McBride PLC Final Results

RNS Number : 4122E

McBride PLC

17 September 2024

McBride plc

("McBride" or the "Group")

Preliminary Results Announcement

Strong operational and strategic progress delivering sales volume and profit growth

17 September 2024

McBride, the leading European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning/hygiene markets, announces its preliminary results for the year ended 30 June 2024.

Divisional and customer focus delivering improved results

· Overall market for private label household cleaning products continues to grow

· Total market sales volumes grew 5.7%, with private label volumes up 7.2%, reflecting our focus on customer partnerships

· Good performance in strategic focus areas of laundry and Germany, which saw sales volume growth of 8.0% and 6.2% respectively

· Strong second half recovery in contract manufacturing, with early start of a new long-term contract

· All divisions delivered profit growth, building on momentum of 2023

· Transformation programme progressing to plan and on track to deliver £50 million of net benefits by 2028

· Sustainability commitment enhanced with appointment of a dedicated team; confirmation of Science Based Target initiative (SBTi) alignment with targets set for the coming years

Financial highlights

· Revenue of £934.8m (2023: £889.0m), up 5.2% (6.2% at constant currency⁽¹⁾)

· Adjusted operating profit⁽²⁾ of £67.1m (2023: £13.5m), slightly ahead of upgraded market expectations

· Operating profit of £64.3m (2023: £10.3m)

· Adjusted profit before tax⁽²⁾ of £53.1m (2023: £0.3m)

· Profit before tax of £46.5m (2023: loss of £15.1m)

· Net debt⁽²⁾ at £131.5m (30 June 2023: £166.5m), representing 1.5x adjusted EBITDA⁽¹⁾

Positive outlook for continued profitable growth

· Early months of new financial year seeing overall sales volumes in line with expectations

· Encouraging signs of continued contract manufacturing momentum, building on strong second half

· Healthy pipeline of new launches and business wins, as the Group prioritises growth initiatives

· Input costs for the main raw materials remain steady, with costs of recycled materials and natural-based chemicals increasing in line with our expectations

· Group full-year outlook is consistent with current market expectations*, targeting a third consecutive year of revenue growth, with profitability significantly ahead of the historical average

* Current market expectations refer to a Group compiled consensus of broker forecasts for FY25 of:

· Adjusted operating profit £59.7m

· Net debt £111.3m

Chris Smith, Chief Executive Officer, commented:

"It has been an excellent financial and operational performance by the Group. While market dynamics have remained favourable, with a continued consumer trend towards private label across European household cleaning product markets, it is the effective execution of our strategy that has led McBride to capitalise on this environment. Our efforts to further develop our customer partnerships, together with improved consumer insights to support product range developments and innovation led by our specialist divisional teams, will continue to drive future growth.

Strong operational delivery, focused growth initiatives, and effective cost and margin management, have led each division to generate profitable growth for the year, resulting in the Group's significantly increased adjusted operating profit, slightly ahead of the upgraded market expectations. In addition, our commitment to reducing debt levels has led to a £35.0 million reduction in net debt for the year.

The Transformation programme is progressing to plan, with a number of key projects moving from design to delivery phase in 2025. The Group has made an encouraging start to the new financial year and while there are signs of increased brander activity, private label demand remains robust with contract manufacturing maintaining the momentum of the fourth quarter. As such, we look forward to the future with confidence."

	Year ended	Year ended		Constant
	30 June	30 June	Reported	currency
£m (unless otherwise stated)	2024	2023	Change	change⁽¹⁾
Revenue	934.8	889.0	5.2%	6.2%
Adjusted operating profit	67.1	13.5	53.6	53.8
Operating profit	64.3	10.3	54.0
Adjusted profit before taxation	53.1	0.3	52.8	52.9
Profit/(loss) before taxation	46.5	(15.1)	61.6
Adjusted diluted earnings per share⁽³⁾	21.7p	0.0p	21.7p
Diluted earnings/(loss) per share⁽³⁾	18.8p	(6.6)p	25.4p
Net debt	131.5	166.5	(35.0)
Adjusted return on capital employed⁽²⁾	33.5%	6.4%	27.1ppts

¹Comparatives translated at financial year 2024 exchange rates.

²Refer to note 19 for definition.

³See note 8.

Analyst and investor presentation

A results presentation will be available on the McBride plc investor relations website from 10.00am today.

McBride plc
Chris Smith, Chief Executive Officer
Mark Strickland, Chief Financial Officer

Instinctif Partners	0207 457 2020
Guy Scarborough Hannah Scott

Forward-looking Statements

This announcement contains forward-looking statements about financial and operational matters. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They sometimes use words such as "may", "will", "could", "should", "aim", "expect", "plan", "intend", "anticipate", "believe", "achieve", "project", "predict", "seek", "estimate", "objective", "goal", "target" or other words of similar meaning. These statements are based on the current views, expectations, assumptions and intentions of management, and are based on information available to management as at the date of this announcement. Because they relate to future events and are subject to future circumstances, these forward-looking statements are subject to risks, uncertainties and other factors which may not have been in contemplation as at the date of the announcement and/or which are beyond McBride plc's ability to control or precisely estimate, including (but not limited to) those set out in this announcement and the economic and business circumstances occurring from time to time in the countries, sectors and markets in which McBride plc operates. As a result, actual financial results, operational performance and other future developments could differ materially from those envisaged by the forward-looking statements. No assurance can be given that any particular expectation will be met, and undue reliance should not be placed on any forward-looking statements. Additional factors that may affect future results are contained in the "Principal risks and uncertainties" section of McBride plc's most recent Annual Report and Accounts.

Any forward-looking statements contained in this announcement speak only as of the date they are made. Neither McBride plc nor any of its affiliates undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except to the extent required by applicable law or regulation.

This announcement does not constitute an offer or invitation to underwrite, subscribe for, or otherwise acquire or dispose of any McBride plc shares or other securities, or of any of the businesses or assets described in the announcement, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with, any contract therefore.

Overall business performance

It has been a year of significant growth and progress for McBride, with the Group delivering an excellent financial and operational performance. All five divisions maintained the positive momentum created in the second half of 2023, generating profit growth for the year, which is a testament to our specialist teams and their ability to execute our strategy. Whilst the consumer trend towards private label has presented a rising tide of potential growth opportunities, it is McBride's operational delivery that has ensured such a strong trading and financial performance.

It is also pleasing to report that the Group continued to make good progress against its strategic imperative of ensuring a safe working environment. The lost time incident frequency rate fell to 0.75 (2023: 0.88), with new tools and an online reporting system being introduced. At the year end, 11 of the Group's 15 manufacturing locations had been free of lost time incidents for over 100 days.

The Group continued to capitalise on higher demand for everyday value private label household cleaning products, with overall sales volumes up 5.7% and private label sales volumes up 7.2%. The strong demand for McBride's products was driven by a combination of new business wins and growth of existing private label products. Whilst contract manufacturing volumes were lower in the first half of the year and for the year overall, they increased by 13.4% in the second half, largely due to strong fourth quarter volumes from the commencement of a substantial new long-term contract. In the second half, there were some signs of increased promotional activity from manufacturers of branded products, but all divisions continued to see solid demand for private label products. Customer service levels (CSL) improved by 2.5ppts compared to last year, with the second half performance being over 3ppts higher than the first half, as issues on a small number of the Group's manufacturing lines were resolved.

The Group's strong sales volume performance resulted in revenue increasing by 5.2% to £934.8 million (2023: £889.0m), and adjusted operating profit of £67.1 million (2023: £13.5m) being delivered slightly ahead of upgraded market expectations. The Group performed well in its strategic focus areas of laundry and Germany, which delivered sales volume growth of 8.0% and 6.2% respectively. Whilst the Group's profit performance has been driven in part by sales volume growth, it was underpinned by a combination of strong margin management, improved operational output and tight cost control in an inflationary environment.

Net debt reduction has remained a key area of focus for McBride. As presented at the Capital Markets Day (CMD) in March 2024, net debt/adjusted EBITDA is one of the primary financial metrics used to measure progress against the Group's strategic priorities. Pleasingly, this focus resulted in net debt closing at £131.5 million, a £35.0 million reduction versus the prior year (2023: £166.5m) and a net debt/adjusted EBITDA of 1.5x, already positioning the Group close to achieving its net debt/adjusted EBITDA ambition of less than 1.5x.

Inflationary environment

Over the course of the year, prices for consumers continued to rise and cost-of-living pressures resulted in continued strong demand for good value, high-quality private label products across the Group's markets. The challenge for McBride has been how to effectively and reliably serve the significantly increased demand. As such, the divisions have successfully focused on efficient supply chain and logistics management, with a key principle of the business being the ability to deliver an effective end-to-end supply chain solution.

The raw materials environment has been relatively benign, with generally weaker demand lowering input cost pressure, which has supported McBride's strong financial performance. However, as the Group exited the financial year, it has started to see upward pressure on certain materials, particularly recycled materials and natural alcohol-based products, as customer and consumer demand for these materials continued to increase.

Strategic progress

At the CMD, McBride presented the significant progress achieved in the implementation of its Compass strategy and outlined the key elements of its Transformation programme. Importantly, each division remains focused on delivery of its key objectives, with the strategies continuing to be as relevant today as they were when they were first implemented in 2021.

In terms of the Transformation programme, it is pleasing to report that the initiatives are progressing to plan, as the Group works towards its target of £50 million of net benefits, annualising at £17 million adjusted operating profit in 2028. The focus at present is on the transition from the technical design stages to a phased implementation of three priority initiatives: SAP S/4HANA, 'Commercial Excellence' and 'Service Excellence'.

One of McBride's key strengths is the depth to which its divisions are embedded in their sectors and markets. It is this focused specialism that provides exceptional product and technological knowledge, together with the ability to adapt to changing customer and consumer needs. Over the past two years, the Group has developed closer partnerships with its customers to enhance the value proposition provided to them. In addition to creating more dynamic pricing arrangements, the clear customer-centric approach means that the divisions can respond quickly and with agility to evolving consumer needs, as well as having a better platform to promote product innovations.

