TIDMMCB
RNS Number : 4791X
McBride PLC
22 February 2017
22 February 2017
McBride plc
McBride plc, the leading European manufacturer and supplier of
Co-manufactured and Private Label products for the Household and
Personal Care market, announces its Half-Year Report for the six
months ended 31 December 2016.
Prepare phase on track; Quality of earnings continuing to
improve
Headlines
Half year Half year Constant
to 31 to 31 Reported Currency
GBPm unless otherwise stated Dec 2016 Dec 2015(1) % Change % Change(2)
--------------------------------- ---------- ------------- ---------- -------------
Revenue 360.6 344.1 4.8% (7.0%)
Adjusted operating profit
(3) 22.9 17.6 30.1% 9.6%
Adjusted operating margin
(3) 6.4% 5.1% 1.3ppts 1.0ppts
Operating profit 22.5 17.1 31.6%
Operating margin 6.2% 5.0% 1.2ppts
Adjusted profit before taxation 19.5 13.6 43.4% 15.4%
Profit before taxation 18.8 13.0 44.6% 15.3%
Diluted earnings per share 7.1p 4.9p 44.9%
Adjusted diluted earnings
per share (4) 7.4p 5.2p 42.3%
Interim payment to shareholders
(per ordinary share) 1.4p 1.2p 16.7%
Cash flow from operations
(before exceptional items) 34.4 26.2
Net debt 82.9 90.9
Return on capital employed
(5) 28.0% 23.6%
-- Adjusted operating profit up 30.1% (9.6% at constant currency)
-- Further progress on margins, adjusted operating margin now 6.4% (2015: 5.1%)
-- Underlying Group revenues(6) 4.5% lower on a constant
currency basis, with a further 2.5% reduction in revenues due to
the "customer choices" project
-- Adjusted profit before taxation up 43.4% to GBP19.5m (2015: GBP13.6m)
-- Adjusted diluted EPS up 42.3% to 7.4p (2015: 5.2p)
-- Strong cash generation continues with underlying net cash
inflow of GBP14.8m, resulting in an improved net debt cover ratio
of 1.4x (30 June 2016: 1.7x)
-- Further progress on ROCE at 28.0% (2015: 23.6%)
-- Interim payment to shareholders up 16.7% to 1.4 pence (2015: 1.2p)
-- Growth strategy and associated capital expenditure plans well advanced
-- Board considering third party expressions of interest to
acquire the Group's Aerosols activities
Rik De Vos, Chief Executive Officer, commented:
"I am both encouraged and delighted by the Group's solid
performance in this first half of our financial year, in spite of
the tough trading environment. Encouraged because our financial
results remain strong and on track to meet our key three to five
year objectives for profitability, cash and ROCE during the phased
implementation of our strategy. Delighted as the McBride teams
continue to implement the strategic objectives as defined for this
"Prepare" phase while managing the business effectively in
uncertain market circumstances. Our focus remains on preparing the
company for growth by securing the future building blocks required,
while protecting the quality of the bottom line.
Uncertainty in both the size and timing of raw material
inflation and changes to foreign exchange rates is to be expected
in the second half of the year. We will work closely with customers
to mitigate these but it is likely the second half will see some
lag effect between higher input prices and margin recovery.
While trading conditions in the second half are expected to
remain challenging, we believe our ongoing margin and cost
initiatives position us well to mitigate these effects. As such,
the Board's full year expectations remain unchanged."
McBride plc
Rik De Vos, Chief Executive
Officer 020 3642 1587
Chris Smith, Chief Financial
Officer
020 3642 1587
FTI Consulting
Ed Bridges, Nick Hasell 020 3727 1017
(1) Net debt comparative is as at 30 June 2016, all other
comparatives refer to the six months ended on 31 December 2015
unless otherwise stated.
(2) Comparatives translated at 2017 exchange rates.
(3) Adjustments made for the amortisation of intangible assets
and exceptional items (see Consolidated Income Statement).
(4) Adjustments made for the amortisation of intangible assets,
exceptional items, non-cash financing costs from unwind of discount
on initial recognition of contingent consideration, unwind of
discount on provisions and any related tax (see Consolidated Income
Statement).
(5) Annualised adjusted operating profit for the six months
ended on 31 December 2016 and 31 December 2015 as a percentage of
average period end net assets excluding net debt.
(6) Underlying revenues after adjusting for constant currency
and excluding the impact of "customer choices" project.
Strategy update
In September 2015, the Group presented its 'Manufacturing Our
Future' strategy, with its three phases - 'Repair, Prepare, Grow',
defining a clear roadmap to restore McBride to its core capability
of manufacturing excellence with a three to five year ambition for
adjusted operating margin (EBITA %) of 7.5% and ROCE targeted at
25% to 30%.
In September 2016 and as part of our 2016 Annual results, we
reported the successful delivery of our key Repair objectives
within our Household business and highlighted the continuing work
necessary within our Personal Care and Aerosols business. This has
promoted clarity, simplification and focus in operational execution
across the business and we are pleased to report the results of
this effort are increasingly visible in our financial
performance.
The separation of our Personal Care and Aerosols business from
the Household activities has provided further insight into the
business and the options the Group has for improved value
generation from these activities. Since the separation, the Group
has received a number of approaches from external parties,
expressing interest in acquiring the Group's Aerosols business. The
initial interest has been narrowed down and the Group is making
progress towards concluding its next steps. The Aerosols activities
have annual revenues of approximately GBP60 million, operate from a
manufacturing site in each of the UK and France and supply
customers with a range of personal hygiene, aircare and homecare
products. There can be no certainty that any transaction will
result. The Board will provide updates as appropriate.
We are now preparing the company for the future, by creating
clarity on the markets, products and segments where we will sell in
the future whilst identifying and approving investment programmes
for our key assets to support this ambition. The definitive plans
are nearing completion and in many aspects of the growth plan, the
business is already busy implementing identified actions. We
continue to develop the Group's organisational structure and
culture, and are setting out plans to address improvements needed
in our under-performing businesses. We will provide further detail
on our plans for the Grow phase of our strategy in due course.
Group operating results
The Group has delivered an encouraging performance for the first
half of the financial year.
Group revenues at GBP360.6 million were GBP16.5 million (4.8%)
higher than the revenues reported for the prior half year, aided by
the translation effect of a strong Euro. On a constant currency
basis, sales were lower by GBP27.1 million
(-7.0%), with Household sales lower by 7.2% and Personal Care
& Aerosols ("PCA") lower by 6.2%.
As reported at the 2016 year end, the Group has completed the
process to reduce the levels of complexity in our customer and
product portfolio (our "customer choices" project), the impact of
which is to see revenues reduce on an annualised basis by
approximately GBP20.0 million. This initiative commenced in the
second half year of the previous financial year such that in the
six months to 31 December 2016, the impact lowered revenues by
GBP9.8 million, equating to approximately 2.5% of the period on
period reduction in Group sales (at constant currency).
