number of ordinary shares in issue (million) |
a |
173.6 |
173.5 |
173.4 |
Effect of dilutive share options (million) |
|
7.1 |
2.8 |
2.5 |
Weighted average number of ordinary shares for calculating |
b |
|
|
|
diluted earnings/(loss) per share (million) |
|
180.7 |
176.3 |
175.9 |
Diluted earnings/(loss) per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potentially dilutive ordinary shares. Where potentially dilutive ordinary shares would cause an increase in earnings per share, or a decrease in loss per share, the diluted loss per share is considered equal to the basic loss per share.
During the period, the Company had equity-settled awards with a nil exercise price that are potentially dilutive ordinary shares.
Adjusted earnings/(loss) per share measures are calculated based on profit/(loss) for the period attributable to owners of the Company before adjusting items as follows:
|
|
Unaudited |
Unaudited |
Audited |
|
|
Half year to |
Half year to |
Year ended |
|
|
31 Dec |
31 Dec |
30 Jun |
|
|
2023 |
2022 |
2023 |
|
Reference |
£m |
£m |
£m |
Profit/(loss) for calculating basic and diluted earnings/(loss) per share |
c |
12.7 |
(16.8) |
(11.5) |
Adjusted for: |
|
|
|
|
Amortisation of intangible assets (note 8) |
|
1.0 |
1.3 |
2.4 |
Exceptional items (note 4) |
|
4.0 |
10.8 |
13.0 |
Taxation relating to the above items |
|
(1.3) |
(2.5) |
(3.9) |
Profit/(loss) for calculating adjusted earnings/(loss) per share |
d |
16.4 |
(7.2) |
- |
|
|
Unaudited |
Unaudited |
Audited |
|
|
Half year to |
Half year to |
Year ended |
|
|
31 Dec |
31 Dec |
30 Jun |
|
|
2023 |
2022 |
2023 |
|
Reference |
pence |
pence |
pence |
Basic earnings/(loss) per share |
c/a |
7.3 |
(9.7) |
(6.6) |
Diluted earnings/(loss) per share |
c/b(1) |
7.0 |
(9.7) |
(6.6) |
Adjusted basic earnings/(loss) per share |
d/a |
9.5 |
(4.2) |
0.0 |
Adjusted diluted earnings/(loss) per share |
d/b(1) |
9.1 |
(4.2) |
0.0 |
(1)Diluted loss per share is considered equal to the basic loss per share as potentially dilutive ordinary shares cause a decrease in the loss per share.
7. Payments to shareholders
Dividends paid and received are included in the financial statements in the year in which the related dividends are actually paid or received or, in respect of the Company's final dividend for the year, approved by shareholders.
Under the terms of the amended RCF announced on 29 September 2022, the Company may not, except with the consent of its lender group, declare, make or pay any dividend or distribution to its shareholders prior to an 'exit event', being a change of control, refinancing of the RCF in full, prepayment and cancellation of the RCF in full, or upon the termination date of the RCF, being May 2026. Hence, the Board is not recommending an interim dividend for the period ended 31 December 2023.
No payments to ordinary shareholders were made or proposed in respect of this period or the prior year.
Furthermore, under the RCF, the Company may not, except with the consent of its lender group, redeem or repay any of its share capital prior to an exit event. Therefore, as intimated in the announcement dated 3 October 2022, the redemption of B Shares that would normally take place in November each year will not take place.
B Shares issued but not redeemed are classified as current liabilities.
|
|
Nominal |
|
Number |
value |
|
000 |
£m |
At 31 December 2022 (unaudited), 30 June 2023 (audited) and 31 December 2023 (unaudited) |
665,888 |
0.7 |
B Shares carry no rights to attend, speak or vote at Company meetings, except on a resolution relating to the winding up of the Company.
8. Intangible assets, property, plant and equipment and right-of-use assets
|
Goodwill |
|
|
|
and other |
Property, |
|
|
intangible |
plant and |
Right-of-use |
|
assets |
equipment |
assets |
|
£m |
£m |
£m |
Net book value at 1 July 2023 (audited) |
26.2 |
117.8 |
8.5 |
Currency translation differences |
0.1 |
1.6 |
0.1 |
Additions |
0.6 |
5.6 |
1.9 |
Disposal of assets |
- |
(0.6) |
- |
Depreciation charge |
- |
(8.6) |
(1.8) |
Amortisation charge |
(1.0) |
- |
- |
Net book value at 31 December 2023 (unaudited) |
25.9 |
115.8 |
8.7 |
Included within 'goodwill and other intangible assets' is goodwill of
Capital commitments as at 31 December 2023 amounted to
9. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
The condensed interim financial information does not include all financial risk management information and disclosures required in the annual financial statements and they should be read in conjunction with the Group's Annual Report and Accounts 2023. There have been no material changes in the risk management policies since the year end.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
• Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 - inputs other than Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices); and
• Level 3 - inputs that are not based on observable market data (unobservable inputs).