Innovation

The development of innovative products remains at the heart of McBride and is a driver of many of its new business wins. Throughout the year, the divisions have continued to create new solutions to meet changing consumer demands and ensure reliable delivery for their customers. A common theme across the whole business is the move to more compact or more concentrated products, reducing the weight of product to transport and the volume of required packaging. Additionally, during the year, Unit Dosing adapted product packaging formats from plastic to carton packs, Liquids introduced improved product formulations, Powders developed innovative solutions for greater compaction and Aerosols introduced lighter-weight packaging to mitigate the impact of input cost pressures.

Sustainability

A commitment to sustainability, relevant and tuned to the needs of our stakeholders and wider society, is core to the Group's strategy and corporate proposition. McBride continues to operate strong levels of governance, as would be expected of a listed company, and has made great strides in engaging with its workforce and local communities. During the year, McBride appointed a small, dedicated team to drive its environmental impact reduction plans. The Group signed up to the SBTi, the only major private label household supplier to have done so, setting goals for the coming years on all three carbon scopes. The divisions' research and development teams work to ensure that each new product launched is less carbon intense than the one it replaces.

Current trading and outlook

The first two months of the new financial year have seen overall volume levels in line with the Group's expectations. The overall market for household cleaning products is showing volume growth, and within that demand for private label products remains robust in the face of initiatives from branded manufacturers to recover market share. The divisions have a good pipeline of new product launches and business wins ahead and continue to prioritise growth initiatives. Input costs for the main raw materials remain steady overall, but with costs of recycled materials and natural-based chemicals increasing in line with expectations. The business will continue to manage its margins through informed and co-operative dialogue with its customers.

The next year is a crucial period for a number of the Group's transformation projects, especially the 'gold programmes', being the SAP S/4HANA ERP system upgrade, Commercial Excellence and Service Excellence. The Group remains confident in the quality of delivery and the benefits that will be delivered from these Transformation initiatives.

The Group's outlook for the year is consistent with analyst expectations, which would represent a third consecutive year of revenue growth, with profitability levels significantly ahead of our historical average.

Divisional performance review

	Year ended	Year ended		Constant
	30 June	30 June	Reported	currency
	2024	2023	change	change
Revenue	£m	£m	%	%
Liquids	532.8	497.9	7.0%	7.7%
Unit Dosing	233.6	234.2	(0.3)%	0.7%
Powders	92.8	85.9	8.0%	9.2%
Aerosols	50.9	46.2	10.2%	11.6%
Asia Pacific	24.7	24.8	(0.4)%	8.3%
Group	934.8	889.0	5.2%	6.2%

	Year ended	Year ended		Constant
	30 June	30 June	Reported	currency
	2024	2023	change	change
Adjusted operating profit/(loss)	£m	£m	£m	£m
Liquids	45.6	10.5	35.1	35.0
Unit Dosing	19.4	10.0	9.4	9.2
Powders	6.0	(0.7)	6.7	7.0
Aerosols	2.1	0.3	1.8	1.8
Asia Pacific	1.4	1.1	0.3	0.4
Corporate	(7.4)	(7.7)	0.3	0.4
Group	67.1	13.5	53.6	53.8

Liquids performance review

Revenue grew to £532.8 million (2023: £497.9m), a 7.7% increase on a constant currency basis, generating an adjusted operating profit of £45.6 million (2023: £10.5m) and resulting in an adjusted operating profit margin of 8.6% (2023: 2.1%).

Driven by sales volume growth of 6.6%, the strong performance was supported by efficient operational delivery and the effect of prior year pricing actions agreed with customers to offset significant input cost inflation. All major geographies saw sales volume and revenue growth, with a standout performance in France, as consumers continued to switch from branded to private label products in response to increased pressure on their disposable incomes.

Private label revenue increased by 9.4%, driven principally by private label share growth and new contract wins, and was the result of a strategic focus on building customer partnerships. In the strategic focus areas of laundry, private label sales volumes grew by 17.9% on a constant currency basis, driven by contract wins and a focused approach. Sales volumes of private label products in the dishwash and cleaners categories grew broadly in line with the wider markets.

Contract manufacturing volumes decreased by 1.8%; however, volumes in the second half increased by 24.1%, driven by a major new customer contract, which is expected to generate further growth in 2025.

Liquids has made good progress with the Transformation programme, creating efficiencies and capacity through the continued rollout of Lean manufacturing methodology across the division and using innovation to improve sustainability. The development of more concentrated products, together with a move towards carton packaging, supports the Group's commitment to sustainability by reducing the use of water and plastic in the manufacturing process.

Unit Dosing performance review

On a constant currency basis, revenue increased by 0.7% to £233.6 million (2023: £234.2m), generating an adjusted operating profit of £19.4 million (2023: £10.0m) and resulting in an adjusted operating profit margin of 8.3% (2023: 4.3%).

While the number of customer units grew by 1.1%, the volume of individual doses sold grew by 6.2%, driven by a shift in sales mix towards larger consumer packs. Volume growth in doses was seen across all product categories and in both private label and contract manufacturing customer segments, despite certain operational challenges limiting laundry capsules output. Contract manufacturing sales volumes increased by 22.4% in the second half, mainly driven by new product launches, with this positive momentum expected to continue into 2025.

Despite the average sales price per dose reducing by 5.2% on a constant currency basis, driven by successful efforts to create more compact and increasingly sustainable products and certain price reductions, the division improved profitability through operating leverage from higher production volumes, strong margin management and tight cost controls.

As outlined at the CMD, product leadership remains at the heart of Unit Dosing's strategy. Expertise in designing and manufacturing compacted products and sustainable packaging solutions, providing its customers with affordable, easy-to-use, fit-for-purpose, sustainable products, led to multiple new business wins in 2024 and created a healthy pipeline of new product launches. Under the 'FleXellence' initiative also discussed at the CMD, the division made investments to improve the flexibility of operations and increase capacity for key product and packaging formats, while ensuring the right balance between output increases, cost to produce and the flexibility required to fully satisfy its customers' needs.

Powders performance review

Revenue grew to £92.8 million (2023: £85.9m), a 9.2% increase on a constant currency basis, generating an adjusted operating profit of £6.0 million (2023: loss of £0.7m) and resulting in an adjusted operating profit margin of 6.5% (2023: operating loss margin of 0.8%).

This strong turnaround performance resulted from a combination of good operational delivery, business wins outpacing contract losses, and a strong recovery in demand from industrial and institutional customers. More broadly, underlying cost-of-living pressures supported the continued trend of consumers switching to private label laundry powder from branded products and other higher-cost laundry product formats.

The division's return to profitability was also underpinned by the proactive cost mitigation actions initiated in 2023 and, in part, by the easing of raw material cost inflation.

In the overall powders market, whilst volumes increased slightly by 0.9%, pricing increased in value by 5.5%, mainly due to branders increasing prices, widening the price gap between private label and brands. The Powders division gained market share versus higher-cost branded competition. Across the five major European markets, private label volume share in laundry rose to 29.8% (2023: 29.1%).

In line with the strategic priorities initially outlined in 2021, Powders continued to deliver award-winning products, led by research and development product compaction and sustainability actions. This is a key component of a wider programme to better tailor products to meet the needs of European consumers, with the aim of being the 'go-to' powder specialist. The focus on operational excellence resulted in efficiency improvements and improved customer service levels. Powders secured a number of new customer wins, gaining new contract manufacturing customers and expanding its private label presence into new geographic regions.

As outlined at the CMD, laundry powder remains a core part of the Group's product offering in the strategically important laundry category. Powders has developed a winning formula of being an efficient powder specialist, meeting its customers' needs by offering a wide portfolio of products, ranging from low-cost everyday value to premium award-winning products. Powders will continue on its journey to become the 'go to' powder specialist, by being the low-cost leader, driving efficiencies by improving asset utilisation, continuing to build on technical and R&D expertise and targeting growth opportunities in new geographies and channels.

Aerosols performance review

Revenue grew to £50.9 million (2023: £46.2m), an 11.6% increase on a constant currency basis, generating an adjusted operating profit of £2.1 million (2023: £0.3m) and resulting in an adjusted operating profit margin of 4.1% (2023: 0.6%).

Delivering on its strategy to expand horizons beyond France, several contract wins in the year delivered good growth in Germany and Iberia. Private label and personal care achieved standout performances, with revenue increasing by 16.0% and 17.5% respectively, on a constant currency basis. A clear focus on innovation, particularly leveraging sustainability credentials, allowed the introduction of more eco-friendly packaging and greener formulations using natural ingredients. In addition to making its products more sustainable, new product developments enabled the realisation of cost efficiencies.

As outlined at the CMD, Aerosols has developed strong relationships with customers, thanks to its proven track record of being fast, agile and reliable. From its established position as a leader in personal care and household aerosol products, Aerosols has a strong base from which to expand into new territories, driving further growth supported by significant capex investments to expand its manufacturing capacity and capabilities.

Asia Pacific performance review

Revenue grew to £24.7 million (2023: £24.8m), an 8.3% increase on a constant currency basis, generating an adjusted operating profit of £1.4 million (2023: £1.1m), and resulting in an adjusted operating profit margin of 5.7% (2023: 4.4%).

During the year, sales of personal care products grew strongly, particularly as the Malaysia facility returned to normal supply levels to customers in Southeast Asia and Australia after the extended Covid-19 slowdown period. Second half revenue growth of 13.1% on a constant currency basis, was significantly up versus 4.0% growth in the first half, as the division secured new personal care contracts, offsetting the partial loss of business with a major customer at the end of the prior financial year. Production output at the Vietnam facility increased significantly in the fourth quarter as a result of a new contract manufacturing agreement.

As outlined at the CMD, with its well-invested and flexible manufacturing capacity, the division is well positioned to grow in the Asia-Pacific region that boasts some of the world's fastest growing economies and a growing middle class that is increasingly demanding environmentally-friendly health and wellness products. The division will leverage its manufacturing capacity and product development knowhow to drive growth opportunities in household cleaning products, developing new contract manufacturing relationships and extending the regional reach for its private label products. More concretely, while the personal care products should continue their strong momentum into FY25, the Malaysia site will also begin to supply new household products to Australia in the first half.

