Slide 1: 2016 Interim Results
a MACFARLANE 2016 Intenm Results
Slide 2: Contents
Contents • Executive Summary • 2016 Interim results/cash flows • Business Review • Packaging Distribution • Manufacturing Operations • Pension Scheme Deficit • 2016 Key Actions • Conclusions 2
Slide 3: Executive Summary
Executive Summary H1 2016 H1 2015 Profit before tax £2.00m £1.85m +8.1% • Group sales £81.5m, 3.7% up – Distribution 5.5% Manufacturing (9.1%) • Distribution sales growth is substantially acquisition driven • Acquisitions all performing to plan – Colton/McNeil now integrated • Organic growth from in
Slide 4: Financial Summary H1 2016
Financial Summary Financial Summary H1 2016 Revenue Profit before tax EBITDA Margin Revenue and Operating Profit ▲4% ▲8% 4.4% Pre-tax ROCE Bank debt Pension Deficit Balance sheet Management and Cash Flow 12.3% ▲£3.6m ▲£1.1m Diluted EPS EPS Dividend per share EPS and Dividend ▲6% 1.35p ▲ 0.55p 4
Slide 5: Results £m
Results £m Results £m H1 2016 H1 2015 H2 2015 Sales 81.5 78.6 90.5 Gross Profit 32.0% 26.1 31.3% 24.6 31.6% 28.6 Overheads exc. DA 22.6 21.4 22.1 EBITDA 3.5 3.2 6.5 Depreciation/amortisation 1.0 0.9 1.1 Operating profit 2.5 2.3 5.4 Interest 0.5 0.4 0.5 Profit before tax 2.0 1.9 4.9 Diluted EPS 1.34p
Slide 6: Cash flow £m
Cash flow £m H1 2016 H1 2015 H2 2015 EBIT 2.5 2.3 5.4 DA 1.0 0.9 1.1 EBITDA 3.5 3.2 6.5 Working Capital (0.0) (0.4) (0.5) Interest (0.5) (0.4) (0.5) Acquisitions (2.7) (0.2) (3.7) Share placing 0.0 0.0 0.0 Tax (0.6) (0.1) (0.6) Capital expenditure (0.8) (0.4) (0.1) Pension (1.4) (1.4) (1.3) Dividend
Slide 7: Packaging Distribution
Packaging Distribution H1 H1 H2 £m 2016 2015 2015 Revenue 70.0 66.3 77.0 Gross margin 29.2% 29.3% 29.6% Overheads 18.2 17.4 18.1 Operating profit 2.3 2.1 4.7 OP Margin 3.2% 3.1% 6.1% • Sales increase 6%, 1% volume, 0% price & 5% acquisition • H2 sales levels in Aug show base business revenue × 2% •
Slide 8: Packaging Distribution
Packaging Distribution • 6% sales growth, 1% organic, 5% acquisitions • Acquisitions all performing well • Internet retail ca. 22% of Distribution revenue • Revenues increasing from Internet retail customers Selfridges and Feel Unique. New customer for H2 – Bertrams Books • National Accounts growth
Slide 9: Recent Acquisitions in Packaging Distribution
Recent Acquisitions in Packaging Distribution Acquisition of Lane, May 2014 Acquisition of One, Aug 2015 Nelsons – July 2016 • Location: Reading • Location: Nottingham • Location: Leicester • Sales: £3m • Sales: £5m • Sales: £9m, Price: £6.75m • Price: £1.4m • Price: £2.7m • Earn out: £1.5m • Earn o
Slide 10: Raw material movements
Raw material movements £1,200 £470 £1,180 £460 £1,160 £450 £1,140 £440 £1,120 £430 £1,100 £420 £1,080 £410 £1,060 £400 £1,040 £390 £1,020 £380 £1,000 £370 £980 £360 2011 2012 2013 2014 2015 2016 Polymer £/tonne £1,063 £1,062 £1,180 £1,141 £1,099 £1,166 Paper £/tonne £460 £398 £429 £450 £440 £434 10
Slide 11: Macfarlane Design and Manufacture
Macfarlane Design and Manufacture H1 H1 H2 £m 2016 2015 2015 Revenue 6.1 6.0 6.4 Gross Margin 35.2% 38.4% 37.8% Operating profit 0.1 0.2 0.3 z Slower demand from export-driven customers z Strong new business pipeline will benefit H2 2016 z Improved operational performance at Grantham targeted z Focu
Slide 12: Macfarlane Labels
Macfarlane Labels H1 H1 H2 £m 2016 2015 2015 Revenue 7.6 9.0 8.9 Gross margin % 37.9% 34.8% 32.9% Operating Profit 0.2 0.1 0.4 SA/Reseal-it % 60/40 65/35 69/31 Net Margin 2.6% 1.1% 4.5% z Reseal-it label sales up by 10% z Self-adhesive sales down by 23% z Exited poor margin business, rebalancing in
Slide 13: Pension Scheme Deficit
Pension Scheme Deficit £m H1 2016 2015 Opening deficit (11.5) (13.9) Ongoing accrual/Interest cost ( 0.1) ( 0.6) Contributions 1.4 2.8 Bond yield È 0.8% to 2.9% (2015 Ç 0.2% to 3.7%) (10.2) 2.3 Investment returns 8.3 (1.7) Net effect of other assumptions (0.5) (0.4) Closing deficit (12.6) (11.5) Fea
Slide 14: Pension Scheme Details
Pension Scheme Details Investments H1 2016 2015 Growth assets Diversified Growth Funds £25.5m £25.5m Equities £16.1m £16.8m Matching assets Corporate Bonds/Loan Fund £ 7.1m £11.1m Liability-driven investments £26.7m £14.1m Cash £ 0.8m £ 0.3m Total £76.2m £67.8m Liabilities Active members 19 ( 20) £
Slide 15: Profitable Growth in Packaging Distribution
Profitable Growth in Packaging Distribution Growth Proposition Capability Internet Retail Reduce total cost of Expertise, knowledge and 3PL packaging customer referrals Rationalise packaging UK national network National Accounts supplier base to reduce costs IT capability Rationalise packaging Geogr
Slide 16: Profitable Growth in Manufacturing Operations
Profitable Growth in Manufacturing Operations Growth Proposition Capability Aerospace, Medical, Unique protection for high Leading-edge MOD Electronics value, fragile Items approved design, expertise Ease of opening, food waste Re-sealable Labels Proven patented technology reduction and brand integr
Slide 17: Conclusions
Conclusions • We are not assuming demand will significantly increase or decrease • Trading agenda: • Distribution focus on identified growth opportunities – Internet Retail, 3PL and National Accounts • Manufacturing focus on higher added value products and services • Ongoing focus on cost reduction
Slide 18: Macfarlane Group Business Case
Macfarlane Group Business Case Strong Clear plans operating Good market and a track A simple and companies positions with record of flexible with growth performance business model differentiated potential propositions 18
Slide 19: Questions and Answers
Cee MACFARLANE Questions and Answers 19