McBride plcAnnual Report and Accounts 2022
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McBride plc
Annual Report and Accounts 2022
What’s inside
Strategic report
Our highlights 1
McBride at a glance 2
Chairman’s statement 4
Q&A with our CEO 6
Market context 8
Business model 10
Our culture 12
Living our values 13
Our strategy 14
CEO’s report 16
Our divisions 20
CFO’s report 30
Key performance indicators 36
Our stakeholders 38
Environmental, social and governance 42
Climate-related financial disclosures 56
Group non-financial information statement 70
Principal risks and uncertainties 71
Going concern and viability statement 79
Directors’ report
Chairman’s introduction to the Directors’ report 80
Board of Directors 82
Compliance with the UK Corporate
Governance Code 2018 84
Corporate governance statement 85
Nomination Committee report 92
Audit and Risk Committee report 98
Remuneration Committee report 105
Statutory information 132
Statement of Directors’ responsibilities
in respect of the financial statements 136
Financial statements
Independent auditors’ report
to the members of McBride plc 137
Consolidated income statement 144
Consolidated statement of
comprehensive income 145
Consolidated balance sheet 146
Consolidated cash flow statement 147
Consolidated statement of changes in equity 148
Notes to the consolidated financial statements 150
Company balance sheet 199
Company statement of changes in equity 200
Notes to the Company financial statements 201
Additional information
Group five-year summary 209
Useful information for shareholders 210
Registered oce and advisers 212
Strategic report
McBride plc Annual Report and Accounts 2022
1
Financial
For the year ending 30 June 2022
Non-financial
(2)
Our highlights
Revenue
£678.3m
(2021: £682.3m)
Health & safety accident
frequency
0.48
(2021: 0.80)
Adjusted EBITDA
(1)
£(3.6)m
(2021: £45.5m)
Adjusted ROCE
(1)
(11.4)%
(2021: 11.5%)
Adjusted operating
(loss)/profit
(1)
£(24.5)m
(2021: £24.1m)
Customer service level
85.4%
(2021: 90.8%)
Operating (loss)/profit
£(26.7)m
(2021: £15.5m)
Debt/adjusted EBITDA
(1)
(45.7)x
(2021: 2.6x)
Adjusted (loss)/profit
before tax
(1)
£(29.6)m
(2021: £19.9m)
Gender split – female
(3)
38.5%
(2021: 38.6%)
(Loss)/profit before tax
£(35.3)m
(2021: £11.3m)
Free cash flow
(1)
£(22.7)m
(2021: £33.1m)
Alternative performance measures
This review includes alternative performance measures
(APMs) that are presented in addition to the standard
IFRS metrics.
The APMs are adjusted operating (loss)/profit, adjusted
EBITDA, adjusted finance costs, adjusted (loss)/profit
before tax, adjusted earnings per share, free cash flow
and cash conversion %, adjusted return on capital
employed and net debt.
The definitions of the APMs used are listed below:
• adjusted operating (loss)/profit is operating
(loss)/profit before the amortisation of intangible
assets and exceptional items;
• adjusted EBITDA means adjusted operating
(loss)/profit before depreciation and amortisation;
• adjusted finance costs refers to figures excluding the
unwind of the discount on environmental remediation
provision;
• adjusted (loss)/profit before tax is based on adjusted
operating (loss)/profit less adjusted finance costs;
• adjusted earnings per share is based on the Group’s
(loss)/profit for the year adjusted for the items excluded
from operating (loss)/profit in arriving at adjusted
operating (loss)/profit, the unwinding of discount on
provisions and the tax relating to those items;
• free cash flow is defined as cash generated from
continuing operations before exceptional items and
cash conversion % is defined as free cash flow as a
percentage of adjusted EBITDA;
• adjusted return on capital employed is defined as
total adjusted operating (loss)/profit from continuing
operations divided by average period-end 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; and
• net debt consists of cash and cash equivalents,
overdrafts, bank and other loans and lease liabilities.
(1) Further details on APMs can be found in note 2 to the consolidated financial statements on page 160.
(2) Please refer to Key performance indicators on pages 36 and 37 for further details.
(3) Includes employees, third-party contractors and agency workers.
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McBride plc Annual Report and Accounts 2022
2
With trading roots dating back to 1927, McBride boasts a strong
heritage. We are private label experts in our segments. We o er
end-to-end development and manufacturing capabilities to a
wide range of customers across Europe and Asia Pacifi c.
McBride at a glance
3,253
colleagues globally
(1)
76.5%
of revenue from
top fi ve European
economies
>90%
top European
retailers supplied
907m
units sold
Middleton
Etain
Bagnatica
Sallent
eper
Strzelce
Foetz
Holstebro
Estaimpuis
Hammel
Moyaux
Rosporden
Ho Chi Minh City
Kuala Lumpur
Our manufacturing locations
Asia
Pacifi c
Europe
(1) Includes employees, third-party contractors and agency workers.
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McBride plc Annual Report and Accounts 2022
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Group functions maximising
synergy benefi ts:
• Purchasing
• Logistics
• Corporate Finance
• IT
• HR
Products:
• Laundry liquids and
fabricconditioner
• Washing up liquid
• Surface cleaners
• Bleach and toilet cleaners
Group sales
£678.3m
Group sales
10.1%
Group sales
56.6%
Group sales
4.7%
Group sales
25.3%
Group sales
3.3%
Products:
• Laundry
• Auto dishwash
• Stain remover
• Water softener
Products:
• Household
• Personal care
• Insecticides
• Sanitisers
Products:
• Auto dishwasher tablets
• Laundry capsules
• Water softener tablets
Products:
• Hand/bodywash and hair care
• Skin care
• Auto dishwasher tablets
• Laundry liquids
Strategic report
McBride plc Annual Report and Accounts 2022
4
Chairman’s statement
Dear shareholder
Welcome to the McBride plc 2022 Annual Report and
Accounts. Without doubt, the past fi nancial year has
been the most challenging faced by the Group in recent
times. A range of pricing and cost actions has been
pushed through to o set the e ect of the rapid and
extraordinary rise in virtually all input costs absorbed
through the year. Whilst these are now close to covering
the rises in costs we have seen, negotiation lags
through the year in the acceptance of our new pricing
levels has meant the Group su ered losses this past
twelve months. The teams at McBride plc have worked
tirelessly throughout to recover profi tability and as we
enter the new fi nancial year, it is pleasing to see the
business recovering and building to improve through
the next year.
External factors
The most signifi cant external factor experienced this
past year related to the unprecedented infl ationary
environment experienced across our industry. Whilst the
Group has strong and long-lasting relationships across
its supplier base, many materials are linked to feedstock
pricing which have risen outside our control and
signifi cantly beyond forecast levels. Alongside trying to
mitigate the challenges of infl ation, supply chains have
been constrained through global shortages of materials
and logistics networks short of resources, adding further
challenges for the business teams aiming to ensure
our customers’ shelves remained stocked. Thewar
in Ukraine has led to signifi cant global uncertainty,
further disruptions to supply chains and additional cost
pressures. As a business, we do not have any operations
or key suppliers in Russia or Ukraine; however, we
continue to monitor and e ectively manage any impact
of the wider macro environment on the Company’s
supply chain. The Group continued to manage the
e ects of the Covid-19 pandemic well, keeping the
wide-ranging day-to-day operational measures put in
place last year under constant review, and adapting
regularly to refl ect the changing environment in which
the Company operates. This kept colleagues safe, sites
operational and customers stocked with our products.
Despite the year being dominated by essential short-term
actions to mitigate rampant input cost infl ation and supply chain
di culties, we have re-confi rmed and made progress withour
medium-term Compass strategies.
Je Nodland
Chairman
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McBride plc Annual Report and Accounts 2022
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Strategic progress
The past twelve months have not been the trading
backdrop expected so early in the deployment of the
Compass strategies, launched in January 2021. Despite
the necessary and near 100% focus on immediate
short-term margin recovery actions, it is pleasing to
see the new divisional business teams develop and
mature over the year. The development of an improved
‘specialist’ proposition through the divisional focus is
making good progress and it is pleasing to recently
record a number of long-term structural contract
manufacturing wins, due to start in 2023. As a Board,
wehave reviewed the strategic direction of each
division during the year and we remain confident
inourstrategy direction across theGroup.
Environmental, social and governance (ESG)
andsustainability
We remain committed to maintaining a responsible
business by building on our newly established ESG
agenda, led directly by our CEO. This consolidates
our existing Corporate Social Responsibility (CSR)
programme and any specific, separate sustainability
initiatives to a single, joined-up, integrated approach,
with clear ambitions and objectives in support of our
ESG agenda and designed to position McBride plc
as a responsible corporate citizen. The past twelve
months have focused on further developing the ESG
framework concluded in 2021 to drive, assess, monitor
and improve upon our ESG baselines and ambitions.
During the year, we have completed our corporate
carbon footprint assessment using an external agency
and we will now begin defining our journey towards
a Net Zero carbon ambition. Wehave also embraced
the requirements of the Task Force on Climate-related
Financial Disclosures (TCFD), having begun the process
of integrating TCFD best practice requirements into
our established ESG programme. Over the next twelve
months, our focus will continue to be that we prioritise
and commit to the most impactful areas in the most
cost-conscious way. On pages 42 to 55 we explain
our approach to enhancing the sustainability of our
business, whilst outlining some of the key initiatives we
are taking to create value for our customers, employees,
shareholdersand society.
Governance
The Board remains focused on ensuring that the UK
Corporate Governance Code’s principles are applied.
My introduction to the Directors’ report on pages 80
and 81 sets out how the Board has complied with the
principles of the UK Corporate Governance Code 2018
(‘the Code’), which applied throughout the financial
year ended 30 June 2022.
Board
At the November 2022 AGM, Steve Hannam, Senior
Independent Director, will step down, by which time
he will have completed nine years as a Non-Executive
Director. I would like to thank Steve for his valuable
contribution and long service and wish him well for the
future. Elizabeth McMeikan will replace Steve as Senior
Independent Director.
On 2 August 2021 we appointed Alastair Murray as a
Non-Executive Director. Alastair took over from Neil
Harrington as Chair of the Audit and Risk Committee
when Neil stepped down from the Board in October
2021. On14 March 2022, we appointed Regi Aalstad
asaNon-Executive Director to the Board.
The past year has seen much change and challenge
for the business, and I would like to extend my thanks
to all Board members for their input, support and wise
counsel.
Our people
The Board would like to thank all colleagues across
the Group for their eorts during a year that saw
unprecedented external pressures on our business,
soon after having implemented major transformation
and change, through Programme Compass during 2021.
We have learned a lot in the past year about managing
inflationary costs and our end-to-end supply chain, and
importantly, about how the organisation needs to adapt
with speed and flexibility in a fast-changing competitive
landscape. We need to build on the progress we have
already made in managing the business responsibly and
sustainably through an unprecedented set of external
challenges and constraints, and these past twelve
months have demonstrated many strong examples
of the resilience and commitment of our teams.
Ilook forward to the ongoing contribution of all our
colleagues in continuing to drive the ambitions of the
Compass strategy in the coming years and deliver a
strong, resilient and sustainable business performance
going forward.
Je Nodland
Chairman
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McBride plc Annual Report and Accounts 2022
6
Q&A with our CEO
Have the challenging past
twelvemonths changed the
coreCompass strategies?
The Board and senior teams completed a
review and update of each divisional strategy
earlier this calendar year. The review confi rmed
the Compass approach and the divisional
organisation and our purpose, vision and
values continue to set the right objectives
for the Group. The recent challenging trading
situation has clearly reset the start points for
each division, but the individual strategies for
each division remain appropriate, each division
having some element of ‘course correction’
and will continue to guide the key activities
and priorities for the divisions and Group as
awhole.
Have the divisional structures
been operating as you expected,
even with the distraction of the
huge infl ation pressures?
It is fair to say that when we launched the
new Compass structures in January 2021,
the business was quickly confronted with
supply chain shortages and rapid infl ation
beginning to emerge. Therefore the focus,
six months in, became very short term in
nature, covering pricing actions and securing
supplies. The commercial teams responded
well, demonstrating the ‘one McBride’ principle
in front of our customers, working collectively
across the product ranges to secure the
appropriate pricing recovery. On the supply
side, we saw the focus from the divisional
supply chain teams linking very well with the
central purchasing group as we negotiated and
secured materials from our suppliers, seeing
no major disruption to factory operations.
What is the latest outlook
forinfl ationary pressures?
A feature of the materials and other
infl ationthat we have experienced in the
past18 months has been not just the feedstock
infl uence on downstream materials but also
the premium that comes from supply/demand
imbalance. As we compile this Annual
Report, there are some signals that certain
feedstock pricing is stabilising and some of
the supply/demand challenges are steadying.
This may signal that some materials may
startfalling in the coming months. At the same
time, some materials (such as cardboard, salts
and other ECU derivatives) continue to rise
and overall, the entire supply side remains
volatile and di cult to predict. Other infl ation
however, is more permanent with extremely
high rises for transport, energy, labour and
general supplies feeding through into our
pricing andmarginactions.
As we emerge from the challenges
of maintaining supply chains,
mitigating unpredictable and
extraordinary input costinfl ation,
and stabilising our fi nances, the
business canstart focusing on
delivering the mid-term Compass
benefi ts of improved profi tability
and growth.
Chris Smith
Chief Executive O cer
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McBride plc Annual Report and Accounts 2022
7
With the cost of living crisis
hitting all your major markets,
will private label volumes benefit
as consumers trade away from
more expensive brands?
There is increasing evidence that consumers
are changing their buying behaviour as a
result of the inflationary pressures being felt
by all. Whether this is a product switch to
private label in a general retailer or consumers
switching to discount stores from general
retailers, both hold good prospects for private
label volumes. With many branded products
reducing product quality to oset inflation,
the value proposition of price versus quality
of private label oers becomes even more
compelling.
What have been the key
priorities for your ESG agenda
inthe current year?
The environment element of our ESG agenda
is understandably highly visible and a crucial
element of our business model. In order to
establish our baseline, during the past year
we have completed the measurement of our
corporate carbon footprint. As a result, we can
now see the shape of our emissions and the
areas of our operations we need to prioritise
in order to have the biggest impact on our
corporate footprint. During 2023 we will set
Science Based Targets with respect to Scope
1, 2 and 3 greenhouse gas emissions and
define our strategy for climate-related risks.
We continue to drive product sustainability
options with our customers mainly focused
on improving the recyclability of packaging.
This year we have stopped the use of all
flexible PVC pouches, moving them to a
new mono-material to improve recyclability.
Additionally, we continue to make good
progress on moving more of our mixed
plastic doypacks to mono-material format.
OurLiquids and Unit Dosing divisions are both
working on non-plastic packaging solutions,
with both business units bringing cardboard
alternatives to market in the next twelve
months.
A key part of Compass related
to margin development from
eciency and eectiveness
improvements; where does
thisagenda now sit?
It is absolutely part of the mid-term plans I
have for the business. We will be establishing
an internal ‘Transformation team’ charged with
an‘Excellence’ agenda aimed at delivering
more resilient and eective processes in a
number of key day-to-day activities such as
customer service levels, inventory management,
commercial processes, logistics and warehouse
network. Additionally, working with our IT
colleagues, this Group will lead the business
teams as we embark on the journey in the
coming 12-24 months of moving to the latest
generation business systems platforms.
Thiswillallow McBride plc to better digitalise
and standardise our processes, driving eciency
and eectiveness in our core activities.
Recent announcements refer
to needing to find additional
liquidity, can you expand more?
The past 18 months have significantly aected
the Group’s level of debt. This has been
impacted by trading losses and higher levels of
working capital, both driven by unprecedented
inflationary pressures. The amended terms of
the Group’s revolving credit facility announced
on 29 September 2022, provide the Group
with the required levels of liquidity headroom
to successfully run the business.
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McBride plc Annual Report and Accounts 2022
8
A closer and better understanding of our direct
customers and the end consumer, enables
us to better align our business to the current
and evolving needs of the markets we serve.
Market context
Raw materials Sustainability Regulation
Sales channels Consumers Brand owners
Global supply chain disruptions
over the last 18 months have
led to widespread shortages
across multiple raw material
categories, which in turn have
led to unprecedented and
sustained increases of material
prices. Theextent to which this
infl ationary pressure can be
passed through to consumers by
retailers will support either price
rises or product engineering
solutions.
Our customers, consumers
and our employees continue to
place a high level of importance
on the sustainability of our
manufactured products.
The legislative landscape that
McBride plc operates within
continues to evolve with new
legislation and amendments to
existing legislation. This impacts
on the production, useand
disposal of our products,
driving a cost increase in the
development, production,
distribution and use of products.
Consumers are continuing to
change the way they shop across
multiple di erent outlets and
online platforms, rather than the
traditional single large weekly
shop. Shopper habits evolved
during the Covid-19 pandemic,
with increased growth of online
and convenience channels,
the profi le of which continues
to adapt as economies relax
or emerge from Covid-19
restrictions.
Consumers are now facing
unprecedented infl ation and
cost of living increases, with
a large number of shoppers
needing to restrict their spend
at the till. As a result, we are
increasingly seeing retailers help
their customers by navigating
them towards lower cost retailer
brand o eringsin store.
Owners of household cleaning
and personal care brands
continue to use private
label suppliers to contract
manufacture their products.
Response
The Group has continued
to drive focused margin
recovery measures, with
targeted price increases and
product engineering options
in development. A signifi cant
number of cost initiatives are
being accelerated, with the
expectation that they will deliver
value in the coming months.
The Group continues to explore
all avenues to create increased
pricing stability across our raw
material spend, building further
on existing initiatives taken
over the last few years in this
area (e.g. short-term pricing
agreements with retailers).
Response
We continue to work towards
our 2025 targets for reducing
our environmental impact
from our products through
the reduction of plastic and
responsible sourcing. In the
coming year we will focus
further on the footprint of
our chemical portfolio as we
recognise the importance this
plays in our ability to be Net
Zero in the future.
Response
McBride plc treats compliance
with legislative requirements
asan essential part of the
service that we o er to our
customers, embracing initiatives
to improve safety/sustainability
for the consumer and the
environment. We make
signifi cant investments in our
factories and improvements to
our product portfolio to ensure
that we fully comply with all
relevant product legislation.
Response
Work continues to ensure that
we have the optimum product
portfolio for all our customers
across di erent retail channels,
including discounter, bargain
stores, online and convenience
channels. We are continuing to
work with all retailers to provide
them with a range of products
that meet the needs of their
customers.
Response
McBride plc always endeavours
to provide optimum value
product o erings for the end
consumer. We are working
with our customers to support
the value positioning of their
private label ranges. By o ering
a wide range of formulation and
packaging options, retailers can
‘design to value’ their o er to
customers.
Response
Our long-standing reputation
as a leading manufacturer of
quality products allows us to
continue to work closely with a
number of major brand owners
to contract manufacture their
products. Such contracts o er
signifi cant growth opportunities,
de-risked marginsand help
drive operational e ciencies
by increasing asset utilisation.
The Group is seeing more
longer-term structural supply
arrangements.
Strategic report
McBride plc Annual Report and Accounts 2022
9
Raw materials Sustainability Regulation
Sales channels Consumers Brand owners
Global supply chain disruptions
over the last 18 months have
led to widespread shortages
across multiple raw material
categories, which in turn have
led to unprecedented and
sustained increases of material
prices. Theextent to which this
infl ationary pressure can be
passed through to consumers by
retailers will support either price
rises or product engineering
solutions.
Our customers, consumers
and our employees continue to
place a high level of importance
on the sustainability of our
manufactured products.
The legislative landscape that
McBride plc operates within
continues to evolve with new
legislation and amendments to
existing legislation. This impacts
on the production, useand
disposal of our products,
driving a cost increase in the
development, production,
distribution and use of products.
Consumers are continuing to
change the way they shop across
multiple di erent outlets and
online platforms, rather than the
traditional single large weekly
shop. Shopper habits evolved
during the Covid-19 pandemic,
with increased growth of online
and convenience channels,
the profi le of which continues
to adapt as economies relax
or emerge from Covid-19
restrictions.
Consumers are now facing
unprecedented infl ation and
cost of living increases, with
a large number of shoppers
needing to restrict their spend
at the till. As a result, we are
increasingly seeing retailers help
their customers by navigating
them towards lower cost retailer
brand o eringsin store.
Owners of household cleaning
and personal care brands
continue to use private
label suppliers to contract
manufacture their products.
Response
The Group has continued
to drive focused margin
recovery measures, with
targeted price increases and
product engineering options
in development. A signifi cant
number of cost initiatives are
being accelerated, with the
expectation that they will deliver
value in the coming months.
The Group continues to explore
all avenues to create increased
pricing stability across our raw
material spend, building further
on existing initiatives taken
over the last few years in this
area (e.g. short-term pricing
agreements with retailers).
Response
We continue to work towards
our 2025 targets for reducing
our environmental impact
from our products through
the reduction of plastic and
responsible sourcing. In the
coming year we will focus
further on the footprint of
our chemical portfolio as we
recognise the importance this
plays in our ability to be Net
Zero in the future.
Response
McBride plc treats compliance
with legislative requirements
asan essential part of the
service that we o er to our
customers, embracing initiatives
to improve safety/sustainability
for the consumer and the
environment. We make
signifi cant investments in our
factories and improvements to
our product portfolio to ensure
that we fully comply with all
relevant product legislation.
Response
Work continues to ensure that
we have the optimum product
portfolio for all our customers
across di erent retail channels,
including discounter, bargain
stores, online and convenience
channels. We are continuing to
work with all retailers to provide
them with a range of products
that meet the needs of their
customers.
Response
McBride plc always endeavours
to provide optimum value
product o erings for the end
consumer. We are working
with our customers to support
the value positioning of their
private label ranges. By o ering
a wide range of formulation and
packaging options, retailers can
‘design to value’ their o er to
customers.
Response
Our long-standing reputation
as a leading manufacturer of
quality products allows us to
continue to work closely with a
number of major brand owners
to contract manufacture their
products. Such contracts o er
signifi cant growth opportunities,
de-risked marginsand help
drive operational e ciencies
by increasing asset utilisation.
The Group is seeing more
longer-term structural supply
arrangements.
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McBride plc Annual Report and Accounts 2022
10
Driven by our purpose, our business model builds on
thekeyattributes that set us apart in order to create
value forour customers, our people, our shareholders
andourwiderstakeholder community.
Business model
Our purpose
everyday value cleaning
products so every home
canbe clean and hygienic
We are a producer of cleaning products
primarily for the home.
We define the home as the dwelling that
welive in and the people who live there.
Our products clean laundry, dishes and
general surfaces. In addition, we oer
specialist aerosol products in Europe
andpersonal cleaning in Asia Pacific.
Our aim is to provide ranges of quality
at value prices to permit our retailer
customers to oer an aordable quality
alternative to higher-cost brands.
Our value engineering, quality and
scale of operations provide aordable
cleaning products for our customers’ end
consumers, helping ensure all homes are
clean and hygienic.
What
we do
How we
do it
How we
make
money
Market intelligence
Customer partnerships
Know-how in:
• Formulation
• Prototyping
• Manufacturing
• Packaging options
• Sourcing expertise
We are end-to-end producers
From:
• Resins
• Base chemicals
• Packaging
To:
• Shelf-ready finished
products
Our in-house processes:
• Blow/injection
moulding
• Liquid and powder
mixing
• Bottle filling
• Capsule forming and
filling
• Tablet pressing
• Powder filling
Inputs:
Production
process:
We sell to retailers and branders
their finished products, aswell as
asmall number of McBridebrands
Strategic report
We seek to provide our customers a compelling
overalloer,balancing price, service and quality
prioritiesforthe productsthey require.
McBride plc Annual Report and Accounts 2022
11
Wide market coverage/knowledge from
pan-European operations
Manufacturing excellence
Supply chain co-ordination and capabilities
Reduced risk from customer diversification
Size to scale advantage: #1 volume player
Innovation – specialisation and focus
Sustainable product expertise – formulation
and packaging
Experienced management and dedicated
employees
Blue-chip reputation
What sets
us apart
How we
allocate
capital
1.
Debt management
(including
deleveraging)
2.
Reinvest for growth
3.
Strategic
investments
4.
Distributions to
shareholders
Strong commitment to:
• Ethical trading
• Sustainability-
orientated innovation
• Waste reduction
Distribution
platform:
Sustainable
outputs:
82.9%
Retailers’
private label
2.1%
Professional and
cleaning suppliers
11.2%
International and
regional branders
3.8%
McBride
brands
Consolidating the
customer requirements
via:
McBride
warehouse
network
Into
Customer
distribution hubs
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McBride plc Annual Report and Accounts 2022
12
Our culture
While McBride operates through fi ve divisional teams
supported by certain Group central functions, we
remain One McBride with a single, unifying purpose
and a common shared vision.
Our
vision
McBride will extend its
positionas the
leading value producer of
everyday consumer hygiene
products,
taking
revenue to €1 billion
through
focused and sustainable
divisional strategies.
Read more on pages 14 and 15
Our values
Our guiding
principles
Focused
growth
Proud of our
identity
E ective
execution
Our
purpose
everyday value cleaning
products, so every
home can be clean
and hygienic.
Read more on
pages 10 and 11
Giving and taking
accountability
Always
committed
Working
together
Aspire to
bethebest
Strategic report
McBride plc Annual Report and Accounts 2022
13
Our purpose and vision are founded on a set of common
values, enabling our focused divisional teams to enhance
our specialist reputation in the market and better target
opportunities for growth and excellence.
Living our values
Always
committed
Working
together
Giving and taking
accountability
Aspire to be
the best
• Our Vietnam site team chose to sleep on site
for a period of time, in order to keep the site
operational during local government movement
restrictions due to Covid-19.
• Securing raw material and packaging supplies
within a very dicult market place, ensuring
continual product supply to our customers.
• Strong and continual engagement with
customers to openly explain inflationary
challenges and working towards solutions
overmultiple iterations.
• Rapid establishment of a German logistics
recovery team to focus on cross-divisional
strategies and solutions in a ‘war-room’ style
approach, to drive improvements in our logistics
service resulting from driver shortages and
unreliable supplier arrangements.
• Qualifying new and lower cost raw material
options to help mitigate the challenges of a
highly inflationary marketplace. This required
close co-operation with the customers and
cross-functional teams involving colleagues
from the Group Purchasing, Technical,
Operations and Commercial teams.
• During the implementation of a new HR digital
platform, we witnessed excellent multi-user
engagement across all of Europe with training
and deployment of this new way of working.
• The HR leadership took on an accelerated
programme to launch Workday across the
business in Europe. The new processes have
been launched on time with excellent colleague
engagement, modernising the ways of working
for HR processes.
• Our newly created divisions drive our Compass
strategy and have taken full responsibility for their
performance and results, translating the Group’s
vision into divisional strategies and action plans.
During the year, the divisions made good progress
in the execution of these plans.
• A number of colleagues were seconded into
Germany to lead dierent aspects of the
recovery plan for our logistics service in Germany,
involving extensive periods of time at our German
warehouses to speed up their recovery.
• A number of exciting product innovations
across the business, including Ecocert products,
compressed aerosols, carton packaging for
capsules, compact laundry powders and
mono-material refill pouches.
• Winning of new multi-year contract
manufacturing supply agreements demonstrated
our new divisional specialism andeective
contract and project management, where we
expect to see deliveries starting in the next
financial year.
• Introduction of new tools and training
programmes to further improve safety in our
operations, including behavioural safety and
comprehensive gap analysis reviews as part of
our zero lost time accident journey.
Strategic report
McBride plc Annual Report and Accounts 2022
14
Be the leading value producer of everyday cleaning
products,leveraging scale and unrivalled product expertise
todeliver a segmented product and customer proposition
witha cost-aware sustainability agenda.
Our strategy
One McBride
Five divisions
Each division has dierent
opportunities, initiatives, challenges
and improvement options in their
business; all reinforcing the need for
varying strategies for the dierent
parts of this business.
Hence, the Group continues to be
managed as a series of portfolio
businesses, each with its own
identity, strategy, operating model
and role within the Group.
Separate, focused and accountable
divisional teams continue to
strengthen our specialist position
and improve speed and agility in all
our dealings and activities.
Central support services such as
purchasing, logistics, finance, HR
and IT continue to drive and deliver
scale advantages to the entire
Group.
Market factors
• Large, stable market
• Commoditised product
categories
• Fragmented competition
• Cost competitiveness
paramount
Market factors
• Dynamic market
• Brander-led innovation
• Sustainability is a key driver
• E-commerce potential
Market factors
• Asset-heavy competitive
market
• Slowing market decline
• Consumer transitioning
• Market consolidating
Market factors
• Well-established market
• Leverage new opportunities
with contract manufacturing
• Niche, specialist player
Market factors
• Return to rapid market growth
• Population and income growth
• Rapid urbanisation
• Maturing retail infrastructure
Strategy = Optimise to grow Strategy = Accelerate to grow Strategy = Revitalise to grow Strategy = Develop to grow Strategy = Deliver to grow
McBride approach
• Low-cost oer
• Reliable and trustworthy
• Delivering sustainable
(innovative) products
• Build on our local strengths
McBride approach
• Specialist supplier
• Embedded in industry
• Ecient innovator
• Right and flexible asset base
• Cost competitive by
scaleandoering
McBride approach
• Low cost
• Technical capability drive
• Asset utilisation
• Targeted markets/
opportunities
McBride approach
• Capitalise on ‘Made in France’
• Build on eco credentials
• Beyond France
McBride approach
• High quality and service
• Develop key relationships
• Continue to add growth
capacity
• Remain cost focused
Focus areas
• Transform our cost through
operational excellence
• Value engineer/simplify our
product portfolio
• Sustainability-oriented
innovation
• Partner with focus customers
Focus areas
• Continued focus on dishwasher
tablets and laundrycapsules
• Sustainable formulations and
packaging development
• Continued adaptation of core
oering
Focus areas
• Cost optimisation
• Expand contract
manufacturing
• Continue technical innovations
• Reinvigorate market position
• Continue to capitalise on
environmental leadership
Focus areas
• Cost optimisation
• Expand volumes in Germany
• Best-in-class commercial and
technical approach
Focus areas
• Exploit new Malaysia facility
• Expand Vietnam output
• Expand into household
• Capture and develop contract
manufacturing opportunities
Cost
leadership
Cash
generation
Product
leadership
Strategic
growth
Strategic report
McBride plc Annual Report and Accounts 2022
15
We support divisional success by leveraging the scale of
theGroup through eective central teams for purchasing,
talentmanagement and other shared services.
Market factors
• Large, stable market
• Commoditised product
categories
• Fragmented competition
• Cost competitiveness
paramount
Market factors
• Dynamic market
• Brander-led innovation
• Sustainability is a key driver
• E-commerce potential
Market factors
• Asset-heavy competitive
market
• Slowing market decline
• Consumer transitioning
• Market consolidating
Market factors
• Well-established market
• Leverage new opportunities
with contract manufacturing
• Niche, specialist player
Market factors
• Return to rapid market growth
• Population and income growth
• Rapid urbanisation
• Maturing retail infrastructure
Strategy = Optimise to grow Strategy = Accelerate to grow Strategy = Revitalise to grow Strategy = Develop to grow Strategy = Deliver to grow
McBride approach
• Low-cost oer
• Reliable and trustworthy
• Delivering sustainable
(innovative) products
• Build on our local strengths
McBride approach
• Specialist supplier
• Embedded in industry
• Ecient innovator
• Right and flexible asset base
• Cost competitive by
scaleandoering
McBride approach
• Low cost
• Technical capability drive
• Asset utilisation
• Targeted markets/
opportunities
McBride approach
• Capitalise on ‘Made in France’
• Build on eco credentials
• Beyond France
McBride approach
• High quality and service
• Develop key relationships
• Continue to add growth
capacity
• Remain cost focused
Focus areas
• Transform our cost through
operational excellence
• Value engineer/simplify our
product portfolio
• Sustainability-oriented
innovation
• Partner with focus customers
Focus areas
• Continued focus on dishwasher
tablets and laundrycapsules
• Sustainable formulations and
packaging development
• Continued adaptation of core
oering
Focus areas
• Cost optimisation
• Expand contract
manufacturing
• Continue technical innovations
• Reinvigorate market position
• Continue to capitalise on
environmental leadership
Focus areas
• Cost optimisation
• Expand volumes in Germany
• Best-in-class commercial and
technical approach
Focus areas
• Exploit new Malaysia facility
• Expand Vietnam output
• Expand into household
• Capture and develop contract
manufacturing opportunities
Cost
leadership
Cash
generation
Product
leadership
Value
optimisation
Cost
and value
leadership
Strategic
upside
Strategic report
McBride plc Annual Report and Accounts 2022
16
Chris Smith
Chief Executive O cer
Business performance improving after a di cult year; reset
fi nancing agreements supporting the Group’s future progress.
CEO’s report
Overall business performance
Without doubt, the last fi nancial year was the toughest
trading year the Group in its current form has ever
experienced. The external factors of rampant and
unpredictable infl ation, supply chain disruptions, residual
Covid-19 impacts, sta shortages and weak demand
levels have challenged the business, its management
teams and its usually ample fundingcapacity.
The scale of the challenge from cost rises, mostly
materials, reached over £200 million on an annualised
basis in the fi nal quarter. Our progressive actions to
mitigate have seen success, but time lags have meant
cost rises outweighed recovery benefi ts in the period to
June. Consequently, the fi nancial performance for the
past year has been very poor. However, the response of
the McBride team to this ‘avalanche’ of challenges has
been excellent and the ongoing recovery actions support
an improved fi nancial outlook into the new year.
Full-year Group revenue at £678.3 million was 0.6%
lower as reported, but 2.9% higher than the prior year
at constant currency
(2)
. On a constant currency basis,
following sales declines of 6.6% in the fi rst half, second
half revenue grew by 13.4% as we were able to partially
o set exceptional input cost pressures by passing on
those costs in the form of higher prices to our customers.
Adjusted operating loss
(1)
for the year was £24.5 million
compared to a profi t in the previous year of £24.1
million. Following the fi rst half adjusted operating loss
(1)
of £14.8 million (2021: profi t of £19.0m), the rate of
losses slowed in the second half and were in line with
our expectations.
Total sales volumes have seen a decline of 6% with
volumes to contract customers falling 32%, mostly as a
result of post-Covid-19 ‘fi ll volumes’ falling away. Private
label volumes saw a smaller e ect with a decline of 2%
across the year but fl at in the second half. This volume
e ect was o set by average selling price increases of
over 9% for the year and 18% in the secondhalf.
Whilst it is disappointing to see the Group’s volumes
lower, the performance is good against a market
backdrop of a 6% fall in the overall market, with equal
impact in both branded and private label volumes.
Atacategory level, total market volumes declined most
heavily in cleaners, seeing a twelve-month volume fall of
9% as Covid-19 behaviours adapted; McBride volumes
fell 6% in this category. In dishwash, whilst the overall
market reduced 5%, we saw volumes rise 2% and for
laundry, where market volumes fell 3%, the Group’s
volumes rose just under 1%.
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
Strategic report
McBride plc Annual Report and Accounts 2022
17
Having had no choice but to pass on the higher prices to our
customers, our open and transparent approach resulted in
strong support and co-operation from customers.
The year was dominated by actions to oset the rapid
and exceptional input cost inflation. The size of the
impact was changing rapidly and dicult to predict.
Asa Group we have taken all necessary steps to control
and reduce our own costs and cash outlays, but the
scale of increases meant we were left with no choice
but to apply a series of price rises to our customers.
These discussions were dicult and tough, but we
believe our open and transparent approach has resulted
in strong support and co-operation from customers.
These significant price rises were delivered in a series
of waves progressively through the year, with additional
rises still in discussion in the new year as we also
deal with energy, transport, labour and other inflation
rises. Increasingly, customers are pursuing the various
options we have presented for product cost mitigation
alongside pure price increases.
Input prices
The severe supply chain challenges and exceptional
input cost pressures seen across many industries have
continued to heavily impact McBride. The financial
impact from this environment has been very significant,
which together with availability pressures has created
a ‘tsunami’ of cost increases, the annual eect being
in excess of £200 million, for the business to handle.
Across the entire range of raw materials and packaging,
we expect total costs to have risen by 51% between
December 2020 and June 2022. The whole industry has
been aected, whether branded or private label, and
the size of the increases has warranted urgent pricing
conversations with customers alongside many branders
publicly warning of price rises for their products.
Throughout the year we continued to experience
challenges with logistics availability and freight costs,
whilst surging energy prices and increases in labour
costs in the second half of the year have added further
inflationary pressures. Maintaining a reliable supply
into our factories has been challenging, but with the
support of some key suppliers and the tenacity of the
purchasing team both in minimising cost rises and
securing supplies, we have been successful in this area
with disruption limited.
Programme Compass
The Compass operating model has now become fully
embedded in the Group, despite the trading challenges
experienced in the early stages of deploying our
Compass strategies, which were launched in January
2021. It has been particularly encouraging to see the
new divisional business teams develop and mature over
the year, despite having had to focus on short-term
margin recovery actions for almost the entire year.
Our divisionally focused approach has allowed us to
develop an improved ‘specialist’ proposition across
all our geographies and product categories, which
is a key outcome from Compass. Ensuring we are
closer to our key customers, listening and acting to
support their needs and requirements, partnering
and jointly developing the right value proposition is
key to our growth plans and our ambition to be the
preferred choice to our retail customers and their
consumers. Thisnew focus also benefits our contract
customers, which has already resulted in several
contract manufacturing wins due to start in the next
financialyear.
We completed a review and update of each divisional
strategy earlier this calendar year. The review confirmed
the Compass approach, divisional organisation and the
strategic direction of each division, whilst rearming
the fact that our purpose, vision and values continue
to set the right objectives for the Group. The recent
challenging trading situation has clearly required each
division to modify and adapt their strategic pathways
in light of recent macro factors but the individual
strategies for each division continue to remain
appropriate for the Group.
As we stabilise and see improving financial outcomes
from trading, the element of the Compass strategy
that will deliver more eective and ecient processes
and thus improved margins from lower structural costs
will launch in the new financial year. An Excellence
and Transformation team is being recruited to lead the
deployment of multiple work streams in support of
the Compass margin ambitions, initially targeting £50
million of benefit over five years.
Strategic report
McBride plc Annual Report and Accounts 2022
18
CEO’s report continued
Covid-19
We have continued to work with colleagues across the
Group to maintain a Covid-19 secure work environment.
We have continuously reviewed and regularly updated
the wide-ranging day-to-day operational measures
put in place last year on an ongoing basis through the
year as we responded to the evolving nature of the
pandemic and the changing environment within which
the Company operates.
All of our factories remained operational throughout the
year, and as lockdowns have lifted, we have reopened
oce facilities and welcomed colleagues back to the
oce, many of whom have continued to work in a
hybrid way this year. Our operations in the Asia Pacific
division were once again aected by a higher level of
Covid-19 related disruption this year. We had to host
workers within our Vietnam site for a few months, to
allow the site to remain operational during peaks in the
pandemic, while strict lockdown rules in Malaysia led
to a shortage of foreign workers, thereby impacting
our output and service levels. It has been encouraging
to note that our Asia Pacific division has successfully
overcome these Covid-19 challenges and has made a
positive contribution to the Group’s results.
Divisional portfolio performance
Following all divisions posting lower year-on-year
sales in the first half, all divisions returned to revenue
growth in the second half, with Liquids and Powders
reporting sales growth for the year on a constant
currency basis
(2)
. Revenue growth in the second half in
Unit Dosing, Aerosols and Asia Pacific was not sucient
for those divisions to report growth for the year, with
their revenue on a constant currency basis
(2)
being lower
than2021.
Liquids volumes were 4.9% lower than prior year as
the prior period was positively impacted by Covid-19,
particularly due to heightened demand in the cleaners
category. Liquids revenue grew by 5.6% on a constant
currency basis
(2)
as cost price increases were actioned
with customers in the second half. Adjusted operating
loss
(1)
of £15.9 million (2021: £11.7m profit) was driven
by unprecedented input cost inflation not immediately
being recovered through cost price increases to our
customers. Whilst the second half was still loss-making,
losses were 40% lower compared to the first half.
Although fourth quarter exit rate margins were still
not back at historical levels, these were nonetheless
stronger than the full-year average due to the timing
ofthe price increase implementation.
Unit Dosing revenue declined 1.9% on a constant
currency basis
(2)
. Following a revenue decline of 8.7% in
the first half of the financial year, the division recorded
revenue growth of 5.0% in the second half. This was
driven by the impact of price increases and through
volume improvements in the capsule product line.
Adjusted operating loss
(1)
of £0.8 million (2021: £16.7m
profit) was driven by unprecedented input cost inflation
in raw materials, energy, transport and labour cost,
which were not immediately recovered through cost
price increases to our customers.
Full-year revenue in Powders was 7.2% higher on a
constant currency basis
(2)
. The demand for laundry
products recovered versus the previous year as Covid-19
restrictions were lifted and volumes to professional
cleaning companies recovered. Adjusted operating
losses
(1)
increased from £2.3 million to £2.5 million.
Pricing actions and volume growth initiatives are in
place to get the business back to at least break-even
inthe near term.
Aerosols revenue of £31.9 million was 2.1% lower
and full-year adjusted operating loss
(1)
of £1.5 million
was down £2.2 million, both on a constant currency
basis
(2)
. Following a first-half revenue decline of 11.0%,
strongly impacted from the reduction in Covid-19
sanitiser product sales, the second half saw sales
increase by 8.9%. Aerosols was also heavily impacted
by unpredictable and successive waves of raw material
price increases. Customer acceptance of price increases
lagged the input cost inflation by up to three months
on each pricing wave, leading to a full-year adjusted
operating loss
(1)
of £1.5 million (2021: profit £0.7m).
Asia Pacific revenue of £22.4 million was lower by 6.7%,
with severe Covid-19 pandemic lockdowns continuing
toreduce footfall in stores across the region, particularly
in the first three quarters of the fiscal year. Adjusted
operating profit
(1)
of £0.7 million (2021: £1.9m) was
lowerdue to exceptional input cost increases which
were not immediately recovered through customer
priceincreases.
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
Strategic report
McBride plc Annual Report and Accounts 2022
19
Year to 30 Year to 30
June 2022 June 2021 Reported Constant
Revenue £m £m change currency
(2)
Liquids 383.9 376.1 2.1% 5.6%
Unit Dosing 171.5 181.5 (5.5)% (1.9)%
Powders 68.6 66.3 3.5% 7.2%
Aerosols 31.9 34 (6.1)% (2.1)%
Asia Pacific 22.4 24.4 (8.2)% (6.7)%
Group 678.3 682.3 (0.6)% 2.9%
Year to 30 Year to 30 Reported Constant
June 2022 June 2021 change currency
(2)
Adjusted operating (loss)/profit
(1)
£m £m £m £m
Liquids (15.9) 11.7 (27.6) (26.9)
Unit Dosing (0.8) 16.7 (17.5) (16.8)
Powders (2.5) (2.3) (0.2) (0.2)
Aerosols (1.5) 0.8 (2.3) (2.2)
Asia Pacific (0.7) 1.9 (1.2) (1.2)
Corporate (4.5) (4.7) 0.2 0.2
Group (24.5) 24.1 (48.6) (47.1)
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
Current trading and outlook
The early months of the new financial year have seen trading in line with our internal plans. Volumes are showing
some early signs of recovery against a backdrop of an environment that should favour private label products.
This, together with an improving service performance, provides reassurance both on our revenue outlook and
factory loading levels. Recent months have seen overall raw material costs steadying but with widely varying trends
between material groups. Energy and currency variations add further uncertainty to the cost environment and
hence margin improvement actions from price rises or product engineering remain key activities. At this stage the
Group is maintaining its view that full-year earnings will be in line with our expectations.
Chris Smith
Chief Executive Ocer
29 September 2022
The Strategic report was approved and signed by
the Board on 29 September 2022 and signed on its
behalf by:
Chris Smith
Chief Executive Ocer
Strategic report
McBride plc Annual Report and Accounts 2022
20
Peter Ingelse
Managing Director Liquids
Performance review
This past year has seen margins
heavily impacted due to
unprecedented and relentless
input cost infl ation in all areas of
raw materials, packaging, energy,
logistics and labour, with the e ect
building from the second quarter.
Cost infl ation in the later part of
thefi nancial year was brought about
indirectly by the Russia-Ukraine war
and the subsequent surge in oil and
fuelcosts.
The key focus for the team has
been to recover margins by taking
necessary steps to control our
own costs before passing this
extraordinary input cost infl ation
on to customers, as well as to work
with them to reduce product costs
as an alternative to pure price rises.
Retailers have understood the need
for price increases and have in the
main been supportive. On average,
however, it has typically taken three
months to pass infl ationary costs
into agreed selling prices, which has
been detrimental to in-year margins
and this lag has ultimately led to
losses in the fi nancial year.
Liquids revenue grew by 5.6% on a
constant currency basis
(2)
, the net
of an overall fall in volumes in the
period of 4.9% o set by the e ects
of price increases.
The volume performance for Liquids
was mostly impacted by volumes
to our contract manufacturing
customer (down38%), with private
label lower by 1.2%. This private label
performance compares favourably
with the volumes for the fi ve key
private label markets in Europe,
which declined on average by 5.6%
versus the prior year, as some of the
positive impact in prior periods from
Covid-19 unwound. Our volumes into
contract manufacturing customers
reduced as the need for top-up
volumes fromthe branders fell post
Covid-19.
Volume of laundry products for
private label grew by 3.8% versus
prior year, again outperforming
the fi ve key private label markets
in Europe, which declined on
average by 0.2%. For consumers,
daily laundry habits were disrupted
during the two years of Covid-19
lockdowns and curfews.
Our divisionsOur divisions
Adjusted
operating (loss)/
profi t
(1)
£(15.9)m
2021: £11.0m
Adjusted ROCE
(1)
(13.0)%
Revenue
£383.9m
2021: £363.5m
Strategic report
McBride plc Annual Report and Accounts 2022
21
Volumes have not returned to
pre-pandemic levels however, which
is thought to be due to the increased
prevalence of remote or hybrid
working.
Adjusted operating loss
(1)
of
£15.9million was £26.9 million lower
than prior year at constant currency
(2)
,
and whilst the second half was still loss
making, profi t performance improved
with losses lower by 40% compared
to the fi rst half. Fourth quarter exit
rate margins, whilst still not back at
historical levels, were stronger than
the full-year average due to the timing
of the price increase implementation.
These higher prices are expected to
annualise in the next fi nancial year.
Service levels were impacted by
disrupted raw material supply, driver
availability and Covid-19-related sta
absences. This negatively impacted
volumes in the period and led to an
increase in customer penalties. Global
supply chains remain unstable, with
uncertainty around supply of key
materials and with logistics routes
disrupted. Good progress has been
made with committed Compass cost
reduction actions, with in-year savings
in line with target. Given the challenge
to margins, management action has
been taken to further tighten spending
controls and restrict capital investment
to conserve cash.
It is encouraging to note that there
was a net positive balance of newly
communicated gains and losses during
the year, including growth with a key
global contract manufacturing partner
and in the German private label market,
which is expected to positively impact
volumes in the next fi nancial year.
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
How are you progressing against your
costleadership strategic priorities?
Work on the Simply 30 project continues. Working
with our customers to identify simplifi cation-led
e ciency savings has proven to be even more
important during this period of high input cost
infl ation.
In order to further optimise our cost base, in addition
to range simplifi cation, we have embarked on the
fi rst phase of our ‘lean’ conversion programme in
recent months. This focus on operational excellence
is expected to unlock capacity in our factories,
improve the e ectiveness of back-o ce processes
and ultimately right-size our cost base.
How do you propose to partner with
focuscustomers?
Considerable focus has gone into setting up our
Partnership Champion model. This means that Tier 1
customers have one point of contact to interface into
all divisions as required, which we expect will further
strengthen our customer relationships.
O ering our customers sustainability-orientated
innovation is another focus area of our strategy.
Our work on building a more sustainable product
portfolio led to a number of new product
development initiatives which will gradually hit
themarket during the next fi nancial year.
Q&A with Peter Ingelse
Strategic report
Our divisions continued
McBride plc Annual Report and Accounts 2022
22
Performance review
The Unit Dosing division had
a challenging year, due to a
combination of extreme input cost
infl ation and softer underlying sales
volumes.