Group operating results

Operating profit of £64.3 million was significantly higher than the prior year (2023: £10.3m). Adjusted operating profit of £67.1 million also improved significantly (2023: £13.5m), with the adjusted operating profit margin increasing from 1.5% to 7.2%. The Group's improved profitability continues to be underpinned by a focus on margin management and volume growth realised through a combination of new business wins and higher demand on existing private label contracts.

Adjusted EBITDA of £87.1 million (2023: £34.1m) reflected the strong trading and operational performance.

Exceptional items

Exceptional items of £4.6 million were recorded during the year (2023: £13.0m). The charge comprised the following:

· £0.8 million costs relating to the re-evaluation of the environmental remediation provision (2023: £0.8m); and

· £3.8 million charged to finance costs (2023: £12.2m). The charge primarily related to the termination of the upside sharing fee. As announced on 25 October 2023, the Group agreed to make a one-off payment of £5.0 million to its lender group in respect of the upside sharing fee. As £1.5 million had already been recognised at 30 June 2023, a further £3.5 million cost was recognised in the year. Costs of £12.2 million incurred in the prior year related to the independent business review and amendment of the Group's revolving credit facility (RCF).

Finance costs

The decrease in total finance costs from £25.4 million to £17.8 million was mainly driven by the reduction in exceptional finance costs. At £14.0 million, adjusted finance costs were £0.8 million higher than the prior year (2023: £13.2m), driven by high market interest rates. Excluding pension interest costs and the impact of foreign exchange movements, underlying adjusted finance costs of £12.1 million (2023: £12.9m) decreased by £0.8 million despite high market interest rates, due to the reduction in the cost of borrowing resulting from lower levels of net debt.

Taxation

Reported profit before taxation was £46.5 million (2023: loss of £15.1m). Adjusted profit before taxation was £53.1 million (2023: £0.3m). The tax charge on adjusted profit before tax for the year is £14.8 million (2023: £0.3m) and the effective tax rate is 28% (2023: 100%).

The statutory effective tax rate for the year is 28% (2023: 24%).

The Group operates across a number of jurisdictions and tax risk can arise in relation to the pricing of cross‑border transactions. Associated provisions have reduced in the year mainly due to statute of limitation expiries.

Earnings/(loss) per share

On an adjusted basis, diluted earnings per share was 21.7 pence (2023: loss of 0.0p). Total adjusted basic earnings per share⁽¹⁾ increased to 22.2 pence (2023: loss of 0.0p), with basic earnings per share at 19.3 pence (2023: loss of 6.6p).

¹Refer to note 19 for definition.

Payments to shareholders

Under the terms of the amended RCF announced on 29 September 2022, the Company may not, except with the consent of its lender group, declare, make or pay any dividend or distribution to its shareholders prior to an 'exit event', being a change of control, refinancing of the RCF in full, prepayment and cancellation of the RCF in full, or upon the termination date of the RCF, being May 2026. Hence, the Board is not recommending a final dividend for the financial year ended 30 June 2024.

Cash flow and balance sheet

	Year ended 30 June 2024	Year ended 30 June 2023
	£m	£m
Adjusted EBITDA	87.1	34.1
Working capital excluding provisions and pensions	(4.6)	7.1
Share-based payments	1.6	0.5
Loss on disposal of property, plant and equipment	1.4	0.3
Impairment of property, plant and equipment	0.2	-
Pension deficit reduction contributions	(4.0)	(4.0)
Free cash flow⁽¹⁾	81.7	38.0
Exceptional items	(1.0)	(1.4)
Interest on borrowings and lease liabilities less interest receivable	(10.9)	(11.4)
Refinancing costs paid	(5.5)	(12.3)
Tax paid	(5.1)	(1.8)
Net cash generated from operating activities	59.2	11.1
Net capital expenditure⁽²⁾	(19.6)	(12.0)
Repayment of lease liabilities	(4.5)	(4.3)
Debt financing activities	(25.9)	2.6
Settlement of derivatives	1.1	0.4
Free cash flow to equity⁽³⁾	10.3	(2.2)
Purchase of own shares	(2.8)	-
Net increase/(decrease) in cash and cash equivalents	7.5	(2.2)

Free cash flow was £81.7 million (2023: £38.0m) in the year to 30 June 2024, mostly attributable to the strong performance in adjusted EBITDA. Working capital outflows of £4.6 million (2023: £7.1m inflow) reflected an increase in trade receivables, driven by the growth in revenue.

Refinancing costs paid of £5.5 million (2023: £12.3m) mainly reflected the payment of £5.0 million to McBride's lender group to terminate the upside sharing fee. The increase in tax paid to £5.1 million (2023: £1.8m) reflects the return to taxable profit across the tax jurisdictions in which the Group operates.

During the year, net capital expenditure was £19.6 million (2023: £12.0m) in cash terms. The £7.6 million increase reflects a return to more normal levels of capital expenditure after a period of careful management of cash flows to mitigate increases in net debt. The Group continues to prioritise investment to support divisional growth objectives and the SAP S/4HANA programme.

Strong levels of cash generation resulted in a net repayment of £25.9 million external debt, significantly reducing the amount drawn on the Group's RCF.

The Group's net assets increased to £63.4 million (2023: £37.1m). Gearing⁽⁴⁾ decreased to 66.0% (30 June 2023: 78.4%) as net debt levels decreased by £35.0 million. Adjusted ROCE⁽¹⁾ of 33.5% was significantly higher than the prior year (2023: 6.4%) driven by the increased operating profit.

¹Refer to note 19 for definition.

²Net capital expenditure is capital expenditure less proceeds from sale of fixed assets.

³Free cash flow to equity excludes cash flows relating to transactions with shareholders.

⁴Gearing represents net debt divided by the average of opening and closing capital.

Bank facilities and net debt

Net debt at 30 June 2024 was £35.0 million lower than the prior year end at £131.5 million (2023: £166.5m).

Throughout the year, the Group had a €175 million multi-currency, sustainability-linked RCF. This facility ensures the Group continues to have significant levels of liquidity headroom.

At 30 June 2024, liquidity⁽¹⁾ was £98.3 million (2023: £59.3m). Liquidity throughout the year remained comfortably above the RCF's minimum liquidity covenant of £15 million.

At 30 June 2024, the net debt cover ratio⁽¹⁾, as defined under the RCF funding arrangements, was 0.8x (2023: 2.9x) and the interest cover⁽¹⁾ was 6.8x (2023: 2.7x). The amount undrawn on the facility was £82.9 million (2023: £40.0m). Under the RCF agreement, net debt cover and interest cover covenants will be tested quarterly with effect from 30 September 2024.

The RCF, which is aligned with the Loan Market Association's 'Sustainability Linked Loan Principles', incorporates three sustainability performance targets which are central to McBride's commitment to maintaining a responsible business and contributing actively to a more sustainable future:

1. Renewable energy: McBride strives to reduce its environmental impact by increasing the percentage of energy from renewable sources from 5.9% in 2020 to 70.0% in 2026. During the year, 54.9% (2023: 42.1%) of the Group's energy came from renewable sources, surpassing the loan agreement target of 50.0% by 30 June 2024.

2. Recycled content: Plastics are a significant element in many of McBride's final products. During the year, 98.8% (2023: 98.2%) of polyethylene terephthalate (PET) plastic packaging sourced in manufacturing the Group's products had post‑consumer recycled (PCR) content, exceeding the loan agreement target of 84.0%. This also significantly exceeds the Company's own target of 94.0% PCR by 2026.

3. Responsible sourcing: McBride aims to source all paper and card components responsibly via FSC®-approved suppliers, with the percentage of virgin carton sourced from FSC®-approved suppliers increasing from 50.0% in 2020 to 100.0% in 2026. By 30 June 2024, the percentage of FSC®-certified skillets sourced was 78.9% (2023: 55.6%), slightly below the loan agreement target of 80.0% by 30 June 2024. The limitation in the use of FSC®-sourced board is due to product mix and transition impacts. McBride continues to focus on improving recyclability via product design and working closely with customers.

Successful achievement of all three annual targets results in a reduction of 0.05% of the margin of the facility.

At 30 June 2024, the Group had a number of facilities whereby it could borrow against certain of its trade receivables. In the UK, the Group had a £20 million facility, committed until May 2026. In Germany and Denmark, the Group had a €45 million facility, committed until May 2026. In France, Belgium and Spain, the Group had an unlimited facility, committed until May 2026. The Group can borrow from the provider of the relevant facility up to the lower of the facility limit and the value of the qualifying receivables.

¹Refer to note 19 for definition.

Pensions

In the UK, the Group operates a defined benefit pension scheme, which is closed to new members and to future accrual.

A cash flow driven investment (CDI) strategy was implemented during the first half of the financial year to 30 June 2020. Using credit/bond investments, the CDI strategy was intended to deliver a stable, more certain, expected return and reduce volatility. The strategy previously targeted a c.100% hedge of interest rates and inflation. This strategy worked well until the UK government bond crisis in 2022. Following that crisis, and the resultant changes in liability-driven investment managers' collateral requirements, the Trustee amended the strategy in October 2022 and, as an interim step, moved to an unlevered government bond-based hedge with c.40% of interest rate and inflation hedging. The investment strategy was then reviewed and hedging was increased to c.65% of interest rates and inflation during October to December 2023 to broadly hedge the funding level of the Fund and strike a balance between risk and return objectives and liquidity needs of the Fund.

At 30 June 2024, the Group recognised a deficit in the scheme of £27.5 million (30 June 2023: £24.7m). The increase in deficit is due to a reduction in corporate bond yields over the year, leading to a decrease in the discount rate used to value the Fund's liabilities, which has led to an increase in the liabilities and a loss on assets in excess of interest income.

