REG - McBride PLC - Half-year Report
28/02/2023 07:00
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RNS Number : 2149R McBride PLC 28 February 2023
McBride plc ("McBride", the "Company" or the "Group")
Good momentum delivering business performance improvement, with
expectations for full year on track
28 February 2023
McBride, the leading European manufacturer and supplier of private label and
contract manufactured products for the domestic household and professional
cleaning/hygiene markets, announces its unaudited interim results for the six
months ended 31 December 2022.
Business headlines
· Business and revenue momentum in line with growth ambition:
· private label volume growth of 2.6% in first half, gaining market
share
· cost conscious consumers supporting near-term growth
· sustained pricing growth delivered
· new products launched supporting product sustainability objectives
· good pipeline of business wins
· improved service levels
· Financial performance recovery:
· trading results close to break-even with recovery to positive EBITA
in final two months
· strong margin recovery from pricing and product engineering
· first half revenues up £102.9m, higher by 30.3% at constant
currency((1)), mostly from price rises
· 'Programme Compass' £20m annualised savings on track
· Strategy and organisation development underpinning recovery:
· divisional focus delivering step-up in customer experience and growth
ambitions
· Compass structure maturing and progressing well
· Transformation team appointed, change programme design concluding
· carbon reduction target setting expected in 2023
Financial headlines
· Group revenues up 31.8%
· EBITA improvement with adjusted operating losses((2)) reduced to
£1.3m from £14.8m loss in H1 FY22
· Net debt((2)) steady at £169.4m (30 June 2022: £164.4m)
· Liquidity((2)) comfortable at £58.9m (30 June 2022: £70.6m)
Half Constant
year to Half
year to
31 Dec 31 Dec Reported currency
£m unless otherwise stated 2022 2021 change change ((1))
Total operations
Group revenue 426.3 323.4 31.8% 30.3%
Adjusted operating loss ((2)) (1.3) (14.8) 13.5 13.5
Operating loss (2.6) (14.7) 12.1
Adjusted loss before taxation((2)) (7.9) (16.9) 9.0 9.0
Loss before taxation (20.0) (16.8) (3.2)
Adjusted diluted loss per share ((3)) (4.2)p (8.1)p 3.9p
Diluted loss per share (9.7)p (8.0)p (1.7)p
Net debt ((2,4)) 169.4 164.4 5.0
Adjusted return on capital employed ((2)) (5.5)% (4.6)% (0.9) ppt
(1)Comparatives translated at six months to 31 December 2022 exchange rates.
(2)Refer to note 16 for definition.
(3)See note 6.
(4)Net debt comparative is at 30 June 2022; all other comparatives refer to
the six months ended 31 December 2021.
Outlook
The early part of the second half year has continued the momentum seen in the
first half and our current expectations are for a stronger operating margin
performance and hence a return to adjusted operating profit in the second half
of the year. This is driven by the impact of the margin management actions
implemented and in progress, steadying cost inflation and a favourable retail
environment for private label products. Our full-year expectations remain on
track.
Medium term, the Group will continue its strategic plans to grow shareholder
value through its focus on delivering growth and cost efficiency benefits. Our
growth ambitions are making good progress with new wins launching through 2023
and further innovative, consumer-insight led and new, eco-friendly product
opportunities in the pipeline. The Transformation programme is being launched
at present, targeting £50 million of benefits over five years.
Whilst positive about the outlook, we also remain vigilant as to the potential
impacts of the ongoing and significant macroeconomic uncertainty, particularly
around energy costs, high general inflation levels and the knock-on impacts of
any escalation of the Ukraine conflict.
Chris Smith, Chief Executive Officer, commented:
"The first half year required continued high levels of attention to margin
recovery in light of ongoing inflationary pressures. Whilst there are some
early signs of stabilisation in certain input costs, many raw material costs
remain historically high. Energy and employment costs continue to apply
further inflationary pressure, and accordingly, we continue to action
mitigations including price increases, product engineering and cost control.
It is pleasing to have returned to positive adjusted operating profit in the
last two months of the period, with momentum improving into the second half as
a result of higher volumes from new business wins, better customer service
levels and pricing actions fully annualising. All of this is supported by
consumer behaviour creating a more favourable environment for private label
products.
The transformation agenda, signposted as part of Compass, gathers pace with
the appointment of the Chief Transformation Officer, dedicated to the key
change and improvement initiatives over the coming years.
The Group's core activities remain strong and the dedication of the entire
McBride team to resolve the challenges confronting us is a strong
demonstration of our values and the commitment to return the Group to
sustainable levels of profitability."
McBride plc
Chris Smith, Chief Executive Officer 0161 203 7401
Mark Strickland, Chief Financial Officer 0161 203 7401
FTI Consulting LLP 020 3727 1017
Ed Bridges, Nick Hasell
The results presentation will be available on the McBride plc investor
relations website from 1.00pm today.
The information in this announcement has not been audited or otherwise
independently verified and no representation or warranty, express or implied,
is made as to, and no reliance should be placed on, the fairness, accuracy,
completeness or correctness of the information or opinions contained herein.
None of the Company or any of its affiliates, advisors or representatives
shall have any liability whatsoever (in negligence or otherwise) for any loss
whatsoever arising from any use of this announcement, or its contents, or
otherwise arising in connection with this announcement. This announcement does
not constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase any shares in the Company, nor shall it
or any part of it or the fact of its distribution form the basis of, or be
relied on in connection with, any contract or commitment or investment
decisions relating thereto, nor does it constitute a recommendation regarding
the shares of the Company. Certain statements, statistics and projections in
this announcement are or may be forward looking. By their nature,
forward-looking statements involve a number of risks, uncertainties or
assumptions that may or may not occur and actual results or events may differ
materially from those expressed or implied by the forward-looking statements.
Accordingly, no assurance can be given that any particular expectation will be
met, and reliance should not be placed on any forward-looking statement.
Accordingly, forward-looking statements contained in this announcement
regarding past trends or activities should not be taken as representation that
such trends or activities will continue in the future. You should not place
undue reliance on forward-looking statements, which are based on the knowledge
and information available only at the date of this announcement's preparation.
The Company does not undertake any obligation to update or keep current the
information contained in this announcement, including any forward-looking
statements, or to correct any inaccuracies, which may become apparent, and any
opinions expressed in it are subject to change without notice. References in
this announcement to other reports or materials, such as a website address,
have been provided to direct the reader to other sources of information on
McBride plc, which may be of interest. Neither the content of McBride's
website nor any website accessible by hyperlinks from McBride's website nor
any additional materials contained or accessible thereon, are incorporated in,
or form part of, this announcement.
Strategy development
The Compass strategy and its financial objectives were to generate sustained
revenue growth and improved margins from efficiency and effectiveness of our
key activities, delivered through accountable business divisions and core
central functions.
The divisional teams have been in place for nearly two years now and their
maturity, accountability and strategic development is increasingly visible,
with encouraging progress in support of the growth agenda. As the inflationary
environment stabilises, our attention now turns to the efficiency and
effectiveness element of Compass.
The Group's Transformation programme has been launched with the appointment of
a new Chief Transformation Officer, a role that sits on the Executive
Committee, with the programme shape mostly finalised.
The plan is consciously constructed to contain seven overall programmes
overseen by a newly-appointed programme management office. Our carbon
reduction programme will be a common thread through all the other programmes,
as we look to decarbonise the business over the coming years. We expect that
the benefits of these programmes will fall into two groups, one supporting
sales and margin growth, the other delivering cost reduction and cash
management improvements.
Key to cost benefit realisation will be the migration to a new ERP over the
coming three to four years, permitting a more modern, standard operating model
with improved data analytics. Supporting our sales and margin growth ambition
will be programmes delivering commercial excellence from our customer facing
teams and service excellence from our supply chain activities.
Most programmes will launch in the coming weeks and months, all in support of
our targeted £50 million benefit over five years. A fuller roadmap will be
provided at the year-end results announcement in September 2023.
Overall business performance
The business has delivered a first half performance in line with our business
recovery plan. Delivery of this plan faced huge challenges, with a further
£97.1 million of price increases delivered in the period and inflation adding
over £87.6 million of further cost rises. However, our momentum is good and
our road to recovery is well underway, with the Group returning consistently
to positive monthly adjusted EBITDA((1)) from May 2022 and positive monthly
adjusted operating profit from November 2022.
In the period, McBride has continued to gain private label market share. First
half sales volumes grew by 1.2% compared to the prior year, with private label
volume growth at 2.6%. The overall European homecare market in the twelve
months to December 2022 has seen volumes fall over 5%, especially in branded
products, with a smaller fall of 2.2% for private label products. Alongside
some residual Covid-19 effects in 2021, these volume falls are attributed to
consumers being more frugal with dosing and usage. Our contract manufacturing
business saw volumes decline 14.0%, mostly a result of weaker volumes for the
brands in stores as shoppers make alternative choices to mitigate the impact
of inflationary pressures.
The strategic aim from our Compass programme - whose objective is to deliver
focused, specialist and expert support to our customers - is increasingly
evident in our commercial performance. Our business win/loss ratio has turned
positive, with new volumes coming on stream over the next twelve months.
Several new products have been launched in line with our product
sustainability objectives, including innovative carton packaging alternatives
to plastic boxes and bottles. We have an encouraging pipeline of opportunities
and innovation options for both private label and contract manufacturing
customers.
