TIDMMCB
RNS Number : 2149R
McBride PLC
28 February 2023
McBride plc ("McBride", the "Company" or the "Group")
Good momentum delivering business performance improvement,
with
expectations for full year on track
28 February 2023
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
2022.
Business headlines
-- Business and revenue momentum in line with growth ambition:
-- private label volume growth of 2.6% in first half, gaining market share
-- cost conscious consumers supporting near-term growth
-- sustained pricing growth delivered
-- new products launched supporting product sustainability objectives
-- good pipeline of business wins
-- improved service levels
-- Financial performance recovery:
-- trading results close to break-even with recovery to positive EBITA in final two months
-- strong margin recovery from pricing and product engineering
-- first half revenues up GBP102.9m, higher by 30.3% at constant
currency(1) , mostly from price rises
-- 'Programme Compass' GBP20m annualised savings on track
-- Strategy and organisation development underpinning recovery:
-- divisional focus delivering step-up in customer experience and growth ambitions
-- Compass structure maturing and progressing well
-- Transformation team appointed, change programme design concluding
-- carbon reduction target setting expected in 2023
Financial headlines
-- Group revenues up 31.8%
-- EBITA improvement with adjusted operating losses(2) reduced
to GBP1.3m from GBP14.8m loss in H1 FY22
-- Net debt(2) steady at GBP169.4m (30 June 2022: GBP164.4m)
-- Liquidity(2) comfortable at GBP58.9m (30 June 2022: GBP70.6m)
Half Half
year to year to Constant
31 Dec 31 Dec Reported currency
GBPm unless otherwise stated 2022 2021 change change (1)
Total operations
Group revenue 426.3 323.4 31.8% 30.3%
Adjusted operating loss (2) (1.3) (14.8) 13.5 13.5
Operating loss (2.6) (14.7) 12.1
Adjusted loss before taxation(2) (7.9) (16.9) 9.0 9.0
Loss before taxation (20.0) (16.8) (3.2)
Adjusted diluted loss per share
(3) (4.2)p (8.1)p 3.9p
Diluted loss per share (9.7)p (8.0)p (1.7)p
Net debt (2,4) 169.4 164.4 5.0
Adjusted return on capital employed
(2) (5.5)% (4.6)% (0.9) ppt
------------------------------------ -------- --------- --------- ----------
(1) Comparatives translated at six months to 31 December 2022
exchange rates.
(2) Refer to note 16 for definition.
(3) See note 6.
(4) Net debt comparative is at 30 June 2022; all other
comparatives refer to the six months ended 31 December 2021.
Outlook
The early part of the second half year has continued the
momentum seen in the first half and our current expectations are
for a stronger operating margin performance and hence a return to
adjusted operating profit in the second half of the year. This is
driven by the impact of the margin management actions implemented
and in progress, steadying cost inflation and a favourable retail
environment for private label products. Our full-year expectations
remain on track.
Medium term, the Group will continue its strategic plans to grow
shareholder value through its focus on delivering growth and cost
efficiency benefits. Our growth ambitions are making good progress
with new wins launching through 2023 and further innovative,
consumer-insight led and new, eco-friendly product opportunities in
the pipeline. The Transformation programme is being launched at
present, targeting GBP50 million of benefits over five years.
Whilst positive about the outlook, we also remain vigilant as to
the potential impacts of the ongoing and significant macroeconomic
uncertainty, particularly around energy costs, high general
inflation levels and the knock-on impacts of any escalation of the
Ukraine conflict.
Chris Smith, Chief Executive Officer, commented:
"The first half year required continued high levels of attention
to margin recovery in light of ongoing inflationary pressures.
Whilst there are some early signs of stabilisation in certain input
costs, many raw material costs remain historically high. Energy and
employment costs continue to apply further inflationary pressure,
and accordingly, we continue to action mitigations including price
increases, product engineering and cost control.
It is pleasing to have returned to positive adjusted operating
profit in the last two months of the period, with momentum
improving into the second half as a result of higher volumes from
new business wins, better customer service levels and pricing
actions fully annualising. All of this is supported by consumer
behaviour creating a more favourable environment for private label
products.
The transformation agenda, signposted as part of Compass,
gathers pace with the appointment of the Chief Transformation
Officer, dedicated to the key change and improvement initiatives
over the coming years.
The Group's core activities remain strong and the dedication of
the entire McBride team to resolve the challenges confronting us is
a strong demonstration of our values and the commitment to return
the Group to sustainable levels of profitability."
McBride plc
Chris Smith, Chief Executive Officer 0161 203 7401
Mark Strickland, Chief Financial
Officer 0161 203 7401
FTI Consulting LLP 020 3727 1017
Ed Bridges, Nick Hasell
The results presentation will be available on the McBride plc
investor relations website from 1.00pm today.
The information in this announcement has not been audited or
otherwise independently verified and no representation or warranty,
express or implied, is made as to, and no reliance should be placed
on, the fairness, accuracy, completeness or correctness of the
information or opinions contained herein. None of the Company or
any of its affiliates, advisors or representatives shall have any
liability whatsoever (in negligence or otherwise) for any loss
whatsoever arising from any use of this announcement, or its
contents, or otherwise arising in connection with this
announcement. This announcement does not constitute or form part of
any offer or invitation to sell, or any solicitation of any offer
to purchase any shares in the Company, nor shall it or any part of
it or the fact of its distribution form the basis of, or be relied
on in connection with, any contract or commitment or investment
decisions relating thereto, nor does it constitute a recommendation
regarding the shares of the Company. Certain statements, statistics
and projections in this announcement are or may be forward looking.
By their nature, forward-looking statements involve a number of
risks, uncertainties or assumptions that may or may not occur and
actual results or events may differ materially from those expressed
or implied by the forward-looking statements. Accordingly, no
assurance can be given that any particular expectation will be met,
and reliance should not be placed on any forward-looking statement.
Accordingly, forward-looking statements contained in this
announcement regarding past trends or activities should not be
taken as representation that such trends or activities will
continue in the future. You should not place undue reliance on
forward-looking statements, which are based on the knowledge and
information available only at the date of this announcement's
preparation. The Company does not undertake any obligation to
update or keep current the information contained in this
announcement, including any forward-looking statements, or to
correct any inaccuracies, which may become apparent, and any
opinions expressed in it are subject to change without notice.
References in this announcement to other reports or materials, such
as a website address, have been provided to direct the reader to
other sources of information on McBride plc, which may be of
interest. Neither the content of McBride's website nor any website
accessible by hyperlinks from McBride's website nor any additional
materials contained or accessible thereon, are incorporated in, or
form part of, this announcement.
Strategy development
The Compass strategy and its financial objectives were to
generate sustained revenue growth and improved margins from
efficiency and effectiveness of our key activities, delivered
through accountable business divisions and core central
functions.
The divisional teams have been in place for nearly two years now
and their maturity, accountability and strategic development is
increasingly visible, with encouraging progress in support of the
growth agenda. As the inflationary environment stabilises, our
attention now turns to the efficiency and effectiveness element of
Compass.
The Group's Transformation programme has been launched with the
appointment of a new Chief Transformation Officer, a role that sits
on the Executive Committee, with the programme shape mostly
finalised.
The plan is consciously constructed to contain seven overall
programmes overseen by a newly-appointed programme management
office. Our carbon reduction programme will be a common thread
through all the other programmes, as we look to decarbonise the
business over the coming years. We expect that the benefits of
these programmes will fall into two groups, one supporting sales
and margin growth, the other delivering cost reduction and cash
management improvements.
Key to cost benefit realisation will be the migration to a new
ERP over the coming three to four years, permitting a more modern,
standard operating model with improved data analytics. Supporting
our sales and margin growth ambition will be programmes delivering
commercial excellence from our customer facing teams and service
excellence from our supply chain activities.
Most programmes will launch in the coming weeks and months, all
in support of our targeted GBP50 million benefit over five years. A
fuller roadmap will be provided at the year-end results
announcement in September 2023.
Overall business performance
The business has delivered a first half performance in line with
our business recovery plan. Delivery of this plan faced huge
challenges, with a further GBP97.1 million of price increases
delivered in the period and inflation adding over GBP87.6 million
of further cost rises. However, our momentum is good and our road
to recovery is well underway, with the Group returning consistently
to positive monthly adjusted EBITDA(1) from May 2022 and positive
monthly adjusted operating profit from November 2022.
In the period, McBride has continued to gain private label
market share. First half sales volumes grew by 1.2% compared to the
prior year, with private label volume growth at 2.6%. The overall
European homecare market in the twelve months to December 2022 has
seen volumes fall over 5%, especially in branded products, with a
smaller fall of 2.2% for private label products. Alongside some
residual Covid-19 effects in 2021, these volume falls are
attributed to consumers being more frugal with dosing and usage.
Our contract manufacturing business saw volumes decline 14.0%,
mostly a result of weaker volumes for the brands in stores as
shoppers make alternative choices to mitigate the impact of
inflationary pressures.
The strategic aim from our Compass programme - whose objective
is to deliver focused, specialist and expert support to our
customers - is increasingly evident in our commercial performance.
Our business win/loss ratio has turned positive, with new volumes
coming on stream over the next twelve months. Several new products
have been launched in line with our product sustainability
objectives, including innovative carton packaging alternatives to
plastic boxes and bottles. We have an encouraging pipeline of
opportunities and innovation options for both private label and
contract manufacturing customers.
