Slide 1: 2022 Interim Results
aS FARLANE GROUP 2022 Interim Results f
Slide 2: Overview
Overview 2 • Executive Summary • H1 2022 Results/Cash Flow • Business Review • Packaging Distribution • Manufacturing Operations • Pension Scheme • Conclusions
Slide 3: Executive Summary
Executive Summary 3 H1 2022 H1 2021 £m £m £m Restated* Operating profit before amortisation (PBITA) from continuing operations 11.4 10.8 Profit before tax from continuing operations 8.9 8.6 Loss before tax from discontinued operations (0.1) (0.8) • Group sales £139m, 14% growth on H1 2021 • PBITA £1
Slide 4: Resilience
Resilience 4 Focus and depth of Breadth of customers Value added expertise in protective and markets served proposition packaging Range of long Performance driven Bespoke product and established supplier culture service range relationships
Slide 5: Financial Summary – H1 2022
Financial Summary – H1 2022 5 Revenue Profit before tax PBITA Revenue and profit* ▲ ▲ ▲ 14% 3% 5% Pre-tax ROCE Bank debt Pension surplus Returns and balance sheet ▼ ▼ ▲ 18% £9.7m £8.8m Diluted EPS Dividend cover Dividend per share EPS and dividend ▲ ▲ ▲ 14% 4.8x 0.90p * from continuing operations
Slide 6: Results
Results 6 H1 2022 H1 2021 £m £m Restated* Sales from continuing operations 139.2 122.1 Gross Profit 47.1 [33.8%] 41.8 [34.2%] Overheads (35.7) (30.9) Operating profit before amortisation 11.4 10.9 Amortisation (1.8) (1.6) Operating profit 9.6 9.3 Interest (0.7) (0.7) Profit before tax from continuin
Slide 7: Cash Flow
Cash Flow 7 H1 2022 H1 2021 £m £m EBIT 9.6 8.5 DA 6.4 7.1 EBITDA 16.0 15.6 Working Capital (5.4) (0.8) Lease Obligations (3.6) (3.4) Interest (0.8) (0.7) Acquisitions (9.3) (12.2) Disposal 0.2 - Tax (2.3) (2.0) Net capital expenditure (2.2) (0.9) Pension (1.3) (1.2) LTIP adj. 0.3 0.4 Dividend (3.7)
Slide 8: Packaging Distribution
Packaging Distribution 8 £m H1 2022 H1 2021 • Results include the benefit of Revenue 123.5 111.0 acquisitions of Carters in March 2021 and PackMann completed end of May Gross margin 32.3% 32.7% 2022 Overheads 31.0 27.2 • Organic sales increase of 9% versus 2021, driven by good progress in Europe, PB
Slide 9: Packaging Distribution
Packaging Distribution 9 H1 2022 H1 2021 £m % of Sales £m % of Sales Management Actions Investment in IT (MS Dynamics, Warehouse Management, Employee costs (excluding incentives) 14.7 11.9% 12.8 11.5% Slimstock); site consolidations; recruitment/retention Employee incentives 1.3 1.1% 2.4 2.2% 2021 w
Slide 10: Packaging Distribution
Packaging Distribution 10 Diversity of customer sectors a strength • Good growth in aerospace, engineering and hospitality sectors • Weaker demand from e-commerce retail versus a strong trading period in H1 2021 which benefited from Covid-19 lockdowns • Retail c.26% (2021 c.30%) of Distribution reve
Slide 11: Packaging Distribution – Raw Material Movements
Packaging Distribution – Raw Material Movements 11 £2,100 £825 £800 £775 £1,900 £750 £725 £700 £1,700 £675 £650 £1,500 £625 £600 £575 £1,300 £550 £525 £500 £1,100 £475 £450 £900 £425 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Polymer £/tonne £1,013 £919 £1,010 £1
Slide 12: Packaging Distribution Challenges for 2022-2024
Packaging Distribution Challenges for 2022-2024 12 Delivering The Base Business Environmental Recruitment and Benefits of New Salary Inflation Plastic Tax Performance Challenge Working Flexibility Software Introductions Sustain the Base Business Improve productivity to Manage the Demonstrate we are
Slide 13: Macfarlane Design and Manufacture
Macfarlane Design and Manufacture 13 • Strong performance from GWP acquired £m H1 2022 H1 2021 in February 2021 performing well ahead of expectations Revenue* 17.7 13.0 • Organic growth of 19% in the base Gross margin 40.5% 42.7% business with strong recovery from the aerospace sector Overheads 4.7