Raw material input costs continued to increase, albeit at a slower rate than
previously. Despite a more favourable feedstock environment on plastics and
naturals compared to the second half of FY22, increased energy, indirect and
labour costs, coupled with large pockets of supply/demand tightness, were key
drivers of the increases and more than offset any feedstock-driven relief.
Distribution costs of £38.5 million (2021: £30.8m) significantly increased
year on year, particularly affected by the surge in the cost of fuel and
driver shortages in Europe following the outbreak of the conflict in Ukraine.
All divisions continued to collaborate with customers to agree pricing actions
and product engineering options to offset the inflationary challenges. Price
increases agreed over the past 18 months have driven essential recovery in
gross margins, but we remain vigilant to the likely need for further price
increases in the coming months to offset continuing inflationary impacts,
particularly in labour, transport, energy and general supplies. We have
adopted the principle of not committing to price levels beyond a three-month
horizon, to protect both our business but also our customers and consumers.
The potential for volatility in input costs remains high and this approach
will better align our private label business with the methods used typically
in contract manufacturing.
Customer service levels improved progressively during the period, particularly
due to improved factory performance and a strong recovery in our logistics
performance.
Capital expenditure continues to be strictly controlled, with prioritisation
processes to ensure that divisions' growth objectives can still be realised.
During the period, capital expenditure, including capital payments on lease
liabilities less proceeds from the sale of property, plant and equipment,
decreased to £6.8 million (2021: £8.8m) in cash terms.
(1)Refer to note 16 for definition.
Divisional portfolio performance
Half Half
year to year to
31 Dec 31 Dec
2022 2021 Reported Constant
Revenue £m £m change currency((1))
Liquids 237.7 182.8 30.0% 29.0%
Unit Dosing 111.4 81.6 36.5% 35.0%
Powders 42.7 32.8 30.2% 28.6%
Aerosols 21.3 15.8 34.8% 33.1%
Asia Pacific 13.2 10.4 26.9% 18.9%
Group 426.3 323.4 31.8% 30.3%
Half Half
year to year to
31 Dec 31 Dec
2022 2021 Reported Constant
Adjusted operating (loss)/profit £m £m change currency((1))
Liquids 0.2 (10.2) 10.4 10.4
Unit Dosing 2.2 (0.4) 2.6 2.6
Powders (1.2) (1.4) 0.2 0.1
Aerosols - (0.8) 0.8 0.8
Asia Pacific 0.8 0.2 0.6 0.6
Corporate (3.3) (2.2) (1.1) (1.0)
Group (1.3) (14.8) 13.5 13.5
(1)Comparatives translated at six months to 31 December 2022 exchange rates.
Liquids performance review
Liquids revenue of £237.7 million was 29.0% higher on a constant currency
basis, driven by the pass-through of input cost inflation to customers via
increased selling prices.
Sales volumes grew by 0.7%, with private label volumes 1.2% higher, as private
label share of the market grew in response to the cost-of-living crisis.
Contract manufacturing volumes declined by 6.2%, reflecting lower demand for
higher-priced branded products.
Dishwash volumes grew by 10.6%, driven by contract manufacturing gains in
machine dishwash and private label volume growth in washing up liquids.
Cleaners' volumes fell by 3.7%, as the last of the Covid-19 temporary demand
subsided, and with a contract manufacturing customer choosing to bring volumes
back in-house. Laundry volumes fell by 1.7%, with the cost-of-living crisis
affecting fabric conditioner demand.
Customer service levels, following a period of supply chain shocks and driver
availability issues which have disrupted supply across the industry for
several years, are now moving back towards pre-Covid-19 levels, showing
gradual month-on-month improvement with initiatives being put in place to
sustain the performance.
Adjusted operating profit of £0.2 million was significantly improved on the
prior year (2021: £10.2m loss) due to three main factors: annualisation of
price increases realised in the prior year; new price increases agreed during
the first half; and continued delivery of Programme Compass cost savings in
line with our 'Cost Leadership' strategy.
Despite the huge demands on the team to recover margin and service performance
in the period, we have made good progress with key strategic initiatives:
· Our lean conversion programme was launched during the first half with
the aim of optimising processes and reducing conversion costs across sites.
The financial benefits are expected to commence in the next financial year,
supporting our Programme Compass cost-saving commitments.
· In February 2023, we launched a range of Liquids products in
innovative recyclable cardboard carton packaging, supporting the Group's
commitment to deliver more sustainable products.
Unit Dosing performance review
Unit Dosing revenue of £111.4 million was 35.0% higher on a constant currency
basis. This revenue increase was largely driven by higher sales prices.
Adjusted operating profit was £2.2 million, a significant improvement versus
the prior year (2021: £0.4m loss), though still below historical
profitability levels.
Throughout the last twelve months price increases have been agreed which
recover a significant part of the exceptional raw material and logistics cost
inflation that the business has and continues to experience. To help reduce
the inflationary impact on consumers, our product development teams, in close
co-operation with our customers, have also focused on product re-engineering.
Sales volumes grew moderately in the first half, driven by higher sales to
private label customers across all categories. This was partly offset by lower
sales to our contract manufacturing customers. Despite very challenging
business conditions, continued progress has been made against the 'Product
Leadership' strategic imperative. The turnaround of the laundry capsules
business is progressing well, with our new eco-friendly, child-safe carton
packaging for capsules being very well received by multiple customers. In
dishwash, we successfully gained new business, which will launch in the months
ahead and benefit the division's positive win/loss balance in the first half.
Our efforts in improving efficiency at our sites have seen positive progress,
particularly at our largest dishwash site. Though overall service levels for
the division have improved, further improvements are needed to realise service
excellence, a key topic of our Transformation programme.
The key priority for the second half is the continued recovery of business
performance. This will allow for mid-term increased investment in sustainable
product offerings and growth of the division in line with its strategic
objectives.
Powders performance review
Powders revenue of £42.7 million was 28.6% higher on a constant currency
basis. Revenue grew significantly across all geographies. Market demand for
private label laundry powders has grown as shoppers have shifted away from
higher-priced branded powder products and other laundry product formats.
Consumers have moved to shop more in discount retailers, where we have a
strong presence, especially in the UK. In certain regions, we were able to
grow due to higher demand from customers that competitors struggled to supply.
Lastly, we benefited from the support of our customers in passing on the
significant continued inflationary cost increases in raw materials for the
manufacture of laundry powder products.
Adjusted operating loss decreased slightly to £1.2 million (2021: £1.4m
loss), as the higher volumes driven by positive demand factors, higher prices
agreed with customers and continued strict cost controls, were not sufficient
to offset the exceptional inflationary increases in raw material and logistics
costs. In particular, the cost of salts increased significantly later in the
half year, driven by energy and feedstock inflation and availability issues.
While the first half saw some benefits of the price increases negotiated with
private label customers, the second half is expected to realise a fuller
recovery of the negative input cost effects.
We continue to develop both our private label and contract manufacturing
businesses through innovation in formulations and packaging solutions. Recent
consumer test results in multiple countries have confirmed product superiority
to both brands and other private label offers, providing a solid base for
further private label business wins. Significant contract manufacturing wins
have been achieved that will deliver their full potential during 2023.
Aerosols performance review
Aerosols revenue of £21.3 million (2021: £15.8m) was 33.1% higher on a
constant currency basis. This is explained by volume growth of 11.4%, driven
by increasing underlying demand and new business wins, with the remaining
growth coming from pricing actions. Supply chain agility and strong cost
controls have reinforced Aerosols' excellent reputation with customers and
have been key factors in capturing new business in both private label and
contract manufacturing. In the second half, we expect private label to
continue its good progression and to benefit from recent contract
manufacturing wins.
At break-even, adjusted operating profit was better than the prior year (2021:
£0.8m loss), driven by higher sales, close control of overheads and
productivity savings. The implementation of price increases with customers
partially offset exceptional increases in raw material, packaging and
logistics costs with further price increases planned in the early part of the
second half.
Asia Pacific performance review
Asia Pacific revenue of £13.2 million was 18.9% higher on a constant currency
basis. Sales recovered strongly in the first half with consumer spending in
the main Asia Pacific markets returning to pre-Covid-19 pandemic levels.
Strong inflationary pressures, especially in Australia, resulted in higher
demand for private label products as consumers attempted to stretch the value
of their money.
Following disruption last financial year from Covid-19-related workforce
shortages, operations at our manufacturing site in Malaysia have stabilised
and the value proposition has been strengthened by obtaining accreditation of
ISO 22716 quality standards. Robust cost control and overhead efficiency
programmes, coupled with moderate price increases implemented to offset input
cost increases, resulted in the delivery of a much-improved adjusted operating
profit of £0.8 million (2021: £0.2m).
We are continuing to progress the divisional 'Deliver to grow' strategy by
expanding the range of private label products and pursuing business
development opportunities in contract manufacturing, in both personal care and
household product categories.
Input costs
The first half saw input costs continue to increase, albeit at a slower rate
than previously experienced. Despite a generally more favourable feedstock
environment on plastics and naturals compared to the second half of FY22,
increased energy and labour costs coupled with large pockets of supply/demand
tightness were key drivers behind the increases seen, more than offsetting any
feedstock-driven relief.
There were a number of cases where energy and supply/demand imbalances caused
significant price rises in key feedstock in the period. Products from the
'salts' and 'persalts' families increased by over 70% during the first half,
while some feedstock continued to reach all-time highs. For example, caustic
soda, where prices were already 100% above the multi-year average at the end
of FY22, doubled again towards the end of the period, breaking new records.