Raw material input costs continued to increase, albeit at a
slower rate than previously. Despite a more favourable feedstock
environment on plastics and naturals compared to the second half of
FY22, increased energy, indirect and labour costs, coupled with
large pockets of supply/demand tightness, were key drivers of the
increases and more than offset any feedstock-driven relief.
Distribution costs of GBP38.5 million (2021: GBP30.8m)
significantly increased year on year, particularly affected by the
surge in the cost of fuel and driver shortages in Europe following
the outbreak of the conflict in Ukraine.
All divisions continued to collaborate with customers to agree
pricing actions and product engineering options to offset the
inflationary challenges. Price increases agreed over the past 18
months have driven essential recovery in gross margins, but we
remain vigilant to the likely need for further price increases in
the coming months to offset continuing inflationary impacts,
particularly in labour, transport, energy and general supplies. We
have adopted the principle of not committing to price levels beyond
a three-month horizon, to protect both our business but also our
customers and consumers. The potential for volatility in input
costs remains high and this approach will better align our private
label business with the methods used typically in contract
manufacturing.
Customer service levels improved progressively during the
period, particularly due to improved factory performance and a
strong recovery in our logistics performance.
Capital expenditure continues to be strictly controlled, with
prioritisation processes to ensure that divisions' growth
objectives can still be realised. During the period, capital
expenditure, including capital payments on lease liabilities less
proceeds from the sale of property, plant and equipment, decreased
to GBP6.8 million (2021: GBP8.8m) in cash terms.
(1) Refer to note 16 for definition.
Divisional portfolio performance
Half Half
year to year to
31 Dec 31 Dec
2022 2021 Reported Constant
Revenue GBPm GBPm change currency(1)
------------- -------- -------- -------- -----------
Liquids 237.7 182.8 30.0% 29.0%
Unit Dosing 111.4 81.6 36.5% 35.0%
Powders 42.7 32.8 30.2% 28.6%
Aerosols 21.3 15.8 34.8% 33.1%
Asia Pacific 13.2 10.4 26.9% 18.9%
------------- -------- -------- -------- -----------
Group 426.3 323.4 31.8% 30.3%
------------- -------- -------- -------- -----------
Half Half
year to year to
31 Dec 31 Dec
2022 2021 Reported Constant
Adjusted operating (loss)/profit GBPm GBPm change currency(1)
--------------------------------- -------- -------- -------- -----------
Liquids 0.2 (10.2) 10.4 10.4
Unit Dosing 2.2 (0.4) 2.6 2.6
Powders (1.2) (1.4) 0.2 0.1
Aerosols - (0.8) 0.8 0.8
Asia Pacific 0.8 0.2 0.6 0.6
Corporate (3.3) (2.2) (1.1) (1.0)
--------------------------------- -------- -------- -------- -----------
Group (1.3) (14.8) 13.5 13.5
--------------------------------- -------- -------- -------- -----------
(1) Comparatives translated at six months to 31 December 2022
exchange rates.
Liquids performance review
Liquids revenue of GBP237.7 million was 29.0% higher on a
constant currency basis, driven by the pass-through of input cost
inflation to customers via increased selling prices.
Sales volumes grew by 0.7%, with private label volumes 1.2%
higher, as private label share of the market grew in response to
the cost-of-living crisis. Contract manufacturing volumes declined
by 6.2%, reflecting lower demand for higher-priced branded
products.
Dishwash volumes grew by 10.6%, driven by contract manufacturing
gains in machine dishwash and private label volume growth in
washing up liquids. Cleaners' volumes fell by 3.7%, as the last of
the Covid-19 temporary demand subsided, and with a contract
manufacturing customer choosing to bring volumes back in-house.
Laundry volumes fell by 1.7%, with the cost-of-living crisis
affecting fabric conditioner demand.
Customer service levels, following a period of supply chain
shocks and driver availability issues which have disrupted supply
across the industry for several years, are now moving back towards
pre-Covid-19 levels, showing gradual month-on-month improvement
with initiatives being put in place to sustain the performance.
Adjusted operating profit of GBP0.2 million was significantly
improved on the prior year (2021: GBP10.2m loss) due to three main
factors: annualisation of price increases realised in the prior
year; new price increases agreed during the first half; and
continued delivery of Programme Compass cost savings in line with
our 'Cost Leadership' strategy.
Despite the huge demands on the team to recover margin and
service performance in the period, we have made good progress with
key strategic initiatives:
-- Our lean conversion programme was launched during the first
half with the aim of optimising processes and reducing conversion
costs across sites. The financial benefits are expected to commence
in the next financial year, supporting our Programme Compass
cost-saving commitments.
-- In February 2023, we launched a range of Liquids products in
innovative recyclable cardboard carton packaging, supporting the
Group's commitment to deliver more sustainable products.
Unit Dosing performance review
Unit Dosing revenue of GBP111.4 million was 35.0% higher on a
constant currency basis. This revenue increase was largely driven
by higher sales prices. Adjusted operating profit was GBP2.2
million, a significant improvement versus the prior year (2021:
GBP0.4m loss), though still below historical profitability
levels.
Throughout the last twelve months price increases have been
agreed which recover a significant part of the exceptional raw
material and logistics cost inflation that the business has and
continues to experience. To help reduce the inflationary impact on
consumers, our product development teams, in close co-operation
with our customers, have also focused on product
re-engineering.
Sales volumes grew moderately in the first half, driven by
higher sales to private label customers across all categories. This
was partly offset by lower sales to our contract manufacturing
customers. Despite very challenging business conditions, continued
progress has been made against the 'Product Leadership' strategic
imperative. The turnaround of the laundry capsules business is
progressing well, with our new eco-friendly, child-safe carton
packaging for capsules being very well received by multiple
customers. In dishwash, we successfully gained new business, which
will launch in the months ahead and benefit the division's positive
win/loss balance in the first half.
Our efforts in improving efficiency at our sites have seen
positive progress, particularly at our largest dishwash site.
Though overall service levels for the division have improved,
further improvements are needed to realise service excellence, a
key topic of our Transformation programme.
The key priority for the second half is the continued recovery
of business performance. This will allow for mid-term increased
investment in sustainable product offerings and growth of the
division in line with its strategic objectives.
Powders performance review
Powders revenue of GBP42.7 million was 28.6% higher on a
constant currency basis. Revenue grew significantly across all
geographies. Market demand for private label laundry powders has
grown as shoppers have shifted away from higher-priced branded
powder products and other laundry product formats. Consumers have
moved to shop more in discount retailers, where we have a strong
presence, especially in the UK. In certain regions, we were able to
grow due to higher demand from customers that competitors struggled
to supply. Lastly, we benefited from the support of our customers
in passing on the significant continued inflationary cost increases
in raw materials for the manufacture of laundry powder
products.
Adjusted operating loss decreased slightly to GBP1.2 million
(2021: GBP1.4m loss), as the higher volumes driven by positive
demand factors, higher prices agreed with customers and continued
strict cost controls, were not sufficient to offset the exceptional
inflationary increases in raw material and logistics costs. In
particular, the cost of salts increased significantly later in the
half year, driven by energy and feedstock inflation and
availability issues. While the first half saw some benefits of the
price increases negotiated with private label customers, the second
half is expected to realise a fuller recovery of the negative input
cost effects.
We continue to develop both our private label and contract
manufacturing businesses through innovation in formulations and
packaging solutions. Recent consumer test results in multiple
countries have confirmed product superiority to both brands and
other private label offers, providing a solid base for further
private label business wins. Significant contract manufacturing
wins have been achieved that will deliver their full potential
during 2023.
Aerosols performance review
Aerosols revenue of GBP21.3 million (2021: GBP15.8m) was 33.1%
higher on a constant currency basis. This is explained by volume
growth of 11.4%, driven by increasing underlying demand and new
business wins, with the remaining growth coming from pricing
actions. Supply chain agility and strong cost controls have
reinforced Aerosols' excellent reputation with customers and have
been key factors in capturing new business in both private label
and contract manufacturing. In the second half, we expect private
label to continue its good progression and to benefit from recent
contract manufacturing wins.
At break-even, adjusted operating profit was better than the
prior year (2021: GBP0.8m loss), driven by higher sales, close
control of overheads and productivity savings. The implementation
of price increases with customers partially offset exceptional
increases in raw material, packaging and logistics costs with
further price increases planned in the early part of the second
half.
Asia Pacific performance review
Asia Pacific revenue of GBP13.2 million was 18.9% higher on a
constant currency basis. Sales recovered strongly in the first half
with consumer spending in the main Asia Pacific markets returning
to pre-Covid-19 pandemic levels. Strong inflationary pressures,
especially in Australia, resulted in higher demand for private
label products as consumers attempted to stretch the value of their
money.
Following disruption last financial year from Covid-19-related
workforce shortages, operations at our manufacturing site in
Malaysia have stabilised and the value proposition has been
strengthened by obtaining accreditation of ISO 22716 quality
standards. Robust cost control and overhead efficiency programmes,
coupled with moderate price increases implemented to offset input
cost increases, resulted in the delivery of a much-improved
adjusted operating profit of GBP0.8 million (2021: GBP0.2m).