|
Unaudited |
Unaudited |
Audited |
|
As at |
As at |
As at |
|
31 Dec |
31 Dec |
30 Jun |
|
2023 |
2022 |
2023 |
|
£m |
£m |
£m |
Level 2 assets |
|
|
|
Derivative financial instruments |
|
|
|
Forward currency contracts |
- |
0.4 |
0.2 |
Interest rate swaps |
2.4 |
4.9 |
4.9 |
Total financial assets |
2.4 |
5.3 |
5.1 |
Level 2 liabilities |
|
|
|
Derivative financial instruments |
|
|
|
Forward currency contracts |
(0.1) |
(0.2) |
- |
Interest rate swaps |
- |
- |
(0.3) |
Upside sharing fee |
- |
- |
(1.5) |
Total financial liabilities |
(0.1) |
(0.2) |
(1.8) |
Derivative financial instruments
Derivative financial instruments comprise the foreign currency derivatives and interest rate derivatives that are held by the Group in designated hedging relationships.
Foreign currency forward contracts are measured by reference to prevailing forward exchange rates. Interest rate swaps and caps are measured by discounting the related cash flows using yield curves derived from prevailing market interest rates.
The upside sharing fee recognised at 30 June 2023 was identified as an embedded derivative. The amended RCF that the Group agreed with its lender group on 29 September 2022 included an 'upside sharing' mechanism whereby a fee would become payable by the Group to members of the lender group upon the occurrence of an 'exit event'. Such a fee was to be determined as the percentage of any increase in the market capitalisation of the Group from 29 September 2022 to the date of the exit event. For reporting to the year ended 30 June 2023, a valuation was performed using a conventional Black-Scholes pricing model with an exit date of 31 May 2024, based on the assumption that the Group would have agreed a new RCF arrangement at that time. In the first half of the current financial year, the Group agreed and paid a settlement in respect of this upside sharing fee, therefore no embedded derivative financial instrument is recognised in respect of this as at 31 December 2023.
Valuation levels and techniques
There were no transfers between levels during the year and no changes in valuation techniques.
Financial assets and liabilities measured at amortised cost
The fair value of borrowings, including overdrafts and lease liabilities, are as follows:
|
Unaudited |
Unaudited |
Audited |
|
As at |
As at |
As at |
|
31 Dec |
31 Dec |
30 Jun |
|
2023 |
2022 |
2023 |
|
£m |
£m |
£m |
Current |
66.5 |
51.3 |
52.8 |
Non-current |
93.5 |
126.1 |
115.3 |
Total borrowings |
160.0 |
177.4 |
168.1 |
The fair value of the following financial assets and liabilities approximate to their carrying amount:
· trade and other receivables;
· other current financial assets;
· cash and cash equivalents; and
· trade and other payables.
10. Net debt
Movements in net debt were as follows:
|
|
IFRS 16 |
|
Currency |
Unaudited |
|
At 1 Jul |
non-cash |
Cash |
translation |
At 31 Dec |
|
2023 |
movements(1) |
flows |
differences |
2023 |
|
£m |
£m |
£m |
£m |
£m |
Cash and cash equivalents |
1.6 |
- |
12.4 |
0.3 |
14.3 |
Overdrafts |
(0.6) |
- |
(9.9) |
(0.5) |
(11.0) |
Bank and other loans |
(158.5) |
- |
20.3 |
(1.6) |
(139.8) |
Lease liabilities |
(9.0) |
(2.2) |
2.1 |
(0.1) |
(9.2) |
Net debt |
(166.5) |
(2.2) |
24.9 |
(1.9) |
(145.7) |
(1)IFRS 16 non-cash movements includes additions (
11. Pensions and post-employment benefits
The Group provides a number of post-employment benefit arrangements. In the UK, the Group operates a closed defined benefit pension scheme and a defined contribution pension scheme. Elsewhere in Europe, the Group has a number of smaller post-employment benefit arrangements that are structured to accord with local conditions and practices in the countries concerned. The Group also recognises the assets and liabilities for all members of the defined contribution scheme in Belgium, accounting for the whole defined contribution section as a defined benefit scheme under IAS 19 'Employee Benefits', as there is a risk the underpin will require the Group to pay further contributions to the scheme.