Revenue for the full year was lower
by 1.9% on a constant currency
basis
(2)
and on a full-year adjusted
basis the division recorded an
operating loss
(1)
of £0.8 million (2021:
operating profi t of £16.0m), resulting
in an adjusted operating loss margin
of 0.5% (2021:adjusted operating
profi t margin of 9.2%).
Following a year-on-year revenue
decline of 8.7% in the fi rst half of
the fi nancial year, the business
grew by 5.0% in the second half.
This was driven by the impact of
price increases and through volume
improvements in laundry capsules.
Whilst now improving, unfortunately,
service challenges, specifi cally
in Germany, continued tohave
a negative impact on dishwash
revenue in the second half.
The division saw exceptional cost
infl ation throughout the year in
all areas including raw materials,
energy, transport and labour
cost. By the end of the year the
business realised signifi cant price
increases to help o set this infl ation,
inconjunction with many other cost
reduction initiatives.
Revenue in private label grew by
3% while contract manufacturing
business revenue declined by
21% as peak pandemic volumes
reduced and thus the need to
supply ‘fi ll volumes’ also fell. Overall,
dishwash sales decreased by 1% as
volume run-rates saw a downward
correction as Covid-19 restrictions
ended. Since May 2022, volumes
have been improving as a result of
the positive impact of new wins for
classic and all-in-one dishwasher
tablets and descaler tablets.
Thelaundry capsules business has
stabilised in the second half of the
year, with revenue higher by 13%
year over year following a three-year
period of decline where the business
recorded a negative balance
between contract gains and losses.
Adjusted ROCE
(1)
(1.2)%
Adjusted
operating (loss)/
profi t
(1)
£(0.8)m
2021: £16.0m
Revenue
£171.5m
2021: £174.9m
Lennard Markestein
Managing Director Unit Dosing
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McBride plc Annual Report and Accounts 2022
23
Additionally, though still in its infancy,
good progress has been seen from the
new revenue stream for refill tablets for
liquid cleaners.
Each of the factories faced varying
operational issues during the year.
Acombination of high absence
rates due to Covid-19, high attrition
rates fortechnical roles and multiple
first-time operational events, led to
weaker eciency levels and higher
waste rates. By the fourth quarter,
these issues were largely resolved,
which supports improved momentum
into the new financial year. Throughout
the year, the division successfully
exerted tight cost controls on divisional
fixed cost, inventory levels and capex
spend as a response to the challenging
financial performance.
Though challenged by the dicult
market conditions and the short-term
focus this required, the division has
made good progress with its innovation
agenda. New capsule shapes have
been launched and multiple sustainable
packaging options introduced based
on carton or Post-Consumer Recycled
(PCR) plastics. Significant eort has
gone intoredesigned formulations for
manyproducts, helping to partly oset
raw material cost inflation, which have
been progressively introduced to our
customers.
The team’s innovative strength was
demonstrated at a leading brander
where the contract manufacturing
agreement was secured, which will
feature the launch of an innovative new
cleaning product in the second half of
the next financial year.
The Unit Dosing team faced and
weathered a perfect storm in 2022
and remains confident that despite
this turmoil, the right steps have been
taken towards placing the division on
arobust growth trajectory.
The team continues to demonstrate
its value to customers and be their
proactive partner of choice for Unit
Dosing products. The mission of
the division is to be recognised for
its ability to develop and supply
aordable, sustainable, safe and
convenient single-use cleaning
products.
Have you delivered the product innovation
priorities that you targeted for this fiscal year?
Despite the challenging market environment, our
team has maintained focus and made good progress
against our product leadership strategy. In the first
half, we launched a new, smaller mono-laundry
capsule and a new premium triple capsule design.
The introduction of our sustainable carton box
packaging for capsules – Superior Child Impeding
Closure (SCIC) with a safe but customer-friendly
opening/closing functionality (Click-to-Lock) –
has been a success. Our compact packaging for
our premium tab-in-tab dishwash product has
been adopted by many customers. The first set of
customers have chosen our new three-chamber
powder liquid dishwash product, recognised for an
appealing and compact design. Looking towards
2023, we will continue to strengthen our ranges
with new sustainable product format and packaging
oerings. Even more emphasis than before will
be placed on improving the aordability of our
productportfolio.
Can you further improve eciencies
andreducecosts in your factories?
During this year, our factories in Hammel, Foetz
and Estaimpuis each had to overcome significant
operational challenges. All in all, these issues have
aected our financial performance by approximately
£2 million. In the later months of the year, we have
seen our eciencies improve and our waste rates
reduce. Webelieve substantial eciency gains
can be realised with limited capex investment.
Thedivision is increasingly deploying ‘lean’
methodology solutions to optimise operations and
reduce downtime and change-over times. Each of
our factories is in a position to increase volumes,
while improving eciencies.
Q&A with Lennard Markestein
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
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Our divisions continued
McBride plc Annual Report and Accounts 2022
24
Adjusted ROCE
(1)
(11.5)%
Adjusted
operating (loss)/
profi t
(1)
£(2.5)m
2021: £(2.3)m
Revenue
£68.6m
2021: £64.0m
Performance review
Full-year revenue in Powders was
7.2% higher on a constant currency
basis
(2)
, but adjusted operating
loss
(1)
increased from £2.3 million
to £2.5 million, with £0.2 million
ongoing cost actions and volume
growth targeting in place to get the
business back to at least break-even
in the near term.
The demand for laundry products
recovered versus the previous year
as the Covid-19 restrictions were
lifted. The impact is being driven
by people returning to work and
being able to socialise, with the
knock-on e ect of washing their
clothes more frequently, although
this has not reached pre-pandemic
levels. The improvement in rates
of sale in both private label and
contract manufacturing for laundry
powder that was witnessed at the
end of the previous fi nancial year
was sustained over the course of
thecurrent year.
These sales trends were refl ected
across the entire European region,
although the two largest countries,
UK and Germany, recorded higher
than average increases. Private
label sales grew slightly despite
the loss of one major contract in
laundry powder tablets. Contract
manufacturing sales were also
higher as the industrial and
hospitality sectors benefi ted from
the easing of restrictions in eating
out and travel.
Gross margins declined
signifi cantlyversus the previous
year due to the signifi cant and
unprecedented increases in raw
material and logistics costs.
Too set this infl ationary pressure,
a series of price increases were
negotiated with customers as well
as making improvements in product
and other costs.
Marielle Claudon
Managing Director Powders
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McBride plc Annual Report and Accounts 2022
25
As seen across the Group’s divisions,
delays in the realisation of price
rises meant higher costs exceeded
price recovery during the period,
leading to increased losses for the
year. Thedivision also continued to
maintain a strong cost focus across the
business which enabled a reduction in
the overheads cost base. As a result,
overall, the adjusted operating loss
(1)
of the Powders division increased by
£0.2 million but with an improving
profi tability trend as the business
exited the fi nancial year. Despite the
poor profi t performance, actions were
implemented to reduce inventories to
improve the working capital position.
As initiated last year, the Powders
division has continued to strengthen
the technical capability of its team,
thereby accelerating product
development for a number of exciting
initiatives which are already under
discussion with key customer partners.
The cost leadership strategy and the
plans around product innovation are
showing benefi ts, which together with
an expected trend of shoppers turning
to powders as a lower cost solution
given consumer infl ationary pressures,
is expected to see better volumes in
the next fi nancial year.
What trends do you see in the laundry
powdercategory for theCompany?
The overall decline of the powders market is
continuing. While this is especially accelerating with
laundry tabs, in the case of laundry powders we are
seeing some stabilisation in countries such as the
UK and Germany. In this market context, branders
are already starting to outsource more of their
manufacturing and smaller competitors have exited
the category. The intense infl ationary pressures
weare seeing have further accelerated this trend.
Inline with our Compass expectations, thismeans
that private label, contract manufacturing and supply
to the professional cleaning industry will become
concentrated amongst fewer manufacturers. With the
focus on cost and quality performance, the Powders
division is showing it is well positioned to operate a
profi table business in this sector.
What are the commercial priorities for
Powdersgoing forward?
The fi rst focus of the business is to recover and/or
o set the infl ationary pressures we currently face.
The commercial teams are actively engaging with
our customers to mitigate the issue through price
increases or revised product o erings. In terms
of overall strategy, our developed understanding
of the laundry powder market and our customer
segmentation has provided clear targets for the
right regions and products. We will continue to
build further on our private label business with key
customers while also actively targeting contract
manufacturing opportunities with branders and
professional cleaning customers. We will succeed by
o ering the best quality for price solutions thanks to
improved formulation and packaging solutions.
Q&A with Marielle Claudon
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
Strategic report
Our divisions continued
McBride plc Annual Report and Accounts 2022
26
Marc Marot
Managing Director Aerosols
Performance review
Aerosols revenue of £31.9 million
was 2.1% lower and full-year adjusted
operating loss
(1)
of £1.5million
was down £2.2 million, both on a
constant currency basis
(2)
compared
to the prior year. This resulted in
an adjusted operating loss margin
of 4.6% (2021: adjusted operating
profi t margin of 2.1%).
The four main product categories
of the Aerosols division are:
household (air fresheners and
cleaners), personal care (deodorants
and shaving), insecticides and
hydroalcoholic (hand and ‘one-shot’
sanitisers). While the household and
personal care ranges saw increasing
demand in the year, insecticides
declined slightly due to seasonal
timing impacts, with hydroalcoholic
sanitiser categories mostly
disappearing post the high early
Covid-19 demand in 2020.
As a result of these di erent
dynamics, following a fi rst half
revenue performance adversely
impacted from the reduction in
sanitiser product sales, the second
half saw sales increase by 3.1%
across all ourcore categories.
The Aerosols division was also
heavily impacted by unpredictable
and successive waves of raw
material price increases. As with
the other divisions and despite
the e orts of our teams, customer
acceptance of price increases
lagged the input cost infl ation by
circa three months on each pricing
wave, leading to margin squeeze
for much of the year. The operating
profi t impact of these pricing
recovery lags and the adverse sales
mix was mitigated to some extent
by overhead cost control.
Adjusted ROCE
(1)
(13.1)%
Adjusted
operating (loss)/
profi t
(1)
£(1.5)m
2021: £0.7m
Revenue
£31.9m
2021: £32.6m
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McBride plc Annual Report and Accounts 2022
27
However, after two successive years of
generating profi ts, this year the division
delivered a full-year adjusted operating
loss
(1)
of £1.5million (2021: adjusted
operating profi t of £0.8 million.
The Aerosols division continues to
pursue its strategy of supplying niche
products to a limited range of markets,
while pursuing targeted geographical
expansion. The division is keenly
focused on meeting customers’ needs
in the most cost-e ective way. This
approach has already secured new
contracts that launched in the third
quarter with others planned for next
fi nancial year, supporting a positive
growth momentum in the next year.
What will drive sales growth in the
nextfi nancialyear?
The previous demand for sanitiser products
has heavily diminished over the course of the
last year, due to market saturation and reduced
‘panic’ usage by consumers as Covid-19 risks
fall. Hence, the Aerosols division is building on
category growth opportunities within insecticides
and household products as well as regional sales
growthopportunities in Germany.
What are the profi t recovery actions in place?
Our division is focused on implementing price
increases to o set the high raw material prices
thatare coming primarily from metals (aluminium
and steel) as well as gases. Our market position and
close relationships with our customers has shown
good success with negotiating new prices, albeit
withdelays.
Next year we expect to see good growth from the
actions to secure new business over the past 18
months. Ensuring this growth delivers the expected
improved profi tability is a key priority for the team.
Additionally, cost control and product engineering
will continue to be a constant focus for the local
team to secure improved profi tability.
Q&A with Marc Marot
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
Strategic report
Our divisions continued
McBride plc Annual Report and Accounts 2022
28
Teong Dee Ong
Managing Director Asia Pacifi c
Performance review
Asia Pacifi c revenue of £22.4million
was lower by 6.7%, adjusted
operating profi t
(1)
of £0.7million was
lower by 61.1%, bothon a constant
currency basis
(2)
. This resulted in an
adjusted operating profi t margin of
3.3%.
The division’s performance has
been hit signifi cantly for the second
year in a row by external factors.
The extended and severe pandemic
lockdowns created reduced demand
in the stores. Footfall in stores
across the region decreased due
to Covid-19 and our run rates have
been notably hit, especially in the
fi rst three quarters of the fi scal
year. In addition, some of the usual
promotional activities did not take
place as planned in the third quarter.
The overall fall in sales of 6.6% was
primarily due to Australia being
lower year-on-year. Nevertheless,
thanks to the strong resilience of
the local teams and our customers’
trust as we were slowly exiting out
of Covid-19, we could see a recovery
appearing in the fourth quarter of
the fi scal year, with sales picking up
again in Malaysia and South-East
Asia, while demand in Australia has
also been recovering.
The impact of Covid-19 was evident
in our operations. Strict lockdown
rules meant shortages of foreign
workers able to enter Malaysia,
impacted output and service
levels. At our site in Vietnam,
wehad to review our operational
set-up by hosting workers on site
for a few months. Ontop of this,
unprecedented fl oods in Malaysia
temporarily blocked access to the
production facility.
Revenue
£22.4m
2021: £24.0m
Adjusted
operating (loss)/
profi t
(1)
£0.7m
2021: £1.9m
Adjusted ROCE
(1)
5.7%
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McBride plc Annual Report and Accounts 2022
29
Lastly, the disrupted global supply
chain aected export shipments as
container availability was erratic while
costs increased significantly.
Our adjusted operating profit of
£0.7million was £1.2 million lower
than last year. This was driven by
the same exceptional raw material
cost increases experienced in all the
divisions. However, we successfully
oset those costs with some price
increases to our main customers in
retail and contract manufacturing,
but could not completely balance the
higher costs we incurred. Managing our
cost base has remained a priority to
try and combat the general inflationary
pressures we experienced.
While our operating profit margin
has declined versus last year, the
division still reported a profit, a good
performance considering the general
environment and trading conditions
of the past year. Along with the recent
change in Regional Managing Director,
further reinforcement of the local
management team is planned in the
coming year to support future growth
for the division.
Has the business environment changed post
Covid-19 and how does this aect the growth
ambitions for the division?
As we come out of the pandemic, consumer demand
is recovering. Therefore, our key private label
customers are looking to grow volumes through
store expansions, aggressive marketing campaigns
and new product launches. In addition, an increasing
number of branded companies are mitigating their
centralised regional product manufacturing base risk
to multiple ‘closer to home’ supply sources.
With our new Malaysia production facility being
fully operational, we are in a better position to grow
our business, by oering increased manufacturing
capacity to multinational branders and our retail
partners, both on personal care and household
categories across the region.
Innovation and cost eciency are particularly
important considerations in the post Covid-19
environment as inflationary pressures impact our
retailers and their end consumers. This is especially
key for success in Australia, in order to oset the
higher costs arising from logistics.
Our local team is now well positioned to capitalise
onthese trends and to engage more actively with
all our customers who are seeking a high-quality,
reliable and blue-chip regional partner.
How do you intend to develop and grow your
household business credentials in the region?
Our ambition is to fast-track growth in Asia Pacific by
leveraging McBride plc’s household sector expertise
in laundry, cleaners and dishwashing products. New
focus will be placed on R&D through improved
coordination between our commercial and operational
teams to ensure we provide a smart and ecient
process to transfer knowledge. We also have access
to our Group R&D sector specialists in our European
Centres of Excellence, to work on key projects.
We will be investing in household production
capabilities in Malaysia to build on our reputation
as a low-cost/high-quality manufacturer. This will
enable us to compete eectively for household
business in private label and also branded contract
manufacturing opportunities.
Our commercial teams are also engaging actively
with our key private label customers to expand
our partnership into household products. We are
also looking to compete eectively for branded
contract manufacturing opportunities through the
relationships already established by our European
divisions.
Q&A with Teong Dee Ong
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
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McBride plc Annual Report and Accounts 2022
30
With the success of our pricing actions and our revised fi nancing
arrangements now in place, we emerge from a disappointing year
impacted by unprecedented input cost infl ation with optimism that
we are still well placed to deliver our Compass strategic plans.
Mark Strickland
Chief Financial O cer
CFO’s report
Group operating results
The full-year operating loss from continuing operations of £26.7 million was a signifi cant reduction from the prior
year (2021: profi t of £15.5m). Full-year adjusted operating loss
(1)
of £24.5 million was also signifi cantly lower than
the prior year (2021: profi t of £24.1m) and adjusted operating profi t margin decreased from 3.5% to (3.6)%.
During the year, the Group experienced rapid input cost infl ation and supply chain disruptions, exacerbated further
in the second half of the year by the confl ict in Ukraine. These impacts have been predominantly o set through
pricing and value engineering actions. However, the time lag between the exceptional levels of input cost infl ation
hitting our business and the mitigating actions being agreed with, and then implemented by, our customers,
signifi cantly impacted our profi tability.
Group EBITDA
Full-year adjusted EBITDA
(1)
of £(3.6) million (2021: £45.5m) refl ected the challenging trading conditions.
2022 2021
£m £m
Operating (loss)/profi t (27.1) 14.8
Add back operating loss from discontinued operations 0.4 0.7
Operating (loss)/profi t from continuing operations (26.7) 15.5
Exceptional items in operating profi t
(0.4) 6.2
Amortisation 2.6 2.4
Adjusted operating (loss)/profi t
(1)
(24.5) 24.1
Depreciation of property, plant and equipment 16.9 17.6
Depreciation of right-of-use assets
4.0 3.8
Adjusted EBITDA
(1)
(3.6) 45.5
(1) Please refer to APM in note 2.
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McBride plc Annual Report and Accounts 2022
31
Exceptional items
Total exceptional items of £3.1 million were recorded
during the period in relation to continuing operations
(2021: £6.2m), including £3.5 million exceptional
finance costs and a £0.4 million exceptional credit
within operating profit. The charges primarily
comprised the following:
• £3.5 million of costs in relation to the independent
business review programme, recognised within
finance costs;
• £0.7 million cost relating to the Group’s logistics
transformation programme, including £0.8 million
of consultancy costs and £0.2 million of redundancy
costs, oset by £0.3 million of profit on sale of a
warehouse in France;
• £0.6 million additional costs relating to the
revaluation of the ongoing environmental
remediation liability in Belgium;
• £0.1 million in respect of one-o legacy costs in
relation to the former UK Aerosols site in Hull;
partially oset by:
• £1.8 million profit on the sale of the Barrow site,
which ceased operations in October 2020, oset by
£0.4 million clearance and site closure costs; and
• £0.4 million gains relating to Programme Compass,
including £1.6 million profit on sale of a factory in
Malaysia, oset by £0.9 million impairment of fixed
assets and £0.3 million in consulting support and
other project expenses.
Finance costs
At £5.1 million, adjusted finance costs
(1)
were
£0.9million higher than the prior year, driven by net
foreign exchange losses (2021: £4.2m).
Loss before tax and taxation
Reported loss before taxation from continuing
operations was £35.3 million (2021: profit of £11.3m).
Adjusted loss before taxation
(1)
from continuing
operations was £29.6 million (2021: profit of £19.9m).
The tax credit on continuing adjusted loss before tax
(1)
for the year is £9.3 million (2021: £1.1m credit) and the
eective tax rate is 31% (2021: (6)%).
The statutory eective tax rate on continuing operations
for the year is 32% (2021: (24)%).
The Group operates across a number of jurisdictions
and tax risk can arise in relation to the pricing of
cross-border transactions, where a taxation authority’s
interpretation of the arm’s length principle can diverge
from the approach taken by the Group. During the year
the Group made minor changes to the Group’s transfer
pricing policy to update it for changes to operating
structures and accountabilities following Programme
Compass changes that are now fully embedded.
Earnings per share
On an adjusted basis, diluted loss per share
(1)
from
continuing operations was 11.7 pence (2021: earnings
of 11.7p). Total adjusted diluted loss per share
(1)
was 11.7
pence (2021: earnings of 11.7p), with basic loss per share
at 14.0 pence (2021: earnings of 7.5p).
(1) Please refer to APM in note 2.
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McBride plc Annual Report and Accounts 2022
32
CFO’s report continued
Payments to shareholders
On 2 November 2020, the Company announced that it would commence a share buy-back programme of up to
£12million in McBride plc ordinary shares, running from 2 November 2020 through to the date of the Company’s
next AGM.
During the year, the Group purchased and cancelled 0.2 million ordinary shares (2021: 8.6m) representing 0.1%
(2021: 4.7%) of the issued ordinary share capital as at 2 November 2020. The shares were acquired at an average
price of 77.0 pence (2021: 79.3p) per share, with prices ranging from 73.3 pence per share to 78.6 pence per share
(2021: 61.0p per share to 90.0p per share). The total cost of £0.1 million (2021: £6.8m) was deducted from equity.
Atransfer of £nil (2021: £0.9m) was made from share capital to the capital redemption reserve. The Board ended
the share buy-back programme on 7 September 2021.
Investing in the business to drive mid-term sustainable profitable growth is a key priority of the Group. The Group’s
flexible policy on payments to shareholders makes distributions when appropriate and aordable. More specifically,
annual payments will be payable only when the net debt
(1)
to adjusted EBITDA
(1)
leverage ratio (on an accounting
basis) is 2.0x or less. Once this ratio is 2.0x or less the Group has indicated a progressive dividend policy, as follows:
1.5x to 2.0x Base dividend – one sixth of EPS Cash
1.0x to 1.49x Additional distribution – one sixth of EPS Cash/share buy-back/retain
Below 1.0x Special distribution At Board’s discretion
Since the ratio was over 2.0x at 30 June 2022, and per the agreement with our lender group not to pay dividends
for the duration of the new banking agreement, the Board does not propose a distribution to shareholders.
Cash flow and balance sheet
2022 2021
Free cash flow
(1)
£m £m
Adjusted EBITDA
(1)
(3.6) 45.5
Working capital excluding provisions and pensions (15.3) (9.4)
Share-based payments — 0.3
Loss on disposal of fixed assets 0.3 0.4
Non-exceptional impairment (0.1) 0.3
Pension deficit reduction contributions (4.0) (4.0)
Free cash flow
(1)
(22.7) 33.1
Exceptional items (4.1) (8.0)
Interest on borrowings and lease liabilities less interest receivable (3.3) (3.2)
Tax paid (0.1) (7.3)
Net cash (used)/generated from operating activities (30.2) 14.6
Net capital expenditure
(2)
(13.2) (28.5)
Debt financing and refinancing activities 22.9 1.1
Settlement of derivatives 0.4 3.8
Free cash flow to equity
(3)
(20.1) (9.0)
Dividends paid/redemption of B Shares (0.1) (2.0)
Share buy-back (0.1) (6.8)
Purchase of own shares held by Employee Benefit Trust — (0.3)
Net decrease in cash and cash equivalents (20.3) (18.1)
Net cash absorbed by continuing operations before exceptional items was £22.7 million (2021: net cash generated
of £33.1m) in the year to 30 June 2022.
Working capital outflows increased compared to the prior year primarily due to the eects of inflation rolled up in
net working capital, combined with reductions in creditor payment terms driven by the loss of credit insurance.
(1) Please refer to APM in note 2.
(2) Net capital expenditure is capital expenditure including capital payments on lease liabilities less proceeds from sale of fixed assets.
(3) Free cash flow to equity excludes cash flows relating to transactions with shareholders.
(4) Gearing is defined as net debt/average year-end capital.
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McBride plc Annual Report and Accounts 2022
33
During the year, capital expenditure, including capital
payments on lease liabilities less proceeds from the
sale of fixed assets, was £13.2 million (2021: £28.5m)
in cash terms. The reduction in capital expenditure
levels resulted from careful management of cash
flows to mitigate increases in net debt during the
current challenging trading conditions. We continue
to prioritise capital expenditure to underpin our
strategy of focused investment in our growth
categories.
In the final months of its share buy-back programme,
the Group bought back shares for a total cash
outflow of £0.1 million (2021: £6.8m) in the year.
The Employee Benefit Trust purchased none (2021:
£0.3m) of McBride plc shares.
The Group’s net assets decreased to £57.0 million
(2021: £69.8m). Gearing
(4)
increased to 80% (30
June 2021: 66%), resulting from the increase in net
debt, and adjusted return on capital employed
(1)
of
(11.4)% was lower compared to the prior year (2021:
11.5%).
Bank facilities and net debt
(1)
Net debt
(1)
at 30 June 2022 increased by £46.0million
to £164.4 million (30 June 2021: £118.4m), as aresult
of both the significant reduction in adjusted
EBITDA
(1)
, and working capital increases caused by
the exceptional input cost inflation experienced in
the year. Net debt
(1)
, excluding IFRS 16, increased
by £45.3 million to £152.4 million (30 June 2021:
£107.1m), again mainly due to challenging trading
conditions.
Throughout the year the Group had an unsecured
€175 million multi-currency, sustainability-linked
revolving credit facility (RCF). Thefacility was
agreed initially for a five-year tenor to May 2026,
with the option to be extended to 30 September
2027, and is provided by a syndicate of supportive
international bank lenders. The facility also includes
a €75 million uncommitted accordion feature which
could provide additional commitments for potential
acquisitions in support of our Programme Compass
strategy.
The facility, which is aligned with the Loan Market
Association’s ‘Sustainability Linked Loan Principles’,
incorporates three sustainability performance targets
which are central to McBride plc’s commitment to
maintaining a responsible business and contributing
actively to a more sustainable future:
1. Renewable energy: McBride plc 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 this
financial year, 25.5% of the Group’s energy came
from renewable sources, beating the target of 15.0%
by 30 June 2022. This was driven by an increase in
renewable energy into the Moyaux manufacturing
site.
2. Recycled content: As plastics are a significant
element in many of the final products of McBride
plc, the Company targets to increase significantly
the post-consumer recycled content of polyethylene
terephthalate (PET) plastic packaging sourced for
manufacturing its products, from 64.0% in 2020 to
94.0% in 2026. During this financial year, 81.0% of
PET bought had post-consumer recycled content,
exceeding the target of 74.0%.
3. Responsible sourcing: McBride plc targets
the sourcing of 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
to100.0% in 2026. By 30 June 2022, the percentage
of skillets sourced that are FSC® certified was 60.5%,
slightly ahead of the target of 60.0% by 30June2022.
Successful achievement of all three annual targets
will result in a reduction of 0.05% of the margin of
the facility.
Position prior to 29 September 2022
The Group’s revolving credit facility (RCF) funding
arrangements are subject to banking covenants,
representations and warranties that are customary
for unsecured borrowing facilities, including two
financial covenants: debt cover (the ratio of net debt
to EBITDA) may not exceed 3.0x and interest cover
(the ratio of EBITDA to net interest) may not be less
than 4.0x. For the purpose of these calculations, net
debt excludes IFRS 16 leases and amounts drawn
under the Group’s invoice discounting facilities.
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McBride plc Annual Report and Accounts 2022
34
CFO’s report continued
Bank facilities and net debt
(1)
continued
Position prior to 29 September 2022 continued
On 22 December 2021, the Group announced that its
lender group waived the December 2021 covenant
tests, following the significant deterioration of
EBITDA due to unprecedented levels of input cost
inflation. Inreaching the agreement of the waiver,
the Group agreed to maintain liquidity (cash plus
facility headroom) of at least £40 million and not to
pay dividends until the Group evidences compliance
with its existing covenants. On 29 June 2022, the
Group announced that its lender group waived the
June 2022 covenant tests until 30September 2022,
with the sameconditions.
As at 30 June 2022, the debt cover ratio under the
RCF funding arrangements was (93.3)x (2021: 1.5x)
and the interest cover was (0.2)x (2020: 11.0x).
Theamount undrawn on the facility was €64.5
million (2021:€87.0m).
At 30 June 2022, the Group had a number of
facilities whereby it could borrow against certain
of its trade receivables. In the UK, the Group had a
£20million facility that was committed until October
2022. InFrance and Belgium, the Group had an
aggregate €30million facility, on which a maximum
of €25 million can be borrowed, with a rolling notice
period of six months for the French part and three
months for the Belgian part. In Germany, the Group
had a €35 million facility committed until December
2023. The Group can borrow from the provider of
the relevant facility up to the lower of the facility
limit and the value of the respective receivables.
The Group also has access to uncommitted working
capital facilities amounting to £22.7 million at
30June2022 (2021: £44.3m). At 30 June 2022,
£6.8million (2021: £5.9m) was drawn against these
facilities in the form of overdrafts and short-term
borrowings.
Position post 29 September 2022
On 29 September 2022, the Group announced that it had
agreed an amended RCF with its lender group, ensuring
the Group has sucient levels of liquidity headroom
and can comply with revised covenant requirements.
Keyprovisions of the revised agreement are:
• €175 million sustainability-linked RCF confirmed to
May 2026;
• the option to extend to 30 September 2027 and the
€75 million accordion feature previously agreed have
been removed;
• RCF shall be secured against material asset, share
and inter-company balances;
• RCF commitments to reduce, and be cancelled, in the
amount of the Euro equivalent of £2.5 million every
three months from September 2024 up until the
termination date;
• existing bilateral overdraft facilities shall become
ancillary facilities committed until 30 September 2024;
• invoice discounting facilities shall be committed to
30September 2024;
• liquidity shall not be less than £15 million when tested
on or prior to 30 September 2024;
• liquidity shall not be less than £25 million when
tested post 30 September 2024;
• net debt cover and interest cover covenants to be
tested quarterly from 30 September 2024;
• no dividends will be paid to shareholders until there is
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; and
• the arrangement includes an ‘upside sharing’
mechanism whereby a fee will become payable by
the Group to members of the lender group upon
the occurrence of an exit event. Such fee to be
determined as a percentage of any increase from
the current market capitalisation of the Group to the
market capitalisation of the Group at the date of such
exit event.
(1) Please refer to APM in note 2.
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McBride plc Annual Report and Accounts 2022
35
The Group considers that the arrangement achieves
an appropriate balance between the interests of all
stakeholders of the Group. In particular, we have been
in regular discussion and consultation with the Trustee
of the Group’s defined benefit pension scheme in the
UK. In order to preserve and support the position of the
scheme, with the support of the lender group, we have
agreed to provide in favour of the scheme a package
of additional credit support in the UK, as well as a
new information sharing protocol to ensure ongoing
communication between the Group and the Trustee
remains comprehensive.
The Group is currently negotiating to further increase
liquidity by £25 million through extension of invoice
discounting facilities to unencumbered receivables
ledgers. However, there is no certainty that these
negotiations will be successful.
The Group continues to explore and assess all avenues
to improve liquidity and create additional funding for
the benefit of all stakeholders. We are fully appreciative
of the support that the lender group has given and
continues to give the Group through this period of
uncertainty caused by macroeconomic factors, which
have resulted in rapid and unprecedented rises in input
costs, and ongoing global supply chain challenges.
Pensions
In the UK, the Group operates a defined benefit
pensionscheme, 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 delivers a stable, more certain, expected return
and reduced volatility in the reported accounting deficit
as assets and liabilities of the fund are better matched.
At 30 June 2022, the Group recognised a deficit on
thescheme of £14.4 million (30 June 2021: £29.3m).
Thedeficit decreased significantly during the year
primarily due to an increase in corporate bond yields.
Following the triennial valuation at 31 March 2021, the
Company and Trustee agreed a new deficit reduction
plan based on the scheme funding deficit of £48.0
million. The current level of deficit contributions of
£4.0million per annum, payable until 31 March 2028,
will continue and this is expected to eliminate the deficit
by 31 March 2028. The Company has separately agreed
that (from 1 October 2024) if EBITA exceeds £30million
in any year following the year ending 31March 2023,
additional annual deficit contributions of £0.34million
for each £1 million of EBITA above £30million, up
to a maximum of £1.7 million, will become payable
(monthly in arrears). Also, the Company has agreed
to make additional contributions such that the total
deficit contributions in any year match the value of
any dividend paid. These arrangements will provide
scope to de-risk and/or accelerate the recovery plan,
where aordability of the business allows. The funding
arrangements and recovery plan will next be reviewed
by the Company and Trustee as part of the 31 March
2024 valuation.
The Group has other post-employment benefit
obligations outside the UK that amounted to £1.7 million
(30 June 2021: £2.6m).
Mark Strickland
Chief Financial Ocer
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McBride plc Annual Report and Accounts 2022
36
Definition and why we measure
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.
A key performance indicator of
commercial performance, this marks
the progress that we are making
towards our strategic objective of
growing to €1 billion revenue.
How we’ve performed
Headline revenue declined by
£4million, buton a constant currency
(2)
basis grew by £19.3 million or 2.9%.
Revenue in the second half was
13.4% up in constant currency
(2)
terms. Reduced volumes in contract
manufacturing and weaker private label
salesin Unit Dosing were oset by
pricerisesacross all divisions.
Definition and why we measure
Cost savings achieved from the
implementation of strategy. Cost
optimisation is the backbone of
the first two years of our five-year
Compass plan. As such, we are
committing to deliver annualised
costsavings of £20 million by the
endof 2023.
How we’ve performed
In 2022 £11.6 million cost savings
have been achieved, this being the
first full financial year that the new
organisation structure was in eect.
Cost savings have resulted from cost
of product initiatives, warehouse
optimisation and reductions in
overheads.
Definition and why we measure
The calculation of adjusted EBITDA
(1)
,
which when divided by revenue gives
this EBITDA margin, is defined in the
adjusted measures section of note 2
tothe accounts.
We measure adjusted EBITDA
(1)
margin to get a good view of the
underlying profitability of the Group,
having adjusted for the impact of
discontinued operations, exceptional
items, depreciation and amortisation.
How we’ve performed
The time lag between the benefits of
price rises with customers and when
the Group was aected by the impact
of inflationary costs pushed the Group
into losses this year and hence led to
a reduction in margin performance.
22 22 2221 21 2120 2019 19
678.3
11.6
(0.5)
682.3
0.5
6.7
706.2
7.0
721.3
6.6
689.8
8.2
18 18
Financial
Key performance indicators
Revenue
(£m)
Cost savings
(£m)
Adjusted EBITDA
(1)
margin
advances (%)
Definition and why we measure
Free cash flow
(1)
is an important indicator of our overall
operational performance as it reflects the cash we generate
from operations. Free cash flow
(1)
is defined as cash
generated from continuing operations before exceptional
items (see note 2).
How we’ve performed
Free cash flow
(1)
declined by £55.8 million, driven by a
£49.4million year-on-year reduction in adjusted EBITDA
and£5.8 million increased working capital outflows.
Definition and why we measure
Adjusted ROCE
(1)
is defined as total adjusted operating profit
(1)
from continuing operations divided by the average period-end
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 (see note 2).
Adjusted ROCE
(1)
serves as an indicator of how eciently
wegenerate returns from the capital invested in the business.
It is a Group KPI that is directly relatable to the outcome of
investment decisions.
How we’ve performed
Adjusted ROCE
(1)
has reduced from 11.5% to (11.4%). Capital
employed has increased to £218.7 million (2021: £209.3m).
The key driver of the decrease is the decline in adjusted
operating profit
(1)
to a loss of £24.5 million (2021: profit of
£24.1m).
Free cash flow
(1)
increase
(£m)
Adjusted ROCE
(1)
improvement
(%)
22 2221 2120 2019 19
(22.7)
(11.4)
33.1
11.5
64.9
12.8
25.7
13.1
43.0
19.2
18 18
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McBride plc Annual Report and Accounts 2022
37
Definition and why we measure
We define customer service level as:
the volume of products delivered
in thecorrect volumes and within
requested timescales, as a percentage
of total volumes ordered by customers.
We strive to deliver a high and
consistent customer service level to
allow customers to operate their supply
chains eciently and eectively.
How we’ve performed
2022 has been particularly challenging
as a result of supply shortages and
disruptions together with a dicult
logistics environment. As we enter the
new financial year, focused actions
are resulting in improvements in our
service performance.
Definition and why we measure
We define our lost time frequency
rate as number of lost time injuries x
100,000 divided by total number of
man-hours worked.
We measure this to track performance
against our key imperative of ensuring
that all of our colleagues return home
safe and healthy at the end of every
working day.
How we’ve performed
Our accident frequency rate fell by
40% with accident numbers falling
45%. These are the lowest levels
achieved by the Group in at least
thepast 15 years.
Definition and why we measure
We define gender split as the
proportion of our total workforce that
is female.
We value diversity and inclusion in
all forms, with gender split just one
measure of this. We endeavour to
promote diversity in our workplace to
enhance the success of our business.
How we’ve performed
Our proportion of female colleagues
has remained broadly stable in the
past few years at between 37.5%
and38.5%
(3)
.
22 22 2221 21 2120 20 2019 19 19
0.48
85.4
38.5
0.80
90.8
38.6
0.67
90.8
38.5
0.87
94.6
38.4
1.18
95.1
37.5
18 18 18
Non-financial
Health and safety Customer service level
(%)
Gender split – female
(%)
Definition and why we measure
We measure customer quality using a customer satisfaction
index which combines critical issues, audit results, returns
and complaints.
How we’ve performed
We continued to perform well in 2022 with appropriate
action plans in place to further upgrade our standards in
line with evolving customer and contract manufacturing
requirements. There continues to be an improvement in the
reduction of microbiological contamination risks despite
increased limitations on the use of restricted preservatives.
Definition and why we measure
We define this as total research and development expenditure
as a percentage of Group revenue. We measure this to ensure
that we are investing at the required levels in order to meet
ourproduct innovation and sustainability objectives.
How we’ve performed
Our research and development expenditure as a percentage
of Group revenue has reduced to 1.00%, down from 1.11% in
the previous year, mainly due to cost management measures
put in place across the business.
Customer quality
(%)
Research & development expenditure
(%)
22 2221 2120 2019 19
97.0
1.00
97.0
1.1197.5
0.96
95.0
0.96
95.0
1.05
18 18
(1) Please refer to APM in note 2.
(2) Comparatives translated at 2021/22 exchange rates.
(3) Includes employees, third-party contractors and agency workers.
Strategic report
How we engage and foster strong relationships
withsomeofour key stakeholders.
Our stakeholders
Section 172(1) statement
The Directors are fully aware of their responsibilities to
promote the success of the Group in accordance with
section 172 of the Companies Act 2006. The Board
considers it has acted in good faith and made decisions
which promote the long-term success of the Group
for the benefit of its shareholders and its people. In
doing so, it considered the interests of stakeholders
impacted by the business as well as its legal duties.
Itacknowledges that as it works towards securing the
Group’s success and sustainability and delivering on
our strategy it needs to build and maintain successful
relationships with a wide range of stakeholders within
an interconnected society. The Board has identified
five key stakeholder groups and recognises that it
must ensure the perspectives, insights and opinions
ofstakeholders are understood and taken into account
when key decisions are being made. Equally, not
all decisions will result in a positive outcome for all
stakeholders; however, the Board recognises that
its decisions should nonetheless be justifiable in
themselves.
Factors taken into account in the Board’s
decision-making included:
• likely consequences of any decisions in the long term;
• the interests and wellbeing of our people, including
health and safety risks;
• the need to foster the Company’s business
relationships with suppliers, customers and others;
• the impact of the Company’s operations on the
community and environment;
• the desirability of the Company maintaining a
reputation for high standards of business conduct;
• the compliance and financial risks to the Company
and our stakeholders; and
• the need to act fairly between shareholders of the
Company.
Examples of how the Board had oversight of
stakeholder matters and had regard for these matters
and the potential impact on stakeholders when making
decisions, are set out here.
Workforce
Customers
Suppliers
Shareholders
Communities
McBride plc Annual Report and Accounts 2022
38
Strategic report
McBride plc Annual Report and Accounts 2022
39
Workforce
Why significant
We are committed to providing a strong and positive
culture for our 3,253 colleagues
(1)
in twelve countries
and recognise that culture plays a fundamental role in
the delivery of our strategic priorities.
How we engage
The Executive Committee is ultimately responsible
for ensuring that our activities reflect the culture we
wish to instil in our colleagues and other stakeholders
to drive the right behaviours. Our culture comes
to life through our three core values, which remain
unchanged. These values underpin our purpose and
have become a vital part of our culture.
We are committed to providing an open and inclusive
culture, where colleagues have the opportunity to
progress and where they are supported in their
development.
2022 highlights
Our hard-working and committed colleagues have
continued to demonstrate extraordinary levels of
teamwork, agility and resilience over the last year
when we have faced a significant period of uncertainty
caused by macroeconomic factors which have
impacted our trading position. Working together to do
the right thing by each other, for our customers, our
shareholders and our communities has been critical.
We continued to work closely with the European
Works Council (EWC) members over the last year,
with the aim of eectively engaging employee
representatives from the dierent European countries
in which we operate.
Outcomes and impact of key decisions
We recognise that our colleagues are fundamental and
core to our business and the delivery of our strategic
priorities. The success of our business depends
on attracting, retaining and motivating talented
employees.
Over the past year, we have made some great
progress, demonstrated by engagement and pride
in McBride plc, which has supported the business
through a very challenging period.
• From June 2022 all colleagues had access to a
digital learning platform containing modules,
allowing them to build broad, future-fit skills across
a wide range of topics. This new learning journey
allows colleagues to access a broader range of
career and learning opportunities at McBride plc.
• We continued to roll out our ‘Let’s Grow’
development programmes with 126 colleagues
attending courses on ‘Investing in Me’, ‘Learning 2
Lead’ and ‘Leading with Impact’.
• Our McBride Cares Employee Assistance
Programme continues to provide a confidential
telephone counselling support line 24/7/365 for
colleagues and their direct families.
• We have continued to operate with an interim smart
home working programme for eligible oce-based
colleagues, allowing them to work in a hybrid way
spending 50% of their working time from home.
(1) Includes employees, third-party contractors and agency workers.
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McBride plc Annual Report and Accounts 2022
40
Our stakeholders continued
Customers
Suppliers
Why significant
Good relationships with our customers are the
fundamental bedrock of our business. Under our new
divisional structure, a core ambition is to provide
focused and specialist insight to help our customers
with the optimal portfolio proposition that best suits
their business.
How we engage
We aim to deliver industry-leading value, service and
quality for our customers. Our specialist commercial
and technical teams, supported by central teams
such as logistics and purchasing, look to drive
long-lasting, trusted relationships with dierent teams
in our customers, ultimately providing a compelling
and valuerange of products. Reacting quickly and
eectively to changing requirements is increasingly
acore competence in our customer proposition.
2022 highlights
This past year has seen frequent interactions with
all our customers, primarily around the subject of
inflation in the supply side requiring customer support
for price rises. Our interactions have reached varying
levels within our customers, from CEO to junior buyer.
At all times in these dicult conversations McBride
plc has provided transparency and co-operated with
the demands and requests from customers. Wehave
increasingly oered customers other solutions
to oset inflation in pricing, demonstrating our
understanding of the diculty ofdealing with inflation
for our customers.
Outcomes and impact of key decisions
Our position on requested price increases was
to look to recover short-term cost rises to cover
known inflation in the coming months and not rely
on long forward estimates and then to seek revision
if these estimates proved inaccurate. We consider
our approach, supported by real data, assisted in
delivering the level of price increases achieved.
Why significant
Raw materials drive the vast majority of our product
costs. Price increases, delays or interruption in the
supply of raw materials could significantly aect
bothour operations and financial position.
How we engage
Our Supplier Code of Conduct, which is visible on
our website, sets out the standards of behaviour we
expect from all of our suppliers. We continually seek to
establish mutually beneficial relationships with each of
our suppliers and encourage them to match our high
standards. Our centralised Group Purchasing function
is dedicated to sourcing the Group’s key materials and
maintaining constructive and collaborative two-way
communication across our supplier base. A due
diligence exercise is carried out on new suppliers and
regular audits take place.
2022 highlights
Over the last twelve months we have seen global
supply chains struggle to cope with the plethora of
daily challenges they have faced. These have ranged
from shipping container availability through to surging
energy prices, creating availability pressures in
multiple areas, with rapid and extraordinary increases
in virtually all raw material and other input costs.
Maintaining a reliable supply into our factories has
been challenging, but with the support of some key
suppliers we have been hugely successful in this area.
Outcomes and impact of key decisions
Having a centralised Group Purchasing function has
allowed us to leverage long-standing relationships
with suppliers across our network in order to keep our
factories supplied. Our teams have worked tirelessly
to negotiate improved pricing and supply terms with
all suppliers, delaying increases or minimising their
impact where possible. The close collaboration with
the divisional R&D teams has been critical in ensuring
that we minimise supply disruption risks by being able
to access multiple sourcing options identified through
our risk assessment exercises.
The last twelve months has further demonstrated that
the Group is not overly reliant on any single supplier.
The Board recognises the importance of strong
supplier relationships to the overall success of the
business. Our UK payment practices reports are filed
on the government website by our trading subsidiary
Robert McBride Ltd.
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McBride plc Annual Report and Accounts 2022
41
Shareholders
Communities
Why significant
A key objective of the Board is to create value for
shareholders and deliver long-term, sustainable
growth. By engaging with our shareholders we ensure
confidence and continued support from shareholders
and alignment ofinterests.
How we engage
We place considerable importance on maintaining
eective and balanced dialogue with all shareholders
todiscuss the Company’s strategy and other
associated objectives. The Chairman and Executive
Directors proactively engage with both existing and
potential shareholders. In addition, the Executive
Directors deliver formal presentations of full-year and
half-year results and attend meetings with analysts,
brokers and fund managers to promote a better
understanding of the business and its strategic plans.
The Board is kept informed of investors’ views through
the distribution and regular discussion of analysts’ and
brokers’ briefings and through summaries of investor
opinion feedback.
All Directors are available at the AGM, either in person
or virtually, to answer questions.
2022 highlights
During the year:
• McBride plc undertook its regular programme of
engagement with shareholders, which included:
thefinancial reporting cycle comprising full-year
and half-year results; quarterly trading statements;
and the AGM;
• Director-investor meetings covered the two key
announcements regarding the ongoing support
fromthe Company’s lender group;
• the Board received updates from the Company’s
brokers;
• the Chairman and Chief Executive Ocer engaged
with four of the Company’s shareholders to secure
support for an increase in the Group’s borrowing
limit, which was subsequently approved at the
General Meeting held on 25August2022; and
• shareholder feedback was provided by the Chairman
or Chief Executive Ocer to the Board following all
meetings or conversations with shareholders.
Outcomes and impact of key decisions
Shareholder views consistently inform McBride plc’s
strategic activities and during the recent period of
economic uncertainty, the views of the Company’s
major shareholders have informed the actions of the
Board in the recovery of the financial situation facing
the Group.
Why significant
We continue to recognise our responsibility to actively
engage and support the local communities in which we
live and work beyond simply providing employment.
How we engage
The Company proactively supports and encourages
colleagues from all locations to come together to
support local initiatives, organise product donations,
raise funds for chosen charities and volunteer for
local organisations. Examples are provided in the ESG
report under ‘Community and social vitality’ on pages
42 to 55.
2022 highlights
Each of our McBride sites continues to support their
local community through specific eorts such as:
• donating products to a range of local organisations
including schools, hospitals, aid organisations,
churches, shelters and foundations in the countries
in which we operate;
• supporting the children of McBride plc colleagues
with educational grants;
• continuing to support In Kind Direct with product
and cash donations;
• providing local employment opportunities; and
• providing development opportunities through our
Let’s Grow development programmes and the
Workday learning platform.
More information on this can be found in the ESG
report under ‘Community and social vitality’ on pages
42 to 55, which highlights some of the charitable
activities over the last financial year.
Outcomes and impact of key decisions
Helping and supporting local communities and
improving the living conditions in the areas where
we operate remains high on our priorities. We also
recognise that, whilst we have made good progress
in recent years, there is still much for us to do this
coming year.
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McBride plc Annual Report and Accounts 2022
42
Our impact on the world
Our contribution to our
colleagues and the communities
where we do business
How we conduct ourselves
Operations
Products
Transport
Waste
Water
Dignity and equality
Health and wellbeing
Skills for the future
Employment/wealth generation
Community and social vitality
Governance body quality
Stakeholder engagement
Ethical behaviour
Risk and opportunity oversight
Strategic report
Environmental,
social and governance
Strategic report
McBride plc Annual Report and Accounts 2022
43
Our ESG agenda is successfully aligned to our
cost-conscious approach and we are now actively
reportingonourclear ambitions and responsibilities.