We are continuing to progress the divisional 'Deliver to grow'
strategy by expanding the range of private label products and
pursuing business development opportunities in contract
manufacturing, in both personal care and household product
categories.
Input costs
The first half saw input costs continue to increase, albeit at a
slower rate than previously experienced. Despite a generally more
favourable feedstock environment on plastics and naturals compared
to the second half of FY22, increased energy and labour costs
coupled with large pockets of supply/demand tightness were key
drivers behind the increases seen, more than offsetting any
feedstock-driven relief.
There were a number of cases where energy and supply/demand
imbalances caused significant price rises in key feedstock in the
period. Products from the 'salts' and 'persalts' families increased
by over 70% during the first half, while some feedstock continued
to reach all-time highs. For example, caustic soda, where prices
were already 100% above the multi-year average at the end of FY22,
doubled again towards the end of the period, breaking new
records.
In general, we are seeing more stability in our main materials
input costs, with improving supply and visibility, but markets
remain volatile and unpredictable. We are not seeing any
significant deflation across our materials base and overall price
levels remain close to 50% higher than the pre-pandemic period on
the vast majority of our input costs.
Despite the market volatility and global supply/demand
imbalances, our own supply chains have continued to demonstrate
resilience, with minimal levels of disruption experienced so
far.
Distribution costs
Global supply chains continue to see a significant impact from
geopolitical events and the aftershocks of the Covid-19 pandemic.
Underlying costs have significantly increased year on year,
particularly affected by the surge in the cost of fuel and driver
shortages in Europe following the outbreak of the conflict in
Ukraine. Inflationary pressures have driven a c.20% increase in
shipping costs per pallet.
Group operating results
The half-year operating loss was GBP2.6 million (2021: GBP14.7m
loss). This includes amortisation of GBP1.3 million (2021: GBP1.3m)
and exceptional costs of GBPnil (2021: GBP1.4m credit).
The half-year adjusted operating loss of GBP1.3 million (2021:
GBP14.8m loss) was due primarily to exceptional raw material,
packaging, logistics, energy and labour cost rises, which were
unable to be fully recovered by price increases in the first half.
Adjusted operating loss margin improved from (4.6)% to (0.3)%.
Corporate costs were GBP3.3 million, an increase of 43.5% from
the prior year at constant currency (2021: GBP2.2m), driven by
inflationary impacts and higher bonus provisions.
Group EBITDA
Half-year adjusted EBITDA(1) profit of GBP8.8 million (2021:
GBP4.3m loss) reflected our improved trading performance and our
ability to recover more of the exceptional cost pressures through
price increases agreed with our customers.
(1) Refer to note 16 for definition.
Exceptional items
A total exceptional charge of GBP10.8 million recorded during
the period relates to continuing operations (2021: GBP1.4m credit)
and comprised costs incurred in respect of an independent business
review and refinancing work completed in September 2022. These were
recognised within finance costs (2021: operating costs).
Finance costs
At GBP6.6 million, non-exceptional finance costs (2021: GBP2.1m)
increased as a result of revised terms under the lending agreement
announced on 29 September 2022 and market interest rate
increases.
Loss before tax and taxation
Reported loss before taxation from continuing operations was
GBP20.0 million (2021: GBP16.8m loss). Adjusted loss before
taxation from continuing operations was GBP7.9 million (2021:
GBP16.9m loss), a decrease in losses of GBP9.0 million. The tax
credit on continuing adjusted loss before tax for the period is
GBP0.7 million (2021: GBP2.8 million credit) and the effective tax
rate is 9% (2021: 17%). The effective tax rate is lower than the
previous year on the basis that, in the prior year, additional
deferred tax assets were recognised on losses in the UK.
The statutory effective tax rate on continuing operations for
the period is 16% (2021: 18%). The Group forecasts an adjusted
effective tax rate for the financial year of 8%.
Loss per share
On an adjusted basis, diluted loss per share from continuing
operations was 4.2 pence (2021: 8.1p loss per share). Total
adjusted diluted loss per share decreased to 4.2 pence (2021: 8.1p
loss per share), with basic loss per share of 9.7 pence (2021: 8.0p
loss per share).
Payments to shareholders
Per the terms of the amended revolving credit facility (RCF)
announced on 29 September 2022, no dividends will be paid to
shareholders at least until there is 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, at this interim stage, there is no
distribution.
Cash flow and balance sheet
Half
year Half year Full year
to to to
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
----------------------------------------------------- ------- --------- ---------
Adjusted EBITDA(1) 8.8 (4.3) (3.6)
Working capital excluding provisions and pensions 12.2 8.4 (15.3)
Share-based payments and loss on disposal of
property, plant and equipment 0.5 0.8 0.3
Non-exceptional reversal of impairment of property,
plant and equipment - (0.1) (0.1)
Pension deficit reduction contributions (2.0) (2.0) (4.0)
----------------------------------------------------- ------- --------- ---------
Free cash flow 19.5 2.8 (22.7)
Exceptional items and tax paid (11.3) 0.9 (4.2)
Capital expenditure including capital payments
on lease liabilities
less proceeds from sale of property, plant and
equipment (6.8) (8.8) (13.2)
Interest on borrowings and lease liabilities
less interest receivable (3.6) (1.6) (3.3)
Debt financing and refinancing activities 5.3 17.3 22.9
Settlement of derivatives (0.1) - 0.4
----------------------------------------------------- ------- --------- ---------
Free cash flow to equity(2) 3.0 10.6 (20.1)
Dividends paid/redemption of B shares - (0.1) (0.1)
Share buy-back - (0.1) (0.1)
Net increase/(decrease) in cash and cash equivalents 3.0 10.4 (20.3)
----------------------------------------------------- ------- --------- ---------
Cash conversion(1) 222% n/a n/a
----------------------------------------------------- ------- --------- ---------
Cash generated from continuing operations before exceptional
items during the half year was GBP19.5 million (2021: GBP2.8m).
During the period, capital expenditure, including capital
payments on lease liabilities less proceeds from the sale of
property, plant and equipment, decreased to GBP6.8 million (2021:
GBP8.8m) in cash terms. Capital expenditure continues to be
strictly controlled.
Working capital management contributed a GBP12.2 million
positive cash flow impact (2021: GBP8.4m). This was driven by
improved payment terms agreed with customers, partially offset by
an increase in the value of inventories due to higher input
costs.
The Group's net assets decreased to GBP37.3 million (30 June
2022: GBP57.0m). Gearing(1) at 31 December was higher at 86% (30
June 2022: 80%) and adjusted return on capital employed(1) of
(5.5)% improved on the prior year (30 June 2022: (11.4)%).
(1) Refer to note 16 for definition.
(2) Free cash flow to equity excludes cash flows relating to
transactions with shareholders.
Bank facilities and net debt
Net debt at the half year increased to GBP169.4 million (30 June
2022: GBP164.4m).
The Group has a EUR175 million sustainability-linked RCF that is
committed until 10 May 2026. At 31 December 2022, the amount
undrawn on the facility was EUR39.7 million (30 June 2022:
EUR64.5m).
As announced on 29 September 2022, the key provisions of the RCF
are:
-- it shall be secured against material asset, share and inter-company balances;
-- commitments to reduce, and be cancelled, in the amount of the
Euro equivalent of GBP2.5 million every three months from September
2024 up until the termination date;
-- existing bilateral overdraft facilities shall become
ancillary facilities committed until 30 September 2024;
-- invoice discounting facilities shall be committed to 30 September 2024;
-- liquidity shall not be less than GBP15 million when tested on or prior to 30 September 2024;
-- liquidity shall not be less than GBP25 million when tested post 30 September 2024;
-- net debt cover and interest cover covenants to be tested quarterly from 30 September 2024;
-- no dividends will be paid to shareholders until there is 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; and
-- the arrangement includes an 'upside sharing' mechanism
whereby a fee will become payable by the Group to members of the
lender group upon the occurrence of an exit event. Such fee is
determined as 11% of any increase in the market capitalisation of
the Group as at 29 September 2022 compared to the market
capitalisation of the Group at the date of such exit event.
At 31 December 2022, liquidity(1) as defined by the RCF
agreement was GBP58.9 million (30 June 2022: GBP70.6m). Liquidity
throughout the period was comfortably above the minimum liquidity
covenant of GBP15 million.
At 31 December 2022, the Group had a number of facilities
whereby it could borrow against certain of its trade receivables.
In the UK, the Group had a GBP20 million facility that is committed
until September 2024. In France and Belgium, the Group had an
aggregate EUR30 million facility, which had a rolling notice period
of six months for the French part and three months for the Belgian
part, and is committed until September 2024. In Germany, the Group
had a EUR40 million facility that is committed until September
2024. The Group can borrow from the provider of the relevant
facility up to the lower of the facility limit and the value of the
respective receivables.
The Group is currently negotiating to increase liquidity by a
further GBP25 million through the extension of its invoice
discounting facilities to unencumbered receivables ledgers.
However, there is no certainty that these negotiations will be
successful.
The Group also has access to uncommitted working capital
facilities amounting to GBP0.2 million at 31 December 2022 (30 June
2022: GBP22.7m). At 31 December 2022, GBPnil (30 June 2022:
GBP6.8m) was drawn against these facilities.
(1) Refer to note 16 for definition.
