REG - McBride PLC - Final Results
19/09/2023 07:00
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RNS Number : 8389M McBride PLC 19 September 2023
Confidential
McBride plc
("McBride", the "Company" or the "Group")
Strong performance recovery through 2023
Improving momentum from private label demand surge
19 September 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 preliminary results for the year ended
30 June 2023.
Improved profitability and a return to volume growth
· Strong business performance recovery; revenue growth and improved
profitability in all five divisions
· Further improvement with customer partnering; supporting big step up
in private label demand, further innovation options and improved delivery
performance
· Volume growth of +5.6%, significantly ahead of the market, with
private label increasing +7.0%. Second half volumes up 9.6%, all from private
label. Final quarter volume up 12.7%.
· Inflationary pressures shifting from raw materials to labour,
transport, energy and general supplies, with additional impact from interest
rate rises
· Healthy progress in key strategic focus areas; volumes in Germany
+9.8% for private label, with European Laundry +6.5% - both significantly
ahead of market growth
· Continued progress on margin de-risking, with three-month sales
pricing in place
· All Transformation programmes underway, targeting £50m of benefits
over five years
· Established targets for Scope 1 and 2 emissions; targeting a 55%
reduction by 2033, with Scope 3 targets to be finalised by end 2023
Financial highlights
· Group revenue of £889.0m (2022: £678.3m), up 31.1% (28.4% at
constant currency((1)))
· Adjusted operating profit((2)) of £13.5m (2022: loss of £24.5m)
· Operating profit from continuing operations of £10.3m (2022: loss of
£26.7m)
· Second half profitability underpinned by surge in private label
demand, stabilisation of raw material prices and new contract wins
· Adjusted profit before tax((2)) of £0.3m (2022: loss of £29.6m)
· Loss before tax from continuing operations of £15.1m (2022: loss of
£35.3m)
· Net debt((2)) at £166.5m (30 June 2022: £164.4m), with liquidity
solid at £59.3m (30 June 2022: £70.6m)
Confident outlook underpinned by business momentum
· Encouraging start to new financial year
· Growing shift towards private label products, across all markets,
evident in demand levels
· Well-positioned to manage in a volatile macro environment
· Maintaining focus on reducing debt with tight control on costs,
margins and operating capital
· Confirmed Group financing, improved financial performance and
positive three-year outlook, will enable further liquidity and cash flow
improvements
Chris Smith, Chief Executive Officer, commented:
"The decisive actions taken in the last financial year helped set the
foundations for the strong recovery achieved across the business. In
combination with the hard work and dedication of our teams, McBride has
delivered an impressive return to profitability and volume growth in an
environment that continues to be volatile. Inflation will remain a challenge
for the business into the new year, one which we believe we are better
positioned to manage, driven in part by our shift to three-monthly pricing.
The second half of the year saw encouraging momentum across the Group,
underpinned by a number of new contract wins and the growing consumer shift
towards private label products as cost-of-living pressures continue to impact
buying behaviour. Importantly, we have continued to make good strategic
progress across all divisions, with our Transformation programmes moving at
pace. Overall, while the current macro environment continues to present
challenges, McBride is well-positioned to deliver sustainable and profitable
long-term growth."
Year to Constant
Year to
30 Jun 30 Jun Reported currency
£m unless otherwise stated 2023 2022 change change((1))
Continuing operations
Group revenue 889.0 678.3 31.1% 28.4%
Adjusted operating profit/(loss) 13.5 (24.5) 38.0 38.4
Operating profit/(loss) 10.3 (26.7) 37.0
Adjusted profit/(loss) before taxation 0.3 (29.6) 29.9 30.2
Loss before taxation (15.1) (35.3) 20.2
Adjusted diluted loss per share((3)) 0.0p (11.7)p 11.7p
Diluted loss per share (6.6)p (13.8)p 7.2p
Net debt 166.5 164.4 2.1
Adjusted return on capital employed((2)) 6.4% (11.4)% 17.8ppt
(1)Comparatives translated at financial year 2023 exchange rates.
(2)Refer to note 19 for definition.
(3)See note 8.
A results presentation will be available on the McBride plc investor relations
website from 9.20am today.
McBride plc 0161 203 7401
Chris Smith, Chief Executive Officer
Mark Strickland, Chief Financial Officer
Instinctif Partners 0207 457 2020
Tim McCall
Guy Scarborough
This announcement contains forward-looking statements about financial and
operational matters. These statements are based on the current views,
expectations, assumptions and information of management, and are based on
information available to the management as at the date of this announcement.
Because they relate to future events and are subject to future circumstances,
these forward-looking statements are subject to unknown risks, uncertainties
and other factors which may not have been in contemplation as at the date of
the announcement. As a result, actual financial results, operational
performance and other future developments could differ materially from those
envisaged by the forward-looking statements. Neither McBride plc nor its
affiliates assume any obligations to update any forward-looking statements.
McBride plc gives no express or implied warranty, representation, assurance or
undertaking as to the impartiality, accuracy, completeness, reasonableness or
correctness of the information, opinions or statements expressed in the
announcement or any other information (whether written or oral) supplied as
part of it. Neither McBride plc, its affiliates nor its officers, employees or
agents will accept any responsibility or liability of any kind for any damage
or loss arising from any use of this announcement or its contents. All and any
such responsibilities and liabilities are expressly disclaimed. In particular,
but without prejudice to the generality of the foregoing, no representation,
warranty, assurance or undertaking is given as to the achievement or
reasonableness of any future projections, forward-looking statements about
financial and operational matters, or management estimates contained in the
announcement.
This announcement does not constitute an offer or invitation to underwrite,
subscribe for, or otherwise acquire or dispose of any McBride plc shares or
other securities, or of any of the businesses or assets described in the
announcement, and the information contained herein cannot be relied upon as a
guide to future performance.
Overall business performance
McBride entered the financial year to 30 June 2023 in a significantly stronger
position than the previous year, when a volatile macroeconomic backdrop led
the Group and the industry to experience unprecedented margin pressures. The
decisive actions we implemented through the second half of calendar year 2021
and into 2022, to enable the business to weather these challenges, have
provided the foundations for a much-improved performance and, encouragingly, a
return to strong volume growth. Whilst the extreme input cost inflationary
period is behind us, many of the themes highlighted in last year's Annual
Report remained significant and continued to be factors that our teams have
had to contend with throughout the year. As a result, McBride has had to be
agile and innovative in its approach; skills that stand us in good stead for
the future.
The first six months of the year were characterised by a focus on margin and
service recovery as the dual effects of pricing and input materials inflation
from the preceding twelve months cycled through the business, with sales
volumes relatively flat and the business break-even at the trading profit
level. However, the second half saw a pleasing return to volume growth and
stronger profitability levels, driven by the stabilisation of materials
prices, combined with McBride delivering new contract wins and a strong volume
pull as there was a growing consumer shift towards private label products
across all markets.
At a Group level, revenue was up 31.1% to £889.0 million (2022: £678.3m)
with £159.6 million a result of the wrap-around effect of selling prices
increases and £32.1 million from higher volumes. Operating profit from
continuing operations improved significantly on the prior year, increasing to
£10.3 million (2022: loss of £26.7m). Adjusted operating profit increased to
£13.5 million (2022: adjusted operating loss of £24.5m), with adjusted
operating profit in the second half of £14.8 million compared to a first half
adjusted loss of £1.3 million.
Heading into the financial year ending 30 June 2023, one of our top priorities
was keeping a tight hold on costs and working capital and maintaining strong
capital expenditure control. The focus across all teams on debt management has
resulted in no significant deterioration in our debt levels. Liquidity remains
strong despite higher activity levels at the end of the year. Debt reduction
will remain an important area of focus into the new financial year.
In the face of such clear and profound pressures, this set of results
represents an excellent performance and is testament to the hard work of our
teams, our commitment to customer service and the steps we have taken to
strengthen the business and position it for long-term growth.
Inflationary environment
As expected, inflation remained a major challenge throughout the year, with
the impact increasingly being from labour and energy costs, with chemicals and
packaging costs more benign. Energy cost inflation remains an unpredictable
factor, however, McBride's own energy costs are fully hedged, with the
principal risk to McBride being the indirect impact of energy in its core raw
material supplies.
While inflation presented significant challenges, it led to an important
opportunity to consider how our pricing approach to customers is best managed.
The Group has persisted this past year with the principle of not committing
pricing to customers beyond three months. With the ongoing potential for
significant volatility in input costs, this principle has enabled divisions to
respond more effectively and quickly to shifts in the macroeconomic
environment. Through our data led approach, our teams can now clearly
demonstrate the dynamics behind the decision making, allowing teams to engage
with customers and move pricing in a collaborative, flexible manner.
Volume growth
Alongside margin recovery through price increases and value engineering, the
volume growth across the Group in the second half of the year helped to
deliver our return to profit. Importantly, while the total market for private
label and branded products is estimated to have fallen by 5.5% in volume
terms, McBride delivered a 5.6% increase in total volumes, with private label
volumes 7.0% higher. A further acceleration in the latter part of the second
half of the financial year saw final quarter volume growth of 12.7%.
The overall market in Europe saw further gains for private label with volume
share up 2.5% to 33.1%, fuelled by clear switching by consumers and retailers
in light of cost-of-living challenges. At a category level, dishwash saw the
biggest growth in volumes, up 5.0%, with laundry up 2.0% and cleaners flat.
McBride saw volume growth significantly ahead of the market across the three
categories, with dishwash volumes standing out at 13.0% higher in the year.