McBride plc works to integrate the principles of
long-term environmental and social sustainability within
its business strategy. Our approach to sustainability
is underpinned by an analysis of the environmental,
social and governance issues that are most relevant
and important in the context of McBride plc’s business
activities. Whilst the Company recognises it must tackle
climate change to remain sustainable, it also places
environmental, social and governance issues at the core
of its approachto sustainability.
Given their strategic significance, our ESG priorities are
actively driven and managed by a cross-functional ESG
Committee, overseen directly by the CEO and reported
to the Board. The Board:
• oversees strategies to manage social and
environmental risks, including management
processes and standards;
• reviews the eectiveness of management policies
and procedures relating to safety, health and
employment practices;
• monitors our key performance indicators against
agreed commitments;
• approves recommendations from the executive ESG
Committee in respect of key ESG issues and related
objectives;
• monitors the level of resource, competence
and commitment applied to the management
of ESG issues to ensure a culture of continuous
improvement; and
• supports McBride plc’s commitment to make a
positive contribution to the communities in which
itoperates.
We have developed a framework of non-financial key
indicators and metrics to assess our performance
against our ongoing environmental, social and
governance objectives which sit alongside our
obligations under the UK Corporate Governance
Code (‘the Code’). Progress is regularly monitored
bythe ESGCommittee and reported on to our
Boardforreview.
In 2020, we set ambitious targets for 2025 on product
sustainability and our operations covering packaging
recyclability, energy eciency and waste. This year
we have completed the external assessment of our
corporate carbon footprint (CCF) where we can now
see the shape of our emissions to enable our teams
to target the most impactful areas of our operations,
products, transport and employee travel. This data will
allow us to set our future targets to be Net Zero Carbon
and define the action plans we need to successfully
deliver the reduction required. We continue with our
ethos on product development to ensure that any new
development is more sustainable than the product it is
replacing and we are working with an external partner
to measure the carbon footprint of individual products
as well. This data helps to make even better choices in
our product formulation and packaging to ensure the
end result has a lower impact on the world than the
previous product.
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McBride plc Annual Report and Accounts 2022
44
Environmental,
social and governance continued
We recognise the criticality of the environmental
element of ESG to our business model
In the past twelve months, the Environmental
sub-team (focusing on the ‘E’ element of ESG) has
been working with an external consultant, Climate
Partner®, to measure our corporate carbon footprint.
Themeasurement was based on the twelve months
to 30June2021 and we plan to update this with data
forthe twelve months to 30 June2022.
Establishing this calculation is the crucial next step in
setting our priorities for carbon reduction and setting
our Paris targets for Net Zero.
The work with Climate Partner® covered Scope 1, 2 and
3 emissions for our operations, including upstream
and downstream activities. The outcome of the study
calculated our footprint, excluding the ‘products in use’
component of 1.01 million tonnes of CO
2
e. Thelargest
contribution to our carbon footprint is driven by the
following areas which collectively accounted for over
90% of our total emissions:
2019 2021 2022
2020
Oil
kWh
0
40,000,000
20,000,000
60,000,000
120,000,000
100,000,000
140,000,000
160,000,000
80,000,000
kg production per kWh
6.60
6.30
6.25
6.35
6.40
6.50
6.45
Gas Electricity
Non-Green
Electricity
Green
Eciency
6.55
McBride plc total energy consumption
(1)
133,528,505
126,484,015
145,424,095
136,936,256
6.35
6.55
6.48
6.47
Impact – Operations
Energy consumption
We continue to work on initiatives supporting
eective process design, production and operational
sustainability to reduce the impact our operations have
on the environment. It should be pointed out that the
impact of Scope 1 and 2 in our overall carbon footprint
is low and whilst any reduction in energy usage is good,
it is not the highest of our environmental priorities.
Whilst we have reduced the absolute level of energy
consumption by 5.2% in year and by 13.0% since 2019,
as a result of product mix and slightly lower output
levels, the eciency measure is showing a flatter
performance. In the next year, we will look to increase
the activity in energy eciency, targeting a range of
energy eciency opportunities across dierent sites
depending on the process technology deployed for
powders or liquids and the volume of in-house blow
moulding machines.
Within the 79% associated with purchased goods, 71%
is attributed to the chemicals we use and 29% of the
footprint is from packaging materials. This interesting
insight will ensure we prioritise and focus our eorts
not only relating to our packaging portfolio (which due
to our plastic reduction ambitions is very high profile),
but also on the choices we make on our chemicals and
their sources going forward.
As we digest this data and move towards developing
our plans and timeline for Net Zero, we continue
to work on our early targets and actions, with our
performance towards our 2025 targets reported in the
following pages.
79%
purchased goods
11%
upstream transport and distribution
3%
own operations Scope 1 and 2 emissions
Our impact on the world
Environmental
(1) Total energy consumption for 2022 of 126 million kWh relates to 18
million kWh for the UK (14.3%) and 108 kWh for the rest of the world
(85.7%).
Methodology note: This GHG inventory has been calculated in accordance
with the GHG Protocol Corporate Accounting Standard using the
operational control approach. UK Government GHG Conversion Factors
for Company Reporting 2020 have been used to calculate GHG emissions.
Electricity – Calculated from supplier invoices using metered kWh
data. The Shared Services oce has been estimated based on historic
consumption as there was no up-to-date information available from the
landlord (>1% of Scope 2 emissions).
Market-based emissions have been calculated using supplier specific fuel
mix disclosures along with the UK residual fuel mix.
Natural gas – Calculated from supplier invoices using metered kWh data.
Gas oil – Calculated based on the volume of fuel delivered to site. UK
Government conversion factors were used to convert the volumetric
datato kWh.
Strategic report
McBride plc Annual Report and Accounts 2022
45
Greenhouse gases (GHG)
We have been calculating our Scope 1 and Scope 2 GHG
emissions since 2008 in accordance with the relevant
GHG Protocol Corporate Accounting and Reporting
Standards and latest emissions factors from recognised
sources, based upon market values.
The overall impact on our operations for Scope 1 and
Scope 2 emissions over the last four years is shown
below. The substantial increase of 19% in the e ciency
of CO
2
e per tonne of production is driven by our
increase in usage of renewable green energy.
Split of energy source including green element
of supplier g
rid mix 2021-2022
Solar power 1.1%
Certified green 24.4%
Fuel oil 0.4%
Gas 27.6%
Supplier mix with
zero carbon 28.0%
Supplier non-green 18.5%
Impact – Products
Following eco-design principles, our teams are driven
todesign, create and supply everyday cleaning products
that are safe to use whilst minimising our environmental
impact. We continue to use the ambition that every new
development is more sustainable than the product it
replaces.
Our areas of focus continue to be to develop solutions
that:
Encouragingly, we see good progress in the
development of the levels of ‘green’ electricity in our
total consumption. In 2021, green electricity represented
7.0% of total energy consumption across our business,
but in 2022 our green energy consumption has
increased to 24.4%, mainly as a result of a move to 25%
renewable energy in our Moyaux powder plant, meaning
over 30 tonnes of CO
2
e reduction in its carbon footprint.
This is a signifi cant step forward towards meeting
ourtarget to procure 30% of renewable energy across
our locations.
0
10,000
2019 2020 2021 2022
8,589
7,615 7,642
30,781
22,400
19,170
7,141
14,199
20,000
30,000
40,000
0
10,000
20,000
30,000
40,000
23,470
29,879
32,287
38,347
Scope 1
Scope 2 CO
2
e eciency
Net Scope 1 and 2 CO
2
e emissions (tonnes CO
2
e)
(1)
We are continuing to drive innovation to deliver more
sustainable formulations and packaging for our customers
following our sustainable product guidelines.
1. Improve
plastic
recyclability
4. Increase
responsible
sourcing
2. Reduce
plastic in total
3. Drive
product
compaction
(1) Total emissions for 2022 of 21,340 tonnes relate to 2,815 tonnes for
the UK (13.2%) and 18,525 tonnes for the rest of the world (86.8%).
Strategic report
McBride plc Annual Report and Accounts 2022
46
Environmental,
social and governance continued
Impact – Products continued
Area of focus 2021 2022 2025 target
FSC® sourced 90.6% 91.4% 100%
100% recyclable 98.5% 98.5% 100%
50% PCR in our plastic packaging
– PET
– PE
15.6%
47.0%
4.7%
17.6%
52.2%
5.1%
50%
Flexible multi-plastic moved to
mono-material plastic
21% 39% 100%
Sustainability is built into our product development
processes; from the sourcing of appropriate raw
materials, to developing new products, we ensure that
all legal and McBride plc policy requirements are met,
o ering not only excellent performance but also proven
sustainability benefi ts.
Microplastics are under continual scrutiny and in
2019, in line with the draft Registration, Evaluation,
Authorisation and Restriction of Chemicals (REACh)
restriction on microplastics, we identifi ed two existing
in-use materials that met this draft defi nition. The
evolution of this defi nition is continuing to develop and
it is likely that other materials will become within scope.
McBride plc will meet all legal requirements with regard
to the fi nal REACh restriction on microplastics and
will make sure that all products follow new guidelines
within the legally mandated timelines. We will be
ready such that customers wishing to remove raw
materials considered today asmicroplastics (opacifi ers,
encapsulated fragrances) can have a product solution
that does not use these materials.
As part of our plans to improve packaging recyclability
we have now exited all PVC fl exible laminate fi lm used
in our berlingot refi lls and moved to a mono-material
PE laminate. This signifi cantly improves the recyclability
of this refi ll concept and production is now available in
our Italian and Spanish plants. This project is helping
McBride plc to move closer to our target that all
our fl exible plastic packaging will be produced with
mono-material laminate by 2025.
We have continued to make progress on the use of
recycled plastics, particularly in PET. Further progress
on the overall target will depend on the success of
being able to incorporate more recycled HDPE, where
currently impurities can prevent its use in certain
homecare products.
Our commitment to sustainability is also underlined
via our membership of the A.I.S.E Charter 2020+,
which is the detergent industry fl agship approach to
sustainability practice and reporting.
Products carrying the Charter icon demonstrate to
our value chain partners, stakeholders, customers and
consumers that we are actively working towards critical
sustainability actions, such as the UN Sustainable
Development Goals, EU Circular Economy and Plastics
Strategy. The Charter is a comprehensive sustainability
scheme for steering best practice for the cleaning and
hygiene industry.
Impact – Transport
As a result of the completion of our carbon footprint
calculations, we now know that transport comprises
10% of our overall footprint. Going forward, we can
use this data to inform on logistics solutions and
options concerning the carbon footprint impact of
transport operations. McBride plc does not own or run
its own truck fl eet, hence there is no impact in Scope
1 emissions. Data for company cars is included in our
GHGemissions fi gures on page 45.
Impact – Waste
We are continuing to reduce our waste to landfi ll year
on year and we now have seven sites that are zero
waste to landfi ll within the Group. In the last fi nancial
year, 378 tonnes were sent for landfi ll, a 25% reduction
when compared to 507 tonnes in 2021. Proactive actions
taken by our site leaders included raising awareness
through colleague engagement to help reduce and
segregate better the waste produced as well as seeking
alternative options for waste that needs to be disposed
of. Wecontinue to drive for all sites to get to zero waste
to landfi ll.
Our impact on the world
Environmental continued
Strategic report
McBride plc Annual Report and Accounts 2022
47
We are introducing a plastic-free packaging solution
for compacted laundry capsules. This newinnovation,
developed in conjunction with Smurfi t Kappa, not
only protects the laundry capsules from water and
humidity but also prevents children from easily
accessing the detergent capsules when stored in
thehome.
Our Click-to-Lock package is made from more than
97% of FSC® (Forest Stewardship Council) certifi ed
paper and contains 91% of recycled paper. This
packaging is also 100% recyclable and suitable for
EU-Ecolabel application.
The impact of this innovation on our carbon footprint
is evident, as every 100,000 Click-to-Lock packages
remove 8.5 tons of plastic from the environment
when compared to the plastic tub equivalent. The
new innovation also improves logistics by reducing
the number of trucks needed for transport by 25%
compared to the plastic tub packaging and by 78%
compared to bag/doypack packaging.
Our liquids development team are also driving
sustainable innovations in homecare liquid packaging.
In 2023 we will start to fi ll homecare liquids into
cardboard cartons, in our drive to reduce plastic
packaging within our portfolio. This investment in
innovation o ers great benefi ts in the overall carbon
footprint of the product and supports a reduction
in plastic by 80%. The format also supports an
improved pallet utilisation and thus has a positive
benefi t on our logistic footprint. Overall, when
compared to an equivalent PET plastic bottle, we
can reduce the packaging carbon footprint of the
product by 50%. This innovation, together with the
progress we have made on incorporating more PCR
into our plastic packaging, o ers our customers
many choices in their and our quest to reduce the
carbon footprint and environmental impact of the
packaging of products.
Case study on laundry unit-dose
Disruptive innovation in
laundry capsules packaging
Case study for homecare liquids
Disruptive innovation in
homecare liquid packaging
Strategic report
McBride plc Annual Report and Accounts 2022
48
Environmental,
social and governance continued
We have continued our commitment to create a
positivesocial impact for our colleagues, stakeholders
and local communities, during a year of significant
uncertainty and challenge.
This has been driven by a clear commitment to our
purpose, vision and values, helping to further develop
a sense of teamwork and belonging during these
challenging times.
Our framework for our societal contribution will
continue to guide the focus of our eorts in the
comingyears.
Dignity and equality
This year we have maintained our focus on increasing
the diversity of our external hires as part of our aim to
create an inclusive and supportive culture for all.
Our aim across the business is to ensure that we recruit,
develop and reward our colleagues based on the
role they perform and their performance in that role,
regardless of identity, background or circumstance.
We strive to ensure that McBride plc is an employer
where everyone, regardless of background, is valued,
respected, and has the opportunity to shine. We look
to embrace our dierences and value the creative
opportunities that an inclusive culture can bring for
ourbusiness.
We report annually on the UK Government website and
our corporate website our Gender Pay Gap statistics
to meet our UK legal obligations. As at 30 June 2022,
female membership of the Board was 25% and of
the Executive Committee was 42.8%. Our published
ambition for Board diversity can be found on page 97.
25% (2/8)
Female Directors
43% (3/7)
Female Executive Committee members
38.9% (7/18)
Female senior managers
(1)
39% (1,252/3,253)
Female total global workforce
(2)
Our contribution to our colleagues and
the communities where we do business
As at 30 June 2022
Giving and taking
accountability
Always
committed
Working
together
Aspire to
bethebest
(1) Includes the Executive Committee and Directors of overseas and UK
subsidiaries.
(2) Includes employees, third-party contractors and agency workers.
Social
Strategic report
McBride plc Annual Report and Accounts 2022
49
Health and wellbeing
Health, safety and wellbeing is taken very seriously
and remains a primary focus that is refl ected in
our improved lost time injury frequency rate. To
demonstrate this primary focus, the Group H&S Lead
reports directly into the CEO, supported by dedicated
health and safety professionals at a local site level
in every country. The dedicated local teams are
responsible for the implementation of Group standards,
processes and procedures and to ensure site teams have
clear roles and responsibilities and to drive prevention
measures and programmes as well as investigations.
Thelocal teams also lead all communication and
information across all levels, including information on
near misses, incident reviews, KPI trends and general
performance reporting.
There have been no work-related fatalities in the
business during the 2021/22 fi nancial year. We utilise
a mixture of lagging and leading indicators to assess
the health and safety performance of our operations.
Lagging indicators include lost time accidents (see
our non-fi nancial KPIs on page 37), whilst our leading
indicators include near miss reporting, corrective
actions completed, risk assessments created/reviewed,
and safety observational walks undertaken.
All our fi rst line managers across the business
completed behavioural safety training during the
year tofurther our maturity in our health and safety
approach, encouraging a culture of ‘coaching’ and
colleague support. This training has helped to further
embed our safety walk initiative, which has been
a key contributor in demonstrating management’s
commitment to reinforce the required health and safety
practices, eliminate dangerous acts and dangerous
conditions that cause accidents and ultimately improve
our health and safety culture.
A comprehensive health and safety gap analysis
programme has also been established and a schedule
of visits agreed for each site to identify common
trends and areas of improvement. The Health & Safety
Council, together with the Group H&S Lead, defi ne
the prioritisation and support the required changes
in each division and individual site. This gap analysis
programme will complete in the next fi nancial year
to provide an overall health check of the Group and
a defi ned strategy that includes priority objectives to
further improve our performance.
Ensuring the wellbeing of our colleagues by providing
a safe place of work and minimising potential exposure
to harm, is a key component of our McBride Cares
programme. We have continued to work with colleagues
and their representatives to maintain a Covid-19
secure work environment and, to date, have been
able to continue our operations without disruption.
Aslockdowns have lifted, we have reopened o ce
facilities and welcomed colleagues back.
Many of our colleagues have continued to work in
a hybrid way this year. We recognise that one size
does not fi t all and that support for fl exible and
hybrid waysof working can help colleagues perform
better and enable us to attract and retain a more
diverse range of talented people. We believe it is
about balance–balancing the needs of the individual,
theteam and thebusiness.
We will continue to assess the e ectiveness of our
approach, updating our SMART Working Principles as
needed. We have supported this by enhancing our IT
platforms, including the introduction of more virtual
anddigital learning.
Our commitment to supporting colleagues and
their families through our McBride Cares Employee
Assistance Programme, providing confi dential 24/7/365
counselling and advice, remains in place in all countries.
Our Estaimpuis plant organised for all colleagues
working in production to attend a cultural safety
event, whereby they invited an external local
speaker who had been severely injured as a result
of a work accident (not in any McBride site) where
he lost one leg. During the event he explained how
his behaviour caused the accident as well as the
impact on his personal and professional life as a
result of the accident.
Read more about
ourGender Pay Gap
www.mcbride.
co.uk/about-us/
corporate-policies/
gender-pay-gap/
Case study
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McBride plc Annual Report and Accounts 2022
50
Environmental,
social and governance continued
Skills for the future
We are committed to providing development
opportunities for all colleagues.
Over the last year, as part of our commitment to grow
internal capability and invest in our colleagues, we have
continued to enhance the ‘Let’s Grow’ development
framework. Three programmes are now available to
colleagues across the Group, including:
• Investing in ME, which is our individual contributor
programme, designed to provide colleagues with
the opportunity to identify their potential, raise
self-awareness and develop skills to be personally
eective. We have facilitated eight cohorts in six
languages covering 80 colleagues from across the
Group.
• Learning 2 Lead is our frontline leader programme,
designed to support colleagues to transition from
being a great individual contributor to a frontline
leader of others, developing critical people skills.
We have facilitated three cohorts in two languages
covering 34 colleagues from across the Group.
• Leading with IMPACT: this programme supports
mid-senior level leaders who have been identified
as having potential through our talent management
process. The first cohort of twelve colleagues have
completed this programme over the last year.
In addition, this year we have invested in our HR Digital
Transformation, by introducing:
• learning management functionality, delivering a
sustainable, accessible and measurable learning
and development proposition for all, incorporating
a comprehensive self-paced learning library of
programmes in all languages; and
• an online process for our annual individual
performance and development review, providing
colleagues with support and accountability for
their own development as part of our aim to drive
ahigh-performance culture.
Our internal coaching scheme, which allows colleagues to
work with a qualified internal coach in a safe space, has
continued over the last year, and we have continued to
support the development of internal accredited coaches.
We are passionate about providing all our colleagues
with opportunities to grow in and from their current
roles to meet aspirations for the future.
Employment and wealth generation
Our sta turnover figures have been consistent over the
period, with high levels of turnover in certain countries.
Details can be found in the non-financial KPIs on page
37.
We have continued to work closely with the European
Works Council (EWC) over the last year. The EWC
brings together employee representatives from the
dierent European countries where we operate, with
the aim of engaging employees through an eective
information and consultation process focused on
business decisions which aect the workforce and
impact on the interests of colleagues. This improves
business outcomes, individuals’ contribution to the
business and development opportunities. Our meetings
over the past year have continued to be virtual.
Community and social vitality
We believe that community involvement and
engagement programmes enhance our relationships
with our communities and colleagues, which in turn
strengthens our Company, benefiting our shareholders.
Our charitable aims look to support colleagues,
community and wider society, through giving cash,
timeor products.
Exec
Senior leader
Frontline leader
Mid-level leader
Individual contributor
Let’s grow
Investing in ME
Learning 2 Lead
Leading with IMPACT
Strategic leadership
Our contribution to our colleagues and
the communities where we do business
Social continued
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McBride plc Annual Report and Accounts 2022
51
In the UK, we supported organising a charity football match to raise money for Salford Hospital, who had
cared for a colleague’s six-year-old daughter who had a stroke last year. McBride plc colleagues and relatives
participated and the site donated rae prizes. The UK business came together andraised £11,000 in total.
Supporting McBride plc children
In the past twelve months we have awarded a total of £16,095 to 87 children, supporting their learning and further
education. Supporting future talent is of great importance to us.
Supporting charitable bodies
This year, we supported Cancer Research and KinderKankerFonds. A total of £962.50 was donated to Cancer
Research, matching what had already been raised by a colleague completing a 5km run. A total of £1,000 was
donated to KinderKankerFonds, adding to the €5,000 already raised by colleagues selling succulents to raise
money for children with cancer.
We support the UK charity In Kind Direct through monthly product donations from our UK site, providing
essential cleaning products to those less fortunate in the UK. We have also made an annual monetary donation of
£30,000. Our teams in all locations have continued to support local charities, associations, schools, missions and
municipalities. The following pages show some of the activities across the business:
UK: Raising money for a local hospital
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McBride plc Annual Report and Accounts 2022
52
Environmental,
social and governance continued
Our team in Sallent, Spain:
• Hosted a site visit for the Special Employment Centre who support local disabled people.
• Organised a walking activity to promote healthy habits and to increase relationships with colleagues.
Thisturned out to be a family event with many colleagues bringing their families.
Spain: Supporting a local charity and team building for healthy habits
Our Belgian teams organised a range of community and colleague initiatives, which included:
• A big cleaning event, where colleagues from the plant and oce come together to clean the entire
outdoorarea of the plant and the local village of Estaimpuis.
• On a Friday evening in September 2021, a small team from our Estaimpuis plant participated at a beach
volleyball tournament with other local businesses.
Belgium: Cleaning the town and participating in a sporting event
Social continued
Our contribution to our colleagues and
the communities where we do business
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McBride plc Annual Report and Accounts 2022
53
The Polish team worked on driving colleague and community engagement through a range of localinitiatives:
• In December and January, colleagues engaged in fundraising and collecting items for local families in need.
• The team planted shrubs as part of Earth Day and spent time cleaning the outdoor area to the site.
• 74 local institutions have been supported with our products – 37,705 cartons.
• A range of fundraising activities to support Ukrainian refugees.
• Colleagues participated in the annual Strzelce Charity Street Run.
Poland: Supporting Ukrainian refugees and other community initiatives
Our colleagues in Rosporden:
• Participated in the financing of a ‘push bike’ which has been dedicated to people with reduced mobility.
This action is part of the site’s approach to improving the quality of life of its colleagues and people
in contact with the company and the community, while respecting the environment and sustainable
development.
• Colleagues actively participated in walking a total of 350km and raised €6,400, which was donated to the
association Cornouaille Enfance Solidarité Afrique.
In addition, our sites continued to support through homecare product donations.
France: A number of dierent fundraising activities
Strategic report
McBride plc Annual Report and Accounts 2022
54
Environmental,
social and governance continued
As a public company, we consider that our governance
processes are already well established but we recognise
these processes need to be maintained and regularly
reviewed to ensure we continue to govern our activities
in accordance with best practice.
Governance body quality
Our guide to how we have complied with each principle
in the UK Corporate Governance Code (‘the Code’)
is set out on page 84. Our metrics on tenure, gender,
nationality and Board members’ relevant experience is
set out on page 88. Our metrics on Board activity and
attendance at Board and Committee meetings are set
out on pages 87, 91, 92, 98 and 105.
Stakeholder engagement
How we engage with our stakeholders is set out in our
section 172(1) statement on pages 38 to 41 and in our
Corporate governance statement on pages 85 to 91.
Both the quality and frequency of our engagement
with our key stakeholders are reviewed regularly by
the Board. During a dicult trading year, we have had
increased levels of interaction with customers, suppliers
and shareholders. We are open and transparent in all
our dealings with our stakeholders, which we consider
as fundamental to our way of working. Monitored via
our framework of key indicators and metrics, we strive
to improve our customer experience, our impact on
our communities, including our environmental and
social impact, and the quality of engagement with
allstakeholders.
We monitor the employment practices of our supply
chain and we carry out third-party ethical audits utilising
the Sedex system wherever possible or, alternatively,
under a specific retailer’s own system. Theaudits
conform with the Ethical Trading Initiative (ETI).
Our sites are independently audited at a frequency
determined by risk. We retain all audit data under the
Sedex system for all sites, regardless of audit frequency.
Our Supplier Code of Conduct sets out the standards
of behaviour we expect from all of our suppliers. As a
minimum standard, we adhere to the provisions of the
ETI and require every supplier to comply with our Code
of Conduct, along with national and other applicable
laws. Our Supplier Code of Conduct is published on
our website and any breach of the code may result in
termination of our business relationship with a supplier.
Ethical behaviour
Our Business Ethics Policy, which can be found on
our website, is a guide for our employees to promote
the right behaviours and to help them make the
right decisions. McBride plc’s Business Ethics Policy
is updated annually and reviewed by the Board.
It is promoted to all employees through internal
communication channels and is highlighted to suppliers.
To ensure a constant minimum standard across the
workforce on good business ethics, McBride plc is in the
course of introducing a new suite of mandatory ethics
and compliance training modules. This includes modules
on anti-bribery and corruption, conflicts of interest, gifts
and hospitality, data protection and cyber security, with
additional training on competition law and economic
sanctions for selected employees. We have also taken
steps during the year to strengthen our compliance
monitoring programme in these areas.
How we conduct ourselvesGovernance
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McBride plc Annual Report and Accounts 2022
55
Protecting human rights and mitigating against
the risk of modern slavery is the foundation of any
good business. We take the issue of human rights
seriously and continue to strengthen our policies and
management systems in this area. Our Anti-Slavery and
Human Tracking Statement enshrines our obligations
under the Modern Slavery Act 2015. We are committed
to ensuring there is transparency in both our own
business and in our approach to identifying modern
slavery in our supply chain. The outcome of our policies
and procedures is that there have been no known
instances of any form of discrimination, slavery or
human rights violation.
While McBride plc aims to reinforce a healthy
culture at all levels of the organisation, it knows that
sometimes things go wrong. McBride plc therefore has
introduced an independent whistleblowing channel,
provided by NAVEX Global, as well as local internal
channels which employees can use to speak up against
wrongdoing. Our Whistleblowing Policy encourages
employees to report genuine concerns they may have
about possible malpractice or wrongdoing by any
employee, supplier, customer, competitor or contractor
without fear of detriment or retribution. During the
year ended 30 June2022, there was one report of
suspected wrongdoing which was passed on for formal
investigation. The investigation established there was no
evidence to support the allegation of wrongdoing.
Risk and opportunity oversight
The Board is responsible for overseeing and monitoring
the management of risks and opportunities. Our
governance framework of committees and advisory
forums provide updates and information to the Board
to ensure it is able to make informed decisions. Details
on the roles of the Board and its Committees are set out
in the schedule of matters reserved for the Board and
Committee Terms of Reference, which are available on
our website.
Our risk management framework and oversight
of risk is set out in the Audit and Risk Committee
report on pages 98 to 104 and in the Principal risks
and uncertainties section on page 71. This is our
first year of reporting our climate-related financial
disclosures. Governance around climate-related risk
andopportunities can be found on pages 56 to 59.
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McBride plc Annual Report and Accounts 2022
56
Climate-related financial disclosures
Governance
Board oversight of climate issues
The Board
The Board is responsible for providing strategic
guidance in respect of McBride plc’s ESG programme,
including actions to address climate-related matters
as well as how McBride plc adapts its strategy to take
account of potential CROs. It reviews climate-related
reporting as part of the overall assessment of the
Annual Report.
Nomination Committee
The Nomination Committee is responsible for Board
appointments and ensures the Board possesses the
correct depth and balance of capabilities to support
McBride plc’s long-term position, including the ability
toassess the impact of climate change.
Audit and Risk Committee
The Audit and Risk Committee oversees the assurance
model and supports the Board on matters relating
to financial reporting, internal control and risk
management. The Committee assesses and appraises
the integrity of McBride plc’s climate-related financial
reporting and the process used to develop McBride plc’s
TCFD-aligned disclosures.
Remuneration Committee
The Remuneration Committee supports the future
implementation of Board-approved policy on CROs
including climate factors and sustainability goals
withinperformance-related pay for Executive Directors
and senior management.
Governance framework
The governance framework of committees and advisory
forums provides updates and information to the Board
to ensure it can make informed decisions. The Board
is also responsible for overseeing and monitoring the
management of risks and opportunities, including with
respect to CROs.
The Board-agreed division of responsibilities across key
areas of McBride plc’s governance framework is set out
in the Board’s schedule of matters reserved and the
Terms of Reference of the Board Committees.
In terms of reporting lines, the TCFD Working Group
identifies CROs and develops climate-related financial
disclosures, which are reported to the Risk Council,
which has direct responsibility for principal risks and
uncertainties and challenges the outputs of the TCFD
Working Group.
The Risk Council reports to the Audit and Risk
Committee, communicating any key climate-related
risks on a twice-yearly basis.
The Executive Committee and ESG Committee (both
led by the CEO and with direct reporting to the Board)
provide advice and inputs to the TCFD Working
Group, during the preparation of the TCFD disclosures.
Thegovernance of climate-related issues is set out in
the graphic on the adjacent page.
The Task Force on Climate-related Financial Disclosures
(TCFD) was established by the Financial Stability
Board to improve reporting of climate-related risks
and opportunities (CROs). McBride plc has structured
its climate disclosures according to the TCFD
recommendations on the basis that good-quality
information about its CROs supports shareholders
inmaking long-term investment decisions.
According to the Financial Conduct Authority listing rule
LR 9.8.6 R(8), reporting is on a ‘comply or explain’ basis.
McBride plc is consistent with the TCFD recommendations
and recommended disclosures, with the exception of
Strategy 2b and 2c and Metrics and Targets 4a, 4b and 4c.
Pages 66 and 69 explain the work to be completed to
ensure consistency with the TCFD recommendations
and set out the activities McBride plc has planned during
2023, as it continues on its journey towards increased
consistency.
Strategic report
TCFD governance structure
McBride plc Board
CEO Nomination
Committee
Audit and Risk
Committee
Remuneration
Committee
Executive Committee ESG Committee Risk Council
Decision-making
Advisory
Reporting line
Exchange of
information and
insights
TCFD Working Group
McBride plc Annual Report and Accounts 2022
57
Role of senior management
Executive Committee
The Executive Committee is responsible for the
implementation of strategy through the operational
management of McBride plc’s divisions and monitoring
of performance in line with agreed plans. It is also
responsible for managing financial risks, including those
of meeting the Group’s climate-related goals.
The Executive Committee receives information
periodically from the Risk Council and ESG Committee
on progress towards the Group’s climate goals.
ESG Committee
The ESG Committee is responsible for the Group’s
programme on environmental, social and governance
issues. Each committee member is responsible for the
execution of an action plan within their own business
area. The key responsibilities of the ESG Committee are:
• delivery of the ESG programme and action plans and
monitoring progress against ESG key indicators;
• developing and adhering to a Board-approved
roadmap of emissions reduction opportunities and
developing and monitoring progress against Science
Based Targets; and
• providing oversight and maintaining the focus
of the Executive Committee on ESG matters and
collaborating with subject matter experts within
McBride plc to deliver objectives around responsible
sourcing, compaction, plastics and packaging.
Risk Council
The Risk Council is responsible for managing climate
risks through its existing risk management process and
assessing existing and proposed mitigating activities
and controls. It is also responsible for review and
oversight of the underlying activities, processes, risks
and impacts surrounding our climate-related financial
disclosures.
It provides information to the Executive Committee on
any business risks, both existing and emerging, that may
impact our strategic objectives. It reports to the Audit
and Risk Committee on McBride plc’s principal risks.
The Risk Council also reports on the performance of the
TCFD Working Group, including progress against the
four TCFD recommendations and eleven recommended
disclosures, as well as outcomes of the scenario analysis
and proposed disclosures.
TCFD Working Group
Reporting to the Risk Council is a TCFD Working Group.
This is a cross-functional working group responsible for
the development of climate-related financial disclosures
including defining climate scenarios, identifying
climate-related risks to the Group under articulated
scenarios, assessing the business and financial
impacts, identifying potential responses and ensuring
appropriate stakeholder input.
The TCFD Working Group works in collaboration
with the ESG Committee developing and adhering to
a Board-approved roadmap of emissions reduction
opportunities and developing and monitoring progress
against Science Based Targets for the purposes of
consistency with the TCFD recommendations.
External advice
McBride plc engaged expert external advice to
supplement the capabilities within the Company and
assist in establishing initial data systems and reporting
frameworks for our Scope 1, 2 and 3 emissions and will
be engaging expert external advice in 2023 to assist in
setting Science Based Targets. Expert advice has also
been engaged to assist McBride plc in identifying and
analysing CROs and to understand the potential impacts
from physical climate change risks and risks associated
with the transition to a decarbonised economy. Further
details can be found on pages 59 to 66.
Governance continued
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58
Climate-related financial disclosures continued
Role of senior management continued
Details of communications between management and the Board, along with key activities and immediate focus
areas, are set out in the table below.
Key activities 2022 Focus areas 2023
Board level
• The CEO presented the Group’s overall
framework in relation to climate action plans.
ESG key indicators were also explained,
along with the implications in relation to
thestrategy.
• The divisional leadership teams presented
a strategy review to the Board including
market insights into customers’ focus shift to
sustainable product solutions, explaining how
sustainability trends were impacting strategy,
to inform the Board’s decision-making around
CROs.
• The Head of Regulatory Aairs provided the
Board with an overview of the regulatory
landscape with reference to the European
Green Deal and UK Environment Act; this
included updates on the EU’s Chemical
Strategy for Sustainability, updates to the
Packaging and Packaging Waste Directive,
EU REACh, EU CLP, and new legislation such
as Eco-design requirements for sustainable
products, explaining the eect on the
legislative landscape and indicating the risks
and opportunities in relation to the Group’s
products.
• The Board reviewed and validated the CROs
identified by the TCFD Working Group
facilitated by Willis Towers Watson (WTW)
• Review and challenge by the Audit and Risk
Committee of the approach to climate-related
financial disclosures and associated assurance
arrangements.
• Board to review and approve the
Group’s roadmap of emissions reduction
opportunities.
• Board to receive updates on progress against
the key indicators in the ESG actions plans.
• Remuneration Committee to consider how
remuneration of the Executive Directors is
linked to progress towards building a more
sustainable future for the business, including
reference to its climate-related goals.
Executive
level
• The ESG Committee, led by the Chief
Executive Ocer, reviewed and updated
environmental, societal and business ethics
goals and ambitions and finalised targeted
action plans.
• Risk Council review of governance and controls
for climate-related financial disclosures.
• The ESG Committee will monitor progress
of the execution of the ESG action plans in
each business area and develop our Net Zero
roadmap. It will also conduct a detailed analysis
to build our prioritised initiatives for emissions
reduction, to develop a roadmap of emissions
reduction opportunities and to develop Science
Based Targets aligned to the roadmap.
• The Risk Council will continue to identify,
assess and manage climate risks through
its existing risk management process on
an annual basis. It will also review the more
detailed scenario analyses in 2023 conducted
by the TCFD Working Group.
Governance continued
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59
Key activities 2022 Focus areas 2023
Operational
level
• The TCFD Working Group (in conjunction with
external advisers) identified climate-related
risks under certain agreed scenarios, assessed
the impact on the Group and identified
potential responses.
• The TCFD Working Group will work with the
ESG Committee in conducting detailed analysis
to build our prioritised initiatives for emissions
reduction, to develop a roadmap of emissions
reduction opportunities and to develop
Science Based Targets aligned to the roadmap.
• During 2023, the TCFD Working Group will
conduct a more granular risk assessment
for the most material risks under the two
articulated scenarios, and consider financial
impact assessment in more detail.
Strategy
Overview of scenario analysis
McBride plc engaged Willis Towers Watson (WTW) to work with the TCFD Working Group to facilitate the
identification of CROs it could be exposed to over the short, medium and long term and to begin to assess what
thepotential impact of these could be on McBride plc’s business. The 15 identified CROs were assessed on an
inherent risk basis i.e. prior to consideration of mitigating actions.
The distinctive nature of climate risks poses a challenge for standard risk assessment. This is because there is a high
degree of certainty that some combination of climate risks will materialise, but the exact outcomes are dependent
on short-term actions and therefore still unclear.
Scenario analysis provides a flexible ‘what if’ framework that enables the exploration of potential economic
outcomes and financial risks under a range of dierent future pathways. As such, qualitative scenario analysis
was used to start to assess McBride plc’s strategy against two contrasting climate scenarios: a 1.5°C Low Carbon
WorldScenario and a 4°C Hot House World Scenario. The approach taken for the assessment is detailed in the risk
management part of this disclosure on page 67. Further work will be conducted in 2023 to describe in more detail
the impact of the most material CROs on McBride plc’s business, strategy and financial planning, and to describe
the resilience of its strategy under each of the climate scenarios (TCFD Strategy recommended disclosures (b)
and(c)).
Selection of climate scenarios
We constructed scenarios by referencing a collection of published scenarios developed by widely used sources.
These sources are detailed in the following table and provided the assumptions underpinning the analysis as
detailed further below.
McBride plc
scenario
Temperature
rise by 2100
Policy
action
Informed
by
Low Carbon World
Scenario
Not likely to exceed +
1.5°C by 2100
Aggressive mitigation
to bring about a
reduction in emissions
RCP 1.9
(1)
IEA NZ2050
(2)
NGFS NZ2050
(3)
SSP1
(4)
Hot House World
Scenario
Likely to exceed + 4°C
by 2100
Minimal policy action
taken
RCP 8.5
(5)
SSP5
(6)
(1) Technical Summary, IPCC, 2018.
(2) World Energy Outlook 2021, IEA, 2021.
(3) NGFS Climate Scenarios, NGFS, 2021.
(4) SSP1 – The roads ahead: Narratives for shared socioeconomic pathways
describing world futures in the 21st century, O’Neill, B et al, (2015).
(5) Technical Summary, IPCC, 2018.
(6) SSP5 – The roads ahead: Narratives for shared socioeconomic
pathways describing world futures in the 21st century, O’Neill, B et al,
(2015).
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60
Climate-related financial disclosures continued
Strategy continued
Selection of climate scenarios continued
Details of the sources and key indicators are
shownbelow.
Low Carbon World Scenario (1.5°C)
The Low Carbon World Scenario presents a world
where global warming is limited to 1.5°C by the end
of the century. This will be achieved through stringent
climate policies, innovation and demand-led change,
where global Net Zero CO
2
emissions will be reached
around 2050. Examples of climate policies include
carbon pricing in advanced economies of US$130/tCO
2
,
major emerging economies of US$90/tCO
2
and other
emerging economies of US$15/tCO
2
by 2030
(1)
. For
McBride plc, the impacts of environmental taxes etc.
are included in our three year forward forecasts where
they are either already legislated or have already been
flagged up for specific timebound implementation by
a particular government or authority. There will also
be policies supporting circular economies; material
eciency strategies and policies promoting production
and use of alternative fuels and technologies such as
hydrogen, biogas, biomethane and carbon capture
utilisation and storage across sectors. In addition
to meeting all current Net Zero pledges, additional
pledges from countries would be made and met.
Theshare of renewables by 2030 in the global
electricity supply would increase to approximately
61%
(2)
, shifting economies from being fossil fuel
dependent to renewable energy driven. The scenario
assumes proactive and sustained action to reduce
carbon emissions over the next 30 years to build a low
carbon economy. It assumes low growth in material
consumption and increasing consumer pressure on
businesses to drive sustainability
(3)
. Those companies
which fail to transition their businesses to a low carbon
model will be adversely impacted. Whilst the transition
risks associated with this scenario are assumed to be
high, the physical risks are expected to be relatively low.
Hot House World Scenario (4°C)
The Hot House World Scenario is aligned with RCP
8.5. It envisions that, due to limited government
policy and international eort, emissions continue to
grow and consequently global warming exceeds 4°C
temperature rise by the end of the century. The scenario
assumes current policies promoting sustainability
are removed, there is no carbon pricing and there is
increasing adoption of resource and energy intensive
lifestyles around the world. As a result, economies fail
to transition to a low carbon world and the physical
impacts of climate change become increasingly
severe. There is assumed to be longer and more severe
heatwaves and droughts and there is an increase in
frequency and severity of flooding and other natural
catastrophe events. As a result of failing to transition,
the transition risks are relatively low, whilst the physical
risks are considered to be severe.
Climate risks and opportunities
Fifteen climate risks and opportunities were identified
as having the potential to impact McBride plc under
the two scenarios outlined above. The risks and
opportunities have been identified over short (before
2025), medium (2025 to 2030) and long-term
(post 2030) time horizons. The time horizons were
selected because of the longer-term timeframe some
climate-related risks will have.
As part of the assessment, consideration was given
to the likelihood of the risk impacting McBride plc
and the most likely time horizon of impact as shown
in the graph opposite. The TCFD Working Group also
qualitatively assessed the potential impact the risks
andopportunities could have, to help prioritise the
mostmaterial risks ahead of a deeper dive assessment
in 2023.
(1) Macro drivers, 2021, IEA.
(2) World Energy Outlook 2021, IEA, 2021 (pg. 37).
(3) SSP1 – The roads ahead: Narratives for shared socioeconomic pathways
describing world futures in the 21st century, O’Neill, B et al, (2015).
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Transition risks Transition opportunities Physical risks
1
Pricing of GHG emissions
2
Climate change litigation
3
Mandates and regulation
4
Increased cost of raw materials
5
Change in consumer demands
6
Investment and finance risk
7
Employee risk
8
Substitution of existing tech to
lower emission options
9
Operational decarbonisation
through low-emission sources of
energy
10
Use of more ecient production
and distribution processes
11
Development of new products
or services through R&D and
innovation
12
Heat stress (heatwaves)
13
Drought stress (prolonged
drought period)
14
Floods, storm surge and sea
level rise
15
Windstorms
Timeframe
Likelihood
Short-term
Low Medium High
Medium-term Long-term
1
7
14
15
6
5
11
2
12
13
4
8
3
9
10
Strategy continued
Note: Relative position of risks/opportunities within grid boxes does not reflect relative ranking (e.g. for 1, 4 and 9).
These 15 risks and opportunities are described in the following tables, which also include detail regarding the potential impact on McBride plc’s
business and financial planning and potential management actions to minimise the risks and capitalise on the potential opportunities. Note that the
risks and opportunities have been assessed prior to consideration of any mitigating actions.
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Climate-related financial disclosures continued
Note: All the transitional risks outlined above and opposite are only considered within the Low Carbon World Scenario (1.5˚C).
Strategy continued
Transition risks – Policy and legal
Risk
1
Pricing of GHG emissions
2
Climate change litigation
3
Mandates on and regulation of
products and services
Impact assessment
Based on our Scope 1 and 2 emissions, McBride plc would be materially impacted by
carbon taxation.
EU Green Deal and UK Environment Act creating legislative changes that will impact
McBride plc business.
Greenwashing is not currently a major concern for McBride plc; it has controls in
place to ensure it does not overstate its environmental claims.
McBride plc provides guidance for its customers and is well prepared for mitigating
this risk and avoiding potential reputational exposure.
Risk response
• Accelerating the shift from gas/oil to renewable electricity.
• Procure 30% of energy from renewables by 2025.
• Develop Net Zero targets and action plan.
• Internally communicate the risks associated with carbon emissions.
• Continue to monitor new/amended legislation via working with industry groups and internal processes.
• Technology scanning to ensure McBride plc is up to date.
• Automation to process for tracking plastic tax liability.
• Clarify contracts with customers to establish McBride plc’s liability in the event that a retail client faces climate change
litigation.
Transition risks – Market
Risk
4
Increased cost of raw materials
5
Change in consumer demands
Impact assessment
Suppliers could pass on the costs of carbon taxation. Suppliers have already done
this for fuel, palm oil and the UK plastics tax.
Consumer demand for more sustainable products increases; this could require
changes to our product portfolio and impact on demand for some existing products.
Risk response
• Attempt to influence suppliers to adopt more renewable approaches.
• Assess supply base and where raw materials are bought from.
• Continue to monitor consumer demands, particularly around buying trends for sustainable products.
• As a private label manufacturer, continue to closely follow actions of major brands to meet consumer preferences.
• Invest in alternative technologies and reformulation to increase sustainability of products and meet changing consumer
demands.
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63
Strategy continued
Transition risks – Investment/finance risk and reputational
Risk
6
Investment and finance risk
7
Employee risk
Impact assessment
Sustainability, ESG and Net Zero are key topics for investors, increased questions on
the topic are expected and it is anticipated to possibly deter potential investors if
McBride plc suers sustainability-linked reputational damage.
Major McBride plc shareholders rank sustainability highly, but not as highly as
financial performance.
Cost of capital could potentially increase if climate credentials are poor and climate
KPIs are not met.
As workforce become more climate conscious, there is a risk that talent attraction
and retention could become increasingly dicult if McBride plc fails to meet its
climate commitments.
Risk response
• Continued investment in carbon reduction eorts.
• Set clear Net Zero SBTi targets and develop a plan for achieving them.
• Proactively promoting sustainability achievements.
• Increased Board focus on ESG/Net Zero as an integral part of the Company’s strategy.
• Ensure that McBride plc’s sustainability agenda and achievements are highlighted in recruitment campaigns.
• Continue to detail climate credentials in Annual Report.
Risk
8
Substitution of existing
technologies to lower emission
options
Impact assessment
Investing in lower emission technology requires significant initial outlay but is
accepted as almost certain to be required by McBride plc, as part of the climate
transition.
McBride plc has already invested £4-5 million capex in new sustainable technology
for detergent packaging. Investments have thus already begun; however, the main
impact of this risk is likely to be felt between 2030 and 2050 as pressure to achieve
Net Zero, and thus invest in lower emission technology, intensifies.
Risk response
• A future-proofed manufacturing plan could be required, focused on reduced energy, reduced footprint and reduced water.
• Commercial strategy adaptation could be required, with nuances between geographies and divisions.
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Climate-related financial disclosures continued
Note: All the opportunities outlined above are only considered within the Low Carbon World Scenario (1.5˚C).
Strategy continued
Opportunities
9
Operational
decarbonisation
through low-emission
sources of energy
Description
• Reduce direct costs
Impact assessment
Use of renewable Purchase Price Agreements
(PPAs) could reduce energy costs in the future as
carbon taxation is implemented.
This will help to achieve the Net Zero strategy
and create additional opportunities to attract
investors, lenders, customers and consumers.
Opportunity response
• Continue monitoring the cost dierence in renewables versus non-renewables so that the shift to increased renewables can
be timed correctly.
• Seek relatively short-term PPAs (i.e. maximum three years) to avoid being locked into expensive contracts and being able to
possibly accrue cost savings.
• Pursue plans to increase renewable energy as part of McBride plc’s energy mix up to 30% by 2025.
10
Use of more ecient
production and
distribution processes
Description
• Reduce direct costs
Impact assessment
Adopting low-emission technologies such as
fitting air source heat pumps and developing
products with more recycled content will require
upfront capex costs but could develop cost
savings through production eciencies over time.
Better pallet utilisation to reduce transportation
emissions via enabling more goods to be
transported from the same space also helps
todevelop transportation eciencies and
reducecosts.
Opportunity response
• Improve communication of financial benefits – via cost savings and energy eciency – of investment in more ecient
low-emission processes.
• Closely monitor technological developments and major brand behaviour to be able to act as a fast follower.
11
Development of new
products or services
through R&D and
innovation
Description
• Increased revenues resulting from
increased demand for products
and services
Impact assessment
Increasing consumer demand for sustainable
products could enable McBride plc to increase its
market share.
This opportunity will be maximised if sustainable
products are aordable to consumers, otherwise
consumers may choose more aordable less
sustainable products due to budget constraints.
Opportunity response
• Continue monitoring consumer demand for sustainable products.
