McBride Interim Results 2015

1. McBride plc
Interim Results
PresentationPresentation
5 February 2015
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2. Headlines
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3. 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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4. Financial Headlines
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5. Financial Headlines
H1
2014/15
H1
2013/14
Y/Y
H1
2013/14
Y/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.

6. 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.

7. 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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8. 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.

9. 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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10. 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.

11. 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)

12. 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)

13. 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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14. Business Performance
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15. 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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16. 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)%

17. 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 PrivateLabel 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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18. 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%
%PrivateLabelVolumeshare
(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
%PrivateLabelVolumeshare
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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19. UK customer initiatives
• End of plinth value positioning
• Product benefits highlighted at POS
• Increased shelf distribution
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• Combination product deals

20. 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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21. Operations – other cost drivers
• Product cost engineering
• Sourcing decisions (internal & external)
• Distribution costs
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• Overheads
• Key capital projects

22. 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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23. Growth through NPD
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24. 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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25. 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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26. 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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27. 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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28. 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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29. Q&AQ&A
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