In general, we are seeing more stability in our main materials input costs,
with improving supply and visibility, but markets remain volatile and
unpredictable. We are not seeing any significant deflation across our
materials base and overall price levels remain close to 50% higher than the
pre-pandemic period on the vast majority of our input costs.
Despite the market volatility and global supply/demand imbalances, our own
supply chains have continued to demonstrate resilience, with minimal levels of
disruption experienced so far.
Distribution costs
Global supply chains continue to see a significant impact from geopolitical
events and the aftershocks of the Covid-19 pandemic. Underlying costs have
significantly increased year on year, particularly affected by the surge in
the cost of fuel and driver shortages in Europe following the outbreak of the
conflict in Ukraine. Inflationary pressures have driven a c.20% increase in
shipping costs per pallet.
Group operating results
The half-year operating loss was £2.6 million (2021: £14.7m loss). This
includes amortisation of £1.3 million (2021: £1.3m) and exceptional costs of
£nil (2021: £1.4m credit).
The half-year adjusted operating loss of £1.3 million (2021: £14.8m loss)
was due primarily to exceptional raw material, packaging, logistics, energy
and labour cost rises, which were unable to be fully recovered by price
increases in the first half. Adjusted operating loss margin improved from
(4.6)% to (0.3)%.
Corporate costs were £3.3 million, an increase of 43.5% from the prior year
at constant currency (2021: £2.2m), driven by inflationary impacts and higher
bonus provisions.
Group EBITDA
Half-year adjusted EBITDA((1)) profit of £8.8 million (2021: £4.3m loss)
reflected our improved trading performance and our ability to recover more of
the exceptional cost pressures through price increases agreed with our
customers.
(1)Refer to note 16 for definition.
Exceptional items
A total exceptional charge of £10.8 million recorded during the period
relates to continuing operations (2021: £1.4m credit) and comprised costs
incurred in respect of an independent business review and refinancing work
completed in September 2022. These were recognised within finance costs (2021:
operating costs).
Finance costs
At £6.6 million, non-exceptional finance costs (2021: £2.1m) increased as a
result of revised terms under the lending agreement announced on 29 September
2022 and market interest rate increases.
Loss before tax and taxation
Reported loss before taxation from continuing operations was £20.0 million
(2021: £16.8m loss). Adjusted loss before taxation from continuing operations
was £7.9 million (2021: £16.9m loss), a decrease in losses of £9.0 million.
The tax credit on continuing adjusted loss before tax for the period is £0.7
million (2021: £2.8 million credit) and the effective tax rate is 9% (2021:
17%). The effective tax rate is lower than the previous year on the basis
that, in the prior year, additional deferred tax assets were recognised on
losses in the UK.
The statutory effective tax rate on continuing operations for the period is
16% (2021: 18%). The Group forecasts an adjusted effective tax rate for the
financial year of 8%.
Loss per share
On an adjusted basis, diluted loss per share from continuing operations was
4.2 pence (2021: 8.1p loss per share). Total adjusted diluted loss per share
decreased to 4.2 pence (2021: 8.1p loss per share), with basic loss per share
of 9.7 pence (2021: 8.0p loss per share).
Payments to shareholders
Per the terms of the amended revolving credit facility (RCF) announced on 29
September 2022, no dividends will be paid to shareholders at least until there
is an 'exit event', being a change of control, refinancing of the RCF in full,
prepayment and cancellation of the RCF in full, or upon the termination date
of the RCF, being May 2026. Hence, at this interim stage, there is no
distribution.
Cash flow and balance sheet
Half year Half year Full year
to to to
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Adjusted EBITDA((1)) 8.8 (4.3) (3.6)
Working capital excluding provisions and pensions 12.2 8.4 (15.3)
Share-based payments and loss on disposal of property, plant and equipment 0.5 0.8 0.3
Non-exceptional reversal of impairment of property, plant and equipment - (0.1) (0.1)
Pension deficit reduction contributions (2.0) (2.0) (4.0)
Free cash flow 19.5 2.8 (22.7)
Exceptional items and tax paid (11.3) 0.9 (4.2)
Capital expenditure including capital payments on lease liabilities
less proceeds from sale of property, plant and equipment (6.8) (8.8) (13.2)
Interest on borrowings and lease liabilities less interest receivable (3.6) (1.6) (3.3)
Debt financing and refinancing activities 5.3 17.3 22.9
Settlement of derivatives (0.1) - 0.4
Free cash flow to equity((2)) 3.0 10.6 (20.1)
Dividends paid/redemption of B shares - (0.1) (0.1)
Share buy-back - (0.1) (0.1)
Net increase/(decrease) in cash and cash equivalents 3.0 10.4 (20.3)
Cash conversion((1)) 222% n/a n/a
Cash generated from continuing operations before exceptional items during the
half year was £19.5 million (2021: £2.8m).
During the period, capital expenditure, including capital payments on lease
liabilities less proceeds from the sale of property, plant and equipment,
decreased to £6.8 million (2021: £8.8m) in cash terms. Capital expenditure
continues to be strictly controlled.
Working capital management contributed a £12.2 million positive cash flow
impact (2021: £8.4m). This was driven by improved payment terms agreed with
customers, partially offset by an increase in the value of inventories due to
higher input costs.
The Group's net assets decreased to £37.3 million (30 June 2022: £57.0m).
Gearing((1)) at 31 December was higher at 86% (30 June 2022: 80%) and adjusted
return on capital employed((1)) of (5.5)% improved on the prior year (30 June
2022: (11.4)%).
(1)Refer to note 16 for definition.
(2)Free cash flow to equity excludes cash flows relating to transactions with
shareholders.
Bank facilities and net debt
Net debt at the half year increased to £169.4 million (30 June 2022:
£164.4m).
The Group has a €175 million sustainability-linked RCF that is committed
until 10 May 2026. At 31 December 2022, the amount undrawn on the facility was
€39.7 million (30 June 2022: €64.5m).
As announced on 29 September 2022, the key provisions of the RCF are:
· it shall be secured against material asset, share and inter-company
balances;
· commitments to reduce, and be cancelled, in the amount of the Euro
equivalent of £2.5 million every three months from September 2024 up until
the termination date;
· existing bilateral overdraft facilities shall become ancillary
facilities committed until 30 September 2024;
· invoice discounting facilities shall be committed to 30 September
2024;
· liquidity shall not be less than £15 million when tested on or prior
to 30 September 2024;
· liquidity shall not be less than £25 million when tested post 30
September 2024;
· net debt cover and interest cover covenants to be tested quarterly
from 30 September 2024;
· no dividends will be paid to shareholders until there is an 'exit
event', being a change of control, refinancing of the RCF in full, prepayment
and cancellation of the RCF in full or upon the termination date of the RCF,
being May 2026; and
· the arrangement includes an 'upside sharing' mechanism whereby a fee
will become payable by the Group to members of the lender group upon the
occurrence of an exit event. Such fee is determined as 11% of any increase in
the market capitalisation of the Group as at 29 September 2022 compared to the
market capitalisation of the Group at the date of such exit event.
At 31 December 2022, liquidity((1)) as defined by the RCF agreement was £58.9
million (30 June 2022: £70.6m). Liquidity throughout the period was
comfortably above the minimum liquidity covenant of £15 million.
At 31 December 2022, the Group had a number of facilities whereby it could
borrow against certain of its trade receivables. In the UK, the Group had a
£20 million facility that is 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, and is committed until September 2024. In Germany, the Group
had a €40 million facility that is committed until September 2024. The Group
can borrow from the provider of the relevant facility up to the lower of the
facility limit and the value of the respective receivables.
The Group is currently negotiating to increase liquidity by a further £25
million through the extension of its invoice discounting facilities to
unencumbered receivables ledgers. However, there is no certainty that these
negotiations will be successful.
The Group also has access to uncommitted working capital facilities amounting
to £0.2 million at 31 December 2022 (30 June 2022: £22.7m). At 31 December
2022, £nil (30 June 2022: £6.8m) was drawn against these facilities.
(1)Refer to note 16 for definition.
Pensions
The Group provides a number of post-employment benefit arrangements. In the
UK, the Group operates a defined benefit scheme, which is closed to new
members and to future accrual, and a defined contribution pension scheme.
Elsewhere in Europe, the Group has a number of smaller unfunded
post‑employment benefit arrangements that are structured to accord with
local conditions and practices in the countries concerned. At 31 December
2022, the Group recognised a deficit in its UK scheme of £22.8 million (30
June 2022: £14.4m). The £8.4 million deficit increase since 30 June 2022 was
driven by the Fund's invested assets falling by more than the liabilities as a
consequence of the gilt crisis in September/October 2022, reducing the
matching of asset movements with liabilities.
The Group has other unfunded post-employment benefit obligations outside the
UK that amounted to £1.9 million (30 June 2022: £1.7m).
Environmental, social and governance
We continue to report progress via our ESG dashboard and deliver on the 2025
targets for our operations and product sustainability, noting increases in our
use of renewable electricity and moving more of our plastic packaging
portfolio into recycled plastic (PCR).
We have measured our corporate carbon footprint now for two consecutive years
and we are clear on the emission hotspots we would like to address. We will
focus our efforts on energy, logistics, chemicals, and packaging. We are in
the process of compiling our carbon reduction initiatives in the near-term
with the SBTi. This year we have launched a range of new product initiatives
based on carton board that has led to a reduction in overall plastic
consumption.