This performance ahead of market is a result of a combination of factors: the
increasing focus and specialism embedded in the divisional teams together with
the Group wide focus on customer service excellence and product quality
leading to more contract wins from customer confidence in McBride as their
trusted and preferred supplier.
Strategic progress
While the volatile macroeconomic environment forced the business to focus on
the short term in the years following the 2021 strategy reset, the Board is
confident that our Compass strategy remains as relevant and compelling as it
did when it was first announced. The business has made significant progress in
the year to 30 June 2023, putting in place many of the processes and plans
that will set us on the path to long-term, sustainable growth.
The Board and senior leadership teams have continued to undertake a thorough
review of Group and divisional strategies each year, and we maintain our
commitment to delivering on our plans. To that effect, we have continued to
see strong growth in two key areas of strategic focus with private label
volumes in our key German market up 9.8%, and in our key laundry category
volumes grew 6.5%, significantly ahead of the total market growth level.
Importantly, we are committed to delivering all programmes set out in our
Transformation agenda. We have made a substantial investment, including
creating a standalone team to ensure each programme is adequately resourced
and we continue to target £50 million of benefits over five years. In
particular, the progression of our SAP programme, in combination with the
Commercial Excellence and Service Excellence programmes, will be key factors
in differentiating McBride in the market, improving business momentum and
generating shareholder value.
Sustainability
McBride remains committed to playing its part in the path to Net Zero and
acting in a responsible manner across its operations. In 2023, we established
our targets for our Scope 1 and 2 emissions, whereby we will reduce these
emissions by 55% by 2033. We expect to finalise our Scope 3 targets by the end
of December 2023.
We also launched a range of ESG innovations, both in pursuit of our Net Zero
agenda and to help our customers and consumers with their environmental
ambitions. Initiatives include the launch of Elopak (liquids in cardboard
cartons), laundry capsules in child-safe cardboard cartons, concentrated
formats for laundry powder and certain liquid cleaners and the introduction of
a cardboard cap for our aerosol products.
Current trading and outlook
The first two months of the new financial year have seen the momentum of last
year's second half continue. However, our teams remain vigilant to safeguard
the business from short-term challenges arising from a still volatile macro
environment and we will continue to focus on reducing debt and maintaining
tight control of costs.
We enter the 2024 financial year with improving confidence about the future.
Our performance improvement momentum, the work done to pursue our Compass
strategies, the gathering pace of our Transformation agenda and our leadership
positions across many of our markets and categories, mean McBride is well
placed to deliver sustainable, profitable growth over the longer term.
Divisional portfolio performance
All divisions reported bottom line improvement with Liquids, Unit Dosing and
Aerosols returning to profitability. While Powders reported an overall loss
for the year, due to cost increases in key raw materials in the first half,
the division recovered well and returned to profitability in the final
quarter. This represents an excellent performance for the Group and highlights
both the underlying strength of the business, its teams and the significant
opportunity for growth.
Corporate costs were £7.7 million (2022: £4.5m), driven by inflationary
impacts and higher bonus provisions.
Year to Year to Constant
30 June 30 June Reported currency
2023 2022 change change
Revenue £m £m % %
Liquids 497.9 383.9 29.7% 27.3%
Unit Dosing 234.2 171.5 36.6% 33.9%
Powders 85.9 68.6 25.2% 22.7%
Aerosols 46.2 31.9 44.8% 40.8%
Asia Pacific 24.8 22.4 10.7% 6.9%
Group 889.0 678.3 31.1% 28.4%
Year to Year to Constant
30 June 30 June Reported currency
2023 2022 change change
Adjusted operating profit/(loss) £m £m £m £m
Liquids 10.5 (15.9) 26.4 26.8
Unit Dosing 10.0 (0.8) 10.8 10.9
Powders (0.7) (2.5) 1.8 1.4
Aerosols 0.3 (1.5) 1.8 1.9
Asia Pacific 1.1 0.7 0.4 0.4
Corporate (7.7) (4.5) (3.2) (3.0)
Group 13.5 (24.5) 38.0 38.4
Liquids performance review
Liquids revenue grew by 27.3% on a constant currency basis, £391.2 million to
£497.9 million, driven by volume growth of 5.0% and selling price increases
in response to continued inflationary pressures.
Private label sales volumes increased by 6.0%. This private label performance
compared favourably with the overall volumes seen in the five key private
label markets in Europe, which grew by 2.8%. Market outperformance was driven
by new contract wins and improving customer service.
In the fourth quarter, there was increased demand for private label products,
particularly in France, in response to pressures on disposable incomes. This
resulted in consumers switching from branded products to private label items.
Until the fourth quarter, this had been more than offset by the overall
decline in consumer demand. Conversely, volumes sold to contract manufacturing
customers were down 16.6% as branded product lines were hit by the market
shift to private label.
Volumes of private label dishwash products grew by 12.9%, driven by a contract
win in the UK and the division outperforming the five largest private label
markets in Europe, which grew by 7.6%. Volumes of private label laundry
products grew by 6.2%, with key contract wins in Spain and Germany, again
significantly outperforming the key markets in Europe. Volumes of private
label cleaner products increased by 1.8%, which represented a positive
performance compared to growth in the market as a whole, which was flat year
on year.
The division delivered an adjusted operating profit of £10.5 million, which
was £26.8 million higher than the prior year on a constant currency basis.
Service levels improved throughout the year, with improvements made in the
division's factories and across the broader supply chain. These improvements
in service resulted in lower customer penalties and helped deliver
year-on-year growth.
Good progress was made with committed Compass cost reduction actions, while
factory efficiencies were also improved through the rollout of Lean
manufacturing methodology across the division.
For the second year, the division achieved net contract wins, particularly in
the German market, which is expected to impact volumes positively over the
next financial year.
Unit Dosing performance review
Revenue was up by 33.9% to £234.2 million on a constant currency basis, with
the division recording adjusted operating profit of £10.0 million (2022:
operating loss of £0.8m), resulting in an adjusted operating profit margin of
4.3% (2022: adjusted operating loss margin of 0.5%).
After delivering a revenue increase of 35.1% in the first half of the
financial year, the division grew 32.7% in the second half, driven by selling
price increases, new contract wins and improved rates of sale of private label
products. Volumes in contract manufacturing declined by 18.5%.
All of the division's product lines saw positive volume growth in 2023, which
represents a significant achievement. The division grew in four of the five
largest economies in Europe (UK, Germany, France and Spain), with a marginal
volume decline in Italy. New product offerings - such as the new 'click to
lock' box and capsule shapes - have been selected by multiple customers and
are growing rapidly, illustrating how McBride is innovating to improve
delivery and create value.
Adjusted operating profit improved by £10.8 million, driven by multiple
factors. Continued price increases to recover inflation played a key role in
the first half, while efforts to develop next generation lower cost products
across all our categories had an increasing impact as the year progressed.
Volume growth allowed the division to leverage its factories which resulted in
an increase in its direct labour productivity of over 7%. Strategic staffing
policies and tight cost controls helped to offset labour and service cost
increases, ensuring overheads only increased by 13%, despite significant
increases in labour and energy inflation. Overall, the division has taken a
major step forward in improving its competitiveness and positioning itself for
long-term growth.
Powders performance review
Revenue in Powders at £85.9 million was 22.7% higher on a constant currency
basis, while the adjusted operating loss reduced by £1.8 million to £(0.7)
million. Ongoing cost mitigation actions and volume growth in the final
quarter provided the foundations to returning the business to break‑even in
the near term.
The division has seen volatile, and at times, immediate price increases for
various key raw materials throughout the year.
Despite the strong selling price increases, given the magnitude of the
inflationary pressures experienced in the year, it was not possible to offset
cost increases fully. Additionally, the higher selling prices of the category
damaged its competitiveness versus other types of formats, such as Liquids and
Unit Dosing products. This caused a reduction in powder product demand in most
markets, both across private label and contract manufacturing.
The total laundry powder market declined in volume by 3.7%, although private
label grew by 1.5%. The same dynamics were seen in auto dishwash powder with a
total market volume decline of 4.6%, but with private label gaining market
share in certain geographic areas. However, the tabs format fell off
significantly, seeing a 31.4% decline in private label volume.
For the laundry powder category, McBride generally benefited from the switch
from brands to private label in most of the key European markets and gained
significant new volumes in contract manufacturing. However, auto dishwash
category sales suffered due to some contract losses and a lack of growth in
France and Italy.
As a result of the implementation of cost saving initiatives throughout the
year and the benefits of increased selling prices, profit recovered in the
last quarter. However, this did not offset the losses incurred during the
first three quarters and prevented the division from achieving its break-even
target.
During the year, the division worked relentlessly to deliver award winning
products in its five key markets, building on its strong R&D strategy and
establishing the Powders division as the 'go to' manufacturer in the market.
Aerosols performance review
Revenue of £46.2 million was 40.8% higher in the year on a constant currency
basis, while adjusted operating profit of £0.3 million was up £1.9 million
at constant currency. This resulted in an adjusted operating profit margin of
0.6% (2022: adjusted operating loss margin of 4.6%).
Following strong revenue growth of 33.4% in the first half, when the division
delivered an adjusted operating profit at break-even, the second half saw
sales increase by 48.1% across all core categories. The implementation of
price increases partially offset exceptional increases in raw material,
packaging and logistics cost increases. Material prices appear to be
plateauing at the high level seen since the fourth quarter.
Of the division's three main product categories, both household and personal
care saw a significant increase in demand in the year, while insecticides grew
slightly.
