McBride plc

Interim Results

PresentationPresentation

5 February 2015

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Headlines

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Headlines

• Solid start for the year, first half profitability in line with expectations.

• Group revenue +0.2% (constant currency basis); Private Label growth of 0.6%.

• Strong growth in Germany, weaker performance in Italy and Spain, subdued

revenues in UK and France.

• UK business restructuring project delivering benefits and on track with timetable.

• Adjusted operating profit (1) up 22.5% to £12.5m (+45.3% at constant currency).

• UK profits recovery, up to £5.3m (2013: £2.1m).

• Interim payment to shareholders maintained at 1.7p.• Interim payment to shareholders maintained at 1.7p.

• Net debt £86.0m (2013: £84.7m) represents 1.9x annualised adjusted EBITDA.

• New management team appointed, Rik de Vos and Chris Smith.

(1) These KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustments were made for the amortisation of intangible assets and exceptional items.

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Financial Headlines

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Financial Headlines

H1

2014/15

H1

2013/14Y/Y

H1

2013/14Y/Y

Revenue (£m) 364.7 380.3 (4.1)% 364.1 +0.2%

EBITA (£m) 12.5 10.2 +22.5% 8.6 +45.3%

EBITA margin 3.4% 2.7% +0.7ppts 2.4% +1.0ppts

Operating profit 11.1 7.0 +58.6% 5.5 +101.8%

Diluted earnings per share (p) 2.8 1.6 +75.0% 1.0 +180.0%

Adjusted diluted earnings per share (p) 3.4 3.0 +13.3% 2.3 +47.8%

Constant Currency

(1)

(1)

(1)Adjusted diluted earnings per share (p) 3.4 3.0 +13.3% 2.3 +47.8%

Interim payments to shareholders per share (p) 1.7 1.7

Cash generated from operations before excep items (£m) 30.7 23.5

Net debt (£m) 86.0 84.7

Return on capital employed 16.4% 10.9%

(1)

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(1) These KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustments were made for the amortisation of intangible assets and exceptional items.

Income statement

H1

2014/15

H1

2013/14 Y/Y

H1

2013/14 Y/Y£m £m £m

Revenue 364.7 380.3 (4.1)% 364.1 +0.2%

Gross margin 34.0% 33.2% +0.8pts 33.2% +0.8pts

Distribution costs (24.8) (26.3) (5.7)% (25.0) (0.8)%

Administrative costs (86.8) (89.9) (3.4)% (87.2) (0.5)%

EBITA 12.5 10.2 +22.5% 8.6 +45.3%

Net financing costs:

- Borrowings (3.2) (2.6) +23.1% (2.6) +23.1%

- Pension (0.6) (0.6) +0.0% (0.6) +0.0%

Adjusted Profit before tax 8.7 7.0 +24.3% 5.4 +61.1%

Constant currency

(1)

(1)Adjusted Profit before tax 8.7 7.0 +24.3% 5.4 +61.1%

Taxation (2.5) (1.5) +66.7% (1.4) +78.6%

Adjusted Profit after tax 6.2 5.5 +12.7% 4.0 +55.0%

Adjusted diluted earnings per share (p) 3.4 3.0 +0.4p

Amortisation 0.6 0.6 0.0

Exceptionals 0.8 2.6 (1.8)

Taxation (2.2) (0.7) (1.5)

Taxation - Effective rate 30% 19% * +11% *

* FY 2013/14: 34%

(1)

(1)

(1)

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(1) These KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustments were made for the amortisation of intangible assets and exceptional items.

Segmental performance – Revenue

H1

2014/15

H1

2013/14 Y/Y

H1

2013/14 Y/Y

£m £m £m

UK 127.6 132.8 (3.9)% 132.8 (3.9)%

Western Europe 205.5 214.3 (4.1)% 200.1 +2.7%

Rest of the World 31.6 33.2 (4.8)% 31.2 +1.3%

Constant Currency

Rest of the World 31.6 33.2 (4.8)% 31.2 +1.3%

Total 364.7 380.3 (4.1)% 364.1 +0.2%

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Segmental performance – Adjusted Operating profit

H1 2014/15 H1 2013/14 Y/Y H1 2013/14 Y/Y

£m £m £m

UK 5.3 2.1 +152.4% 2.1 +152.4%

Western Europe 10.2 10.8 (5.6)% 9.3 +9.7%

Rest of the World 0.4 0.4 +0.0% 0.3 +33.3%

Total segments 15.9 13.3 +19.5% 11.7 +35.9%

Constant Currency

Corporate (3.4) (3.1) +9.7% (3.1) +9.7%

Total 12.5 10.2 +22.5% 8.6 +45.3%

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(1) These KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustments were made for the amortisation of intangible assets and exceptional items.