We will continue to report against the Taskforce on Climate-related Financial
Disclosures (TCFD) framework, taking the learnings from our FY22 Annual
Reporting process.
Principal risks and uncertainties
The Group is subject to risk factors, both internal and external, to its
business and has a well-established set of risk management procedures. The
following risks and uncertainties are those that the Directors believe could
have the most significant impact on the Group's business:
· Financing risks
· Supply chain resilience
· Changing market, customer and consumer dynamics
· Disruptions to systems and processes
· Challenges in attracting and retaining talent
· Climate change and environmental concerns
· Increased regulation
Responsibility statement
The Directors confirm that to the best of their knowledge:
· The condensed set of financial statements has been prepared in
accordance with UK adopted IAS 34 'Interim Financial Reporting' and gives a
true and fair view of the assets, liabilities, financial position and profit
or loss of the issuer, or the undertakings included in the consolidation as a
whole as required by DTR 4.2.4 of the Disclosure and Transparency Rules.
· The interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7 of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8 of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any material changes in the
related party transactions described in the last annual report that could do
so.
Chris Smith
Chief Executive Officer
Mark Strickland
Chief Financial Officer
28 February 2023
Condensed interim consolidated income statement
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Continuing operations Note £m £m £m
Revenue 3 426.3 323.4 678.3
Cost of sales (311.2) (233.2) (487.5)
Gross profit 115.1 90.2 190.8
Distribution costs (38.5) (30.8) (64.3)
Administrative costs (77.7) (72.8) (153.8)
Impairment of trade receivables (1.5) (1.1) (2.0)
(Loss)/gain on disposal of property, plant and equipment - (0.3) 3.4
(Reversal of) impairment of property, plant and equipment - 0.1 (0.8)
Operating loss (2.6) (14.7) (26.7)
Finance costs (17.4) (2.1) (8.6)
Loss before taxation (20.0) (16.8) (35.3)
Taxation 3.2 3.0 11.3
Loss for the period from continuing operations (16.8) (13.8) (24.0)
Discontinued operations
Loss for the period from discontinued operations - - (0.3)
Total operations
Loss for the period (16.8) (13.8) (24.3)
6
Loss per ordinary share from continuing and discontinued operations
attributable to the owners of the parent during the period
Basic loss per share
From continuing operations (9.7)p (8.0)p (13.8)p
From discontinued operations - - (0.2)p
From loss for the period (9.7)p (8.0)p (14.0)p
Diluted loss per share
From continuing operations (9.7)p (8.0)p (13.8)p
From discontinued operations - - (0.2)p
From loss for the period (9.7)p (8.0)p (14.0)p
Operating loss from continuing operations (2.6) (14.7) (26.7)
Adjusted for:
Amortisation of intangible assets 8 1.3 1.3 2.6
Exceptional items 4 - (1.4) (0.4)
Adjusted operating loss from continuing operations (1.3) (14.8) (24.5)
Loss before taxation from continuing operations (20.0) (16.8) (35.3)
Adjusted for:
Amortisation of intangible assets 8 1.3 1.3 2.6
Exceptional items 4 10.8 (1.4) 3.1
Adjusted loss before taxation from continuing operations (7.9) (16.9) (29.6)
Condensed interim consolidated statement of comprehensive income
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Loss for the period (16.8) (13.8) (24.3)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation differences on foreign subsidiaries 2.6 (1.5) 0.2
(Loss)/gain on net investment hedges (0.5) 1.0 0.5
Gain on cash flow hedges in the period 3.4 0.8 2.4
Cash flow hedges transferred to profit or loss (0.5) (0.2) -
Taxation relating to items above (0.7) (0.1) (0.5)
4.3 - 2.6
Items that will not be reclassified to profit or loss:
Net actuarial (loss)/gain on post-employment benefits (10.3) 6.7 12.4
Taxation relating to item above 2.6 (1.6) (3.1)
(7.7) 5.1 9.3
Total other comprehensive (expense)/income (3.4) 5.1 11.9
Total comprehensive expense (20.2) (8.7) (12.4)
Total comprehensive expense attributable to equity shareholders arises from:
Continuing operations (20.2) (8.7) (12.1)
Discontinued operations - - (0.3)
(20.2) (8.7) (12.4)
Condensed interim consolidated balance sheet
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
Note £m £m £m
Non-current assets
Goodwill 8 19.8 19.7 19.7
Other intangible assets 8 6.5 7.6 7.3
Property, plant and equipment 8 121.1 122.1 122.9
Derivative financial instruments 9 3.8 0.7 1.9
Right-of-use assets 8 9.9 11.8 11.3
Deferred tax assets 32.9 23.2 29.7
194.0 185.1 192.8
Current assets
Inventories 128.2 96.4 118.9
Trade and other receivables 131.1 120.4 145.4
Current tax assets 5.3 5.0 3.9
Non-current assets classified as held for sale - 1.6 -
Derivative financial instruments 9 1.5 1.3 0.6
Cash and cash equivalents 10 8.0 34.9 4.5
274.1 259.6 273.3
Total assets 468.1 444.7 466.1
Current liabilities
Trade and other payables 211.9 183.2 206.9
Borrowings 9 47.5 58.1 60.5
Lease liabilities 9 3.8 3.8 3.9
Derivative financial instruments 9 0.2 0.4 -
Current tax liabilities 4.0 5.4 5.3
Provisions 2.8 0.6 3.4
270.2 251.5 280.0
Non-current liabilities
Borrowings 9 119.3 88.9 96.4
Lease liabilities 9 6.8 9.0 8.1
Pensions and other post-employment benefits 11 24.7 23.4 16.1
Provisions 3.9 3.9 3.8
Deferred tax liabilities 5.9 6.5 4.7
160.6 131.7 129.1
Total liabilities 430.8 383.2 409.1
Net assets 37.3 61.5 57.0
Equity
Issued share capital 17.4 17.4 17.4
Share premium account 68.6 68.6 68.6
Other reserves 81.5 76.1 77.2
Accumulated losses (130.2) (100.6) (106.2)
Total equity 37.3 61.5 57.0
Condensed interim consolidated cash flow statement
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Note £m £m £m
Operating activities
Loss before tax
Continuing operations (20.0) (16.8) (35.3)
Discontinued operations - - (0.4)
Finance costs 17.4 2.1 8.6
Exceptional items excluding finance costs 4 - (1.4) -
Share-based payments charge 0.5 0.5 -
Depreciation of property, plant and equipment 8 8.2 8.5 16.9
Depreciation of right-of-use assets 8 1.9 2.0 4.0
Loss on disposal of property, plant and equipment - 0.3 0.3
Amortisation of intangible assets 8 1.3 1.3 2.6
Reversal of impairment of property, plant and equipment - (0.1) (0.1)
Operating cash flow before changes in working capital and exceptional items 9.3 (3.6) (3.4)
Decrease/(increase) in receivables 17.6 (4.6) (27.4)
Increase in inventories (5.7) (5.2) (25.7)
Increase in payables 0.3 18.2 37.8
Operating cash flow after changes in working capital before exceptional items 21.5 4.8 (18.7)
Additional cash funding of pension schemes (2.0) (2.0) (4.0)
Cash generated/(used) from operations before exceptional items 19.5 2.8 (22.7)
Cash outflow in respect of exceptional items (0.8) (2.2) (4.1)
Cash generated/(used) from operations 18.7 0.6 (26.8)
Interest paid (3.6) (1.6) (3.3)
Taxation received/(paid) 0.1 0.5 (0.1)
Net cash generated/(used) from operating activities 15.2 (0.5) (30.2)
Investing activities
Proceeds from sale of property, plant and equipment - 2.6 6.1
Purchase of property, plant and equipment (4.0) (5.7) (12.6)
Purchase of intangible assets (0.5) (0.7) (1.7)
Settlement of derivatives used in net investment hedges (0.1) - 0.4
Net cash used in investing activities (4.6) (3.8) (7.8)
Financing activities
Redemption of B Shares 12 - (0.1) (0.1)
(Repayment)/drawdown of overdrafts 10 (4.1) (4.5) 0.7
(Repayment)/drawdown of other loans 10 (10.6) 11.2 6.0
Drawdown of bank loans 10 20.0 10.6 18.0
Refinancing costs paid (10.6) - (1.8)
Repayment of IFRS 16 lease obligations 10 (2.3) (2.4) (5.0)
Purchase of own shares - (0.1) (0.1)
Net (used)/cash generated in financing activities (7.6) 14.7 17.7
Increase/(decrease) in net cash and cash equivalents 3.0 10.4 (20.3)
Net cash and cash equivalents at the start of the period 4.5 24.9 24.9
Currency translation differences 0.5 (0.4) (0.1)
Net cash and cash equivalents at the end of the period 8.0 34.9 4.5
Condensed interim consolidated statement of changes in equity
Other reserves
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 2022 17.4 68.6 1.8 (1.8) 77.2 (106.2) 57.0
Loss for the period - - - - - (16.8) (16.8)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation differences of foreign subsidiaries - - - 2.6 - - 2.6
Loss on net investment hedges - - - (0.5) - - (0.5)
Gain on cash flow hedges in the period - - 3.4 - - - 3.4
Cash flow hedges transferred to profit or loss - - (0.5) - - - (0.5)
Taxation relating to items above - - (0.7) - - - (0.7)
- - 2.2 2.1 - - 4.3
Items that will not be reclassified to profit or loss:
Net actuarial loss on post‑employment benefits - - - - - (10.3) (10.3)
Taxation relating to items above - - - - - 2.6 2.6
- - - - - (7.7) (7.7)
Total other comprehensive income/(expense) - - 2.2 2.1 - (7.7) (3.4)
Total comprehensive income/(expense) - - 2.2 2.1 - (24.5) (20.2)
Transactions with owners of the parent
Share-based payments - - - - - 0.5 0.5
At 31 December 2022 17.4 68.6 4.0 0.3 77.2 (130.2) 37.3
Other reserves
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
Loss for the period - - - - - (13.8) (13.8)
Other comprehensive (expense)/income
Items that may be reclassified to profit or loss:
Currency translation differences of foreign subsidiaries - - - (1.5) - - (1.5)
Gain on net investment hedges - - - 1.0 - - 1.0
Gain on cash flow hedges in the period - - 0.8 - - - 0.8
Cash flow hedges transferred to profit or loss - - (0.2) - - - (0.2)
Taxation relating to items above - - (0.1) - - - (0.1)
- - 0.5 (0.5) - - -
Items that will not be reclassified to profit or loss:
Net actuarial gain on post‑employment benefits - - - - - 6.7 6.7
Taxation relating to items above - - - - - (1.6) (1.6)
- - - - - 5.1 5.1
Total other comprehensive income/(expense) - - 0.5 (0.5) - 5.1 5.1
Total comprehensive income/(expense) - - 0.5 (0.5) - (8.7) (8.7)
Transactions with owners of the parent
Redemption of B Shares - - - - 0.1 (0.1) -