This growth was driven by higher private label sales, largely due to
increasing underlying demand and new contract wins, in addition to increased
selling prices. Supply chain agility and strong cost controls reinforced
Aerosols' strong reputation with customers and were key factors in capturing
new business in both private label and contract manufacturing.
The Aerosols division continues to pursue its strategy of supplying niche
products to a limited range of markets, while pursuing targeted geographical
expansion. The division is keenly focused on meeting customers' needs in the
most cost-effective way. This approach has already secured new contract wins
that launched in the third quarter, with others planned for the next financial
year, continuing the positive growth momentum experienced through 2023.
Asia Pacific performance review
Revenue grew 6.9% on a constant currency basis to £24.8 million, with
adjusted operating profit growing to £1.1 million, representing a 57.1%
increase. This resulted in an adjusted operating profit margin of 4.4%, which
was achieved via a disciplined approach to overhead cost control across the
division as a means to combat the general inflationary pressures seen across
the region.
Revenue in the first six months of the year grew by 18.9%, but decreased by
4.2% in the second half of the year. This reduction was primarily due to the
partial loss of a contract with a major customer that operates across multiple
countries in the South East Asia region. Nevertheless, new contracts secured
and launched in the fourth quarter will more than mitigate this loss going
forward and are expected to generate positive sales growth momentum going into
the next financial year.
Demand for private label products is strong as consumers increasingly turn
towards better value products without compromising on performance. In
Australia, private label contracts with a major customer were successfully
extended. In Malaysia, key customers have been strongly promoting their
private label personal care offering, resulting in significant sales growth.
Group operating results
Operating profit from continuing operations of £10.3 million was a
significant improvement on the prior year (2022: loss of £26.7m). Adjusted
operating profit of £13.5 million was also significantly better than the
prior year (2022: loss of £24.5m) whilst the adjusted operating profit margin
increased from (3.6)% to 1.5%.
The Group returned to profitability as the time lag between the exceptional
levels of input cost inflation hitting the business and the mitigating actions
being agreed with our customers unwound. In particular, in the second half of
the year, we saw encouraging sales momentum across the Group, underpinned by
improved customer service levels, new contract wins and increased consumer
demand for great-value, high-quality private label products.
Group EBITDA
Adjusted EBITDA((1)) of £34.1 million (2022: £(3.6)m) reflected the strong
trading performance.
2023 2022
£m £m
Operating profit/(loss) 10.3 (27.1)
Add back: operating loss from discontinued operations - 0.4
Operating profit/(loss) from continuing operations 10.3 (26.7)
Exceptional items in operating profit/(loss) (note 4) 0.8 (0.4)
Amortisation of intangibles (note 10) 2.4 2.6
Adjusted operating profit/(loss) from continuing operations 13.5 (24.5)
Depreciation of property, plant and equipment (note 10) 16.8 16.9
Depreciation of right-of-use assets (note 10) 3.8 4.0
Adjusted EBITDA 34.1 (3.6)
(1)Definition and reconciliation provided in note 19.
Exceptional items
Total exceptional items of £13.0 million were recorded during the year in
relation to continuing operations (2022: £3.1m). The charges primarily
comprised the following:
· £12.2 million in respect of the independent business review and
refinancing costs, recognised in finance costs, including a £1.5 million
charge in respect of the valuation of the upside sharing fee payable to
members of the lender group upon exiting the existing revolving credit
facility (RCF) agreement; and
· £0.8 million costs relating to the re-evaluation of an environmental
remediation provision.
Finance costs
At £13.2 million, adjusted finance costs were £8.1 million higher than the
prior year (2022: £5.1m), driven by revised terms under the lending agreement
announced on 29 September 2022 and increases to the underlying market interest
rates.
Loss before tax and taxation
Reported loss before taxation from continuing operations was £(15.1) million
(2022: £(35.3)m). Adjusted profit before taxation from continuing operations
was £0.3 million (2022: loss of £29.6m). The tax charge on continuing
adjusted profit before tax for the year is £(0.3) million (2022: £9.3m
credit) and the effective tax rate is 100% (2022: 31%).
The statutory effective tax rate on continuing operations for the year is 24%
(2022: 32%).
The Group operates across a number of jurisdictions and tax risk can arise in
relation to the pricing of cross‑border transactions, where a taxation
authority's interpretation of the arm's length principle can diverge from the
approach taken by the Group.
Loss per share
On an adjusted basis, diluted loss per share from continuing operations was
0.0 pence (2022: loss of 11.7p). Total adjusted diluted loss per share was 0.0
pence (2022: loss of 11.7p), with basic loss per share at 6.6 pence (2022:
loss of 14.0p).
Payments to shareholders
Under the terms of the amended RCF announced on 29 September 2022, the Company
may not, except with the consent of its lender group, declare, make or pay any
dividend or distribution to its shareholders prior to an 'exit event', being a
change of control, refinancing of the RCF in full, prepayment and cancellation
of the RCF in full, or upon the termination date of the RCF, being May 2026.
Hence the Board is not recommending a final dividend for the financial year
ended 30 June 2023.
Cash flow and balance sheet
2023 2022
£m £m
Adjusted EBITDA 34.1 (3.6)
Working capital excluding provisions and pensions 7.1 (15.3)
Share-based payments and loss on disposal of property, plant and equipment 0.8 0.3
Non-exceptional reversal of impairment of property, plant and equipment - (0.1)
Pension deficit reduction contributions (4.0) (4.0)
Free cash flow((1)) 38.0 (22.7)
Exceptional items (1.4) (4.1)
Interest on borrowings and lease liabilities less interest receivable (11.4) (3.3)
Refinancing costs paid (12.3) (1.8)
Tax paid (1.8) (0.1)
Net cash generated from/(used in) operating activities 11.1 (32.0)
Net capital expenditure((2)) (16.3) (13.2)
Debt financing activities 2.6 24.7
Settlement of derivatives 0.4 0.4
Free cash flow to equity((3)) (2.2) (20.1)
Dividends paid/redemption of B Shares - (0.1)
Share buy-back - (0.1)
Net decrease in cash and cash equivalents (2.2) (20.3)
Free cash flow in the year was £38.0 million (2022: £(22.7)m).
Working capital inflows increased compared to the prior year primarily due to
a reduction in customer payment terms, partially offset by an increase in the
value of inventories due to higher input costs.
During the year, net capital expenditure was £16.3 million (2022: £13.2m) in
cash terms. The ongoing reduction in gross capital expenditure levels resulted
from careful management of cash flows to mitigate increases in net debt. The
Group continues to prioritise capital expenditure to underpin our strategy of
focused investment in our growth categories.
The Group's net assets decreased to £37.1 million (2022: £57.0m).
Gearing((4)) decreased slightly to 78% (30 June 2022: 80%) as net debt levels
remained broadly in line with the prior year end. Adjusted return on capital
employed of 6.4% was higher than the prior year (2022: (11.4)%) driven by a
return to operating profitability.
(1)Refer to note 19 for definition.
(2) Net capital expenditure is capital expenditure including capital payments
on lease liabilities less proceeds from sale of fixed assets.
(3)Free cash flow to equity excludes cash flows relating to transactions with
shareholders.
(4)Gearing represents net debt divided by the average of current and prior
year year-end capital.
Bank facilities and net debt
Net debt at 30 June 2023 increased marginally to £166.5 million (30 June
2022: £164.4m).
Throughout the year the Group had a €175 million multi-currency,
sustainability-linked RCF. The facility was agreed for a five‑year tenor to
May 2026 and is provided by a syndicate of supportive international bank
lenders. On 29 September 2022, the Group announced that it had agreed an
amended RCF with its lender group maintaining the commitment date to May 2026
and, ensuring the Group has sufficient levels of liquidity headroom and can
comply with revised covenant requirements.
The Group considers that the amended RCF arrangement achieves an appropriate
balance between the interests of all stakeholders of the Group. In particular,
we have been in regular discussion and consultation with the Trustee of the
Group's defined benefit pension scheme in the UK. In order to preserve and
support the position of the scheme, with the support of the lender group, we
agreed to provide in favour of the scheme a package of additional credit
support in the UK, as well as a new information sharing protocol to ensure
ongoing communication between the Group and the Trustee remains comprehensive.
At 30 June 2023, liquidity((1)) as defined by the RCF agreement was £59.3
million (2022: £70.6m). Liquidity throughout the year was comfortably above
the minimum liquidity covenant of £15 million.
At 30 June 2023, the net debt cover ratio as defined under the RCF funding
arrangements was 2.9x (2022: (93.3)x) and the interest cover was 2.7x (2022:
(0.2)x). The amount undrawn on the facility was €46.7 million (2022:
€64.5m). Under the current agreement, net debt cover and interest cover
covenants are to be tested quarterly from 30 September 2024.
The RCF, which is aligned with the Loan Market Association's 'Sustainability
Linked Loan Principles', incorporates three sustainability performance targets
which are central to McBride plc's commitment to maintaining a responsible
business and contributing actively to a more sustainable future:
1. Renewable energy: McBride plc strives to reduce its environmental
impact by increasing the percentage of energy from renewable sources from 5.9%
in 2020 to 70.0% in 2026. During this financial year, 58.6% of the Group's
energy came from renewable sources, beating the target of 30.0% by 30 June
2023.
2. Recycled content: Plastics are a significant element in many of the
final products of McBride. The Company targets to increase significantly the
post-consumer recycled (PCR) content of polyethylene terephthalate (PET)
plastic packaging sourced for manufacturing its products, from 64.0% in 2020
to 94.0% in 2026. During this financial year, 98.2% of PET bought had PCR
content, exceeding the target of 79.0%.