Pensions
The Group provides a number of post-employment benefit
arrangements. In the UK, the Group operates a defined benefit
scheme, which is closed to new members and to future accrual, and a
defined contribution pension scheme. Elsewhere in Europe, the Group
has a number of smaller unfunded post -- employment benefit
arrangements that are structured to accord with local conditions
and practices in the countries concerned. At 31 December 2022, the
Group recognised a deficit in its UK scheme of GBP22.8 million (30
June 2022: GBP14.4m). The GBP8.4 million deficit increase since 30
June 2022 was driven by the Fund's invested assets falling by more
than the liabilities as a consequence of the gilt crisis in
September/October 2022, reducing the matching of asset movements
with liabilities.
The Group has other unfunded post-employment benefit obligations
outside the UK that amounted to GBP1.9 million (30 June 2022:
GBP1.7m).
Environmental, social and governance
We continue to report progress via our ESG dashboard and deliver
on the 2025 targets for our operations and product sustainability,
noting increases in our use of renewable electricity and moving
more of our plastic packaging portfolio into recycled plastic
(PCR).
We have measured our corporate carbon footprint now for two
consecutive years and we are clear on the emission hotspots we
would like to address. We will focus our efforts on energy,
logistics, chemicals, and packaging. We are in the process of
compiling our carbon reduction initiatives in the near-term with
the SBTi. This year we have launched a range of new product
initiatives based on carton board that has led to a reduction in
overall plastic consumption.
We will continue to report against the Taskforce on
Climate-related Financial Disclosures (TCFD) framework, taking the
learnings from our FY22 Annual Reporting process.
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 following risks and uncertainties are
those that the Directors believe could have the most significant
impact on the Group's business:
-- Financing risks
-- Supply chain resilience
-- Changing market, customer and consumer dynamics
-- Disruptions to systems and processes
-- Challenges in attracting and retaining talent
-- Climate change and environmental concerns
-- Increased regulation
Responsibility statement
The Directors confirm that to the best of their knowledge:
-- The condensed set of financial statements has been prepared
in accordance with UK adopted IAS 34 'Interim Financial Reporting'
and gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the issuer, or the
undertakings included in the consolidation as a whole as required
by DTR 4.2.4 of the Disclosure and Transparency Rules.
-- 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
Chief Executive Officer
Mark Strickland
Chief Financial Officer
28 February 2023
Condensed interim consolidated income statement
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Continuing operations Note GBPm GBPm GBPm
------------------------------------------- ---- --------- --------- ----------
Revenue 3 426.3 323.4 678.3
Cost of sales (311.2) (233.2) (487.5)
------------------------------------------- ---- --------- --------- ----------
Gross profit 115.1 90.2 190.8
Distribution costs (38.5) (30.8) (64.3)
Administrative costs (77.7) (72.8) (153.8)
Impairment of trade receivables (1.5) (1.1) (2.0)
(Loss)/gain on disposal of property,
plant and equipment - (0.3) 3.4
(Reversal of) impairment of property,
plant and equipment - 0.1 (0.8)
Operating loss (2.6) (14.7) (26.7)
Finance costs (17.4) (2.1) (8.6)
------------------------------------------- ---- --------- --------- ----------
Loss before taxation (20.0) (16.8) (35.3)
Taxation 3.2 3.0 11.3
------------------------------------------- ---- --------- --------- ----------
Loss for the period from continuing
operations (16.8) (13.8) (24.0)
Discontinued operations
------------------------------------------- ---- --------- --------- ----------
Loss for the period from discontinued
operations - - (0.3)
Total operations
------------------------------------------- ---- --------- --------- ----------
Loss for the period (16.8) (13.8) (24.3)
------------------------------------------- ---- --------- --------- ----------
Loss per ordinary share from continuing
and discontinued operations attributable
to the owners of the parent during
the period 6
Basic loss per share
From continuing operations (9.7)p (8.0)p (13.8)p
From discontinued operations - - (0.2)p
------------------------------------------- ---- --------- --------- ----------
From loss for the period (9.7)p (8.0)p (14.0)p
------------------------------------------- ---- --------- --------- ----------
Diluted loss per share
From continuing operations (9.7)p (8.0)p (13.8)p
From discontinued operations - - (0.2)p
------------------------------------------- ---- --------- --------- ----------
From loss for the period (9.7)p (8.0)p (14.0)p
------------------------------------------- ---- --------- --------- ----------
Operating loss from continuing
operations (2.6) (14.7) (26.7)
Adjusted for:
Amortisation of intangible assets 8 1.3 1.3 2.6
Exceptional items 4 - (1.4) (0.4)
------------------------------------------- ---- --------- --------- ----------
Adjusted operating loss from continuing
operations (1.3) (14.8) (24.5)
------------------------------------------- ---- --------- --------- ----------
Loss before taxation from continuing
operations (20.0) (16.8) (35.3)
Adjusted for:
Amortisation of intangible assets 8 1.3 1.3 2.6
Exceptional items 4 10.8 (1.4) 3.1
Adjusted loss before taxation
from continuing operations (7.9) (16.9) (29.6)
---- --------- ---------
Condensed interim consolidated statement of comprehensive
income
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------- --------- --------- ----------
Loss for the period (16.8) (13.8) (24.3)
------------------------------------------------- --------- --------- ----------
Other comprehensive income/(expense)
Items that may be reclassified to profit
or loss:
Currency translation differences on foreign
subsidiaries 2.6 (1.5) 0.2
(Loss)/gain on net investment hedges (0.5) 1.0 0.5
Gain on cash flow hedges in the period 3.4 0.8 2.4
Cash flow hedges transferred to profit or
loss (0.5) (0.2) -
Taxation relating to items above (0.7) (0.1) (0.5)
------------------------------------------------- --------- --------- ----------
4.3 - 2.6
Items that will not be reclassified to profit
or loss:
Net actuarial (loss)/gain on post-employment
benefits (10.3) 6.7 12.4
Taxation relating to item above 2.6 (1.6) (3.1)
------------------------------------------------- --------- --------- ----------
(7.7) 5.1 9.3
Total other comprehensive (expense)/income (3.4) 5.1 11.9
------------------------------------------------- --------- --------- ----------
Total comprehensive expense (20.2) (8.7) (12.4)
------------------------------------------------- --------- --------- ----------
Total comprehensive expense attributable
to equity shareholders arises from:
Continuing operations (20.2) (8.7) (12.1)
Discontinued operations - - (0.3)
------------------------------------------------- --------- --------- ----------
(20.2) (8.7) (12.4)
------------------------------------------------- --------- --------- ----------
Condensed interim consolidated balance sheet
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
Note GBPm GBPm GBPm
----------------------------------- ---- --------- --------- -------
Non-current assets
Goodwill 8 19.8 19.7 19.7
Other intangible assets 8 6.5 7.6 7.3
Property, plant and equipment 8 121.1 122.1 122.9
Derivative financial instruments 9 3.8 0.7 1.9
Right-of-use assets 8 9.9 11.8 11.3
Deferred tax assets 32.9 23.2 29.7
194.0 185.1 192.8
Current assets
Inventories 128.2 96.4 118.9
Trade and other receivables 131.1 120.4 145.4
Current tax assets 5.3 5.0 3.9
Non-current assets classified as
held for sale - 1.6 -
Derivative financial instruments 9 1.5 1.3 0.6
Cash and cash equivalents 10 8.0 34.9 4.5
----------------------------------- ---- --------- --------- -------
274.1 259.6 273.3
Total assets 468.1 444.7 466.1
----------------------------------- ---- --------- --------- -------
Current liabilities
Trade and other payables 211.9 183.2 206.9
Borrowings 9 47.5 58.1 60.5
Lease liabilities 9 3.8 3.8 3.9
Derivative financial instruments 9 0.2 0.4 -
Current tax liabilities 4.0 5.4 5.3
Provisions 2.8 0.6 3.4
----------------------------------- ---- --------- --------- -------
270.2 251.5 280.0
Non-current liabilities
Borrowings 9 119.3 88.9 96.4
Lease liabilities 9 6.8 9.0 8.1
Pensions and other post-employment
benefits 11 24.7 23.4 16.1
Provisions 3.9 3.9 3.8
Deferred tax liabilities 5.9 6.5 4.7
----------------------------------- ---- --------- --------- -------
160.6 131.7 129.1
Total liabilities 430.8 383.2 409.1
----------------------------------- ---- --------- --------- -------
Net assets 37.3 61.5 57.0
----------------------------------- ---- --------- --------- -------
Equity
Issued share capital 17.4 17.4 17.4
Share premium account 68.6 68.6 68.6
Other reserves 81.5 76.1 77.2
Accumulated losses (130.2) (100.6) (106.2)
----------------------------------- ---- --------- --------- -------
Total equity 37.3 61.5 57.0
----------------------------------- ---- --------- --------- -------
Condensed interim consolidated cash flow statement
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Note GBPm GBPm GBPm
----------------------------------------------------- ---- --------- --------- ----------
Operating activities
Loss before tax
Continuing operations (20.0) (16.8) (35.3)
Discontinued operations - - (0.4)
Finance costs 17.4 2.1 8.6
Exceptional items excluding finance costs 4 - (1.4) -
Share-based payments charge 0.5 0.5 -
Depreciation of property, plant and equipment 8 8.2 8.5 16.9
Depreciation of right-of-use assets 8 1.9 2.0 4.0
Loss on disposal of property, plant and equipment - 0.3 0.3
Amortisation of intangible assets 8 1.3 1.3 2.6
Reversal of impairment of property, plant
and equipment - (0.1) (0.1)
----------------------------------------------------- ---- --------- --------- ----------
Operating cash flow before changes in working