Slide 14: Packaging Manufacturing Challenges for 2022-2024
Packaging Manufacturing Challenges for 2022-2024 14 Business Environmental Recruitment And GWP in-house Salary Inflation Plastic Tax Performance Challenge Working Flexibility Growth Opportunities Sustain the business Improve productivity to Manage the Demonstrate we are Improve our retention, Identi
Slide 15: Packaging Distribution – Acquisitions 2014 to H1 2022
Packaging Distribution – Acquisitions 2014 to H1 2022 Acquisition Location Sales EBITDAx Placing price Integrated Lane Reading £3m 5-6x N/A Network Wolverhampton £9m 5-6x Sep-14 37.5p One Bingham £5m 5x N/A Colton Teesside £3m 5x N/A Edward McNeil Glasgow £3m 5x N/A Nelsons Leicester £9m 5
Slide 16: Sustainability – Supporting our Customers
Sustainability – Supporting our Customers 16 Helping customers choose packaging that enables them to achieve their sustainability objectives 2022 Update • Rollout of the Packaging Optimiser tool to help customers reduce their C02 footprint • High utilisation of Innovation Lab to design bespoke envir
Slide 17: Sustainability – Implementation our ESG Program
Sustainability – Implementation our ESG Program 17 In our 2021 Annual Report, we outlined several ESG initiatives we will implement from 2022 onwards. Our first ever ESG report is now also available on our website. Key progress this year is as follows: Area 2022 Progress Environmental New pilot 16T
Slide 18: Macfarlane Labels
Macfarlane Labels 18 £m H1 2022 H1 2021 • The Labels Division sold to The Reflex Group Revenue 11.4 - in December 2021 for £6.3m • Loss in H1 2022 represents adjustment related Loss before tax (0.1) (0.8) to finalising the completion accounts • H1 2021 reflected the operating performance of the busi
Slide 19: Pension Scheme Surplus £m
Pension Scheme Surplus £m 19 H1 2022 H1 2021 2021 Opening deficit 8.3 (1.5) (1.5) Ongoing accrual/Interest cost 0.1 (0.1) (0.1) Past service costs (2021: re Sale of Labels; 2020: GMP) - - (0.3) Contributions 1.3 1.3 2.0 Bond yield 1.90% to 3.80% (2021 0.55%) 22.9 8.1 8.1 Investment returns (23.8)
Slide 20: Pension Scheme Details £m
Pension Scheme Details £m 20 Investments H1 2022 H1 2021 2021 Growth assets Diversified Growth Funds 27.1 32.6 29.1 Equities 20.5 25.5 26.4 European Loan Fund 6.3 6.6 6.8 Long-term Property Fund 7.3 6.6 7.0 Matching assets Liability-driven Investments 14.3 24.9 30.6 Cash 1.0 0.3 0.6 Total investment
Slide 21: Profitable Growth in Packaging Distribution
Profitable Growth in Packaging Distribution 21 Growth Proposition Capability Reduce total cost of packaging and Expertise, 3PL partnerships and Retail improve sustainability customer referrals Rationalise packaging supplier base UK national network Industrial to reduce costs and improve sustainabili
Slide 22: Profitable Growth in Manufacturing
Profitable Growth in Manufacturing 22 Growth Proposition Capability Unique protection for high value, Leading-edge MOD approved Aerospace, Medical, Electronics fragile Items Design, expertise Build our manufacturing Acquisition Experience capability Performance Improvement Proposition Capability Mar
Slide 23: Conclusions
Conclusions 23 • Solid performance in H1 2022 against background of inflationary pressures in operating costs, investments in IT/new distribution centre and marked slowdown in the e-commerce sector • Good progress in Europe both organically and through recent acquisition • Business model remains res
Slide 24: Macfarlane Business Case
Macfarlane Business Case 24 A simple Strong and operating Good market Clear plans companies positions with and a track flexible with growth record of business differentiated potential performance model propositions