Slide 1: 2019 Interim Results
C MACFARLANE GROUP 2019 Interim Results -
Slide 2: Overview
Overview • Executive Summary • 2019 Results/Cash Flow • Business Review Packaging Distribution Manufacturing Operations • Pension Scheme Deficit • 2019 Key Actions in H2 • Conclusions 2
Slide 3: Executive Summary
Executive Summary H1 2019 H1 2018 Profit before tax £3.8m £3.5m • Group sales £108m, 5.4% growth / profit before tax £3.8m, 8.7% growth • Distribution sales growth of 4.4% vs. 2018 reflects new business wins compensating for weaker demand and sales price deflation • Manufacturing Operations sales up
Slide 4: Financial Summary – H1 2019
Financial Summary – H1 2019 Revenue Profit before tax EBITDA Revenue and profit ▲ 5.4% ▲ 8.7% ▲ 7.4% Pre-tax ROCE Bank debt Pension deficit Returns and balance sheet 12.2% ▲ £15.0m £9.0m Diluted EPS EPS Dividend per share EPS and dividend ▲ 10% ▲ 1.99p ▲ 6.2% 4
Slide 5: Results £m
Results £m IFRS 16 impact H1 2019 H1 2018 H2 2018 Sales 107.5 102.0 115.3 Gross Profit 30.9% 33.2 30.5% 31.1 30.7% 35.4 Overheads exc. DA (4.0) 23.0 25.4 25.6 EBITDA 10.2 5.7 9.8 DA 3.4 5.4 1.8 2.0 Operating profit 4.8 3.9 7.8 Interest 0.6 1.0 0.4 0.4 Profit before tax 0.0 3.8 3.5 7.4 Diluted EPS 1.
Slide 6: Cash Flow £m
Cash Flow £m IFRS 16 impact H1 2019 H1 2018 H2 2018 EBIT 0.6 4.8 3.9 7.8 DA 3.4 5.4 1.8 2.0 EBITDA 4.0 10.2 5.7 9.8 Working Capital (3.4) (1.7) 3.6 (2.2) Interest (0.6) (1.0) (0.3) (0.2) Acquisitions (2.8) 0.0 (5.6) Tax (0.9) (0.7) (1.2) Capital expenditure (1.3) (0.7) (0.7) Pension (1.7) (1.6) (1.1
Slide 7: Profit Progression
Profit Progression Profit before tax Profit £m Earnings per share 12 7.00 Profit Earnings Per Share 10 6.00 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 7
Slide 8: Packaging Distribution
Packaging Distribution £m H1 2019 H1 2018 Revenue 93.1 89.1 Gross Margin 30.0% 29.3% Overheads * 23.5 22.4 Operating Profit * 4.5 3.7 OP Margin * 4.8% 4.2% • Sales increase 4.5% vs. 2018 • New business growth of £4.0m offset weaker sales demand and sales price deflation • Sales split 72% Industrial
Slide 9: Packaging Distribution – Raw Material Movements
Packaging Distribution – Raw Material Movements £1,250 £600 £1,225 £575 £1,200 £550 £1,175 £525 £1,150 £500 £1,125 £475 £1,100 £450 £1,075 £1,050 £425 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Polymer £/tonne £1,225 £1,242 £1,194 £1,233 £1,239 £1,208 £1,230 £1,1
Slide 10: Packaging Distribution
Packaging Distribution • New business wins in H1 2019 – Dunelm, Hobbycraft, Ideal Shopping, Body Shop and Arvato • Existing business flat due to weaker general demand, sales price deflation and sector pressures in UK automotive and general retail • Internet retail ca. 21% of Distribution revenue • N
Slide 11: Packaging Distribution – Acquisitions 2014 to 2019
Packaging Distribution – Acquisitions 2014 to 2019 EBITDA Placing Acquisition Location Sales Integrated multiple price 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 TBD Nottingham £15m 5
Slide 12: Macfarlane Design and Manufacture
Macfarlane Design and Manufacture £m H1 2019 H1 2018 Revenue 6.9 7.0 Gross Margin 36.3% 35.1% Operating Profit 0.2 0.1 Sales to Distribution 20% 23% • Good sales demand from exporters, weaker demand from UK automotive sector • Operational changes implemented are reducing costs and improve manufactur
Slide 13: Macfarlane Labels
Macfarlane Labels £m H1 2019 H1 2018 Revenue 9.7 8.0 Gross Margin 30.4% 33.6% Operating Profit 0.2 0.1 Self-Ad/Reseal-it % 50/50 53/47 • Re-sealable labels sales/machines up 28% • Self-adhesive label sales up 14% • Investment in new printing press in Ireland will improve margin in H2 2019 • Some goo
Slide 14: Pension Scheme Deficit £m
Pension Scheme Deficit £m H1 2019 FY 2018 Opening deficit (9.8) (11.8) Ongoing accrual/Interest cost (0.2) (0.4) GMP equalisation – exceptional items - (0.3) Contributions 1.7 2.8 Bond yield 0.6% to 2.2% (2018 0.3%) (9.1) 4.1 Investment returns 8.5 (4.1) Net effect of other assumptions (0.1) (0.
Slide 15: Pension Scheme Details £m
Pension Scheme Details £m Investments H1 2019 FY 2018 Growth assets Movements Diversified Growth Funds £0.6m 19.2 17.5 Equities 18.6 16.0 European Loan Fund (£0.6m) 6.3 6.6 Long-term Property Fund (£1.3m) 6.0 7.1 Matching assets Liability-driven Investments 33.6 28.4 Cash £1.3m 1.7 0.2 Total investm
Slide 16: Profitable Growth in Packaging Distribution
Profitable Growth in Packaging Distribution Growth Proposition Capability Reduce total cost of Expertise, 3PL partnerships Retail packaging and customer referrals Rationalise packaging UK national network Industrial supplier base to reduce costs IT capability Rationalise packaging “Follow the Custom
Slide 17: 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 18: Brexit impact
Brexit impact • Risk assessment commenced in 2018 • Concentration on potential impact of “No-deal” Brexit • Principal areas of impact Maintain robust supply chain for customers given 8% purchases from Europe and 5% from Rest of the World Currency fluctuations - Euro purchases 6m, Dollar purchases $3
Slide 19: Conclusions
Conclusions • H1 2019 was challenging with weak demand and price deflation, but we continued to make progress • Trading agenda: Distribution focus on identified growth opportunities – National Accounts (mainly industrial customers), Internet retail and 3PL Effective management of input price mov
Slide 20: Macfarlane Business Case
Macfarlane Business Case Strong operating Good market Clear plans A simple and and a track companies positions with flexible record of with growth business model performance differentiated potential propositions 20