Slide 1: 2020 Interim Results
C MACFARLANE GROUP 2020 Interim Results - EEE EE nn ee 1
Slide 2: Overview
Overview • Covid-19 Update • Executive Summary • H1 2020 Results/Cash Flow • Business Review Packaging Distribution Manufacturing Operations • Pension Scheme Deficit • 2020 Key Actions in H2 • Conclusions 2
Slide 3: Covid-19 Update
Covid-19 Update Trading Resilient Prioritisation of Employee Health and Safety 2% sales growth in Q1 2020 offset by 5% decline in • All sites continued to operate through Q2 2020 due to lockdown lockdown • Customer closures/reduced working • Office-based staff working from home • Some sectors contin
Slide 4: Supporting our Customers to Keep the Country Moving
Hand Sanitiser Supplies Supporting Ventilator Builds Nelsons for Cartons have supplied Supplying packaging to Rolls Royce, 100,000 boxes to SC Johnson who are Siemens, JCB & Alpha Solway who have shipping hand sanitiser to the NHS been supporting the production of ventilators Supporting our Customer
Slide 5: Executive Summary
Executive Summary H1 2020 H1 2019 Profit before Tax £3.6m £3.8m • Group sales £106m, 2% decrease compared to 2019 • Profit before tax £3.6m, 5% below 2019, inclusive of Covid-19 incremental costs • Distribution sales decreased 2% and PBT by 10% reflecting impact of Covid-19 on demand, partly offset
Slide 6: Financial Summary – H1 2020
Financial Summary – H1 2020 Revenue Profit before tax EBITDA Revenue and profit q q q 2% 5% 5% Pre-tax ROCE Bank debt Pension deficit Returns and balance sheet q q q 10% £0.8m £6.0m Diluted EPS Dividend cover Dividend per share EPS and dividend q ▲ 9% 2.6x 0.70p 6
Slide 7: Results £m
Results £m H1 2020 H1 2019 H1 2018 Sales 105.6 107.5 102.0 Gross Profit 33.0% 34.8 30.9% 33.2 30.5% 31.1 Overheads exc. DA 25.2 23.0 25.4 Operating profit before DA 9.6 10.2 5.7 Depreciation/amortisation 5.4 5.4 1.8 Operating profit 4.2 4.8 3.9 Interest 0.6 1.0 0.4 Profit before tax 3.6 3.8 3.5 Dilu
Slide 8: Cash Flow £m
Cash Flow £m H1 2020 H1 2019 H1 2018 EBIT 4.4 4.9 3.9 DA 5.4 5.4 1.8 EBITDA 9.8 10.3 5.7 Working Capital 9.7 1.4 3.6 Lease obligations (3.2) (3.3) - Interest (0.6) (0.9) (0.3) Acquisitions (0.9) (2.8) - Tax (0.8) (0.9) (0.7) Capital expenditure (0.6) (1.3) (0.7) Pension (1.5) (1.7) (1.6) Dividend -
Slide 9: Profit Progression
Profit Progression Profit £m Earnings per share Profit Earnings per share 12 6.00 10 5.00 8 4.00 6 3.00 4 2.00 2 1.00 0 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 9
Slide 10: Packaging Distribution
Packaging Distribution £m H1 2020 H1 2019 Revenue 91.5 93.1 Gross margin 32.2% 30.0% Overheads 25.5 23.5 Operating profit 4.0 4.5 OP Margin 4.4% 4.8% Net promoter score 52 46 • Sales decrease of 1.7% versus 2019 • Growth in Q1 of 3% offset by 6.3% decline in Q2 • Q2 impacted by Covid-19 lockdown • G
Slide 11: Packaging Distribution – Raw Material Movements
Packaging Distribution – Raw Material Movements £1,250 £600 £1,225 £1,200 £575 £1,175 £1,150 £550 £1,125 £1,100 £525 £1,075 £1,050 £500 £1,025 £1,000 £475 £975 £950 £450 £925 £900 £425 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Polymer £/tonne £1,239 £1,208 £1,23
Slide 12: Packaging Distribution