Exceptional items – Income Statement

H1 FY

2014/15 2013/14

Cash Impairment Total Cash Impairment Total

£m £m £m £m £m £m

Functional reorganisation - - - 2.6 - 2.6

UK restructuring:

- Reorganisation costs - - - 7.9 - 7.9

- Impairment of goodwill and PP&E - - - - 20.7 20.7

- - - 7.9 20.7 28.6- - - 7.9 20.7 28.6

CLP 0.8 - 0.8 0.2 - 0.2

Environmental remediation - - - 2.5 - 2.5

Other impairments - - - - 0.6 0.6

Total 0.8 - 0.8 10.6 21.3 34.5

UK restructuring costs paid in H1 2014/15 were £4.3m.

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Balance Sheet Dec-14 Jun-14 Y/Y

£m £m

Goodwill and other intangible assets 25.7 26.3 (2.3)%

Property, plant and equipment 139.7 143.4 (2.6)%

Other non-current assets 18.2 14.6 +24.7%

Working capital 18.4 28.9 (36.3)%

Net other debtors/(creditors) (7.8) (15.1) (48.3)%

Pensions (31.5) (30.4) +3.6%

Non current liabilities (10.9) (14.4) (24.3)%Non current liabilities (10.9) (14.4) (24.3)%

Net debt (86.0) (84.7) +1.5%

Net assets 65.8 68.6 (4.1)%

Average Capital Employed 152.6 173.4 (12.0)%

ROCE 16.4% 10.9% +5.5ppts

Working capital % of sales 5.0% 7.9% -2.9ppts

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(1) These KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustments were made for the amortisation of intangible assets and exceptional items.

Movement in net debt

-60.0

-45.0

-30.0

-15.0

0.0

Opening net debt

Net cash generated

from operations Pensions

Exceptional items Interest Taxation

Capital expenditure

Payments to shareholders

Foreign exchange Other

Closing net debt

£m

(1)(2)

-90.0

-75.0

-60.0

(84.7) 32.0 (4.1) (86.0)(3.0) 0.2(1.3)

(1) Pre exceptional items and additional cash funding of pension schemes.

(2) Exceptional items include UK Business restructuring £4.3m and CLP £0.8m.

(5.8)

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(5.6)(9.8) (3.9)

Committed headroom and Net debt

Facility Drawn Headroom Net Debt

£m £m £m £m

Committed facilities:

- US Private Placements 57.7 (57.7) - (57.7)

- Revolving facilities 109.0 (23.4) 85.6 (23.4)

- Invoice discounting facilities 48.4 (28.4) 20.0 (28.4)

- Other 2.2 (2.2) - (2.2)

217.3 (111.7) 105.6 (111.7)

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217.3 (111.7) 105.6 (111.7)

Uncommitted facilities 50.4 (2.5) 47.9 (2.5)

Total facilities 267.7 (114.2) 153.5 (114.2)

Less: committed facilities (50.4)

Committed headroom 103.1

Cash and cash equivalents 28.2

Net debt (86.0)

Financial Headlines

• Underlying revenues flat, but margin improvements.

• Impact of weaker Euro on non UK sales and profits.

• UK restructuring project on track with timetable.

• Adjusted operating profit up 22.5% (45.3% at constant currency) to £12.5m.

• Operating margin up to 3.4% (2013: 2.7%).

• UK profits higher, improving mix for tax rate.

• Exceptional items relate only to CLP, further charges in second half.

• Interim payment to shareholders maintained.

• Net debt at £86.0m broadly flat compared to June 2014.

• Significant headroom of approximately £100m on committed facilities.

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Business Performance

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Headlines

• Overall market for household and personal care in main European markets flat.

• Private label share not showing sustained growth in past 12 months.

• Strong positions maintained with key European retailers.

• Good growth in targeted markets, balancing decline in traditional channels.

• Asia; strong growth in Australia.

• Group wide focus on CLP regulations.• Group wide focus on CLP regulations.

• Ongoing investment in R&D, supporting NPD and cost engineering.

• UK restructuring plan on track with timetable, UK profits improving.

• Continued expansion of our manufacturing capability in Poland.

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Year on year sales and private label growth

Sales change : (3.9)%

Private Label : (3.1)%

Sales change : (4.1)% actual

Sales change : +2.7% CFX

Private Label : +2.8%

+33.0%

Overall: (4.1)%+0.2% CFX

Private Label +0.6%

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Sales change : (4.8)% actual

Sales change : +1.3% CFX

Private Label : +1.3%

+24.1%

+0.4%

(13.1)%

(2.5)%

+33.0%

(15.0)%

0

2

4

6

8

UK France Italy Germany Spain Poland

% change vs prior year

Tough trading conditions continue across Europe in the

Household sector

-6

-4

-2

UK France Italy Germany Spain Poland

Market volume Private Label volume

Data for period 24 weeks to 30 Nov 2014, except Poland which relates to 31 Oct 2014.