At 31 December 2023, the Group recognised a deficit on its UK defined benefit pension plan of
Non-governmental collected post-employment benefits had the following effect on the Group's results and financial position:
|
Unaudited |
Unaudited |
Audited |
|
Half year to |
Half year to |
Year ended |
|
31 Dec |
31 Dec |
30 Jun |
|
2023 |
2022 |
2023 |
|
£m |
£m |
£m |
Profit or loss |
|
|
|
Service cost and administrative expenses (net of employee contributions) |
(0.4) |
(0.5) |
(1.0) |
Net charge to operating profit/(loss) |
(0.4) |
(0.5) |
(1.0) |
Net interest cost on defined benefit obligation |
(0.6) |
(0.3) |
(0.5) |
Net charge to profit/(loss) before taxation |
(1.0) |
(0.8) |
(1.5) |
Other comprehensive expense |
|
|
|
Net actuarial loss |
(7.3) |
(10.3) |
(14.1) |
|
Unaudited |
Unaudited |
Audited |
|
As at |
As at |
As at |
|
31 Dec |
31 Dec |
30 Jun |
|
2023 |
2022 |
2023 |
|
£m |
£m |
£m |
Balance sheet |
|
|
|
Defined benefit obligations |
|
|
|
UK - funded |
(107.6) |
(97.6) |
(98.1) |
Other - unfunded |
(12.5) |
(12.5) |
(12.4) |
|
(120.1) |
(110.1) |
(110.5) |
Fair value of scheme assets |
|
|
|
UK - funded |
77.0 |
74.8 |
73.4 |
Other - unfunded |
10.5 |
10.6 |
10.5 |
Deficit on the schemes |
(32.6) |
(24.7) |
(26.6) |
For accounting purposes, the UK scheme's benefit obligation as at 31 December 2023 has been calculated based on data gathered for the 2021 triennial actuarial valuation and by applying assumptions made by the Group on the advice of an independent actuary in accordance with IAS 19 'Employee Benefits'.
12. Share capital
|
Allotted and fully paid |
|
|
Number |
£m |
Ordinary shares of |
|
|
At 31 December 2022 (unaudited), 30 June 2023 (audited) and 31 December 2023 (unaudited) |
174,057,328 |
17.4 |
Ordinary shares carry full voting rights and ordinary shareholders are entitled to attend Company meetings and to receive payments to shareholders.
13. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties of the Company, are eliminated on consolidation and, therefore, are not required to be disclosed in these financial statements.
Key management compensation and transactions with the Group's pension and post-employment schemes for the financial year ended 30 June 2023 are detailed in note 28 (page 211) of McBride plc's Annual Report and Accounts 2023. A copy of McBride plc's Annual Report and Accounts 2023 is available on McBride's website at www.mcbride.co.uk.
14. Exchange rates
The exchange rates used to translate the results, assets, liabilities and cash flows of the Group's principal foreign operations into Sterling were as follows:
|
Unaudited |
Unaudited |
Audited |
|
Half year to |
Half year to |
Year ended |
|
31 Dec |
31 Dec |
30 Jun |
|
2023 |
2022 |
2023 |
Average rate: |
|
|
|
Euro |
1.16 |
1.16 |
1.15 |
US Dollar |
1.25 |
1.17 |
1.20 |
Polish Zloty |
5.17 |
5.49 |
5.38 |
Danish Krone |
8.64 |
8.62 |
8.56 |
Malaysian Ringgit |
5.84 |
5.32 |
5.41 |
Australian Dollar |
1.92 |
1.75 |
1.79 |
Closing rate: |
|
|
|
Euro |
1.15 |
1.13 |
1.17 |
US Dollar |
1.27 |
1.20 |
1.27 |
Polish Zloty |
4.99 |
5.28 |
5.17 |
Danish Krone |
8.58 |
8.38 |
8.68 |
Malaysian Ringgit |
5.84 |
5.30 |
5.91 |
Australian Dollar |
1.87 |
1.77 |
1.91 |
15. Key performance indicators (KPIs)
Management uses a number of KPIs to measure the Group's performance and progress against its strategic objectives. The most important of these are defined below.