Share-based payments - - - - - 0.5 0.5
Purchase of own shares - - - - - (0.1) (0.1)
At 31 December 2021 17.4 68.6 0.4 (1.5) 77.2 (100.6) 61.5
Other reserves
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
Loss for the year - - - - - (24.3) (24.3)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation differences of foreign subsidiaries - - - 0.2 - - 0.2
Gain on net investment hedges - - - 0.5 - - 0.5
Gain on cash flow hedges in the year - - 2.4 - - - 2.4
Taxation relating to the items above - - (0.5) - - - (0.5)
- - 1.9 0.7 - - 2.6
Items that will not be reclassified to profit or loss:
Net actuarial gain on post‑employment benefits - - - - - 12.4 12.4
Taxation relating to items above - - - - - (3.1) (3.1)
- - - - - 9.3 9.3
Total other comprehensive income/(expense) - - 1.9 0.7 - 9.3 11.9
Total comprehensive income/(expense) - - 1.9 0.7 - (15.0) (12.4)
Transactions with owners of the parent
Redemption of B Shares - - - - 0.1 (0.1) -
Purchase of own shares - - - - - (0.1) (0.1)
Transfers between reserves - - - (1.5) - 1.5 -
Taxation relating to items above - - - - - (0.3) (0.3)
At 30 June 2022 17.4 68.6 1.8 (1.8) 77.2 (106.2) 57.0
At 30 June 2022, the accumulated losses included a deduction of £0.5 million
(30 June 2021: £0.5m loss) for the cost of own shares held in relation to
employee share schemes.
Notes to the condensed interim consolidated financial information
1. Corporate information
McBride plc ('the Company') is a public company limited by shares
incorporated and domiciled in the United Kingdom and registered in England and
Wales. The Company's ordinary shares are listed on the London Stock Exchange.
The registered office of the Company is Middleton Way, Middleton, Manchester
M24 4DP. For the purposes of DTR 6.4.2R, the Home State of McBride plc is the
United Kingdom.
The Company and its subsidiaries (together, 'the Group') is Europe's leading
provider of private label and contract manufactured products for the domestic
household and professional cleaning/hygiene markets. The Company has the scale
to offer our development and manufacturing capabilities to customers in Europe
and Asia Pacific.
2. Accounting policies
Basis of preparation
The interim financial information for the six months period ended 31 December
2022 has been prepared on the basis of the accounting policies set out in the
2022 annual financial statements and in accordance with UK adopted IAS 34
'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the UK's Financial Conduct Authority. The auditors' report
on those 2022 accounts was not qualified and did not contain statements under
section 498(2) or (3) of the Companies Act 2006, but did include a section
highlighting a material uncertainty that may cast significant doubt on the
Group and Company's ability to continue as a going concern.
This interim financial information should be read in conjunction with the
annual consolidated financial statements for the year ended 30 June 2022 which
were prepared in accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006. The financial statements
have been prepared under the historical cost convention, modified in respect
of financial assets and liabilities (derivative financial instruments) at fair
value through profit or loss, assets held for sale and defined benefit pension
plan assets.
The results for each half year are unaudited and do not represent the Group's
statutory accounts within the meaning of Section 434 of the Companies Act
2006. The interim financial information has not been reviewed or audited. The
Group's statutory accounts were approved by the Directors on 29 September 2022
and have been reported on by PricewaterhouseCoopers LLP and delivered to the
Registrar of Companies. The report of PricewaterhouseCoopers LLP was (i)
unqualified, (ii) included a reference to a material uncertainty related to
going concern to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
498 of the Companies Act 2006.
Taxation
Taxation in the interim period is accrued using the tax rate that would be
applicable to the expected annual profit or loss, adjusted for the tax effect
of certain items recognised in full in the interim period.
New accounting standards and interpretations effective during the period
No new or amended accounting standards that became effective during the period
have had a significant impact on the Group.
New accounting standards and interpretations issued but not yet effective
None of the amendments issued but not yet effective are expected to have a
significant impact on the Group, however, the Group will continue to consider
these and any additional amendments, interpretations and new standards to
identify potential future impact.
Going concern
In determining the appropriate basis of preparation of the financial
statements for the six months to 31 December 2022, the Directors are required
to consider whether the Group can continue in operational existence for the
foreseeable future.
The rapid and unprecedented rise in input costs and the ongoing macroeconomic
supply chain challenges as a result of the Covid-19 pandemic have had a
negative effect on the financial performance of the Group and has cast a
degree of uncertainty as to the future financial performance and cash flows of
the Group. In particular, the Group's inability to immediately offset the
significant input cost inflation by raising prices at which its products are
sold to private label customers has resulted in a significant deterioration of
the Group's profitability.
The Group meets its funding requirements through internal cash generation and
bank credit facilities. As announced on 29 September 2022, the Group agreed an
amended RCF with its lender group, ensuring the Group has sufficient levels of
liquidity headroom and can comply with revised covenant requirements. In
reaching this agreement, the Group agreed to:
· maintain liquidity (cash plus facility headroom) of at least £15
million when tested on or prior to 30 September 2024;
· not pay dividends to shareholders until there is an 'exit event',
being a change of control, refinancing of the RCF in full, prepayment and
cancellation of the RCF in full or upon the termination date of the RCF, being
May 2026.
At 31 December 2022, liquidity amounted to £58.9 million.
In assessing the going concern assumptions, the Board has reviewed the Group's
base case plans and considered reasonable worst-case downsides.
The Group's base case scenario to 30 June 2024 assumes:
· revenue growth of c.4% per annum;
· raw material prices marginally reducing compared to current still
high levels;
· interest rates remaining unchanged from February 2023 levels;
· Sterling:Euro exchange rate per current spot rate (£1:€1.13); and
· £25 million extension of invoice discounting facilities to
unencumbered receivables ledgers.
The Directors have considered a severe but plausible downside risk scenario
including several downside assumptions to stress test the Group's financial
forecasts:
· zero revenue growth from volumes, with revenue growing in H2 FY23 and
FY24 only for pricing already agreed with customers;
· higher than forecast raw material and packaging input costs and
additional inflationary pressures driven particularly by energy, distribution
and labour, ultimately being recovered through pricing actions, but only after
a lag;
· worsening trade working capital, caused by deterioration in both
customer and supplier payment terms;
· interest rates increasing by a further 100 basis points;
· Sterling appreciating significantly against the Euro to £1:€1.185;
and
· no extension of invoice discounting facilities to unencumbered
receivables ledgers.
In the event that such a severe but plausible downside risk scenario occurs,
the Group would incur a covenant breach and a liquidity shortfall. In this
downside risk scenario, the Group would therefore need to obtain a covenant
waiver and increase its funding facilities compared to those that are
currently committed, to ensure that the business can meet its obligations for
the next 18 months.
To mitigate against these risks, the Group is currently negotiating to further
increase liquidity by £25 million by extending invoice discounting facilities
to unencumbered receivables ledgers. However, there is no certainty that these
negotiations will be successful.
After reviewing the current liquidity position, financial forecasts, stress
testing of potential risks and considering the uncertainties described above,
and based on the currently committed funding facilities, the Directors have a
reasonable expectation that the Group has sufficient resources to continue in
operational existence and without significant curtailment of operations for
the foreseeable future. For these reasons, the Directors continue to adopt the
going concern basis of accounting in preparing the Group financial statements.
However, the occurrence of multiple downside trading and liquidity risks
represents a material uncertainty at 28 February 2023 that could cast
significant doubt upon the Group's ability to continue as a going concern.
The financial statements do not include the adjustments that would result if
the Group were unable to continue as a going concern.
The condensed interim consolidated financial statements were approved by the
Board on 28 February 2023.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the condensed interim financial information requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
In preparing the condensed interim financial information, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those applied to
the consolidated financial statements for the year ended 30 June 2022.
Discontinued operations
During the 2019 financial year, the Group successfully completed the sale of
the European Personal Care (PC) Liquids business. The financial results of
this business have been treated as discontinued operations in the prior year
financial statements. The remaining activities within the Group are referred
to as continuing operations.
