Slide 1: 2015 Interim Results
* MACFARLANE _. 2015 Interim Results
Slide 2: Contents
Contents • Executive Summary • 2015 Interim results/cash flows • Business Review • Packaging Distribution • Manufacturing Operations • Pension Scheme Deficit • 2015 Key Actions • Conclusions 2
Slide 3: Executive Summary
Executive Summary H1 2015 H1 2014 Profit before exceptional items £1.85m £1.22m • Group sales £78.6m, 12% up – Distribution 16% Manufacturing (5%) • Distribution sales growth 16% of which 6% organic, 10% acquisition • Acquisitions both performing to plan – Lane now being integrated • Organic growth
Slide 4: Financial Summary
Financial Summary Revenue Profit before tax EBITDA Margin Revenue and Operating Profit ▲12% ▲52% 4.1% Pre-tax ROCE Bank debt Pension Deficit Balance sheet Management and Cash Flow 21.2% ▲£0.8m ▼£1.8m Diluted EPS EPS Dividend per share EPS and Dividend ▲50% ▲1.26p 0.53p 4
Slide 5: Results £m
Results £m H1 2015 H1 2014 H2 2014 Sales 78.6 70.1 83.7 Gross Profit 31.3% 24.6 30.6% 21.4 31.1% 26.1 Overheads exc. DA 21.4 19.1 20.3 EBITDA 3.2 2.3 5.8 Depreciation/amortisation 0.9 0.6 0.9 Operating profit 2.3 1.7 4.9 Interest 0.4 0.5 0.5 Profit before tax 1.9 1.2 4.4 EPS 1.26p 0.84p 2.87p 5
Slide 6: Cash Flow £m
Cash Flow £m H1 2015 H1 2014 H2 2014 EBIT 2.3 1.7 4.9 DA 0.9 0.6 0.9 EBITDA 3.2 2.3 5.8 Working Capital (0.4) (0.5) (0.5) Interest (0.4) (0.5) (0.6) Acquisitions (0.2) (1.2) (3.8) Share placing 0.0 0.0 2.8 Tax (0.1) (0.4) (0.4) Capital expenditure (0.4) (0.2) (0.3) Pension (one-off £2.5m H1-14) (1.4
Slide 7: Profit Progression
Profit Progression Profit before exceptional items £000 £7m £6m £5m £4m £3m £2m £1m £0m 2009 2010 2011 2012 2013 2014 2015 * * 2015 - Arden Broker Estimate 7
Slide 8: Packaging Distribution
Packaging Distribution H1 H1 H2 £m 2015 2014 2014 Revenue 66.3 57.0 69.9 Gross margin 29.3% 28.6% 28.9% Overheads 17.4 14.8 16.0 Operating profit 2.1 1.5 4.3 OP Margin 3.1% 2.7% 6.2% • Sales increase 16%, 6% volume, 1% price & 9% acquisition • H2 sales levels for Jul/Aug show base business revenue
Slide 9: Packaging Distribution
Packaging Distribution • 16% sales growth, 7% organic, 9% acquisitions • Acquisitions performing well • Internet retail ca. 19% of Distribution revenue • Revenues increasing from recent Internet retail wins Home Retail Group £0.5m & Selfridges £0.2m • National Accounts growth up significantly with s
Slide 10: Raw Material Movements
Raw Material Movements £1,250 £500 £1,225 £1,200 £1,175 £475 £1,150 £1,125 £1,100 £450 £1,075 £1,050 £1,025 £425 £1,000 £975 £950 £925 £400 £900 £875 £850 £375 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 Polymer £/ tonne £1,165 £1,127 £1,219 £1,212 £1,186 £1,156 £
Slide 11: Macfarlane Design and Manufacture
Macfarlane Design and Manufacture H1 H1 H2 £m 2015 2014 2014 Revenue 6.1 6.2 6.8 Gross Margin 38.4% 38.9% 42.5% Operating profit 0.2 0.2 0.6 Strong new business pipeline will benefit H2 2015 Focus on value-added products maintaining good margin Slower demand from export-driven customers Eval
Slide 12: Macfarlane Labels
Macfarlane Labels H1 H1 H2 £m 2015 2014 2014 Revenue 9.6 9.7 8.8 Operating Profit 0.1 0.0 0.1 SA/Reseal-it % 65/35 62/38 59/41 Net Margin 1.0% 0.0% 1.1% Reseal-it label sales up by 4% Resealable systems sales down 20% vs strong H1 2014 Self-adhesive sales down by 3% Key self-adhesive custome
Slide 13: Pension Scheme Deficit £m
Pension Scheme Deficit £m H1 2015 2014 Opening deficit (13.9) (15.9) Ongoing accrual/Interest cost ( 0.2) ( 0.7) Contributions 1.5 5.4 Bond yield 0.1% to 3.6% (2013 1.0% to 3.5%) 1.1 (11.0) Investment returns (0.9) 9.2 Net effect of other assumptions 0.3 (0.9) Closing deficit (12.1) (13.9) Featur
Slide 14: Pension Scheme details
Pension Scheme details Investments H1 2015 2014 Growth assets Diversified Growth Funds £25.5m £18.5m Equities £16.9m £15.9m Matching assets UK Corporate Bonds/Gilts £11.0m £11.3m Liability-driven investments £13.8m £22.2m Cash £ 0.8m £ 0.1m Total £68.0m £68.0m Liabilities Active members 21 ( 22) £ 5
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
Profitable Growth in Manufacturing Growth Proposition Capability Leading-edge MOD Aerospace, Medical, Unique protection for high approved Packaging Design, Electronics value, fragile Items expertise Ease of opening, food waste Re-sealable Labels Proven Patented technology reduction and brand integri
Slide 17: Acquisitions in Packaging Distribution
Acquisitions in Packaging Distribution 2014 acquisitions • May-14 - Lane based in Reading, sales £3m • Sep-14 - Network based in Wolverhampton sales £10m • Prices of £1.4m and £7.5m respectively • Earn-out mechanisms £0.2m and £2.5m within the price • EBITDA multiple of 5.5 – 6.0 2015 acquisitions i
Slide 18: Conclusions
Conclusions • We are not assuming demand will significantly improve in the short term • 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 reduc
Slide 19: Macfarlane Business Case
Macfarlane 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 19