Following the triennial valuation at 31 March 2021, McBride and the Trustee agreed a new deficit reduction plan based on the scheme funding deficit of £48.4 million. The current level of deficit contributions of £4.0 million per annum is payable until 31 March 2028. McBride separately agreed that, from 1 October 2024, conditional profit-related contributions of £1.7 million per annum will be paid over the period to 31 March 2028. If adjusted operating profit exceeds £35.0 million, additional annual deficit contributions of £1.7 million will be due over the following year. If adjusted operating profit is below £30.0 million then no profit-related contributions will be due the following year. If reported adjusted operating profit is between £30.0m and £35.0m, a proportion of the £1.7 million contribution will be due over the following year, with incremental increases of £0.34 million of additional contributions for each whole £1.0 million of adjusted operating profit in excess of £30.0 million. As adjusted operating profit for the twelve months ended 31 March 2024 exceeded £35.0 million, additional deficit contributions of £0.14 million will be payable each month from 1 October 2024, with total additional payments for the year ended 30 June 2025 expected to be £1.3 million. McBride also agreed to make additional contributions such that the total deficit contributions in any year match the value of any dividend paid. The funding arrangements and recovery plan will next be reviewed by McBride and the Trustee as part of the 31 March 2024 valuation, which has a statutory deadline for signing of 30 June 2025.

The Directors acknowledge the appeal judgement dated 25 July 2024 in the case of NTL vs Virgin Media and will be reviewing the implications for the Group in the coming months.

The Group has other post-employment benefit obligations outside the UK that amounted to £1.9 million (30 June 2023: £1.9m).

Principal risks and uncertainties

The Group is subject to both internal and external risk factors to its business and has a well-established set of risk management procedures. The following risks and uncertainties are those that the Directors believe could have the most significant impact on the Group's business:

· Changing market, customer and consumer dynamics;

· Disruption to systems and processes;

· Financing risks;

· Supply chain resilience;

· Safe and high-quality products;

· Health and safety;

· Climate change and environmental concerns;

· Challenges in attracting and retaining talent;

· Increased regulation;

· Economic, political and macro environment instability; and

· Business transformation challenges.

Consolidated Income Statement

Year ended 30 June 2024

		2024			2023
		Adjusted	Adjusting items	Total	Adjusted	Adjusting items	Total
	Note	£m	£m	£m	£m	£m	£m
Revenue	3	934.8	-	934.8	889.0	-	889.0
Cost of sales		(586.9)	-	(586.9)	(625.4)	-	(625.4)
Gross profit		347.9	-	347.9	263.6	-	263.6
Distribution costs		(81.3)	-	(81.3)	(77.9)	-	(77.9)
Administrative costs		(196.3)	(2.8)	(199.1)	(168.4)	(3.2)	(171.6)
Impairment of trade receivables		(1.6)	-	(1.6)	(3.5)	-	(3.5)
Loss on disposal of property, plant and equipment		(1.4)	-	(1.4)	(0.3)	-	(0.3)
Impairment of property, plant and equipment		(0.2)	-	(0.2)	-	-	-
Operating profit/(loss)		67.1	(2.8)	64.3	13.5	(3.2)	10.3
Finance costs	6	(14.0)	(3.8)	(17.8)	(13.2)	(12.2)	(25.4)
Profit/(loss) before taxation		53.1	(6.6)	46.5	0.3	(15.4)	(15.1)
Taxation	7	(14.8)	1.6	(13.2)	(0.3)	3.9	3.6
Profit/(loss) for the year		38.3	(5.0)	33.3	-	(11.5)	(11.5)
Earnings/(loss) per ordinary share attributable to the owners of the parent during the year		8
Basic earnings/(loss) per share				19.3p			(6.6)p
Diluted earnings/(loss) per share				18.8p			(6.6)p

Consolidated Statement of Comprehensive Income

Year ended 30 June 2024

	2024	2023
	£m	£m
Profit/(loss) for the year	33.3	(11.5)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation differences of foreign subsidiaries	0.1	(0.6)
Gain on net investment hedges	0.8	0.4
(Loss)/gain on cash flow hedges in the year	(1.3)	3.7
Cash flow hedges transferred to profit or loss	(1.6)	(1.4)
Taxation relating to the items above	(0.6)	(0.4)
	(2.6)	1.7
Items that will not be reclassified to profit or loss:
Net actuarial loss on post‑employment benefits	(5.6)	(14.1)
Taxation relating to the items above	1.3	3.5
	(4.3)	(10.6)
Total other comprehensive expense	(6.9)	(8.9)
Total comprehensive income/(expense)	26.4	(20.4)

Consolidated Balance Sheet

At 30 June 2024

		2024	2023
	Note	£m	£m
Non-current assets
Goodwill	10	19.7	19.7
Other intangible assets	10	9.8	6.5
Property, plant and equipment	10	114.4	117.8
Derivative financial instruments	11	1.7	4.5
Right-of-use assets	10	8.1	8.5
Deferred tax assets		42.8	41.6
		196.5	198.6
Current assets
Inventories		119.6	121.5
Trade and other receivables		148.8	145.7
Current tax assets		2.1	2.3
Derivative financial instruments	11	0.3	0.6
Cash and cash equivalents	12	9.3	1.6
		280.1	271.7
Total assets		476.6	470.3

Current liabilities
Trade and other payables		220.1	219.6
Borrowings	11	67.4	49.3
Lease liabilities	11	3.1	3.5
Derivative financial instruments	11	0.4	1.8
Current tax liabilities		12.9	6.7
Provisions	14	2.2	2.7
		306.1	283.6
Non-current liabilities
Borrowings	11	65.0	109.8
Lease liabilities	11	5.3	5.5
Pensions and other post-employment benefits	13	29.4	26.6
Provisions	14	1.4	2.6
Deferred tax liabilities		6.0	5.1
		107.1	149.6
Total liabilities		413.2	433.2
Net assets		63.4	37.1

Equity
Issued share capital	16	17.4	17.4
Share premium account		68.6	68.6
Other reserves		76.3	78.9
Accumulated losses		(98.9)	(127.8)
Total equity		63.4	37.1

Consolidated Cash Flow Statement

Year ended 30 June 2024


		2024	2023
	Note	£m	£m
Operating activities
Profit/(loss) before tax		46.5	(15.1)
Finance costs		17.8	25.4
Exceptional items excluding finance costs	4	0.8	0.8
Share-based payments charge		1.6	0.5
Depreciation of property, plant and equipment	10	16.3	16.8
Depreciation of right-of-use assets	10	3.7	3.8
Loss on disposal of property, plant and equipment		1.4	0.3
Amortisation of intangible assets	10	2.0	2.4
Impairment of property, plant and equipment		0.2	-
Operating cash flow before changes in working capital and exceptional items		90.3	34.9
Increase in receivables		(5.2)	(1.3)
Decrease/(increase) in inventories		0.6	(2.7)
Increase in payables		-	11.1
Operating cash flow after changes in working capital before exceptional items		85.7	42.0
Additional cash funding of pension scheme		(4.0)	(4.0)
Cash generated from operations before exceptional items		81.7	38.0
Cash outflow in respect of exceptional items		(1.0)	(1.4)
Cash generated from operations		80.7	36.6
Interest paid		(10.9)	(11.4)
Refinancing costs paid		(5.5)	(12.3)
Taxation paid		(5.1)	(1.8)
Net cash generated from operating activities		59.2	11.1
Investing activities
Purchase of property, plant and equipment		(14.3)	(10.3)
Purchase of intangible assets		(5.3)	(1.7)
Settlement of derivatives used in net investment hedges		1.1	0.4
Net cash used in investing activities		(18.5)	(11.6)
Financing activities
Drawdown/(repayment) of overdrafts	12	11.2	(6.2)
Drawdown/(repayment) of other loans	12	7.4	(4.9)
(Repayment)/drawdown of bank loans	12	(44.5)	13.7
Repayment of IFRS 16 lease obligations	12	(4.5)	(4.3)
Purchase of own shares		(2.8)	-
Net cash used in financing activities		(33.2)	(1.7)

Increase/(decrease) in net cash and cash equivalents		7.5	(2.2)
Net cash and cash equivalents at the start of the year		1.6	4.5
Currency translation differences		0.2	(0.7)
Net cash and cash equivalents at the end of the year		9.3	1.6

Consolidated Statement of Changes in Equity

Year ended 30 June 2024

				Other reserves
	Issued share capital £m	Share premium account £m	Cash flow hedge reserve £m		Currency translation reserve £m	Capital redemption reserve £m	Accumulated losses £m	Total equity £m
At 1 July 2023	17.4	68.6	3.7		(2.0)	77.2	(127.8)	37.1
Profit for the year	-	-	-		-	-	33.3	33.3
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation differences of foreign subsidiaries	-	-	-		0.1	-	-	0.1
Gain on net investment hedges	-	-	-		0.8	-	-	0.8
Loss on cash flow hedges in the year	-	-	(1.3)		-	-	-	(1.3)
Cash flow hedges transferred to profit or loss	-	-	(1.6)		-	-	-	(1.6)
Taxation relating to the items above	-	-	(0.6)		-	-	-	(0.6)
	-	-	(3.5)		0.9	-	-	(2.6)
Items that will not be reclassified to profit or loss:
Net actuarial loss on post‑employment benefits	-	-	-		-	-	(5.6)	(5.6)
Taxation relating to the items above	-	-	-		-	-	1.3	1.3
	-	-	-		-	-	(4.3)	(4.3)
Total other comprehensive (expense)/income	-	-	(3.5)		0.9	-	(4.3)	(6.9)
Total comprehensive (expense)/income	-	-	(3.5)		0.9	-	29.0	26.4
Transactions with owners of the parent
Purchase of own shares	-	-	-		-	-	(2.8)	(2.8)
Share-based payments	-	-	-		-	-	1.6	1.6
Taxation relating to the items above	-	-	-		-	-	1.1	1.1
At 30 June 2024	17.4	68.6	0.2		(1.1)	77.2	(98.9)	63.4