• Ensure continued capex investment in sustainable technology to ensure readiness to meet rising demand.
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Strategy continued
Physical risks
12
Heat stress
13
Drought stress
Description
• Periods of time with sustained high
temperatures more than 30°C.
• Period of abnormally dry weather
suciently prolonged for the
lack of water to cause serious
hydrologic imbalances and regional
water scarcity.
Impact assessment
Increased opex, energy consumption and carbon
emissions due to increased cooling demand.
Failure of cooling systems may interrupt business
and manufacturing. Potential delays in supply
chain, bottlenecks in logistics and distribution.
Reduced labour productivity/ineective work
performance.
Impact to water-intensive manufacturing
processes. Potable and process water supply
reduction/disruption could impact manufacturing
and commercial operations. High water costs.
Impact to raw materials.
Risk response
• Consider, review and plan for a range of specific measures, including, but not limited to:
• Review operating temperature tolerances for machinery and computer equipment.
• Review building design and HVAC for ineciencies.
• Consider additions such as solar shading, trees, double glazed windows, thermal insulation.
• Consider introduction of natural cooling and ventilation solutions.
• Maintain a good practice fire loss control maintenance and mitigation.
• Understand suppliers’ preparedness for future heat stress.
• Water system audits, pipe repair and leak maintenance.
• Explore options for water saving in the manufacturing process.
• Look at incentivising and encouraging water saving by employees.
• Look to introduce grey/rainwater collection and input to non-potable uses.
14
Floods
(inland flood, storm
surge and sea level
rise)
Description
• Includes inland floods caused by
heavy precipitation (flash floods)
and/or by riverbank overflow
(riverine). Coastal flooding caused
by storms.
• Sea level rise plays an important
role on the severity of storm
surges.
Impact assessment
Factory and infrastructure damage.
Damage to contents stored on ground and
basement level.
Possible long disruptions for repairs or installation
of critical utilities.
Impact on emergency services.
Delays in supply chain and distribution.
Long-term/temporary road and railroad damage
and closure.
Threat to life.
Risk response
• Consider, review and plan for a range of specific measures, including, but not limited to:
• Risk transfer/insurance.
• Consider deep dive (engineering) assessment for high-risk assets to gauge the flood risk.
• Prepare business continuity and emergency response plans and create stress test ‘what if’ scenarios.
• Consider temporary and portable flood defence systems.
• Look to reduce critical equipment and operations in basements.
• Engage with suppliers currently at risk and for those having future risk of flooding.
• Monitor and warn employees using government/local authorities/flood (and coastal) warnings and associated
guidanceon personal protection.
Note: All the physical risks outlined above and on the following page are only considered within the Hot House World Scenario (4˚C).
Any specific risk responses will be reviewed annually and actively considered if the scenario becomes increasingly relevant.
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Climate-related financial disclosures continued
Strategy continued
Physical risks continued
15
Windstorms
Description
• Includes the wind-related impact
of dierent types of storms such
as winter storms, extratropical
cyclones or hurricanes.
Impact assessment
Factories and infrastructure damage.
Impact to utilities (water supply, energy supply,
telecoms/internet).
Possible long disruptions for repairs or installation
of critical utilities.
Delays in supply chain and distribution.
Long-term/temporary road and railroad damage
and closure.
Threat to life.
Risk response
• Consider, review and plan for a range of specific measures, including, but not limited to:
• Risk transfer/insurance.
• Consider deep dive (engineering) assessment for high-risk assets to gauge the windstorm risk.
• Make sure that any critical equipment and utilities attached to the building and installed on rooftops are well fixed
andsecured.
• Prepare business continuity and emergency response plans and create stress test ‘what if’ scenarios.
• Engage with suppliers currently at risk and for those having future risk of tropical and extratropical cyclones.
• Monitor and warn employees of government/Met Oce windstorm and tornado warnings and associated guidance
onpersonal protection.
Informing resilience and strategy planning
Noting the importance of mitigating the potential
impacts of these risks and enabling McBride plc to
capitalise on the identified opportunities, the table
above outlines actions McBride plc is currently
undertaking and additional plans it intends to take to
ensure resilience in the face of both the Low Carbon
World (1.5°C) and Hot House World (4°C) Scenarios.
Focus going forward to meet recommended
disclosures b) and c)
We have made good progress in identifying the CROs
we could be exposed to over dierent time horizons.
We have also started to describe the impact of CROs
on our business, which has helped inform its risk
management response and potential adaptations to its
strategy and financial planning. In 2023, McBride plc
intends to conduct a more granular risk assessment
for the most material risks under the two articulated
scenarios. The most material risks have been prioritised
based on their gross risk score; a combination of
their impact, likelihood and time horizon assessment.
In2023we will start considering risks on a residual
basis, i.e.after management response and strategies
have been implemented and consideration of the
resilience ofour strategy under the two articulated
scenarios will be given.
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Risk management
Defining a process for climate risk identification
and management
As detailed on pages 71 to 78, the Company has a
rigorous process in place to report the organisation’s
principal and emerging risks. Through this process,
climate change and environmental concerns was
identified as a principal risk and was assessed
accordingly. Aspects of climate change risk are also
captured in other principal risks; notably supply chain
resilience; changing market dynamics; and increased
regulatory focus. In addition, we conducted a thorough
climate risk assessment in 2022 with third-party
consultants from WTW. The process used for identifying,
assessing and managing climate-related risks under
dierent climate scenarios is detailed in the graphic
below.
Under the articulated climate scenarios, a list of potential
CROs that could impact McBride plc’s business were
identified. This involved considering each of our business
units and all activities performed across its value
chain. The list of risks and opportunities was drawn
up using details from the scenarios, knowledge of the
business and its value chain, industry reports and peer
benchmarking. These risks were then validated by the
TCFD Working Group.
In order to assess the identified risks and opportunities,
workshops were held with the cross-functional senior
individuals from across the Group. The first workshop
focused on the assessment of transition risks, which
wereassessed under the 1.5°C Low Carbon World
scenario. The scenario was articulated to workshop
participants who were then asked to assess the risk
or opportunity in terms of impact, the most likely
timeframeof impact and the likelihood of impact.
Impacts were considered in terms of a potential hit
to financial performance (profit & loss) and financial
position (balance sheet). The second workshop assessed
physical risks under both the 1.5°C and 4°C climate
scenarios.
In advance of the workshop, WTW modelled the
exposure of McBride plc’s own manufacturing locations
together with a selection of its suppliers and supplier
regions against both climate scenarios. The modelling
provided the likelihood of occurrence and the most
likely time horizon of impact and the workshop was
then used to discuss the potential impact to McBride
plcas a result of its exposure.
Throughout the assessment process, participants were
asked to consider existing mitigation actions that were
in place and what more is required to reduce future risk
and capitalise on potential opportunities.
Following the assessment of both transition and
physical risks and the identification of risk management
actions, a final validation assessment workshop was held
with the TCFD Working Group and the outputs from the
assessment were then shared with the Audit and Risk
Committee to communicate exposure to inherent risk.
In2023, risk assessment of the most material CROs will
be conducted, considering risks on a residual risk basis.
Integration of climate risk management into
McBride plc’s wider risk management
The climate risk assessment conducted in 2022
assessed risks against an adapted version of our
Enterprise Risk Management (ERM) scales. The adapted
scales allowed for longer time horizons due to the
nature of climate risk and the assessment of upside
opportunities. Using aligned scales has enabled McBride
plc to integrate the assessment of its climate risks into
its corporate risk register. We will continue to identify,
assess and manage climate risks through the existing
risk management process on an annual basis. We will
also conduct more detailed scenario analyses in 2023.
Following completion of the 2023 study, we intend to
update our climate scenario analysis at least every three
years, when scenario indicators change, or if there is a
material change to our business.
1. Define climate
scenarios
3. Assess business
impacts to
McBrideplc
2. Identify climate-
related risks to
McBride plc under
articulated scenarios
4. Identify potential
responses
Transition risk
1.2
o
C
Physical risk
1.5
o
C and 4
o
C
Policy and
legal risks
Acute
physical
risk
Impact on:
Physical asset portfolio
Input costs
Operational costs
Revenues
Supply chain
Business interruption
Responses might
include:
Changes to
business model
Portfolio mix
Investments in capabilities
and technology
Reputation
risks
Market
risks
Chronic
physical
risk
Technology
risks
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McBride plc Annual Report and Accounts 2022
68
Metrics and targets
We have been calculating our Scope 1 and Scope 2 GHG
emissions since 2008 in accordance with the relevant
GHG Protocol Corporate Accounting and Reporting
Standards and latest emissions factors from recognised
sources, based upon market values. Details of the
Group’s Scope 1 and 2 carbon emissions for the financial
year ended 30 June 2022 are set out on page 45.
In addition, during the fiscal year we engaged Climate
Partner®, to validate the Group’s Scope 1 and 2 GHG
emissions and to calculate the Group’s Scope 3
emissions for the year ending 30 June 2021. Climate
Partner® are also currently repeating this exercise for
the year ending 30 June 2022, expected for completion
during October 2022.
Currently, the Group is not consistent with
recommended disclosures 4(a) – 4(c). Whilst Scope 1
and Scope 2 GHG emissions have been calculated since
2008 in accordance with the relevant GHG Protocol
Corporate Accounting and Reporting Standards and
latest emissions factors from recognised sources, based
upon market values, Scope 3 emissions data for 2022 is
currently being finalised.
The next stage in the Group’s journey towards
consistency with the TCFD recommended disclosures
4(a) – 4(c) is to work with an external partner during
the financial year ending 30June 2023 to:
• set appropriate metrics and targets for the careful
management of resource use and eciency, to drive
a reduction in emissions;
• conduct an analysis and to develop a set of
prioritised initiatives for emission reduction;
• identify GHG emission abatement potential and
related abatement costs;
• develop a roadmap of emissions reduction
opportunities;
• develop Science Based Targets and KPIs aligned to
the roadmap; and
• include Scope 3 emissions for financial year ending
June 2023.
Focus for 2023
McBride plc commits to building on the progress
achieved in 2022 in relation to the impact our
operations have on the world.
Our strategy outlines our commitments to reduce
carbon emissions. The results of these commitments
will be externally validated by setting appropriate
Science Based Targets and our performance will be
benchmarked by the Carbon Disclosure Project (CDP).
We are also very aware of the impact that climate
change may have on us as an organisation. The CRO
identification process is now an established tool for us
to identify the inherent risks that McBride plc faces.
Following risk identification and scenario analysis in
2022, we remain committed to prioritising and further
embedding the appropriate mitigating actions within
our strategy to ensure we address the assessed material
climate-related risks.
This will be centred around ensuring we build on
our existing goals and ambitions, whilst developing
appropriate metrics and Science Based Targets (to be
initiated during 2023), with a view to monitoring and
assessing those risks whilst focusing on maximising the
climate-related opportunities within our business model.
Climate-related financial disclosures continued
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69
Location of TCFD aligned disclosures within the Annual Report
Governance
Disclose the Company’s governance around climate-related risks and opportunities See page(s)
a) Describe the Board’s oversight of climate-related risks and
opportunities
Climate-related financial disclosures
Audit and Risk Committee report
56 to 59
102
b) Describe management’s role in identifying, assessing and managing
climate-related risks and opportunities
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the Company’s business, strategy and financial
planning where material
a) Describe the climate-related risks and opportunities that the
organisation has identified over the short, medium and long term
Climate-related financial disclosures
Principal risks and uncertainties
59 to 66
77
b) Describe the impact of climate-related risk and opportunities on the
Company’s business, strategy and financial planning
c) Describe the resilience of the organisation’s strategy, taking into
consideration dierent climate-related scenarios, including a 2°C or
lowerscenario
Risk management
Disclose how the Company identifies, assesses and manages climate-related risks and opportunities
a) Describe the Company’s process for identifying and assessing
climate-related risks and opportunities
Climate related-financial disclosures
Principal risks and uncertainties
Audit and Risk Committee report
67
77
102 to 104
b) Describe the Company’s process for managing climate-related risks
and opportunities
c) Describe how processes for identifying, assessing and managing
climate-related risks are integrated into the organisation’s overall risk
management
Metrics and targets
Disclose the metrics and targets used to assess and manage climate-related risks and opportunities
a) Disclose the metrics used by the organisation to assess climate-
related risks and opportunities in line with its strategy and risk
management process
Climate-related financial disclosures
Environmental, social and governance
68
45
b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the related risks
c) Describe the targets used by the organisation to manage climate-
related risks and opportunities and performance against targets
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McBride plc Annual Report and Accounts 2022
70
In accordance with sections 414CA and 414CB of the Companies Act 2006 which outline new requirements for
non-financial reporting, the table below is intended to provide our stakeholders with the content they need to
understand our development, performance, position and the impact of our activities with regard to specified
non-financial matters.
Group non-financial information statement
Reporting requirement and
ourmaterial areas of impact
Policy embedding, due
diligence, outcomes and
key performance indicators
– page references
Relevant Group
principal risks
Relevant Group
policies
Environmental matters
• Responsible approach
to product design and
production
Social matters
• Responsible approach to
taxation
Business model
Description of principal risks
Non-financial key
performance indicators
Respect for human rights,
anti-bribery and corruption
• Reinforcing an ethical
businessculture
Consumer and
customer trends
• Group ESG Policy Environmental, social and
governance, pages 44 to 47
Legislation
Financial risks
All risks
Legislation
• Group Quality,
Health, Safety and
Environment Policy
• Tax Strategy
Statement
• Business Ethics Policy
• Business Ethics Policy
• Supplier Code of
Conduct
• Anti-Bribery and
Corruption Policy
• Gifts and Hospitality
Policy
• Policy on the use of
independent auditor
for non-audit services
• Whistleblowing Policy
• Anti-slavery and
Human Tracking
Statement
Environmental, social and
governance, pages 50 to 52
Pages 10 and 11
Pages 71 to 78
Page 37
Environmental, social and
governance, pages 54 and 55
andpolicies, page 91
Environmental, social and
governance, page 49 and
policies, page 91
Workforce engagement,
page85
Our stakeholders,
workforce,page 39
Employees
• Responsible for the health and
safety of our workforce
Understanding the impact of our activities with regard tospecified non-financial matters.
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71
An eective risk management process is a fundamental
cornerstone of good corporate governance, essential
inenabling the business to achieve its overall strategic and
day-to-day operational objectives and in delivering on its
commitments to all stakeholders.
Principal risks and uncertainties
The Group’s established risk management framework,
which is aligned to ISO 31000:2018, was enhanced
during the year to formalise a defined risk taxonomy
structure. This is to guide risk identification and to
help with the categorisation of the types of risk to
which McBride plc is exposed, whilst establishing a
common language for the reporting of risk across the
organisation. Additionally, a comprehensive risk appetite
framework was established during the year. This is to
help with the assessment, escalation and reporting of
principal risks, through the identification and regular
monitoring of key risk indicators tracked bysenior
business leaders.
Further detail on the risk management process can
befound on page 103.
This process has allowed the Board to identify those
risks which are deemed fundamental to the business
as they potentially threaten the delivery of the Group’s
strategic priorities.
The Group continues to review its overall risk framework
within the context of an ever shifting and dynamic
post-Covid-19 environment, which has resulted in
high levels of input price inflation and a time-lag in
recovering these in the form of price increases from
our customers, product re-design initiatives and cost
reduction exercises conducted by the Group. This has
impacted McBride plc from both a global supply chain
perspective as well as the more regional/local retailer
and consumer behavioural aspects.
This has been accompanied with a heightened focus
on climate and environmental considerations from
both consumers and governments, a complex and
evolving set of legislative requirements across individual
jurisdictions, as well as the increased risk to sensitive
business data as a result of legacy systems, potential
security breaches and cyber threats. The Board also
considered the specific risks and opportunities relating
to the Group’s level of debt, largely driven by higher
levels of working capital and trading losses. Over the
course of the year, this has squeezed our liquidity
headroom with our funders, although this risk has been
reduced post year end as a result of the revised funding
agreement announced on 29 September 2022.
Likelihood
Impact
Almost
certain
LikelyPossibleUnlikelyRare
Minimal
Minor
Moderate
Major
Catastrophic
1
Financing risks
2
Supply chain resilience
3
Changing market, customer
and consumer dynamics
4
Disruption to systems and
processes
5
Challenges in attracting
and retaining talent
6
Climate change and
environmental concerns
7
Increased regulation
1
3
2
4
6
7
5
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1
Financing risks
The Company is potentially exposed to financing risks aecting liquidity and funding
that could threaten the ongoing operation and financial viability of the Company
Risk trend/change:
Risk impact
Mitigation Key developments
• Inability to oset in a timely
manner the significant input
cost inflation by raising prices,
has resulted in a significant
deterioration of the Group’s
profitability and liquidity.
• Not achieving historic levels
of profitability and cash flows
increases the risk that banking
facilities may be withdrawn due to
breach of banking covenants.
• Divisional Managing Directors
are accountable for developing
and executing pricing plans or
cost-saving product redesigns to
recover gross margins through cost
price increases to customers.
• A comprehensive governance
process of divisional performance
reviews is in place to monitor actual
performance versus pricing and
financial targets. This includes the
Executive Committee’s weekly
review of key operational and
financial performance metrics,
including health and safety, volume,
customer service, trading and
pricing, meaning that risks can be
identified and mitigating actions
agreed in a timely manner.
• Our lender group waived the
December 2021 and June 2022
covenant tests. In reaching the
agreement of the waiver, the Group
agreed to maintain liquidity (cash
plus facility headroom) of at least
£40 million and not pay dividends
until it is in compliance with its
existing covenants.
• At 29 September 2022, the Group
announced that it had agreed an
amended RCF with its lender group,
ensuring the Group has sucient
levels of liquidity headroom and
can comply with revised covenant
requirements. Key provisions of the
revised agreement are set out in the
CFO’s report on page 34.
Risk appetite rating: Low
Low Moderate High Very HighAverse
McBride plc recognises that it is not possible to fully eliminate financing risk, but will deploy a one-time robust and
proportionate level of control to ensure material instances of risk are minimised.
The set of principal risks and uncertainties provided on the following pages is not intended to be an exhaustive
list. Additional risks not presently known to management, or risks currently deemed to be less material/
strategically important, may also have the potential to cause an adverse impact on our business. The Board has
confidence in the ongoing risk horizon scanning and monitoring activities embedded within the Group’s existing
risk management processes, to provide early notification of emerging, potentially significant and strategically
importantrisks on a regular basis.
Principal risks and uncertainties continued
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2
Supply chain resilience
Raw materials continue to drive a significant proportion of our product costs, thereby
resulting in key underlying risks associated with commodity markets and their
heightened volatility
Risk trend/change:
Risk impact
Mitigation Key developments
• Global supply chains were
stretched beyond breaking point
in many areas as demand bounced
back from Covid-19-driven lows
which saw capacity reduced in
many sectors.
• Pressures on material and freight
availability, along with underlying
labour challenges in the market,
aects our ability to ship products
out on time, ultimately posing a risk
to our customer service levels.
• Uncertainty over forward input price
inflation will restrict the Group’s
ability to implement plans for
recovery through pricing initiatives.
• A growing trend of some customers
moving to a more transactional
approach to relationship
management leading to lengthy
and prolonged discussions on the
implementation of the required
pricing actions. This has the
potential to have a significant
impact on the Group’s profitability.
• An increased focus on
environmental considerations in
the form of sustainability demands
poses a risk from both a cost and
complexity perspective.
• Over-reliance on any one supplier
poses a significant risk to the
business.
• An appropriately resourced and
skilled Group Purchasing function
with the requisite market and
industry knowledge providing the
ability to spot market trends and
developments.
• Long-standing and strong supplier
relationships allowing McBride
plc to leverage scale and push for
prioritisation in times of material
shortages. Divisional teams taking
full responsibility for demand
forecasting providing forward views
of requirements.
• Reliable and regular forecasting
capability in order to equip the
Group with forward visibility of
both the direction and magnitude
of input cost evolution, along with
a well-structured and controlled
information flow through the supply
chain into the Divisional Commercial
teams to help position each wave of
pricing actions with our customers.
• Clearly defined account plans across
our customer base to ensure that we
create the appropriate engagement,
at the right level and at the right
time.
• A clearly defined set of corporate
goals underpinned by specific
metrics and targets, with
well-articulated plans to achieve
them, that are shared with our
customers.
• A strong and eective risk
management ethos, driving the
most opportune sourcing decisions
to ensure McBride plc is not overly
exposed to any single supplier.
• In addition to the continued
investment in training and
development, access to market
intelligence and analytical resources
has been improved.
• The continual improvement of
the high-level early warning tool
already in place, along with a more
automated, rolling forecasting
process, capturing both feedstock
and supply/demand influences,
embedded in the organisation.
• Key risk indicators (KRIs) in
place to monitor progress and
drive appropriate action, where
necessary.
• A continued focus on contractual
cover, with closer alignment
between the Group Purchasing,
Commercial and Legal functions.
• Group Purchasing provide the
divisional sales teams with regular
‘commercial packs’ to help explain
the markets within which we
operate from a pricing and supply
chain perspective, and how that
translates into the products that we
sell.
• McBride plc already has a set of
published sustainability targets
which are monitored on a regular
basis, and have started on the TCFD
reporting journey to drive further
improvements in this area.
• Specific actions taken during the
year to broaden our supplier base,
in areas of increased supply risk.
Risk appetite rating: Moderate
Low Moderate High Very HighAverse
McBride plc accepts a moderate level of concentration risk in relation to raw material suppliers to maximise economies of scale
and leverage pricing strategies. The Company is also prepared to accept a moderate level of risk exposure in the supply chain to
optimise pricing strategies whilst maintaining a certain level of flexibility across the value chain to be able to absorb disruptions
and quickly adapt to change.
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74
3
Changing market, customer and consumer dynamics
Loss of key product categories and/or customer positions could arise due to an
inability to maintain supply or through an uncompetitive cost position. Additionally,
the demand in sustainability trends in product technology, formats and usage has
increased significantly, and speed to market is essential and is required by our
customers and end consumers
Risk trend/change:
Risk impact
Mitigation Key developments
• The ‘post-Covid-19’ consumer is
adapting to a higher cost of living
in an inflationary environment,
also marked by a heightened
sustainability agenda and a
significant demand for e-commerce.
The lack of an appropriate product
portfolio would be a risk to our
sales performance.
• Shifts in purchasing habits due to
‘sticky post-Covid-19 factors’ (such
as working from home) may mean
that there are permanent shifts in
product choices misaligned to the
capacity in the business.
• Key international retailers face
significant pressure to be the
‘backstop’ of grocery inflation and
therefore continue to resist price
increases.
• Despite an increasing number
of high-profile failures in our
competitor set, together with global
pressures on supply chain networks,
continuity of supply of essential
hygiene products remains critical.
High levels of CSL are therefore
being demanded, and failure to
deliver jeopardises our reputation
and sales performance.
• There is a risk that in addressing
the short-term issues faced by
customers and consumers that
innovation becomes a lower priority
and risks medium-term sales growth
and profitability.
• An appropriate amount of
resource and attention to the
understanding of consumer trends.
This includes an established ESG
forum where sustainability insights
and Group-wide ESG targets are
monitored to drive actions through
divisional deployment.
• A flexible approach to product
portfolio management that can
adapt with agility to changes in
consumer needs. This could include
a range of alternative oerings
to minimise the price impact to
consumers.
• A five-year strategic plan, reviewed
on an annual basis, in order to
balance capital allocation between
new initiatives and supporting
existing business.
• Strengthened partnerships with key
retailers to avoid one-dimensional
discussions solely focused on price.
• Clear cost-saving initiatives in each
area of the business to mitigate the
eects of input price increase.
• Having centralised our approach
to market data, we are using this
eectively to drive decision-making
and inform longer-term strategy.
• We have accelerated our approach
in R&D in respect of two major
pillars around cost saving and
sustainability – working closely
with suppliers to achieve speed to
market and capital eciency.
• The ESG Group has made great
progress in measuring the
Company’s environmental impact
and setting appropriate targets
to support ongoing business
performance and growth.
• The five-year plan has been
reviewed and adjusted in the short
term to take account of latest
market priorities.
• We have been proactive and
reacted quickly to assist retailers
where they have had disruptions
in supply due to competitors’
financial and operational diculties,
demonstrating our agility and role
as a valued supplier of choice.
• We have developed new
relationships with direct and indirect
suppliers in order to ensure best
pricing and continuity of supply in
volatile circumstances.
• All divisions and Group functions
have clear cost-saving targets
enabled by continued investment in
business processes.
• As part of the TCFD risk assessment
performed during the year,
climate-related changes to market
factors were considered and risk
responses explored.
Risk appetite rating: Moderate to High
Low Moderate High Very HighAverse
We strive to uphold strong relationships with our customers during a period of dynamic market conditions.
We accept a moderate to high level of risk in our relationships with customers whilst these are being tested by increased
product prices to take account of increased input costs, market factors, competitor actions and customer responses.
Principal risks and uncertainties continued
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4
Disruption to systems and processes
Reliability, availability and security of our business systems and processes continue to
be a focus area to avoid business disruption. Availability of core systems is targeted,
as a minimum, to be at the levels required to maintain the day-to-day operations
of the business. The risk has increased due to an increase in the number of external
cyber-attacks and elevated threat levels globally. This trend is expected to continue
for the foreseeable future
Risk trend/change:
Risk impact Mitigation Key developments
• Loss of key and sensitive business
data as a result of security breaches,
external hacking and/or cyber
attacks.
• The loss of data or the inability
to obtain data – due to issues
with physical storage (e.g. data
destruction), logical storage
(e.g.deletion) and data corruption
(e.g. software errors).
• Physical damage to key computer
equipment – e.g. due to fire, theft,
flood, malicious damage, etc which
would disrupt a physical location
which hosts critical IT services.
• Internet/World Wide Web
disrupted/unavailable due to an
external, global event aecting our
systems, data, connectivity and
operations.
• Increased incidence of security
breaches due to high volumes of
home working experienced during
the pandemic and a move to flexible
working patterns.
• Underinvesting in IT leads to
outdated technologies with weak IT
General Controls (ITGCs), potentially
leading to increased overhead
mitigation costs, a higher risk of
cyber-attack, loss of key data, failure
to adequately harness digitalisation
and significant business disruption.
• Continual review and investment
in security policies, controls and
technologies to protect commercial
and sensitive data.
• Continued monitoring of
developments in cyber security
including engaging with third-party
penetration testers and other
specialists, where appropriate.
• Alignment to changes in legislation
assessed and implemented,
including GDPR.
• Ongoing hardware and software
refresh and upgrade programmes
to ensure performance can be
monitored and systems and
technologies adequately supported
to combat against any potential loss
of data and/or cyber-attacks.
• Formal disaster recovery planning
to ensure critical systems have a
clear plan for recovery.
• The IT team has continued to
support the business during the
transition from oce-based to
home working experienced during
the year, by continuing to roll
out processes and solutions that
maintain strong access controls to
our systems.
• Review of the business systems
roadmap to ensure relevance.
• Recruitment of additional IT
security resource to strengthen
focus in this area.
• External vulnerability testing
undertaken.
• Security key risk indicators (KRIs)
in place to monitor progress and
drive appropriate action, where
necessary.
• Development and rollout of an
employee education programme to
improve cyber risk awareness.
• Cyber simulation exercise
conducted.
• Upgrading critical infrastructure and
ensuring the correct patch levels are
applied.
• Moving critical systems away from
our sites into an external cloud
infrastructure.
• Review of disaster recovery
processes for all business-critical
systems and ensuring relevant
back-up and recovery plans are
inplace.
• Introduction of new secure access
mechanisms when employees
connect to the corporate systems
away from the oce.
• Core business system reviewed and
key actions in progress.
• Investments in updated applications
to modernise the workplace.
Risk appetite rating: Moderate
Low Moderate High Very HighAverse
We have a moderate appetite for risk in relation to IT resilience and to manage our IT infrastructure, in order to ensure the
security of confidential information and the availability of our critical systems are not compromised.
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5
Challenges in attracting and retaining talent
Failure to attract, retain and develop the required capabilities and to embed our
values in our culture, which could impact the delivery of our purpose, vision and
business performance
Risk trend/change:
Risk impact
Mitigation Key developments
• Our ability to attract, develop and
retain a diverse workforce with a
wide range of skills is critical for the
eective delivery of our strategies.
• The loss of key leadership and
talented colleagues and the inability
to replace them could make it
dicult to manage the business,
ultimately adversely aecting
operations and financial results.
• Market competition for key
leadership and talent remains strong
across the wider economy and
specifically in some of the countries
within which we operate. Whilst we
continue to have strong response
mechanisms in place, we face
complexities posed by uncertain
macroeconomic conditions,
intense competition for talent and
significant wage inflation.
• People performance, potential and
succession management is formally
reviewed and subject to calibration
by senior management each year.
Core skills gaps are identified
to inform clear action plans and
address key talent retention or
attraction risks.
• Our Remuneration Committee
agrees the objectives and
remuneration arrangements for
senior leaders.
• Agile ways of working (including
smart home working) frequently
reviewed, to unlock internal
capacity and support our ability to
motivate, retain and attract talent.
• Regular review of our ways of
working to drive speed and
simplicity through our business,
allowing us to remain agile and
responsive to marketplace trends.
• Our talent planning and people
development processes are
established and are being rolled
out, utilising our new Human Capital
Management (HCM) system across
the Group.
• There are frequent discussions
on talent and retention with the
Executive Committee, with regular
oversight by the Board.
• Investment in our learning
management system, providing all
colleagues with access to online
self-paced development, supporting
skills growth internally.
• We continue to roll out measures
to ensure the wellbeing of our
colleagues, with a number of
specific initiatives launched during
the year.
Risk appetite rating: Low
Low Moderate High Very HighAverse
McBride plc has a low appetite in relation to people risks. It acknowledges that there is a core dependency on people and their
knowledge in order to provide an eective service both within the business and to our customers.
Principal risks and uncertainties continued
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6
Climate change and environmental concerns
An evolving, multi-dimensional risk influencing our ability to continue to produce
and deliver appropriate goods and services in a sustainable and environmentally
responsible manner, leading to a lack of alignment with key retail customers, a loss of
revenue, supply disruptions and an inability to deliver a reduction on our corporate
carbon footprint
Risk trend/change:
Risk impact
Mitigation Key developments
• Failing to adapt our business
models and strategies could
influence our ability to continue to
produce and deliver appropriate
goods and services in a sustainable
and environmentally responsible
manner. This could lead to
reputational damage for the
Company, whilst impacting our
customers and consumers and
ultimately aecting our growth,
competitiveness and profitability.
• The increased incidence of extreme
weather events could impact
our ability to sustainably source
essential components for our
products and services, potentially
leading to supply disruptions.
• Failing to be eligible as a preferred
supplier by our customers due to
lack of our commitment to measure
our corporate carbon footprint
and to set and realise appropriate
targets.
• The immediate focus of our
mitigation activities is on our
preparedness for both supply
disruptions (e.g. through flexible
sourcing policies in place) and
the ongoing reduction of our
operational carbon footprint.
• A full understanding of our
customers’ needs, goals and
objectives to mitigate their overall
carbon footprint, aligning our own
climate change action plans as
appropriate.
• Measurement of our corporate
carbon footprint with external
consultants, driving action plans
to reduce our carbon-intense
production areas.
• A focused cross-functional
ESG forum continues to
operate eectively, leading the
Company’s environmental, social
and governance activities and
specifically driving our response to
climate change and environmental
concerns.
• An established ESG framework in
place that continues to drive and
steer our overall ESG approach,
including climate and environmental
considerations.
• We engaged Willis Towers Watson
(WTW) to work with the TCFD
Working Group to facilitate the
identification of CROs over the
short, medium and long term and
to begin to assess their potential
impact on the Group’s business.
Further details are provided on
pages 59 to 66.
• Measurement of our corporate
carbon footprint to set future
science based targets.
• Working with our energy suppliers
to increase the proportion of our
energy from renewable sources at
minimal additional cost, to meet
our 2025 target (30%), starting
January2023.
• Completion of the 2022 CDP
disclosure on climate action.
• Successful submission of our
climate and sustainability data to
EcoVadis for a revised business
sustainability rating.
• Advances in product development
with capex approved for new
packaging solutions that reduce
plastic consumption in the laundry
category.
Risk appetite rating: Low
Low Moderate High Very HighAverse
We have a low tolerance for risk in this area but recognise external factors can be dicult to mitigate as they are often outside
our control.
Strategic report
[Intro para]
McBride plc Annual Report and Accounts 2022
78
7
Increased regulation
The regulatory environment is increasing in complexity with requirements for
increased monitoring, governance and reporting. McBride plc is subject to laws
and regulations in the markets in which it operates and compliance with these is an
essential part of our business operations
Risk trend/change:
Risk impact Mitigation Key developments
• Non-compliance with relevant
laws and regulations could expose
McBride plc and/or our customers
to civil and/or criminal actions.
This could result in possible
damages, fines, criminal sanctions,
and damage to our corporate
reputation.
• Some examples of the heightened
regulatory landscape for 2022
include:
• Climate regulation (incl TCFD)
• EU Chemical Strategy for
Sustainability
• UK Environment Act
• Plastic taxes
• Post Brexit increased
intra-European regulatory
requirements and regulatory
divergence
• Changes to and introduction of
additional laws and regulations also
have a material impact on the cost
of doing business via increased
reporting and/or growing resource
requirements to meet heightened,
complex, and frequently evolving
compliance needs.
• Continued focus on product
compliance processes and controls,
which are regularly monitored to
drive improvement.
• Communication to relevant
employees ensures that compliance
is embedded within key roles.
• All raw material suppliers must
verify compliance to relevant legal
and safety requirements, with these
standards continually monitored
and updated.
• Legal and regulatory specialists
continue to monitor the relevant
legislative framework that McBride
plc operates under, to provide
assurances of compliance with all
existing and new legal obligations.
External legal guidance is sought,
where appropriate.
• McBride plc is an active member
of relevant trade associations and
industry bodies. Where appropriate,
we can provide input into
government consultations which
aect our products or industry.
• Continual improvement of
monitoring and oversight systems,
processes and activities to respond
to increased emerging regulatory
compliance and reporting
obligations.
• Specific systems, process
rationalisation and standardisation
projects are in place and McBride plc
continues to look for opportunities
to leverage technology to improve
automation and increase process
uniformity. This has already
helped drive improvements in
regulatory compliance, with
further improvements to resilience,
eciency and performance
expected.
• Monitoring of the legislative
landscape continues to be a priority,
particularly in relation to the EU
Chemical Strategy for Sustainability.
• McBride plc has successfully
contributed to the detergent
industry impact assessment report
via AISE.
• Communication of legislative
requirements now fully formalised
via specific divisional briefing,
leadership briefings and specific
project teams.
• Increased regulation has also been
assessed as a transitional risk as
part of the work undertaken by
the TCFD Working Group. Further
details are in pages 61 and 62.
Risk appetite rating: Low
Low Moderate High Very HighAverse
So far as legal compliance and safety of consumers and employees are concerned, the Company has a zero tolerance for risk.
McBride plc recognises the need to adopt a risk-based approach to managing regulatory risk that is proportionate to the risk,
delivers acceptable outcomes for its customers and is financially sustainable and practical to operate.
In accordance with the UK Corporate Governance Code 2018, the Board has taken into consideration these
principal risks and uncertainties when determining whether to adopt the going concern basis of accounting
andwhen assessing the prospects for the Group when preparing its viability statement.
Principal risks and uncertainties continued
Strategic report
McBride plc Annual Report and Accounts 2022
79
Going concern and viability statement
In accordance with the UK Corporate Governance Code
2018, the Board has taken into consideration the Group’s
principal risks and uncertainties when determining
whether to adopt the going concern basis of accounting
and when assessing the prospects for the Group when
preparing its viability statement.
Going concern statement
The Group’s business activities, together with the
factors likely to aect its future development,
performance and position, are set out in the Strategic
report. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are
described in the report of the CFO on pages 30 to35.
Inaddition, note 21 to the financial statements includes
the Group’s objectives, policies and processes for
managing its capital; its financial risk management
objectives; details of its financial instruments and
hedging activities; and its exposures to credit and
liquidity risks. The Group meets its funding requirements
through internal cash generation and bank credit
facilities. At 30 June 2022, committed undrawn facilities
and net cash position amounted to £70.6 million.
The Group’s base case forecasts are based on
the Board-approved budget and three-year plan.
Theyindicate sucient liquidity throughout the going
concern review period to ensure compliance with its
minimum liquidity banking covenant. The Group’s base
case scenario assumes:
• revenue growth of c.5%, driven predominantly by
thewrap-around eect of pricing already agreed
with customers;
• raw material prices marginally reducing compared
to the June 2022 levels, which in themselves were
significantly higher than pre-Covid-19 pandemic
levels;
• interest rates increasing by c.150 basis points; and
• Sterling: Euro exchange rate of £1:€1.185.
The Directors have considered a severe but plausible
downside scenario including several downside
assumptions to stress test the Group’s financial forecasts:
• zero revenue growth from volumes, with revenue
growing in 2023 just for pricing already agreed with
customers;
• higher than forecast raw material and packaging
input costs and additional inflationary pressures
driven particularly by energy, distribution and labour,
ultimately being recovered through pricing actions,
but only after a lag;
• worsening trade working capital, caused by
deterioration in both customer and supplier payment
terms;
• interest rates increasing by a further 100 basis
points;and
• Sterling appreciating significantly against the Euro
to£1:€1.22.
In the event that such a severe but plausible downside
risk scenario occurs, the Group would incur a covenant
breach and a liquidity shortfall.
In this downside risk scenario, the Group would
therefore need to obtain a covenant waiver and
increase its funding facilities compared to those that are
currently committed, to ensure that the business can
meet its obligations for the next eighteen months.
To mitigate against these risks, the Group is currently
negotiating to further increase liquidity by £25million
by extending invoice discounting facilities to
unencumbered receivables ledgers, however there is no
certainty that these negotiations will be successful.
After reviewing the current liquidity position,
financial forecasts, stress testing of 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 sucient 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. However, the occurrence of
multiple downside trading and liquidity risks represents
a material uncertainty at 29 September 2022 that
could cast significant doubt upon the Group’s ability to
continue as a going concern.
The financial statements do not include the adjustments
that would result if the Group were unable to continue
as a going concern.
Viability statement
In accordance with the requirements of the UK Corporate
Governance Code (‘the Code’), 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
30June 2025 constitutes an appropriate period over
which to provide its viability statement.
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,
incorporating the principal risks from a financial and
operational perspective, with the resulting impact on
key metrics, such as debt headroom and covenants.
The downside risk scenario assumes sensitivity around
exchange rates and interest rates, along with significant
reductions in revenue, margins and cash flow over the
three-year period. The Group’s global footprint, product
diversification and access to external financing all provide
resilience against these factors and the other principal
risks that the Group is exposed to.
After conducting their viability review, the Directors
confirm that subject to the material uncertainty noted
in the basis of preparation in note 2 of the financial
statements 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 2025.
Directors’ report
McBride plc Annual Report and Accounts 2022
80
Chairman’s introduction
to the Directors’ report
Dear shareholder
On behalf of the Board, I am pleased to present this
year’s Directors’ report and to update you on the work
of the Board and its Committees and how we have
discharged our responsibilities during this fi nancial year.
Board leadership
As Chairman, I am responsible for leading and ensuring
an e ective Board. The current period of economic
uncertainty has impacted the way the Board and its
Committees worked throughout 2021/22. During the
last few months of the fi nancial year 2022 the Board
convened additional meetings to receive and consider
fi nancial updates, and updates on progress with the
Company’s pricing initiatives. These meetings have
continued into the fi nancial year 2023. I would like to
pay tribute to my Board colleagues for their fl exibility
and outstanding support throughout the year.
Governance
The application of the Principles of the UK Corporate
Governance Code 2018 (‘the 2018 Code’) is evidenced
throughout this Annual Report.
We are accountable to all of our stakeholders for
ensuring that governance processes are in place and we
are fully committed to meeting the standards of the 2018
Code as far as it applies to a FTSE Fledgling company.
The table on page 84 provides details of our compliance
with the 2018 Code for the fi nancial year 2021/22.
Board changes
In October 2021, Neil Harrington retired from the Board
at the conclusion of the 2021 AGM following nine years’
service. During his tenure, Neil was Chair of the Audit
and Risk Committee and his contribution and insights
were valued greatly. As previously disclosed, Alastair
Murray became Chair of the Audit and Risk Committee
in October 2021 and the transition has been seamless.
Following a recruitment process led by the Nomination
Committee, we were delighted to appoint Regi Aalstad
to the Board as an independent Non-Executive Director
on 14 March 2022. Regi brings with her a wealth of
knowledge in the fast-moving consumer goods sector
and strong experience as a Non-Executive Director.
Information on her induction process can be found
within the Nomination Committee report on page 93.
In line with our succession plans and in anticipation of
Steve Hannam not seeking re-election at the 2022 AGM
since he has served nine years on the Board, Elizabeth
McMeikan will be appointed as Senior Independent
Director from the conclusion of the 2022 AGM.
Elizabeth already has extensive experience as a Senior
Independent Director which she will bring to the role.
Regi Aalstad will be appointed as the Non-Executive
Director responsible for employee engagement,
continuing Steve’s good work in this area once he has
stepped down from the Board.
The Board continues to support and challenge
management as we strive to deliver the next
chapterof our strategic goals and vision.
Je Nodland
Chairman
Directors’ report
McBride plc Annual Report and Accounts 2022
81
I would like to thank Steve for his dedicated service over
the nine years he has been on the Board and for his
unwavering support, particularly during the challenges
over the last twelve months.
As required by Provision 10 of the 2018 Code, the Board
considered the independence of Steve Hannam at the
point he had served on the Board for nine years, and
again as at the date of this report. The Board concluded
that the objectivity of Steve Hannam was not impaired
by his length of tenure and he continues to demonstrate
his commitment to making decisions that are in the best
interests of the business.
Dividend
The Board has agreed with its lender group that
no dividends will be paid until it is in compliance
with its banking covenants. Therefore, the Board is
not recommending a final dividend in 2022. Future
dividends will be final dividends paid annually in cash,
not by the allotment and issue of B Shares. Existing
B Shares will continue to be redeemable but limited
to one redemption date per annum, in November of
eachyear.
S172 of the Companies Act 2006
Stakeholder interests are at the heart of every strategic
and operational decision taken by the Board. Our focus
on discharging our responsibilities to promote the
success of the Company in accordance with section
172 of the Companies Act 2006 and the impact our
decisions will have on our stakeholder groups is at the
forefront of our minds at each and every Board and
Committee meeting.
Further information on our stakeholders, how we have
considered them in decisions during the year and our
engagement with these stakeholders is set out on pages
38 to 41.
Board eectiveness
As Chairman, I am responsible for ensuring we continue
to have an eective and functioning Board. We review
our eectiveness as a Board on an annual basis,
including an assessment of its Committees.
The internally led Board evaluation undertaken in May
2022 gave us the opportunity to reflect on our own
performance and consider areas of focus which will
drive positive change over the coming years. Further
details of the Board evaluation can be found in the
Nomination Committee report on page 95.
I will continue to work with my fellow Directors and
with the Company Secretary to seek enhancements
to the eectiveness of the Board and its Committees
and create further focus on those areas that the
Board believes will make the most impact in achieving
long-term sustainable success for the business.
General Meeting
As explained in the Strategic Report, the rapid and
unprecedented rise in input costs and macroeconomic
supply chain challenges, exacerbated by the war
in Ukraine, had a negative eect on the financial
performance and cash flows of the Group during the
financial year ended 30 June 2022. This resulted in an
increase in the Group’s borrowings and a reduction to
the value of the adjusted capital and reserves in the
Company’s balance sheet. As the borrowing limit in
the Articles of Association (‘Articles’) is calculated by
reference to the adjusted capital and reserves in the
Company’s latest audited consolidated balance sheet,
when the accounts for the financial year 2022 were
published it was expected that the Group’s borrowings
would exceed the limit in the Articles. Consequently,
in anticipation of the borrowing limit set out in the
Company’s Articles being exceeded, at a General
Meeting of the Company held on 25 August 2022,
the prior sanction of shareholders was sought to the
borrowing limit being exceeded and subject to a new
higher borrowing limit of the higher of £500 million
and an amount equal to five times the aggregate of
(i)the amount paid up on the issued share capital of the
Company; and (ii) the total of the capital and reserves
of the Group.
I am pleased to report that the ordinary resolution
tosanction the borrowing limit being exceeded and
toapprove an increased borrowing limit was passed
with 99.98% votes in favour.
Annual General Meeting
The 2022 AGM will be held at Building C, Central
Park, Northampton Road, Manchester M40 5BP on
16November 2022 at 2.00pm.
Each ordinary share of the Company carries one vote at
General Meetings of the Company. Any ordinary shares
held in treasury and the B Shares have no voting rights.
A shareholder entitled to attend, speak and vote at
a General Meeting may exercise their right to vote in
person, by proxy, or in relation to corporate members,
by corporate representatives. To be valid, notification of
the appointment of a proxy must be received not less
than 48 hours before the General Meeting at which the
person named in the proxy notice proposes to vote.
As a Board, we have adapted to reflect the changing
times we have all experienced. We would like to thank
our colleagues, suppliers, investors, lender group and
customers for their continued support during this
period of economic uncertainty. As we look forward
to the future, I believe that your Board has the right
balance of skills and expertise to continue to support
and challenge management as we strive to deliver the
next chapter of our strategic goals and vision.
Je Nodland
Chairman
Directors’ report
McBride plc Annual Report and Accounts 2022
82
The Board of Directors is collectively responsible
for the long-term success of the Company.
Board of Directors
Appointed to Board:
June 2019
Skills and experience:
Je has eleven years’ experience
in consumer chemicals
manufacturing businesses,
including both private label
and contract manufacturing
activities. He was most recently
President and CEO of one
of North America’s largest
independent manufacturers
of consumer packaged goods
(including branded and private
label products), KIK Custom
Products, retiring in February
2019 after eleven years in the
role. During that time Je led the
fi nancial turnaround and growth
of the business both organically
and via acquisition.
Previously, Je held executive
positions at specialty chemical
businesses including Hexion
Speciality Chemicals, Inc.,
McWhorter Technologies and
The Valspar Corporation, with
responsibility for activities at a
number of chemical plants in
Europe.
Other roles:
Independent Non-Executive
Director of EcoSynthetix. He
is also a board member of
the Augsburg University in
Minneapolis, Minnesota, USA and
Pioneer Recycling Inc.
Committees:
Appointed to Board:
January 2015
Skills and experience:
Chris joined the Company in
2015 as Chief Financial O cer.
During the period 22 July2019
to 1 November 2019 he held
the position of Interim Chief
Executive O cer and on
11June2020 he was appointed
Chief Executive O cer.
Chris’s career spans over
30 years working in listed
manufacturing businesses
in highly competitive global
industries. He brings extensive
experience of international
leadership in multi-site and
multi-country organisations,
covering mostly the UK, Europe
and Asia Pacifi c. From 2008 to
2014, Chris was Group Finance
Director at API Group plc, the
AIM-listed specialty metallic
fi lm, foil and laminates producer.
Other previous roles have
included Scapa plc, where he
was Finance and IT Director
for Europe & Asia and also a
number of senior fi nance roles
at Courtaulds plc, where he
gained extensive international
experience, including overseas
positions based in Germany and
Hong Kong.
Appointed to Board:
January 2021
Skills and experience:
Mark has operated at the
C-Suitelevel for more than
25years, possessing extensive
and hands-on fi nance
experienceacross chemicals,
logistics, retail/own label food
businesses, B2B/B2C services,
insurance and fi nancial services.
More recently, Mark has been
involved in a number of business
turnarounds/transformations
and has delivered a number of
successful private equity exits
(having worked with CBPE,
Apollo and Promethean).
Immediately prior to joining
McBride plc, he was Interim Chief
Financial O cer at The AA plc.
Mark has an MBA from
Manchester Business School and
is a Fellow member of CIMA.
Appointed to Board:
February 2013
Skills and experience:
Steve brings extensive
experience of independent
Board-level scrutiny, having
held a number of positions as
Chairman and Non-Executive
Director in listed companies
during his career, as well as
senior executive positions both
internationally and in the UK.