Alternative performance measures (APM)
The performance of the Group is assessed using a variety of adjusted measures
that are not defined under IFRS and are therefore termed non-GAAP measures.
APM Definition Source
Adjusted operating loss Operating loss before amortisation of intangible assets and exceptional items Group income statement
Adjusted EBITDA Adjusted operating loss before depreciation Group income statement
Adjusted loss before tax Adjusted loss before tax is based on adjusted operating loss less adjusted Group income statement
finance costs
Adjusted loss per share Adjusted loss per share is based on the Group's loss for the period adjusted Note 6
for the items excluded from operating loss in arriving at adjusted operating
loss Group income statement
Free cash flow Cash generated/(used) from continuing operations before exceptional items Group cash flow statement
Cash conversion Free cash flow as a percentage of adjusted EBITDA Group income statement
Group cash flow statement
Adjusted return on capital employed Rolling 12 months total adjusted operating loss from continuing operations Group income statement
divided by the average of the past two years' capital employed. Capital
employed is defined as the total of goodwill and other intangible assets, Group balance sheet
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 Cash and cash equivalents, overdrafts, bank and other loans and lease Group balance sheet
liabilities
The APMs we use may not be directly comparable with similarly titled measures
used by other companies.
Adjusted measures
Adjusted measures exclude specific items that are considered to hinder
comparison of the trading performance of the Group's businesses either
year-on-year or with other businesses. This presentation is consistent with
the way that financial performance is measured by management and reported to
the Board and Executive Committee and is used for internal performance
analysis and in relation to employee incentive arrangements. The Directors
present these measures in the financial statements in order to assist
investors in their assessment of the trading performance of the Group.
Directors do not regard these measures as a substitute for, or superior to,
the equivalent measures calculated and presented in accordance with IFRS.
During the periods under review, the items excluded from operating profit in
arriving at adjusted operating profit were the amortisation of intangible
assets and exceptional items. Exceptional items and amortisation are excluded
from adjusted operating profit because they are not considered to be
representative of the trading performance of the Group's businesses during the
period.
See note 16 'Additional information' for further information on alternative
performance measures.
3. Segment information
Background
Financial information is presented to the Board by division for the purposes
of allocating resources within the Group and assessing the performance of the
Group's businesses. There are five separately managed and accountable business
divisions:
· Liquids
· Unit Dosing
· Powders
· Aerosols
· Asia Pacific
Intra-group revenue from the sale of products is agreed between the relevant
customer-facing units and eliminated in the segmental presentation that is
presented to the Board, and therefore excluded from the below figures. Our
Compass strategy is delivering an increased focus on cost optimisation and has
meant that most overhead costs are now directly attributed within the
respective divisions' income statements. The only costs now allocated out to
the divisions are central overheads, with corporate costs being retained at a
Group level. Central overheads are allocated to a reportable segment
proportionally using an appropriate cost driver. Corporate costs, which
include the costs associated with the Board and the Executive Leadership Team,
governance and listed company costs and certain central functions (mostly
associated with financial disciplines such as treasury), are reported
separately. Exceptional items are detailed in note 4 and are not allocated to
the reportable segments as this reflects how they are reported to the Board.
Finance expense and income are not allocated to the reportable segments, as
the central treasury function manages this activity, together with the overall
net debt position of the Group.
The Board uses adjusted operating (loss)/profit to measure the profitability
of the Group's businesses. Adjusted operating (loss)/profit is, therefore, the
measure of segment profit presented in the Group's segment disclosures.
Adjusted operating (loss)/profit represents operating (loss)/profit before
specific items that are considered to hinder comparison of the trading
performance of the Group's businesses, either period on period or with other
businesses. During the years under review, the items excluded from operating
(loss)/profit in arriving at adjusted operating (loss)/profit were the
amortisation of intangible assets and exceptional items.
Liquids Unit Dosing Powders Aerosols Asia Pacific Corporate Group
Period ended 31 December 2022 £m £m £m £m £m £m £m
Continuing operations
Divisional revenue 237.7 111.4 42.7 21.3 13.2 - 426.3
Adjusted operating profit/(loss) 0.2 2.2 (1.2) - 0.8 (3.3) (1.3)
Amortisation of intangible assets (1.3)
Exceptional items -
Operating loss (2.6)
Finance costs (17.4)
Loss before taxation (20.0)
Inventories 62.6 36.2 15.5 10.3 3.6 - 128.2
Capital expenditure 1.6 1.3 0.3 0.1 0.1 - 3.4
Amortisation and depreciation 6.5 3.1 0.7 0.3 0.8 - 11.4
Liquids Unit Dosing Powders Aerosols Asia Pacific Corporate Group
Period ended 31 December 2021 £m £m £m £m £m £m £m
Continuing operations
Divisional revenue 182.8 81.6 32.8 15.8 10.4 - 323.4
Adjusted operating (loss)/profit (10.2) (0.4) (1.4) (0.8) 0.2 (2.2) (14.8)
Amortisation of intangible assets (1.3)
Exceptional items 1.4
Operating loss (14.7)
Finance costs (2.1)
Loss before taxation (16.8)
Inventories 49.6 25.7 10.6 7.6 2.9 - 96.4
Capital expenditure 1.8 1.5 0.2 0.3 0.2 1.0 5.0
Amortisation and depreciation 6.5 3.0 0.7 0.2 0.7 0.7 11.8
Liquids Unit Dosing Powders Aerosols Asia Pacific Corporate Group
Year ended 30 June 2022 £m £m £m £m £m £m £m
Continuing operations
Divisional revenue 383.9 171.5 68.6 31.9 22.4 - 678.3
Adjusted operating (loss)/profit (15.9) (0.8) (2.5) (1.5) 0.7 (4.5) (24.5)
Amortisation of intangible assets (2.6)
Exceptional items 0.4
Operating loss (26.7)
Finance costs (8.6)
Loss before taxation (35.3)
Inventories 57.5 35.5 13.7 9.1 3.1 - 118.9
Capital expenditure 5.7 6.5 1.0 0.6 0.3 - 14.1
Amortisation and depreciation 13.7 6.5 1.4 0.5 1.4 - 23.5
4. Exceptional items
Analysis of exceptional items
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Continuing operations
Reorganisation and restructuring costs:
Factory footprint review - (1.5) (1.4)
Review of strategy, organisation and operations - (0.1) (0.4)
Logistics transformation programme - 0.1 0.7
UK Aerosols closure - 0.1 0.1
- (1.4) (1.0)
Environmental remediation - - 0.6
Total credited to operating loss - (1.4) (0.4)
Group refinancing 10.8 - 3.5
Total charged to finance costs 10.8 - 3.5
Total continuing operations 10.8 (1.4) 3.1
Discontinued operations
Sale of PC Liquids business - - 0.5
Other - - (0.1)
Total discontinued operations before tax - - 0.4
Tax on discontinued operations - - (0.1)
Total discontinued operations - - 0.3
Total operations
Total exceptional items before tax 10.8 (1.4) 3.5
Exceptional items are presented separately as, due to their nature or the
infrequency of the events giving rise to them, this allows users of the
financial statements to understand better the elements of financial
performance for the year, to facilitate comparison with prior periods, and to
assess the trends of financial performance.
During the period ended 31 December 2022, the Group incurred exceptional costs
from continuing operations of £10.8 million (2021: £1.4m credit), relating
to the Group refinancing programme, charged to finance costs.
During the period ended 31 December 2021, the Group recognised a £1.4 million
credit in respect of exceptional items, included within operating costs. The
credit comprised the following:
· £1.5 million credit comprising £1.8 million profit on the disposal
of the closed Barrow site, the sale proceeds for which were £2.6 million, and
£0.3 million of site closure costs;
· £0.1 million credit relating to the release of excess redundancy
provisions in respect of Programme Compass;
· £0.1 million charge relating to the Group's logistics transformation
programme; and
· £0.1 million charge in respect of legacy costs in relation to the
former UK Aerosols site in Hull.
5. Taxation
Reported loss before taxation from continuing operations was £20.0 million
(30 June 2022: £35.3m loss). Adjusted loss before taxation from continuing
operations was £7.9 million (30 June 2022: £29.6m loss).
The tax credit on continuing adjusted profit before tax for the year is £0.7
million (30 June 2022: £9.3m credit) and the effective tax rate is a charge
of 9% (30 June 2022: 31% credit). The effective tax rate is lower than the
previous year on the basis that, in the prior year, additional deferred tax
assets were recognised on losses in the UK.
The Group forecasts an adjusted effective tax rate for the full year of 8%,
before discrete items.
6. Loss per ordinary share
Basic loss per ordinary share is calculated by dividing the loss for the
period attributable to owners of the Company by the weighted average number of
the Company's ordinary shares in issue during the financial period. The
weighted average number of the Company's ordinary shares in issue excludes
629,200 shares (2022: 629,200 shares), being the weighted average number of
own shares held during the year in relation to employee share schemes.
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
Reference 2022 2021 2022
Weighted average number of ordinary shares in issue (million) a 173.5 173.5 173.5
Effect of dilutive share incentive plans (million) 2.8 - 1.0
Weighted average number of ordinary shares for calculating
diluted loss per share (million) b 176.3 173.5 174.5
Diluted loss per share is equal to the basic loss per share. During the
period, the Company had equity-settled long-term incentive plan (LTIP) and
restricted share unit (RSU) awards with a nil exercise price that are
potentially dilutive ordinary shares. However, the calculation of diluted loss
per share ignores the assumption that all potentially dilutive ordinary shares
are converted, as this would decrease the loss per share.