				Other reserves
	Issued share capital £m	Share premium account £m	Cash flow hedge reserve £m		Currency translation reserve £m	Capital redemption reserve £m	Accumulated losses £m	Total equity £m
At 1 July 2022	17.4	68.6	1.8		(1.8)	77.2	(106.2)	57.0
Loss for the year	-	-	-		-	-	(11.5)	(11.5)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation differences of foreign subsidiaries	-	-	-		(0.6)	-	-	(0.6)
Gain on net investment hedges	-	-	-		0.4	-	-	0.4
Gain on cash flow hedges in the year	-	-	3.7		-	-	-	3.7
Cash flow hedges transferred to profit or loss	-	-	(1.4)		-	-	-	(1.4)
Taxation relating to the items above	-	-	(0.4)		-	-	-	(0.4)
	-	-	1.9		(0.2)	-	-	1.7
Items that will not be reclassified to profit or loss:
Net actuarial loss on post‑employment benefits	-	-	-		-	-	(14.1)	(14.1)
Taxation relating to the items above	-	-	-		-	-	3.5	3.5
	-	-	-		-	-	(10.6)	(10.6)
Total other comprehensive income/(expense)	-	-	1.9		(0.2)	-	(10.6)	(8.9)
Total comprehensive income/(expense)	-	-	1.9		(0.2)	-	(22.1)	(20.4)
Transactions with owners of the parent
Share-based payments	-	-	-		-	-	0.5	0.5
At 30 June 2023	17.4	68.6	3.7		(2.0)	77.2	(127.8)	37.1

At 30 June 2024, the accumulated losses include a deduction of £3.2 million (2023: £0.4m) for the cost of own shares held in relation to employee share schemes.

Notes to the Consolidated Financial Information

1. Corporate information

McBride plc ('the Company') is a public company limited by shares incorporated and domiciled in the United Kingdom and registered in England and Wales. The Company's ordinary shares are listed on the London Stock Exchange. The registered office of the Company is Middleton Way, Middleton, Manchester M24 4DP. For the purposes of DTR 6.4.2R, the Home State of McBride plc is the United Kingdom.

The Company and its subsidiaries (together, 'the Group') is Europe's leading manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning/hygiene markets. The Company develops and manufactures products for retailers and brand owners in Europe and the Asia-Pacific region.

2. Accounting policies

Basis of preparation

The financial information does not constitute statutory accounts of the Group for the years ended 30 June 2024 and 2023 within the meaning of sections 434(3) and 435(3) of the Companies Act 2006 or contain sufficient information to comply with the disclosure requirements of IFRS. The financial information for 2023 is derived from the statutory accounts for 2023 which have been delivered to the Registrar of Companies.

The statutory accounts for the year ended 30 June 2024 have been reported on by the Company's auditors, PricewaterhouseCoopers LLP, and will be delivered to the Registrar of Companies in due course. The auditors have reported on those statutory accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The financial information has been prepared on the going concern basis in accordance with UK-adopted International Financial Reporting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The financial statements have been prepared under the historical cost convention, modified in respect of the revaluation to fair value of financial assets and liabilities (derivative financial instruments) at fair value through profit or loss, assets held for sale and defined benefit pension plan assets. The financial information has been prepared applying accounting policies that were applied in the preparation of the Company's published consolidated financial statements for the year ended 30 June 2023.

Going concern

The Group's base case forecasts are based on the Board-approved budget and three-year plan. They indicate sufficient liquidity, debt cover and interest cover throughout the going concern review period to ensure compliance with current banking covenants. The Group's base case scenario assumes:

· revenue growth of c.4% per annum, driven predominantly by volume increases;

· raw material prices stabilising after the exceptional levels of input cost inflation seen in the previous two years;

· interest rates reducing in line with current market expectations; and

· a Sterling to Euro exchange rate of £1:€1.15.

The Directors have considered the Group's principal risks with the highest likelihood of occurrence or the severest impact, and the adverse effect this would have on the Group's financial forecasts. Changing market, customer and consumer dynamics could adversely impact revenue growth. Lack of supply chain resilience influences raw material and packaging input costs. Economic, political and macro environment instability potentially affects both revenue growth and input costs, in addition to market interest rates and foreign exchange rates. Considering these risks, together with the risk that the Group's revolving credit facility is reduced as part of the upcoming refinancing project, a severe but plausible downside scenario to stress test the Group's financial forecasts has been modelled, with the following assumptions:

· no revenue growth in 2025;

· revenue growth reducing to 1% in 2026, being half of the Group's long-term target of 2%;

· an increase in raw material and packaging input costs compared to latest forecasts;

· interest rates increasing by 100 basis points;

· Sterling appreciating significantly against the Euro to £1:€1.25; and

· revolving credit facility reducing from €175 million to €150 million.

In the event that such a severe but plausible downside risk scenario occurs, the Group would remain compliant with current banking covenants.

After reviewing the current liquidity position and financial forecasts, stress testing for potential risks and considering the uncertainties described above, and based on the currently committed funding facilities, the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence and without significant curtailment of operations for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis of accounting in preparing the Group financial statements.

Viability statement

In accordance with the requirements of the UK Corporate Governance Code 2018, the Directors have performed a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. The Board has determined that a three-year period to 30 June 2027 constitutes an appropriate period over which to provide its viability statement. The strategic plan is based on detailed action plans developed by the Group with specific initiatives and accountabilities. There is inherently less certainty in the projections for years four and five.

The Group has a €175 million multi‑currency, sustainability-linked RCF, with a tenor to May 2026, as well as a number of facilities whereby it could borrow against certain of its trade receivables: in the UK a £20 million facility, committed until May 2026; in Germany and Denmark a €45 million facility, committed until May 2026; and in France, Belgium and Spain an unlimited facility committed until May 2026. The Group can borrow from the provider of the relevant facility up to the lower of the facility limit and the value of the qualifying receivables. The Group's strategic plan assumes that financing facilities will be available on an appropriate basis and as required to meet the Group's capital investment and growth strategies for the entire viability period.

In assessing the Group's viability, the Directors have considered the current financial position of the Group and its principal risks and uncertainties. The analysis considers a severe but plausible downside scenario, featuring the principal risks from a financial and operational perspective, with the resulting impact on key metrics, such as liquidity headroom and covenants. The downside risk scenario assumes sensitivity around exchange rates and interest rates, along with significant reductions in revenue and cash flow over the three-year period. The Group's geographic footprint, product diversification and access to external financing all provide resilience against these factors and the other principal risks to which the Group is exposed.

Whilst the Group ends the year with net current liabilities of £26.0 million (2023: £11.9m), the Directors conclude that the Group has access to sufficient financing facilities in order to support this position.

After conducting their viability review, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment to 30 June 2027.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the consolidated financial statements from which this preliminary announcement is derived requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported assets, liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 30 June 2023.

Alternative performance measures (APMs)

The performance of the Group is assessed using a variety of adjusted measures that are not defined under IFRS and are therefore termed non-GAAP measures.

APM	Definition	Source
Adjusted operating profit	Operating profit before amortisation of intangible assets and exceptional items		Consolidated Income Statement
Adjusted EBITDA	Adjusted operating profit before depreciation		Consolidated Income Statement
Adjusted profit before tax	Adjusted profit before tax is based on adjusted operating profit less adjusted finance costs		Consolidated Income Statement
Adjusted profit for the year	Adjusted profit for the year is based on adjusted profit before tax less taxation relating to non-adjusting items		Consolidated Income Statement
Adjusted earnings per share	Adjusted earnings per share is based on the Group's profit/(loss) for the year adjusted for the items excluded from operating profit in arriving at adjusted operating profit, and the tax relating to those items		Note 8 Consolidated Income Statement
Free cash flow	Free cash flow is defined as cash generated before exceptional items		Consolidated Cash Flow Statement
Cash conversion %	Cash conversion % is defined as free cash flow as a percentage of adjusted EBITDA (applicable only when adjusting EBITDA is positive)		Consolidated Income Statement Consolidated Cash Flow Statement
Adjusted return on capital employed (ROCE)	Adjusted ROCE is defined as adjusted operating profit divided by the average of opening and closing capital employed. Capital employed is defined as the total of goodwill and other intangible assets, property, plant and equipment, right-of-use assets, inventories, trade and other receivables less trade and other payables.		Consolidated Income Statement Consolidated Balance Sheet
Liquidity	Liquidity means, at any time, without double counting, the aggregate of: (a) cash; (b) cash equivalents; (c) the available facility at that time, which comprises the headroom available in the RCF and other committed facilities; and (d) the aggregate amount available for drawing under uncommitted facilities.		Consolidated Cash Flow Statement Note 19
Net debt	Net debt consists of cash and cash equivalents, overdrafts, bank and other loans and lease liabilities.		Consolidated Balance Sheet

The APMs we use may not be directly comparable with similarly titled measures used by other companies.

Adjusted measures

Adjusted measures exclude specific items that are considered to hinder comparison of the trading performance of the Group's businesses either year on year or with other businesses. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and Executive Committee, and is used for internal performance analysis and in relation to employee incentive arrangements. The Directors present these adjusted measures in the financial statements in order to assist investors in their assessment of the trading performance of the Group. Directors do not regard these measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with IFRS.

During the years under review, the items excluded from operating profit in arriving at adjusted operating profit were the amortisation of intangible assets and exceptional items. Exceptional items and amortisation are excluded from adjusted operating profit because they are not considered to be representative of the trading performance of the Group's businesses during the year.

See note 19 'Additional information' for further information on alternative performance measures.

3. Segment information

Segmental reporting

Financial information is presented to the Board by business division for the purposes of allocating resources within the Group and assessing the performance of the Group. There are five separately managed and accountable business divisions. The European business is managed as four divisions based on product technology and the Asia Pacific division is based on geography:

· Liquids;

· Unit Dosing;

· Powders;

· Aerosols; and

· Asia Pacific.