Steve brings diversity of style,
skill and experience, which
makes him ideally suited for
the role of Senior Independent
Director, ensuring a challenging
mindset when setting and
monitoring implementation of
the Group’s strategy.
Steve’s previous positions have
included Chairman of Aviagen
International Inc, Non-Executive
Director of Clariant AG and AZ
Electronic Materials Services
Limited, Group Chief Executive
of BTP Chemicals plc and, most
recently, Chairman of Devro plc
and Senior Independent Director
of Low & Bonar plc.
Committees:
Je Nodland
Chairman
Steve Hannam
Senior Independent
Non-Executive Director
Chris Smith
Chief Executive O cer
Mark Strickland
Chief Financial O cer
Directors’ report
McBride plc Annual Report and Accounts 2022
83
Appointed to Board:
November 2019
Skills and experience:
Elizabeth has extensive
experience within the consumer
goods and retail sectors,
including senior management
roles in operations and
marketing at Colgate Palmolive
and Tesco. This, combined
with her strong non-executive
experience, makes her an
excellent addition to the Board.
Elizabeth is currently Senior
Independent Director at Unite
Group plc, a Non-Executive
Director of Dalata Hotel
Groupplc, Senior Independent
Director of property investment
trust Custodian REIT plc and
a Non-Executive Director
of private company Fresca
Group, where she chairs the
Audit Committee. Her past
appointments include Senior
Independent Director at
J.D. Wetherspoon plc and
Remuneration Committee
chairat Flybe plc.
Other roles:
Senior Independent Director
and Remuneration Committee
Chair of Unite Group plc,
Non-Executive Director and ESG
Committee Chair of Dalata Hotel
Group plc, Senior Independent
Director at Custodian REIT plc,
Non-Executive Director and
Chair of the Audit Committee
ofFresca Group.
Committees:
Appointed to Board:
2 August 2021
Skills and experience:
Alastair, a chartered
management accountant, brings
a strong fi nancial background,
having operated as Chief
Financial O cer of Premier
Foods plc until August 2019.
Alastair has recent and relevant
fi nancial experience across a
number of listed companies,
including Premier Foods plc,
Dairy Crest plc and The Body
Shop International plc. As well as
a background in fi nance, Alastair
has signifi cant experience in
corporate strategy, restructuring
and M&A.
Other roles:
Independent Member of the
Audit and Risk Committee for
the Department for Education.
Committees:
Appointed to Board:
June 2019
Skills and experience:
Igor brings a strong background
in fi nance, operational e ciency
and strategy. He has more
than 15 years’ experience as an
investor in mid-sized European
companies. He also has
experience as a management
consultant advising multinational
corporations across various
industries.
In 2013, Igor co-founded Teleios
Capital Partners. Teleiosis an
investment fi rm that acquires
ownership positions in European
public companies, seeking
to help them maximise their
long-term potential by working
constructively with management
and other shareholders. Prior
to Teleios, he was a Partner at
the investment fi rm Octavian
Advisors and a management
consultant for McKinsey &
Company.
Other roles:
Managing Partner of Teleios
Capital Partners GmbH.
Committees:
Appointed to Board:
14 March 2022
Skills and experience:
Regi has extensive leadership
experience in global fast-moving
consumer goods. She has held
Regional General Manager and
Vice President positions with
Procter & Gamble (P&G) in
Europe, Asia, the Middle East
and Africa. She fi rst joined
P&G in the Nordics within the
laundry and cleaning sector. Regi
is currently a Non-Executive
Director at the Ontex Group
and at several tech start-ups in
Switzerland, where she resides.
She also works as an adviser to
private equity companies and as
a coach.
Regi holds a Master of
BusinessAdministration from the
University of Michigan, USA.
Regi has previously held
Non-Executive Director positions
at Telenor ASA, Geberit AG and
as chair of aninternational NGO.
Other roles:
Regi is a Non-Executive
Directorat Ontex Group NV,
Gmelius SA and Plair SA.
Committees:
Elizabeth McMeikan
Independent
Non-ExecutiveDirector
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Chair
Igor Kuzniar
Non-Executive Director
Alastair Murray
Independent
Non-Executive Director
Regi Aalstad
Independent
Non-ExecutiveDirector
Directors’ report
McBride plc Annual Report and Accounts 2022
84
Compliance with the UK Corporate
Governance Code 2018
The Board is pleased to report that the Company has applied the Principles and complied with the Provisions of the
UK Corporate Governance Code 2018 for its financial year ended 30 June 2022, except in relation to Provision6,
which states ‘there should be a means for the workforce to raise concerns in confidence and – if theywish –
anonymously’. However, a new, externally supported Whistleblowing Reporting Line was introduced in June 2022,
which complies with the EU Whistleblower Directive as far as this has been transposed into national law by the
relevant countries. Further work to promote and improve understanding of the Whistleblowing Reporting Line
within the Group is underway.
The table below provides a guide to the most relevant explanations for how the Company has complied with
eachPrinciple.
Board leadership and Company purpose Page reference
A. An eective and entrepreneurial Board promotes the long-term sustainable success of the Company,
generating value for shareholders and contributing to wider society.
B. Purpose, values and strategy are set and align with culture, which is promoted by the Board.
C. Resources allow the Company to meet its objectives and measure performance. A framework of
controls enables assessment and management of risk.
D. Engagement with shareholders and stakeholders is eective and encourages their participation.
E. Oversight of workforce policies and practices ensures consistency with values and supports long-term
sustainable success. The workforce is able to raise matters of concern.
pages 1 to 79, 82
to 83 and 86 to 91
pages 12 to 15, 48,
85 to 91 and 109
pages 55, 67, 71 to
79, 103 and 104
pages 38 to 41 and
85 to 86
pages 39, 48 to
53, 85 to 86 and 91
Division of responsibilities Page reference
F. The Chairman is objective and leads an eective Board with constructive relations.
G. The Board comprises an appropriate combination of Non-Executive and Executive Directors, with a
clear division of responsibilities.
H. Non-Executive Directors commit appropriate time in line with their role.
I. The Company Secretary and the correct policies, processes, information, time and resources support
Board functioning.
pages 81, 82 to 83
and 88 to 91
pages 80 to 83
and 89
pages 91, 92, 98
and 105
pages 86 to 87
and 91 to 93
Composition, succession and evaluation Page reference
J. There is a procedure for Board appointments and succession plans for Board and senior management
which recognise merit and promote diversity.
K. There is a combination of skills, experience and knowledge across the Board and its Committees.
Tenure and membership are regularly considered.
L. Annual evaluation of the Board and Directors considers overall composition, diversity, eectiveness
and contribution.
pages 80 and 91
to 97
pages 82 to 83, 88,
90 and 92 to 97
pages 81and 95
Audit, risk and internal control Page reference
M. Policies and procedures ensure the independence and eectiveness of internal and external audit
functions. The Board satisfies itself of the integrity of financial and narrative statements.
N. A fair, balanced and understandable assessment of the Company’s position and prospects is
presented.
O. Procedures manage and oversee risk, the internal control framework and the extent of principal risks
the Company is willing to take to achieve its long-term strategic objectives.
pages 98 to 103
pages 1 to 79, 104
and 136 to 203
pages 71 to 78, 87
and 98 to 104
Remuneration Page reference
P. Remuneration policies and practices are designed to support strategy and promote long-term
sustainable success, with executive remuneration aligned to Company purpose, values and strategic
delivery.
Q. A transparent and formal procedure is used to develop policy and agree executive and senior
management remuneration.
R. Independent judgement and discretion is exercised over remuneration outcomes taking account of the
relevant wider context.
pages 106 and 108
to 118
pages 106, 108 and
109
pages 106 and 108
to 118
The Code is published by the Financial Reporting Council, a full copy of which can be viewed on its
website www.frc.org.uk
Directors’ report
McBride plc Annual Report and Accounts 2022
85
Corporate governance statement
Board leadership and Company purpose
Introduction
In this Annual Report we report on how we have applied
the main Principles of the 2018 Code and followed its
recommendations. A cross-referencing table to each
Code Principle can be found on page 84.
The Directors’ report complements the Strategic report
and explains how the Board operates in support of
fulfilling McBride plc’s purpose. The Board’s role is
promoting the Group’s long-term success; setting its
strategic aims and values; supporting leadership to
put them into eect; supervising and constructively
challenging leadership on the operational running of the
business; ensuring a framework of prudent and eective
controls; and reporting to shareholders on the Board’s
stewardship. We trust that the Strategic and Directors’
reports together enable our stakeholders to assess the
eectiveness of those frameworks and the quality of
their outcomes.
Business model, strategy and risks
Strategy
Throughout the year, the Board’s focus shifted to
immediate short-term margin recovery actions. Despite
this, the divisional business teams still managed to
develop and mature over the year in line with our
strategy, Programme Compass. As a Board, we reviewed
the strategic direction of each division during the year.
The review confirmed the Compass approach, divisional
organisation and the strategic direction of each division,
whilst rearming the fact that our purpose, vision
and values continue to set the right objectives for the
Group. On pages 42 to 55 we explain our approach
to enhancing the sustainability of our business, whilst
outlining some of the key initiatives we are taking to
create value for our customers, employees, shareholders
and society. Further details on strategic topics assessed
by the Board during 2022/23 can be found on page 87.
Purpose, values and culture
McBride plc’s purpose, values and strategy, Programme
Compass, have sustainability at their heart. Whilst we
operate through five divisions, we have a single vision and
purpose and common values. Our guiding principles of
focused profitable growth, backed by eective execution
and a strong McBride plc identity, provide strategic
direction towards achieving our vision and purpose and
achieving long-term sustainable success. As explained
in the Strategic report, to fulfil our commitment to our
stakeholders to govern responsibly, we need to ensure
that we have a full understanding of the impact of our
products and the way we conduct business, on people
and the environment. Our sustainability framework is
therefore based around four objectives:
• product and design;
• production and operations;
• our people; and
• community and society.
McBride plc continues to encourage a sense
ofbelonging and employee engagement to ensure
a motivated and productive workforce. We are
continuing to focus on the development of our people
and on promoting a diverse and inclusive culture.
Themeasurements the Board uses to evaluate culture
are evolving and include senior leaders’ pulse surveys
and monitoring HR statistics such as absenteeism,
employee turnover, learning and development
completion rates and safety incidents. Some of these
are already part of ournon-financial KPIs as set out in
the Strategic report.
Stakeholder engagement
The Board is aware of its obligations both collectively
and individually to promote the success of the Company
for the benefit of its stakeholders as a whole: its
workforce, its customers, its suppliers, its shareholders
and its communities. Having an overall understanding
of our stakeholders’ perspectives and values, and
considering them in our decision-making and planning,
is crucial to the Group’s continued success and we
value their broad range of perspectives. Comprehensive
engagement allows us to make informed decisions,
while taking into account the consequences of our
actions on the dierent stakeholder groups. The Board
is mindful of all of the Group’s stakeholders when
making decisions of strategic importance.
Workforce engagement
In accordance with Provision 5 of the 2018 UK Corporate
Governance Code, the Board appointed SteveHannam,
Senior Independent Director, as the dedicated
Non-Executive Director for workforce engagement.
When Steve steps down from the Board in
November2022, Regi Aalstad will take on the role
of dedicated Non-Executive Director for workforce
engagement andcontinue with the good work that
Steve started.
During the year, the Board visited a number of the
Group’s manufacturing plants and spent time with our
colleagues. Engaging with the workforce, both formally
and informally, is a priority for the Board to ensure that
we are aware of the views of the workforce and can
address any concerns they may have.
Directors’ report
McBride plc Annual Report and Accounts 2022
86
Corporate governance statement continued
Board leadership and Company purpose continued
Stakeholder engagement continued
Customer engagement
Engagement with customers is at operational level.
The Board receives regular updates from the CEO
and members of the senior management team on
sales performance and customer metrics. Updates
are also shared in relation to evolving relationships
with customers as we respond to market conditions.
During the course of the year, there have been global
challenges with raw material price increases, availability
of certain raw materials and packaging, together with
distribution and wider macroeconomic supply chain
issues. Engagement with our customers has been
vital at these times to ensure that we were able to
agree price increases with our customers that would
reduce the impact of raw material price increases
whilst still fostering a good working relationship with
our customers. These updates assist the Board in
developing and maintaining its understanding of any
potential issues and how these could be addressed.
Supplier engagement
Further details on engagement with our suppliers can
be found on page 40.
Communities
The Board is conscious of the need to positively
impactthe communities living and working around us
by providing employment within our communities and
by our increased focus on ESG initiatives. Further details
of engagement within our communities can be found
onpage 41.
Shareholder engagement
The Board recognises the importance of regular, open
and constructive dialogue with shareholders throughout
the year. The Board welcomes the opportunity to openly
engage with shareholders and help them understand
our business. Details of engagement with shareholders
can be found on page 41.
Case study
Dialogue between the Board and
employees is achieved through
dierent forums. Face-to-face
discussions during site visits as well as
frequent interaction with the divisional
leadership teams have proved
eective this past year.
As soon as coronavirus restrictions were lifted, the Board took the
opportunity to reconnect in person, visiting the sites in Middleton,
UKandEstaimpuis, Belgium. More site visits are planned, to enable the
Board to build an appreciation of our colleagues’ experience of their
working environment and how this diers by site.
The site visits provided the opportunity for informal discussions and
deeper two-way dialogue between Board members and individual
colleagues working in the manufacturing facilities and in roles such as
R&D and H&S.
Meetings with divisional leadership teams provided the Board with
theopportunity to interact with employees in various roles from
diverse geographies, providing insight of the challenges of day-to-day
life in McBride.
A meeting with the European Works Council employee representative
spokesperson provided the Board with greater appreciation of the
issues of importance to the workforce.
Directors’ report
McBride plc Annual Report and Accounts 2022
87
Board activity in 2022
Below is a non-exhaustive list of areas of focus, actions and decisions taken by the Board during the year.
Governance
and risk
15%
Trading, financial and
operational performance
38%
Strategic development
opportunities
32%
Market and economic
environment
15%
Market and economic environment
Matters considered • Pricing indexation reviews
• Review of trading in Russia
• Sales and pricing activity reviews
• Purchasing performance and feedstock forecasts
• Forward outlook for FX and interest rates
• Market and customer development updates
• Competitor activity analysis
• Raw material market updates
Strategic development opportunities
Matters considered • Key operational project progress reviews, including
major capital expenditure investment proposals
• Business excellence initiative review
• Review of talent strategy
• Overseeing strategic implementation
• Programme Compass – review of divisional
strategies and organisational strategy
Trading, financial and operational performance
Matters considered • Reviewed the funding and management of the
defined benefit pension scheme
• Considered the share price performance
• Covenant waiver
• Banking and liquidity reviews
• Approval of amendment to revolving credit facility
• Considered the impact of raw material price
increases on the business
• Reviewed customer price increase progress
• Divisional trading reports
• Financial management and performance
• Approval of budget
• Banking, tax and treasury strategy and
policy reviews
• Review and approval of five-year plans
• Approval of full-year and half-year announcements
and other trading updates
• Annual Report and Accounts review and approval
• Consideration of shareholder views and analyst
expectations
Governance and risk
Matters considered • Approval of the modern slavery statement
• Received updates from the Audit and Risk
Committee,Nomination Committee and
Remuneration Committee
• Approved the 2022 Annual Report and Accounts
• Approved the risk appetite framework
• Approved Committee Terms of Reference
• Litigation updates
• Corporate governance horizon scanning
• Approved the appointment of Non-Executive
Director, Regi Aalstad
• Approved the business to be considered at
the 2022 AGM
• Insurance programme renewal
• Corporate policies review and approval
• Health and safety updates
• Directors’ duties training
• Approved the business to be considered
atthe2022General Meeting
Directors’ report
McBride plc Annual Report and Accounts 2022
88
Corporate governance statement continued
Division of responsibilities
The Board
The Board has collective responsibility for leading
theGroup and promoting its long-term success.
Ithasthe prime role of confirming the Group’s
purposeand vision and agreeing a sustainable strategy
that supports its purpose. It is responsible for setting
cultural expectations that drive ethical and responsible
business conduct.
As of 30 June 2022, the Board of Directors comprised
the Non-Executive Chairman, four independent
Non-Executive Directors, one non-independent
Non-Executive Director, representing McBride plc’s
largest shareholder, and two Executive Directors.
Additional responsibilities assigned to certain
Non-Executive Directors are explained on page 89.
The composition of the Board is subject to review and is
a responsibility delegated to the Nomination Committee.
Details of the tenure, gender, nationality and relevant
experience of Board members are set out below.
Board Committees
The Board is directly assisted in the discharge of its
duties by three Board Committees: the Nomination
Committee, the Audit and Risk Committee and the
Remuneration Committee. The remit, authority and
composition of the Committees is monitored to ensure
eective Board support. Each Committee provides
dedicated focus to a defined area of responsibility
with the nature of delegated work ranging from a
recommendation being made to the Board or, if within its
agreed authority, a final decision being taken on behalf
of the Board. Further information on the specific role of
each Committee is set out in their respective reports on
pages 92 to 131.
The Audit and Risk Committee
The Board has established an Audit and Risk Committee
of independent Non-Executive Directors. The Audit
and Risk Committee is responsible for monitoring the
integrity of the financial statements, reviewing the
eectiveness of internal controls and risk management
systems, and overseeing the relationship with the
independent auditor.
Details of its composition and work during the year
are set out in the Audit and Risk Committee report
on pages 98 to 104. The Board is satisfied that the
Chair of the Audit and Risk Committee has recent and
relevant financial experience including competence
inaccounting.
The Remuneration Committee
The Board has established a Remuneration Committee,
the composition and role of which is set out in the
Remuneration report. The Remuneration Committee
ensures that the remuneration policies and practices
are designed to support the Company’s strategy and
promote long-term sustainable success. Further details
of the work of the Remuneration Committee throughout
the year can be found on pages 106 and 107.
The Nomination Committee
The Board has established a Nomination Committee.
The Nomination Committee is responsible for setting
out and monitoring the Board’s succession plans,
reviewing composition and diversity of the Board and
proposing new appointments to the Board. Further
detail of the composition of the Nomination Committee
and its work during the year can be found on pages 92
to 97.
Operational management
The management of the Group’s business activities is
delegated to the Chief Executive Ocer (CEO), who
is ultimately responsible for establishing objectives
and monitoring executive actions and for the
overall performance of the business. The day-to-day
management and global governance of the business
isdelegated to members of the Executive Committee
on a structured functional basis.
As at 30 June 2022, the membership of the Executive
Committee comprised the Chief Executive Ocer,
the Chief Financial Ocer, the Divisional Managing
Directors of the three largest divisions, namely Liquids,
Unit Dosing and Powders, the Chief HR Ocer and the
Chief Legal Ocer and Company Secretary.
Board composition as at 30 June 2022
Tenure
0-5 years 6
6-8 years 1
8+ years 1
Gender
Male 6
Female 2
Relevant experience
Manufacturing 5
Retail 2
Chemicals 2
Finance 5
Nationality
Norwegian 1
Swiss 1
American 1
British 5
Directors’ report
McBride plc Annual Report and Accounts 2022
89
Roles within the Board
The roles of the Chairman and the Chief Executive Ocer are separate and there is a clear division of responsibility
between the executive and non-executive members of the Board. Details of these responsibilities are set out below:
Chairman of the Board
Responsible for:
• overall leadership and governance of the Board,
ensuring it operates eectively in terms of agenda
setting, information management, induction,
development and performance evaluation;
• maintaining a focus on strategy, performance and value
creation and the assessment of significant risks in the
implementation of strategy;
• ensuring the Board as a whole has a clear
understanding of shareholder, customer and workforce
views;
• promoting a healthy culture of challenge and debate
at Board and Committee meetings and encouraging
constructive debate and decision-making;
• fostering eective relationships and open
communication between all Directors;
• ensuring both Board and shareholder meetings are
properly conducted; and
• developing a supportive working relationship with the
Chief Executive Ocer.
Chief Executive Ocer
Responsible for:
• eective leadership and development of the executive
management team and operational running of the
Group;
• developing and implementing the Group’s business
model and strategy;
• eectively communicating the Group’s strategy and
performance; and
• building positive relationships by engaging
appropriately with all internal and external stakeholders.
Chief Financial Ocer
Responsible for:
• deputising for the Chief Executive Ocer;
• proposing policy and actions to support sound financial
management, including in relation to funding and
netdebt;
• leading the Finance, Tax, Treasury and IT functions;
• leading on mergers and acquisitions; and
• overseeing the defined benefit pension scheme.
Senior Independent Director
Responsible for:
• providing a sounding board for the Chairman and acting
as an intermediary between other Directors when
necessary;
• evaluating the performance of the Chairman on behalf
of the Directors; and
• being available to shareholders, where contact through
the Chairman or Executive Directors is not appropriate.
Company Secretary
Responsible for:
• compliance with Board procedures and supporting the
Chairman of the Board;
• ensuring the Board has high-quality information,
adequate reading time and the appropriate resources;
• advising and keeping the Board updated on corporate
governance developments;
• considering Board eectiveness in conjunction with the
Chairman;
• facilitating the Directors’ induction programmes and
assisting with professional development; and
• providing advice, services and support to the Directors
as and when required.
Non-Executive Directors
Responsible for:
• providing the skills, experience and knowledge toassist
the Board’s decision-making;
• challenging and assisting with developing and
establishing objectives and monitoring the Group’s
business model and strategy;
• measuring and reviewing the performance of the
Executive Directors;
• providing independent insight and support and advice
to the Executive Directors;
• reviewing Group financial information and overseeing
the eectiveness of the Company’s internal controls;
• reviewing succession plans for Board Directors and
senior managers and supporting inclusion and diversity;
and
• setting policy in respect of Executive Director
remuneration.
Directors’ report
McBride plc Annual Report and Accounts 2022
90
Corporate governance statement continued
Division of responsibilities continued
How the Board operates
Boardroom culture
The Board recognises the importance of establishing
the right culture and values and communicating this
message consistently throughout the organisation.
It is important that the Board provides strong and
eective leadership, constructive challenge and accepts
collective accountability for the long-term sustainable
success of the Group. In so doing, it will continue to
drive and deliver our strategy in the best interests of
allour stakeholders.
A strong feature of the Board’s eectiveness in
delivering the Group’s strategy is our inclusive and open
style of interaction which benefits from a free flow of
information between the Executive and Non-Executive
Directors. The size of our Board encourages Directors
to discuss matters openly and freely and to make
individual contributions through the exercise of their
personal skills and experience. No one individual has
unfettered powers of decision-making.
All Directors communicate with each other on a regular
basis and contact with the Group’s senior managers is
sought and encouraged. In-person Board meetings have
been held at various site locations across the Group in
2021/22.
Independence
All Non-Executive Directors have been appointed
fortheir specific areas of knowledge and expertise.
They are independent of management and exercise
their duties in good faith based on judgements
informed by their personal experience. This ensures
that matters can be debated constructively in relation
to both the development of strategy and assessment
ofperformance against the objectives set by the Board.
In line with the 2018 Code, the Board has determined
that Igor Kuzniar is not considered independent as he
is an appointed representative of McBride plc’s largest
shareholder, Teleios Capital Partners GmbH.
Despite the long tenure of Steve Hannam, the Board
resolved that Steve remains independent at the date of
this report and would continue to serve on the Board
until the 2022 AGM to allow the new Board members to
become accustomed with the business.
It is believed that the balance between non-executive
and executive representation continues to encourage
healthy independent challenge.
Powers of Directors
The powers of the Directors are determined by the
Articles of Association (‘Articles’), which are available
on our website, UK legislation, including the Companies
Act 2006, and any directions given by the Company in
a General Meeting. The Directors are authorised by the
Company’s Articles to issue and allot ordinary shares
and to make market purchases of its own shares. These
powers are referred to shareholders for renewal at each
AGM. Further information is set out on page 133 of the
Directors’ report.
The appointment and replacement of Directors is
governed by the Company’s Articles, the 2018 Code,
theCompanies Act 2006 and related legislation.
The Directors may from time to time appoint one
or more Directors. As required by the Articles, any
Director appointed during the year will be required to
step downand stand for re-election at the next Annual
General Meeting.
Any amendments to the Articles can only be made by
special resolution at a General Meeting of shareholders.
Subject to the Articles and the Companies Act 2006
and any directions given by special resolution, the
business of the Company is managed by the Board who
may exercise all the powers of the Company.
Conflicts of interest
In line with the Companies Act 2006 and the Articles,
the Company has a strict process in place to manage
conflicts of interest.
A Director who becomes aware that they or their
Connected Persons have an interest in an existing or
proposed transaction with the Company is required
to declare that interest at a meeting of the Board.
Suchdisclosures are recorded and compliance
reviewedat each meeting. Under the powers granted
by the Articles, the Board is authorised to approve
suchconflicts where appropriate.
During the period to 30 June 2022, the Board
authorised Igor Kuzniar’s conflict of interest as an
appointed representative of McBride plc’s largest
shareholder, Teleios Capital Partners GmbH.
No Director had a material interest at any time in any
contract of significance with the Company other than
their service contract or letter of appointment.
Re-election of Directors
The Board is satisfied that all the Directors standing
for re-election perform eectively and demonstrate
commitment to their roles. This has been demonstrated
during the year by the willingness of the Directors
to attend additional Board meetings as well as from
the general support they have given to the Executive
Directors and senior managers. When appropriate,
any changes to the commitments of any Director are
considered in advance by the Board to ensure they are
still able to fulfil their duties satisfactorily.
Although the Articles require the Directors to submit
themselves for re-election at every third AGM, in line
with the requirements of the 2018 Code, all Directors
aresubject to annual re-election at the AGM.
The biographies for each Director seeking re-election
are set out on pages 82 and 83 of the 2022 notice
of meeting. These provide details of the skills and
experience which demonstrates why each Director’s
contribution is, and continues to be, important to the
Company’s long-term sustainable success.
Directors’ report
McBride plc Annual Report and Accounts 2022
91
The Board, its Committees and the individual
Directorsparticipate in an annual performance
evaluation. Furtherdetails of the performance
evaluation process can be found in the Nomination
Committee report on pages 92 to 97.
Theperformance evaluation process confirmed
thecontinuing independent and objective judgement
of all the Non-Executive Directors. Theprocess also
confirmed that the performance of all the current
Directors standing for re-appointment and appointment
continued to be eective and that they continue to
demonstrate commitment in their respectiveroles.
Policies
Whilst the Board takes overall responsibility for
approving Group policies, including those relating to
business ethics, health and safety, environmental matters,
anti-bribery and corruption, and whistleblowing, their
implementation is delegated to the Chief Executive
Ocer and cascaded throughout the organisation via the
Executive Committee and the various functional teams.
Attendance at meetings year ended 30 June 2022
Number of scheduled Board meetings held: 7
Members of the Board
Number of
scheduled
meetings
attended
Eligible to
attend
Je Nodland
Chairman 7 7
Chris Smith
Chief Executive Ocer 7 7
Mark Strickland
Chief Financial Ocer 7 7
Regi Aalstad
(2)
Independent
Non-Executive Director 2 2
Steve Hannam
Senior Independent
Non-Executive Director 7 7
Neil Harrington
(1)
Independent
Non-Executive Director 2 2
Igor Kuzniar
Non-Executive Director 7 7
Elizabeth McMeikan
Independent
Non-Executive Director 7 7
Alastair Murray
(2)
Independent
Non-Executive Director 6 6
(1) To date of resigning as a Director.
(2) From date of joining Board.
Time commitment
The expected time commitment of the Chairman and
Non-Executive Directors is agreed and set out in writing
in the letters of appointment confirming their position.
The existing demands on a Non-Executive Director’s
time are assessed on appointment to confirm their
capacity to take on the role. The Nomination Committee
reviews Directors’ external commitments annually
to ensure they still have sucient capacity to fulfil
their role. Further appointments which could impair
their ability to meet these arrangements can only be
accepted following approval by the Board. Thetaking
on of any external appointment by an Executive
Director is subject to Board consent.
There were seven scheduled meetings in the year to
30June 2022. Scheduled meetings of the Board follow
an agreed format, with agendas developed by the
Chairman, Chief Executive Ocer and Company
Secretary who consider the Board’s annual plan of
business and the current status of projects, strategic
workstreams and overarching operating content.
Adequate time is allocated to support eective and
constructive discussion of each item. An electronic
resources portalallows ecient navigation of
Boardpapers.
Board and other meetings
Board papers are prepared and issued prior to each
Board meeting to allow Directors sucient time to
givedue consideration to all matters. Directors are able
to take independent professional advice, if necessary,
atthe Company’s expense.
The Board holds a minimum of seven meetings a year
at regular intervals. Additional meetings are held as
required. During the last few months of the financial
year 2022 the Board convened additional meetings
toreceive and consider financial updates, and updates
on progress with the Company’s pricing initiatives.
These meetings have continued into the financial
year2023.
From time to time, the Board authorises the
establishment of an additional committee or
sub-committee to consider and, if thought fit, approve
certain items of business.
During the year, the Non-Executive Directors have met
without Executive Directors being present after each
scheduled Board meeting. The Senior Independent
Director and the Non-Executive Directors have also
conversed by telephone without the presence of
the Chairman as part of the Board performance
evaluationexercise.
The Corporate governance statement was approved
by the Board on 29 September 2022 and signed on its
behalf by:
Je Nodland
Chairman
Directors’ report
McBride plc Annual Report and Accounts 2022
92
Nomination Committee report
Composition, succession and evaluation
The Committee focused on the appointment of a new
Non-Executive Director in line with the succession plans for
Steve Hannam and continued to strive towards greater diversity
on the Board and at a senior level within the business.
Dear shareholder
On behalf of the Nomination Committee, I am pleased
to present the Nomination Committee report for the
year ended 30 June 2022.
The Committee’s key objective is to ensure that the
Board comprises individuals with the appropriate skills,
knowledge, experience and diversity to ensure that
McBride plc can fulfi l its purpose, achieve its vision
andexecute its strategy.
On 14 March 2022, we welcomed Regi Aalstad to the
Board. Regi brings with her a wealth of knowledge in
the fast-moving consumer goods sector and strong
experience as a Non-Executive Director. She has already
brought signifi cant value to the Board, and we look
forward to the contribution she will make to enrich
ourBoard discussions.
Elizabeth McMeikan has agreed to take on the role of
Senior Independent Director following Steve Hannam
stepping down at the 2022 AGM. Elizabeth already has
strong experience as a Senior Independent Director so
we are confi dent that she will excel in this role.
Committee membership and meetings 2021/22
The Committee held two scheduled meetings during
the year. Details of attendance by all members at
scheduled meetings can be found below:
Members
Number of
meetings
attended
(quorum is
three members)
Eligible
to attend
Je Nodland (Chair) 2 2
Regi Aalstad — —
Steve Hannam 2 2
Igor Kuzniar 2 2
Elizabeth McMeikan 2 2
Alastair Murray 2 2
Je Nodland
Chair of the Nomination Committee
Directors’ report
McBride plc Annual Report and Accounts 2022
93
As announced on 18 February 2022, Steve Hannam will
be stepping down from the Board immediately following
the Annual General Meeting on 16 November2022.
TheBoard would like to thank Steve for his wise counsel
and guidance over the last nine years. Steve’s insight
and contribution to discussions have been invaluable
to both the Board and the business, from which we
will continue to benefit until the AGM. The Committee
extended Steve’s term of appointment in February2022
to allow Regi time to settle into her role whilst he
continued to provide experienced advice.
Composition of the Nomination Committee
I chair the Nomination Committee and I was regarded
as independent on appointment. I will not chair the
Committee when it is dealing with matters of succession
to the Chairmanship of the Board. The Committee
also comprises four other independent Non-Executive
Directors, Steve Hannam, Elizabeth McMeikan, Alastair
Murray and Regi Aalstad, and one non-independent
Non-Executive Director, Igor Kuzniar, representing our
largest shareholder.
Further details on our key responsibilities can be found
inour Terms of Reference at www.mcbride.co.uk
Induction, development and support
On appointment, all new Directors undergo formal
and in-depth induction programmes to provide them
with an appropriate understanding of the business and
what is expected of them in their role as a director. This
involves site visits, meetings with senior management
and provision of access to key documents relating to
their role. External training may also be provided by
independent legal advisers in relation to the key duties
ofDirectors and required governance principles.
In March 2022 Regi Aalstad joined the Board. The Chief
Executive Ocer and Company Secretary assisted the
Chairman with the preparation and delivery of a tailored
comprehensive induction programme, designed to give
Regi a thorough overview and understanding of our
business, with a focus on purpose, strategy and wider
business objectives. The induction sessions were mainly
face to face, complemented by visits to our Middleton
and Manchester sites, which involved a factory tour,
meetings with senior management and the wider
workforce and a meeting with the Company Secretariat.
The Board recognises the importance of ongoing training
and development to ensure Directors have the skills and
knowledge to discharge their duties eectively. This can
take the form of briefing papers and/or presentations
on strategic, regulatory and legislative developments
and other topics of specific relevance to ensure that the
Directors continually update their knowledge of, and
familiarity with, the Group’s business and the markets
in which we operate. During the year, the Board was
provided with external training on directors’ duties and
the market abuse regulations.
All Directors have access to the Company Secretary,
who is responsible for ensuring that Board procedures
are followed and that the Company complies with all
applicable rules, regulations and obligations governing
itsoperations.
Key responsibilities of the Nomination Committee
Board composition
• Review the ongoing composition of the Board and
its Committees to ensure they have the necessary
expertise to discharge their role now and in the future.
• Lead the appointment process for new Directors.
Succession planning and talent management
• Ensure adequate plans are in place for eective
succession planning at management and Board level.
• Review the measures in place for the development
and retention of senior management.
Diversity and inclusion
• Ensure a balance of skills, knowledge, experience and
diversity on the Board.
• Encourage diversity throughout the Group and
oversee a diverse pipeline for succession.
• Review the Board’s monitoring of diversity and
inclusion initiatives to ensure compliance with the
Board’s policy.
Governance
• Oversee the Board performance and evaluation
process.
• Agree an action plan addressing the results of the
annual performance evaluation process.
Directors’ report
McBride plc Annual Report and Accounts 2022
94
Nomination Committee report continued
Composition, succession and evaluation continued
Committee activities
Our principal activities during 2021/22 and up to the date of approval of this Annual Report were as follows:
Board composition Discussed and recommended proposed changes to the Board of Directors.
Non-Executive Director
recruitment
Oversaw the search and appointment for new Non-Executive Director,
Regi Aalstad.
Re-election of Directors After considering the individual contributions made by the Directors, recommended
to the Board that all Directors be proposed for re-election at the 2022 AGM, other
than Steve Hannam who is not standing for re-election.
Review of performance
and eectiveness during
2020/21
Undertook a review of the Board and the Committee’s performance and
eectiveness as part of the Board evaluation.
Conflicts of interest
and independence
Informed the Board of updates to the Conflicts of Interest Register.
Reviewed the independence of all independent Non-Executive Directors.
TheCommittee considered the following when assessing the independence
ofSteveHannam, who has now served over nine years on the Board:
• continuing to provide challenge to the Board and Committees;
• eective workforce engagement as the designated Non-Executive Director for
workforce engagement;
• continuing eectively to act as a sounding board for the Chairman and provide
support to the other Directors where necessary; and
• remaining objective despite deep understanding of the business.
It was agreed that Steve Hannam remains independent, despite serving over nine
years, and would continue to serve on the Board until the 2022 AGM to allow our
new Board member time to become accustomed with the Board.
All other independent Non-Executive Directors were considered to have maintained
independence throughout the year.
External commitments
and Director
performance review
During the year, Je Nodland was appointed to the Board of Pioneer Recycling
Inc. The Committee carefully considered the additional external commitment,
considering his other commitments and the time commitment that each
appointment aorded. The Committee also took into consideration his level of
contribution at Board and Committee meetings. Having carefully considered the
appointment, the Board agreed that Je Nodland continued to be eective as
Chairman and that an additional appointment would not aect this.
The Committee will continue to review the external commitments of each Director
on an annual basis.
The performance of all Directors was assessed during the year and discussed with
the Chairman.
Details of the Directors’ external commitments can be found on pages 82 and 83.
Board Inclusion and
Diversity Policy
Received for review a Board-level policy on inclusion and diversity to ensure the
ongoing relevance of Board membership to a global manufacturing company in
today’s world. The Committee updated the policy to bring it in line with Listing
Rule 9.8.6R(9) that will be applicable to the Company for the financial year ending
30June 2023.
Directors’ report
McBride plc Annual Report and Accounts 2022
95
Board evaluation
As a constituent of the FTSE Fledgling, McBride plc
is not required to conduct an externally facilitated
Board evaluation; however, the Board recognises the
importance and benefits of continually monitoring
the Board’s eectiveness. In May 2022, the Board
conducted an online evaluation, led by the Chairman.
Theevaluation used BoardClic’s online system as the
basis of the review. The respondents consisted of the
Board and the Company Secretary who anonymously
answered questions derived from the BoardClic
question libraries. A report was prepared by BoardClic
based on the results of the self-assessment. No
interviews or document reviews were conducted as part
of this exercise, and the report was based solely on the
information gathered through the questionnaires.
The evaluation covered themes regarding the operation
of the Board, value creation and strategy, talent and
culture, management of risk, Board composition
and dynamics, the Chairman and the Committees.
Subsequently, the Chairman held one-to-one
discussions with each Director to discuss areas of focus
for the year ahead.
The Senior Independent Director, Steve Hannam, also
led a meeting of the Non-Executive Directors (without
the Chairman being present) to appraise the Chairman’s
performance separately to the Board evaluation. Steve
discussed the feedback and any areas of development
with the Chairman.
The Board’s main strengths identified by the evaluation
were:
• the Chairman’s ability to promote open discussion
that leverages the Board’s collective knowledge and
experience;
• a spirit of trust and openness between the Board and
the Executive Committee;
• Director contribution to the formation of strategy;
• making a positive contribution to the organisation;
and
• the eectiveness of the Committees.
Key areas of focus from
our 2021/22 evaluation Actions to be implemented during 2022/23
Value creation
and strategy
More time to be set aside in Board meetings for strategic discussions; to identify
Group strategic priorities and to assess and support the implementation of agreed
strategic objectives.
Talent management
and culture
Continue to engage with employees through site meetings, manufacturing plant
visits and social occasions to provide the Board with better oversight of any issues.
Continue to focus on talent and capability across senior leadership and developing
further bench strength.
Oversight of ESG Oversight of ESG ambitions and targets and how to further embed ESG
intostrategy.
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96
Nomination Committee report continued
Composition, succession and evaluation continued
In 2020/21 the Board approved a formal succession
plan considering the Group’s strategy and structure,
the size and composition of the Board, the terms of
appointment for the current Directors and the skills
and expertise that McBride plc will need going forward.
Short-term and medium-term plans were put in place
for all roles subject to formal succession planning.
The Committee has continued to work towards this
succession plan throughout 2021/22.
Over the next year, the Committee will continue to
review the succession plan to ensure that it continues
to support the development of a diverse pipeline with
particular focus on key senior employees. Where internal
candidates are identified, ongoing development will be
put in place to ensure that they are prepared for the role.
Board appointments
The Committee has overall responsibility for leading
the process for new appointments to the Board and
ensuring that the Board has Non-Executive Directors
with relevant, diverse and complementary skills.
Prior to the appointment of Regi Aalstad, the Board
reviewed the size and composition of the Board.
The Board also took into consideration the recent
appointment of Alastair Murray, who joined the Board
in August 2021 to replace Neil Harrington who stepped
down as a Director and Chair of the Audit and Risk
Committee, and the planned departure of Steve
Hannam as a Director and Senior Independent Director
immediately after the 2022 AGM.
The Nomination Committee was keen to add a
Non-Executive Director with European experience in
the consumer, own label and/or retailing sector and in
due course to promote a current Board Director to the
Senior Independent Director role to oer continuity and
provide the Board with the required depth of experience
of UK listed companies’ governance.
The Board engaged Warren Partners to assist with the
recruitment process. Warren Partners has no other
connection with the Company or its individual Directors.
The candidate specification was drawn up and agreed
with Warren Partners for the European Non-Executive
Director appointment. Besides focusing on specific
knowledge and experience, the brief highlighted the
benefit of all types of diversity, including gender.
The search was led by the Nomination Committee
and co-ordinated by the Chief HR Ocer. Our search
partners, Warren Partners, conducted an extensive
search to identify and engage with a diverse and broad
pool of candidates across the agreed industry sectors.
At the longlist stage, Warren Partners engaged with
13candidates. They included commercial leaders, past
and present, with deep experience in the consumer
products and/or retail sectors in Europe. Every eort
was made to identify and approach suitably experienced
female Non-Executive Directors in the region. Warren
Partners’ research showed that the number of women
on boards in markets such as France, Germany and
Holland are increasing, but only very slowly. There
was also a higher number of women on boards across
the FMCG sector than in retailing. Therewere many
more experienced female Non-Executive Directors in
Scandinavia – with countries such as Norway one of the
first to introduce quotas. Thepicture was much bleaker
for ethnicminorities.
During the search, several candidates based in Europe
had to consider whether they could meet the time
demands of a Non-Executive Director appointment
alongside their executive role and/or factoring the
travel and logistics of flying into Manchester/London
(or indeed other locations). Some needed to seek
the necessary permissions from their Board before
progressing their candidature.
Warren Partners was pleased to present and shortlist
three strong female candidates. This led to the successful
appointment of Regi Aalstad on 14March2022. Regi
brings with her a wealth of knowledge in the fast-moving
consumer goods sector and strong experience as a
Non-Executive Director. Regi is a member of the
Nomination, Remuneration and Audit and
RiskCommittees.
Succession planning
During the year, the Committee continued to develop its succession plan for all Board roles to ensure that
appointments are made of individuals who have the appropriate skills, experience and personal characteristics.
Our succession planning involves the following steps:
5.
Identify those
roles that
are subject
to formal
succession
planning.
4.3.2.1.
Define the skills,
competencies
and experience
required of
individuals
to undertake
thoseroles.
Identify
internal talent
or external
sources
to which
recruitment will
be directed.
Assess the
individuals to
undertake the
roles.
Appoint
Individuals.
Identify those
roles that
are subject
to formal
succession
planning.
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97
Diversity and inclusion
In 2022, the Committee approved a Board Diversity Policy, which sets out a commitment to encourage diversity
and inclusion in the boardroom. The policy sets out to ensure that appointments are based on the best individual
for the role and that the Board’s composition should have an appropriate balance of skills and diversity to meet
the requirements of the business. TheCommittee considers that it has successfully achieved diversity in terms
of diering experience, education, background, thinking styles and gender both on the Board and Executive
Committee. However, the Committee acknowledges it must continue to move forward to embrace all aspects of
diversity. As a global company with manufacturing sites in the EU and Asia, with six non-UK nationals on the Board
and Executive Committee, the Company is well placed to continue on this journey.
At 30 June 2022, two members of the Board were female (25%), three out of seven members (43%) of the
Executive Committee were female and 34% of the direct reports to the Executive Committee were female.
The objectives of the Board Diversity Policy are reviewed and recommended to the Board for adoption annually by
the Committee. This year the Board updated the policy as it continues to strive for greater diversity on the Board
and at executive and senior management level. The Board’s objectives are set out below:
Objective Implementation and progress
To ensure so far as
possible that the
proportion of women
on the Board is not less
than40%.
McBride continues to work towards its diversity target of 40% female representation.
The Committee is hopeful that any future recruitment will bring the Board closer to
achieving this target.
To ensure that at least
one of the senior Board
positions (Chair, CEO, SID
or CFO) is a woman.
In November 2022, Elizabeth McMeikan will take on the role of Senior Independent
Director when Steve Hannam steps down from the Board.
To ensure so far as
possible that the
proportion of women
within the Executive
Committee and their
direct reports is not less
than 25%.
The minimum target for female representation within the Executive Committee
and their direct reports has been achieved and maintained throughout the year.
TheCompany will continue to ensure that there are no barriers for women rising to
senior positions within McBride.
To ensure so far as
possible that there is one
member of the board
from a minority ethnic
background.
During the search for our new Non-Executive Director, our search partner, Warren
Partners, uncovered ethnically diverse talent using technology such as LinkedIn and
other online search engines, identifying potential candidates across a list of target
companies as well as assessing ‘first-time’ Non-Executive Directors or candidates
operating below board level. We will continue to ensure that these methods are used
during recruitment to identify ethnically diverse talent to enable the Board to achieve
this target.
The Committee will continue to make recommendations for new appointments to the Board based on the best
individual for the role, whilst ensuring that the Board’s composition has an appropriate balance of skills and
diversity to meet the requirements of the business.
2022/23 objectives
The Committee’s focus for 2022/23 will be on talent and capability across senior leadership and senior leaders’
development to support future plans.
Je Nodland
Chair of the Nomination Committee
Directors’ report
McBride plc Annual Report and Accounts 2022
98
Audit and Risk Committee report
Audit, risk and internal control
Dear shareholder
On behalf of your Board, I am pleased to present the
Audit and Risk Committee report for the year ended
30June 2022.
In March 2021, the Department for Business, Energy
and Industrial Strategy (BEIS) published a consultation
paper on its proposals for signifi cant reform to UK
audit and corporate governance. Recognising the
AuditCommittee’s responsibility for oversight of
risk and internal controls, the Audit Committee was
re-named in July 2021 as the Audit and Risk Committee
(‘the Committee’).
The Committee is responsible for monitoring and
reviewing the integrity of the Group’s fi nancial reporting
systems and for assessing and providing assurance
on the adequacy and e ectiveness of internal control
policies and procedures in place for the identifi cation,
assessment and reporting of risk. The Committee
also reviews and oversees the relationship with the
independent auditor, PwC, including the approval of the
terms of their engagement and fees, their independence
and expertise, and the e ectiveness of the audit
process. In addition to the disclosure requirements
relating to audit and risk committees under the Code,
the Committee’s report sets out areas of signifi cant
andparticular focus for the Committee.
Committee membership and meetings 2021/22
The Committee met fi ve times in the year ended
30 June 2022, at appropriate times in the fi nancial
reporting and audit cycle. Details of attendance can
be found below:
Members
Number of
meetings
attended
(quorum is
three members)
Eligible
to attend
Alastair Murray (Chair)
(1)
4 4
Regi Aalstad
(2)
— —
Steve Hannam 5 5
Neil Harrington
(3)
3 3
Elizabeth McMeikan 5 5
(1) Alastair Murray was appointed as a Director on 2 August 2021.
(2) Regi Aalstad was appointed as a Director on 14 March 2022.
(3) Neil Harrington stepped down as a Director on 19 October 2021.
Over the course of 2022, we focused on the impact of
signifi cant changes in the external environment, regulatory
frameworks and macroeconomic conditions in our key markets.
Alastair Murray
Chair of the Audit and Risk Committee
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McBride plc Annual Report and Accounts 2022
99
Over the course of 2021/22, we carried out our usual
work as set out on page 87. In addition, given the
unprecedented inflationary impact on commodity prices
due to global supply chain shocks post the Covid-19
pandemic, we gave special consideration to the
impact of macroeconomic conditions and the external
environment in our principal geographies and on the
Group as a whole, especially as regards Group funding.
Composition of the Audit and Risk Committee
Steve Hannam and Elizabeth McMeikan served on
the Committee throughout the year. Neil Harrington
stepped down on 19 October 2021 following the
conclusion of the 2021 AGM, at which point I replaced
him as Chair of the Committee. Regi Aalstad joined the
Committee on 14 March 2022 when she was appointed
as a Non-Executive Director.
For the purposes of the UK Corporate Governance Code,
I qualify as a person with ‘recent and relevant financial
experience’ being a Fellow of the Chartered Institute of
Management Accountants and having previously been
the Chief Financial Ocer for Premier Foods plc. Ihave
previously held other senior finance roles at DairyCrest
plc and The Body Shop International plc.
All members of the Committee are independent
Non-Executive Directors, with a broad range of
fast-moving consumer goods (FMCG), commercial,
operational and financial experience relevant to the
Group’s business.
In addition to the Committee members, the Chief
Executive Ocer, Chief Financial Ocer, Chairman,
Group Financial Controller, Head of Internal Audit and
independent audit partner are regularly invited to attend
and present at the Committee’s meetings. During the
year, PwC attended all five meetings.