3. Responsible sourcing: McBride plc targets the sourcing of all paper and
card components responsibly via FSC® approved suppliers, with the percentage
of virgin carton sourced from FSC® approved suppliers increasing from 50.0%
in 2020 to 100.0% in 2026. By 30 June 2022, the percentage of skillets sourced
that are FSC® certified was 55.6%, below the target of 65.0% by 30 June 2023.
The decrease in the use of FSC® sourced board is due to product mix and
transition impacts. McBride continues to focus on improving our recyclability
via product design and working closely with our customers.
Successful achievement of all three annual targets will result in a reduction
of 0.05% of the margin of the facility.
At 30 June 2023, the Group had a number of facilities whereby it could borrow
against certain of its trade receivables. In the UK, the Group had a £20
million facility, committed until September 2024. In France and Belgium, the
Group had an aggregate €30 million facility, which had a rolling notice
period of six months for the French part and three months for the Belgian
part, both committed until September 2024. In Germany, the Group had a €40
million facility, committed until September 2024. In Spain, the Group had an
€8 million facility, committed until May 2026. Since the year end, the Group
has agreed extension of all invoice discounting facilities to May 2026. 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's confirmed financing, improved trading performance and more
positive three-year financial forecast has meant that there is no longer a
material uncertainty that would cast significant doubt on the Group's ability
to continue as a going concern, even when modelling severe but plausible
downside risks. The Board anticipates that the financial turnaround will allow
the Group to improve liquidity and cash flows further. In particular, it is
expected that having a clean auditors' report will facilitate the agreement of
an invoice discounting line on our unencumbered Italian debtor ledger and
allow credit insurers to increase levels of insurance cover to our suppliers
back to more normal levels.
(1)Refer to note 19 for definition.
Pensions
In the UK, the Group operates a defined benefit pension scheme, which is
closed to new members and to future accrual.
A cash flow driven investment (CDI) strategy was implemented during the first
half of the financial year to 30 June 2020. Using credit/bond investments, the
CDI strategy delivered a stable, more certain expected return and reduced
volatility. The strategy previously targeted a c.100% hedge of interest rates
and inflation. As a result of the government bond crisis in 2022 and the
resultant changes in liability driven investing (LDI) managers' collateral
requirements, the Trustee amended the strategy in October 2022 and as an
interim step moved to an unlevered government bond-based hedge with c.40% of
interest rate and inflation hedging. The investment strategy is currently
being reviewed and hedging is due to be increased to c.60% of interest rates
and inflation. This level of hedging broadly hedges the current funding level
of the Fund and strikes a balance between risk and return objectives and the
liquidity needs of the Fund.
A significant increase in corporate bond yields has decreased the value of the
liabilities and the assets over the year to 30 June 2023. At 30 June 2023, the
Group recognised a deficit in the scheme of £24.7 million (30 June 2022:
£14.4m). The increase in deficit is due to recent high inflation impacting
pension liabilities at 30 June 2023 by more than had been assumed within
long-term inflation assumptions.
Following the triennial valuation at 31 March 2021, the Company and Trustee
agreed a new deficit reduction plan based on the scheme funding deficit of
£48.4 million. The current level of deficit contributions of £4.0 million
per annum is payable until 31 March 2028. The Company has separately agreed
that, from 1 October 2024, conditional profit-related contributions of £1.7
million per annum will be paid over the period to 31 March 2028. If adjusted
operating profit exceeds £35 million, additional annual deficit contributions
of £1.7 million will be due over the following year. If adjusted operating
profit is below £30 million then no profit-related contributions will be due
the following year. If reported adjusted operating profit is between £31
million and £35 million, a proportion of the £1.7 million contribution will
be due over the following year, with incremental increases of £0.34 million
of additional contributions for each whole £1 million of adjusted operating
profit in excess of £30 million. Also, the Company has agreed to make
additional contributions such that the total deficit contributions in any year
match the value of any dividend paid. The funding arrangements and recovery
plan will next be reviewed by the Company and Trustee as part of the 31 March
2024 valuation.
The Group has other post-employment benefit obligations outside the UK that
amounted to £1.9 million (30 June 2022: £1.7m).
Environmental, social and governance (ESG)
McBride plc works to integrate the principles of long‑term environmental and
social sustainability within its business strategy. Our approach to
sustainability is underpinned by an analysis of the ESG issues that are most
relevant and important in the context of McBride plc's business activities.
The Company recognises it must tackle climate change to remain viable, it
places ESG issues at the core of its approach to sustainability.
Given their strategic significance, our ESG priorities are actively driven and
managed by a cross-functional ESG Committee, overseen directly by the CEO
reporting to the Board. The Board:
· oversees strategies to manage social and environmental risks,
including management processes and standards;
· reviews the effectiveness of management policies and procedures
relating to safety, health and employment practices;
· monitors our key performance indicators against agreed commitments;
· approves recommendations from the executive ESG Committee in respect
of key ESG issues and related objectives;
· monitors the level of resource, competence and commitment applied to
the management of ESG issues to ensure a culture of continuous improvement;
and
· supports McBride plc's commitment to make a positive contribution to
the communities in which it operates.
We have developed a framework of non-financial key indicators and metrics to
assess our performance against our ongoing ESG objectives which sit alongside
our obligations under the UK Corporate Governance Code ('the Code'). Progress
is regularly monitored by the ESG Committee and reported on to our Board for
review.
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;
· Safe and high-quality products;
· Health and safety;
· Challenges in attracting and retaining talent;
· Climate change and environmental concerns;
· Increased regulation; and
· Economic, political and macro environment instability.
Consolidated income statement
Year ended 30 June 2023
2023 2022
Adjusted Adjusting items Total Adjusted Adjusting items Total
Continuing operations Note £m £m £m £m £m £m
Revenue 3 889.0 - 889.0 678.3 - 678.3
Cost of sales (625.4) - (625.4) (487.5) - (487.5)
Gross profit 263.6 - 263.6 190.8 - 190.8
Distribution costs (77.9) - (77.9) (64.3) - (64.3)
Administrative costs (168.4) (3.2) (171.6) (148.8) (5.0) (153.8)
Impairment of trade receivables (3.5) - (3.5) (2.0) - (2.0)
(Loss)/gain on disposal of property, plant and equipment
(0.3) - (0.3) (0.3) 3.7 3.4
Impairment of property, plant and equipment
- - - 0.1 (0.9) (0.8)
Operating profit/(loss) 13.5 (3.2) 10.3 (24.5) (2.2) (26.7)
Finance costs 6 (13.2) (12.2) (25.4) (5.1) (3.5) (8.6)
Profit/(loss) before taxation 0.3 (15.4) (15.1) (29.6) (5.7) (35.3)
Taxation 7 (0.3) 3.9 3.6 9.3 2.0 11.3
Loss for the year from continuing operations
- (11.5) (11.5) (20.3) (3.7) (24.0)
Discontinued operations
Loss for the year from discontinued operations
- - - - (0.3) (0.3)
Loss for the year - (11.5) (11.5) (20.3) (4.0) (24.3)
Loss per ordinary share from continuing and discontinued operations 8
attributable to the owners of the parent during the year
Basic loss per share
From continuing operations (6.6)p (13.8)p
From discontinued operations 0.0p (0.2)p
From loss for the year (6.6)p (14.0)p
Diluted loss per share
From continuing operations (6.6)p (13.8)p
From discontinued operations 0.0p (0.2)p
From loss for the year (6.6)p (14.0)p
Consolidated statement of comprehensive income
Year ended 30 June 2023
2023 2022
£m £m
Loss for the year (11.5) (24.3)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation differences on foreign subsidiaries (0.6) 0.2
Gain on net investment hedges 0.4 0.5
Gain on cash flow hedges in the year 3.7 2.4
Cash flow hedges transferred to profit or loss (1.4) -
Taxation relating to items above (0.4) (0.5)
1.7 2.6
Items that will not be reclassified to profit or loss:
Net actuarial (loss)/gain on post‑employment benefits (14.1) 12.4
Taxation relating to item above 3.5 (3.1)
(10.6) 9.3
Total other comprehensive (expense)/income (8.9) 11.9
Total comprehensive expense (20.4) (12.4)
Total comprehensive expense attributable to equity shareholders arises from:
Continuing operations (20.4) (12.1)
Discontinued operations - (0.3)
(20.4) (12.4)
Consolidated balance sheet
As at 30 June 2023
2023 2022
Note £m £m
Non-current assets
Goodwill 10 19.7 19.7
Other intangible assets 10 6.5 7.3
Property, plant and equipment 10 117.8 122.9
Derivative financial instruments 11 4.5 1.9
Right-of-use assets 10 8.5 11.3
Deferred tax assets 41.6 29.7
198.6 192.8
Current assets
Inventories 121.5 118.9
Trade and other receivables 145.7 145.4
Current tax asset 2.3 3.9
Derivative financial instruments 11 0.6 0.6
Cash and cash equivalents 12 1.6 4.5
271.7 273.3
Total assets 470.3 466.1
Current liabilities
Trade and other payables 219.6 206.9
Borrowings 11 49.3 60.5
Lease liabilities 11 3.5 3.9
Derivative financial instruments 11 1.8 -
Current tax liabilities 6.7 5.3
Provisions 14 2.7 3.4
283.6 280.0
Non-current liabilities
Borrowings 11 109.8 96.4
Lease liabilities 11 5.5 8.1
Pensions and other post-employment benefits 13 26.6 16.1
Provisions 14 2.6 3.8
Deferred tax liabilities 5.1 4.7
149.6 129.1
Total liabilities 433.2 409.1
Net assets 37.1 57.0
Equity
Issued share capital 16 17.4 17.4
Share premium account 68.6 68.6
Other reserves 78.9 77.2
Accumulated losses (127.8) (106.2)
Total equity 37.1 57.0
Consolidated cash flow statement