Excluding "customer choices", overall consumer units are down
3.4% across the Group, 1.5% of which specifically relates to the
exceptionally high volumes in December 2015 as retailers restocked
for January 2016 promotions. Price pressure was most evident in the
North region, which saw pricing lower overall by approximately
2%.
Half year adjusted operating profit was GBP22.9 million (2015:
GBP17.6m) with adjusted operating profit margin increasing to 6.4%
(2015: 5.1%), showing good progress towards our 7.5% ambition.
Excluding the impact of translation of exchange rates, adjusted
operating profit improved by 9.6% or GBP2.0 million. Half year
operating profit increased by GBP5.4 million to GBP22.5 million
(2015: GBP17.1m). Based on adjusted operating profit, the improved
profitability levels led to an improved return on capital employed
ratio (ROCE), with the measure rising to 28.0% (2015: 23.6%). The
year on year profit improvement reflects cost saving initiatives,
either in overheads or from structural buying improvements.
In the six month period to December 2016 underlying raw material
prices remained in line overall with the same period last year
(excluding currency). However, key feedstock prices, especially
those of natural feedstocks, have moved higher in recent months and
the outlook is for further increases during the first half of
calendar 2017.
Business simplification continues to generate purchasing
efficiencies. Our purchasing teams are active in driving scale
benefits in many aspects of our procurement activities. The
significant effort to drive technically led formulation
simplification and thorough reviews of how and what we buy has led
to a steep fall in the number of components and chemicals used by
the Group, which realised a benefit of over GBP2 million compared
to the prior period. These purchasing benefits and a range of
efficiency initiatives in our factories have delivered improved
gross margins, which rose 1.3 percentage points to 36.8% (2015:
35.5%) despite the ongoing effect of lower unit sales pricing.
Overhead savings of GBP4.3 million were achieved in the six
months to December 2016, comprising further savings (in addition to
the GBP2.2 million achieved in the year to 30 June 2016) of GBP2.5
million representing early and complete delivery of the cost
savings required to balance the margin loss impact of the "customer
choices" project. In addition, a further overhead reduction of
GBP1.8 million has been achieved versus prior year comparatives as
the business remained vigilant on costs given the uncertainty
surrounding material pricing conditions.
The half year was a strong one for cash management with cash
generated from operations before exceptional items of GBP34.4
million (2015: GBP26.2m). Capital expenditure cash flow remained
steady at GBP7.4 million (2015: GBP5.6m) but is expected to
increase during the second half of the financial year as our
capital plans gain momentum in line with our expected GBP100
million capital expenditure investment objective over the coming
four years.
Cash outflow for exceptional items of GBP1.5 million (2015:
GBP3.5m) primarily reflects the impact of the charges taken in
previous years for central overhead restructuring.
Net cash flow before payments to shareholders was GBP19.0
million (2015: GBP13.9m). Cash payments made to shareholders during
the period amounted to GBP4.2 million (2015: GBP3.7m).
Consequently, half year-end net debt decreased to GBP82.9 million
(30 June 2016: GBP90.9m) comprising a strong net cash flow of
GBP14.8 million reduced by GBP6.8 million of translation impact as
a result of the weaker Sterling exchange rates on Euro and
USD-denominated borrowings. Reported half year-end net debt, if
translated using December 2015 exchange rates would have been
GBP71.3 million.
The Group's balance sheet remains robust with net assets of
GBP64.8 million (30 June 2016: GBP69.1m). Gearing improved further
to 56% (30 June 2016: 59%) and the debt cover ratio fell to 1:4x
(30 June 2016: 1:7x). The Group has significant borrowing capacity
with headroom of GBP134.0 million (2015: GBP94.6m) on committed
debt facilities. The Group traded throughout the period with ample
headroom on its banking covenants.
Segmental performance
In line with our year end reporting, we continue to separately
manage the Group's Household and PCA activities, and our segmental
reporting reflects this.
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 to
Household and PCA.
Household
The Household activities are managed by four regional teams,
ensuring key organisational responsibility within our management
structure. Whilst revenues for the four regions are split, trading
profits are only measured and reported at the total segment
level.
Reported revenues increased by 4.9% to GBP284.4 million (2015:
GBP271.1m) but at constant currency revenues were lower by 7.2%. Of
this sales decrease, GBP7.6 million related to the in-year effect
of our "customer choices" project and GBP11.3 million due to a
reduction in underlying volumes, of which an unusually strong
December 2015 comparative was responsible for GBP5.7 million. The
remaining revenue shortfall related to the effect of pricing
deflation which has been particularly noticeable within our North
region.
Half year Half year
to to Reported Constant
31 Dec 31 Dec
2016 2015 Change Currency
Revenue GBPm GBPm Change(1)
-------- --------- --------- -------- ---------
UK 79.7 85.8 (7.1%) (7.1%)
North 96.0 90.2 6.4% (10.7%)
South 39.2 34.2 14.6% (4.2%)
East 69.5 60.9 14.1% (3.9%)
284.4 271.1 4.9% (7.2%)
-------- --------- --------- -------- ---------
(1) Comparatives translated at 2017 exchange rates.
In the UK, revenues of GBP79.7 million compared to revenue of
GBP85.8 million in 2015, a decline of 7.1%. In addition to an
unusually high December 2015 comparative, the decrease reflected
lower volumes particularly within McBride branded SKUs as a number
of UK retailers delisted some secondary brands as they reduced
their SKU ranges offered to consumers. Approximately GBP3.1 million
of lost revenue resulted from our "customer choices" project.
The UK business imports materials used for manufacturing from
the EU, for which the Group has been hedged at rates consistent
with prior year averages in the first half year. In the second half
of this year, the UK business, along with our competitors, will
face some imported inflation and we will seek to mitigate this via
increased pricing actions with customers.
In the North region, overall sales were impacted by an
increasingly competitive market, particularly in France. Volume
decline of 7.3% during the period was in part due to the "customer
choices" project of 1.1%, in addition to price deflation of 1.8%
driven by an increasingly competitive environment.
Our South region reported underlying flat sales at constant
currency. Our Iberia business continues to show significant
improvement with volumes up 5.4% on prior period following new
business wins at the end of last financial year. Within Italy,
revenue is down primarily driven by the impact from our "customer
choices" project.
The East region, covering Germany, Poland and other East
European countries, saw volumes slightly down on prior year but
prices have remained consistent with the first half of last year.
Germany has continued to perform well with some significant new
Private Label contract wins during the period. In Poland, sales are
weaker as a result of certain key retailers shifting their business
model towards higher proportions of branded SKUs in store.
Headline profits increased in Household by 27.4% (11.3% at
constant currency), broadly matching the improvements seen in the
Group overall. In spite of slightly lower revenues, further
positive progress on margins and costs resulted in trading profit
margins in this segment rising from 7.7% to 9.3%.