Intra-group revenue from the sale of products is agreed between the relevant customer-facing units and eliminated in the segmental presentation that is presented to the Board, and therefore excluded from the reported figures. Most overhead costs are directly attributed within the respective divisions' income statements. Central overheads are allocated to a reportable segment proportionally using an appropriate cost driver. Corporate costs, which include the costs associated with the Board and the Executive Leadership Team, governance and listed company costs. The costs of certain Group functions (mostly associated with financial disciplines such as treasury) are reported separately. Exceptional items are detailed in note 4 and are not allocated to the reportable segments as this reflects how they are reported to the Board. Finance expense and income are not allocated to the reportable segments, as the Group Treasury function manages this activity, together with the overall net debt position of the Group.

The Board uses adjusted operating profit to measure the profitability of the Group's businesses. Adjusted operating profit is, therefore, the measure of segment profit presented in the Group's segment disclosures. Adjusted operating profit represents operating profit before specific items that are considered to hinder comparison of the trading performance of the Group's businesses either year on year or with other businesses. During the years under review, the items excluded from operating profit in arriving at adjusted operating profit were the amortisation of intangible assets and exceptional items.

	Liquids	Unit Dosing	Powders	Aerosols	Asia Pacific	Corporate	Group
Year ended 30 June 2024	£m	£m	£m	£m	£m	£m	£m
Segment revenue	532.8	233.6	92.8	50.9	24.7	-	934.8
Adjusted operating profit/(loss)	45.6	19.4	6.0	2.1	1.4	(7.4)	67.1
Amortisation of intangible assets							(2.0)
Exceptional items (note 4)							(0.8)
Operating profit							64.3
Finance costs (note 6)							(17.8)
Profit before taxation							46.5

Inventories	61.2	31.3	14.1	10.3	2.7	-	119.6
Capital expenditure	10.3	7.7	2.0	0.6	0.3	-	20.9
Amortisation and depreciation	12.8	5.8	1.4	0.6	1.4	-	22.0

	Liquids	Unit Dosing	Powders	Aerosols	Asia Pacific	Corporate	Group
Year ended 30 June 2023	£m	£m	£m	£m	£m	£m	£m
Segment revenue	497.9	234.2	85.9	46.2	24.8	-	889.0
Adjusted operating profit/(loss)	10.5	10.0	(0.7)	0.3	1.1	(7.7)	13.5
Amortisation of intangible assets							(2.4)
Exceptional items (note 4)							(0.8)
Operating profit							10.3
Finance costs (note 6)							(25.4)
Loss before taxation							(15.1)

Inventories	59.4	33.8	15.8	9.6	2.9	-	121.5
Capital expenditure	5.9	4.9	1.7	0.4	0.3	-	13.2
Amortisation and depreciation	13.2	6.3	1.4	0.6	1.5	-	23.0

Geographical information

	Revenue			Non-current assets
	2024	2023	2024		2023
	£m	£m	£m		£m
United Kingdom	194.4	187.8	36.8		34.5
Germany	212.4	205.8	-		-
France	201.5	188.0	9.8		9.1
Italy	78.4	73.9	14.4		14.3
Spain	41.2	35.1	9.5		9.6
Other Europe	177.5	169.5	77.6		80.2
Asia Pacific	25.4	25.7	3.9		4.8
Rest of the World	4.0	3.2	-		-
Total	934.8	889.0	152.0		152.5

The geographical revenue information above is based on the location of the customer.

Non-current assets for this purpose consist of goodwill, other intangible assets, property, plant and equipment and right-of-use assets.

Revenue by major customer

In 2024 and 2023, no individual customer provided more than 10% of the Group's revenue. During 2024, the top ten customers accounted for 52% of total Group revenue (2023: 53%).

4. Exceptional items

Analysis of exceptional items

	2024	2023
	£m	£m
Environmental remediation	0.8	0.8
Total charged to operating profit	0.8	0.8
Group refinancing:
Independent business review and refinancing costs	3.8	12.2
Total charged to finance costs	3.8	12.2
Total exceptional items before tax	4.6	13.0

Total exceptional items of £4.6 million were recorded during the year (2023: £13.0m). The charge comprised the following:

· £0.8 million costs relating to the re-evaluation of the environmental remediation provision (2023: £0.8m); and

5. Operating profit

Operating profit is stated after charging:

	2024	2023
	£m	£m
Cost of inventories (included in cost of sales)*	519.9	573.2
Employee costs	157.2	142.0
Amortisation of intangible assets (note 10)	2.0	2.4
Depreciation of property, plant and equipment (note 10)	16.3	16.8
Depreciation of right-of-use assets (note 10)	3.7	3.8
Impairment:
Property, plant and equipment (note 10)	0.2	-
Inventories	8.9	3.0
Trade receivables	1.6	2.6
Expense relating to short-term leases	0.2	0.3
Expense relating to low-value leases	0.1	0.1
Research and development costs not capitalised	10.0	7.3
Net foreign exchange loss	0.5	0.4

^*Direct material costs only.

6. Finance costs

	2024	2023
	£m	£m
Finance costs
Interest on bank loans and overdrafts	10.5	11.1
Interest on lease liabilities	0.3	0.3
Net foreign exchange loss/(gain)	0.7	(0.2)
Amortisation of facility fees	0.5	0.5
Non-utilisation and other fees	0.8	1.0
	12.8	12.7
Post-employment benefits:
Net interest cost on defined benefit obligation (note 13)	1.2	0.5
Adjusted finance costs	14.0	13.2
Costs associated with independent business review and refinancing (note 4)	3.8	12.2
Total finance costs	17.8	25.4

Interest rate caps are used to manage the interest rate profile of the Group's borrowings. Accordingly, interest income from interest rate caps of £1.6 million (2023: £0.5m) is included in interest on bank loans and overdrafts.

No interest costs were capitalised in the current year (2023: £nil).

7. Taxation

Income tax expense/(credit)

	2024			2023
Total attributable to ordinary	UK	Overseas	Total	UK	Overseas	Total
shareholders	£m	£m	£m	£m	£m	£m
Current tax expense/(credit)
Current year	0.4	12.0	12.4	-	5.0	5.0
Adjustment for prior years	-	(0.8)	(0.8)	-	(0.2)	(0.2)
	0.4	11.2	11.6	-	4.8	4.8
Deferred tax expense/(credit)
Origination and reversal of temporary differences	1.0	(0.3)	0.7	(8.8)	0.9	(7.9)
Adjustment for prior years	0.7	0.2	0.9	(0.2)	(0.3)	(0.5)
	1.7	(0.1)	1.6	(9.0)	0.6	(8.4)

Income tax expense/(credit)	2.1	11.1	13.2	(9.0)	5.4	(3.6)

The current tax adjustment for the prior year was £0.5 million charge (2023: £nil) and £0.2 million credit (2023: £0.2m credit) relating to the release of provisions for uncertain tax treatments due to the expiry of statutes of limitation.

Reconciliation to UK statutory tax rate

The total tax charge/(credit) on the Group's profit/(loss) before tax for the year is higher (2023: higher) than the amount that would be charged at the UK standard rate of corporation tax for the following reasons:

	2024	2023
Total attributable to ordinary shareholders	£m	£m
Profit/(loss) before tax	46.5	(15.1)
Profit/(loss) before tax multiplied by the UK corporation tax rate of 25.0% (2023: 20.5%)	11.6	(3.1)
Effect of tax rates in foreign jurisdictions	0.3	1.1
Non-deductible expenses	0.5	0.4
Change in tax rate	-	(1.6)
Other differences	0.7	0.3
Adjustment for prior years	0.1	(0.7)
Total tax charge/(credit) in profit or loss	13.2	(3.6)
Exclude adjusting items	1.6	3.9
Total tax charge in profit or loss before adjusting items	14.8	0.3

The taxation is provided at current rates on the profits earned for the year. There have been no changes in applicable tax rates that have impacted the current year tax charge.

The main rate of UK corporation tax applicable for the financial year is 25.0% (2023: 20.5%, being the weighted average of 19.0% for nine months and 25.0% for three months).

8. Earnings/(loss) per ordinary share

Basic earnings/(loss) per ordinary share is calculated by dividing the profit/(loss) for the year attributable to owners of the Company by the weighted average number of the Company's ordinary shares in issue during the financial year. The weighted average number of the Company's ordinary shares in issue excludes 1,372,779 shares (2023: 623,968 shares), being the weighted average number of own shares held during the year in relation to employee share schemes.

	Reference	2024	2023
Weighted average number of ordinary shares in issue (million)	a	172.7	173.4
Effect of dilutive share options (million)		4.2	2.5
Weighted average number of ordinary shares for calculating diluted earnings/(loss) per share (million)	b	176.9	175.9

Diluted earnings/(loss) per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potentially dilutive ordinary shares. Where potentially dilutive ordinary shares would cause an increase in earnings per share, or a decrease in loss per share, the diluted loss per share is considered equal to the basic loss per share.

During the year, the Company had equity-settled awards with a nil exercise price that are potentially dilutive ordinary shares.

Adjusted earnings per share measures are calculated based on profit/(loss) for the year attributable to owners of the Company before adjusting items as follows:

		2024	2023
	Reference	£m	£m
Profit/(loss) for calculating basic and diluted earnings/(loss) per share	c	33.3	(11.5)
Adjusted for:
Amortisation of intangible assets (note 10)		2.0	2.4
Exceptional items (note 4)		4.6	13.0
Taxation relating to the items above		(1.6)	(3.9)
Profit for calculating adjusted earnings per share	d	38.3	-

		2024	2023
	Reference	pence	pence
Basic earning/(loss) per share	c/a	19.3	(6.6)
Diluted earnings/(loss) per share	c/b⁽¹⁾	18.8	(6.6)
Adjusted basic earnings per share	d/a	22.2	0.0
Adjusted diluted earnings per share	d/b⁽¹⁾	21.7	0.0

¹Diluted loss per share is considered equal to the basic loss per share as potentially dilutive ordinary shares cause a decrease in the loss per share.

9. Payments to shareholders

Dividends paid and received are included in the Company financial statements in the year in which the related dividends are actually paid or received or, in respect of the Company's final dividend for the year, approved by shareholders.

No payments to ordinary shareholders were made or proposed in respect of this year or the prior year.