Packaging Distribution • Weaker demand from existing customers in automotive, high street retail and hospitality sectors • Strong demand from e-commerce, household and medical sectors • New business subdued but recent major new wins– Halfords, Mountain Warehouse and Missoma • Internet retail c27% (2
Slide 13: Packaging Distribution – Organic Growth
Packaging Distribution – Organic Growth The Significant Six Supported by our Recent Approach Innovation Lab Customer wins Reduce damage Improve the rate speed of packing Reduce logistics Increase costs customer loyalty Reduce storage Reduce admin costs costs 13
Slide 14: Packaging Distribution – Acquisitions 2014 to 2020
Packaging Distribution – Acquisitions 2014 to 2020 EBITDA Acquisition Location Sales Placing price Integrated multiple Reading £3m 5-6 x N/A Wolverhampton £9m 5-6 x Sep-14 37.5p Bingham £5m 5x N/A Teesside £3m 5x N/A Glasgow £3m 5x N/A Leicester £9m 5-6 x Jul-16 58.0p SRP 2023 earliest Not
Slide 15: Macfarlane Design and Manufacture
Macfarlane Design and Manufacture £m H1 2020 H1 2019 Revenue 5.5 6.9 Gross Margin 37.1% 36.3% Operating profit 0.0 0.2 Sales to Distribution 24% 20% • Weak demand particularly from automotive and aerospace sectors which will take time to recover • New business development re-focused on growth sector
Slide 16: Macfarlane Labels
Macfarlane Labels £m H1 2020 H1 2019 Revenue 10.9 9.7 Gross margin 30.3% 30.4% Operating Profit 0.2 0.2 Self-Ad/Reseal-it % 52/48 50/50 • Re-sealable labels revenue 9% ahead of 2019 but machinery sales lower in 2020 • Self-adhesive label sales up 13% versus 2019 • Strong demand from food, household
Slide 17: Pension Scheme Deficit £m
Pension Scheme Deficit £m H1 2020 FY 2019 Opening deficit (6.5) (9.8) Ongoing accrual/Interest cost (0.1) (0.3) Contributions 1.6 3.1 Bond yield 0.5% to 1.5% (2019 0.8%) (8.2) (12.1) Investment returns 7.0 11.1 Net effect of other assumptions 0.2 1.5 Closing deficit (6.0) (6.5) • Reduction in bo
Slide 18: Pension Scheme Details £m
Pension Scheme Details £m Investments H1 2020 FY 2019 Growth assets Diversified Growth Funds 24.0 25.4 Equities 20.0 22.1 European Loan Fund 6.1 6.4 Long-term Property Fund 6.1 6.2 Matching assets Liability-driven Investments 32.7 27.7 Cash 6.8 0.3 Total investments 95.7 88.1 Liabilities Members Act
Slide 19: Profitable Growth in Packaging Distribution
Profitable Growth in Packaging Distribution Growth Proposition Capability Reduce total cost of Expertise, 3PL partnerships Retail packaging and improve and customer referrals sustainability Rationalise packaging supplier UK national network Industrial base to reduce costs and improve sustainability
Slide 20: Profitable Growth in Manufacturing
Profitable Growth in Manufacturing Growth Proposition Capability Aerospace, Medical, Unique protection for high Leading-edge MOD Electronics value, fragile Items approved Design, expertise Re-sealable Labels Ease of opening, food waste Proven Patented technology reduction and brand integrity Perform
Slide 21: Conclusions
Conclusions • Resilient H1 2020 performance despite impact of Covid-19 • H2 2020 performance dependent on impact of further lockdowns, consumer demand in Q4 and managing the bad debt risk • Trading Agenda: Distribution focus on identified growth opportunities – Internet Retail, National Accounts,