Personal Care & Aerosols (PCA)
The PCA division comprises the Personal Care liquids, Skincare
and Aerosols businesses of McBride's European operations and also
the activities of McBride in Asia.
On a reported basis, revenues for this division grew by 4.4% to
GBP76.2 million (2015: GBP73.0m) while at constant currency,
revenues were lower by 6.2%. Within this segment revenues were
significantly higher in Asia, up 16.9% at constant currency. Our
European businesses saw volumes lower by 8% overall at constant
currency with the main markets for these products, UK and France,
continuing to see private label volumes under pressure from
branders and high levels of in-store promotional activity.
Overall reported profitability for this segment reduced by
GBP0.4 million to GBP0.9 million (2015: GBP1.3m). At constant
currency, profitability reduced by GBP0.7m reflecting the volume
challenges during the period within our European business.
In Asia, the local teams have successfully turned a break-even
operation to one that now makes underlying profit margins close to
the Group average.
Corporate Costs
Costs remain consistent with last half year at GBP4.5 million
(2015: GBP4.5m).
Outlook
For the second half year, current expectations are for constant
currency underlying revenues to be slightly lower year-on-year, in
line with the performance witnessed in the first half year. As
planned the impact from the "customer choices" project will reduce
second half revenues by approximately GBP6.0 million. A number of
business wins however, secured in the past six months, will start
to be evident in our top line as we start the new financial year in
July 2017.
Uncertainty in both the size and timing of raw material
inflation and changes to foreign exchange rates is to be expected
in the second half of the year. We will work closely with customers
to mitigate these but it is likely the second half will see some
lag effect between higher input prices and margin recovery.
While trading conditions in the second half are expected to
remain challenging, we believe our ongoing margin and cost
initiatives position us well to mitigate these effects. As such,
the Board's full year expectations remain unchanged.
Other financial information
Exceptional items
During the period ended 31 December 2016, the Group recognised
no exceptional items (2015: GBPnil).
Net finance costs
Net finance costs were GBP3.7 million (2015: GBP4.1m) with the
decrease mainly due to foreign exchange losses on financing
activities in the prior year not being incurred during the current
period.
Profit before taxation and tax rate
Reported profit before taxation was GBP18.8 million (2015:
GBP13.0m) with adjusted profit before taxation totalling GBP19.5
million (2015: GBP13.6m). The tax charge on adjusted profit before
taxation for the first half of 2016/17 of GBP6.0 million represents
a 31% effective tax rate (30 June 2016: 31%).
Earnings per share
On an adjusted basis, diluted earnings per share (EPS) increased
by 42.3% to 7.4 pence (2015: 5.2p) with basic EPS at 7.1 pence
(2015: 4.9p).
Payments to shareholders
In line with the new policy on payments to shareholders
implemented in September 2015, the Group expects to distribute
adjusted earnings to shareholders based on a dividend cover range
of 2x-3x, progressive with earnings of the Group, taking into
account funding availability.
The Board recommends an interim payment of 1.4 pence (2015:
1.2p) to shareholders in May and it is intended this will be issued
using the Company's B Share scheme.
Covenants
The Group's funding arrangements are subject to covenants,
representations and warranties that are customary for unsecured
borrowing facilities, including two financial covenants: Debt Cover
(the ratio of net debt to EBITDA) may not exceed 3:1 and Interest
Cover (the ratio of EBITDA to net interest) may not be less than
4:1. For the purpose of these calculations, net debt excludes
amounts drawn under the invoice discounting facilities. The Group
remains comfortably within these covenants.
Pensions
The Group operates a funded defined benefit scheme in the UK. At
31 December 2016, the Group recognised a deficit on its UK scheme
of GBP41.8 million (30 June 2016: GBP31.1m); the increase during
the period is principally due to both a fall in the applied
discount rate and an increase in expectations of long term
inflation.
The Group also has other unfunded post-employment benefit
obligations outside the UK that amounted to GBP1.8 million (30 June
2016: GBP1.8m).
Going Concern
The Group meets its funding requirements through internal cash
generation and bank credit facilities, most of which are committed
until April 2019.
At 31 December 2016, committed undrawn facilities amounted to
GBP134.0 million. The Group's forecasts and projections, taking
account of reasonably possible changes in trading performance, show
that the Group will be able to operate comfortably within its
current bank facilities.
The Group has a relatively conservative level of debt to
earnings. As a result, the Directors believe that the Group is well
placed to manage its business risks successfully despite the
current uncertain economic outlook. After making enquiries, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
the preparation of the financial statements.
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 condensed interim financial statements.
Key management compensation and transactions with the Group's
pension and post-employment schemes for the financial year ended 30
June 2016 are detailed in note 28 (page 106) of McBride plc's
Annual Report and Accounts 2016. A copy of McBride plc's Annual
Report and Accounts 2016 is available on McBride's website at
www.mcbride.co.uk. Although there have been changes to the
Executive Leadership Team since the year-end, there are no other
related party transactions.
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:
-- Market competitiveness
-- Change agenda
-- Input costs
-- Legislation and consumer trends
-- Financial risks
-- Breach of IT security
For greater detail of these risks, please refer to pages 22 to
24 of the McBride plc Annual Report and Accounts 2016 - which is
available on the Group's website www.mcbride.co.uk.
Forward looking statements
This announcement contains forward-looking statements that are
subject to risk factors associated with, among other things the
economic and business circumstances occurring from time to time in
the countries, sectors and markets in which the Group operates. It
is believed that the expectations reflected in these statements are
reasonable but they may be affected by a wide range of variables
which could cause actual results to differ materially from those
currently anticipated. No assurances can be given that the
forward-looking statements in this announcement will be
realised.
The forward-looking statements reflect the knowledge and
information available at the date of preparation of this
announcement and the Company undertakes no obligation to update
these forward-looking statements. Nothing in this announcement
should be construed as a profit forecast.
Responsibility statement
The Directors confirm that to the best of their knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the EU;
-- 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.