capital and exceptional items 9.3 (3.6) (3.4)
Decrease/(increase) in receivables 17.6 (4.6) (27.4)
Increase in inventories (5.7) (5.2) (25.7)
Increase in payables 0.3 18.2 37.8
----------------------------------------------------- ---- --------- --------- ----------
Operating cash flow after changes in working
capital before exceptional items 21.5 4.8 (18.7)
Additional cash funding of pension schemes (2.0) (2.0) (4.0)
----------------------------------------------------- ---- --------- --------- ----------
Cash generated/(used) from operations before
exceptional items 19.5 2.8 (22.7)
Cash outflow in respect of exceptional items (0.8) (2.2) (4.1)
----------------------------------------------------- ---- --------- --------- ----------
Cash generated/(used) from operations 18.7 0.6 (26.8)
Interest paid (3.6) (1.6) (3.3)
Taxation received/(paid) 0.1 0.5 (0.1)
----------------------------------------------------- ---- --------- --------- ----------
Net cash generated/(used) from operating
activities 15.2 (0.5) (30.2)
----------------------------------------------------- ---- --------- --------- ----------
Investing activities
Proceeds from sale of property, plant and
equipment - 2.6 6.1
Purchase of property, plant and equipment (4.0) (5.7) (12.6)
Purchase of intangible assets (0.5) (0.7) (1.7)
Settlement of derivatives used in net investment
hedges (0.1) - 0.4
----------------------------------------------------- ---- --------- --------- ----------
Net cash used in investing activities (4.6) (3.8) (7.8)
----------------------------------------------------- ---- --------- --------- ----------
Financing activities
Redemption of B Shares 12 - (0.1) (0.1)
(Repayment)/drawdown of overdrafts 10 (4.1) (4.5) 0.7
(Repayment)/drawdown of other loans 10 (10.6) 11.2 6.0
Drawdown of bank loans 10 20.0 10.6 18.0
Refinancing costs paid (10.6) - (1.8)
Repayment of IFRS 16 lease obligations 10 (2.3) (2.4) (5.0)
Purchase of own shares - (0.1) (0.1)
Net (used)/cash generated in financing activities (7.6) 14.7 17.7
----------------------------------------------------- ---- --------- --------- ----------
Increase/(decrease) in net cash and cash equivalents 3.0 10.4 (20.3)
Net cash and cash equivalents at the start
of the period 4.5 24.9 24.9
Currency translation differences 0.5 (0.4) (0.1)
----------------------------------------------------- ---- --------- --------- ----------
Net cash and cash equivalents at the end
of the period 8.0 34.9 4.5
----------------------------------------------------- ---- --------- --------- ----------
Condensed interim consolidated statement of changes in
equity
Other reserves
--------------------------------
Cash
Issued Share flow Currency Capital
share premium hedge translation redemption Accumulated Total
capital account reserve reserve reserve losses equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
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
Loss 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 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 items
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
--------------------------------
Cash
Issued Share flow Currency Capital
share premium hedge translation redemption Accumulated Total
capital account reserve reserve reserve losses equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
At 1 July 2021 17.4 68.6 (0.1) (1.0) 77.1 (92.2) 69.8
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
Loss for the period - - - - - (13.8) (13.8)
Other comprehensive (expense)/income
Items that may be reclassified
to profit or loss:
Currency translation differences
of foreign subsidiaries - - - (1.5) - - (1.5)
Gain on net investment hedges - - - 1.0 - - 1.0
Gain on cash flow hedges in
the period - - 0.8 - - - 0.8
Cash flow hedges transferred
to profit or loss - - (0.2) - - - (0.2)
Taxation relating to items
above - - (0.1) - - - (0.1)
- - 0.5 (0.5) - - -
Items that will not be reclassified
to profit or loss:
Net actuarial gain on post
-- employment benefits - - - - - 6.7 6.7
Taxation relating to items
above - - - - - (1.6) (1.6)
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
- - - - - 5.1 5.1
Total other comprehensive
income/(expense) - - 0.5 (0.5) - 5.1 5.1
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
Total comprehensive income/(expense) - - 0.5 (0.5) - (8.7) (8.7)
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
Transactions with owners of
the parent
Redemption of B Shares - - - - 0.1 (0.1) -
Share-based payments - - - - - 0.5 0.5
Purchase of own shares - - - - - (0.1) (0.1)
At 31 December 2021 17.4 68.6 0.4 (1.5) 77.2 (100.6) 61.5
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
Other reserves
--------------------------------
Cash
Issued Share flow Currency Capital
share premium hedge translation redemption Accumulated Total
capital account reserve reserve reserve losses equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
At 1 July 2021 17.4 68.6 (0.1) (1.0) 77.1 (92.2) 69.8
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
Loss for the year - - - - - (24.3) (24.3)
Other comprehensive income/(expense)
Items that may be reclassified
to profit or loss:
Currency translation differences
of foreign subsidiaries - - - 0.2 - - 0.2
Gain on net investment hedges - - - 0.5 - - 0.5
Gain on cash flow hedges in
the year - - 2.4 - - - 2.4
Taxation relating to the items
above - - (0.5) - - - (0.5)
- - 1.9 0.7 - - 2.6
Items that will not be reclassified
to profit or loss:
Net actuarial gain on post
-- employment benefits - - - - - 12.4 12.4
Taxation relating to items
above - - - - - (3.1) (3.1)
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
- - - - - 9.3 9.3
Total other comprehensive
income/(expense) - - 1.9 0.7 - 9.3 11.9
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
Total comprehensive income/(expense) - - 1.9 0.7 - (15.0) (12.4)
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
Transactions with owners of
the parent
Redemption of B Shares - - - - 0.1 (0.1) -
Purchase of own shares - - - - - (0.1) (0.1)
Transfers between reserves - - - (1.5) - 1.5 -
Taxation relating to items
above - - - - - (0.3) (0.3)
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
At 30 June 2022 17.4 68.6 1.8 (1.8) 77.2 (106.2) 57.0
------------------------------------- ------- ------- ------- ----------- ---------- ----------- ------
At 30 June 2022, the accumulated losses included a deduction of
GBP0.5 million (30 June 2021: GBP0.5m loss) for the cost of own
shares held in relation to employee share schemes.
Notes to the condensed interim 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 has the scale to offer our
development and manufacturing capabilities to customers in Europe
and Asia Pacific.
2. Accounting policies
Basis of preparation
The interim financial information for the six months period
ended 31 December 2022 has been prepared on the basis of the
accounting policies set out in the 2022 annual financial statements
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. The auditors'
report on those 2022 accounts was not qualified and did not contain
statements under section 498(2) or (3) of the Companies Act 2006,
but did include a section highlighting a material uncertainty that
may cast significant doubt on the Group and Company's ability to
continue as a going concern.
This interim financial information should be read in conjunction
with the annual consolidated financial statements for the year
ended 30 June 2022 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 29 September 2022 and
have been reported on by PricewaterhouseCoopers LLP and delivered
to the Registrar of Companies. The report of PricewaterhouseCoopers
LLP was (i) unqualified, (ii) included a reference to a material
uncertainty related to going concern to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 of the
Companies Act 2006.
Taxation
Taxation in the interim period is accrued using the tax rate
that would be applicable to the expected annual profit or loss,
adjusted for the tax effect of certain items recognised in full in
the interim period.
New accounting standards and interpretations effective during
the period
No new or amended accounting standards that became effective
during the period have had a significant impact on the Group.
New accounting standards and interpretations issued but not yet
effective
None of the amendments issued but not yet effective are expected
to have a significant impact on the Group, however, the Group will
continue to consider these and any additional amendments,
interpretations and new standards to identify potential future
impact.
Going concern
In determining the appropriate basis of preparation of the
financial statements for the six months to 31 December 2022, the
Directors are required to consider whether the Group can continue
in operational existence for the foreseeable future.
The rapid and unprecedented rise in input costs and the ongoing
macroeconomic supply chain challenges as a result of the Covid-19
pandemic have had a negative effect on the financial performance of
the Group and has cast a degree of uncertainty as to the future
financial performance and cash flows of the Group. In particular,
the Group's inability to immediately offset the significant input
cost inflation by raising prices at which its products are sold to
private label customers has resulted in a significant deterioration
of the Group's profitability.
The Group meets its funding requirements through internal cash
generation and bank credit facilities. As announced on 29 September
2022, the Group agreed an amended RCF with its lender group,
ensuring the Group has sufficient levels of liquidity headroom and
can comply with revised covenant requirements. In reaching this
agreement, the Group agreed to:
-- maintain liquidity (cash plus facility headroom) of at least
GBP15 million when tested on or prior to 30 September 2024;
-- not pay dividends to shareholders until there is 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.
At 31 December 2022, liquidity amounted to GBP58.9 million.
In assessing the going concern assumptions, the Board has
reviewed the Group's base case plans and considered reasonable
worst-case downsides.