Furthermore, under the RCF the Company may not, except with the consent of its lender group, redeem or repay any of its share capital prior to an exit event. Therefore, the redemption of B Shares that would normally take place in November each year will not take place. B Shares issued but not redeemed are classified as current liabilities.

Movements in the number of B Shares outstanding were as follows:

		Nominal
	Number	value
	000	£'000
Issued and fully paid
At 1 July 2022, 30 June 2023 and 30 June 2024	665,888	666

B Shares carry no rights to attend, speak or vote at Company meetings, except on a resolution relating to the winding up of the Company.

10. Intangible assets, property, plant and equipment and right-of-use assets

	Goodwill
	and other	Property,
	intangible	plant and	Right-of-use
	assets	equipment	assets
	£m	£m	£m
Net book value at 1 July 2023	26.2	117.8	8.5
Currency translation differences	-	(1.1)	(0.1)
Additions	5.3	15.6	3.4
Disposal of assets	-	(1.4)	-
Impairment	-	(0.2)	-
Depreciation charge	-	(16.3)	(3.7)
Amortisation charge	(2.0)	-	-
Net book value at 30 June 2024	29.5	114.4	8.1

Included within goodwill and other intangible assets is goodwill of £19.7 million (2023: £19.7m), computer software of £5.0 million (2023: £5.6m) and customer relationships of £0.2 million (2023: £0.6m).

Capital commitments at 30 June 2024 amounted to £5.7 million (2023: £5.5m). At 30 June 2024, the Group was committed to future minimum lease payments of £0.3 million (2023: £2.1m) in respect of leases which have not yet commenced and for which no lease liability has been recognised.

11. Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

There have been no material changes in the Group's risk management policies in either the 30 June 2024 or 30 June 2023 financial years.

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

· Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities

· Level 2 - inputs other than Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices)

· Level 3 - inputs that are not based on observable market data (unobservable inputs).


	At	At
	30 June	30 June
	2024	2023
	£m	£m
Level 2 assets
Derivative financial instruments
Forward currency contracts	-	0.2
Interest rate caps	2.0	4.9
Total financial assets	2.0	5.1
Level 2 liabilities
Derivative financial instruments
Forward currency contracts	(0.4)	-
Interest rate caps	-	(0.3)
Upside sharing fee	-	(1.5)
Total financial liabilities	(0.4)	(1.8)

Derivative financial instruments

Derivative financial instruments comprise the foreign currency derivatives and interest rate derivatives that are held by the Group in designated hedging relationships.

Foreign currency forward contracts are measured by reference to prevailing forward exchange rates. Foreign currency options are measured using a variant of the Monte Carlo valuation model. Interest rate caps are measured by discounting the related cash flows using yield curves derived from prevailing market interest rates.

In the prior year, an upside sharing fee was identified as an embedded derivative. The amended RCF that the Group agreed with its lender group on 29 September 2022 included an upside sharing mechanism whereby a fee would become payable by the Group to members of the lender group upon the occurrence of an 'exit event'. Such a fee was to be determined as the percentage of any increase in the market capitalisation of the Group from 29 September 2022 to the date of the exit event. At 30 June 2023, a valuation was performed using a conventional Black-Scholes pricing model. As announced on 25 October 2023, the Group agreed to make a one-off payment of £5.0 million to its lender group in respect of the upside sharing fee, therefore the derivative was not recognised in the current financial year.

Valuation levels and techniques

There were no transfers between levels during the year and no changes in valuation techniques.

Financial assets and liabilities measured at amortised cost

The fair value of borrowings (including overdrafts and lease liabilities) are as follows:


	At	At
	30 June	30 June
	2024	2023
	£m	£m
Current	70.5	52.8
Non-current	70.3	115.3
Total borrowings	140.8	168.1

The fair value of the following financial assets and liabilities approximate to their carrying amount:

· trade and other receivables;

· other current financial assets;

· cash and cash equivalents; and

· trade and other payables.

12. Net debt

Movements in net debt were as follows:

		IFRS 16		Currency
	At 1 July	non-cash	Cash	translation	At 30 June
	2023	movements⁽¹⁾	flows	differences	2024
	£m	£m	£m	£m	£m
Overdrafts	(0.6)	-	(11.2)	-	(11.8)
Bank loans	(109.8)	-	44.5	0.3	(65.0)
Other loans	(48.7)	-	(7.4)	0.5	(55.6)
Lease liabilities	(9.0)	(3.7)	4.5	(0.2)	(8.4)
Financial liabilities	(168.1)	(3.7)	30.4	0.6	(140.8)
Cash and cash equivalents	1.6	-	7.5	0.2	9.3
Net debt	(166.5)	(3.7)	37.9	0.8	(131.5)

¹IFRS 16 non-cash movements includes additions £3.4 million, disposals of £nil and interest charged of £0.3 million.

13. Pensions and post-employment benefits

The Group provides a number of post-employment benefit arrangements. In the UK, the Group operates a closed defined benefit pension scheme and a defined contribution pension scheme. Elsewhere in Europe, the Group has a number of smaller post-employment benefit arrangements that are structured to accord with local conditions and practices in the countries concerned. The Group also recognises the assets and liabilities for all members of the defined contribution scheme in Belgium, accounting for the whole defined contribution section as a defined benefit scheme under IAS 19 'Employee Benefits', as there is a risk the underpin will require the Group to pay further contributions to the scheme.

At 30 June 2024, the Group recognised a deficit on its UK defined benefit pension plan of £27.5 million (2023: £24.7m). The Group's post-employment benefit obligations outside the UK amounted to £1.9 million (2023: £1.9m).

Non-governmental collected post-employment benefits had the following effect on the Group's results and financial position:


	2024		2023
	£m		£m
Profit or loss Operating profit Defined benefit schemes
Service cost and administration expenses (net of employee contribution)	(0.6)		(1.0)
Net charge to operating profit	(0.6)		(1.0)
Finance costs Net interest cost on defined benefit obligation	(1.2)		(0.5)
Charge to profit/(loss) before taxation	(1.8)		(1.5)
Other comprehensive income/(expense)
Net actuarial loss	(5.6)		(14.1)

		2024	2023
		£m	£m
Balance sheet
Defined benefit obligations
UK - funded		(101.6)	(98.1)
Other - unfunded		(12.0)	(12.4)
		(113.6)	(110.5)
Fair value of scheme assets
UK - funded		74.1	73.4
Other - unfunded		10.1	10.5
Deficit on the schemes		(29.4)	(26.6)

For accounting purposes, the UK scheme's benefit obligation as at 30 June 2024 has been calculated based on data gathered for the 2021 triennial actuarial valuation and by applying assumptions made by the Company on the advice of an independent actuary in accordance with IAS 19, 'Employee Benefits'.

Impact of NTL vs Virgin Media case, 25 July 2024

In June 2023, the High Court judged that amendments made to the Virgin Media scheme were invalid because the scheme's actuary did not provide the associated Section 37 certificate. The High Court's decision has wide-ranging implications, affecting other schemes that were contracted out on a salary-related basis and made amendments between April 1997 and April 2016. The Fund was contracted out until 29 February 2016 and amendments were made during the relevant period. As such, the ruling could have implications for the Company. Following the Court of Appeal upholding the 2023 High Court ruling on 25 July 2024, the Trustees initiated the process of investigating any potential impact for the Fund.

As the detailed investigation is in progress, the Company considers that the amount of any potential impact on the defined benefit obligation cannot be confirmed and/or measured with sufficient reliability at the 2024 year end. We are therefore disclosing this issue as a potential contingent liability at 30 June 2024 and will review again in 2025 based on the findings of the detailed investigation.

14. Provisions

	Reorganisation			Independent
	and	Leasehold	Environmental	business
	restructuring	dilapidations	remediation	review	Other	Total
	£m	£m	£m	£m	£m	£m
At 1 July 2022	0.8	1.5	2.7	1.7	0.5	7.2
(Released)/charged to profit or loss	(0.1)	0.2	0.7	1.0	-	1.8
Currency translation differences	-	-	0.1	-	-	0.1
Utilisation	(0.4)	-	(0.5)	(2.6)	(0.3)	(3.8)
At 30 June 2023	0.3	1.7	3.0	0.1	0.2	5.3
(Released)/charged to profit or loss	-	(0.1)	0.8	3.8	-	4.5
Currency translation differences	-	-	(0.2)	-	-	(0.2)
Utilisation	-	(1.3)	(0.8)	(3.9)	-	(6.0)
At 30 June 2024	0.3	0.3	2.8	-	0.2	3.6

Analysis of provisions:

	2024	2023
	£m	£m
Current	2.2	2.7
Non-current	1.4	2.6
Total	3.6	5.3

The closing provision for reorganisation and restructuring relates to the Group's logistics transformation programme only. The provision is expected to be fully utilised within twelve months of the balance sheet date.

The leasehold dilapidations provision relates to costs expected to be incurred to restore leased properties to their original condition at the end of the respective lease terms. A provision has been recognised for the present value of the estimated expenditure required to undertake restoration works. Amounts will be utilised as the respective leases end and restoration works are carried out, within a period of approximately twelve months.

The environmental remediation provision relates to historical environmental contamination at a site in Belgium. The additional costs in the year of £0.8 million relate to a re-evaluation of the cost of environmental remediation. The closing provision is expected to be utilised as the land is restored within a period of approximately ten years, with £1.6 million expected to be utilised within twelve months.

The independent business review provision related to the amendment of the Group's revolving credit facility and banking covenants. The provision for consultancy support for the independent business review programme was utilised in the year.

Other provisions of £0.2 million are expected to be settled within a period of approximately three years.

The amount and timing of all cash flows related to the provisions are reasonably certain.