During the year I met separately with representatives of
the independent auditor in the absence of the Executive
Directors. I also had regular meetings with senior
members of the Finance team and the Head of Internal
Audit. This provided me with a better understanding
and insight of the key risk and control issues raised,
and ensured sucient time was devoted to them at
subsequent meetings.
Eectiveness of the Audit and Risk Committee
As part of the annual Board evaluation, the
eectiveness of the Committee was reviewed by
questionnaire. Itwas determined that the Committee
continues to be eective in its role. More details on how
the annualBoard evaluation was conducted can be
foundon page95 of the Nomination Committee report.
The Board is satisfied that each of the Committee
members is independent and that the Committee as
a whole has the necessary commercial, financial and
audit expertise required to fulfil its responsibilities.
The members of the Committee have a wide range
of business, international and governance expertise
both within the sector and elsewhere, as shown in
their biographies on pages 82 and 83. The Board
has determined that the Committee, as a whole,
has competence relevant to the sector in which
theGroupoperates.
Independent auditor
The Audit and Risk Committee has primary
responsibility for making recommendations to the Board
on the appointment, re-appointment and removal of the
independent auditor. This is submitted to shareholders
for their approval at the Company’s AGM. Following the
audit tender carried out during 2021/22 and pursuant to
the Committee’s recommendation, a resolution for the
re-appointment of PwC as independent auditor for the
Company was proposed and passed at the last AGM in
October 2021.
As part of its oversight of the independent auditor,
the Committee has undertaken its annual assessment
of the auditor and audit process. This included
the Committee’s own evaluation of the reports
and services received, such as the scope, strategy,
approach, audit hours, quality of reports presented
to the Committee, value added and outcome of the
interim and year-end audits. The Committee also
considered the professionalism, competence and
objectivity, constructive challenge of management and
key judgements of the auditor. In its assessment the
Committee took account of the views of management
and the Committee’s own experience and interactions
with the independent auditor throughout the year.
The Committee has sought assurance from PwC of
their compliance with applicable ethical guidance
and, in addition, has taken account of the appropriate
independence and objectivity guidelines.
The Committee considers the risk of PwC withdrawing
from the market as remote, since they are one of the
top four accounting firms globally.
The Committee has considered and approved the terms
of engagement and fees of PwC for the year ended
30June 2022. Fees payable by the Group to PwC
totalled £1.1 million (2021: £0.9m) in respect of audit
services. There were no contingent fee arrangements
with PwC.
Audit tenure
PwC was appointed as the Group’s auditor on
14November 2011. In accordance with the Companies
Act 2006 and the EU Audit Regulation forming part of
UK law (as amended by the EU Exit Regulations), a full
tender for the appointment of the independent audit
firm was undertaken during 2021, as a result of which,
PwC were re-appointed as our independent auditor
from 2021/22.
The Committee remains satisfied with the level of
independence, objectivity, expertise, fees, resources
and general eectiveness of PwC and, accordingly,
the Committee recommends (and the Board agrees)
that a resolution for the re-appointment of PwC as
independent auditor for the Company should be
proposed at the forthcoming AGM in November 2022.
The independent auditor is required to rotate the audit
engagement partner every five years. The current
audit engagement partner, Graham Parsons, began his
appointment in September 2018, so this is his fourth
audit cycle.
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McBride plc Annual Report and Accounts 2022
100
Audit and Risk Committee report continued
Audit, risk and internal control continued
Non-audit services
The Company maintains a detailed policy on the
engagement of the independent auditor for non-audit
services, designed to preserve their independence when
performing the statutory audit. To avoid any conflict
of interest, types of non-audit work are categorised
asthose:
• for which the auditor can be engaged without referral
to the Committee;
• for which a case-by-case decision is necessary; and
• from which the independent auditor is excluded.
In accordance with this policy, other providers are
considered for non-audit work and such work is
awarded on the basis of expertise, service and cost.
Thispolicy is regularly reviewed and a copy is available
from the Group’s website at www.mcbride.co.uk.
Fees payable by the Group to PwC totalled £2,000
(2021: £23,000) in respect of non-audit services,
equating to 0.2% of audit fees received by PwC
during the same period (2021: 2.6%). These non-audit
services involved other non-audit assurance services.
TheCommittee is of the view that this has not
threatened the independence or objectivity of the
independent auditor.
The Company’s policy on the employment of former
employees of the independent auditor was adhered
to during the financial year. No such employees were
employed by any company in the Group.
In all other respects, the Committee is satisfied that the
independent auditor has exercised an appropriate level
of scepticism and challenge in relation to the Company’s
control environment.
Responsibilities of the Audit and Risk Committee
The Committee’s principal responsibility is to monitor
the Group’s financial reporting process and the integrity
of the Group and Company financial statements,
reviewing any significant financial reporting judgements
contained therein.
Additional responsibilities of the Committee are:
• to review the formal announcements of the Group’s
performance;
• to consider the Group’s viability statement;
• to review the Internal Audit programme and
the consideration of findings of any internal
investigations and management’s response, and
to review the eectiveness of the Internal Audit
function;
• to review and monitor the eectiveness of the
Group’s financial, operational and compliance internal
controls and risk management systems; and
• to oversee the appointment, objectivity,
independence, eectiveness and remuneration of
the independent auditor, including the policy on
the engagement of the independent auditor for
non-audit services.
The main roles and responsibilities of the Committee
are set out in its Terms of Reference. The Committee
is authorised by the Board to investigate any matters
within its Terms of Reference. The Terms of Reference
are reviewed annually to ensure that they are aligned
with best practice, including the recommendations of
the ICSA: The Chartered Governance Institute. A copy
ofthe Committee’s Terms of Reference is available on
the Group’s website www.mcbride.co.uk.
Committee activities
The Committee received regular reports on the Group’s
trading performance, as well as progress on both the
interim and full-year financial statements. Papers and
other regular updates from both management and
PwC have also been provided to assist the Committee
in assessing whether suitable accounting policies have
been adopted and appropriate judgements made
bymanagement.
The significant matters considered, and judgements
undertaken during the financial year, are set out
overleaf. The Committee is satisfied that the
presentation of the financial statements is appropriate
and in accordance with the Group’s accounting policies.
The Committee concluded that there were no major
concerns that had not been addressed, that there was
no evidence of systemic control weaknesses and that
the overall control environment was acceptable for a
group of McBride’s size and nature.
Going concern and viability
The Code requires the Board to state whether it
considers it appropriate to adopt the going concern
basis of accounting in preparing the financial
statements and identify any material uncertainties to
the Company’s ability to do so over a period of at least
twelve months from the date of approval of the financial
statements. Details of the Group’s going concern
statement are on page 79.
The Committee thoroughly considered and
constructively questioned the forecast assumptions
underlying the going concern and viability statements
presented by management. The Committee assessed
the prospects of the Company over a three-year period
following a robust assessment of principal and emerging
risks aecting the Company, the business model,
forecasts and strategic plans. It also reviewed stress test
scenarios. Details of the assessment and the viability
statement are set out on page 79.
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McBride plc Annual Report and Accounts 2022
101
Significant judgements and estimates
Matters considered Committee review and conclusions
Impairment reviews
Management’s judgement on the need (or otherwise) to take impairment charges for goodwill or
fixed assets was reviewed, considering the trading performance of, and the prospects for, each
cash-generating unit (CGU). Recommendations were discussed and agreed with PwC.
Details of the impairment reviews performed are outlined in note 12 to the financial statements.
Thereviews concluded that no impairment was required.
Going concern status
and longer-term viability
statements
In line with typical market practice for most UK companies, the Board considered that an
eighteen-month period from the reporting date, constitutes an appropriate period over which
to provide its going concern statement. The Board determined that a three-year period to
30June2025 constitutes an appropriate period over which to provide its viability statement.
Reviews of the Group’s going concern status were carried out by the Committee at both the half
and full-year period ends. Detailed papers setting out all the relevant considerations were tabled
bymanagement and discussed by the Committee together with PwC.
The Group’s base case forecasts, based on the Board-approved budget and three-year plan,
indicate sucient liquidity throughout the going concern and viability review period to ensure
compliance with its minimum liquidity banking covenant. The Committee noted that if a severe
but plausible downside risk scenario occurs, the Group would need to obtain a covenant waiver
and increase its funding facilities compared to those that are currently committed, to ensure that
the business can meet its obligations for the next eighteen months. To mitigate against these risks,
the Group is currently negotiating to further increase liquidity by £25 million by extending invoice
discounting facilities to unencumbered receivables ledgers, however there is no certainty that these
negotiations will be successful.
After reviewing the Group’s liquidity position, financial forecasts, stress testing of potential risks
and uncertainties, and based on the current funding facilities, the Directors have a reasonable
expectation that the Group has sucient resources to be able to meet its liabilities as they fall due
over the three-year period ending 30June2025. The risk that the Group would become insolvent
during this timeframe was considered remote.
The Committee recommended to the Board that the going concern and viability statements on
page 79 be approved.
Exceptional items
The Committee reviewed the accounting treatment of exceptional items and agreed that the
items listed in note 4 are exceptional in size and nature in relation to the Group and therefore itis
appropriate to disclose them separately.
Quality of earnings
Reviews of the quality of the earnings (material items of income or expense) and one-o items
included in cash flow were carried out by the Committee both at the half and full-year period ends.
The Committee agreed that sucient disclosure has been made in the financial statements.
Tax and treasury matters
The Committee continued to review the Group’s tax strategy and monitor tax governance and
compliance with transfer pricing rules.
TheCommittee approved the Group’s tax strategy for 2022; this can be found inthe Corporate
Policies section of the Group’s website at www.mcbride.co.uk. TheCommittee received updates
regarding the project to update the Group’s transfer pricing policy for changes to operating
structures and accountabilities following Programme Compass changes. The Committee approved
the minor changes made tothe Group’s transfer pricing policy and were satisfied that Programme
Compass did not result in any cross-border reorganisation or transfer ofsignificant functions, assets
or risks, meaning that the risk of exit tax is consideredlow.
The Committee reviewed the Group’s debt funding strategy and compliance with policies on
currency, interest rate and commodity hedging transactions. TheCommittee continued to monitor
performance versus all relevant covenants, toensure the Group could continue to have sucient
funding capacity to deliver its strategy. The worsening financial performance in 2022, driven by
exceptional input cost inflation, meant that normal debt cover and interest cover covenants had to
be waived at the 31 December 2021 test date, and deferred at the 30 June 2022 test date.
In the second half of the financial year, the Committee reviewed the Group’s short-term cash flow
forecasts to ensure that these remained above the minimum liquidity covenant agreed with RCF
lenders following the waiver of the 31December2021 covenant test.
Pensions
The Committee reviewed the performance of the Robert McBride Pension Fund (‘the Fund’),
a defined benefit pension scheme, closed to new members and future accrual, operated in the
UK. The Cash flow Driven Investment (CDI) strategy, implemented during the first half of 2021,
continues to operate in line with expectations, reducing volatility in the reported accounting deficit
as the assets and liabilities of the Fund are better matched.
Following the triennial valuation at 31 March 2021, the Company and Trustee agreed a new deficit
reduction plan based on the scheme funding deficit of £48.0 million. The current level of deficit
contributions of £4.0 million per annum, payable until 31 March 2028, will continue and this is
expected to eliminate the deficit by 31 March 2028.
Directors’ report
McBride plc Annual Report and Accounts 2022
102
Audit and Risk Committee report continued
Audit, risk and internal control continued
Significant judgements and estimates continued
Matters considered Committee review and conclusions
Covid-19
The Committee reviewed the impact of Covid-19 on the Group’s financial performance and the
steps taken by management to mitigate supply risks as well as other risk considerations relating
to the pandemic. This has resulted in a number of short-term operational issues, requiring
tactical responses from the business, as well as long-term strategic matters and emerging
risk considerations, incorporated into the significant and strategic risk topics identified by the
Group’s risk management process.
Task Force on
Climate-related Financial
Disclosures (TCFD)
The Committee provides oversight of the Group’s compliance with the recommendations
ofTCFD.
A TCFD working group has been established to develop the Group’s approach to TCFD,
raise awareness of climate-related risks around the business and to report on progress to
the Committee. The TCFD working group also co-ordinates the adoption of TCFD best
practices into the Group’s risk management processes and ensures visibility and oversight of
the programme by the ESG Governance Committee. The Committee has reviewed progress
against the various workstreams, the Group’s TCFD roadmap and the four disclosure pillars
(Governance, Strategy, RiskManagement, and Metrics and Targets). The Group’s TCFD
disclosure is set out on pages 56 to 69.
Risk management framework
The Group has an established risk management
framework to identify, evaluate, mitigate and monitor
the risks facing the business. The risk management
framework, which is aligned to ISO 31000:2018,
incorporates both a top-down approach to identify the
Group’s principal risks and a bottom-up approach to
identify the Group’s operational risks. The framework
was updated and enhanced during the year to
formalise a risk taxonomy framework, to help with
the categorisation of risk types to which McBride is
exposed, whilst providing a common language for
the management and reporting of risk across the
organisation. In addition, a risk appetite framework
was also established during the year, to help with the
assessment, communication, escalation and reporting
of principal risks, within the context of determining the
amount of risk that the Board is prepared to accept,
tolerate or be exposed to at any point in time.
Responsibility for the ongoing monitoring,
review, reporting and oversight of risks lies with
a cross-functional Risk Council made up of senior
employees from across the business. The council acts
as a focal point for the exploration and evaluation of
strategic and emerging risks faced by the Group in
pursuit of its strategic objectives. It provides regular
reporting on key risk indicators to the Executive
Committee and makes recommendations for
appropriate mitigation strategies in line with the Group’s
risk appetite. It supports the embedding of the Group’s
risk management framework through improved risk
awareness, a more joined-up discussion on risk and the
consideration of risk in key decision-making across the
organisation. During the fourth quarter of the financial
year 2022, an assessment of each principal risk was
completed by the Risk Council.
The Risk Council considered any contextual changes
to the risks and whether over the course of the year
the risks had become more or less material based on
impact and likelihood and ensured procedures were
in place for controlling the risks. Climate change and
environmental concerns, and increased regulation were
both recognised as principal risks this year, having
previously been regarded as emerging risks.
The principles of risk management have also been
embedded into the day-to-day operations of the
divisions and corporate functions, who are primarily
responsible for identifying and evaluating key risks
in their functional, operational and geographical
domains, and escalating the same to the Risk Council.
TheCommittee monitors and challenges the adequacy
of the Company’s procedures in respect of business risk
identification, assessment, monitoring and reporting.
On behalf of the Board, the Committee specifically
considered those risks and uncertainties which
were deemed significant and sought comfort from
management on any specific and underlying mitigating
factors being used to manage, monitor and address
these. The current principal risks and uncertainties
aecting the Group can be found on pages 71 to 78.
The Committee ratifies the Risk Council’s Terms of
Reference and is provided with biannual updates of
matters the Risk Council has considered. Information
on the matters considered by the Risk Council can be
found on page 71.
Directors’ report
McBride plc Annual Report and Accounts 2022
103
Risk Council
• Provides a Group-wide
cross-functional forum
for the discussion,
monitoring and
oversight of risks and
controls arising from
business activities
• Explores and evaluates
strategic, significant
and emerging risks
through access to
internal and external
knowledge, expertise
and insight
• Reviews key risk
indicators submitted
periodically by
individual functions
and divisions, before
reporting and
escalating the same
to the Executive
Committee
• Supported by various
risk forums within
individual functions
and divisions, focusing
on the identification,
assessment and
monitoring of risks
andcontrols within
each division and
function
Executive
Committee
• Reviews the strategic
risk register and ratifies
the assessment and
evaluation of risks
conducted by the
RiskCouncil
• Agrees actions to
mitigate key risks
facing the business
that are escalatedto it
• Ensures risk
management is
embedded across
thebusiness
• Defines and establishes
the risk appetite of
theGroup
• Considers key risk
indicators escalated
bythe Risk Council
and works with the
business to ensure
adequate and eective
risk mitigation actions
are in place for risks
outside acceptable
tolerance thresholds
Audit and Risk
Committee
• Ensures actions to
mitigate risks are
put in place with
ownership and
timescales to ensure
the Group’s strategy
can be delivered in
the context of the
risk management
framework
• Monitors and
reviews keyfinancial,
non-financial and
internal controls,
as well as the
independent audit
process and reports.
These include key risk
indicators escalated
by the Risk Council
and the Executive
Committee on an
ongoing basis
• Receives and reviews
a report from the
Risk Council on
the principal risks,
discusses and confirms
the risk trend, overall
eectiveness of the risk
control and monitoring
environment and
considers whether
any additional control
improvement actions
arerequired
The Board
• Monitors and reviews
the eectiveness
of the Group’s risk
management and
internal control
systems
• Approves the risk
appetite of the Group
• Reviews reports from
the Audit and Risk
Committee on risk
management and
internal controls
Risk management framework
Risk management and internal control environment
The Group’s risks are identified and managed through
various activities, including:
• business risk reviews;
• major project and investment reviews;
• strategic risk assessments and specific functional risk
mapping activities;
• year-end self-assessment questionnaires supporting
key internal control procedures, with an in-built
control validation, review and reporting mechanism;
• a quarterly follow-up process to review outstanding
internal control actions; and
• a programme of audits within and across individual
processes, functions and sites by various internal
stakeholders, including Internal Audit and other
assurance providers within the business.
The Audit and Risk Committee is delegated the
responsibility for reviewing the eectiveness of the
Group’s systems of internal control, including all material
financial, operational and compliance controls, key
corporate policies, financial reporting framework and
processes, the preparation of the Group’s consolidated
financial statements, and also the overall risk
management system in place throughout the year under
review, uptothe date of this Annual Report.
The Committee receives regular reporting from senior
management and it has concluded that there continues
to be a robust and eective control environment in
place. The Committee also confirms that it has not been
advised of any failings, breaches or weaknesses which
it considers to be significant during the financial year,
and which had a material eect on the Group’s financial
performance.
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McBride plc Annual Report and Accounts 2022
104
Risk management and internal control environment
continued
Key control procedures undertaken by the Group during
the year included:
• monthly consolidated management accounts
reviewed by the Executive Committee;
• monthly reporting on commercial, operational,
financial and non-financial KPIs, with performance
discussed at both functional and Group level;
• regular updates to the Board on the Group’s
financialperformance and position against targets;
• a comprehensive annual budgeting process
ultimately approved by the Board;
• ongoing monitoring of the Group’s cash and debt
position with monthly reviews of working capital
balances;
• authorisation and control procedures in place for
capital expenditure and other major projects, with
post-completion reviews to highlight issues and
learnings, and to improve future performance and
delivery; and
• regular meetings and site visits with insurance and
risk advisers to discuss risk assessments, safety
audits and performance against agreed objectives.
The Internal Audit function provides independent
assurance on the adequacy and eectiveness of the
Group’s risk management framework and is responsible
for overseeing and monitoring the eective design
and operation of internal control processes across
theGroup. Further details are set out below.
Recommendations arising from the independent
auditor’s internal controls report are reviewed and
actions to implement enhanced policies, processes
andprocedures are discussed and agreed.
The Board, through the Audit and Risk Committee,
confirms that a robust assessment of the Company’s risk
management and internal controls has been carried out
and that no significant failings or weaknesses have been
identified. The assessment covered financial, operational
and compliance controls together with financial
reporting processes.
Internal Audit
The Internal Audit function provides assurance to
the Committee that the overall control environment
and specific control activities across the Group are
adequate, eective and fit-for-purpose. The Internal
Audit function provides a range of financial, operational,
regulatory and compliance-driven audit activities,
either performed by our independent, experienced
and qualified in-house internal audit professionals, or
in conjunction with skilled and experienced in-house
personnel, at a central functional or a local divisional
level. For specific audits, services have also been
co-sourced from external professional firms, providing
experienced, local resources to perform audit reviews,
under the supervision and direction of the Internal
Auditfunction.
Regular meetings are held between the Head of Internal
Audit and the Chair of the Audit and Risk Committee
and the Committee actively engages the Internal Audit
function to determine the extent to which the overall
internal control environment is robust and eective
and how it can be enhanced further by considering and
evaluating specific process and control enhancements.
At the start of each financial year, the Committee
reviews and agrees the Internal Audit Plan, confirming
its alignment with the Group’s strategic priorities
and key current and emerging risk management
considerations, whilst also ensuring there is appropriate
focus on essential and integral compliance monitoring
requirements. There are in-built mechanisms to ensure
the Internal Audit Plan remains flexible and agile in
order to address any new and emerging risks that
mayarise throughout the year.
Every six months, the Committee considers the
resultsof any audits undertaken and the adequacy
andtimeliness of management’s response to matters
raised. Any recurring themes across processes, functions
or locations are challenged and these, along with
any significant audit findings, could result in specific
follow-up reviews or separate assurance projects,
informing and influencing the scope of workundertaken
in the Internal Audit Plan, both forthecurrent year and
for subsequent years.
The Committee continues to be satisfied that the
Internal Audit function has sucient resource and
provides a critical and eective assurance role to
theorganisation.
Fair, balanced and understandable
Having given due and full consideration to all the
matters referred to above, the Committee is satisfied
that the financial statements present a fair, balanced
and understandable view and provide shareholders
with the necessary information to assess the Group’s
position, performance, strategy and business model,
andhas undertaken to report accordingly to the Board.
The Audit and Risk Committee report was approved
bythe Board on 29 September 2022 and signed on its
behalf by:
Alastair Murray
Chair of the Audit and Risk Committee
Audit and Risk Committee report continued
Audit, risk and internal control continued
Directors’ report
McBride plc Annual Report and Accounts 2022
105
Remuneration Committee report
Annual statement
Committee membership and meetings 2021/22
The Committee met fi ve times in the year ended
30June 2022. Details of attendance can be found
below:
Members
Number of
meetings
attended
(quorum is
three members)
Eligible
to attend
Elizabeth McMeikan
5 5
Regi Aalstad
(1)
1 1
Steve Hannam
5 5
Neil Harrington
(2)
2 2
Alastair Murray
(3)
4 4
Je Nodland
5 5
(1) Regi Aalstad joined the Board as an independent Non-Executive
Director on 14March 2022.
(2) Neil Harrington stepped down as a Non-Executive Director on
19October 2021.
(3) Alastair Murray joined the Board as a Non-Executive Director on
2 August 2021.
Dear shareholder
On behalf of the Remuneration Committee, I am pleased
to present the Directors’ Remuneration report (‘the
Report’) for the year ended 30 June 2022.
This Report has been prepared in accordance with the
provisions of the Companies Act 2006 and Schedule 8
of the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 as amended
(‘the Regulations’), the UK Corporate Governance Code
2018 and the Financial Conduct Authority’s Listing Rules
and takes into account the accompanying Directors’
Remuneration Reporting Guidance and the relevant
policies of the shareholder representative bodies.
TheReport is split into three sections: the Remuneration
Committee Chair’s annual statement, Annual Report on
Remuneration and the Remuneration Policy.
At the 2022 AGM, we will be asking shareholders to
vote on a single resolution: an advisory vote on the
Annual Report on Remuneration, which provides details
of how we have operated the approved policy, the
remuneration earned by Directors for performance in
the year ended 30 June 2022 and how the approved
Remuneration Policy will be implemented for the
coming year.
The Committee seeks to support the delivery
ofMcBride’sstrategy through establishing
appropriateremuneration arrangements.
Elizabeth McMeikan
Chair of the Remuneration Committee
Directors’ report
McBride plc Annual Report and Accounts 2022
106
Remuneration Committee report continued
Annual statement continued
Performance of the business
The most significant external factor overshadowing
this past year related to the unprecedented inflationary
environment experienced across our industry. As we
now emerge from the challenges of maintaining supply
chains, mitigating unpredictable and extraordinary input
cost inflation, and stabilising our finances, the business
can start focusing on delivering the mid-term Compass
benefits of improved profitability and growth.
2021/22 remuneration outcomes
All awards in relation to the financial year 2021/22 were
made in accordance with our Remuneration Policy.
Thekey decisions made by the Committee in respect of
Directors’ remuneration were as follows:
• annual bonus (Executive Directors) – The outcomes
for the Chief Executive Ocer and Chief Financial
Ocer were determined by reference to performance
against the agreed financial measure of Group
adjusted EBITA
(1)
and the Committee’s assessment
of their individual performance during a challenging
year. The methodology used to calculate the
financial performance determined that there would
be no payout this year. The Committee considered
the progress against each Executive Director’s
personal objectives for the year across all aspects
of the Company’s strategy, cost reduction and value
creation. Despite the progress made against these
objectives, payout being contingent upon attainment
of threshold performance of the financial measure,
nopayment against these objectives was made;
• vesting of 2019 LTIP awards – Following a review
ofthe last three years’ performance against the
pre-agreed measures, the Committee determined
that the 2019 LTIP awards would not vest, as the
performance measures had not been satisfied.
Further detail can be found on page 122; and
• taken as a whole, the Committee is satisfied that
the overall pay outcomes for the year ended
30June2022 are appropriate and, accordingly, we
have not applied any discretion to this year’s outturns.
Remuneration principles and structure
The Committee seeks to support the delivery of
McBride’s strategy through establishing appropriate
remuneration arrangements. The link to strategy for
each element of the Executive Directors’ remuneration
is described in the Remuneration Policy.
The Committee has adopted remuneration principles
which are designed to ensure that executive
remuneration:
• is transparent in respect of elements of remuneration,
quantum, the rationale for targets and performance
outcomes;
• is simple to ensure that remuneration structures act
as intended and are clearly understood;
• discourages inappropriate behaviours or excessive
risk-taking through clawback provisions and holding
periods;
• is predictable through the use of a range of outcomes
and individual caps;
• is aligned to the Group’s strategy and the long-term
sustainable development of the business; and
• is aligned to the Company’s purpose, values and
strategy and to the Group’s culture.
These principles apply equally to those of senior
management.
Directors’ remuneration matters considered during
and in respect of 2021/22
A summary of the key matters considered by the
Committee during the year and since the year end in
respect of 2021/22 is as follows:
• the committee determined that the Executive
Directors would not receive any increase to salary
in2021/2022;
• in relation to the annual bonus, the Committee
determined after the year end that no bonus would
be payable to Executive Directors covering this
period. No discretion was applied in reaching this
decision. Further details can be found on page 121;
• in relation to the LTIP awards granted in September
2019, the Committee reviewed the performance
conditions after the year end and determined
that performance for these awards was below
the threshold levels. No discretion was applied in
determining the level of vesting. The awards have,
therefore, lapsed;
• the Committee approved the grant of the 2021 LTIP
and RSU awards; and
• the Committee reviewed and approved the Chief
Executive Ocer’s and Chief Financial Ocer’s
personal objectives under the annual bonus scheme.
(1) Please refer to APM in note 2.
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McBride plc Annual Report and Accounts 2022
107
Main duties:
• to review the ongoing appropriateness and relevance
of the Remuneration Policy;
• to apply formal and transparent procedures
regarding executive remuneration packages;
• to consider and make recommendations to the Board
on remuneration issues for the Chairman, Executive
Directors and other senior executives, taking into
account the interests of relevant stakeholders;
• to ensure that failure is not rewarded and that
steps are taken to mitigate loss on termination to
contractual obligations where appropriate; and
• to review the implementation and operation of any
Company share option schemes, bonus schemes and
Long-Term Incentive Plans (LTIPs) and to review the
formal policy for shareholding requirements, both in
employment and post-cessation.
Committee membership and attendance at
meetings year ended 30 June 2022
Je Nodland satisfied the independence condition on
his appointment as a Non-Executive Director. The Board
is satisfied that the remaining members during the year
were independent Non-Executive Directors.
Meetings may be attended by the Chief Executive
Ocer on all matters except those relating to his own
remuneration. The Chief Financial Ocer, Igor Kuzniar
(a Non-Executive Director), the Chief HR Ocer and the
Company’s independent remuneration consultants also
attend meetings by invitation. The Company Secretary
attended each meeting as Secretary to the Committee.
No Director participates in any discussion relating to
their own remuneration.
The Terms of Reference of the Committee were
reviewed during the year and a copy of the Committee’s
Terms of Reference is available on the Group’s website
www.mcbride.co.uk.
Remuneration Policy and shareholder engagement
The Remuneration Policy, approved at the 2020 AGM,
has operated as intended in year one and year two.
Further details on application of the Policy can be found
on pages 110 to 120.
Looking forward 2022/2023
• 2022 LTIP awards granted will change from ROCE
measure to statutory net debt to EBITDA ratio, to
ensure that the business focuses on maintaining a
healthy cash flow, along side EPS with equal weighting.
• 2022 LTIP the number of shares to be granted will be
determined using the share price of 35 pence or the
prevailing share price on the day of grant, if higher.
The share price of 35 pence has been chosen as it
reflects the consensus forecast of McBride’s share price
in the forthcoming year. The Committee will also carry
out an overall assessment of the Company’s underlying
performance and the vesting outcome of the LTIP to
ensure the vesting reflects Company performance and
that there is no windfall gain.
Looking ahead
Looking to the future, the Committee intends
to continue to seek to align Executive Director
remuneration with the experience of our shareholders.
During the year ending 30 June 2023, the Committee
will carry out a review of the Policy and consult with
shareholders on any proposed significant changes
in preparation for our next triennial binding vote on
the Policy at our 2023 AGM. We shall continue to
ensure appropriate alignment between executive pay
arrangements and the wider workforce. We also look
to continue to enhance our alignment of pay with
McBride’s strategy, Programme Compass.
Elizabeth McMeikan
Chair of the Remuneration Committee
Directors’ report
McBride plc Annual Report and Accounts 2022
108
Remuneration Committee report continued
Remuneration Policy
The Remuneration Policy was approved by shareholders at the AGM held on 23 November 2020. The Remuneration
Policy as approved by shareholders is available on our website www.mcbride.co.uk. We have included a version of
the Remuneration Policy below, which has been updated where appropriate to reflect the passage of time.
Remuneration Policy principles
The Group’s approach for all employees, including executives, is to set remuneration that is closely aligned with
our underlying Group strategy, takes account of market practice, economic conditions, the performance of the
Group and of teams or individuals, recognising any collective agreements that may apply as well as any legal or
regulatory requirements in jurisdictions where it operates. Our Policy aims to attract, motivate and retain suitably
eectiveemployees.
The Committee follows the following broad principles when considering the design, implementation and
assessment of remuneration in line with the recommendations set out in Provision 40 of the 2018 UK Corporate
Governance Code:
Clarity
The Committee is committed to being transparent in respect to the elements of
remuneration, quantum, the rationale for targets set and performance outcomes.
The Committee engages with shareholders and is keen to understand their views
and priorities when considering key remuneration issues and any major changes.
Simplicity
The Committee is mindful of the need to avoid overly complex remuneration
structures which can be misunderstood and deliver unintended outcomes.
TheCommittee is confident that the remuneration structure and its operation
isunderstood by participants and supports the overall strategic objectives.
Risk
Targets are reviewed to ensure they reflect the overall risk appetite set by the
Boardand do not encourage inappropriate behaviours or excessive risk-taking.
Mitigation is provided through the clawback provisions (which are in line with
current best practice expectations) and through the discretion the Committee
hastooverride the vesting result in exceptional circumstances.
In addition, holding periods are in place for awards under the RSU plan, the DBP
andthe LTIP.
Predictability
The Committee assesses the potential outcome of future reward by reference to
potential payouts that can be received at a range of outcomes (minimum, mid-point
and maximum). Individual caps apply to participation in our incentive plans.
Directors’ report
McBride plc Annual Report and Accounts 2022
109
Proportionality
The Committee seeks to ensure that targets for annual bonus and long-term
incentives are aligned with the Group’s strategy and the long-term sustainable
development of the business.
The focus of our remuneration strategy is on rewarding performance – the majority
of executive remuneration is performance based and only payable if demanding
performance targets are met. The majority of variable pay is delivered in the form
ofshares.
When setting targets for variable elements of pay, the Committee carefully
considers the targets to minimise the risk of excessive reward by reference to the
maximum potential award that could be achieved.
When assessing performance against annual bonus and LTIP, the Committee also
considers:
• the overall performance of the business;
• the quality of earnings when assessing the achievement of financial targets; and
• the market in which the Company operates.
Both annual bonus and LTIP payments are at the ultimate discretion of the
Committee. The Committee retains discretion to override formulaic outcomes
produced by the assessment of performance against predetermined performance
conditions and scale back awards where, in the Committee’s view, the payout levels
do not reflect the performance of the wider business over the period, individual
performance or where events happen that cause the Committee to determine
that the conditions are unable to fulfil their original intended role. Any exercise of
discretion will be fully disclosed to shareholders.
Notwithstanding that the RSUs, which are an element of our fixed pay, are not
subject to performance conditions, the Committee is mindful of the potential for
windfall gains when awards vest and downward discretion may also be applied to
the actual number of shares to be granted and the vesting of RSU awards where
exceptional circumstances exist.
Alignment to culture
The Committee believes that the overall design of the Group remuneration strategy
is consistent with the Company’s purpose, values and strategy and is aligned with
the Group’s culture. In particular, the Committee has taken steps to improve the
alignment of interests between senior management and shareholders through the
RSU plan and the matching awards under the DBP, both of which are designed to
increase share ownership.
Directors’ report
McBride plc Annual Report and Accounts 2022
110
Remuneration Committee report continued
Remuneration Policy continued
Remuneration Policy table
The following table summarises each element of our Remuneration Policy for the Executive Directors, explaining
how each element operates.
Element: Executive Director base salary
Purpose and link
to strategy
• To ensure the Group is able to recruit and retain high-calibre executives.
Operation
• Salaries are set by the Committee taking into account individual experience,
performance, skills and responsibilities, prevailing market conditions (by reference
to companies of a similar size and complexity and other companies in the same
industry) and internal relativities.
• Salaries are paid monthly in arrears by bank transfer and are normally reviewed
annually with any changes eective from January.
Maximum
• Details of current salaries of the Executive Directors are detailed on page 121.
• Salaries are normally reviewed annually and may be increased each year. There
is no maximum, but increases will generally be in line with those awarded to the
Group’s workforce, as well as reflective of the overall financial performance of
theGroup.
• Increases beyond this may be awarded in limited circumstances, such as where
there is a change in responsibility, experience or a significant change in the scale
of the role and/or size, value and/or complexity of the Group.
Performance measures
• Not applicable.
Element: RSUs
Purpose and link to
strategy
• To ensure the Group is able to recruit and retain high-calibre executives.
• To provide enhanced alignment to shareholders.
Operation
• Annual awards, as part of fixed pay.
• Awards will normally vest three years from the date of grant.
• Awards will be subject to a two-year post-vesting holding period, less any shares
required to be sold to cover withholding tax.
• Not pensionable, or ‘salary’, for the purposes of bonus, LTI or payments for
loss of oce.
• Subject to malus and clawback
(1)
.
Maximum
• Awards of up to 15% of salary may be granted annually.
Performance measures
• Not applicable.
(1) Malus and clawback apply in the event of an error in calculation, a material misstatement of the financial results, serious misconduct by a
participant, corporate failure or reputational damage.
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McBride plc Annual Report and Accounts 2022
111
Element: benefits
Purpose and link to
strategy
• To provide market-competitive benefits, in line with those provided to other
Group employees.
Operation
• Benefits may include private medical insurance, sick pay, a fully expensed car
(orequivalent cash allowance), disability and life assurance cover.
• Some benefits may be provided in the case of relocation, such as removal
expenses, and in the case of international relocation might also include such items
as cost of accommodation, children’s schooling, home leave, tax equalisation and
professional advice etc.
• The Company has the ability to reimburse the tax payable (grossed up) on any
business expenses captured as taxable benefits.
Maximum
• The benefit provision is reviewed periodically. No maximum level is set on the
value or cost of benefits provided.
Performance measures
• Not applicable.
Element: pension
Purpose and link to
strategy
• Retirement benefits are regarded as an important element of the Group’s basic
benefits package to attract and retain talent.
Operation
• Membership of the Company’s defined contribution, or similar, pension scheme,
or in agreed circumstances, a cash allowance in lieu of pension.
Maximum
• Up to 8% of base salary, or such other amount in line with that available to the
majority of the UK general workforce, from time to time.
Performance measures
• Not applicable.
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112
Remuneration Committee report continued
Remuneration Policy continued
Remuneration Policy table continued
Element: annual bonus
Purpose and link to
strategy
• The purpose of the annual bonus is to incentivise delivery of the Group’s financial
and non-financial objectives and to ensure that Executive Directors and senior
executives are fairly rewarded for their contribution to the success of the Group.
• To provide alignment of Directors’ interests to the interests of shareholders
through enhanced shareholdings.
Operation
• Performance conditions are set independently by the Committee at the start of
each year.
• Performance criteria include the financial targets of the Group as agreed by the
Board and specific annual targets based on clear and measurable objectives that
underpin, and are key to achievement of, the Group’s strategy.
• Personal objectives are reviewed by the Committee to ensure they contribute to
the strategic aims of the Group.
• To further align the interests of Directors with shareholders, 30% of the bonus is
paid via the Deferred Annual Bonus Plan (DBP).
• Executive Directors can voluntarily invest any remaining bonus, up to a maximum
of 70% of salary, into the DBP. Invested sums will be matched with additional
shares on a 1:2 ratio.
• Awards granted under the DBP vest after three years and are normally subject
tothe Director remaining employed by the Group at the end of that period.
• A ‘dividend equivalent’ provision is also available on the DBP shares at the
discretion of the Committee, enabling dividend equivalent payments to be paid,
in cash or shares, on any shares that vest.
• All bonus payments are at the ultimate discretion of the Committee and the
Committee retains an overriding ability to ensure that overall bonus payments
reflect its view of corporate performance during the year when determining the
final bonus amount to be awarded.
• Both the cash and deferred share elements of the annual bonus are subject to
malus and clawback
(1)
.
Maximum
• 100% of base salary.
Performance measures
• At least 80% of the bonus will be assessed against a sliding scale of challenging
and stretching financial performance targets, with no more than 20% of the bonus
being based on the achievement of specific and measurable personal targets.
Irrespective of achievement against the personal targets, no bonus is payable
unless a minimum level of financial performance is achieved.
• The Committee retains the ability in exceptional circumstances to adjust the
targets and/or set dierent measures and alter weightings for the annual bonus
if certain events occur, such as a material divestment of a Group business, which
cause it to determine they are no longer appropriate and a change is required to
ensure that they achieve their original purpose and are not materially less dicult
to satisfy.
(1) Malus and clawback apply in the event of an error in calculation, a material misstatement of the financial results, serious misconduct by a
participant, corporate failure or reputational damage.
Directors’ report
McBride plc Annual Report and Accounts 2022
113
Element: LTIP
Purpose and link to
strategy
• The objectives of the LTIP are to align the long-term interests of shareholders
andmanagement and reward achievement of long-term, stretching targets.
• Awards are made to Executive Directors and to senior executives who have
asignificant influence over the Group’s ability to meet its strategic objectives.
Whilst it is not a requirement of the LTIP, senior executives are encouraged to
usethe scheme to increase their share ownership in the Company.
Operation
• Annual awards are granted, subject to individual performance and Committee
discretion. The awards vest after three years subject to continued employment
and the satisfaction of challenging performance conditions. A two-year
post-vesting holding period applies to all shares (less any shares required
tobesold to cover withholding tax) that vest.
• LTIP awards are subject to malus and clawback
(1)
.
• The Committee will operate the LTIP according to its respective rules and in
accordance with the Listing Rules and HMRC rules, where relevant.
Maximum
• 125% of salary for the Chief Executive Ocer and 110% of salary for the
ChiefFinancial Ocer and any other Executive Director in any financial year.
TheCommittee reviews the quantum of awards annually to ensure they are in line
with market levels and appropriate given the performance of the individual and
the Company.
• Actual award levels to Executive Directors are set out in the Annual Report on
Remuneration.
Performance measures
• Vesting of awards would normally be based on key financial measures of
performance (such as, but not limited to, earnings per share (EPS), ROCE),
selected by the Committee and measured over a period of no less than three
financial years. EPS is a measure of the Company’s overall financial success and
ROCE is a key performance indicator for the Group.
• Dierent performance measures and/or weightings may be used for future
awards to help drive the strategy of the business.
• Targets are set by the Committee for each award on a sliding scale basis. No more
than 25% of awards will vest for threshold performance, with full vesting taking
place for equalling or exceeding maximum performance conditions.
• The Committee retains the ability in exceptional circumstances to adjust the
targets and/or set dierent measures and alter weightings for the LTIP if events
occur, such as a material divestment of a Group business, which cause it to
determine they are no longer appropriate and a change is required to ensure that
they achieve their original purpose and are not materially less dicult to satisfy.
(1) Malus and clawback apply in the event of an error in calculation, a material misstatement of the financial results, serious misconduct by a
participant, corporate failure or reputational damage.
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Remuneration Committee report continued
Remuneration Policy continued
Remuneration Policy table continued
Element: Non-Executive Director fees
Purpose and link
to strategy
• To ensure the Group is able to attract and retain experienced and skilled
Non-Executive Directors able to advise and assist with establishing and
monitoring the strategic objectives of the Company.
Operation
• The remuneration of the Chairman and the Non-Executive Directors is payable in
cash fees.
• They are not eligible to participate in bonus or share incentive schemes.
• Their services do not qualify for pension or other benefits.
• Expenses incurred for advice in respect of UK tax returns for non-UK NEDs may
be reimbursed.
• Fees are paid monthly and reasonable expenses are reimbursed where
appropriate. Tax may be reimbursed if these expenses are determined to be a
taxable benefit.
• Fee levels are determined by the full Board with reference to those paid by other
companies of similar size and complexity, and to reflect the amount of time they
are expected to devote to the Group’s activities during the year (and may include
additional ad-hoc payments to reflect increased time commitments over a short
period).
• A supplementary fee is also paid to Committee Chairs and to the Senior
Independent Director to reflect their additional responsibilities.
• An additional allowance of up £50,000 p.a. may be payable to the Chairman to
compensate for the additional time commitment involved in travelling both to
attend Board meetings and to generally carry out the duties as Chairman.
• An additional allowance of up to £15,000 p.a. may be paid to NEDs based
overseas for any additional time commitment involved in travelling both to attend
Board meetings and to generally carry out the duties as a NED.
Maximum
• Details of the current fees for the Chairman and Non-Executive Directors are
set out on page 130. The aggregate annual sum for Non-Executive Director fees
cannot exceed £600,000 p.a. The Company does not intend to seek shareholder
approval for any increase to this maximum in the short to medium term.
Performance measures
• No element of the Chairman’s nor Non-Executive Directors’ fees is performance
related.
Directors’ report
McBride plc Annual Report and Accounts 2022
115
Element: share ownership guidelines/requirements
Purpose and link to
strategy
• Executive Directors and other senior executives are required to build and
maintain a shareholding in the Company as this represents the best way to align
their interests with those of shareholders. Levels are set in relation to earnings
and according to the post held in the Company.
• Non-Executive Directors are encouraged to build and maintain a shareholding.
Operation
• The expectation is that executives will build up to these levels over a period
of time, through retaining shares received under the Company’s incentive
arrangements, net of sales to settle tax and/or shares purchased in their own
right.
• Vested but unexercised LTIP awards, unvested RSU awards and deferred shares
will count towards this requirement, on a net of tax basis.
• The Executive Directors are also required to maintain their shareholding
requirement or the actual shareholding on departure, if lower, for a minimum of
twelve months after cessation of employment. The post-cessation shareholding
obligation will apply to shares acquired (net of tax) under awards granted under
this and future policies. Shares purchased from the executives’ own funds would
not be included.
Maximum
• There is no maximum; however, Executive Directors are required to build and
maintain a shareholding equivalent to 200% of salary, 300% for the CEO and 50%
of salary for other senior executives.
• Newly appointed Executive Directors would normally be required to achieve the
required shareholding within a five-year period of appointment to the Board.
• The guideline for NEDs is to hold shares equivalent to 100% of their annual fee.
Performance measures
• Not applicable.
Committee discretion in the operation of variable pay schemes
The Committee operates the Group’s incentive plans according to their respective rules and in accordance with
HMRC requirements and the Listing Rules, where relevant. The Committee, consistent with market practice, retains
discretion over a number of areas relating to the operation and administration of the plans. The extent of such
discretion is set out in the relevant plan rules and the Remuneration Policy table above. The Committee will apply
certain operational discretions to ensure the ecient administration of the plans which include, but are not limited to:
• selecting the participants;
• timing;
• quantum of awards, including determining the actual number of shares granted, taking into account share price
and wider factors;
• setting the performance criteria and respective weightings of performance measures;
• determining the extent of vesting based on the assessment of performance;
• determining ‘good leaver’ status;
• the form of payment; and
• making appropriate adjustments required in certain circumstances, including overriding formulaic outcomes and
scaling back awards in respect of variable pay outturns.
The Committee may vary the performance conditions applying to share-based awards if an event occurs which causes
the Committee to consider it would be appropriate to amend the performance conditions, if the Committee considers
the varied conditions are fair and reasonable and not materially less challenging than the original conditions.
Any use of such discretion would, where relevant, be explained in the Annual Report on Remuneration.
Anyproposed application of this discretion to make an upward adjustment would be the subject of
consultationwith shareholders.
Directors’ report
McBride plc Annual Report and Accounts 2022
116
Remuneration Committee report continued
Remuneration Policy continued
Remuneration Policy table continued
Statement of consideration of shareholder views
The Committee considers the feedback from shareholders at the AGM each year and guidance from shareholder
representative bodies more generally. In addition, the Committee consulted proactively with major shareholders
in the development of the approved Policy and, based on shareholder feedback, changes were made to the Policy
that was approved.
Statement of consideration of employment conditions elsewhere in the Group
Workforce remuneration data is provided to the Committee on a regular basis by the Chief HR Ocer. Recognising
there are good reasons for the level and structure of executive pay to dier from that of the wider employee
population, the Committee will continue to consider pay across McBride, reflecting on the appropriate alignment
with the principles which guide executive remuneration across the wider employee population.
Dierences in the Policy for executives relative to the broader employee population
The Policy for the Executive Directors is informed by the structure operated for the broader employee population.
Pay levels and components vary by organisational level but the broad themes and philosophy remain consistent
across the Group:
• salaries are reviewed annually with regard to the same factors as those set out in the Policy table for Executive
Directors;
• members of the Executive Committee participate in an annual bonus plan aligned with that oered to the
Executive Directors. Other members of senior management participate in the same plan, dependent on
performance of the Group or performance of business division, according to their role and level;
• members of the senior management team can be considered for awards under the LTIP. This is intended to
encourage share ownership in the Company and align the management team with the strategic business plan; and
• eligibility for and provision of benefits and allowances varies by level and local market practice.
Element: recruitment remuneration
Purpose and link
to strategy
• To ensure the Group is able to recruit and retain high-calibre Executive and
Non-Executive Directors.
Operation
• New Director remuneration arrangements will be based upon and within the limits
of the various elements as set out on pages 129 and 130.
In addition:
• Executive Director buy-out payments may be made in exceptional circumstances,
typically when these are considered to be in the best interests of the Company
to facilitate the buy-out of value forfeited on joining the Company for an external
appointment. These payments would typically be in the form of an enhanced
LTIP award under the rules and maximums permitted under the Company’s LTIP
rules at that time or under the new Restricted Share Plan, if required, using Listing
Rule 9.4.2. Such payment would take account of remuneration being relinquished,
including the nature and time horizons attached to such remuneration and the
impact of any performance conditions. In exceptional circumstances, payments
could be made in the form of a cash payment which would normally be subject
to clawback in certain situations, in line with other elements under the Company’s
Remuneration Policy.
• Relocation packages, generally consisting of out-of-pocket expenses, together
with any additional costs solely attributable to the relocation may be oered in
situations deemed essential in order to carry out the relevant role successfully.
Any package will be designed to ensure the new recruit becomes eective in
their role as soon as possible, with minimal distractions from any relocation.
• In respect of internal promotions, any remuneration commitments made before
such promotion (whether or not they would fall within the principles of the
Company’s current Remuneration Policy) may form part of that Director’s
remuneration package, with the expectation that any such commitments would
be phased out over time.
Maximum
• It is intended that the value of any element of normal remuneration will generally
be on the same basis as the existing Directors (pro-rated where appropriate
dependent on time of joining the Company) and elements such as buy-out
payments being no higher than the expected value of the forfeited arrangements.