The Group's base case scenario to 30 June 2024 assumes:
-- revenue growth of c.4% per annum;
-- raw material prices marginally reducing compared to current still high levels;
-- interest rates remaining unchanged from February 2023 levels;
-- Sterling:Euro exchange rate per current spot rate (GBP1:EUR1.13); and
-- GBP25 million extension of invoice discounting facilities to
unencumbered receivables ledgers.
The Directors have considered a severe but plausible downside
risk scenario including several downside assumptions to stress test
the Group's financial forecasts:
-- zero revenue growth from volumes, with revenue growing in H2
FY23 and FY24 only for pricing already agreed with customers;
-- higher than forecast raw material and packaging input costs
and additional inflationary pressures driven particularly by
energy, distribution and labour, ultimately being recovered through
pricing actions, but only after a lag;
-- worsening trade working capital, caused by deterioration in
both customer and supplier payment terms;
-- interest rates increasing by a further 100 basis points;
-- Sterling appreciating significantly against the Euro to GBP1:EUR1.185; and
-- no extension of invoice discounting facilities to unencumbered receivables ledgers.
In the event that such a severe but plausible downside risk
scenario occurs, the Group would incur a covenant breach and a
liquidity shortfall. In this downside risk scenario, the Group
would therefore need to obtain a covenant waiver and increase its
funding facilities compared to those that are currently committed,
to ensure that the business can meet its obligations for the next
18 months.
To mitigate against these risks, the Group is currently
negotiating to further increase liquidity by GBP25 million by
extending invoice discounting facilities to unencumbered
receivables ledgers. However, there is no certainty that these
negotiations will be successful.
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. However, the occurrence of multiple downside
trading and liquidity risks represents a material uncertainty at 28
February 2023 that could cast significant doubt upon the Group's
ability to continue as a going concern.
The financial statements do not include the adjustments that
would result if the Group were unable to continue as a going
concern.
The condensed interim consolidated financial statements were
approved by the Board on 28 February 2023.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of the condensed interim financial information
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.
In preparing the condensed interim financial information, 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 2022.
Discontinued operations
During the 2019 financial year, the Group successfully completed
the sale of the European Personal Care (PC) Liquids business. The
financial results of this business have been treated as
discontinued operations in the prior year financial statements. The
remaining activities within the Group are referred to as continuing
operations.
Alternative performance measures (APM)
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 Operating loss before amortisation of Group income statement
loss intangible assets and exceptional items
-------------------- ------------------------------------------------------- ---------------------------
Adjusted EBITDA Adjusted operating loss before depreciation Group income statement
-------------------- ------------------------------------------------------- ---------------------------
Adjusted loss before Adjusted loss before tax is based on Group income statement
tax adjusted operating loss less adjusted
finance costs
-------------------- ------------------------------------------------------- ---------------------------
Adjusted loss per Adjusted loss per share is based on the Note 6
share Group's loss for the period adjusted Group income statement
for the items excluded from operating
loss in arriving at adjusted operating
loss
-------------------- ------------------------------------------------------- ---------------------------
Free cash flow Cash generated/(used) from continuing Group cash flow
operations before exceptional items statement
-------------------- ------------------------------------------------------- ---------------------------
Cash conversion Free cash flow as a percentage of adjusted Group income statement
EBITDA Group cash flow
statement
-------------------- ------------------------------------------------------- ---------------------------
Adjusted return Rolling 12 months total adjusted operating Group income statement
on capital employed loss from continuing operations divided Group balance sheet
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.
-------------------- ------------------------------------------------------- ---------------------------
Liquidity At any time, without double counting, Group cash flow
the aggregate of: (a) cash; (b) cash statement
equivalents; (c) the available facility Note 16
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.
-------------------- ------------------------------------------------------- ---------------------------
Net debt Cash and cash equivalents, overdrafts, Group balance sheet
bank and other loans and lease liabilities
-------------------- ------------------------------------------------------- ---------------------------
The APMs we use may not be directly comparable with similarly
titled measures used by other companies.
Adjusted measures
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 periods 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 period.
See note 16 'Additional information' for further information on
alternative performance measures.
3. Segment information
Background
Financial information is presented to the Board by division 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
-- 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. Our Compass strategy is delivering an
increased focus on cost optimisation and has meant that most
overhead costs are now directly attributed within the respective
divisions' income statements. The only costs now allocated out to
the divisions are central overheads, with corporate costs being
retained at a Group level. 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. Finance expense and income 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 (loss)/profit to measure the
profitability of the Group's businesses. Adjusted operating
(loss)/profit is, therefore, the measure of segment profit
presented in the Group's segment disclosures. Adjusted operating
(loss)/profit represents operating (loss)/profit before specific
items that are considered to hinder comparison of the trading
performance of the Group's businesses, either period on period or
with other businesses. During the years under review, the items
excluded from operating (loss)/profit in arriving at adjusted
operating (loss)/profit were the amortisation of intangible assets
and exceptional items.
Unit Asia
Liquids Dosing Powders Aerosols Pacific Corporate Group
Period ended 31 December
2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ------- ------- ------- -------- -------- --------- ------
Continuing operations
Divisional 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)
Exceptional items -
------------------------------ ------- ------- ------- -------- -------- --------- ------
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
------------------------------ ------- ------- ------- -------- -------- --------- ------
Unit Asia
Liquids Dosing Powders Aerosols Pacific Corporate Group
Period ended 31 December
2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------- ------- ------- -------- -------- --------- ------
Continuing operations
Divisional revenue 182.8 81.6 32.8 15.8 10.4 - 323.4
--------------------------- ------- ------- ------- -------- -------- --------- ------
Adjusted operating
(loss)/profit (10.2) (0.4) (1.4) (0.8) 0.2 (2.2) (14.8)
Amortisation of intangible
assets (1.3)
Exceptional items 1.4
--------------------------- ------- ------- ------- -------- -------- --------- ------
Operating loss (14.7)
Finance costs (2.1)
--------------------------- ------- ------- ------- -------- -------- --------- ------
Loss before taxation (16.8)
--------------------------- ------- ------- ------- -------- -------- --------- ------
Inventories 49.6 25.7 10.6 7.6 2.9 - 96.4
Capital expenditure 1.8 1.5 0.2 0.3 0.2 1.0 5.0
Amortisation and
depreciation 6.5 3.0 0.7 0.2 0.7 0.7 11.8
--------------------------- ------- ------- ------- -------- -------- --------- ------
Unit Asia
Liquids Dosing Powders Aerosols Pacific Corporate Group
Year ended 30 June
2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------- ------- ------- -------- -------- --------- ------
Continuing operations
Divisional revenue 383.9 171.5 68.6 31.9 22.4 - 678.3
--------------------------- ------- ------- ------- -------- -------- --------- ------
Adjusted operating
(loss)/profit (15.9) (0.8) (2.5) (1.5) 0.7 (4.5) (24.5)
Amortisation of intangible
assets (2.6)
Exceptional items 0.4
--------------------------- ------- ------- ------- -------- -------- --------- ------
Operating loss (26.7)
Finance costs (8.6)
--------------------------- ------- ------- ------- -------- -------- --------- ------
Loss before taxation (35.3)
--------------------------- ------- ------- ------- -------- -------- --------- ------
Inventories 57.5 35.5 13.7 9.1 3.1 - 118.9
Capital expenditure 5.7 6.5 1.0 0.6 0.3 - 14.1
Amortisation and
depreciation 13.7 6.5 1.4 0.5 1.4 - 23.5
--------------------------- ------- ------- ------- -------- -------- --------- ------
4. Exceptional items
Analysis of exceptional items
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------------------ --------- --------- ----------
Continuing operations
Reorganisation and restructuring costs:
Factory footprint review - (1.5) (1.4)
Review of strategy, organisation and operations - (0.1) (0.4)
Logistics transformation programme - 0.1 0.7
UK Aerosols closure - 0.1 0.1
------------------------------------------------------------ --------- --------- ----------
- (1.4) (1.0)
Environmental remediation - - 0.6
------------------------------------------------------------ --------- --------- ----------
Total credited to operating loss - (1.4) (0.4)
Group refinancing 10.8 - 3.5
Total charged to finance costs 10.8 - 3.5
------------------------------------------------------------ --------- --------- ----------
Total continuing operations 10.8 (1.4) 3.1
------------------------------------------------------------ --------- --------- ----------
Discontinued operations
Sale of PC Liquids business - - 0.5
Other - - (0.1)
------------------------------------------------------------ --------- --------- ----------
Total discontinued operations before tax - - 0.4
Tax on discontinued operations - - (0.1)
Total discontinued operations - - 0.3
------------------------------------------------------------ --------- --------- ----------
Total operations
------------------------------------------------------------ --------- --------- ----------
Total exceptional items before tax 10.8 (1.4) 3.5
------------------------------------------------------------ --------- --------- ----------
Exceptional items are presented separately as, due to their
nature or the infrequency of the events giving rise to them, this
allows users of the financial statements to understand better the
elements of financial performance for the year, to facilitate
comparison with prior periods, and to assess the trends of
financial performance.
During the period ended 31 December 2022, the Group incurred
exceptional costs from continuing operations of GBP10.8 million
(2021: GBP1.4m credit), relating to the Group refinancing
programme, charged to finance costs.