Year ended 30 June 2023
2022
2023 (restated)((1))
Note £m £m
Operating activities
Loss before tax
Continuing operations (15.1) (35.3)
Discontinued operations - (0.4)
Finance costs 25.4 8.6
Exceptional items excluding finance costs 4 0.8 -
Share-based payments charge 0.5 -
Depreciation of property, plant and equipment 10 16.8 16.9
Depreciation of right-of-use assets 10 3.8 4.0
Loss on disposal of fixed assets 0.3 0.3
Amortisation of intangible assets 10 2.4 2.6
(Reversal of) impairment of property, plant and equipment - (0.1)
Operating cash flow before changes in working capital before exceptional items 34.9 (3.4)
Increase in receivables (1.3) (27.4)
Increase in inventories (2.7) (25.7)
Increase in payables 11.1 37.8
Operating cash flow after changes in working capital before exceptional items 42.0 (18.7)
Additional cash funding of pension schemes (4.0) (4.0)
Cash generated from/(used in) operations before exceptional items 38.0 (22.7)
Cash outflow in respect of exceptional items (1.4) (4.1)
Cash generated from/(used in) operations 36.6 (26.8)
Interest paid (11.4) (3.3)
Refinancing costs paid (12.3) (1.8)
Taxation paid (1.8) (0.1)
Net cash generated from/(used in) operating activities 11.1 (32.0)
Investing activities
Proceeds from sale of property, plant and equipment - 6.1
Purchase of property, plant and equipment (10.3) (12.6)
Purchase of intangible assets (1.7) (1.7)
Settlement of derivatives used in net investment hedges 0.4 0.4
Net cash used in investing activities (11.6) (7.8)
Financing activities
Redemption of B Shares 16 - (0.1)
(Repayment)/drawdown of overdrafts 12 (6.2) 0.7
(Repayment)/drawdown of other loans 12 (4.9) 6.0
Drawdown of bank loans 13.7 18.0
Repayment of IFRS 16 lease obligations 12 (4.3) (5.0)
Purchase of own shares - (0.1)
Net cash (used in)/generated from financing activities (1.7) 19.5
Decrease in net cash and cash equivalents (2.2) (20.3)
Net cash and cash equivalents at the start of the year 4.5 24.9
Currency translation differences (0.7) (0.1)
Net cash and cash equivalents at the end of the year 1.6 4.5
(1)Refinancing costs paid have been reclassified as operating activities,
having been reported previously under financing activities.
Consolidated statement of changes in equity
Year ended 30 June 2023
Other reserves
Issued Share Cash flow Currency Capital Accumulated Total
share premium hedge translation redemption losses equity
capital account reserve reserve reserve £m £m
£m £m £m £m £m
At 1 July 2022 17.4 68.6 1.8 (1.8) 77.2 (106.2) 57.0
Year ended 30 June 2023
Loss for the year - - - - - (11.5) (11.5)
Other comprehensive income/(expense)
Items that may be reclassified
to profit or loss:
Currency translation differences
of foreign subsidiaries - - - (0.6) - - (0.6)
Gain on net investment hedges - - - 0.4 - - 0.4
Gain on cash flow hedges in the year - - 3.7 - - - 3.7
Cash flow hedges transferred to profit or loss
- - (1.4) - - - (1.4)
Taxation relating to the items above - - (0.4) - - - (0.4)
- - 1.9 (0.2) - - 1.7
Items that will not be reclassified
to profit or loss:
Net actuarial loss on
post‑employment benefits - - - - - (14.1) (14.1)
Taxation relating to items above - - - - - 3.5 3.5
- - - - - (10.6) (10.6)
Total other comprehensive income/(expense)
- - 1.9 (0.2) - (10.6) (8.9)
Total comprehensive income/(expense) - - 1.9 (0.2) - (22.1) (20.4)
Transactions with owners of the parent
Share-based payments - - - - - 0.5 0.5
At 30 June 2023 17.4 68.6 3.7 (2.0) 77.2 (127.8) 37.1
Other reserves
Issued Share Cash flow Currency Capital
share premium hedge translation redemption Accumulated Total
capital account reserve reserve reserve losses equity
£m £m £m £m £m £m £m
At 1 July 2021 17.4 68.6 (0.1) (1.0) 77.1 (92.2) 69.8
Year ended 30 June 2022
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 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 - - 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 the 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 2023, the accumulated losses include a deduction of £0.4 million
(2022: £0.5m) for the cost of own shares held in relation to employee share
schemes.
Notes to the consolidated financial information
1. Corporate information
McBride plc ('the Company') is a public company limited by shares incorporated
and domiciled in the United Kingdom and registered in England and Wales. The
Company's ordinary shares are listed on the London Stock Exchange. The
registered office of the Company is Middleton Way, Middleton, Manchester M24
4DP. For the purposes of DTR 6.4.2R, the Home State of McBride plc is the
United Kingdom.
The Company and its subsidiaries (together, 'the Group') is Europe's leading
provider of private label and contract manufactured products for the domestic
household and professional cleaning/hygiene markets. The Company develops and
manufactures products for the majority of retailers and major brand owners
throughout the UK, Europe and Asia.
2. Accounting policies
Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 June 2023 and 30 June 2022, but is
derived from those accounts. The financial information for 2022 is derived
from the statutory accounts for 2022 which have been delivered to the
registrar of companies. The statutory accounts for the year ended 30 June 2023
have been reported on by the Company's auditor, PricewaterhouseCoopers LLP,
and will be delivered to the Registrar of Companies in due course.
The financial information has been prepared on the going concern basis in
accordance with UK-adopted International Financial Reporting Standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. 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 financial information has been prepared applying accounting policies that
were applied in the preparation of the Company's published consolidated
financial statements for the year ended 30 June 2022.
The financial information does not constitute statutory accounts of the Group
for the years ended 30 June 2023 and 2022 within the meaning section 435 of
the Companies Act 2006 or contain sufficient information to comply with the
disclosure requirements of IFRS.
The auditor has reported on those accounts; their report was (i) unqualified,
(ii) did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies Act
2006.
Going concern
The Group's base case forecasts are based on the Board-approved budget and
three-year plan. They indicate sufficient liquidity, debt cover and interest
cover throughout the going concern review period to ensure compliance with
current banking covenants. The Group's base case scenario assumes:
· revenue growth of c.4-5% per annum, driven predominantly by volume
increases resulting from net contract wins;
· raw material prices reducing compared to 2023 levels, which in
themselves remained significantly higher than the pre-Covid-19 pandemic era as
a result of exceptional levels of input cost inflation;
· interest rates increasing by c.100 basis points versus budgeted
assumptions; and
· Sterling: Euro exchange rate of £1:€1.12.
The Directors have considered a severe but plausible downside scenario to
stress test the Group's financial forecasts, with the following assumptions:
· no revenue growth from assumed contract wins in 2024;
· revenue growth reducing to half of that assumed in the original
three-year plan for 2025;
· an increase in raw material and packaging input costs compared to
latest forecasts;
· interest rates increasing by a further 100 basis points; and
· Sterling appreciating significantly against the Euro to £1:€1.22.
In the event that such a severe but plausible downside risk scenario occurs,
the Group would remain compliant with current banking covenants.
After reviewing the current liquidity position, financial forecasts, stress
testing of potential risks and considering the uncertainties described above,
and based on the currently committed funding facilities, the Directors have a
reasonable expectation that the Group has sufficient resources to continue in
operational existence and without significant curtailment of operations for
the foreseeable future. For these reasons the Directors continue to adopt the
going concern basis of accounting in preparing the Group financial statements.
Viability statement
In accordance with the requirements of the UK Corporate Governance Code ('the
Code'), the Directors have performed a robust assessment of the principal
risks facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity. The Board has determined
that a three year period to 30 June 2026 constitutes an appropriate period
over which to provide its viability statement.
In assessing the Group's viability, the Directors have considered the current
financial position of the Group and its principal risks and uncertainties. The
analysis considers a severe but plausible downside scenario, featuring the
principal risks from a financial and operational perspective, with the
resulting impact on key metrics, such as debt headroom and covenants. The
downside risk scenario assumes sensitivity around exchange rates and interest
rates, along with significant reductions in revenue and cash flow over the
three year period. The Group's global footprint, product diversification and
access to external financing all provide resilience against these factors and
the other principal risks to which the Group is exposed.
Whilst the Group ends the year with net current liabilities of £11.9 million,
the Directors conclude that the Group has access to sufficient financing
facilities in order to support this position.
After conducting their viability review, the Directors confirm that they have
a reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the three year period of their
assessment to 30 June 2026.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements from which this
preliminary announcement is derived, requires management to make judgements,
estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. The significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the consolidated
financial statements for the year ended 30 June 2022.
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.
APM Definition Source
Adjusted operating (loss)/profit Operating profit/(loss) before amortisation of intangible assets and Group income statement
exceptional items
Adjusted EBITDA Adjusted operating profit/(loss) before depreciation Group income statement
Adjusted profit/(loss) before tax Adjusted profit/(loss) before tax is based on adjusted operating profit less Group income statement
adjusted finance costs.