Directors’ report
McBride plc Annual Report and Accounts 2022
117
Element: Executive Director compensation on loss of oce
Purpose
and link to
strategy
• On termination of an Executive Director’s service contract, the Committee will seek to
provide the minimum compensation applicable to the individual’s employment contract.
• The Committee will take into account the departing Director’s duty to mitigate their loss
when determining the amount of compensation.
Operation
• In the event of an early termination, any compensation commitments will be within the
principles of the Company’s approved Remuneration Policy (or if an amendment to the
Policy authorising the Company to make the payment has been approved by shareholders).
• Directors’ service contracts confirm that the Company may terminate the contract with
immediate eect by making a payment equal to base salary for any unexpired period of
notice. The Company also has the option to pay notice month by month that would reduce
or cease if the departing Director obtained other employment.
• There are no agreements between the Company and its Directors or employees providing
for additional compensation for loss of oce or employment (whether through resignation,
purported redundancy or otherwise) that may occur in the event of a takeover bid. It is also
the Company’s policy not to include liquidated damages clauses in service contracts, unless
there is a clear explainable benefit for the Company in doing so. None of the Executive
Director service contracts contain any such liquidated damages provision.
• Statutory redundancy payments will be made as appropriate.
• Costs attributable to outplacement and/or legal fees associated with the termination of an
Executive Director’s service contract may be paid by the Company, where appropriate.
• Payments may be made by the Company where appropriate to settle claims brought against
the Company, such as unfair dismissal.
Maximum
In circumstances in which a leaving Director may be entitled to pursue a legal claim, the
Company may negotiate settlement terms if it considers this to be in the best interests of the
Company and, with the approval of the Committee on the remuneration elements therein, enter
into a settlement agreement.
Directors’ report
McBride plc Annual Report and Accounts 2022
118
Remuneration Committee report continued
Remuneration Policy continued
Remuneration Policy table continued
Element: Executive Director compensation on loss of oce continued
Normal exit
(termination for
reasons of resignation
or dismissal where the
Committee does not
exercise discretion
to treat the leaving
Director as a good
leaver).
Good leaver
(termination for reasons of
death, ill health, retirement,
redundancy, or at the
discretion of the Committee).
Change of control
(excludes a reorganisation or
reconstruction where ownership
does not materially change).
Base salary,
RSUs,
pension
andbenefits
Base salary, pension
and benefits will be
paid/provided to the
date employment
ends or payment in
lieu of notice made.
Any untaken holiday is
pro-rated to the leaving
date.
Unvested RSUs will
lapse. Any vested RSUs
will normally remain
subject to the two-year
post-vesting holding
period.
Base salary, pension and
benefits will be paid/provided
to the date employment ends
or payment in lieu of notice
made. Any untaken holiday is
pro-rated to the leaving date.
Unvested RSUs (at Committee
discretion) will vest at the
normal vesting date unless the
Committee determines they
shall vest on an earlier date.
Any vested RSUs will normally
remain subject to the two-year
post-vesting holding period.
If within twelve months of a
change of control the individual
is given notice or there is a
material change to their duties
precipitating departure, there
would be an additional payment
due of 18months’ salary for the
CEO and twelve months’ salary
for the CFO and other Executive
Directors.
Any unvested RSUs will vest on
the date of the relevant event,
subject to pro-ration by reference
to a twelve-month period from
the grant date (as defined) and
the two-year post-vesting holding
period will end.
Annual
bonus
No entitlement for year
of exit. Payments in
earlier years may be
subject to clawback in
certain circumstances.
Annual bonus is pro-rated
(based upon timing) and
subject to performance for
year of exit.
Any DBP awards, which include
compulsory and voluntary
deferral and matching shares,
(at Committee discretion)
vest in full at either the normal
vesting date or on cessation
ofemployment.
Extent to which performance
requirements are satisfied in year
determines level of annual bonus.
If within twelve months of a
change of control the individual
is given notice or there is a
material change to their duties
precipitating departure, there
would be an additional payment
due of 150% of target bonus for
the CEO and 100% for the CFO
and any other Executive Directors.
Any unvested DBP awards will
vestin full on the date of the
relevant event.
LTIP
Unvested awards lapse.
Vested awards may be
subject to clawback in
certain circumstances.
Anyvested awardswill
normally remainsubject
to the two-year
post-vesting holding
period.
Unvested awards may be
pro-rated based upon the rules
of the LTIP plan (at Committee
discretion) and vest on either
the normal vesting date or
cessation of employment.
Vested awards may be
subject to clawback in certain
circumstances. Anyvested
awards will normally remain
subject to the two-year post-
vesting holding period.
Unvested awards may be
pro-rated based upon the rules
of the LTIP plan (at Committee
discretion) andvest on the date of
the relevant event. Vested awards
may be subject to clawback in
certain circumstances and the
two-year post-vesting holding
period willend.
Directors’ report
McBride plc Annual Report and Accounts 2022
119
Executive Directors’ service contracts
Service contracts stipulate that the Executive Directors will provide services to the Company on a full-time basis.
Copies of the Executive Directors’ service contracts are available for inspection at the Company’s registered oce.
Date of service Notice
Executive Director
(1)
contract period
(2)
Chris Smith 11 June 2020 6 months
Mark Strickland 4 January 2021 6 months
(1) All Directors are re-elected on an annual basis.
(2) By either the Company or the Executive Director. In exceptional circumstances, notice periods of up to a maximum of twelve months may be oered
to newly recruited Directors. The service contract is of an unlimited duration.
The contracts contain restrictive covenants for periods of up to six months post-employment relating to
non-competition and non-solicitation of the Group’s customers, suppliers and employees and indefinitely with
respect to confidential information. In addition, they provide for the Group to own any intellectual property rights
created by the Directors in the course of their employment.
The employment contracts for Executive Directors are structured on a similar basis to the US ‘double trigger’ in the
event of a change of control. If the change of control is followed within twelve months by the Executive Director
being given notice or there is a material change in their duties precipitating their departure, the Chief Executive
Ocer would receive an additional payment equivalent to 18 months’ salary and 150% of target bonus for the
relevant period. For the Chief Financial Ocer and any other Executive Director, this payment will be by reference
to twelve months’ salary and 100% of target bonus.
Remuneration performance scenarios 2022/23
The Executive Directors’ remuneration packages comprise both core fixed elements (base salary, RSUs, pension
and benefits) and performance-based variable pay. The charts below illustrate the composition of the Chief
Executive Ocer’s and Chief Financial Ocer’s remuneration packages (£’000) at minimum, target, maximum
andmaximum +50% share price growth for 2022/23 in line with policy.
Minimum Maximum
Target
Fixed pay
2,000,000
200,000
1,200,000
400,000
1,400,000
1,800,000
1,600,000
Annual bonus Long-term incentive
0
800,000
1,000,000
600,000
Maximum +50%
share price growth
£1,817,000
£1,048,000
£554,000
31%
45%
24%
36%
36%
28%
53%
26%
21%
100%
CEO
£1,542,000
Minimum Maximum
Target
Fixed pay
2,000,000
200,000
1,200,000
400,000
1,400,000
1,800,000
1,600,000
Annual bonus Long-term incentive
0
800,000
1,000,000
600,000
Maximum +50%
share price growth
£1,038,000
£615,000
£338,000
33%
42%
25%
38%
32%
30%
55%
24%
21%
100%
CFO
£892,000
(1) Fixed pay comprises salary for the financial year beginning 1July2022, RSUs, benefits and cash allowance in lieu of pension.
(2) Bonus includes both the cash element and the deferred share element but it is assumed that no voluntary deferral takes place and therefore no
matching award is made.
(3) Assumptions when compiling the charts are:
• minimum = fixed pay only (i.e. salary, RSUs face value at grant (i.e. 15% of annual salary), benefits and pension);
• target = fixed pay plus 50% of annual bonus payable and 50% vesting of LTIP;
• maximum = fixed pay plus 100% of annual bonus payable and 100% of LTIP vesting; and
• maximum +50% share price growth = fixed pay plus 100% of annual bonus payable and 100% of LTIP vesting at a 50% higher share price than
when the LTIP was awarded.
Directors’ report
McBride plc Annual Report and Accounts 2022
120
Remuneration Committee report continued
Remuneration Policy continued
External appointments
Executive Directors are permitted, where appropriate and with Board approval, to assume non-executive
directorships of other organisations. Where the Company releases the Executive Directors to carry out
non-executive duties, they will be required to disclose the fact that they retain any earnings and the amount
of suchremuneration. During the year ended 30 June 2022, neither Executive Director held any external
non-executive directorships.
Non-Executive Directors’ letters of appointment
Set out below is information regarding the dates of the letters of appointment and notice periods for the Chairman
and the Non-Executive Directors.
Copies of the letters of appointment are available for inspection at the Company’s registered oce.
Latest letter of Date first appointed
Director
(1)
appointment to the Board Notice period
(2)
Je Nodland 21/06/2019 26/06/2019 3 months
Steve Hannam 03/09/2019 04/02/2013 3 months
Elizabeth McMeikan 14/11/2019 14/11/2019 3 months
Neil Harrington
(3)
03/09/2019 03/01/2012 3 months
Igor Kuzniar 31/05/2019 03/06/2019 3 months
Alastair Murray 01/07/2021 02/08/2021 3 months
Regi Aalstad 17/02/2022 14/03/2022 3 months
(1) All Directors stand for re-election on an annual basis at the AGM.
(2) Terminable at the discretion of either party. Appointments may be terminated without compensation in the event of them not being re-elected by
shareholders or otherwise in accordance with the Articles. Appointments are of an unlimited duration subject to note 1 above.
(3) Neil Harrington stood down as a Non-Executive Director on 19 October 2021.
Any appointment for more than nine years in total will be subject to annual review by the Board, as well as
shareholder approval. Consideration will be given to the importance of refreshing the membership of the Board and
avoiding any undue reliance on any particular individual, whilst assessing the contribution made by that individual,
together with the ongoing commitment required to the role and the benefit gained from any continuity of handover
with newer members of the Board. Further information on the Board’s assessment of independence and succession
planning can be found in the Nomination Committee report on pages 92 to 97.
Directors’ report
McBride plc Annual Report and Accounts 2022
121
Annual Report on Remuneration
Application of the shareholder-approved 2020 Remuneration Policy for 2021/22
Single total remuneration figure for the Executive Directors (audited)
The table below sets out a single total remuneration figure for the position of the Executive Directors in oce for the
2021/22 financial year:
Performance-related
Fixed remuneration remuneration
Base Total fixed Annual Total variable
salary RSU
(2,3)
Benefits
(4)
Pension
(5)
remuneration
bonus LTIPs remuneration Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Chris Smith
2021/22 439 64 13 35 551 — — — 551
2020/21 437 65 14 35 551 — — — 551
Mark Strickland
(1)
2021/22 264 40 13 21 338 — — — 338
2020/21 134 20 7 10 171 — — — 171
(1) Mark Strickland was appointed CFO on 4 January 2021.
(2) The RSU grants have been included for Chris Smith: (i) using the closing share price for the day prior to the eective date of grant of 11 June 2020
for the initial award as this was eectively backdated to the date he was appointed as CEO with 20/365ths of this included in 2019/2020 and
345/365ths of this included in 2020/21; (ii) using the closing share price for the day prior to the date of grant of 11 June 2021 for the second award
with 20/365ths of this included in 2020/2021 with the remaining 345/365ths of this included in 2021/22; and (iii) using the closing share price for
the day prior to the date of grant of 13 June 2022 for the third award with 18/365ths of this included in 2021/22 with the remaining 347/365ths of
this to be included in 2022/23.
(3) The RSU grants have been included for Mark Strickland: (i) using the closing share price for the day prior to the eective date of grant of
25February2021 for the initial award with 6/8ths of this included in 2020/2021 and the remaining 2/8ths of this included in 2021/22; and (ii) using
the closing share price for the day prior to the date of grant of 9 September 2021 for the second award with 10/12ths of this included in 2021/22
and the remaining 2/12ths of this to be included in 2022/23.
(4) Benefits consist of the provision of a company car and fuel (or cash equivalent), private healthcare, disability insurance and life cover.
(5) The pension figure represents the value of the Company’s contribution to the individual’s pension scheme and/or the cash value of payments in lieu
of pension contribution.
Pension (audited)
Both Chris Smith and Mark Strickland receive a pension supplement in lieu of contributions to a pension scheme
of 8% of salary, which is in line with that available to the majority of the UK general workforce. The Company has
a contracted agreement with the Executive Directors that this payment relieves the Company of any liability for
pension provision on their behalf.
Annual bonus (audited)
For the 2021/22 financial year, the maximum bonus opportunity for the Executive Directors was 100% of base
salary. 80% of bonus was based upon financial performance and 20% for performance against demanding specific
measurable personal objectives.
Financial element outcomes
Actual
Performance targets
(3)
(£m) performance Payout
Threshold Target Stretch £m (% of salary)
Group adjusted EBITA
(1,2)
15.39 16.2 20.25 £(24.5)m —
(1) Please refer to APM in note 2.
(2) Excludes amortisation of intangibles and exceptional costs.
(3) EBITA as a percentage of target will be calculated on a straight-line basis between the threshold and target and between target and stretch.
Personal element outcomes
Both Executive Directors were set two personal objectives to be measured as a whole, weighted at a maximum of
20% as follows:
1. For both Executive Directors: develop a series of options/ideas for value creation that go beyond Programme
Compass, which could include: big ideas on eciencies, commercial targets, absolute costs; reduce earnings
volatility – pricing and input cost mitigations; and acquisition or disposals or co-operation arrangements.
2. For Chris Smith: ensure Programme Compass continues to deliver on its strategic objectives.
3. For Mark Strickland: cost reduction plan that goes beyond the planned reductions for 2020/21 and 2021/22
withspecific timelines.
Notwithstanding Chris and Mark performed well against their personal objectives throughout the year, the
Committee determined that no payment would be payable in respect of their personal objectives in line with the
scheme rules, as the outcome of the financial element did not meet the threshold performance target.
Directors’ report
McBride plc Annual Report and Accounts 2022
122
Remuneration Committee report continued
Annual Report on Remuneration continu ed
LTIP (audited)
In the year under review, LTIP awards were granted to both Executive Directors in September 2021 under the
McBride plc 2014 LTIP. These awards were granted in the form of conditional share awards.
Detailed assumptions used in calculating the fair value of the awards are outlined in note 24 to the consolidated
financial statements on page 193.
Interests of Directors under the McBride plc 2014 LTIP at 1 July 2021 and 30 June 2022 are set out below:
Market price
Number of Number of the day
awards at Awards Allocations awards at before the
Date of 1 July Allocated vested in lapsed 30 June date of Vesting Performance
Director award 2021 in year year in year 2022 award (£) date period
Chris Smith 10/09/2018 248,006 — — 248,006 — 1.3040 11/09/2021 1 July 2018-
30 June 2021
07/10/2019 585,870
(1)
— — — 585,870 0.552 08/10/2022 1 July 2019-
30 June 2022
10/09/2020 877,016 — — — 877,016 0.62 10/09/2023 1 July 2020-
30 June 2023
09/09/2021 — 716,955
(2)
— — 716,955 0.766 09/09/2024 1 July 2021-
30 June 2024
Total 1,710,892 716,955 — 248,006 2,179,841
Mark Strickland 25/02/2021 178,378
— — — 178,378 0.8140 25/02/2024 1 July 2020-
30 June 2023
09/09/2021 — 379,112
(2)
— — 379,112 0.766 09/09/2024 1 July 2021-
30 June 2024
Total 178,378 379,112 — — 557,490
(1) The LTIP awards granted on 7 October 2019 were based on performance over the three years to 30 June 2022. On 27 July 2022 the Committee
reviewed the related performance conditions (as detailed in the tables below) and determined that the Company had not achieved threshold
performance in either element and all the awards therefore lapsed on 7 October 2022.
(2) Awards were granted on the basis of 125% of salary for Chris Smith and 110% of salary for Mark Strickland. The face value of the awards are Chris
Smith: £549,188 and Mark Strickland: £290,400.
The performance conditions attaching to awards under the LTIP included in the preceding table are:
Grant October 2019
a) 50% of the award is subject to a relative Total Shareholder Return (TSR) performance condition measured
against the FTSE SmallCap Ex. Investment Companies Index as the comparator group. If the Company’s TSR
performance is lower than the median of the comparator group, awards subject to the TSR condition will lapse.
The TSR measure is based upon the average of three months’ share prices immediately preceding the relevant
performance date and is independently calculated for the Committee.
TSR performance of the Company % of total award
relative to the comparator group
(1)
vesting (max 50%)
Below the median —
Equal to the median (threshold) 12.5
Upper quartile (maximum) 50
(1) The awards vest on a straight-line basis between threshold and maximum.
b) 50% of the award is subject to a performance condition based on the compound annual growth rate in earnings
per share (EPS) as set out in the table below. Awards subject to the EPS condition will lapse if below the stated
minimum growth rate in each year.
% of total award
Grant Oct 2019 vesting (max 50%)
(1)
<8% p.a. —
8% p.a. (threshold) 10
17% p.a. (maximum) 50
(1) The awards vest on a straight-line basis between threshold and maximum.
Directors’ report
McBride plc Annual Report and Accounts 2022
123
TSR and EPS performance are measured over the period of three consecutive financial years of the Company,
beginning with the year of grant of the award. There will be no resetting or retesting of the performance conditions,
other than in exceptional circumstances as set out on page 113. The Committee has noted the decrease in the
issued share capital during 2020/21 due to the share buy-back. Following a careful review of the last three years’
performance against the pre-agreed measures, the Committee determined that the 2019 LTIP awards would not
vest, as the performance measures had not been satisfied.
Grant September 2020, Grant February 2021 and Grant September 2021
a) 50% of the award is subject to a ROCE performance condition. ROCE is defined as the adjusted operating
profit
(1)
as a percentage of average capital employed in the period. Operating profit is defined as EBITA adjusted
for the amortisation of tangible assets and exceptional items. Capital employed is defined as tangible and
intangible fixed assets, including goodwill plus inventories and current trade and other receivables less current
trade and other payables.
ROCE % of total award
Grant Sept 2020 and February 2021 vesting (max 50%)
(2)
<14.8% —
14.8% 5 (threshold)
17.2% 25 (target)
18.6% 50 (maximum)
ROCE % of total award
Grant Sept 2021 vesting (max 50%)
(2)
<11.6% —
11.6% 5 (threshold)
14.0% 25 (target)
15.4% 50 (maximum)
(1) Please refer to APM in note 2.
(2) The awards vest on a straight-line basis between threshold and target and between target and maximum.
b) 50% of the award is subject to an EPS performance condition as set out in the table below.
EPS Compound Annual Growth Rate (CAGR)
(1)
% of total award
Grant Sept 2020 and February 2021 vesting (max 50%)
(2)
<7% p.a. —
7% p.a. 5 (threshold)
14.3% p.a. 25 (target)
21.1% p.a. 50 (maximum)
EPS Compound Annual Growth Rate (CAGR)
(1)
% of total award
Grant Sept 2021 vesting (max 50%)
(2)
<12.6% p.a. —
12.6% p.a. 5 (threshold)
21.95% p.a. 25 (target)
31.3% p.a. 50 (maximum)
(1) Adjusted to include eects of amortisation of intangible assets and exceptional items.
(2) The awards vest on a straight-line basis between threshold and target and between target and maximum.
ROCE and EPS performance are measured over the period of three consecutive financial years of the Company,
beginning with the year of grant of the award. There will be no resetting or retesting of the performance conditions,
other than in exceptional circumstances as set out on page 113.
Directors’ report
McBride plc Annual Report and Accounts 2022
124
Remuneration Committee report continued
Annual Report on Remuneration continu ed
Restricted Share Unit Plan (RSU) (audited)
The RSU was approved by shareholders at the 2020 AGM on 23 November 2020. In the year under review, RSU
awards were granted to Chris Smith and Mark Strickland under the McBride plc 2020 RSU. These awards were
granted in the form of conditional share awards.
Interests of Directors under the McBride plc 2020 RSU at 1 July 2021 and 30 June 2022 are set out below:
Market price
Number of Number of the day
awards at Awards Allocations awards at before the
Date of 1 July Allocated vested in lapsed 30 June date of Vesting
Director award 2021 in year year in year 2022 award (£) date
Chris Smith 23 December 2020
(1)
98,864 — — — 98,864 0.66
(1)
11 June 2023
(1)
11 June 2021
(2)
74,382 — — — 74,382 0.886 11 June 2024
13 June 2022
(3)
— 216,073 — — 216,073 0.305 13 June 2025
Total 173,246 216,073 — — 389,319
Mark Strickland 25 February 2021
(4)
32,432 — — — 32,432 0.814 25 February 2024
9 September 2021
(5)
— 51,697 — — 51,697 0.766 9 September 2024
Total 32,432 51,697 — — 84,129
(1) The RSU plan was approved by shareholders at the 2020 AGM on 23 November 2020. Following the approval of the RSU, McBride plc resolved
to grant RSU awards on 23 December 2020, with a deemed grant date of 11 June 2021, being the date that Chris Smith was appointed as CEO.
This led to two grants in the financial year 2020/21. This was because the award formed part of his CEO remuneration package from his date of
appointment. The share price disclosed of £0.66 was the closing share price on 10 June 2021 which was used by the Committee to determine the
number of shares subject to the award such that the total value would be 15% of his salary and has therefore been included above. Based on this
price, the face value of the award was £65,250, being 15% of his base salary. The closing share price on the day prior to the actual date of grant
was£0.886.
(2) The face value of the award granted to Chris Smith on 11 June 2021 was £65,902, being 15% of his base salary.
(3) The face value of the award granted to Chris Smith on 13 June 2022 was £65,902, being 15% of his base salary.
(4) The face value of the award granted to Mark Strickland on 25 February 2021 was £26,400, being 15% of 8/12ths of his base salary (as the RSU
award was only meant to cover the period from January to August with future awards being made in September each year).
(5) The face value of the award granted to Mark Strickland on 9 September 2021 was £39,599, being 15% of his base salary.
Deferred Annual Bonus Plan (DBP) (audited)
No awards were made under the McBride plc 2012 Deferred Annual Bonus Plan during the year. Neither of the
Executive Directors currently have any outstanding awards under this plan.
Single total remuneration figure for the Non-Executive Directors (audited)
2021/22 2020/21
Committee Committee
Base Chair/ Base Chair/
fee SID fee Benefits
(1)
Total fee SID fee Benefits
(1)
Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Je Nodland
(2)
200 — 49 249 200 — 1 201
Steve Hannam 50 8 — 58 49 8 — 57
Neil Harrington
(3)
20 — — 20 49 9 — 58
Igor Kuzniar 50 — 1 51 49 — — 49
Elizabeth McMeikan 50 8 — 58 49 8 — 57
Alastair Murray
(4)
46 6 — 52 — — — —
Regi Aalstad
(5)
15 — — 15 — — — —
(1) Benefits comprise reimbursement of expenses on a gross of tax basis incurred by Non-Executive Directors in the course of carrying out their roles
which are considered by HMRC to be taxable.
(2) Je Nodland received a travel allowance of £45,833 during the year.
(3) Neil Harrington stepped down as Chair of the Audit and Risk Committee and from the Board on 19 October 2021.
(4) Alastair Murray joined the Board on 2 August 2021 and was appointed the Chair of the Audit and Risk Committee on 19 October 2021.
(5) Regi Aalstad joined the Board on 14 March 2022.
Directors’ report
McBride plc Annual Report and Accounts 2022
125
Statement of Directors’ shareholding and share interests (audited)
At
28 September
At 30 June 2022 2022 At 1 July 2021
Total shares Value % Shareholding Shareholding Conditional Total shares Conditional
beneficially of shares of annual requirement/ requirement/ share Share beneficially share
owned
(1)
£’000 base salary guideline %
(2)
guideline met
(2)
awards
(3)
holding owned
(1)
awards
(3)
Je Nodland 664,600 103 51.5 100 Below guideline N/A 664,600 464,600 N/A
Steve Hannam 75,126 9 23.2 100 Below guideline N/A 75,126 75,126 N/A
Neil Harrington
(4)
64,395 10 — 100 — N/A N/A
(6)
64,395 N/A
Igor Kuzniar
(5)
— — — N/A — N/A — — —
Elizabeth McMeikan 29,000 4 0.09 100 Below guideline N/A 29,000 15,790 N/A
Alastair Murray — — — 100 Below guideline N/A — N /A
(6)
N/A
Regi Aalstad 80,000 12 24.8 100 Below guideline N/A 80,000 N/A
(6)
N/A
Chris Smith
(7)
436,928 68 15.4 300 Below requirement 2,569,160 436,928 393,669 1,884,138
Mark Strickland
(8)
45,923 7 0.03 200 Below requirement 641,619 45,923 — 210,810
(1) Changes in the current Directors’ interests in shares in the Company and those of their Connected Persons between the end of the financial year
and 29 September 2022 are shown in the table above.
(2) Executive Directors have a shareholding requirement equal to a multiple of base salary; 300% in the case of the CEO and 200% in the case of
the CFO which they are expected to reach within five years of their appointment. NEDs have a shareholding guideline equivalent to 100% of their
annual base fee.
(3) The conditional share awards have been made under the McBride plc 2014 LTIP, 2020 Restricted Share Unit Plan and the 2020 Deferred Annual
Bonus Plan. The conditions to which the share awards are subject are set out on pages 122 to 124.
(4) Neil Harrington stepped down from the Board on 19 October 2021. This sets out his shareholding at the time of his stepping down from the Board.
(5) Igor Kuzniar is the appointed representative of McBride plc’s largest shareholder Teleios Capital Partners GmbH and therefore the NED guidelines
do not apply to him.
(6) Not in employment at this date, therefore N/A.
(7) Of the CEO’s 2,569,160 shares subject to conditional awards (2020/21: 1,884,138), 389,319 (2020/21: 173,246) were granted as RSUs and hence are
not subject to performance measures and are only subject to continued employment.
(8) Of the CFO’s 641,619 shares subject to conditional awards (2020/21: 210,810), 84,129 (2020/21: 32,432) were granted as RSUs and hence are not
subject to performance measures and are only subject to continued employment.
None of the Directors had any interest in the shares of any subsidiary company.
Shareholder dilution
Awards under executive share plans are currently being satisfied by market purchase shares acquired by the
Employee Benefit Trust which held 587,159 shares at 30 June 2022 that were available to satisfy subsisting awards.
However, newly issued shares may be used in future to satisfy these awards. There are no all-employee share plans.
The Company monitors the number of shares issued under these schemes and their impact on dilution limits.
The Company’s maximum usage of shares compared with the dilution limits set by the Investment Association in
respect of executive share plans (5% in any rolling ten-year period) as at 30 June 2022 is as follows:
Executive share plans
Actual 4.07%
Limit 5.0%
This reduces to 3.17% following the Committee determining on 27 July 2022 that the remaining 1,562,107
September2019 awards lapsed in full.
Directors’ report
McBride plc Annual Report and Accounts 2022
126
Remuneration Committee report continued
Annual Report on Remuneration continu ed
Review of past performance
The graph below charts the TSR (share value movement plus reinvested dividends), over the ten years to
30June2022, of shares in McBride plc compared with that of a hypothetical holding in the FTSE SmallCap
Ex. Investment Companies Index. The Directors consider this index to be an appropriate comparator group for
assessingthe Company’s TSR as it provides a well-defined, understood and accessible benchmark.
McBride FTSE SmallCap
Jun
12
0
300
£
50
100
150
200
250
Jun
22
Jun
21
Jun
20
Jun
19
Jun
18
Jun
17
Jun
16
Jun
15
Jun
14
Jun
13
350
This graph shows the value, by 30 June 2022, of £100 invested in McBride plc on 30 June 2012, compared with the
value of £100 invested in the FTSE SmallCap Index (excluding Investment Trusts) on the same date.
The following table shows the historic Chief Executive Ocers’ levels of total remuneration (single figure of total
remuneration), together with annual bonus and LTIP awards as a percentage of the maximum available.
Total Annual LTIP % of
remuneration bonus % of maximum
CEO/financial year £’000 maximum vested
(6)
Chris Smith
(1)
2021/22 552 — —
2020/21 551 — —
2019/20
(2)
497 24.8 —
Ludwig de Mot
(3)
2019/20
(2)
368 — —
Rik De Vos
(4)
2018/19 592 — —
2017/18 890 — 62.5
2016/17 1,169 70.8 100.0
2015/16 893 98.5 —
2014/15 357 89.0 —
Chris Bull
(5)
2014/15 253 — —
2013/14 512 — —
2012/13 512 — —
(1) Chris Smith was appointed CEO with eect from 11 June 2020 having previously been CFO since 15 July 2014.
(2) For 2019/20, the total remuneration has been adjusted to include the single figure calculation.
(3) Ludwig de Mot was appointed CEO with eect from 1 November 2019 and left the business on 10 June 2020.
(4) Rik De Vos was appointed CEO with eect from 2 February 2015 and left the business on 31 August 2019.
(5) Chris Bull was appointed CEO with eect from 4 May 2010 and left the business on 18 December 2014.
(6) The LTIP % of maximum is the percentage of shares vesting compared to the maximum that could have vested.
Directors’ report
McBride plc Annual Report and Accounts 2022
127
Annual percentage change in remuneration of Directors and employees
The table below shows the annual percentage change in remuneration of Directors and UK employees over the
last two financial years. Although the Company has an international workforce, this group has been chosen as it
continues to represent the most meaningful comparator group to compare to the UK-based Executive Directors.
Where there are no prior years to compare to, the value is marked as not applicable.
Salary/fees change
(1)
Benefits change
(1)
Bonus change
(1)
2020 2021 2022 2020 2021 2022 2020 2021 2022
Executive Directors
Chris Smith
(2)
17.0% 27.0% 0.5% 22.8% (6.6%) (2.0%) N/A (100.0%) N /A
Mark Strickland
(3)
N/A N/A 96.47% N/A N/A 102.57% N/A N/A N/A
Non-Executive Directors
Steve Hannam — 8.7% 2.7% 89.9% (100.0%) — N/A N/A N/A
Neil Harrington
(4)
— 10.1% (65.7%) (100.0%) — 100% N/A N/A N /A
Igor Kuzniar N/A — 2.56% N/A (100.0%) 100% N/A N/A N /A
Elizabeth McMeikan N/A 91.6% 2.65% N/A — — N/A N/A N /A
Je Nodland
(5)
N/A 62.9% —% N/A (95.9%) 3,602.8% N/A N/A N /A
Comparator group
Average for UK employees
(6)
1.3% 7.6% 2.1% N/A (65.7%) (21.5%) 9.5% 417.4% (18%)
(1) Footnotes in relation to 2020 and 2021 percentage changes can be found in the Annual Report and Accounts for the relevant year.
(2) No bonus was paid in respect of 2018/19, 2020/21 and 2021/22.
(3) Mark Strickland was appointed CFO partway through 2020/21 on 4 January 2021, hence the significant percentage increase in salary and benefits
in2021/22 when he served a full year.
(4) Neil Harrington stepped down as Chair of the Audit and Risk Committee and from the Boardon 19 October 2021.
(5) The Chairman received a travel allowance of £45,833 during 2021/22, whereas in 2020/21 he only received £1,323 as a result of Covid-19-related
restrictions on travel, resulting in the significant percentage increase in benefits.
(6) The calculations for the comparator group are based upon the average values for UK-based employees (other than Directors) that were
employedbyRobert McBride Ltd versus the same criteria for the previous financial year. Last financial year there were 481 employees in the
comparatorgroup versus 471 employees at the end of this financial year. Pension benefits and long-term incentive awards are excluded from
the calculation. The comparator group data is being reported in this way as all of the employees of McBride plc are Directors and therefore the
comparisonrequired by the Regulations cannot be shown.
CEO pay ratio
Under Option B of The Companies (Miscellaneous Reporting) Regulations 2018, the latest available gender pay
gap data was used to identify the best equivalent comparison for the three UK-based employees whose pay is at
the 25th, 50th (median) and 75th percentiles of the comparator group. There were 465 UK-based employees in
the comparator group. This calculation methodology was selected as it provides the most consistent company
approach for identifying meaningful equivalents which are reasonably representative of the percentiles and are
aligned to our approach to UK gender pay gap reporting.
The ratios shown in the table compare the total remuneration for the relevant UK-based employees to the current
CEO single total remuneration figure. The ratios continue to reduce in 2021/22, primarily as a result of the fact
that the CEO did not receive an annual bonus in respect of 2020/21. This means that in future years the pay ratio
may increase if a bonus award is paid to the CEO. Our ratio for 2021/22 of 14.8:1 to our median employee total
remuneration, is also lower than the median of the ratios in other FTSE SmallCap companies, which is around 27:1.
This relatively low ratio is consistent with the pay, reward and progression policies applicable to the Company’s
employees as a whole. All employees are eligible for incentives, salaries are based on role size and market
benchmarks, and there are similar pension contributions (in terms of percentage of salary) for the Executive
Directors compared to the median employee. It is also worth noting that the CEO’s single figure for 2019/20 was
calculated using a cumulative pro-rata single figure to represent the pay of the three dierent CEOs that had been
appointed throughout that year.
25th percentile Median 75th percentile
Year Method pay ratio pay ratio pay ratio
2021/22
(1)
Option B 17.8:1 14.8:1 9.6:1
2020/21
(1)
Option B 20.5:1 16.6:1 11.1:1
2019/20 Option B 23.1:1 19.7:1 14.2:1
(1) The ratios shown in the table compare total remuneration for the three relevant UK-based employees to a CEO single total remuneration figure that
includes base salary, RSUs, benefits and pension only as there were no incentive payments in respect of 2020/21 and 2021/22. Typically, a significant
proportion of the CEO’s pay is delivered through incentives where performance conditions are met. This means that in future years the pay ratio may
increase if incentive awards are paid to the CEO.
Directors’ report
McBride plc Annual Report and Accounts 2022
128
Remuneration Committee report continued
Annual Report on Remuneration continu ed
CEO pay ratio continued
The table below shows the total remuneration and salary for each quartile of UK employees as at 23 April 2021.
25th 75th
percentile Median percentile
Salary £27,968 £32,836 £51,867
Total remuneration £30,979 £37,288 £57,324
Relative importance of spend on pay
The table below shows the total amount of distributions to shareholders and the amount paid to buy back shares
compared to the total payroll costs for the Group for the financial years ended 30 June 2021 and 30 June 2022.
Year ended Year ended
30 June 30 June
2021 2022
£m £m % change
Shareholder distribution Nil Nil N /A
Amounts paid to buy back shares 6.8 Nil N /A
Total payroll costs
(1)
(of all Group employees including Directors) 128.9 126.2 (2.3)
(1) Total payroll costs excludes termination benefits.
Compliance with the UK Corporate Governance Code (‘the Code’)
The table below summarises how we have complied with the Code during the year.
Remuneration provision of the Code Alignment with Policy
Five-year period between the date of
grant and realisation of equity incentives
The LTIP has a three-year performance period and a two-year
post-vesting holding requirement.
Post-cessation shareholding requirement
There is a formal post-cessation holding policy, requiring
Executive Directors to maintain their in-employment shareholding
for a minimum of twelve months post-cessation.
Pension alignment
The pension contribution/allowance for all Executive Directors is
aligned with the workforce level of 8% of salary.
Only basic salary is pensionable.
Discretion to override formulaic
outcomes
Discretion to override formulaic outcomes and scale back awards
is included for the annual bonus and Long-Term Incentive Plan.
Extended malus and clawback
Malus and clawback triggers apply to the RSU, annual bonus
(both cash and deferred) and Long-Term Incentive Plan in the
event of an error in calculation, a material misstatement of the
financial results, serious misconduct by a participant, corporate
failure or reputational damage.
Notice periods should be a year or less
Executive Directors have a six-month notice period.
Directors’ report
McBride plc Annual Report and Accounts 2022
129
Application of the Remuneration Policy for the 2022/23 financial year
The table below sets out how the Remuneration Policy is intended to be applied for the 2022/23 financial year for
Chris Smith and Mark Strickland. There is no change to the way the Remuneration Policy will be implemented in the
current financial year compared to the previous financial year.
Element Application of Policy for 2022/23 Explanation
Executive Director base salary
The Executive Directors’ salaries will
remain unchanged in 2022/23 at
£439,350 for the CEO and £264,000
for the CFO.
The Committee believes the Executive
Directors’ current salaries remain at
an appropriate level for 2022/23.
RSUs
An award of £65,902 (15% of
salary) was made to Chris Smith
on13June2022 in line with the RSU
plan, in respect of the twelve-month
period from 13 June 2022 to
12June2023.
An award of £39,600 (15% of salary)
will be made to Mark Strickland
during October 2022 in line with
the RSU plan, pending Committee
approval, in respect of the
twelve-month period from 3 October
2022 to 3 October 2023.
In line with the Remuneration Policy,
the Committee wishes to increase
the rate at which Executive Directors
acquire shares in the Company and
hence continue to structure part of
their fixed pay as RSUs.
Benefits
Pension contribution (or cash
allowance in lieu of pension) of 8%
ofsalary. Car allowance of £12,180 per
annum and private medical coverage
of £1,428 per annum.
Pension and private medical
allowance is fully aligned with the
majority of the UK general workforce.
Car allowance is based on the
Company Car Policy.
Annual bonus
The structure and operation of the
annual bonus scheme will continue
inline with the previous financial year.
The maximum bonus opportunity
continues to be 100% of salary. 40%
of the award will be subject to a
sliding scale of challenging operating
profit targets, 40% of the award
will be subject to a sliding scale of
working capital targets and 20% will
be subject to specific measurable
personal targets.
The Committee considers that
the forward-looking targets are
commercially sensitive and has,
therefore, chosen not to disclose
them in advance. Details of the
targets will be set out retrospectively
in next year’s Remuneration report;
however, the targets are considered
to be demanding in the context of the
Company’s circumstances.
Directors’ report
McBride plc Annual Report and Accounts 2022
130
Remuneration Committee report continued
Annual Report on Remuneration continu ed
Application of the Remuneration Policy for the 2022/23 financial year continued
Element Application of Policy for 2022/23 Explanation
LTIP
The LTIP awards to be granted in
2022/23 will be subject to EPS and
net debt to EBITDA ratio with equal
weighting.
The intended Executive Director grant
level for the LTIP is 125% of salary
for the CEO and 110% of salary for
the CFO. The number of shares to
be granted will be determined using
the share price of 35 pence or the
prevailing share price on the day of
grant, if higher. The Committee will also
carry out an overall assessment of the
Company’s underlying performance
and the vesting outcome of the LTIP to
ensure the vesting reflects Company
performance and that there is no
windfall gain.
The past eighteen months have
significantly aected the Group’s
level of debt. This has been impacted
by higher levels of working capital
as well as trading losses arising from
inflationary pressures. As the Group
continues to manage the impact of
unprecedented inflation and disruption
to supply chains in the next few years,
it remains a focus of the business to
maintain a healthy cash flow and level
of debt relative to profit.
The EPS performance measure has
been selected as it is one of the KPIs
used in the business and is a measure
well understood by the senior
executives. It is also something which
they can influence directly.
TheCommittee is mindful of the
current share price compared to a
year ago and the resulting increase in
number of shares that will be granted.
The share price of 35 pence has been
chosen as it reflects the consensus
forecast of McBride’s share price in the
forthcoming year.
Non-Executive Director fees
The fee policy for the Chairman and
Non-Executive Directors is as follows:
• base Chairman fee: £200,000;
• base Non-Executive Director fee:
£50,000;
• Chair of the Audit and Risk
Committee: £9,000 (additional fee);
• Chair of the Remuneration
Committee: £8,000 (additional
fee);
• Senior Independent Director:
£8,000 (additional fee);
• international travel allowance for
the Chairman up to £50,000; and
• international travel allowance
for NEDs based overseas up to
£15,000.
The Chairman’s fees were reviewed
and increased in 2020. The
current fee is considered to be
commensurate with market rate and
the time commitments of the role.
The other NED fees were reviewed
and increased in 2020. The fees are
considered to reflect market rate
and the time commitments of the
NEDs, therefore no fee increases
are proposed by the Board. The
introduction of international travel
allowances was to ensure that the
Company could continue to appoint
and retain overseas-based NEDs when
appropriate without needing to pay
higher base fees than are paid to
UK-based NEDs. There is no current
intention to provide an additional
allowance for any Non-Executive
Director other than the Chairman.
Directors’ report
McBride plc Annual Report and Accounts 2022
131
Exit payments (audited)
No exit payments were made to Executive Directors in the financial year.
Payments to past Directors (audited)
No payments to past Directors were made in the financial year.
Payments to third parties
No payments were made to third parties for making available the services of any of the Directors during 2021/22.
Remuneration Committee and advisers
At the time of this report, the members of the Remuneration Committee are Elizabeth McMeikan (Chair),
JeNodland, Steve Hannam, Regi Aalstad and Alastair Murray. Alastair Murray was appointed to the Committee
with eect from his appointment to the Board on 2 August 2021 and Regi Aalstad was appointed to the Committee
with eect from her appointment to the Board on 14 March 2022. In determining the remuneration structure, the
Committee appoints and receives advice from independent remuneration consultants on the latest developments
in corporate governance and the pay and incentive arrangements prevailing in comparably sized manufacturing
companies. Alvarez & Marsal Taxand UK LLP (‘A&M’) were appointed by the Committee in June 2020 when the lead
adviser moved from Aon plc to A&M. A&M received £37,945 in respect of the services provided for the 2021/22
financial year. A&M is a member of the Remuneration Consultants Group and is a signatory to its Code of Conduct
which sets out guidelines to ensure that any advice is independent and free of undue influence.
The Committee is satisfied that the advice provided by A&M was independent and objective. The Committee is
also satisfied that the team who provided that advice do not have any connection to McBride that may impair their
independence or objectivity.
Statement of shareholder voting
The table below shows the voting outcome at the November 2021 AGM for the approval of the Company’s 2020/21
Remuneration report:
Votes Votes Votes
Resolution for % against % withheld
Approval of Remuneration report (advisory vote) 95,445,753 98.43 1,520,894 1.57 19,248,352
The Remuneration report was approved by the Board on 29 September 2022 and signed on its behalf by:
Elizabeth McMeikan
Chair of the Remuneration Committee
Directors’ report
McBride plc Annual Report and Accounts 2022
132
Statutory information
Reporting requirements
The Group is required to produce a Strategic report
complying with the requirements of section 414A of the
Companies Act 2006. The Strategic report is set out on
pages
1 to 79.
As permitted by section 414C(11) of the Companies Act
2006, the below matters have been disclosed in the
Strategic report.
An indication of likely future
development in the business
of the Company pages 14 and 15
Particulars of important events
aecting the Company since
the financial year end pages 183 and 198
Greenhouse gas emissions pages 44 and 45
Employee engagement
and involvement page 39
Engagement with suppliers,
customers and others in a business
relationship with the Company pages 40 and 41
A summary of the principal risks
facing the Company pages 71 to 79
The Corporate governance statement, as required by
the Disclosure and Transparency Rules (DTR) 7.2.1, is set
out on pages 85 to 91 of the Directors’ report.
For the purposes of DTR 4.1.8R the Strategic report and
the Directors’ report together form the management
report.
For the purposes of Listing Rule 9.8.4R, the information
required to be disclosed can be found on the following
pages:
Listing Rule Topic Location
4 Details of Remuneration
long-term report, pages
incentive 122 to 124
schemes
13 Dividend waiver Statutory
information,
page 132
Contracts with controlling shareholders
During the year, there were no contracts of significance
(as defined in the FCA’s Listing Rules) between any
Group undertaking and a controlling shareholder and
no contracts for the provision of services to any Group
undertaking by a controlling shareholder.
Group results
The results for the year are set out in the consolidated
income statement on page 144 and a discussion of the
Group’s financial performance and progress is set out
inthe Strategic report on pages 1 to 79.
Directors
The Directors who held oce at any time during
the year were JeNodland, Chris Smith, Mark
Strickland, SteveHannam, Neil Harrington, Elizabeth
McMeikan, Alastair Murray, Regi Aalstad and Igor
Kuzniar. NeilHarrington stepped down from the Board
on19October 2021.
Alastair Murray joined the Board on 2 August 2021 as
an independent Non-Executive Director. Details on his
appointment were included in our Annual Report for
thefinancial year ended 30 June 2021.
Regi Aalstad joined the Board on 14 March 2022
as an independent Non-Executive Director. Further
information on Regi Aalstad’s appointment can
be found in the Nomination Committee report.
The biographical details of all Directors serving at
30June2022 appear on pages 82 and 83.
Dividends
The Group’s results and performance highlights for the
year are set out on pages 1 to 79. The Board has agreed
with its lender group that no dividends will be paid until
it is in compliance with its banking covenants. Therefore,
the Board is not recommending a final dividend in 2022.
Continuing the policy outlined last year, future dividends
will be final dividends paid annually in cash, not by
the allotment and issue of B Shares. Existing B Shares
will continue to be redeemable but limited to one
redemption date per annum in November of each year.
Details of the scheme can be found in the booklet
entitled ‘Your Guide to B Shares’ and on the Company’s
website at www.mcbride.co.uk.
Sanne Fiduciary Services Limited, in its capacity as
trustee of the McBride Employee Benefit Trust, has
waived its entitlement to dividends on ordinary shares
in the Company comprised in the trust fund where
no beneficial interest in the shares has vested in a
beneficiary. This waiver will continue unless and until
theCompany directs the trustee otherwise.
Directors’ interests in the Company’s shares
The interests of persons who were Directors of
the Company (and of their Connected Persons) at
30June2022 in the issued shares of the Company (orin
related derivatives or financial instruments) which have
been notified to the Company in accordance with the
Market Abuse Regulation are set out in the Remuneration
report on page 125. The Remuneration report also sets
out details of any changes in those interests between
30June 2022 and 5 October 2022.
Directors’ report
McBride plc Annual Report and Accounts 2022
133
Indemnification of Directors
The Directors have the benefit of an indemnity provision
contained in the Articles of Association of the Company.
In addition, under deeds of indemnity, the Company
has granted indemnities in favour of each Director of
the Company in respect of any liability that he or she
may incur to a third party in relation to the aairs of
the Company or any Group company. Consequently,
qualifying third-party indemnity provisions for the
purposes of section 234 of the Companies Act 2006
were accordingly in force during the course of the
financial year and remain in force at the date of the
approval of this report.
During the financial year ended 30 June 2022 and up
to the date of this Directors’ report, the Company has
appropriate Directors’ and ocers’ liability insurance
cover in place in respect of legal action against its
Directors.
Directors’ interests in contracts
Other than service contracts, no Director had any
interest in any material contract with any Group
company at any time during the year. There were no
contracts of significance (as defined in the FCA’s Listing
Rules) during the year to which any Group undertaking
was a party and in which a Director of the Company is,
or was, materially interested.
Share capital
As at 29 September 2022, the issued share capital
ofthe Company was 174,015,287 ordinary shares
(20.717%oftotal year-end capital) of 10 pence each
(excluding treasury shares), 42,041 treasury shares
(0.005% of total year-end capital) and 665,888,258
BShares (79.278% of total year-end capital). There
were no purchases, sales or transfers of treasury
shares during the year. There were no allotments of
ordinary shares during the year. Details of the issued
share capital, together with details of movement in the
issued share capital of the Company during the year,
are shown in note 26 to the financial statements. This is
incorporated by reference and deemed to be part of this
report. The Company has one class of ordinary shares,
which carries no right to fixed income. The ordinary
shares are listed on the Ocial List and traded on the
London Stock Exchange. Allissued shares are fully paid.
The Company was authorised at the 2021 AGM to allot
shares, or grant rights over shares, up to an aggregate
nominal amount equal to £5,800,509 (representing
58,005,095 ordinary shares of 10 pence each excluding
treasury shares) representing approximately one-third
of its issued share capital. A renewal of this authority
will be proposed at the 2022 AGM.
The Company was authorised at the 2021 AGM to
allot up to an aggregate nominal amount of £870,076
(representing 8,700,764 ordinary shares of 10 pence
each and approximately 5% of the issued share
capital) for cash without first oering them to existing
shareholders in proportion to their holding. A renewal of
this authority will be proposed at the 2022 AGM.
