Slide 1: Creating growth
Creating growth Results and Strategy Presentation: September 2018
Slide 2: Agenda
Agenda 1. Headlines 2. ‘Repair, Prepare, Grow’ update 3. Financial results 4. Growth outlook FY19 5. Longer term macro trends and McBride opportunities 6. Q&A McBride plc 1 Results and Strategy Presentation: September 2018
Slide 3: Headlines
Headlines Significant progress with ‘Prepare’ objectives; good growth in key Household categories • 9% revenue growth including • Adjusted operating profit of £37.7m Danlind acquisition (2017: £42.0m), down £4.3m on last year • Underlying Household growth 3.8% in H2 • ROS of 5.5% with underlying Hou
Slide 4: 'Repair, Prepare, Grow' Progress update
‘Repair, Prepare, Grow’ Progress update McBride plc 3 Results and Strategy Presentation: September 2018
Slide 5: Reminder – Repair, Prepare, Grow
Reminder – Repair, Prepare, Grow Time horizon by calendar year 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repair Prepare • Define and launch the five-year growth plan • Define and launch the supporting asset development programme • Upgrade organisational skills and capabilit
Slide 6: Prepare phase: progress on under-performing businesses
Prepare phase Progress on under-performing businesses European Personal Care and Aerosols Personal Care Liquids actions activities making significant losses, urgent • Skincare business in Czech Republic, action required sold in February 2018 • Consists of: Skincare (Brno, Czech), • Resolving Persona
Slide 7: Prepare phase: asset configuration
Prepare phase Asset configuration – aligned to growth ambitions Capex in third full year of the £100m total Capex approvals since RPG launch • Projects approved: 61% Liquids • since RPG launch, £58m 15% Powders/Tablets • past two years, £45.2m 10% IT central • Strong focus on liquids sites 9% PCA •
Slide 8: Prepare phase: organisational development
Prepare phase Organisational development New organisation structure launched Talent Development Programme June 18 designed to best capture growth • New programme launched October 2017 and deliver value • Aimed at next generation of business leaders • Commercial organisation established dedicated gro
Slide 9: Prepare phase: growth ambition defined for Household
Prepare phase Growth ambition defined for Household: 2.0% – 2.5% CAGR organic Led by product category – Dishwash (auto Contract Manufacturing and hand), Laundry (capsules, liquids, FabCon) • Exploit trend for more outsourcing from • Certain categories growing in excess global and regional branders o
Slide 10: Entering 'Grow' phase
Entering ‘Grow’ phase Delivering growth in Household – 15.8% in second half Auto-dishwash Laundry Capsules Limited Contract Acquisitions H2 growth 10.7% H2 growth 9.7% Assortment Manufacturing Discounters • Competitive position • Significant capacity • Developing • Full year growth 3.6% • First acqu
Slide 11: Financial results
Financial results McBride plc 10 Results and Strategy Presentation: September 2018
Slide 12: Financial headlines
Financial headlines • Revenues 9.0% higher at £689.8m, Danlind • Reduction in interest costs (£2.4m) following adding £48.4m; underlying revenues 0.8% refinancing in June 2017 lower for the full year, with second half +2.9% • Adjusted profit before tax on continuing • Household underlying revenues b
Slide 13: Revenue development
Revenue development Group revenues Continuing revenues Change in continuing revenues £m £m by half year and full year (at CCY) £m 48.4 755.0 43.3 705.2 720.7 689.8 42.3 632.9 646.5 72.7 33.2 77.2 78.1 48.4 15.2 555.7 568.4 568.7 10.3 -10.0 0.3 -4.2 1.0 72.3 74.2 65.2 2017 2017 CCY 2018 -1.2 Househol