Adjusted loss for the year Adjusted loss after tax is based on adjusted profit before tax less taxation. Group income statement
Adjusted loss per share Adjusted loss per share is based on the Group's loss for the year adjusted for Note 8
the items excluded from operating profit/(loss) in arriving at adjusted
operating profit/(loss) Group income statement
Free cash flow Free cash flow is defined as cash generated from continuing operations before Group cash flow statement
exceptional items.
Cash conversion % Cash conversion % is defined as free cash flow as a percentage of adjusted Group income statement
EBITDA.
Group cash flow statement
Adjusted return on capital employed Adjusted ROCE is defined as rolling twelve months total adjusted operating Group income statement
profit from continuing operations divided by the average of the past two
years' capital employed. Capital employed is defined as the total of goodwill Group balance sheet
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, the aggregate of: (a) cash; (b) cash Group cash flow statement
equivalents; (c) the available facility at that time, which comprises the
headroom available in the RCF and other committed facilities; and (d) the Note 16
aggregate amount available for drawing under uncommitted facilities.
Net debt Net debt consists of cash and cash equivalents, overdrafts, bank and other Group balance sheet
loans and lease liabilities.
The alternative performance measures 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 years under review, the items excluded from operating profit in
arriving at adjusted operating profit were the amortisation of intangible
assets and exceptional items. Exceptional items and amortisation are excluded
from adjusted operating profit because they are not considered to be
representative of the trading performance of the Group's businesses during the
year.
See note 19 'Additional information' for further information on alternative
performance measures.
3. Segment information
Background
Financial information is presented to the Board by product technology for the
purposes of allocating resources within the Group and assessing the
performance of the Group's businesses. There are five separately managed and
accountable business divisions:
· Liquids
· Unit Dosing
· Powders
· Aerosols
· 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.
Programme Compass 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 profit to measure the profitability of the
Group's businesses. Adjusted operating profit is, therefore, the measure of
segment profit presented in the Group's segment disclosures. Adjusted
operating profit represents operating profit before specific items that are
considered to hinder comparison of the trading performance of the Group's
businesses either year on year or with other businesses. During the years
under review, the items excluded from operating profit in arriving at adjusted
operating profit were the amortisation of intangible assets and exceptional
items.
Liquids Unit Dosing Powders Aerosols Asia Pacific Corporate Group
Year ended 30 June 2023 £m £m £m £m £m £m £m
Continuing operations
Segment revenue 497.9 234.2 85.9 46.2 24.8 - 889.0
Adjusted operating profit/(loss) 10.5 10.0 (0.7) 0.3 1.1 (7.7) 13.5
Amortisation of intangible assets (2.4)
Exceptional items (note 4) (0.8)
Operating profit 10.3
Finance costs (note 6) (25.4)
Loss before taxation (15.1)
Inventories 59.4 33.8 15.8 9.6 2.9 - 121.5
Capital expenditure 5.9 4.9 1.7 0.4 0.3 - 13.2
Amortisation and depreciation 13.2 6.3 1.4 0.6 1.5 - 23.0
Liquids Unit Dosing Powders Aerosols Asia Pacific Corporate Group
Year ended 30 June 2022 £m £m £m £m £m £m £m
Continuing operations
Segment 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 (note 4) 0.4
Operating profit (26.7)
Finance costs (note 6) (8.6)
Profit 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
Geographical information
Revenue from external customers
Non-current assets
2023 2022 2023 2022
£m £m £m £m
United Kingdom 187.8 150.6 34.5 37.7
Germany 205.8 143.3 - -
France 188.0 140.3 9.1 9.2
Other Europe 278.5 217.8 104.1 108.0
Australia 0.4 8.5 - -
Other Asia Pacific 25.3 14.7 4.8 6.3
Rest of the World 3.2 3.1 - -
Total 889.0 678.3 152.5 161.2
The geographical revenue information above is based on the location of the
customer.
Non-current assets for this purpose consist of goodwill, other intangible
assets, property, plant and equipment and right-of-use assets.
Revenue by major customer
In 2023 and 2022, no individual customer provided more than 10% of the Group's
revenue.
During 2023, the top ten customers accounted for 53% of total Group revenue
(2022: 50%).
4. Exceptional items
Analysis of exceptional items
2023 2022
£m £m
Continuing operations
Reorganisation and restructuring costs/(gains):
UK Aerosols closure - 0.1
Factory footprint review - (1.4)
Review of strategy, organisation and operations - (0.4)
Logistics transformation programme - 0.7
- (1.0)
Environmental remediation 0.8 0.6
Total charged/(credited) to operating profit/(loss) 0.8 (0.4)
Group refinancing:
Independent business review and refinancing costs 12.2 3.5
Total charged to finance costs 12.2 3.5
Total continuing operations 13.0 3.1
Discontinued operations
Sale of PC Liquids business - 0.5
Other - (0.1)
Discontinued operations before tax - 0.4
Tax on discontinued operations - (0.1)
Total discontinued operations - 0.3
Total 13.0 3.5
Total exceptional items of £13.0 million were recorded during the year (2022:
£3.5m). The charge primarily comprises the following:
Items relating to continuing operations
Total exceptional items incurred in relation to the continuing business of
£13.0 million were recorded during the year (2022: £3.1m). The charges
comprise the following:
· £0.8 million costs relating to the re-evaluation of the environmental
remediation provision; and
· £12.2 million charged to finance costs in respect of the independent
business review and refinancing work completed in September 2022. The charge
includes £1.5 million reflecting the fair value of the liability in relation
to fees payable to members of the lender group upon exiting the existing RCF
agreement. As reported in last year's Annual Report, the amended RCF that
McBride plc agreed with its lender group on 29 September 2022 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 a fee
will be determined as the percentage of any increase in the market
capitalisation of the Group from 29 September 2022 to the date of the exit
event. This valuation has been performed on an embedded derivative basis using
a conventional Black-Scholes pricing model.
Items relating to discontinued operations
An exceptional charge of £nil was incurred in respect of discontinued
operations during the year (2022: £0.4m).
5. Operating profit/(loss)
Operating profit/(loss) is stated after charging/(crediting):
2023 2022
(restated)
£m £m
Cost of inventories (included in cost of sales) 573.2 441.8
Employee costs 142.0 126.2
Amortisation of intangible assets (note 10) 2.4 2.6
Depreciation of property, plant and equipment (note 10) 16.8 16.9
Depreciation of right-of-use assets (note 10) 3.8 4.0
Impairment:
Property, plant and equipment (note 10) - 0.8
Inventories 3.0 3.9
Trade receivables 2.6 2.0
Expense relating to short-term leases 0.3 0.3
Expense relating to low-value leases 0.1 0.2
Research and development costs not capitalised 7.3 6.8
Net foreign exchange loss 0.4 0.3
6. Finance costs
2023 2022
£m £m
Finance costs
Interest on bank loans and overdrafts 11.1 2.7
Interest on lease liabilities 0.3 0.4
Net foreign exchange loss/(gain) (0.2) 0.4
Amortisation of facility fees 0.5 0.5
Non-utilisation and other fees 1.0 0.6
12.7 4.6
Post-employment benefits:
Net interest cost on defined benefit obligation 0.5 0.5
Adjusted finance costs 13.2 5.1
Costs associated with independent business review and refinancing 12.2 3.5
Total finance costs 25.4 8.6
Interest rate swaps are used to manage the interest rate profile of the
Group's borrowings. Accordingly, net interest payable or receivable on
interest rate swaps is included in finance costs.
7. Taxation
Income tax expense/(credit): 2023 2022
UK Overseas Total UK Overseas Total
From continuing operations £m £m £m £m £m £m
Current tax expense/(credit)
Current year - 5.0 5.0 - 3.2 3.2
Adjustment for prior years - (0.2) (0.2) (1.0) (0.9) (1.9)
- 4.8 4.8 (1.0) 2.3 1.3
Deferred tax (credit)/expense
Origination and reversal of temporary differences
(8.8) 0.9 (7.9) (7.9) (2.7) (10.6)
Adjustment for prior years (0.2) (0.3) (0.5) (6.4) 5.4 (1.0)
Impact of change in tax rate - - - (1.0) - (1.0)
(9.0) 0.6 (8.4) (15.3) 2.7 (12.6)
Income tax (credit)/expense (9.0) 5.4 (3.6) (16.3) 5.0 (11.3)
The current tax adjustment for the prior year was £nil (2022: £0.5m credit)
and £0.4 million (2022: £0.4m) credit relating to the release of provisions
for uncertain tax treatments due to the expiry of statutes of limitation.
Reconciliation to UK statutory tax rate
The total tax charge on the Group's (loss)/profit before tax for the year
differs from the theoretical amount that would be charged at the UK standard
rate of corporation tax for the following reasons:
2023 2022
From continuing operations £m £m
Loss before tax (15.1) (35.3)
Loss before tax multiplied by the UK corporation tax rate of 25% (2022: 19.0%) (3.1) (6.7)
Effect of tax rates in foreign jurisdictions 1.1 (1.7)
Non-deductible expenses 0.4 0.6
Tax incentives/non-taxable income - (0.4)
Tax losses and other temporary differences for which no deferred tax - 0.6
recognised
Change in tax rate (1.6) (1.0)
Other differences 0.3 0.2
Adjustment for prior years (0.7) (2.9)
Total tax credit in profit or loss (3.6) (11.3)
Exclude adjusting items 3.9 2.0
Total tax charge/(credit) in profit or loss before adjusting items 0.3 (9.3)
Taxation is provided at current rates on the profits earned for the
year.