On behalf of the Board
Rik De Vos, Chief Executive
Officer
Chris Smith, Chief Financial
Officer
22 February 2017
CONDENSED INTERIM CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2016 2015 2016
Continuing Operations Note GBPm GBPm GBPm
----------------------------------- ---- --------- --------- ----------
Revenue 4 360.6 344.1 680.9
Cost of sales (227.9) (221.9) (437.1)
Gross profit 132.7 122.2 243.8
Distribution costs (23.8) (24.1) (46.5)
Administrative expenses (86.4) (81.0) (164.4)
---------
Operating profit 22.5 17.1 32.9
Net finance costs (3.7) (4.1) (7.1)
Profit before taxation 18.8 13.0 25.8
Taxation 5 (5.8) (4.0) (8.8)
----------------------------------- ---- --------- --------- ----------
Profit for the period attributable
to owners of
the Parent 13.0 9.0 17.0
----------------------------------- ---- --------- --------- ----------
Earnings per ordinary share 6
Basic 7.1p 4.9p 9.3p
Diluted 7.1p 4.9p 9.3p
----------------------------------- ---- --------- --------- ----------
Operating profit 22.5 17.1 32.9
Adjusted for:
Amortisation of intangible
assets 0.4 0.5 0.9
Exceptional items 7 - - 2.4
----------------------------------- ---- --------- --------- ----------
Adjusted operating profit 22.9 17.6 36.2
----------------------------------- ---- --------- --------- ----------
Profit before taxation 18.8 13.0 25.8
Adjusted for:
Amortisation of intangibles
assets 0.4 0.5 0.9
Exceptional items - - 2.4
Unwind of discount on contingent
consideration 0.1 - 0.1
Unwind of discount on provisions 0.2 0.1 0.2
----------------------------------- ---- --------- --------- ----------
Adjusted profit before taxation 19.5 13.6 29.4
----------------------------------- ---- --------- --------- ----------
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
2016 2015 2016
GBPm GBPm GBPm
------------------------------------------ --------- --------- ----------
Profit for the period attributable
to owners of the Parent 13.0 9.0 17.0
------------------------------------------ --------- --------- ----------
Other comprehensive income/(expense)
Items that may be reclassified
to profit and loss:
Currency translation differences
on foreign subsidiaries 3.7 3.0 12.0
Loss on net investment hedges (2.3) (2.5) (10.4)
Gain on cash flow hedges 4.8 3.9 12.4
Loss on cash flow hedges transferred
to profit or loss (8.1) (3.1) (10.3)
Taxation relating to items above 0.1 (0.1) (0.6)
------------------------------------------ --------- --------- ----------
(1.8) 1.2 3.1
Items that will not be reclassified
to profit or loss:
Net actuarial loss on post-employment
benefits (11.9) (1.2) (2.6)
Taxation relating to item above 0.8 (0.7) (0.4)
------------------------------------------ --------- --------- ----------
(11.1) (1.9) (3.0)
------------------------------------------ --------- --------- ----------
Total other comprehensive expense (12.9) (0.7) 0.1
------------------------------------------ --------- --------- ----------
Total comprehensive income for
the period 0.1 8.3 17.1
------------------------------------------ --------- --------- ----------
CONDENSED INTERIM CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
as at as at as at
31 Dec 31 Dec 30 June
2016 2015 2016
Note GBPm GBPm GBPm
----------------------------------- ---- --------- --------- -------
Non-current assets
Goodwill 17.5 17.6 17.5
Other intangible assets 2.8 2.1 2.5
Property, plant and equipment 8 136.4 126.9 136.2
Derivative financial instruments 9 15.2 12.1 12.7
Deferred tax assets 10.5 9.0 9.3
Other non-current assets 0.5 0.5 0.5
182.9 168.2 178.7
----------------------------------- ---- --------- --------- -------
Current assets
Inventories 81.2 74.2 75.7
Trade and other receivables 132.2 129.6 135.7
Derivative financial instruments 9 0.7 1.3 2.6
Cash and cash equivalents 10 28.9 27.7 24.8
Assets classified as held
for sale 1.3 1.1 1.2
244.3 233.9 240.0
----------------------------------- ---- --------- --------- -------
Total assets 427.2 402.1 418.7
----------------------------------- ---- --------- --------- -------
Current liabilities
Trade and other payables 187.2 176.1 181.7
Borrowings 9 36.8 29.3 30.3
Derivative financial instruments 9 0.9 0.4 1.2
Current tax liabilities 5.9 5.9 2.9
Provisions 2.1 1.4 3.5
232.9 213.1 219.6
Non-current liabilities
Trade and other payables 9 - 0.5 2.3
Borrowings 9 75.0 84.7 85.4
Derivative financial instruments 9 0.1 - -
Pensions and other post-employment
benefits 11 43.6 32.3 32.9
Provisions 3.5 3.3 2.9
Deferred tax liabilities 7.3 5.8 6.5
129.5 126.6 130.0
----------------------------------- ---- --------- --------- -------
Total liabilities 362.4 339.7 349.6
Net assets 64.8 62.4 69.1
Equity
Issued share capital 18.3 18.3 18.3
Share premium account 92.3 98.9 96.7
Other reserves 46.8 40.4 44.4
Accumulated loss (93.2) (95.8) (90.9)
----------------------------------- ---- --------- --------- -------
Equity attributable to owners
of the Parent 64.2 61.8 68.5
Non-controlling interests 0.6 0.6 0.6
----------------------------------- ---- --------- --------- -------
Total equity 64.8 62.4 69.1
----------------------------------- ---- --------- --------- -------
CONDENSED INTERIM CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 June
Note 2016 2015 2016
GBPm GBPm GBPm
----------------------------------- ---- --------- --------- ----------
Operating activities
Profit before taxation 18.8 13.0 25.8
Net finance costs 3.7 4.1 7.1
Exceptional items 7 - - 2.4
Share-based payments charge 1.2 0.7 1.8
Depreciation of property,
plant and equipment 8 9.7 9.3 18.2
Amortisation of intangible
assets 0.4 0.5 0.9
----------------------------------- ---- --------- --------- ----------
Operating cash flow before
changes in working capital 33.8 27.6 56.2
Decrease in receivables 7.2 5.4 11.0
Increase in inventories (3.7) (6.1) (1.5)
(Decrease)/Increase in payables (1.4) 0.6 (10.1)
----------------------------------- ---- --------- --------- ----------
Operating cash flow after
changes in working capital 35.9 27.5 55.6
Additional cash funding of
pension schemes (1.5) (1.3) (3.1)
----------------------------------- ---- --------- --------- ----------
Cash flow from operations
before exceptional items 34.4 26.2 52.5
Cash outflow in respect of
exceptional items (1.5) (3.5) (4.2)
----------------------------------- ---- --------- --------- ----------
Cash generated from operations 32.9 22.7 48.3
Interest paid (2.8) (2.7) (5.2)
Taxation paid (2.6) (0.2) (8.2)
Net cash from operating activities 27.5 19.8 34.9
----------------------------------- ---- --------- --------- ----------
Investing activities
Proceeds from sale of non-current
assets - - 0.1
Purchase of property, plant
and equipment (6.8) (5.1) (11.5)
Purchase of intangible assets (0.6) (0.5) (1.3)
Settlement of derivatives
used in net investment hedging (0.9) (0.3) (2.5)
Net cash used in investing
activities (8.3) (5.9) (15.2)