During the period ended 31 December 2021, the Group recognised a
GBP1.4 million credit in respect of exceptional items, included
within operating costs. The credit comprised the following:
-- GBP1.5 million credit comprising GBP1.8 million profit on the
disposal of the closed Barrow site, the sale proceeds for which
were GBP2.6 million, and GBP0.3 million of site closure costs;
-- GBP0.1 million credit relating to the release of excess
redundancy provisions in respect of Programme Compass;
-- GBP0.1 million charge relating to the Group's logistics transformation programme; and
-- GBP0.1 million charge in respect of legacy costs in relation
to the former UK Aerosols site in Hull.
5. Taxation
Reported loss before taxation from continuing operations was
GBP20.0 million (30 June 2022: GBP35.3m loss). Adjusted loss before
taxation from continuing operations was GBP7.9 million (30 June
2022: GBP29.6m loss).
The tax credit on continuing adjusted profit before tax for the
year is GBP0.7 million (30 June 2022: GBP9.3m credit) and the
effective tax rate is a charge of 9% (30 June 2022: 31% credit).
The effective tax rate is lower than the previous year on the basis
that, in the prior year, additional deferred tax assets were
recognised on losses in the UK.
The Group forecasts an adjusted effective tax rate for the full
year of 8%, before discrete items.
6. Loss per ordinary share
Basic loss per ordinary share is calculated by dividing the 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 629,200 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 Half year
to to Year ended
31 Dec 31 Dec 30 June
Reference 2022 2021 2022
------------------------------------ ---------- --------- --------- ----------
Weighted average number of ordinary
shares in issue (million) a 173.5 173.5 173.5
Effect of dilutive share incentive
plans (million) 2.8 - 1.0
------------------------------------------------ --------- --------- ----------
Weighted average number of ordinary
shares for calculating
diluted loss per share (million) b 176.3 173.5 174.5
------------------------------------ ---------- --------- --------- ----------
Diluted loss per share is equal to the basic loss per share.
During the period, the Company had equity-settled long-term
incentive plan (LTIP) and restricted share unit (RSU) awards with a
nil exercise price that are potentially dilutive ordinary shares.
However, the calculation of diluted loss per share ignores the
assumption that all potentially dilutive ordinary shares are
converted, as this would decrease the loss per share.
Adjusted loss per share measures are calculated based on loss
for the period attributable to owners of the Company before
adjusting items as follows:
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
From continuing operations Reference GBPm GBPm GBPm
--------------------------------------- ---------- --------- --------- ----------
Loss for calculating basic and diluted
loss per share c (15.2) (13.8) (24.0)
Adjusted for:
Amortisation of intangible assets
(note 8) 1.3 1.3 2.6
Exceptional items (note 4) 10.8 (1.4) 3.1
Taxation relating to the above items (2.5) (0.2) (2.0)
Losses for calculating adjusted
loss per share d (5.6) (14.1) (20.3)
--------------------------------------- ---------- --------- --------- ----------
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Reference pence pence pence
-------------------------------- ---------- --------- --------- ----------
Basic loss per share c/a (9.7) (8.0) (13.8)
Diluted loss per share c/b(1) (9.7) (8.0) (13.8)
Adjusted basic loss per share d/a (4.2) (8.1) (11.7)
Adjusted diluted loss per share c/b(1) (4.2) (8.1) (11.7)
-------------------------------- ---------- --------- --------- ----------
(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.
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
From discontinued operations Reference GBPm GBPm GBPm
------------------------------------- ---------- --------- --------- ----------
Losses for calculating basic and
diluted earnings per share e - - (0.3)
Adjusted for:
Exceptional items (note 4) - - 0.4
Taxation relating to the above items - - (0.1)
------------------------------------------------- --------- --------- ----------
Earnings for calculating adjusted - -
earnings per share f -
------------------------------------- ---------- --------- --------- ----------
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Reference pence pence pence
-------------------------------- ---------- --------- --------- ----------
Basic loss per share e/a - - (0.2)
Diluted loss per share e/b(1) - - (0.2)
Adjusted basic loss per share f/a - - -
Adjusted diluted loss per share f/b(1) - - -
-------------------------------- ---------- --------- --------- ----------
(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.
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Total attributable to ordinary shareholders Reference GBPm GBPm GBPm
-------------------------------------------- ---------- --------- --------- ----------
Earnings for calculating basic and
diluted earnings per share g (15.2) (13.8) (24.3)
Adjusted for:
Amortisation of intangible assets
(note 8) 1.3 1.3 2.6
Exceptional items (note 4) 10.8 (1.4) 3.5
Taxation relating to the above items (2.5) (0.2) (2.1)
Earnings for calculating adjusted
earnings per share h (5.6) (14.1) (20.3)
-------------------------------------------- ---------- --------- --------- ----------
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Reference Pence pence Pence
-------------------------------- ---------- --------- --------- ----------
Basic loss per share g/a (9.7) (8.0) (14.0)
Diluted loss per share g/b(1) (9.7) (8.0) (14.0)
Adjusted basic loss per share h/a (4.2) (8.1) (11.7)
Adjusted diluted loss per share h/b(1) (4.2) (8.1) (11.7)
-------------------------------- ---------- --------- --------- ----------
(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
As set out in the Annual Report, per the terms of the amended
RCF announced on 29 September 2022, no dividends will be paid to
shareholders until there is 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.
No payments to ordinary shareholders were made or proposed in
respect of this year or the prior year.
Movements in the B Shares were as follows:
Nominal
Number value
000 GBPm
-------------------------------------------------- -------- -------
At 1 July 2021 747,399 0.7
Redeemed (81,511) (0.1)
-------------------------------------------------- -------- -------
At 31 December 2021, 30 June 2022 and 31 December
2022 665,888 0.6
-------------------------------------------------- -------- -------
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
GBPm GBPm GBPm
------------------------------------------ ---------- --------- ------------
Net book value at 1 July 2022 (audited) 27.0 122.9 11.3
Currency translation differences 0.1 3.4 0.1
Additions 0.5 3.0 0.4
Depreciation charge - (8.2) (1.9)
Amortisation charge (1.3) - -
------------------------------------------ ---------- --------- ------------
Net book value at 31 Dec 2022 (unaudited) 26.3 121.1 9.9
------------------------------------------ ---------- --------- ------------
Included within goodwill and other intangible assets is goodwill
of GBP19.8 million (30 June 2022: GBP19.7m), computer software of
GBP4.4 million (30 June 2022: GBP5.3m) and customer relationships
of GBP0.9 million (30 June 2022: GBP1.1m).
Capital commitments as at 31 December 2022 amounted to GBP4.6
million (30 June 2022: GBP4.0m). At 31 December 2022 the Group was
committed to future minimum lease payments of GBP1.3 million (30
June 2022: GBP1.5m) in respect of leases which have not yet
commenced and for which no lease liability has been recognised.
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 2022. 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 are 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).
In the current and prior reporting periods, the Group has Level
2 assets and liabilities only.
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
---------------------------------- --------- --------- -------
Level 2 Assets
Derivative financial instruments:
Forward currency contracts 0.4 1.2 0.4
Interest rate swaps 4.9 0.7 2.1
Contracts for Difference (HDPE) - 0.1 -
---------------------------------- --------- --------- -------
Total financial assets 5.3 2.0 2.5
---------------------------------- --------- --------- -------
Level 2 Liabilities
Derivative financial instruments:
Forward currency contracts (0.2) (0.3) -
Interest rate swaps - (0.1) -
---------------------------------- --------- --------- -------
Total financial liabilities (0.2) (0.4) -
---------------------------------- --------- --------- -------
Valuation levels and techniques
There were no transfers between levels during the period and no
changes in valuation techniques.
Financial assets and liabilities measured at amortised cost
The fair value of borrowings are as follows:
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
----------------- --------- --------- -------
Current 51.3 61.9 64.4
Non-current 126.1 97.9 104.5
----------------- --------- --------- -------
Total borrowings 177.4 159.8 168.9
----------------- --------- --------- -------
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:
Audited Unaudited
As at IFRS 16 As at
30 June non-cash Exchange 31 Dec
2022 movements(1) Cash flow differences 2022
GBPm GBPm GBPm GBPm GBPm
-------------------------- ------- ------------ --------- ----------- ---------
Cash and cash equivalents 4.5 - 3.0 0.5 8.0
Overdrafts (6.8) - 4.1 - (2.7)
Bank and other loans (150.1) - (9.4) (4.6) (164.1)
IFRS 16 lease liabilities (12.0) (0.5) 2.3 (0.4) (10.6)
-------------------------- ------- ------------ --------- ----------- ---------
Total net debt (164.4) (0.5) - (4.5) (169.4)
-------------------------- ------- ------------ --------- ----------- ---------
(1) IFRS 16 non-cash movements includes additions (GBP0.4m) and
interest charged (GBP0.1m).
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 unfunded
post-employment benefit arrangements that are structured to accord
with local conditions and practices in the countries concerned.
From 1 July 2021, the Group also recognised 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 2022, the Group recognised a deficit on its UK
defined benefit pension plan of GBP22.8 million (30 June 2022:
GBP14.4m). The Group's post-employment benefit obligations outside
the UK amounted to GBP1.9 million (30 June 2022: GBP1.7m).