Slide 14: EBITA development
EBITA development Group EBITA Group EBITA – Continuing Change in EBITA continuing £m £m by half year £m 42.8 43.2 1.6 41.5 42.0 48.8 50.0 37.7 36.2 44.4 0.6 0.7 0.3 -4.5 0.1 0.0 -3.1 1.6 1.3 1.3 -8.1 -8.1 -6.8 -0.5 -0.4 -1.5 -1.5 Household Household -10 Household Household Base Danlind PCA Corporate
Slide 15: Income statement
Income statement Gross margin ROS Labour costs % of sales and Underlying interest cost £m % % overhead % of gross profit and tax rate % 31.0% 31.0% 35.8% 35.5% 5.9% 85.2% 30.0% 85.9% 34.2% 5.5% 83.6% 84.0% 33.4% 5.3% 19.7% 0.9 1.1 4.8% 19.0% 19.0% 1.1 18.4% 5.2 6.0 3.4 2015/16 2016/17 2017/18 2015/1
Slide 16: Balance sheet and cash flow
Balance sheet and cash flow ROCE Cash flow from operations Net debt £m/ % £m debt cover x times 114.3 63.3 90.9 2.1 52.5 75.7 1.7 43.0 27.7% 1.2 23.4% 22.5% 2015/16 2016/17 2017/18 2015/16 2016/17 2017/18 2015/16 2016/17 2017/18 ROCE Net debt Debt cover • Danlind dilutive on ROCE • Capital expenditu
Slide 17: Other financials
Other financials Exceptional items Payments to shareholders pence, Group pension liability £m dividend cover x times £m 0.3 4.3 4.3 42.2 21.7 3.6 32.9 13.0 30.9 3.1 3.0 2.8 0.78 0.79 0.73 2.4 1.0 2015/16 2016/17 2017/18 2015/16 2016/17 2017/18 2015/16 2016/17 2017/18 Operating Finance Payments to sh
Slide 18: Danlind
Danlind An encouraging start following acquisition in October 2017 Danlind revenues Danlind local EBITA • Revenues ahead of acquisition plans • January – June Auto-Dishwash Tablets growth 16% • Powder volumes stable • Run rate cost reduction • Profit and Loss synergies on track, 2015 2016 2017 17/18
Slide 19: 2019 outlook
2019 outlook McBride plc 18 Results and Strategy Presentation: September 2018
Slide 20: Current outlook
Current outlook FY19 growth to exceed RPG target • Additional Q1 Danlind revenues included • Key regions in growth apart from France • Further growth in our key categories • Asia continues to grow while Aerosols continues decline Pricing initiatives launched in January 2018 Cost and projects • Mater
Slide 21: Longer term macro trends and McBride opportunities
Longer term macro trends and McBride opportunities 1. Consumers 2. Branders 3. Channels 4. Private Label McBride plc 20 Results and Strategy Presentation: September 2018
Slide 22: Macro trends: Consumers
Macro trends Consumers Consumers are engaging into an increasingly These trends will drive a “Branders’ Push” personalised product experience to a “Consumers’ Pull” market requiring • Why they buy is driven through social media • Speed and agility in innovation and reflecting the consumers’ search f
Slide 23: Macro trends: Branders
Macro trends Branders Consumers behavioural trend will impact This creates the space for “Challenger Brands” Branders’ market positioning as Brands will which are already a reality in certain industries become challenged as articulated by the • New brands appearing based upon Visual Berenberg report
Slide 24: Macro trends: Channels
Macro trends Channels Consumers behaviours will redefine the traditional fault lines in the industry • Traditional Retail versus Limited Assortment Discounters: convergence in model, consolidation between players • Retail versus E-tail: convenience driving category selection and subsequent product d
Slide 25: Macro trends: Private Label