----------------------------------- ---- --------- --------- ----------
Financing activities
Redemption of B Shares (4.2) (3.7) (5.8)
Drawdown of borrowings 27.6 60.0 131.2
Repayment of borrowings (38.6) (66.1) (145.3)
Repurchase of own Shares (0.2) - -
Capital element of finance
lease rentals (0.1) (0.2) (0.1)
Net cash generated used in
financing activities (15.5) (10.0) (20.0)
----------------------------------- ---- --------- --------- ----------
Increase/(decrease) in net
cash and cash equivalents 3.7 3.9 (0.3)
Net cash and cash equivalents
at start of the period 24.8 23.3 23.3
Currency translation differences 0.4 0.5 1.8
Net cash and cash equivalents
at end of the period 28.9 27.7 24.8
----------------------------------- ---- --------- --------- ----------
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Other reserves
--------------------------------
Equity
attributable
Cash to owners
Issued Share flow Currency Capital of the Non-
share premium hedge translation redemption Accumulated Parent controlling Total
capital account reserve reserve reserve loss Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
At 1 July 2016 18.3 96.7 (0.5) (3.0) 47.9 (90.9) 68.5 0.6 69.1
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Profit for the
period - - - - - 13.0 13.0 - 13.0
Other
comprehensive
income /(expense)
Items that may
be reclassified
to profit or
loss:
Currency
translation
differences
on foreign
subsidiaries - - - 3.7 - - 3.7 - 3.7
Loss on net
investment
hedges - - - (2.3) - - (2.3) - (2.3)
Gain on cash
flow hedges
in the period - - 4.8 - - - 4.8 - 4.8
Loss on cash
flow hedges
transferred
to profit or
loss - - (8.1) - - - (8.1) - (8.1)
Taxation relating
to items above - - 0.1 - - - 0.1 - 0.1
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
- - (3.2) 1.4 - - (1.8) - (1.8)
Items that will
not be
reclassified
to profit or
loss:
Net actuarial
loss on post
employment
benefits - - - - - (11.9) (11.9) - (11.9)
Taxation relating
to items above - - - - - 0.8 0.8 - 0.8
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
- - - - - (11.1) (11.1) - (11.1)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Total other
comprehensive
income/(expense) - - (3.2) 1.4 - (11.1) (12.9) - (12.9)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Total
comprehensive
income/(expense) - - (3.2) 1.4 - 1.9 0.1 - 0.1
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Transactions
with owners
of the Parent
Issue of B Shares - (4.4) - - - - (4.4) - (4.4)
Redemption of
B Shares - - - - 4.2 (4.2) - - -
Share-based
payments charge - - - - - 0.2 0.2 - 0.2
Repurchase of
own shares - - - - - (0.2) (0.2) - (0.2)
At 31 December
2016 18.3 92.3 (3.7) (1.6) 52.1 (93.2) 64.2 0.6 64.8
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Other reserves
--------------------------------
Equity
attributable
Cash to owners
Issued Share flow Currency Capital of the Non-
share premium hedge translation redemption Accumulated Parent controlling Total
capital account reserve reserve reserve loss Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
At 1 July 2015 18.3 102.4 (2.0) (4.6) 42.1 (99.3) 56.9 0.6 57.5
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Profit for the
period - - - - - 9.0 9.0 - 9.0
Other
comprehensive
income /(expense)
Items that may
be reclassified
to profit or
loss:
Currency
translation
differences
on foreign
subsidiaries - - - 3.0 - - 3.0 - 3.0
Loss on net
investment
hedges - - - (2.5) - - (2.5) - (2.5)
Gain on cash
flow hedges
in the period - - 3.9 - - - 3.9 - 3.9
Loss on cash
flow hedges
transferred
to profit or
loss - - (3.1) - - - (3.1) - (3.1)
Taxation relating
to items above - - (0.1) - - - (0.1) - (0.1)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
- - 0.7 0.5 - - 1.2 - 1.2
Items that will
not be
reclassified
to profit or
loss:
Net actuarial
loss on post
employment
benefits - - - - - (1.2) (1.2) - (1.2)
Taxation relating
to items above - - - - - (0.7) (0.7) - (0.7)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
- - - - - (1.9) (1.9) - (1.9)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Total other
comprehensive
income/(expense) - - 0.7 0.5 - (1.9) (0.7) - (0.7)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Total
comprehensive
income - - 0.7 0.5 - 7.1 8.3 - 8.3
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Transactions
with owners
of the Parent
Issue of B Shares - (3.5) - - - - (3.5) - (3.5)
Redemption of
B Shares - - - - 3.7 (3.7) - - -
Share-based
payments charge - - - - - 0.1 0.1 - 0.1
At 31 December
2015 18.3 98.9 (1.3) (4.1) 45.8 (95.8) 61.8 0.6 62.4
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Other reserves
--------------------------------
Equity
attributable
Cash to owners
Issued Share flow Currency Capital of the Non-
share premium hedge translation redemption Accumulated Parent controlling Total
capital account reserve reserve reserve loss Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
At 1 July 2015 18.3 102.4 (2.0) (4.6) 42.1 (99.3) 56.9 0.6 57.5
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Profit for the
year - - - - - 17.0 17.0 - 17.0
Other
comprehensive
income/(expense)
Items that may
be reclassified
to profit or
loss:
Currency
translation
differences
on foreign
subsidiaries - - - 12.0 - - 12.0 - 12.0
Loss on net
investment
hedges - - - (10.4) - - (10.4) - (10.4)
Gain on cash
flow hedges
in the year - - 12.4 - - - 12.4 - 12.4
Loss on cash
flow hedges
transferred
to profit or
loss - - (10.3) - - - (10.3) - (10.3)
Taxation relating
to items above - - (0.6) - - - (0.6) - (0.6)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
- - 1.5 1.6 - - 3.1 - 3.1
Items that will
not be
reclassified
to profit or
loss:
Net actuarial
loss on post
employment
benefits - - - - - (2.6) (2.6) - (2.6)
Taxation relating
to items above - - - - - (0.4) (0.4) - (0.4)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
- - - - - (3.0) (3.0) - (3.0)
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Total other
comprehensive
income/(expense) - - 1.5 1.6 - (3.0) 0.1 - 0.1
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Total
comprehensive
income - - 1.5 1.6 - 14.0 17.1 - 17.1
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
Transactions
with owners
of the Parent
Issue of B Shares - (5.7) - - - - (5.7) - (5.7)
Redemption of
B Shares - - - - 5.8 (5.8) - - -
Share-based
payments charge - - - - - 0.2 0.2 - 0.2
At 30 June 2016 18.3 96.7 (0.5) (3.0) 47.9 (90.9) 68.5 0.6 69.1
----------------- ------- -------- ------- ----------- ---------- ----------- ------------ ----------- ------
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
1) Basis of preparation
McBride plc ('the Company') is a company incorporated and
domiciled in the United Kingdom. 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')
comprise of the leading European manufacturer and supplier of
Co-manufactured and Private Label products for the Household and
Personal Care market.