Source: Nielsen

Categories: Laundry Detergents, Machine Dishwashing, Washing up Liquid and Household Cleaners.

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25.6%

41.7%

45.3%

25.3%

52.8%

23.1%25.1%

41.0%

44.5%

24.6%

53.2%

24.9%

20.0%

30.0%

40.0%

50.0%

60.0%

% P

riv

ate

La

be

l Vo

lum

e s

ha

re

(3.9)%Private Label Unit

Volume change

Private Label Unit

Volume change0.0%

Private Label – share of market

(3.6)%(0.1)% +2.0% +6.0%

0.0%

10.0%

20.0%

UK France Germany Italy Spain Poland

2013 2014

% P

riv

ate

La

be

l Vo

lum

e s

ha

re

Data for period 24 weeks to 30 Nov 2014, except Poland which relates to 31 Oct 2014.

Source: Nielsen

Categories: Laundry Detergents, Machine Dishwashing, Washing up Liquid and Household cleaners.

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UK customer initiatives

• End of plinth value positioning

• Product benefits highlighted at POS

• Increased shelf distribution

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• Combination product deals

What were the drivers?→ falling UK revenues in past 3 years→ unprofitable contracts→ margins declining – adjusted operating margin down to 1.6%→ inefficient manned capacity levels→ overhead structure heavy

The Plan→ re-base output needs from each factory

→ including moving production between sites where appropriate

→ re-set shift patterns, loss of jobs

UK restructuring

→ re-set shift patterns, loss of jobs → re-assess overhead base and plant and central functions, loss of jobs→ investigate “efficiency” investment in equipment

Progress→ project on track with timetable→ savings in H1 => £1.5m→ full year outlook – ahead of predicted £3.0m→ annualised savings remain at £12.0m by 30 June 2016 – on track

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Operations – other cost drivers

• Product cost engineering

• Sourcing decisions (internal & external)

• Distribution costs

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• Overheads

• Key capital projects

Investing to support output growth in Poland

50% Capacity uplift in Strzelce to 150 million bottles pa.

Further significant capacity uplift - planning in progress.

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Growth through NPD

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Growth through NPD – first to market

First to Market in France with a private label

compressed Aerosol.

Delivering ....

- 48hr Protection (APD)

- Deodorant Efficacy. No white stains.

- 75ml = 150ml – lasts as long!

Consumer Benefits ...

- More comfortable ‘spray’ on the skin

- More convenient packaging

- Sustainability benefits, less gas, less packaging.

Launching across Europe in 2015

Reduction

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Growth through NPD

New washing up liquid with

enzymes.

Starch removal - enzyme

technology.

Roll out of concept across

Europe.

Initial launch Germany, soon

Bathroom Limescale

Remover Trigger.

Brand matching formulation.

Achieving a CLP classification

of ‘irritant’ avoiding

‘corrosive’ classification.

- Can keep product on

marketInitial launch Germany, soon

to follow in Spain, France and

Italy.

market

- no need to change

trigger solution

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Increasing legislation and responsibility

• Increasingly regulated world - challenges

• Biocide Regulations.

• Detergent Regulations.

• Fragrance Allergens.

• CLP: Classification Labelling and Packaging.

• Sustainability – including sustainable Palm Oil.

• Emissions reporting.

• Charter for Sustainable cleaning.

• Product Environmental Footprint (PEF).

• Recent achievements:

• Member of Roundtable for Sustainable Palm Oil.

• Participation in PEF pilot studies.

• Opportunity for McBride

• Closer customer collaboration.

• Size & scale of internal resource - an advantage compared to competition.

• Market presence – play a leadership role to help shape the future.

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Opportunities

• Growth

• Raw material developments

Challenges

• Competitive pressures

• Currency volatility

Second Half Outlook

• Additional UK restructuring

savings

• Customer and market

developments

• Economic back-drop

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Summary

• Delivery of overall sales growth remains challenging in Group’s main markets.

• Good ongoing progress with markets where McBride is under-represented.

• UK sales activity stabilising after significant falls of past 3 years.

• Ongoing and future actions on cost savings to restore profitability.

• Currency volatility.

• Margin management.

• New management team appointed, Rik de Vos and Chris Smith.

• Future strategic priorities and objectives to be outlined in September 2015.

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Q&AQ&A

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