Adjusted loss per share measures are calculated based on loss for the period
attributable to owners of the Company before adjusting items as follows:
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
From continuing operations Reference £m £m £m
Loss for calculating basic and diluted loss per share c (15.2) (13.8) (24.0)
Adjusted for:
Amortisation of intangible assets (note 8) 1.3 1.3 2.6
Exceptional items (note 4) 10.8 (1.4) 3.1
Taxation relating to the above items (2.5) (0.2) (2.0)
Losses for calculating adjusted loss per share d (5.6) (14.1) (20.3)
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Reference pence pence pence
Basic loss per share c/a (9.7) (8.0) (13.8)
Diluted loss per share c/b((1)) (9.7) (8.0) (13.8)
Adjusted basic loss per share d/a (4.2) (8.1) (11.7)
Adjusted diluted loss per share c/b((1)) (4.2) (8.1) (11.7)
(1)Diluted loss per share is considered equal to the basic loss per share as
potentially dilutive ordinary shares cause a decrease in the loss per share.
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
From discontinued operations Reference £m £m £m
Losses for calculating basic and diluted earnings per share e - - (0.3)
Adjusted for:
Exceptional items (note 4) - - 0.4
Taxation relating to the above items - - (0.1)
Earnings for calculating adjusted earnings per share f - - -
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Reference pence pence pence
Basic loss per share e/a - - (0.2)
Diluted loss per share e/b((1)) - - (0.2)
Adjusted basic loss per share f/a - - -
Adjusted diluted loss per share f/b((1)) - - -
(1)Diluted loss per share is considered equal to the basic loss per share as
potentially dilutive ordinary shares cause a decrease in the loss per share.
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Total attributable to ordinary shareholders Reference £m £m £m
Earnings for calculating basic and diluted earnings per share g (15.2) (13.8) (24.3)
Adjusted for:
Amortisation of intangible assets (note 8) 1.3 1.3 2.6
Exceptional items (note 4) 10.8 (1.4) 3.5
Taxation relating to the above items (2.5) (0.2) (2.1)
Earnings for calculating adjusted earnings per share h (5.6) (14.1) (20.3)
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Reference Pence pence Pence
Basic loss per share g/a (9.7) (8.0) (14.0)
Diluted loss per share g/b((1)) (9.7) (8.0) (14.0)
Adjusted basic loss per share h/a (4.2) (8.1) (11.7)
Adjusted diluted loss per share h/b((1)) (4.2) (8.1) (11.7)
(1)Diluted loss per share is considered equal to the basic loss per share as
potentially dilutive ordinary shares cause a decrease in the loss per share.
7. Payments to shareholders
As set out in the Annual Report, per the terms of the amended RCF announced on
29 September 2022, no dividends will be paid to shareholders until there is an
'exit event', being a change of control, refinancing of the RCF in full,
prepayment and cancellation of the RCF in full or upon the termination date of
the RCF, being May 2026.
No payments to ordinary shareholders were made or proposed in respect of this
year or the prior year.
Movements in the B Shares were as follows:
Nominal
Number value
000 £m
At 1 July 2021 747,399 0.7
Redeemed (81,511) (0.1)
At 31 December 2021, 30 June 2022 and 31 December 2022 665,888 0.6
B Shares carry no rights to attend, speak or vote at Company meetings, except
on a resolution relating to the winding up of the Company.
8. Intangible assets, property, plant and equipment and right-of-use assets
Goodwill
and other Property,
intangible plant and Right-of-use
assets equipment assets
£m £m £m
Net book value at 1 July 2022 (audited) 27.0 122.9 11.3
Currency translation differences 0.1 3.4 0.1
Additions 0.5 3.0 0.4
Depreciation charge - (8.2) (1.9)
Amortisation charge (1.3) - -
Net book value at 31 Dec 2022 (unaudited) 26.3 121.1 9.9
Included within goodwill and other intangible assets is goodwill of £19.8
million (30 June 2022: £19.7m), computer software of £4.4 million (30 June
2022: £5.3m) and customer relationships of £0.9 million (30 June 2022:
£1.1m).
Capital commitments as at 31 December 2022 amounted to £4.6 million (30 June
2022: £4.0m). At 31 December 2022 the Group was committed to future minimum
lease payments of £1.3 million (30 June 2022: £1.5m) in respect of leases
which have not yet commenced and for which no lease liability has been
recognised.
9. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, fair value interest rate risk, cash flow interest
rate risk and price risk), credit risk and liquidity risk.
The condensed interim financial information does not include all financial
risk management information and disclosures required in the annual financial
statements and they should be read in conjunction with the Group's Annual
Report and Accounts 2022. There have been no material changes in the risk
management policies since the year end.
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels are defined as follows:
· Level 1 - unadjusted quoted prices in active markets for identical
assets or liabilities;
· Level 2 - inputs other than level 1 that are observable for the asset
or liability, either directly (prices) or indirectly (derived from prices);
and
· Level 3 - inputs that are not based on observable market data
(unobservable inputs).
In the current and prior reporting periods, the Group has Level 2 assets and
liabilities only.
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Level 2 Assets
Derivative financial instruments:
Forward currency contracts 0.4 1.2 0.4
Interest rate swaps 4.9 0.7 2.1
Contracts for Difference (HDPE) - 0.1 -
Total financial assets 5.3 2.0 2.5
Level 2 Liabilities
Derivative financial instruments:
Forward currency contracts (0.2) (0.3) -
Interest rate swaps - (0.1) -
Total financial liabilities (0.2) (0.4) -
Valuation levels and techniques
There were no transfers between levels during the period and no changes in
valuation techniques.
Financial assets and liabilities measured at amortised cost
The fair value of borrowings are as follows:
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Current 51.3 61.9 64.4
Non-current 126.1 97.9 104.5
Total borrowings 177.4 159.8 168.9
The fair value of the following financial assets and liabilities approximate
to their carrying amount:
· trade and other receivables;
· other current financial assets;
· cash and cash equivalents; and
· trade and other payables.
10. Net debt
Movements in net debt were as follows:
Audited Unaudited
As at IFRS 16 As at
30 June non-cash Exchange 31 Dec
2022 movements((1)) Cash flow differences 2022
£m £m £m £m £m
Cash and cash equivalents 4.5 - 3.0 0.5 8.0
Overdrafts (6.8) - 4.1 - (2.7)
Bank and other loans (150.1) - (9.4) (4.6) (164.1)
IFRS 16 lease liabilities (12.0) (0.5) 2.3 (0.4) (10.6)
Total net debt (164.4) (0.5) - (4.5) (169.4)
(1)IFRS 16 non-cash movements includes additions (£0.4m) and interest charged
(£0.1m).
11. Pensions and post-employment benefits
The Group provides a number of post-employment benefit arrangements. In the
UK, the Group operates a closed defined benefit pension scheme and a defined
contribution pension scheme. Elsewhere in Europe, the Group has a number of
smaller unfunded post-employment benefit arrangements that are structured to
accord with local conditions and practices in the countries concerned. From 1
July 2021, the Group also recognised the assets and liabilities for all
members of the defined contribution scheme in Belgium, accounting for the
whole defined contribution section as a defined benefit scheme under IAS 19
'Employee Benefits', as there is a risk the underpin will require the Group to
pay further contributions to the scheme.
At 31 December 2022, the Group recognised a deficit on its UK defined benefit
pension plan of £22.8 million (30 June 2022: £14.4m). The Group's
post-employment benefit obligations outside the UK amounted to £1.9 million
(30 June 2022: £1.7m).
Defined benefit schemes had the following effect on the Group's results and
financial position:
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Profit or loss
Service cost and administration expenses (0.5) (0.5) (1.0)
Charge to operating loss (0.5) (0.5) (1.0)
Net interest cost on defined benefit obligation (0.3) (0.3) (0.5)
Charge to loss before taxation (0.8) (0.8) (1.5)
Other comprehensive (expense)/income
Net actuarial (loss)/gain (10.3) 6.7 12.4
Other comprehensive (expense)/income (10.3) 6.7 12.4
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Balance sheet
Defined benefit obligations:
UK - funded (97.6) (161.3) (116.6)
Other - unfunded((1)) (12.5) (2.8) (12.0)
(110.1) (164.1) (128.6)
Fair value of scheme assets:
UK - funded 74.8 140.7 102.2
Other - unfunded((1)) 10.6 - 10.3
85.4 140.7 112.5
Deficit on the schemes (24.7) (23.4) (16.1)
(1)At 30 June 2022, the Group recognised the assets and liabilities for all
members of the defined contribution scheme in Belgium, accounting for the
whole defined contribution section as a defined benefit scheme under IAS 19
'Employee Benefits'. As at 30 June 2022 and 31 December 2022, the scheme
assets and plan liabilities are reported on a gross basis.
For accounting purposes, the UK scheme's benefit obligation as at 31 December
2022 has been calculated based on data gathered for the 2021 triennial
actuarial valuation and by applying assumptions made by the Group on the
advice of an independent actuary in accordance with IAS 19. 'Employee
Benefits'.
12. Share capital
Allotted and fully paid
Number £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 31 December 2021, 30 June 2022 and 31 December 2022 174,057,328 17.4
Ordinary shares carry full voting rights and ordinary shareholders are
entitled to attend Company meetings and to receive payments to shareholders.
13. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties of the Company, have been eliminated on consolidation and, therefore,
are not required to be disclosed in these financial statements.
Key management compensation and transactions with the Group's pension and
post-employment schemes for the financial year ended 30 June 2022 are detailed
in note 29 (page 198) of McBride plc's Annual Report and Accounts 2022. A copy
of McBride plc's Annual Report and Accounts 2022 is available on McBride's
website at www.mcbride.co.uk (www.mcbride.co.uk) .
14. Exchange rates
The principal exchange rates used to translate the results, assets and
liabilities and cash flows of the Group's foreign operations into sterling
were as follows:
Unaudited Unaudited Audited
Half year to Half year to Year ended
31 Dec 31 Dec 30 June
2022 2021 2022
Average rate:
Euro 1.16 1.17 1.18
US Dollar 1.17 1.36 1.33
Polish Zloty 5.49 5.39 5.45
Czech Koruna 28.39 29.87 29.57
Danish Krone 8.62 8.73 8.78
Hungarian Forint 471.97 421.77 433.28
Malaysian Ringgit 5.32 5.71 5.63
Australian Dollar 1.75 1.86 1.83
Closing rate:
Euro 1.13 1.19 1.17
US Dollar 1.20 1.35 1.21
Polish Zloty 5.28 5.47 5.47
Czech Koruna 27.19 29.58 28.83
Danish Krone 8.38 8.85 8.67
Hungarian Forint 451.97 439.37 462.64
Malaysian Ringgit 5.30 5.62 5.33
Australian Dollar 1.77 1.86 1.76
15. Key performance indicators (KPIs)
Management uses a number of KPIs to measure the Group's performance and
progress against its strategic objectives. The most important of these are
noted and defined below:
Financial:
· Continuing revenue: Revenue from contracts with customers from the
sale of goods is measured at the invoiced amount, net of sales rebates,
discounts, value-added tax and other sales taxes.
· Cost savings: Cost savings achieved from the implementation of the
Compass strategy.
· Adjusted EBITDA margin advances: The calculation of adjusted EBITDA,
which when divided by revenue gives this EBITDA margin, is defined in the
adjusted measures section of Note 2 to the 2022 Accounts.
· Free cash flow increase: Free cash flow is defined as cash generated
from continuing operations before exceptional items.
· Adjusted ROCE improvement: Total adjusted operating (loss)/profit
from continuing operations divided by the total of goodwill and other
intangible assets, property, plant and equipment, right-of-use assets,
inventories, trade and other receivables less trade and other payables.
Non-financial:
· Health and safety: The number of lost time injuries x 100,000 divided
by total number of person-hours worked.
· Customer service level: The volume of products delivered in the
correct volumes and within requested timescales, as a percentage of total
volumes ordered by customers.
· Gender split - female: The proportion of our workforce that is
female.
· Customer quality: A customer satisfaction index, which combines
critical issues, audit results, returns and complaints.
· Research & development expenditure: Total research and
development expenditure as a percentage of Group revenue.
16. Additional information
Alternative performance measures
The performance of the Group is assessed using a variety of adjusted measures
that are not defined under IFRS and are therefore termed non-GAAP measures. A
reconciliation for each non-GAAP measure to the most directly comparable IFRS
measure is set out below.
Adjusted operating loss and adjusted EBITDA
Adjusted EBITDA means adjusted operating loss before depreciation. A
reconciliation between adjusted operating loss, adjusted EBITDA and the
Group's reported statutory operating loss is shown below.
Half year Half year Full year
to 31 Dec to 31 Dec to 30 June
2022 2021 2022
£m £m £m
Operating loss (2.6) (14.7) (27.1)
Add back: operating loss from discontinued operations - - 0.4
Operating loss from continuing operations (2.6) (14.7) (26.7)
Exceptional items (note 4) - (1.4) (0.4)
Amortisation of intangibles (note 8) 1.3 1.3 2.6
Adjusted operating loss from continuing operations (1.3) (14.8) (24.5)
Depreciation of property, plant and equipment (note 8) 8.2 8.5 16.9
Depreciation of right-of-use assets (note 8) 1.9 2.0 4.0
Adjusted EBITDA 8.8 (4.3) (3.6)
Adjusted loss before tax
Adjusted loss before tax is based on adjusted operating loss less adjusted
finance costs. The table below reconciles adjusted loss before tax to the
Group's reported loss before tax.
Half year Half year Full year
to 31 Dec to 31 Dec to 30 June
2022 2021 2022
£m £m £m
Loss before tax (20.0) (16.8) (35.7)
Add back: loss before tax from discontinued operations - - 0.4
Loss before tax from continuing operations (20.0) (16.8) (35.3)
Exceptional items (note 4) 10.8 (1.4) 3.1
Amortisation of intangibles (note 8) 1.3 1.3 2.6
Adjusted loss before tax from continuing operations (7.9) (16.9) (29.6)
Adjusted loss per share
Adjusted loss per share is based on the Group's (loss)/profit for the year
adjusted for the items excluded from operating (loss)/profit in arriving at
adjusted operating (loss)/profit, and the tax relating to those items.
Free cash flow and cash conversion
Free cash flow is one of the Group's key performance indicators by which our
financial performance is measured. It is primarily a liquidity measure.
However, we also believe that free cash flow and cash conversion are important
indicators of our overall operational performance as they reflect the cash we
generate from operations. Free cash flow is defined as cash generated from
continuing operations before exceptional items. Cash conversion is defined as
free cash flow as a percentage of adjusted EBITDA. A reconciliation from net
cash generated from operating activities, the most directly comparable IFRS
measure to free cash flow, is set out as follows:
Half year Half year Full year
to 31 Dec to 31 Dec to 30 June
2022 2021 2022
£m £m £m
Net cash generated from operating activities 15.2 (0.5) (30.2)
Add back:
Taxation paid (0.1) (0.5) 0.1
Interest paid 3.6 1.6 3.3
Cash outflow from exceptional items 0.8 2.2 4.1
Free cash flow 19.5 2.8 (22.7)
Adjusted EBITDA 8.8 (4.3) (3.6)
Cash conversion 222% n/a n/a
Adjusted return on capital employed (ROCE)
Adjusted ROCE serves as an indicator of how efficiently we generate returns
from the capital invested in the business. It is a Group KPI that is directly
relatable to the outcome of investment decisions. Adjusted ROCE is defined as
total adjusted operating (loss)/profit from continuing operations divided by
the average year-end capital employed. Capital employed is defined as the
total of goodwill and other intangible assets, property, plant and equipment,
right-of-use assets, inventories, trade and other receivables less trade and
other payables. There is no equivalent statutory measure within IFRS. Adjusted
ROCE is calculated as follows:
As at As at As at As at
31 Dec 31 Dec 31 Dec 30 June
2022 2021 2020 2022
£m £m £m £m
Goodwill (note 8) 19.8 19.7 19.8 19.7
Other intangible assets (note 8) 6.5 7.6 8.1 7.3
Property, plant and equipment (note 8) 121.1 122.1 135.9 122.9
Right-of-use assets (note 8) 9.9 11.8 10.7 11.3
Inventories 128.2 96.4 95.8 118.9
Trade and other receivables 131.1 120.4 134.5 145.4
Trade and other payables (211.9) (183.2) (179.8) (206.9)
Capital employed 204.7 194.8 225.0 218.6
Average period-end capital employed 199.8 209.9 223.3 214.0
Rolling 12 months adjusted operating (loss)/profit from continuing operations (11.0) (9.7) 35.7 (24.5)
Adjusted return on capital employed % (5.5)% (4.6)% 16.0% (11.4)%
Liquidity
Liquidity means, at any time, without double counting, the aggregate of:
(a) cash;
(b) cash equivalents;
(c) the available facility at that time, which comprises the headroom
available in the RCF and other committed facilities; and
(d) the aggregate amount available for drawing under uncommitted facilities.
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Cash and cash equivalents 8.0 34.9 4.5
RCF headroom 35.2 58.3 55.1
Other committed facilities headroom 15.5 - -
Uncommitted facilities 0.2 21.0 11.0
Liquidity 58.9 114.2 70.6
Net debt
Net debt consists of cash and cash equivalents, overdrafts, bank and other
loans and lease liabilities.
Net debt is a measure of the Group's net indebtedness that provides an
indicator of overall balance sheet strength. It is a key indicator used by
management to assess both the Group's cash position and its indebtedness. The
use of the term 'net debt' does not necessarily mean that the cash included in
the net debt calculation is available to settle the liabilities included in
this measure.
Net debt is considered to be an alternative performance measure as it is not
defined in IFRS. A reconciliation from loans and other borrowings, lease
liabilities and cash and cash equivalents, the most directly comparable IFRS
measures to net debt is set out below:
As at As at As at
31 Dec 31 Dec 30 June
2022 2021 2022
£m £m £m
Current assets
Cash and cash equivalents 8.0 34.9 4.5
Current liabilities
Borrowings (note 9) (47.5) (58.1) (60.5)
Lease liabilities (3.8) (3.8) (3.9)
(51.3) (61.9) (64.4)
Non-current liabilities
Borrowings (note 9) (119.3) (88.9) (96.4)
Lease liabilities (6.8) (9.0) (8.1)
(126.1) (97.9) (104.5)
Net debt (169.4) (124.9) (164.4)
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AnnouncementREG - McBride PLC - Holding(s) in Company
AnnouncementREG - McBride PLC - Holding(s) in Company
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