This half-year report has been prepared in accordance with the
Disclosure and Transparency Rules of the United Kingdom Financial
Conduct Authority; IAS 34 'Interim Financial Reporting' as adopted
by the European Union; on the basis of the accounting policies and
the recognition and measurement requirements of IFRS applied in the
financial statements at 30 June 2016 and those standards that have
been endorsed by the European Union and will be applied at 30 June
2017. This report should be read in conjunction with the financial
statements for the year ended 30 June 2016.
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 been reviewed, not audited. The Group's statutory
accounts were approved by the Directors on 7 September 2016 and
have been reported on by PricewaterhouseCoopers LLP and delivered
to the Registrar of Companies. The report of PricewaterhouseCoopers
LLP was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 of the Companies Act 2006.
Going concern basis
The Group meets its funding requirements through internal cash
generation and bank credit facilities, most of which are committed
until April 2019.
At 31 December 2016, committed undrawn facilities amounted to
GBP134.0 million. The Group's forecasts and projections, taking
account of reasonably possible changes in trading performance, show
that the Group will be able to operate comfortably within its
current bank facilities.
The Group has a relatively conservative level of debt to
earnings. As a result, the Directors believe that the Group is well
placed to manage its business risks successfully despite the
current uncertain economic outlook. After making enquiries, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis.
The condensed interim consolidated financial statements were
approved by the Board on 22 February 2017.
2) Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 30 June 2016.
The Group has applied the following standards and amendments for
the first time for the annual reporting period commencing 1 July
2016:
- Accounting for acquisitions of interests in joint operations - Amendments to IFRS 11;
- Clarification of acceptable methods of depreciation and
amortisation - Amendments to IAS 16 and IAS 38;
- Annual improvements to IFRSs 2012 - 2014 cycle; and
- Disclosure initiative - amendments to IAS 1.
All of the above changes to accounting policies will have no
material financial effect on the consolidated financial statements
for the year ended 30 June 2017.
Adjusted results
The Group believes that adjusted operating profit, adjusted
profit before taxation and adjusted earnings per share provide
additional useful information to shareholders on the underlying
performance achieved by the Group. These measures are used for
internal performance analysis and short and long-term incentive
arrangements for employees. Adjusting items include amortisation of
intangible assets, exceptional items, any non-cash financing costs
from unwind of discount on initial recognition of contingent
consideration, unwind of discount on provisions and any related
tax.
Taxation
Taxation in the interim period is accrued using the tax rate
that would be applicable to the expected annual profit or loss.
Accounting standards issued but not yet adopted
Recently issued accounting standards that are relevant to the
Group but have not yet been adopted are outlined below:
- IFRS 9 - Financial Instruments;
- IFRS 15 - Revenue from Contracts with Customers; and
- IFRS 16 - Leases.
The Group will undertake an assessment of the impact of these
new standards and interpretations in due course. There are no other
standards that are not yet effective and that would be expected to
have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
3) Critical accounting judgments and estimates
The preparation of the condensed interim financial statements
requires management to make judgments, 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 these condensed interim financial statements, the
significant judgments 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 2016.
4) Segment information
Financial information is presented to the Board by product
category for the purposes of allocating resources within the Group
and assessing the performance of the Group's businesses. It is
considered that Household Products have different market
characteristics to Personal Care & Aerosols in terms of
volumes, market share and production requirements. Accordingly, the
Group's operating segments are determined by product category.
The Board uses adjusted operating profit to measure the
profitability of the Group's businesses. Adjusted operating profit
is, therefore, the measure of segment profit presented in the
Group's segment disclosures. Adjusted operating profit represents
operating profit before specific items that are considered to
hinder comparison of the trading performance of the Group's
businesses either period-on-period or with other businesses. During
the periods under review, the items excluded from operating profit
in arriving at adjusted operating profit were the amortisation
of
intangibles assets and exceptional items.
Analysis by reportable segment
Household
------------------------------------------------
Personal
Care
Total & Aerosols Total Corporate Total
UK North(1) South(2) East(3) Household (4) Segments (5) Group
31 December
2016 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Segment revenue 79.7 96.0 39.2 69.5 284.4 76.2 360.6 - 360.6
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Adjusted operating
profit/(loss) 26.5 0.9 27.4 (4.5) 22.9
Amortisation
of intangible
assets (0.4)
Exceptional
items (see note
7) -
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Operating profit 22.5
Net finance
costs (3.7)
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Profit before
taxation 18.8
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Inventories 62.7 18.5 81.2 - 81.2
Capital expenditure 6.6 0.8 7.4 - 7.4
Amortisation
and depreciation 8.6 1.5 10.1 - 10.1
==== ======== ======== ========= =========== =========== ========= ========= ======
(1) France, Belgium, Holland and Scandinavia
(2) Italy and Spain
(3) Germany, Poland, Luxembourg & other Eastern Europe
(4) Includes Asia
(5) Corporate represents costs related to the Board, the
Executive leadership team and key supporting functions.
Household
------------------------------------------------
Personal
Care
Total & Aerosols Total Corporate Total
UK North(1) South(2) East(3) Household (4) Segments (5) Group
31 December 2015 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Segment revenue 85.8 90.2 34.2 60.9 271.1 73.0 344.1 - 344.1
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Adjusted operating
profit/(loss) 20.8 1.3 22.1 (4.5) 17.6
Amortisation
of intangible
assets (0.5)
Exceptional items
(see note 7) -
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Operating profit 17.1
Net finance costs (4.1)
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Profit before
taxation 13.0
---- -------- -------- --------- ----------- ----------- --------- --------- ------
Inventories 54.6 19.6 74.2 - 74.2
Capital expenditure 5.1 0.5 5.6 - 5.6
Amortisation
and depreciation 8.3 1.5 9.8 - 9.8
==== ======== ======== ========= =========== =========== ========= ========= ======
Household
-------------------------------------------------
Personal
Care
Total & Aerosols Total Corporate Total
UK North(1) South(2) East(3) Household (4) Segments (5) Group
30 June 2016 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----- -------- -------- --------- ----------- ----------- --------- --------- ------
Segment revenue 164.9 179.0 69.2 121.9 535.0 145.9 680.9 - 680.9
----- -------- -------- --------- ----------- ----------- --------- --------- ------
Adjusted operating
profit/(loss) 42.7 2.7 45.4 (9.2) 36.2
Amortisation
of intangible
assets (0.9)
Exceptional items (2.4)
----- -------- -------- --------- ----------- ----------- --------- --------- ------
Operating profit 32.9
Net finance costs (7.1)
----- -------- -------- --------- ----------- ----------- --------- --------- ------
Profit before
taxation 25.8
----- -------- -------- --------- ----------- ----------- --------- --------- ------
Inventories 56.9 18.8 75.7 - 75.7
Capital expenditure 10.6 2.2 12.8 - 12.8
Amortisation
and depreciation 16.0 3.1 19.1 - 19.1
===== ======== ======== ========= =========== =========== ========= ========= ======
5) Taxation
The tax charge reflects an effective tax rate of 31% (30 June
2016: 31%) on adjusted profit before taxation of GBP19.5 million
(30 June 2016: GBP29.4m).