Financial
· Revenue: Revenue from contracts with customers from the sale of goods is measured at the invoiced amount, net of sales rebates, discounts, value added tax and other sales taxes.
· Transformation benefits: Net profit benefit achieved from the Transformation programme.
· Adjusted EBITDA margin: The calculation of Adjusted EBITDA, which when divided by revenue gives this EBITDA margin, is defined in note 2 to the 2023 Annual Report and Accounts.
· Free cash flow increase: Free cash flow is defined as cash generated before exceptional items.
· Adjusted ROCE improvement: Total adjusted operating profit divided by the total of goodwill and other intangible assets, property, plant and equipment, right-of-use assets, inventories, trade and other receivables less trade and other payables.
Non-financial
· Health and safety: The number of lost time injuries x 100,000 divided by total number of person-hours worked.
· Customer service level: The volume of products delivered in the correct volumes and within requested timescales, as a percentage of total volumes ordered by customers.
· Gender split - female: The proportion of our workforce that is female.
· Customer quality: A customer satisfaction index which combines critical issues, audit results, returns and complaints.
· Research and development expenditure: Total research and development expenditure as a percentage of Group revenue.
16. Additional information
Alternative performance measures
The performance of the Group is assessed using a variety of adjusted measures that are not defined under IFRS and are therefore termed non-GAAP measures. A reconciliation for each non-GAAP measure to the most directly comparable IFRS measure, is set out below.
Adjusted operating profit and adjusted EBITDA
Adjusted EBITDA means adjusted operating profit before depreciation and amortisation. A reconciliation between adjusted operating profit, adjusted EBITDA and the Group's reported statutory operating profit is shown below:
|
Half year to 31 Dec 2023 |
Half year to 31 Dec 2022 |
Year ended 30 Jun 2023 |
|
£m |
£m |
£m |
Operating profit/(loss) |
29.5 |
(2.6) |
10.3 |
Exceptional items (note 4) |
- |
- |
0.8 |
Amortisation of intangibles (note 8) |
1.0 |
1.3 |
2.4 |
Adjusted operating profit/(loss) |
30.5 |
(1.3) |
13.5 |
Depreciation of property, plant and equipment (note 8) |
8.6 |
8.2 |
16.8 |
Depreciation of right-of-use assets (note 8) |
1.8 |
1.9 |
3.8 |
Adjusted EBITDA |
40.9 |
8.8 |
34.1 |
Adjusted profit before taxation and adjusted profit for the year
Adjusted profit before taxation is based on adjusted operating profit less adjusted finance costs. Adjusted profit for the period is based on adjusted profit before taxation less taxation. The table below reconciles adjusted profit before taxation to the Group's reported profit before taxation, and adjusted profit for the period to the Group's reported profit for the period.
|
Half year to 31 Dec 2023 |
Half year to 31 Dec 2022 |
Year ended 30 Jun 2023 |
|
£m |
£m |
£m |
Profit/(loss) before taxation |
17.4 |
(20.0) |
(15.1) |
Exceptional items (note 4) |
4.0 |
10.8 |
13.0 |
Amortisation of intangibles (note 8) |
1.0 |
1.3 |
2.4 |
Adjusted profit/(loss) before taxation |
22.4 |
(7.9) |
0.3 |
Taxation |
(6.0) |
0.7 |
(0.3) |
Adjusted profit/(loss) for the period |
16.4 |
(7.2) |
- |
Adjusted earnings per share
Adjusted earnings per share is based on the Group's profit for the period adjusted for the items excluded from operating profit in arriving at adjusted operating profit, and the tax relating to those items.