15. Exchange rates

The principal exchange rates used to translate the results, assets and liabilities and cash flows of the Group's foreign operations into Sterling were as follows:

	Average rate		Closing rate
	2024	2023	2024	2023
Euro	1.16	1.15	1.18	1.17
US Dollar	1.26	1.20	1.26	1.27
Danish Krone	8.68	8.56	8.81	8.68
Polish Zloty	5.11	5.38	5.09	5.17
Czech Koruna	28.72	27.72	29.57	27.66
Hungarian Forint	449.75	453.41	466.81	433.34
Malaysian Ringgit	5.91	5.41	5.97	5.91
Australian Dollar	1.92	1.79	1.90	1.91

16. Share capital

	Authorised, allotted and fully paid
	Number	£m
Ordinary shares of 10 pence each
At 1 July 2022, 30 June 2023 and 30 June 2024	174,057,328	17.4

Ordinary shares carry full voting rights and ordinary shareholders are entitled to attend Company meetings and to receive payments to shareholders.

17. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and therefore are not required to be disclosed in these financial statements. Details of transactions between the Group and other related parties are disclosed below.

Post-employment benefit plans

Contributions amounting to £7.0 million (2023: £6.5m) were payable by the Group to pension schemes established for the benefit of its employees. At 30 June 2024, £0.5 million (2023: £0.6m) in respect of contributions due was included in other payables.

Compensation of key management personnel

For the purposes of these disclosures, the Group regards its key management personnel as the Directors and certain members of the senior executive team.

Compensation relating to key management personnel in respect of their services to the Group was as follows:

	2024	2023
	£m	£m
Short-term employee benefits	3.8	2.5
Post-employment benefits	0.1	0.1
Share-based payments	1.2	0.3
Total	5.1	2.9

18. Key performance indicators (KPIs)

Management uses a number of KPIs to measure the Group's performance and progress against its strategic objectives. The most important of these are noted and defined below:

Financial:

· Revenue: Revenue from contracts with customers from the sale of goods is measured at the invoiced amount, net of sales rebates, discounts, value added tax and other sales taxes.

· Transformation benefits: Net profit benefit achieved from the implementation of the Transformation programmes.

· Adjusted EBITDA margin: The calculation of adjusted EBITDA, which when divided by revenue gives this EBITDA margin, is defined in note 19.

· Free cash flow increase: Free cash flow is defined as cash generated before exceptional items.

· Adjusted ROCE: Total adjusted operating profit divided by the average of opening and closing capital employed. Capital employed is defined as the total of goodwill and other intangible assets, property, plant and equipment, right-of-use assets, inventories, and trade and other receivables, less trade and other payables.

Non-financial:

· Lost time incident frequency rate: The number of lost time incidents x 100,000 divided by total number of person-hours worked.

· Customer service level: The volume of products delivered in the correct volumes and within requested timescales, as a percentage of total volumes ordered by customers.

19. Additional information

Alternative performance measures

The performance of the Group is assessed using a variety of adjusted measures that are not defined under IFRS and are therefore termed non-GAAP measures. A reconciliation for each non-GAAP measure to the most directly comparable IFRS measure is set out below.

Adjusted operating profit and adjusted EBITDA

Adjusted EBITDA means adjusted operating profit before depreciation. A reconciliation between adjusted operating profit, adjusted EBITDA and the Group's reported statutory operating profit is shown below:

	2024	2023
	£m	£m
Operating profit	64.3	10.3
Exceptional items in operating profit (note 4)	0.8	0.8
Amortisation of intangibles (note 10)	2.0	2.4
Adjusted operating profit	67.1	13.5
Depreciation of property, plant and equipment (note 10)	16.3	16.8
Depreciation of right-of-use assets (note 10)	3.7	3.8
Adjusted EBITDA	87.1	34.1

Adjusted profit before tax and adjusted profit for the year

Adjusted profit before tax is based on adjusted operating profit less adjusted finance costs. Adjusted profit for the year is based on adjusted profit before tax less taxation relating to non-adjusting items. The table below reconciles adjusted profit before tax to the Group's reported profit/(loss) before tax.

	2024	2023
	£m	£m
Profit/(loss) before tax	46.5	(15.1)
Exceptional items (note 4)	4.6	13.0
Amortisation of intangibles (note 10)	2.0	2.4
Adjusted profit before tax	53.1	0.3
Taxation (note 7)	(14.8)	(0.3)
Adjusted profit for the year	38.3	-

Adjusted earnings/(loss) per share

Adjusted earning/(loss) per share is based on the Group's profit/(loss) for the year adjusted for the items excluded from operating profit in arriving at adjusted operating profit, and the tax relating to those items.

Free cash flow and cash conversion %

Free cash flow is one of the Group's KPIs by which our financial performance is measured. It is primarily a liquidity measure; however free cash flow and cash conversion % are also important indicators of overall operational performance as they reflect the cash generated from operations. Free cash flow is defined as cash generated before exceptional items. Cash conversion % is defined as free cash flow as a percentage of adjusted EBITDA (applicable only when adjusted EBITDA is positive). A reconciliation from net cash generated from operating activities, the most directly comparable IFRS measure to free cash flow, is set out as follows:

	2024	2023
	£m	£m
Net cash generated from operating activities	59.2	11.1
Add back:
Taxation paid	5.1	1.8
Interest paid	10.9	11.4
Refinancing costs paid	3.8	12.3
Cash outflow in respect of exceptional items	2.7	1.4
Free cash flow	81.7	38.0

Adjusted EBITDA	87.1	34.1

Cash conversion %	94%	111%

Adjusted return on capital employed (ROCE)

Adjusted ROCE serves as an indicator of how efficiently we generate returns from the capital invested in the business. It is a Group KPI that allows management to evaluate the outcome of investment decisions. Adjusted ROCE is defined as total adjusted operating profit divided by the average of opening and closing capital employed. Capital employed is defined as the total of goodwill and other intangible assets, property, plant and equipment, right-of-use assets, inventories, trade and other receivables less trade and other payables. There is no equivalent statutory measure within IFRS. Adjusted ROCE is calculated as follows:

	2024	2023	2022
	£m	£m	£m
Goodwill (note 10)	19.7	19.7	19.7
Other intangible assets (note 10)	9.8	6.5	7.3
Property, plant and equipment (note 10)	114.4	117.8	122.9
Right-of-use assets (note 10)	8.1	8.5	11.3
Inventories	119.6	121.5	118.9
Trade and other receivables	148.8	145.7	145.4
Trade and other payables	(220.1)	(219.6)	(206.9)
Capital employed	200.3	200.1	218.6
Average of opening and closing capital employed	200.2	209.4	214.0
Adjusted operating profit/(loss)	67.1	13.5	(24.5)
Adjusted ROCE %	33.5%	6.4%	(11.4)%

Liquidity

Liquidity means, at any time, without double counting, the aggregate of:

(a) cash;

(b) cash equivalents;

(c) the available facility at that time, which comprises the headroom available in the RCF and other committed facilities; and

(d) the aggregate amount available for drawing under uncommitted facilities.

The Company uses this measure to manage cash flow and ensure that financial covenants are adhered to.

	2024	2023
	£m	£m
Cash and cash equivalents	9.3	1.6
RCF headroom	82.9	40.0
Other committed facilities headroom	-	17.5
Uncommitted facilities	6.1	0.2
Liquidity	98.3	59.3

Net debt

Net debt consists of cash and cash equivalents, overdrafts, bank and other loans and lease liabilities.

Net debt is a key indicator used by management to assess the Group's indebtedness and overall balance sheet strength.

Net debt is an alternative performance measure as it is not defined in IFRS. A reconciliation from loans and other borrowings, lease liabilities and cash and cash equivalents, the most directly comparable IFRS measures to net debt is set out below:

	2024	2023
	£m	£m
Current assets
Cash and cash equivalents	9.3	1.6
Current liabilities
Borrowings	(67.4)	(49.3)
Lease liabilities	(3.1)	(3.5)
	(70.5)	(52.8)
Non-current liabilities
Borrowings	(65.0)	(109.8)
Lease liabilities	(5.3)	(5.5)
	(70.3)	(115.3)

Net debt	(131.5)	(166.5)

Net debt cover ratio (banking basis)

The net debt cover ratio (banking basis) is an indicator of the Company's ability to repay its debts. Under the RCF it is calculated as net debt (as defined in the RCF agreement) divided by EBITDA (as defined in the RCF agreement). The Company uses the ratio to ensure compliance with the RCF financial covenants that will be tested quarterly from 30 September 2024.

	2024	2023
	£m	£m
Net debt (as defined above)	(131.5)	(166.5)
Invoice discounting facilities	55.6	48.7
B Shares (note 9)	(0.7)	(0.7)
Lease liabilities	8.4	9.0
Adjustment for average exchange rates	(0.9)	(0.7)
Net debt banking basis (as defined in the RCF agreement)	(69.1)	(110.2)

Adjusted EBITDA	87.1	34.1
Net interest cost on defined benefit obligation (note 6)	(1.2)	(0.5)
Loss on disposal of property, plant and equipment (note 10)	1.4	0.3
Lease payments	4.5	4.3
EBITDA banking basis (as defined in the RCF agreement)	91.8	38.2

Net debt cover ratio (banking basis)

0.8x

2.9x

Interest cover ratio (banking basis)

The interest cover ratio (banking basis) is a measure of the Company's ability to pay the interest on its outstanding debts. Under the RCF it is calculated as EBITDA (as defined in the RCF agreement) divided by adjusted finance costs (excluding net interest cost on defined benefit obligation). The Company uses the ratio to ensure compliance with the RCF financial covenants that will be tested quarterly from 30 September 2024.

	2024	2023
	£m	£m
EBITDA banking basis (as defined in the RCF agreement)	91.8	38.2
Lease payments	(4.5)	(4.3)
EBITDA banking basis (as defined in the RCF agreement)	87.3	33.9

Adjusted finance costs excluding net interest cost on defined benefit obligation (note 6)	12.8	12.7

Interest cover ratio (banking basis)	6.8x	2.7x

Annual General Meeting

The Annual General Meeting will be held on 12 November 2024.

Annual Report and Accounts

The Annual Report and Accounts will be published on the McBride plc website by no later than 30 September 2024. Reflecting McBride's commitment to the environment, a small number of printed copies will be sent to shareholders in October 2024, on a 'by request only' basis.

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