6) Earnings per ordinary share
Basic earnings per ordinary share is calculated by dividing the
profit 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 0.7 million shares
(2015: 0.6m shares), being the weighted average number of own
shares held during the year in relation to employee share
schemes.
Unaudited
Half Unaudited Audited
year Half year Year
to to ended
31 Dec 31 Dec 30 Jun
Reference 2016 2015 2016
------------------------------------- ----------- ---------- ----------- ----------
Weighted average number of ordinary
shares in issue (million) a 182.1 182.2 182.2
Effect of dilutive share incentive
plans (million) 0.7 0.4 0.4
-------------------------------------------------- ---------- ----------- ----------
Weighted average number of ordinary
shares for calculating diluted
earnings per share (million) b 182.8 182.6 182.6
------------------------------------- ----------- ---------- ----------- ----------
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares in issue assuming the
conversion of all potentially dilutive ordinary shares. During the
period, the Company had both equity-settled LTIP awards and
Deferred Annual Bonus Plan awards (together the "share incentive
plans") that are potentially dilutive ordinary shares.
Adjusted earnings per share measures are calculated based on
profit for the year attributable to owners of the Company before
adjusting items as follows:
Unaudited Unaudited
Half Half
year year Audited
to to Year ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Reference GBPm GBPm GBPm
----------------------------------- ----------- ----------- ---------- -------------
Earnings for calculating basic
and diluted earnings per share c 13.0 9.0 17.0
Adjusted for:
Amortisation of intangible assets 0.4 0.5 0.9
Exceptional items (see note 7) - - 2.4
Unwind of discount on contingent
consideration 0.1 - 0.1
Unwind of discount on provisions 0.2 0.1 0.2
Taxation relating to the above
items (0.2) (0.1) (0.4)
------------------------------------------------ ----------- ---------- -------------
Earnings for calculating adjusted
earnings per share d 13.5 9.5 20.2
----------------------------------- ----------- ----------- ---------- -------------
Unaudited
Unaudited Half
Half year year Audited
to to Year ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
pence pence pence
----------------------------------- ----------- ----------- ---------- -------------
Basic earnings per share c/a 7.1 4.9 9.3
Diluted earnings per share c/b 7.1 4.9 9.3
Adjusted basic earnings per
share d/a 7.4 5.2 11.1
Adjusted diluted earnings per
share d/b 7.4 5.2 11.1
----------------------------------- ----------- ----------- ---------- -------------
7) Exceptional items
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 better understand 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 2016, the Group recognised
no exceptional costs (2015: GBPnil).
8) Property, plant and equipment
Total
GBPm
----------------------------------------------- -----
Net book value at 1 July 2016 (audited) 136.2
Exchange movements 3.3
Additions 6.8
Disposals (0.2)
Depreciation charge (9.7)
Net book value at 31 December 2016 (unaudited) 136.4
----------------------------------------------- -----
Capital commitments as at 31 December 2016 amounted to GBP7.0
million (2015: GBP2.5m).
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 statements do 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 financial statements as at 30
June 2016. There have been no material changes in the risk
management policies since the year-end.
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
-- Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities;
-- Level 2 - inputs other than Level 1 that are observable for
the asset or liability, either directly (prices) or indirectly
(derived from prices); and
-- Level 3 - inputs that are not based on observable market data (unobservable inputs).
Unaudited Unaudited Audited
as at as at as at
31 Dec 31 Dec 30 Jun
2016 2015 2016
GBPm GBPm GBPm
--------------------------------- --------- --------- -------
Assets
Level 2:
Derivative financial
instruments
- Forward currency
contracts 0.8 1.5 2.4
- Cross currency interest
rate swaps 15.1 11.9 12.7
- Contract for Difference
(HDPE) - - 0.2
------------------------------------ --------- --------- -------
Total assets 15.9 13.4 15.3
------------------------------------ --------- --------- -------
Liabilities
Level 2:
Derivative financial
instruments
- Forward currency
contracts (1.0) (0.4) (1.2)
(1.0) (0.4) (1.2)
Level 3:
Trade and other payables
- Contingent consideration (2.6) (0.5) (2.3)
----------------------------------- --------- --------- -------
Total liabilities (3.6) (0.9) (3.5)
----------------------------------- --------- --------- -------
Derivative financial instruments
Derivative financial instruments comprise the foreign currency
derivatives, non-deliverable commodity derivatives and interest
rate derivatives that are held by the Group in designated hedging
relationships. Foreign currency forward contracts are measured by
reference to prevailing forward exchange rates. Commodity forward
contracts are measured by the difference to prevailing market
prices. Foreign currency options are measured using a variant of
the Monte Carlo valuation model. Interest rate swaps and caps are
measured by discounting the related cash flows using yield curves
derived from prevailing market interest rates.
Contingent consideration
Contingent consideration is measured at fair value based upon
management's estimates of the future sales and profitability of the
acquired business. At each reporting date, the Directors estimate
the contingent consideration payable in relation to the 70%
interest acquired and the liability to acquire the remaining 30%
interest.
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 Jun
2016 2015 2016
GBPm GBPm GBPm
----------------- --------- --------- -------
Current 36.8 29.3 30.3
Non current 75.0 84.7 85.4
Total borrowings 111.8 114.0 115.7
-------------------- --------- --------- -------
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
-- Trade and other payables
10) Net debt
Audited Unaudited
as at as at
30 Jun Exchange 31 Dec
2016 Cash flow differences 2016
GBPm GBPm GBPm GBPm
--------------------------- -------- ---------- ------------- ----------
Cash and cash equivalents 24.8 3.7 0.4 28.9
Overdrafts (8.3) 4.2 (0.1) (4.2)
Bank and other loans (106.9) 6.8 (7.1) (107.2)
Finance lease liabilities (0.5) 0.1 - (0.4)
--------------------------- -------- ---------- ------------- ----------
Net debt (90.9) 14.8 (6.8) (82.9)
--------------------------- -------- ---------- ------------- ----------
11) Pensions and post-employment benefits.
The Group operates a number of post-employment benefit
arrangements. In the UK, the Group operates a defined benefit
pension scheme and defined contribution schemes. Together, these
schemes cover most of the Group's UK employees. Elsewhere in
Europe, the Group has a number of unfunded post-employment benefit
arrangements.
At 31 December 2016, the Group recognised a deficit on its UK
Defined Benefit pension plan of GBP41.8 million (30 June 2016:
GBP31.1m). The Group's post-employment benefit obligations outside
the UK amounted to GBP1.8 million (30 June 2016: GBP1.8m).