Free cash flow and cash conversion %
Free cash flow is one of the Group's key performance indicators by which our financial performance is measured. It is primarily a liquidity measure. However, management also believe that free cash flow and cash conversion % are important indicators of overall operational performance as they reflect the cash generated from operations. Free cash flow is defined as cash generated before exceptional items. Cash conversion % is defined as free cash flow as a percentage of adjusted EBITDA. A reconciliation from net cash generated from operating activities, the most directly comparable IFRS measure, to free cash flow, is set out as follows:
|
Half year to 31 Dec 2023 |
Half year to 31 Dec 2022 |
Year ended 30 Jun 2023 |
|
£m |
£m |
£m |
Net cash generated from operating activities |
33.7 |
4.6 |
11.1 |
Add back: |
|
|
|
Taxation paid/(received) |
2.6 |
(0.1) |
1.8 |
Interest paid |
6.2 |
3.6 |
11.4 |
Refinancing costs paid |
5.6 |
10.6 |
12.3 |
Cash outflow in respect of exceptional items |
0.5 |
0.8 |
1.4 |
Free cash flow |
48.6 |
19.5 |
38.0 |
Adjusted EBITDA |
40.9 |
8.8 |
34.1 |
Cash conversion % |
119% |
222% |
111% |
Adjusted return on capital employed (ROCE)
Adjusted ROCE serves as an indicator of how efficiently we generate returns from the capital invested in the business. It is a Group KPI that is directly relatable to the outcome of investment decisions. Adjusted ROCE is defined as total adjusted operating profit/(loss) divided by the average period-end capital employed. Capital employed is defined as the total of goodwill and other intangible assets, property, plant and equipment, right-of-use assets, inventories, trade and other receivables less trade and other payables. There is no equivalent statutory measure within IFRS. Adjusted return on capital employed is calculated as follows:
|
As at 31 Dec 2023 |
As at 31 Dec 2022 |
As at 31 Dec 2021 |
As at 30 Jun 2023 |
|
£m |
£m |
£m |
£m |
Goodwill (note 8) |
19.8 |
19.8 |
19.7 |
19.7 |
Other intangible assets (note 8) |
6.1 |
6.5 |
7.6 |
6.5 |
Property, plant and equipment (note 8) |
115.8 |
121.1 |
122.1 |
117.8 |
Right-of-use assets (note 8) |
8.7 |
9.9 |
11.8 |
8.5 |
Inventories |
109.4 |
128.2 |
96.4 |
121.5 |
Trade and other receivables |
147.7 |
131.1 |
120.4 |
145.7 |
Trade and other payables |
(215.5) |
(211.9) |
(183.2) |
(219.6) |
Capital employed |
192.0 |
204.7 |
194.8 |
200.1 |
Average period-end capital employed |
198.4 |
199.8 |
209.9 |
209.4 |
Rolling twelve months' adjusted operating profit/(loss) |
45.3 |
(11.0) |
(9.7) |
13.5 |
Adjusted return on capital employed % |
22.8% |
(5.5)% |
(4.6)% |
6.4% |
Liquidity
Liquidity means, at any time, without double counting, the aggregate of:
(a) cash;
(b) cash equivalents;
(c) the available facility at that time, which comprises the headroom available in the RCF and other committed facilities; and
(d) the aggregate amount available for drawing under uncommitted facilities.
|
As at 31 Dec 2023 |
As at 31 Dec 2022 |
As at 30 Jun 2023 |
|
£m |
£m |
£m |
Cash and cash equivalents |
14.3 |
8.0 |
1.6 |
RCF headroom |
64.2 |
35.2 |
40.0 |
Other committed facilities headroom |
6.5 |
15.5 |
17.5 |
Uncommitted facilities |
- |
0.2 |
0.2 |
Liquidity |
85.0 |
58.9 |
59.3 |
Net debt
Net debt consists of cash and cash equivalents, overdrafts, bank and other loans and lease liabilities.
Net debt is a measure of the Group's net indebtedness that provides an indicator of overall balance sheet strength. It is a key indicator used by management to assess both the Group's cash position and its indebtedness. The use of the term 'net debt' does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities included in this measure.
Net debt is considered to be an alternative performance measure as it is not defined in IFRS. A reconciliation from loans and other borrowings, lease liabilities and cash and cash equivalents, the most directly comparable IFRS measures to net debt is set out below:
|
As at 31 Dec 2023 |
As at 31 Dec 2022 |
As at 30 Jun 2023 |
|
£m |
£m |
£m |
Current assets |
|
|
|
Cash and cash equivalents |
14.3 |
8.0 |
1.6 |
Current liabilities |
|
|
|
Borrowings (note 9) |
(63.2) |
(47.5) |
(49.3) |
Lease liabilities |
(3.3) |
(3.8) |
(3.5) |
|
(66.5) |
(51.3) |
(52.8) |
Non-current liabilities |
|
|
|
Borrowings (note 9) |
(87.6) |
(119.3) |
(109.8) |
Lease liabilities |
(5.9) |
(6.8) |
(5.5) |
|
(93.5) |
(126.1) |
(115.3) |
Net debt |
(145.7) |
(169.4) |
(166.5) |
Note: This report contains inside information which is disclosed in accordance with the Market Abuse Regulation, which came into effect on 3 July 2016.