8. Loss per ordinary share
Basic loss per ordinary share is calculated by dividing the loss for the year
attributable to owners of the Company by the weighted average number of the
Company's ordinary shares in issue during the financial year. The weighted
average number of the Company's ordinary shares in issue excludes 623,968
shares (2022: 629,200 shares), being the weighted average number of own shares
held during the year in relation to employee share schemes.
Reference 2023 2022
Weighted average number of ordinary shares in issue (million) a 173.4 173.5
Effect of dilutive LTIP and RSU awards (million) 2.5 1.0
Weighted average number of ordinary shares for calculating diluted loss per b
share (million)
175.9 174.5
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares in issue assuming the conversion of all potentially
dilutive ordinary shares. Where potentially dilutive ordinary shares would
cause an increase in earnings per share, or a decrease in loss per share, the
diluted loss per share is considered equal to the basic loss per share.
During the year, the Company had equity-settled LTIP and RSU awards with a nil
exercise price that are potentially dilutive ordinary shares.
Adjusted loss per share measures are calculated based on loss for the year
attributable to owners of the Company before adjusting items as follows:
2023 2022
From continuing operations Reference £m £m
Loss for calculating basic and diluted loss per share c (11.5) (24.0)
Adjusted for:
Amortisation of intangible assets (note 10) 2.4 2.6
Exceptional items (note 4) 13.0 3.1
Taxation relating to the above items (3.9) (2.0)
Loss for calculating adjusted loss per share d - (20.3)
2023 2022
Reference pence pence
Basic loss per share c/a (6.6) (13.8)
Diluted loss per share c/b((1)) (6.6) (13.8)
Adjusted basic loss per share d/a 0.0 (11.7)
Adjusted diluted loss per share d/b((1)) 0.0 (11.7)
( )
2023 2022
From discontinued operations Reference £m £m
Loss for calculating basic and diluted loss per share e - (0.3)
Adjusted for:
Exceptional items (note 4) - 0.4
Taxation relating to the above items - (0.1)
Loss for calculating adjusted earnings per share f - -
2023 2022
Reference pence pence
Basic loss per share e/a 0.0 (0.2)
Diluted loss per share e/b((1)) 0.0 (0.2)
Adjusted basic loss per share f/a 0.0 0.0
Adjusted diluted loss per share f/b((1)) 0.0 0.0
2023 2022
Total attributable to ordinary shareholders Reference £m £m
Loss for calculating basic and diluted loss per share g (11.5) (24.3)
Adjusted for:
Amortisation of intangible assets 2.4 2.6
Exceptional items (note 4) 13.0 3.5
Taxation relating to the above items (3.9) (2.1)
Loss for calculating adjusted loss per share h - (20.3)
2023 2022
Reference Pence pence
Basic loss per share g/a (6.6) (14.0)
Diluted loss per share g/b((1)) (6.6) (14.0)
Adjusted basic loss per share h/a 0.0 (11.7)
Adjusted diluted loss per share h/b((1)) 0.0 (11.7)
(1)Diluted loss per share in 2022 is considered equal to the basic loss per
share as potentially dilutive ordinary shares cause a decrease in the loss per
share.
9. Payments to shareholders
Dividends paid and received are included in the Company financial statements
in the year in which the related dividends are actually paid or received or,
in respect of the Company's final dividend for the year, approved by
shareholders.
Under the terms of the amended RCF announced on 29 September 2022, the Company
may not, except with the consent of its lender group, declare, make or pay any
dividend or distribution to its shareholders prior to an 'exit event', being a
change of control, refinancing of the RCF in full, prepayment and cancellation
of the RCF in full, or upon the termination date of the RCF, being May 2026.
Hence the Board is not recommending a final dividend for the financial year
ended 30 June 2023.
No payments to ordinary shareholders were made or proposed in respect of this
year or the prior year.
Furthermore, under the RCF the Company may not, except with the consent of its
lender group, redeem or repay any of its share capital prior to an exit event.
Therefore, as intimated in the announcement dated 3 October 2022, the
redemption of B Shares that would normally take place in November each year
will not take place.
B Shares issued but not redeemed are classified as current liabilities.
Movements in the B Shares were as follows:
Nominal
Number value
000 £'000
At 1 July 2021 747,399 747
Issued - -
Redeemed (81,511) (81)
At 30 June 2022 665,888 666
Issued - -
Redeemed - -
At 30 June 2023 665,888 666
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.
10. Intangible assets, property, plant and equipment and right-of-use assets
Goodwill
and other Property,
intangible plant and Right-of-use
assets equipment assets
£m £m £m
Net book value at 1 July 2022 27.0 122.9 11.3
Currency translation differences - 0.4 (0.2)
Additions 1.7 11.5 1.2
Disposal of assets (0.1) (0.2) -
Depreciation charge - (16.8) (3.8)
Amortisation charge (2.4) - -
Net book value at 30 June 2023 26.2 117.8 8.5
Included within goodwill and other intangible assets is goodwill of £19.7
million (2022: £19.7m), computer software of £5.6 million (2022: £5.3m) and
customer relationships of £0.6 million (2022: £1.1m).
Capital commitments as at 30 June 2023 amounted to £5.5 million (2022:
£4.0m). At 30 June 2023 the Group was committed to future minimum lease
payments of £2.1 million (2022: £1.5m) in respect of leases which have not
yet commenced and for which no lease liability has been recognised.
11. 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.
There have been no material changes in the risk management policies in either
the 30 June 2023 or 30 June 2022 financial years.
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
· Level 1 - unadjusted quoted prices in active markets for identical
assets or liabilities;
· Level 2 - inputs other than Level 1 that are observable for the asset
or liability, either directly (prices) or indirectly (derived from prices);
and
· Level 3 - inputs that are not based on observable market data
(unobservable inputs).
As at As at
30 June 30 June
2023 2022
£m £m
Level 2 Assets
Derivative financial instruments
Forward currency contracts 0.2 0.4
Interest rate swaps 4.9 2.1
Total financial assets 5.1 2.5
Level 2 Liabilities
Derivative financial instruments
Forward currency contracts - -
Interest rate swaps (0.3) -
Upside sharing fee (1.5) -
Total financial liabilities (1.8) -
Derivative financial instruments
Derivative financial instruments comprise the foreign currency derivatives,
non-deliverable commodity derivatives and interest rate derivatives that are
held by the Group in designated hedging relationships, in addition to the
upside sharing fee payable to the lender group upon exit of the current RCF
arrangement.
Foreign currency forward contracts are measured by reference to prevailing
forward exchange rates. Commodity forward contracts are measured by difference
to prevailing market prices. Foreign currency options are measured using a
variant of the Monte Carlo valuation model. Interest rate swaps and caps are
measured by discounting the related cash flows using yield curves derived from
prevailing market interest rates.
The upside sharing fee has been identified as an embedded derivative. The
amended RCF that the Group agreed with its lender group on 29 September 2022
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 a fee will be determined as the percentage of any increase in the
market capitalisation of the Group from 29 September 2022 to the date of the
exit event. A valuation has been performed using a conventional Black-Scholes
pricing model with an exit date of 31 May 2024, based on the assumption that
the Group will have agreed a new RCF arrangement at that time.
Valuation levels and techniques
There were no transfers between levels during the year and no changes in
valuation techniques.
Financial assets and liabilities measured at amortised cost
The fair value of borrowings (including overdrafts and lease liabilities) are
as follows:
As at As at
30 June 30 June
2023 2022
£m £m
Current 52.8 64.4
Non-current 115.3 104.5
Total borrowings 168.1 168.9
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.
12. Net debt
Movements in net debt were as follows:
IFRS 16 Currency
At 1 July non-cash Cash translation At 30 June
2022 movements((1)) flows differences 2023
£m £m £m £m £m
Cash and cash equivalents 4.5 - (2.2) (0.7) 1.6
Overdrafts (6.8) - 6.2 - (0.6)
Bank and other loans (150.1) - (8.8) 0.4 (158.5)
Lease liabilities (12.0) (1.5) 4.3 0.2 (9.0)
Net debt (164.4) (1.5) (0.5) (0.1) (166.5)
(1)IFRS 16 non-cash movements includes additions (£1.2m) and interest charged
(£0.3m).
13. Pensions and post-employment benefits
The Group provides a number of post-employment benefit arrangements. In the
UK, the Group operates a closed defined benefit pension scheme and a defined
contribution pension scheme. Elsewhere in Europe, the Group has a number of
smaller post-employment benefit arrangements that are structured to accord
with local conditions and practices in the countries concerned. The Group also
recognises the assets and liabilities for all members of the defined
contribution scheme in Belgium, accounting for the whole defined contribution
section as a defined benefit scheme under IAS 19 'Employee Benefits', as there
is a risk the underpin will require the Group to pay further contributions to
the scheme.
At 30 June 2023, the Group recognised a deficit on its UK defined benefit
pension plan of £24.7 million (2022: £14.4m). The Group's post-employment
benefit obligations outside the UK amounted to £1.9 million (2022: £1.7m).