Defined Benefit schemes had the following effect on the Group's
results and financial position:
Unaudited Unaudited Audited
Half Half Year
year to year to ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
GBPm GBPm GBPm
------------------------------------- --------- --------- -------
Profit or loss
Service cost and administration
expenses (0.3) (0.9) (1.5)
------------------------------------- --------- --------- -------
Charge to operating profit (0.3) (0.9) (1.5)
------------------------------------- --------- --------- -------
Net interest cost on defined benefit
obligation (0.5) (0.6) (1.1)
------------------------------------- --------- --------- -------
Charge to profit before taxation (0.8) (1.5) (2.6)
------------------------------------- --------- --------- -------
Other comprehensive expense
Net actuarial loss (11.9) (1.2) (2.6)
------------------------------------- --------- --------- -------
Other comprehensive expense (11.9) (1.2) (2.6)
------------------------------------- --------- --------- -------
Unaudited Unaudited Audited
as at as at as at
31 Dec 31 Dec 30 Jun
2016 2015 2016
GBPm GBPm GBPm
------------------------------------- --------- --------- -------
Balance sheet
Defined benefit obligations:
UK - funded (162.1) (133.5) (145.2)
Other - unfunded (1.8) (1.6) (1.8)
------------------------------------- --------- --------- -------
(163.9) (135.1) (147.0)
Fair value of scheme assets 120.3 102.8 114.1
Deficit on the schemes (43.6) (32.3) (32.9)
------------------------------------- --------- --------- -------
Following consultation with staff and the UK plan's Trustees,
the UK Defined Benefit plan was closed to future service accrual
from 29 February 2016. Staff affected by this change were offered a
new defined contribution scheme from that date.
For accounting purposes, the Fund's benefit obligation as at 31
December 2016 has been calculated based on data gathered for the
triennial actuarial valuation as at March 2015 and by applying
assumptions made by the Group on the advice of an independent
actuary in accordance with IAS 19, 'Employee Benefits'.
Following the last triennial valuation at March 2015, the
Company and Trustees agreed a new deficit reduction plan based on
the scheme funding deficit of GBP44.2 million. The deficit cash
funding requirement of GBP3.0 million per annum took effect from 31
March 2015.
12) Payments to shareholders
Payments to ordinary shareholders are made by way of the issue
of B Shares in place of income distributions. Ordinary shareholders
are able to redeem any number of the B Shares issued to them for
cash. Any B Shares that they retain attract a dividend of 75% of
LIBOR on the 0.1 pence nominal value of each share, paid on a
twice-yearly basis.
Payments to ordinary shareholders made or proposed in respect of
each period were as follows:
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 31 Dec 30 Jun
2016(*) 2015 2016
-------- --------- --------- ----------
Interim 1.4p 1.2p 1.2p
Final n/a n/a 2.4p
-------- --------- --------- ----------
* Interim payment to shareholders that is not recognised within
these condensed interim consolidated financial statements.
Movements in the B Shares were as
follows: Nominal
Number value
000 GBPm
---------------------------------- ----------- -------
At 1 July 2015 (audited) 969,007 1.0
Issued 3,461,977 3.5
Redeemed (3,674,427) (3.7)
---------------------------------- ----------- -------
At 31 December 2015 (unaudited) 756,557 0.8
---------------------------------- ----------- -------
Issued 2,188,512 2.2
Redeemed (2,086,541) (2.1)
---------------------------------- ----------- -------
At 30 June 2016 (audited) 858,528 0.9
---------------------------------- ----------- -------
Issued 4,373,024 4.4
Redeemed (4,231,289) (4.2)
---------------------------------- ----------- -------
At 31 December 2016 (unaudited) 1,000,263 1.0
---------------------------------- ----------- -------
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 condensed interim financial statements.
Key management compensation and transactions with the Group's
pension and post-employment schemes for the financial year ended 30
June 2016 are detailed in note 28 (page 106) McBride plc's Annual
Report and Accounts 2016. A copy of McBride plc's Annual Report and
Accounts 2016 is available on McBride's website at
www.mcbride.co.uk. Although there have been changes to the
Executive Leadership Team since the year end, there are no other
related party transactions.
14) 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:
-- Organic revenue growth - change in revenue adjusted for the
effect of exchange rate movements (constant currency).
-- Adjusted operating profit - operating profit before adjusting items.
-- Adjusted operating margin - adjusted operating profit as a percentage of revenue.
-- Labour cost/revenue - labour cost as a percentage of revenue.
-- Customer Service Level - volume of products delivered in the
correct volumes and within agreed timescales as a percentage of
total volumes ordered by customers.
-- Adjusted diluted earnings per share - profit attributable to
shareholders before adjusting items divided by the weighted average
number of ordinary shares used for calculating diluting earnings
per share.
-- Return on capital employed - adjusted operating profit as a
percentage of average year-end net assets excluding net debt.
Other information
Financial calendar for the year ending 30 June 2017
Payments to shareholders
-------------------------- ----------------------- ----------------
Interim Announcement 22 February 2017
Entitlement to B Shares 21 April 2017
Redemption of B Shares 26 May 2017
Final Announcement 7 September
2017
Entitlement to B Shares 27 October
2017
Redemption of B Shares 1 December
2017
------------------------ -----------------------------
Results
------------------------ ------------------------- ----------------
Interim Announcement 22 February
2017
Preliminary statement Announcement 7 September
for full year 2017
Annual Report and Circulated September 2017
Accounts 2017
Annual General Meeting To be held 24 October 2017
-------------------------- --------------------------- ------------------
Exchange rates
The exchange rates used for conversion to Sterling were as
follows:
Unaudited Unaudited Audited
Half year Half year
to to Year ended
31 Dec 30 June
31 Dec 2016 2015 2016
-------------------- ----------- --------- ----------
Average rate:
Euro 1.16 1.39 1.34
US Dollar 1.28 1.53 1.48
Polish Zloty 5.08 5.87 5.74
Czech Koruna 31.47 37.62 36.19
Malaysian Ringgit 5.35 6.39 6.14
Australian Dollar 1.69 2.12 2.04
Chinese Yuan 8.62 9.73 9.55
Closing rate:
Euro 1.17 1.36 1.21
US Dollar 1.23 1.48 1.34
Polish Zloty 5.15 5.81 5.37
Czech Koruna 31.56 36.82 32.83
Malaysian Ringgit 5.52 6.40 5.36
Australian Dollar 1.70 2.10 1.81
Chinese Yuan 8.55 9.62 8.92
-------------------- ----------- --------- ----------
Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation which came
into effect on 3 July 2016.
-Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGZZNMZGNZM
(END) Dow Jones Newswires
February 22, 2017 02:00 ET (07:00 GMT)
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