Defined benefit schemes had the following effect on the Group's
results and financial position:
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------ --------- --------- ----------
Profit or loss
Service cost and administration expenses (0.5) (0.5) (1.0)
------------------------------------------------ --------- --------- ----------
Charge to operating loss (0.5) (0.5) (1.0)
Net interest cost on defined benefit obligation (0.3) (0.3) (0.5)
------------------------------------------------ --------- --------- ----------
Charge to loss before taxation (0.8) (0.8) (1.5)
------------------------------------------------ --------- --------- ----------
Other comprehensive (expense)/income
Net actuarial (loss)/gain (10.3) 6.7 12.4
------------------------------------------------ --------- --------- ----------
Other comprehensive (expense)/income (10.3) 6.7 12.4
------------------------------------------------ --------- --------- ----------
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
----------------------------- --------- --------- -------
Balance sheet
Defined benefit obligations:
UK - funded (97.6) (161.3) (116.6)
Other - unfunded(1) (12.5) (2.8) (12.0)
----------------------------- --------- --------- -------
(110.1) (164.1) (128.6)
Fair value of scheme assets:
UK - funded 74.8 140.7 102.2
Other - unfunded(1) 10.6 - 10.3
----------------------------- --------- --------- -------
85.4 140.7 112.5
----------------------------- --------- --------- -------
Deficit on the schemes (24.7) (23.4) (16.1)
----------------------------- --------- --------- -------
(1) At 30 June 2022, the Group recognised 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 at 30
June 2022 and 31 December 2022, the scheme assets and plan
liabilities are reported on a gross basis.
For accounting purposes, the UK scheme's benefit obligation as
at 31 December 2022 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 GBPm
-------------------------------------------------- -------------- ----
Ordinary shares of 10 pence each
-------------------------------------------------- -------------- ----
At 1 July 2021 174,242,702 17.4
Shares bought back on-market and cancelled (185,374) -
-------------------------------------------------- -------------- ----
At 31 December 2021, 30 June 2022 and 31 December
2022 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, have been 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 2022 are detailed in note 29 (page 198) of McBride plc's
Annual Report and Accounts 2022. A copy of McBride plc's Annual
Report and Accounts 2022 is available on McBride's website at
www.mcbride.co.uk .
14. Exchange rates
The principal exchange rates used to translate the results,
assets and liabilities and cash flows of the Group's foreign
operations into sterling were as follows:
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
------------------ --------- --------- ----------
Average rate:
Euro 1.16 1.17 1.18
US Dollar 1.17 1.36 1.33
Polish Zloty 5.49 5.39 5.45
Czech Koruna 28.39 29.87 29.57
Danish Krone 8.62 8.73 8.78
Hungarian Forint 471.97 421.77 433.28
Malaysian Ringgit 5.32 5.71 5.63
Australian Dollar 1.75 1.86 1.83
------------------ --------- --------- ----------
Closing rate:
Euro 1.13 1.19 1.17
US Dollar 1.20 1.35 1.21
Polish Zloty 5.28 5.47 5.47
Czech Koruna 27.19 29.58 28.83
Danish Krone 8.38 8.85 8.67
Hungarian Forint 451.97 439.37 462.64
Malaysian Ringgit 5.30 5.62 5.33
Australian Dollar 1.77 1.86 1.76
------------------ --------- --------- ----------
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 noted and defined below:
Financial:
-- Continuing 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.
-- Cost savings: Cost savings achieved from the implementation of the Compass strategy.
-- Adjusted EBITDA margin advances: The calculation of adjusted
EBITDA, which when divided by revenue gives this EBITDA margin, is
defined in the adjusted measures section of Note 2 to the 2022
Accounts.
-- Free cash flow increase: Free cash flow is defined as cash
generated from continuing operations before exceptional items.
-- Adjusted ROCE improvement: Total adjusted operating
(loss)/profit from continuing operations 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 & 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 loss and adjusted EBITDA
Adjusted EBITDA means adjusted operating loss before
depreciation. A reconciliation between adjusted operating loss,
adjusted EBITDA and the Group's reported statutory operating loss
is shown below.
Half year Full year
Half year to 31 to 30
to 31 Dec Dec June
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------------------- ---------- --------- ---------
Operating loss (2.6) (14.7) (27.1)
Add back: operating loss from discontinued
operations - - 0.4
--------------------------------------------------- ---------- --------- ---------
Operating loss from continuing operations (2.6) (14.7) (26.7)
Exceptional items (note 4) - (1.4) (0.4)
Amortisation of intangibles (note 8) 1.3 1.3 2.6
--------------------------------------------------- ---------- --------- ---------
Adjusted operating loss from continuing operations (1.3) (14.8) (24.5)
Depreciation of property, plant and equipment
(note 8) 8.2 8.5 16.9
Depreciation of right-of-use assets (note
8) 1.9 2.0 4.0
--------------------------------------------------- ---------- --------- ---------
Adjusted EBITDA 8.8 (4.3) (3.6)
--------------------------------------------------- ---------- --------- ---------
Adjusted loss before tax
Adjusted loss before tax is based on adjusted operating loss
less adjusted finance costs. The table below reconciles adjusted
loss before tax to the Group's reported loss before tax.
Half year Full year
Half year to 31 to 30
to 31 Dec Dec June
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------- ---------- --------- ---------
Loss before tax (20.0) (16.8) (35.7)
Add back: loss before tax from discontinued
operations - - 0.4
-------------------------------------------- ---------- --------- ---------
Loss before tax from continuing operations (20.0) (16.8) (35.3)
Exceptional items (note 4) 10.8 (1.4) 3.1
Amortisation of intangibles (note 8) 1.3 1.3 2.6
Adjusted loss before tax from continuing
operations (7.9) (16.9) (29.6)
-------------------------------------------- ---------- --------- ---------
Adjusted loss per share
Adjusted loss per share is based on the Group's (loss)/profit
for the year adjusted for the items excluded from operating
(loss)/profit in arriving at adjusted operating (loss)/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, we also believe that free cash flow and
cash conversion are important indicators of our overall operational
performance as they reflect the cash we generate from operations.
Free cash flow is defined as cash generated from continuing
operations 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 Full year
Half year to 31 to 30
to 31 Dec Dec June
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------------- ---------- --------- ---------
Net cash generated from operating activities 15.2 (0.5) (30.2)
Add back:
Taxation paid (0.1) (0.5) 0.1
Interest paid 3.6 1.6 3.3
Cash outflow from exceptional items 0.8 2.2 4.1
Free cash flow 19.5 2.8 (22.7)
Adjusted EBITDA 8.8 (4.3) (3.6)
--------------------------------------------- ---------- --------- ---------
Cash conversion 222% n/a n/a
--------------------------------------------- ---------- --------- ---------
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
(loss)/profit from continuing operations divided by the average
year-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 ROCE is calculated as
follows:
As at As at As at As at
31 Dec 31 Dec 31 Dec 30 June
2022 2021 2020 2022
GBPm GBPm GBPm GBPm
--------------------------------------------------- ------- ------- ------- --------
Goodwill (note 8) 19.8 19.7 19.8 19.7
Other intangible assets (note 8) 6.5 7.6 8.1 7.3
Property, plant and equipment (note 8) 121.1 122.1 135.9 122.9
Right-of-use assets (note 8) 9.9 11.8 10.7 11.3
Inventories 128.2 96.4 95.8 118.9
Trade and other receivables 131.1 120.4 134.5 145.4
Trade and other payables (211.9) (183.2) (179.8) (206.9)
--------------------------------------------------- ------- ------- ------- --------
Capital employed 204.7 194.8 225.0 218.6
--------------------------------------------------- ------- ------- ------- --------
Average period-end capital employed 199.8 209.9 223.3 214.0
--------------------------------------------------- ------- ------- ------- --------
Rolling 12 months adjusted operating (loss)/profit
from continuing operations (11.0) (9.7) 35.7 (24.5)
--------------------------------------------------- ------- ------- ------- --------
Adjusted return on capital employed % (5.5)% (4.6)% 16.0% (11.4)%
--------------------------------------------------- ------- ------- ------- --------
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 As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
------------------------------------ ------- ------- --------
Cash and cash equivalents 8.0 34.9 4.5
RCF headroom 35.2 58.3 55.1
Other committed facilities headroom 15.5 - -
Uncommitted facilities 0.2 21.0 11.0
------------------------------------ ------- ------- --------
Liquidity 58.9 114.2 70.6
------------------------------------ ------- ------- --------
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 As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
GBPm GBPm GBPm
-------------------------- ------- ------- --------
Current assets
Cash and cash equivalents 8.0 34.9 4.5
Current liabilities
Borrowings (note 9) (47.5) (58.1) (60.5)
Lease liabilities (3.8) (3.8) (3.9)
-------------------------- ------- ------- --------
(51.3) (61.9) (64.4)
Non-current liabilities
Borrowings (note 9) (119.3) (88.9) (96.4)
Lease liabilities (6.8) (9.0) (8.1)
-------------------------- ------- ------- --------
(126.1) (97.9) (104.5)
Net debt (169.4) (124.9) (164.4)
-------------------------- ------- ------- --------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR GZGZZGNRGFZZ
(END) Dow Jones Newswires
February 28, 2023 02:00 ET (07:00 GMT)
Mcbride (LSE:MCB)
Gráfico Histórico do Ativo
De Dez 2024 até Jan 2025
Mcbride (LSE:MCB)
Gráfico Histórico do Ativo
De Jan 2024 até Jan 2025