Non-governmental collected post-employment benefits had the following effect
on the Group's results and financial position:
Year ended Year ended
30 June 30 June
2023 2022
£m £m
Profit or loss
Service cost and administration expenses (1.0) (1.0)
Charge to operating loss (1.0) (1.0)
Net interest cost on defined benefit obligation (0.5) (0.5)
Charge to profit or loss before taxation (1.5) (1.5)
Other comprehensive (expense)/income
Net actuarial (loss)/gain (14.1) 12.4
Other comprehensive (expense)/income (14.1) 12.4
As at As at
30 June 30 June
2023 2022
£m £m
Balance sheet
Defined benefit obligations:
UK - funded (98.1) (116.6)
Other - unfunded (12.4) (12.0)
(110.5) (128.6)
Fair value of scheme assets
UK - funded 73.4 102.2
Other - unfunded 10.5 10.3
Deficit on the schemes (26.6) (16.1)
For accounting purposes, the UK scheme's benefit obligation as at 30 June 2023
has been calculated based on data gathered for the 2022 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'.
14. Provisions
Reorganisation Independent
and Leasehold Environmental business
restructuring dilapidations remediation review Other Total
£m £m £m £m £m £m
At 1 July 2021 2.1 1.5 2.4 - 0.4 6.4
Charged to profit or loss 0.4 - 0.6 1.7 0.6 3.3
Utilisation (1.7) - (0.3) - (0.5) (2.5)
At 30 June 2022 0.8 1.5 2.7 1.7 0.5 7.2
Charged to profit or loss (0.1) 0.2 0.7 1.0 - 1.8
Currency translation differences - - 0.1 - - 0.1
Utilisation (0.4) - (0.5) (2.6) (0.3) (3.8)
At 30 June 2023 0.3 1.7 3.0 0.1 0.2 5.3
Analysis of provisions:
2023 2022
£m £m
Current 2.7 3.4
Non-current 2.6 3.8
Total 5.3 7.2
Reorganisation costs in the year of £0.1 million is due to a release of costs
associated with the Group's logistics transformation programme. The closing
provision for reorganisation and restructuring relates to the Group's
logistics transformation programme only. The provision is expected to be fully
utilised within twelve months of the balance sheet date.
Leasehold dilapidations provision relates to costs expected to be incurred to
restore leased properties to their original condition at the end of the
respective lease terms. A provision has been recognised for the present value
of the estimated expenditure required to undertake restoration works. A
dilapidation provision of £0.2 million has been added in year, relating to
the UK head office building. Amounts will be utilised as the respective leases
end and restoration works are carried out, within a period of approximately
twelve months.
Environmental remediation provision relates to historical environmental
contamination at a site in Belgium. The additional costs in the year of £0.7
million result from a re-evaluation of the cost of environmental remediation.
The closing provision is expected to be utilised as the land is restored
within a period of approximately seven years.
The independent business review (IBR) was initiated to support discussions
with banking partners regarding revisions to financing arrangements and
banking covenants. A closing provision of £0.1 million has been recognised in
relation to consultancy costs directly associated with the IBR.
Other provisions of £0.2 million relate to costs concerning the sale of the
PC Liquids business, property repairs and onerous lease obligations. The
liability is expected to be settled within twelve months of the balance sheet
date.
The amount and timing of all cash flows related to the provisions are
reasonably certain.
15. 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:
Average rate Closing rate
2023 2022 2023 2022
Euro 1.15 1.18 1.17 1.17
US Dollar 1.20 1.33 1.27 1.21
Danish Krone 8.56 8.78 8.68 8.67
Polish Zloty 5.38 5.45 5.17 5.47
Czech Koruna 27.72 29.57 27.66 28.83
Hungarian Forint 453.41 433.28 433.34 462.64
Malaysian Ringgit 5.41 5.63 5.91 5.33
Australian Dollar 1.79 1.83 1.91 1.76
16. Share capital
Allotted and fully paid
Number £m
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 30 June 2022 and 30 June 2023 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.
McBride plc announced on 2 November 2020 that it would commence a share
buy-back programme of up to £12 million in McBride plc ordinary shares,
running from 2 November 2020 through to the date of the Company's next AGM.
The maximum number of shares that could have been repurchased by the Company
under the programme was 18.3 million. The purpose of the share buy-back
programme was to reduce the share capital of the Company (cancelling any
shares repurchased for this purpose). The Board believed that it was in the
interests of all shareholders to commence this programme based on the Board's
assessment that McBride plc's share price at that time did not reflect the
value of the underlying business, which has resilient revenue, a strong
balance sheet and highly visible cash flows.
As previously announced, the Board ended the share buy-back programme during
the prior year. In the year to 30 June 2022, the Group purchased and cancelled
185,374 ordinary shares, representing 0.1% of the issued ordinary share
capital as at 2 November 2020. The shares were acquired at an average price of
77.0 pence per share, with prices ranging from 73.3 pence per share to 78.6p
per share. The total cost of £0.1 million was deducted from equity as the
purchase of own shares. A transfer of £nil was made from share capital to the
capital redemption reserve.
17. 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. Details of
transactions between the Group and other related parties are disclosed below.
Post-employment benefit plans
Contributions amounting to £6.5 million (2022: £6.4m) were payable by the
Group to pension schemes established for the benefit of its employees. At 30
June 2023, £0.6 million (2022: £0.5m) in respect of contributions due was
included in other payables.
Compensation of key management personnel
For the purposes of these disclosures, the Group regards its key management
personnel as the Directors and certain members of the senior executive team.
Compensation payable to key management personnel in respect of their services
to the Group was as follows:
2023 2022
£m £m
Short-term employee benefits 2.5 2.2
Post-employment benefits 0.1 0.1
Share-based payments 0.3 -
Total 2.9 2.3
18. 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.
19. Additional information
Alternative performance measures
The performance of the Group is assessed using a variety of adjusted measures
that are not defined under IFRS and are therefore termed non-GAAP measures. A
reconciliation for each non-GAAP measure to the most directly comparable IFRS
measure, is set out below.
Adjusted operating profit/(loss) and adjusted EBITDA
Adjusted EBITDA means adjusted operating profit/(loss) before depreciation. A
reconciliation between adjusted operating profit/(loss), adjusted EBITDA and
the Group's reported statutory operating profit/(loss) is shown below:
2023 2022
£m £m
Operating profit/(loss) 10.3 (27.1)
Add back: operating loss from discontinued operations - 0.4
Operating profit/(loss) from continuing operations 10.3 (26.7)
Exceptional items (note 4) 0.8 (0.4)
Amortisation of intangibles 2.4 2.6
Adjusted operating profit/(loss) from continuing operations 13.5 (24.5)
Depreciation of property, plant and equipment 16.8 16.9
Depreciation of right-of-use assets 3.8 4.0
Adjusted EBITDA 34.1 (3.6)
Adjusted profit/(loss) before tax and adjusted loss for the year
Adjusted profit/(loss) before tax is based on adjusted operating profit/(loss)
less adjusted finance costs. Adjusted loss for the year is based on adjusted
profit/(loss) before tax less/add taxation. The table below reconciles
adjusted profit/(loss) before tax to the Group's reported loss before tax, and
adjusted loss for the year to the Group's reported loss for the year
2023 2022
£m £m
Loss before tax (15.1) (35.7)
Add back: loss before tax from discontinued operations - 0.4
Loss before tax from continuing operations (15.1) (35.3)
Exceptional items (note 4) 13.0 3.1
Amortisation of intangibles (note 10) 2.4 2.6
Adjusted profit/(loss) before tax from continuing operations 0.3 (29.6)
Taxation (note 7) (0.3) 9.3
Adjusted loss for the year from continuing operations - (20.3)
Adjusted loss per share
Adjusted loss per share is based on the Group's loss for the year adjusted for
the items excluded from operating profit/(loss) in arriving at adjusted
operating profit/(loss), 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:
2023 2022
£m £m
Net cash generated from/(used in) operating activities 11.1 (32.0)
Add back:
Taxation paid 1.8 0.1
Interest paid 11.4 3.3
Refinancing costs paid 12.3 1.8
Cash outflow from exceptional items 1.4 4.1
Free cash flow 38.0 (22.7)
Adjusted EBITDA 34.1 (3.6)
Cash conversion % 111% 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 profit/(loss) 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
return on capital employed is calculated as follows:
2023 2022 2021
£m £m £m
Goodwill (note 10) 19.7 19.7 19.7
Other intangible assets (note 10) 6.5 7.3 8.2
Property, plant and equipment (note 10) 117.8 122.9 129.8
Right-of-use assets (note 10) 8.5 11.3 10.0
Inventories 121.5 118.9 92.9
Trade and other receivables 145.7 145.4 117.9
Trade and other payables (219.6) (206.9) (169.2)
Capital employed 200.1 218.6 209.3
Average year-end capital employed 209.4 214.0 208.7
Adjusted operating profit/(loss) from continuing operations 13.5 (24.5) 24.1
Adjusted return on capital employed % 6.4% (11.4)% 11.5%
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.
2023 2022
£m £m
Cash and cash equivalents 1.6 4.5
RCF headroom 40.0 55.1
Other committed facilities headroom 17.5 -
Uncommitted facilities 0.2 11.0
Liquidity 59.3 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:
2023 2022
£m £m
Current assets
Cash and cash equivalents 1.6 4.5
Current liabilities
Borrowings (49.3) (60.5)
Lease liabilities (3.5) (3.9)
(52.8) (64.4)
Non-current liabilities
Borrowings (109.8) (96.4)
Lease liabilities (5.5) (8.1)
(115.3) (104.5)
Net debt (166.5) (164.4)
Annual General Meeting
The Annual General Meeting will be held on 20 November 2023.
Annual Report and Accounts
Copies of the Annual Report and Accounts will be circulated to shareholders in
October and can be viewed after the posting date on the McBride plc website.
Note: This report contains inside information which is disclosed in accordance
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