Macro trends Private Label Retail value chain pressures will continue while the volatile raw material environment creates further destabilisation • Private Label Household competitive environment dynamics accelerate further • Private Label value proposition will develop more towards a “fit-for-purpo
Slide 26: How these trends impact McBride beyond 2019
How these trends impact McBride beyond 2019 Consumers Branders • ‘Consumer Pull’ will drive industry dynamics • Brands need to reinvent branding • Accelerated product innovation cycle Legislation Social pressures • Localised manufacturing platforms • Delivery convenience drives category design Chann
Slide 27: How these trends impact McBride beyond 2019
How these trends impact McBride beyond 2019 Consumers Branders • ‘Consumer Pull’ will drive industry dynamics • Brands need to reinvent branding • Accelerated product innovation cycle Legislation Social pressures • Localised manufacturing platforms • Delivery convenience drives category design Chann
Slide 28: Q&A
Q&A McBride plc 27 Results and Strategy Presentation: September 2018
Slide 29: Appendices
Appendices 1. Income statement 2. Segmental reporting 3. Exceptional items 4. Balance sheet 5. Cash flow 6. Use of cash 7. Funding headroom McBride plc 28 Results and Strategy Presentation: September 2018
Slide 30: Appendix 1: income statement
Appendix 1: income statement Constant currency(1) 2017/18 2016/17 2016/17 Continuing operations £m £m Y/Y £m Y/Y Revenue 689.8 632.9 9.0% 646.5 6.7% Gross profit 235.6 230.3 2.3% 235.2 0.1% Gross margin 34.2% 36.4% (2.2ppt) 36.4% (6.1%) Distribution costs (48.9) (42.7) 14.5% (43.6) 12.3% Administrat
Slide 31: Appendix 2: segmental reporting
Appendix 2: segmental reporting Constant currency 2017/18 2016/17 2017/18 £m £m Y/Y £m Y/Y Continuing revenue UK 163.9 155.4 5.5% 155.4 5.5% North 189.7 192.8 (1.6%) 198.8 (4.6%) East 137.9 131.1 5.2% 135.5 1.8% South 77.2 76.4 1.0% 78.7 (1.9%) Danlind 48.4 — N/A — N/A Household 617.1 555.7 11.0% 56
Slide 32: Appendix 3: exceptional items
Appendix 3: exceptional items 2018 2017 £m £m Continuing operations Reorganisation and restructuring costs: Supply chain restructuring — 0.9 Other prior year projects — 0.1 Reorganisation of continuing PCA business 2.9 — Danlind acquisition 1.6 — Total charged to operating profit 4.5 1.0 Group refin
Slide 33: Appendix 4: balance sheet
Appendix 4: balance sheet 2017/18 2016/17 £m £m Y/Y Goodwill and other intangible assets 29.9 21.7 37.8% Property, plant and equipment 135.6 140.9 (3.8%) Other non-current assets 9.8 12.7 (22.8%) Working capital 41.9 22.7 84.6% Net other debtors/(creditors) (2.7) (5.6) (51.8%) Provisions (7.2) (4.7)
Slide 34: Appendix 5: cash flow
Appendix 5: cash flow 2017/18 2016/17 Y/Y £m £m £m Adjusted operating profit 36.2 41.5 (12.8%) Depreciation 19.1 19.4 (1.5%) Share-based payments (0.4) 2.3 (117.4%) Additional cash funding of pension scheme (3.0) (3.0) 0.0% Operating cash flow before movements in working capital 51.9 60.2 (13.8%) Mo
Slide 35: Appendix 6: use of cash
Appendix 6: use of cash 90 Purchase of Fortune Organics Foreign Movement in £0.5 exchange net debt 80 £0.7 £10.4 Acquisition of Danlind 70 £38.6 60 Debt acquired £25.3 with Danlind 50 Proceed from Brno disposal £1.0 £m £0.2 Other items £4.1 Exceptionals 40 Financing £3.7 cost £6.8 Taxation 30 Cash £
Slide 36: Appendix 7: funding headroom
Appendix 7: funding headroom Committed Facility Drawn headroom £m £m £m Committed facilities: – revolving facilities (June 2022) 155.1 (82.0) 73.1 – invoice discounting facilities 39.2 (39.2) — – other loans 1.6 (1.6) — Total committed facilities 195.9 (122.8) 73.1 Uncommitted facilities 65.5 (4.1)