There are no restrictions on the transfer of ordinary
shares or B Shares in the Company, other than certain
restrictions that may from time to time be imposed
by law. The Company is not aware of any agreements
between shareholders that may result in restrictions on
the transfer of securities and/or voting rights.
Purchase by the Company of its own shares
At the 2021 AGM, shareholders authorised the Company
to make market purchases of up to 17,401,528 ordinary
shares of 10 pence each, representing 10% of the issued
share capital of the Company (excluding treasury
shares). Any shares so purchased by the Company may
be cancelled or held as treasury shares. This authority
will cease at the date of the 2022 AGM.
On 7 September 2021, as stated in its final results
announcement, the Board ended the share buy-back
programme announced on 2 November 2020.
During the year, the Group purchased and cancelled
185,375 ordinary shares representing 0.1% of the
issued ordinary share capital as at 2November2020.
The buy-back and cancellation was approved by
shareholders at the 2020 AGM. The shares were
acquired at an average price of 77.0 pence per share,
with prices ranging from 73.3 pence per share to
78.6pence per share. The total cost of £0.1 million was
deducted from equity. A transfer of £nil was made from
share capital to the capital redemption reserve.
Directors’ report
McBride plc Annual Report and Accounts 2022
134
Statutory information continued
Substantial shareholdings
The Company had been notified in accordance with Chapter 5 of the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules of the following interests amounting to 3% or more of its issued share capital
asatthe end of the financial year and at 28 September 2022 (being the last practicable date prior to the date of
thisreport).
As at 28 September 2022 As at 30 June 2022
Number Number
Shareholder of shares % of shares %
Teleios Capital Partners 43,335,757 24.01 43,335,757 24.01
DUMAC, Inc. 30,716,748 16.80 30,716,748 16.80
Zama Capital 21,007,962 12.07 19,872,045 11.01
NN Investment Partners 9,085,000 4.97 9,085,000 4.97
Aberforth Partners LLP 9,072,968 5.21 9,072,968 5.21
Invesco Ltd. 8,952,597 4.89 8,952,597 4.89
Premier Miton Investors 8,347,899 4.76 8,347,899 4.76
No changes have been disclosed in the period since 28 September 2022.
Accounting policies
Information on the Group’s financial risk management
objectives, policies and activities and on the exposure
of the Group to relevant risks in respect of financial
instruments is set out in note 21 to the consolidated
financial statements on pages 179 to 188.
Political donations
It is the Group’s policy not to make political donations
or to incur political expenditure. During the year, no
political donations were made by the Group to any
EU or non-EU political party, political organisation
or independent election candidate. During the year,
no EU or non-EU political expenditure was incurred.
In keeping with the Group’s approach in prior years,
shareholder approval is being sought at the forthcoming
AGM, as a precautionary measure, for the Company
and its subsidiaries to make donations and/or incur
expenditure, which may be construed as political by
the wide definition of that term included in the relevant
legislation. Further details are provided in the Notice
ofAGM.
Research and development
The Group is involved in a range of activities in the
field of research and development. A number of these
activities are referred to in the Strategic report on
pages45 to 47.
Employment of disabled people
Our people policies are designed to provide equal
opportunities and create an inclusive culture in line with
our values and in support of our long-term success.
They also reflect relevant local employment law in our
countries of operation.
We expect our colleagues to treat each other with
dignity and respect, and do not tolerate discrimination,
bullying, harassment or victimisation on any grounds.
We are committed to recruiting, training and paying our
people fairly and equitably relative to their role, skills,
experience and performance – in a way that balances
the needs of all our business.
It is our policy to give full and fair consideration to
applications for employment received from people with
disabilities, having regard to their particular aptitudes
and abilities. Wherever possible we will continue the
employment of, and arrange appropriate training for,
colleagues who have become disabled during the
period of their employment. We provide the same
opportunities for training, career development and
promotion for colleagues with disabilities as for other
colleagues.
Creating an inclusive and supportive culture is not only
the right thing to do, but also best for our business.
Itcreates a sense of belonging and value and enables
colleagues to perform at their best.
Colleague engagement
We recognise the importance of keeping all colleagues
at all levels across the business up to date on the
strategy, performance and progress of the divisions
and Group through multi communication channels.
Thiscombines leader-led communication at a site,
divisional and Group level supported by emails,
intranet, the Group’s employee self-service portal,
announcements and bulletins.
Colleague engagement at all levels is a crucial element
of embedding our core and aspirational values, allowing
us to help colleagues see how their eorts contribute to
their site, division or function’s strategic objectives.
We also engage with our colleagues collectively through
a strong and eective partnership with our European
Works Council, which represents all colleagues within
the European Union, which meet biannually in addition
to other local works council forums.
Eligible employees participate in performance-related
bonus schemes and some senior managers participate
in an LTIP or RSU scheme.
Directors’ report
McBride plc Annual Report and Accounts 2022
135
Change of control
As at 30 June 2022 and at 5 October 2022, the nearest
practicable date prior to approval of this report, the
Company and its subsidiaries were party to a number
of commercial contracts, contract manufacturing
and brand licensing agreements that may allow the
counterparties to alter or terminate the agreements
on achange of control of the Company following a
takeover bid. The Group has a syndicated multi-currency
revolving loan facility for €175 million which may require
prepayment if there is a change of control of the
Company. The rules of the discretionary share schemes
set out the consequences of a change of control of the
Company on participants’ rights under the schemes.
Generally, the rights will vest and become exercisable
on a change of control subject to the satisfaction
of relevant performance conditions. There are no
arrangements between the Company and its Directors
or employees providing for compensation for loss of
oce or employment that occurs specifically because
of a takeover, merger or amalgamation. For further
information on the change of control provisions in the
Company’s share plans and service agreements, please
refer to the Directors’ Remuneration Policy, which is set
out in full in the Directors’ Remunerationreport.
Branches
The Company has no overseas branches. TheCompany’s
subsidiaries are detailed in note 14 to the financial
statements.
2022 Annual General Meeting
The Company’s 2022 AGM will be held on 16November
2022 at Central Park, Northampton Road, Manchester
M40 5BP at 2.00pm. Details of the resolutions to be
proposed, how to vote and ask questions are set out in
a separate Notice of Annual General Meeting which
accompanies this report for shareholders receiving hard
copy documents, and which is available on our website
at www.mcbride.co.uk for those who have elected to
receive documents electronically. The results will be
announced as soon aspossible and posted on
ourwebsite.
Disclosure of information to the auditor
Each of the Directors who held oce at the date of
approval of this Directors’ report confirms that, so far
as each Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware
and each Director has taken all the steps that ought
to have been taken in his or her duty as a Director to
make himself or herself aware of any relevant audit
information and to establish that the Company’s
auditoris aware of that information.
The Directors’ report was approved by the Board on
29September 2022 and signed on its behalf by:
Glenda MacGeekie
Chief Legal Ocer and Company Secretary
Directors’ report
McBride plc Annual Report and Accounts 2022
136
Statement of Directors’ responsibilities
inrespect of the financial statements
The Directors are responsible for preparing the Annual
Reportand Accounts and the financial statements in
accordancewith applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year that give a true and
fair view of the state of aairs of the Group and the
Company as at the end of the financial year, and of
the profit or loss of the Group for the financial year.
Under that law the Directors have prepared the Group
financial statements in accordance with UK-adopted
international accounting standards and the Company
financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101
‘Reduced Disclosure Framework’, and applicable law).
Under company law, the Directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of aairs of
the Group and Company and of the profit or loss of
the Group for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• state whether applicable UK-adopted international
accounting standards have been followed for the
Group financial statements and United Kingdom
Accounting Standards, comprising FRS 101, have
been followed for the Company financial statements,
subject to any material departures disclosed and
explained in the Group and Company financial
statements respectively;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and Company will continue
inbusiness.
The Directors are responsible for safeguarding the
assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sucient to show and
explain the Group’s and Company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the Group and Company and
enable them to ensure that the financial statements
and the Directors’ Remuneration report comply with
the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
The Directors are responsible for the maintenance
and integrity of the Company’s website. Legislation
inthe United Kingdom governing the preparation and
dissemination of financial statements may dier from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and
financial statements, taken as a whole, are fair, balanced
and understandable and provide the information
necessary for shareholders to assess the Group’s and
Company’s position and performance, business model
and strategy.
Each of the Directors, whose names and functions are
listed in the Board of Directors, confirms that, to the
best of their knowledge:
• the Group financial statements, which have
been prepared in accordance with UK-adopted
international accounting standards, give a true and
fair view of the assets, liabilities, financial position
and loss of the Group;
• the Company financial statements, which have
been prepared in accordance with United Kingdom
Accounting Standards, comprising FRS 101, give a
true and fair view of the assets, liabilities and financial
position of the Company; and
• the Strategic report and Directors’ report include
a fair review of the development and performance
of the business and the position of the Group,
together with a description of the principal risks
anduncertainties that it faces.
In the case of each Director in oce at the date the
Directors’ report is approved:
• so far as the Director is aware, there is no relevant
audit information of which the Group’s and
Company’s auditor is unaware; and
• they have taken all the steps that they ought to
havetaken as a Director in order to make themselves
aware of any relevant audit information and to
establish that the Group’s and Company’s auditor
isaware of that information.
Financial statements
McBride plc Annual Report and Accounts 2022
137
Independent auditors’ report
to the members of McBride plc
Report on the audit of the financial statements
Opinion
In our opinion:
• McBride plc’s group financial statements and company
financial statements (the “financial statements”) give a
true and fair view of the state of the group’s and of the
company’s aairs as at 30 June 2022 and of the group’s
loss and the group’s cash flows for the year then ended;
• the group financial statements have been properly
prepared in accordance with UK-adopted international
accounting standards;
• the company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act2006.
We have audited the financial statements, included within
the Annual report and Accounts (the “Annual Report”),
which comprise: the Consolidated and Company balance
sheets as at 30 June 2022; the Consolidated income
statement, the Consolidated statement of comprehensive
income, the Consolidated cash flow statement and the
Consolidated and Company statements of changes in
equity for the year then ended; and the notes to the
financial statements, which include a description of the
significant accounting policies.
Our opinion is consistent with our reporting to the Audit
and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sucient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which includes
the FRC’s Ethical Standard, as applicable to listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in note 6, we have provided
no non-audit services to the company or its controlled
undertakings in the period under audit.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which
is not modified, we have considered the adequacy of the
disclosure made in note 2 to the group financial statements
and note 2 to the company financial statements concerning
the group’s and the company’s ability to continue as
a going concern. The Group’s base case forecasts and
projections are based on the board approved budget
and indicate continued compliance with its liquidity
headroom covenant and sucient liquidity throughout the
going concern review period. However, in the event of a
severe but plausible downside scenario, in which revenue
volume growth is zero, with revenue growing in 2023 just
for pricing already agreed with customers; higher than
forecast raw material and packaging input costs and
additional inflationary pressures driven particularly by
energy, distribution and labour, ultimately being recovered
through pricing actions, but only after a time lag; working
capital worsens through a deterioration in both customer
and supplier payment terms; interest rates increase
by a further 100 basis points; and Sterling appreciates
significantly against the Euro to £1:€1.22, the group would
incur a covenant breach and a liquidity shortfall. In this
downside risk scenario, the group would therefore need
to obtain a covenant waiver and increase its funding
facilities compared to those that are currently committed,
to ensure that the business can meet its obligations for
the next 18 months. These conditions, along with the other
matters explained in note 2 to the financial statements,
indicate the existence of a material uncertainty which
may cast significant doubt about the group’s and the
company’s ability to continue as a going concern. The
financial statements do not include the adjustments that
would result if the group and the company were unable to
continue as a going concern.
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s
and the company’s ability to continue to adopt the going
concern basis of accounting included:
• We obtained management’s assessment that supports
the Board’s conclusions with respect to the disclosures
provided around going concern;
• We obtained management’s severe but plausible
downside scenario and discussed the assumptions that
were applied in order to understand the rationale and
the appropriateness of those assumptions;
• We corroborated the key assumptions in the base case
and severe but plausible downside scenario to third
party evidence and/or our knowledge of the business;
• We assessed the availability of liquid resources under
dierent scenarios modelled by management, and the
associated covenant test applied;
• We checked the banking agreement for the terms of the
financing facilities which were put in place during the
year and post year end, and agreed these facilities to
management’s cash flow forecasts.
Financial statements
McBride plc Annual Report and Accounts 2022
138
Independent auditors’ report
to the members of McBride plc continued
Report on the audit of the financial statementscontinued
Material uncertainty related to going concern continued
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, other than
the material uncertainty identified in note 2 to the group financial statements and note 2 to the company financial
statements, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to adopt the going concern basis of accounting, or
in respect of the directors’ identification in the financial statements of any other material uncertainties to the group’s
and the company’s ability to continue to do so over a period of at least twelve months from the date of approval of the
financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in
the audit of the financial statements of the current
period and include the most significant assessed risks
of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had
the greatest eect on: the overall audit strategy; the
allocation of resources in the audit; and directing the
eorts of the engagement team. These matters, and any
comments we make on the results of our procedures
thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
In addition to going concern, described in the Material
uncertainty related to going concern section above, we
determined the matters described below to be the key
audit matters to be communicated in our report. This is
not a complete list of all risks identified by our audit.
Valuation of investments in subsidiaries and
recoverability of amounts owed by subsidiaries is a new
key audit matter this year. Impact of COVID-19 and Fraud
in relation to rebates, which were key audit matters last
year, are no longer included because of the impact of
the pandemic becoming embedded within the economic
environment and due to there not being a track record
of errors in relation to rebates. Otherwise, the key audit
matters below are consistent with last year.
Our audit approach
Overview
Audit
scope
Key audit
matters
Materiality
Audit scope
• Our work incorporated full scope audits of the Group’s components in
the UK, France, Belgium and Germany plus limited scope procedures in
relation to some of the Group’s other components.
• The territories where we conducted audit work, together with audit work
performed at the group’s shared service centre and at the consolidated
level, accounted for approximately 83% of the group’s revenue and 91%
ofthe group’s loss before tax.
Key audit matters
• Material uncertainty related to going concern
• Valuation of goodwill, other intangible assets and property plant and
equipment (group)
• Valuation of investments in subsidiaries and recoverability of amounts
owed by subsidiaries (company)
Materiality
• Overall group materiality: £1.7m (2021: £1.7m) based on 0.25% of Revenue.
• Overall company materiality: £1.5m (2021: £1.5m) based on 1% of Total
assets, capped at 90% of the group materiality.
• Performance materiality: £1.3m (2021: £1.3m) (group) and £1.1m (2021:
£1.2m) (company).
Financial statements
McBride plc Annual Report and Accounts 2022
139
Key audit matter How our audit addressed the key audit matter
Valuation of goodwill, other intangible
assets and property plant and equipment
(group)
Refer to notes 12, 13, and 14 to the Group
financial statements. Goodwill of £19.7m
(2021: £19.7m), Other intangible assets of
£7.3m (2021: £8.2m) and Property, plant and
equipment of £122.9m (2021: £129.8m) are
material to the Group financial statements.
The carrying values of the Group’s cash
generating units (CGUs) are considered
annually for impairment with reference to a
value in use model. This model incorporates
a number of estimates, including: forecast
cash flows for the three years subsequent
to the balance sheet date; long-term growth
rates; and discount rates. The Directors
have sensitised the value in use model to
assess the financial impact of several risks
that the Directors believe have a reasonable
likelihood of occurrence.
An impairment of £0.8m (2021: £0.3m) has
been recognised against Property, plant and
equipment.
No impairment has been recognised against
Goodwill and Other intangible assets.
We evaluated and assessed the Group’s future cash flow forecasts,
the process by which they were drawn up and tested the underlying
value in use calculations. We compared the Group’s forecasts to the
latest Board approved budget and found them to be consistent.
We discussed the cash flow forecasts with management and
compared these to external market research in order to identify any
inconsistencies.
We compared actual results with previous forecasts to assess
historical accuracy of the forecasts and incorporated the variances
identified into the sensitivity analysis performed. Wealso assessed
management’s key assumptions for long-term growth rates and
margins by comparing with external forecasts of long-term growth
rates and historical data; and the discount rates used by assessing
the cost of capital calculations for the Group and comparing against
comparable organisations.
We challenged management to the extent of which climate change
has been reflected within management’s impairment assessment
process.
We have considered management’s analysis of the potential impact
of reasonably possible changes in key assumptions. This work
included consideration of all key assumptions and changes that
could be considered to be reasonably possible based on the related
risks. We have also reviewed the disclosures made regarding the
assumptions and are satisfied that these are appropriate.
Valuation of investments in subsidiaries
and recoverability of amounts owed by
subsidiaries (company)
Refer to notes 5 and 6 in the company
financial statements. Investment in
subsidiaries of £158.4m (2021: £158.4m) and
amounts owed by subsidiary undertakings
of £154.4m (2021: £148.6m) are material to
the company financial statements. Due to
the performance of the group, impairment
indicators exist in the current year and
management have assessed the balances
for impairment.
We evaluated and assessed the company’s investments in
subsidiaries with reference to the Group’s future cash flow forecasts,
and checked the allocation of this by legal entity, the process by
which they were drawn up and tested the underlying value in use
calculations. We compared the Group’s forecasts to the latest Board
approved budget and found them to be consistent. We discussed
the cash flow forecasts with management and compared these to
external market research in order to identify any inconsistencies.
We compared the current period’s actual results with previous
forecasts to assess historical accuracy of the forecasts and
incorporated the variances identified into the sensitivity analysis
performed. We also assessed management’s key assumptions for
long-term growth rates by comparing with external forecasts of
long-term growth rates and the discount rates used by assessing
the cost of capital calculations for the Group and comparing against
comparable organisations.
We have obtained management’s intercompany recoverability
model and assessed whether the methods applied were consistent
with IFRS 9. We checked the calculations within the model and
agreed the figures included to the relevant financial information
included in the Group consolidation schedules.
We have considered management’s analysis of the potential impact
of reasonably possible changes in key assumptions. Thiswork
included consideration of all key assumptions and changes that
could be considered to be reasonably possible based on the related
risks. We have also reviewed the disclosures made regarding the
assumptions and are satisfied that these are appropriate.
Financial statements
McBride plc Annual Report and Accounts 2022
140
Independent auditors’ report
to the members of McBride plc continued
Report on the audit of the financial
statementscontinued
Our audit approach continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion
on the financial statements as a whole, taking into
account thestructure of the group and the company, the
accountingprocesses and controls, and the industry in
which they operate.
The group is a manufacturer of private label household and
personal care products. It operates across 15 manufacturing
facilities in Europe and Asia. The group is structured in
five operating segments: Liquids, Powders, Unit dosing,
Aerosols and Asia as well as Corporate. The group financial
statements are a consolidation of the Group’s 22 reporting
units within these segments comprising the group’s
operating businesses, holding entities and centralised
functions. In establishing the overall approach to the group
audit, we determined the type of work that needed to
be performed at the reporting units by us, as the group
engagement team, or component auditors operating under
our instruction. Where work was performed by component
auditors, we determined the level of involvement we
needed to have in this work to be able to conclude that
sucient appropriate audit evidence had been obtained.
Our work incorporated full scope audits of the Group’s
legal entities in the UK, France, Belgium and Germany plus
limited scope procedures in relation to some of the Group’s
other jurisdictions. The territories where we conducted
audit work, together with audit work performed at the
Group’s shared service centre and at a consolidated level,
accounted for approximately 83% of the group’s revenue
and 91% of the group’s loss before tax.
Materiality
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and
in evaluating the eect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £1.7m (2021: £1.7m). £1.5m (2021: £1.5m).
How we determined it 0.25% of Revenue 1% of Total assets, capped at 90% of the
group materiality
Rationale for benchmark
applied
We considered materiality in a
number of dierent ways, and used
our professional judgement having
applied ‘rule of thumb’ percentages
to a number of potential benchmarks.
On the basis of this, we concluded that
0.25% of revenue is an appropriate level
of materiality considering the overall
scale of the business.
We believe that calculating statutory
materiality based on 1% of total assets
is a typical primary measure for users
of the financial statements of holding
companies, and is a generally accepted
auditing benchmark.
For each component in the scope of our group audit, we
allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across
components was £0.7m – £1.5m.
We use performance materiality to reduce to an
appropriately low level the probability that the aggregate
of uncorrected and undetected misstatements exceeds
overall materiality. Specifically, we use performance
materiality in determining the scope of our audit and the
nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was
75% (2021:75%) of overall materiality, amounting to £1.3m
(2021:£1.3m) for the group financial statements and £1.2m
(2021: £1.2m) for the company financial statements.
In determining the performance materiality, we considered
a number of factors – the history of misstatements, risk
assessment and aggregation risk and the eectiveness of
controls – and concluded that an amount at the upper end
of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we
would report to them misstatements identified during our
audit above £86k (group audit) (2021: £85k) and £77k
(company audit) (2021: £58k) as well as misstatements
below those amounts that, in our view, warranted reporting
for qualitative reasons.
Financial statements
McBride plc Annual Report and Accounts 2022
141
Reporting on other information
The other information comprises all of the information in
the Annual Report other than the financial statements and
our auditors’ report thereon. The directors are responsible
for the other information, which includes reporting based
on the Task Force on Climate-related Financial Disclosures
(TCFD) recommendations. Our opinion on the financial
statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except
to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a
material misstatement of the financial statements or a
material misstatement of the other information. If, based
on the work we have performed, we conclude that there
is a material misstatement of this other information, we
are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic report and Directors’ report,
we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit,
the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic report
and Directors’ report for the year ended 30 June 2022
is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group
and company and their environment obtained in the course
of the audit, we did not identify any material misstatements
in the Strategic report and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Remuneration Committee
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’
statements in relation to going concern, longer-term
viability and that part of the corporate governance
statement relating to the company’s compliance with
the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities
with respect to the corporate governance statement as
other information are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
corporate governance statement is materially consistent
with the financial statements and our knowledge obtained
during the audit, and, except for the matters reported in
the section headed ‘Material uncertainty related to going
concern’, we have nothing material to add or draw attention
to in relation to:
• The directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are
being managed or mitigated;
• The directors’ statement in the financial statements
about whether they considered it appropriate to adopt
the going concern basis of accounting in preparing them,
and their identification of any material uncertainties to
the group’s and company’s ability to continue to do so
over a period of at least twelve months from the date of
approval of the financial statements;
• The directors’ explanation as to their assessment of
the group’s and company’s prospects, the period this
assessment covers and why the period is appropriate;
and
• The directors’ statement as to whether they have a
reasonable expectation that the company will be able
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors’ statement regarding the
longer-term viability of the group was substantially less in
scope than an audit and only consisted of making inquiries
and considering the directors’ process supporting their
statement; checking that the statement is in alignment with
the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent
with the financial statements and our knowledge and
understanding of the group and company and their
environment obtained in the course of the audit.
In addition, based on the work undertaken as part of
our audit, we have concluded that each of the following
elements of the corporate governance statement is
materially consistent with the financial statements and our
knowledge obtained during the audit:
• The directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the members to assess the group’s and company’s
position, performance, business model and strategy;
• The section of the Annual Report that describes the
review of eectiveness of risk management and internal
control systems; and
• The section of the Annual Report describing the work of
the Audit and Risk Committee.
We have nothing to report in respect of our responsibility
to report when the directors’ statement relating to the
company’s compliance with the Code does not properly
disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Financial statements
McBride plc Annual Report and Accounts 2022
142
Independent auditors’ report
to the members of McBride plc continued
Report on the audit of the financial
statementscontinued
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the
financialstatements
As explained more fully in the Statement of Directors’
responsibilities in respect of the financial statements, the
directors are responsible for the preparation of the financial
statements in accordance with the applicable framework
and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control
as they determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financialstatements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the group and industry,
we identified that the principal risks of non-compliance
with laws and regulations related to health and safety
regulations, environmental laws and employment laws,
and we considered the extent to which non-compliance
might have a material eect on the financial statements.
We also considered those laws and regulations that
have a direct impact on the financial statements such
as the listing rules, local and international tax laws and
the Companies Act 2006. We evaluated management’s
incentives and opportunities for fraudulent manipulation
of the financial statements (including the risk of override
of controls), and determined that the principal risks were
related to posting inappropriate journal entries to improve
financial performance, and management bias in accounting
estimates and judgements. The group engagement team
shared this risk assessment with the component auditors
so that they could include appropriate audit procedures
in response to such risks in their work. Audit procedures
performed by the group engagement team and/or
component auditors included:
• challenging assumptions and judgements made by
management in their significant accounting estimates
(because of the risk of management bias), in particular
around the carrying value of goodwill, other intangible
assets, and property plant and equipment (see related
key audit matter above), defined benefit scheme
liabilities and deferred tax assets;
• discussions with the audit committee, management,
internal audit and the in-house legal team including
consideration of known or suspected instances of
non-compliance with laws and regulation or fraud;
• enquired with external legal counsel around actual and
potential litigation and claims;
• reviewing minutes of meetings of those charged with
governance;
• auditing the tax computations to ensure compliance with
tax legislation;
• identifying and testing journal entries, in particular
any journal entries posted with unusual account
combinations; and
• reviewing financial statements disclosures and testing to
supporting documentation, where appropriate, to assess
compliance with applicable laws and regulations.
Financial statements
McBride plc Annual Report and Accounts 2022
143
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting
a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
Our audit testing might include testing complete
populations of certain transactions and balances, possibly
using data auditing techniques. However, it typically
involves selecting a limited number of items for testing,
rather than testing complete populations. We will often
seek to target particular items for testing based on their
size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the
population from which the sample is selected.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared
for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report
is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
• we have not obtained all the information and
explanations we require for our audit; or
• adequate accounting records have not been kept by the
company, or returns adequate for our audit have not
been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• the company financial statements and the part of the
Remuneration Committee Report to be audited are not
in agreement with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Appointment
Following the recommendation of the Audit and Risk
Committee, we were appointed by the directors on
14November 2011 to audit the financial statements for the
year ended 30 June 2012 and subsequent financial periods.
The period of total uninterrupted engagement is 10 years,
covering the years ended 30 June 2012 to 30 June 2022.
Other matter
As required by the Financial Conduct Authority Disclosure
Guidance and Transparency Rule 4.1.14R, these financial
statements form part of the ESEF-prepared annual financial
report filed on the National Storage Mechanism of the
Financial Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). Thisauditors’
report provides no assurance over whether the annual
financial report has been prepared using the single
electronic format specified in the ESEF RTS.
Graham Parsons (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Manchester
29 September 2022
Financial statements
McBride plc Annual Report and Accounts 2022
144
Consolidated income statement
Year ended 30 June 2022
2022 2021
Adjusting Adjusting
Adjusted items Adjusted items
(note 2) (note 2)
Total
(note 2) (note 2)
Total
Continuing operations Note £m £m £m £m £m £m
Revenue 3 678.3 — 67 8.3 682.3 — 682.3
Cost of sales (487 .5 ) — (487 .5 ) (445.3 ) — (445.3 )
Gross profit 190.8 — 190 .8 237 .0 — 23 7 .0
Distribution costs (64.3 ) — (64.3 ) (56.0 ) — (56.0 )
Administrative costs (148.8 ) (5.0 ) (153.8 ) (154.9 ) (8.6 ) (163.5 )
Impairment of trade receivables (2.0 ) — (2.0 ) (1.3 ) — (1.3 )
(Loss)/gain on disposal of property, plant and equipment (0 .3 ) 3.7 3.4 (0.4 ) — (0.4 )
Impairment of property, plant and equipment 0. 1 (0.9 ) (0.8 ) (0 .3 ) — (0.3 )
Operating (loss)/profit 7 (24.5 ) (2.2 ) (26.7 ) 24. 1 (8.6 ) 15.5
Finance costs 8 (5. 1 ) (3.5 ) (8.6 ) (4.2 ) — (4.2 )
(Loss)/profit before taxation (29.6 ) (5. 7 ) (35.3 ) 19.9 (8.6 ) 11.3
Taxation 9 9.3 2.0 11.3 1. 1 1.6 2.7
(Loss)/profit for the year from continuing operations (20.3 ) (3.7 ) (24. 0 ) 21.0 (7 .0 ) 14.0
Discontinued operations
Loss for the year from discontinued operations 4 — (0.3 ) (0.3 ) — (0.6 ) (0 .6 )
(Loss)/profit for the year (20.3 ) (4.0 ) (2 4.3 ) 21.0 (7 .6 ) 13.4
(Loss)/earnings per ordinary share from continuing
and discontinued operations attributable to the
owners of the parent during the year 10
Basic (loss)/earnings per share
From continuing operations (13.8 )p 7 .8 p
From discontinued operations (0.2 )p (0.3 )p
From (loss)/profit for the year (14.0 )p 7 .5 p
Diluted (loss)/earnings per share
From continuing operations (13.8 )p 7 .8 p
From discontinued operations (0.2 )p (0.3 )p
From (loss)/profit for the year (14.0 )p 7 .5 p
Financial statements
McBride plc Annual Report and Accounts 2022
145
Consolidated statement of comprehensive income
Year ended 30 June 2022
2022 2021
Note £m £m
(Loss)/profit for the year (24.3 ) 13.4
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Currency translation dierences on foreign subsidiaries 0.2 (4.6 )
Gain on net investment hedges 0.5 3 .7
Gain/(loss) on cash flow hedges in the year 2.4 (0. 1 )
Cash flow hedges transferred to profit or loss — (0.5 )
Taxation relating to items above 9 (0.5 ) —
Items that will not be reclassified to profit or loss:
Net actuarial gain/(loss) on post-employment benefits 23 12.4 (4.2 )
Taxation relating to item above 9 (3. 1 ) 4 .1
Total other comprehensive income/(expense) 11.9 (1.6 )
Total comprehensive (expense)/income (12.4 ) 11.8
Total comprehensive (expense)/income attributable to equity shareholders arises from:
Continuing operations (12.1 ) 12.4
Discontinued operations (0.3 ) (0.6 )
(12.4 ) 11.8
Financial statements
McBride plc Annual Report and Accounts 2022
146
Consolidated balance sheet
At 30 June 2022
2022 2021
Note £m £m
Non-current assets
Goodwill 12 19 .7 1 9.7
Other intangible assets 13 7. 3 8.2
Property, plant and equipment 14 122.9 129.8
Derivative financial instruments 21 1.9 0.1
Right-of-use assets 15 11.3 10.0
Deferred tax assets 9 29.7 22.8
Current assets
Inventories 16 118.9 92.9
Trade and other receivables 17 145.4 117 .9
Current tax assets 3.9 3 .7
Non-current assets classified as held for sale 18 — 1.6
Derivative financial instruments 21 0. 6 0. 2
Cash and cash equivalents 4.5 24.9
Total assets 466. 1 431.8
Current liabilities
Trade and other payables 19 206.9 169.2
Borrowings 20 60.5 53 .7
Lease liabilities 15, 20 3.9 3.4
Derivative financial instruments 21 — 0.3
Current tax liabilities 5.3 4.2
Provisions 25 3.4 2.7
Non-current liabilities
Borrowings 20 96.4 78.3
Lease liabilities 15, 20 8 .1 7. 9
Pensions and other post-employment benefits 23 16. 1 31.9
Provisions 25 3.8 3 .7
Deferred tax liabilities 9 4 .7 6 .7
Total liabilities 409. 1 362.0
Net assets 5 7. 0 69. 8
Equity
Issued share capital 26 17 .4 17 .4
Share premium account 26 68.6 68.6
Other reserves 26 77 .2 76.0
Accumulated losses (106.2 ) (9 2.2 )
Total equity 5 7. 0 69.8
The financial statements on pages 144 to 198 were approved by the Board of Directors on 29 September 2022 and were
signed on its behalf by:
Chris Smith
Director
Financial statements
McBride plc Annual Report and Accounts 2022
147
Consolidated cash flow statement
Year ended 30 June 2022
2022 2021
Note £m £m
Operating activities
(Loss)/profit before tax
Continuing operations (35.3 ) 11.3
Discontinued operations (0.4 ) (0.7 )
Finance costs 8 8.6 4.2
Exceptional items excluding finance costs 4 — 6.9
Share-based payments charge 5 — 0.3
Depreciation of property, plant and equipment 14 16.9 17 .6
Depreciation of right-of-use assets 15 4.0 3.8
Loss on disposal of fixed assets 0.3 0. 4
Amortisation of intangible assets 13 2.6 2.4
(Reversal of) impairment of property, plant and equipment 14 (0. 1 ) 0. 3
Operating cash flow before changes in working capital before exceptional items (3.4 ) 46.5
(Increase)/decrease in receivables (27 .4 ) 13.2
Increase in inventories (25.7 ) (0 .4 )
Increase/(decrease) in payables 3 7. 8 (22.2 )
Operating cash flow after changes in working capital before exceptional items (18.7 ) 3 7. 1
Additional cash funding of pension schemes 23 (4.0 ) (4. 0 )
Cash (used)/generated from operations before exceptional items (22.7 ) 33. 1
Cash inflow/(outflow) in respect of exceptional items (4. 1 ) (8.0 )
Cash (used)/generated from operations (26.8 ) 25.1
Interest paid (3.3 ) (3.2 )
Taxation paid (0. 1 ) (7 .3 )
Net cash (used)/generated from operating activities (30.2 ) 14.6
Investing activities
Proceeds from sale of property, plant and equipment 6 .1 0.2
Purchase of property, plant and equipment 14 (12.6 ) (21.6 )
Purchase of intangible assets 13 (1.7 ) (2.2 )
Settlement of derivatives used in net investment hedges 0. 4 3.8
Net cash used in investing activities (7 .8 ) (19.8 )
Financing activities
Redemption of B Shares 11 (0. 1 ) (2.0 )
Drawdown of overdrafts 0.7 2.8
Drawdown of other loans 6 .0 25.9
Drawdown of bank loans 18.0 76.2
Repayment of bank loans — (103.8 )
Refinancing costs paid (1.8 ) —
Repayment of IFRS 16 lease obligations 15 (5.0 ) (4.9 )
Purchase of own shares (0. 1 ) (6.8 )
Purchase of own shares held by Employee Benefit Trust — (0.3 )
Net cash generated/(used) in financing activities 1 7. 7 (12.9 )
Decrease in net cash and cash equivalents (20.3 ) (18. 1 )
Net cash and cash equivalents at the start of the year 24.9 44.2
Currency translation dierences (0. 1 ) (1.2 )
Net cash and cash equivalents at the end of the year 4.5 24.9
Financial statements
McBride plc Annual Report and Accounts 2022
148
Consolidated statement of changes in equity
Year ended 30 June 2022
Other reserves
Issued Share Cash flow Currency Capital
share premium hedge translation redemption
Accumulated
Total
capital account reserve reserve reserve losses equity
Note £m £m £m £m £m £m £m
At 1 July 2020 18.3 7 0.6 0.5 (0. 1 ) 7 4.2 (96.6 ) 66.9
Year ended 30 June 2021
Profit for the year — — — — — 13.4 13.4
Other comprehensive (expense)/income
Items that may be reclassified
to profit or loss:
Currency translation dierences of
foreign subsidiaries — — — (4.6 ) — — (4.6 )
Gain on net investment hedges 21 — — — 3.7 — — 3.7
Loss on cash flow hedges in the year 21 — — (0. 1 ) — — — (0. 1 )
Cash flow hedges transferred to
profit or loss 21 — — (0.5 ) — — — (0.5 )
Items that will not be reclassified
to profit or loss:
Net actuarial loss on
post-employment benefits 23 — — — — — (4.2 ) (4.2 )
Taxation relating to items above 9 — — — — — 4.1 4. 1
Total other comprehensive expense — — (0.6 ) (0.9 ) — (0. 1 ) (1.6 )
Total comprehensive (expense)/income — — (0.6 ) (0.9 ) — 13.3 11.8
Transactions with owners of the parent
Issue of B Shares 11 — (2.0 ) — — — — (2. 0 )
Redemption of B Shares 11 — — — — 2.0 (2.0 ) —
Share-based payments 24 — — — — — 0.3 0.3
Purchase of own shares 26 — — — — — (6.8 ) (6.8 )
Purchase of own shares held by
Employee Benefit Trust 26 — — — — — (0.3 ) (0.3 )
Transfers between reserves (0.9 ) — — — 0.9 — —
Taxation relating to items above 9 — — — — — (0. 1 ) (0. 1 )
At 30 June 2021 17 .4 68.6 (0. 1 ) (1.0 ) 77 . 1 (92.2 ) 69.8
Financial statements
McBride plc Annual Report and Accounts 2022
149
Other reserves
Issued Share Cash flow Currency Capital
share premium hedge translation redemption
Accumulated
Total
capital account reserve reserve reserve losses equity
Note £m £m £m £m £m £m £m
Year ended 30 June 2022
Loss for the year — — — — — (24.3 ) (24.3 )
Other comprehensive income/(expense)
Items that may be reclassified
to profit or loss:
Currency translation dierences
of foreign subsidiaries — — — 0.2 — — 0.2
Gain on net investment hedges 21 — — — 0.5 — — 0.5
Gain on cash flow hedges in the year 21 — — 2.4 — — — 2.4
Taxation relating to the items above — — (0.5 ) — — — (0 .5 )
Items that will not be reclassified
to profit or loss:
Net actuarial gain on
post-employment benefits 23 — — — — — 12.4 12.4
Taxation relating to items above 9 — — — — — (3. 1 ) (3.1 )
Total other comprehensive income — — 1.9 0.7 — 9.3 11.9
Total comprehensive income/(expense) — — 1.9 0.7 — (15.0 ) (12.4 )
Transactions with owners of the parent
Redemption of B Shares 11 — — — — 0. 1 (0. 1 ) —
Purchase of own shares 26 — — — — — (0. 1 ) (0. 1 )
Transfers between reserves — — — (1.5 ) — 1.5 —
Taxation relating to the items above 9 — — — — — (0.3 ) (0.3 )
At 30 June 2022 17 .4 68.6 1.8 (1.8 ) 77 .2 (106.2 ) 57 .0
At 30 June 2022, the accumulated losses include a deduction of £0.5 million (2021: £0.5m) for the cost of own shares held
in relation to employee share schemes. Further information on own shares is presented in note 26.
Financial statements
McBride plc Annual Report and Accounts 2022
150
Notes to the consolidated financial statements
Year ended 30 June 2022
1. Corporate information
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 oce of the Company is Middleton Way,
of DTR 6.4.2R, the Home State of McBride plc is the
UnitedKingdom.
2. Accounting policies
Accounting period
The Group’s annual financial statements are drawn up to
30June. These financial statements cover the year ended
30 June 2022 (‘2022’) with comparative amounts for the
year ended 30 June 2021 (‘2021’).
Basis of preparation
The consolidated financial statements on pages 144 to
198 have been prepared on the going concern basis in
accordance with UK-adopted International Accounting
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.
A summary of the significant accounting policies is set out
below. The accounting policies that follow set out those
policies that apply in preparing the financial statements for
the year ended 30 June 2022 and the Group and Company
have applied the same policies throughout the year.
Going concern
The Group’s business activities, together with the factors
likely to aect its future development, performance and
position, are set out in the Strategic report. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the report of the CFO
on pages 30 to 35. In addition, note 21 to the financial
statements includes the Group’s objectives, policies
and processes for managing its capital; its financial risk
management objectives; details of its financial instruments
and hedging activities; and its exposures to credit and
liquidity risks. The Group meets its funding requirements
through internal cash generation and bank credit facilities.
At 30 June 2022, committed undrawn facilities and net
cash position amounted to £70.6 million.
The Group’s base case forecasts are based on the
Board-approved budget and three-year plan. They indicate
sucient liquidity throughout the going concern review
period to ensure compliance with its minimum liquidity
banking covenant. The Group’s base case scenario assumes:
• revenue growth of c.5%, driven predominantly by the
wrap-around eect of pricing already agreed with
customers;
• raw material prices marginally reducing compared to the
June 2022 levels, which in themselves were significantly
higher than pre-Covid-19 pandemic levels;
• interest rates increasing by c.150 basis points; and
• Sterling: Euro exchange rate of £1:€1.185.
The Directors have considered a severe but plausible
downside scenario including several downside assumptions
to stress test the Group’s financial forecasts:
• zero revenue growth from volumes, with revenue
growing in 2023 just for pricing already agreed with
customers;
• higher than forecast raw material and packaging input
costs and additional inflationary pressures driven
particularly by energy, distribution and labour, ultimately
being recovered through pricing actions, but only after
a lag;
• worsening trade working capital, caused by deterioration
in both customer and supplier payment terms;
• interest rates increasing by a further 100 basis points; and
• Sterling appreciating significantly against the Euro to
£1:€1.22.
In the event that such a severe but plausible downside risk
scenario occurs, the Group would incur a covenant breach
and a liquidity shortfall. In this downside risk scenario, the
Group would therefore need to obtain a covenant waiver
and increase its funding facilities compared to those that
are currently committed, to ensure that the business can
meet its obligations for the next 18 months.
To mitigate against these risks, the Group is currently
negotiating to further increase liquidity by £25 million by
extending invoice discounting facilities to unencumbered
receivables ledgers, however there is no certainty that these
negotiations will be successful.
After reviewing the current liquidity position, financial
forecasts, stress testing of 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 sucient
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. However, the occurrence of
multiple downside trading and liquidity risks represents a
material uncertainty at 29 September 2022 that could cast
significant doubt upon the Group’s ability to continue as a
going concern.
The financial statements do not include the adjustments
that would result if the Group were unable to continue as
agoing concern.
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McBride plc Annual Report and Accounts 2022
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Segmental reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The Board of McBride plc assesses the
financial performance and position of the Group and makes
strategic decisions. Therefore, the Board of McBride plc has
been identified as the chief operating decision maker.
Financial information is presented to the Board by product
technology for the purposes of allocating resources
within the Group and assessing the performance of the
Group’s businesses. There are five separately managed and
accountable business divisions:
• 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. Programme Compass is delivering an increased
focus on cost optimisation and has meant that most
overhead costs are now directly attributed within the
respective divisions’ income statements. The only costs
now allocated out to the divisions are central overheads,
with corporate costs being retained at a Group level.
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 and certain central 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 central treasury function manages this
activity, together with the overall net debt position of
theGroup.
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. Adjusted operating profit is not
defined under IFRS and is therefore termed a non-GAAP
measure. The rationale for using this measure, along with
a reconciliation from the nearest measures prepared
in accordance with IFRS, is discussed in alternative
performance measures on page 160.
Segment information is presented in note 3.
Principal accounting policies
The Group and Company financial statements are presented
in Pounds Sterling and all values are rounded to the nearest
million Pounds (£m) except where otherwise indicated.
Basis of consolidation
The consolidated financial statements include the results,
cash flows and assets and liabilities of the Group and
its subsidiaries. Details of the Group’s subsidiaries at
30June2022 are set out on pages 207 and 208.
Subsidiaries are all entities over which the Group has
control. The Group controls an entity where the Group
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to aect
those returns through its power to direct the activities of
the entity. The Group’s results, cash flows and assets and
liabilities include those of each of its subsidiaries from the
date on which the Group obtains control until such time as
the Group loses control.
Intra-group balances and transactions, and any unrealised
gains and losses arising from intra-group transactions, are
eliminated on consolidation. Consistent accounting policies
are adopted across the Group.
Business combinations
A business combination is a transaction or other event in
which the Group obtains control of one or more businesses.
Business combinations are accounted for using the
acquisition method.
Goodwill arising in a business combination represents the
excess of the sum of the consideration transferred, the
amount of any non-controlling interest in the acquired
business and, in a business combination achieved in
stages, the fair value at the acquisition date of the Group’s
previously held equity interest, over the net total of the
identifiable assets and liabilities of the acquired business at
the acquisition date. If the identifiable assets and liabilities
of the acquired business exceed the aggregate of the
consideration transferred, the amount of any non-controlling
interest in the business and the fair value at the acquisition
date of any previously held equity interest, the excess is
recognised as a gain in profit or loss. The fair value of assets
and liabilities can be revised up to twelve months following
the date of acquisition. Consideration transferred in a
business combination represents the sum of the fair values
at the acquisition date of the assets given, liabilities incurred
or assumed and equity instruments issued by the Group in
exchange for control over the acquired business.
Acquisition-related costs are charged to profit or loss in the
period in which they are incurred.
Changes in the amount of contingent consideration payable
that result from events after the acquisition date, such as
meeting a revenue or profit target, are not measurement
period adjustments and are, therefore, recognised in profit
or loss.
Any non-controlling interest in the acquired business is
measured either at fair value or at the non-controlling
interest’s proportionate share of the identifiable assets and
liabilities of the business.
Changes in the Group’s ownership interest in a subsidiary
that do not result in a loss of control are accounted for
within equity.
If the Group loses control of a subsidiary, it derecognises
the assets and liabilities and related equity components of
the subsidiary and measures any investment retained in the
former subsidiary at its fair value at the date when control
is lost. Any gain or loss on a loss of control is recognised in
profit or loss.
Financial statements
McBride plc Annual Report and Accounts 2022
152
Notes to the consolidated financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
Principal accounting policies continued
Foreign currency translation
The Group’s presentational currency is Pound Sterling.
At an entity level, transactions in foreign currencies
are translated into the entity’s functional currency at
the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are translated at the exchange rate ruling at
the balance sheet date. Currency translation dierences
arising at entity level are recognised in profit or
loss. Onconsolidation, the results of foreign operations are
translated into Pound Sterling at the average exchange rate
for the period and their assets and liabilities are translated
into Pound Sterling at the exchange rate ruling at the
balance sheet date. Currency translation dierences arising
on consolidation are recognised in other comprehensive
income and taken to the currency translation reserve.
In the event that a foreign operation is sold, the gain or loss
on disposal recognised in profit or loss is determined after
taking into account the cumulative currency translation
dierences arising on consolidation of the operation
subsequent to the adoption of IFRS.
In the cash flow statement, the cash flows of foreign
operations are translated into Sterling at the average
exchange rate for the period.
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.
Revenue is recognised on the transfer of the control of
goods upon delivery of the goods to the customer, when
the significant risks and rewards of ownership are passed
to the customer and when all contractual performance
obligations have been met.
Accruals for sales rebates and discounts are established at
the time of sale based on management’s judgement of the
amounts payable under the contractual arrangements with
the customer. The estimated rebates or discounts payable
do not contain significant estimates as they are mostly
contractually driven and are based on, amongst other
things, expected sales to the customer during the period to
which the rebate or discount relates, historical experience
and market information.
The type of rebates and discounts given by the Group
include:
• volume-related rebates for achieving sales targets within
a set period; and
• promotional, marketing and other allowances to support
specific promotional pricing discounts, in-store displays
and cost reimbursement.
At 30 June 2022, the carrying amount of accruals relating
to rebates and discounts amounted to £2.1 million (2021:
£2.4m). Rebates equate to less than 1.0% (2021: less than
1.0%) of revenue and are not considered to be a critical
judgement. There is an element of judgement applied to
the level of future achieved sales within volume-related
rebates.
Payment is typically due 60 days after despatch.
TheGroup has an obligation for returns due to damages
and recognises a credit note provision and corresponding
adjustment to revenue.
Exceptional items
Exceptional items are material either individually or, if of
a similar type, in aggregate and which, due to their nature
or the infrequency of the events giving rise to them,
are presented separately to assist users of the financial
statements in assessing the underlying trading performance
and trends of the Group’s businesses either year-on-year or
with other businesses.
Examples of exceptional items include, but are not limited
to, the following:
• restructuring and other expenses relating to the
integration of an acquired business and related expenses
for reconfiguration of the Group’s activities;
• impairment of current and non-current assets;
• gains/losses on disposals of businesses;
• acquisition-related costs, including adviser fees incurred
for significant transactions, and adjustments to the fair
values of assets and liabilities that result in non-recurring
charges to the income statement; and
• costs arising because of material and non-recurring
regulatory and litigation matters.
Borrowing costs
Borrowing costs directly attributable to the construction
of a manufacturing or distribution facility are capitalised
as part of the cost of the facility if, at the outset of
construction, the facility was expected to take a substantial
period of time to get ready for its intended use.
Costs attributable to the arrangement of term
borrowing facilities are amortised over the life of those
facilities. Allother borrowing costs are recognised in profit
or loss in the period in which they are incurred.
Goodwill
Goodwill arising in a business combination is recognised as
an intangible asset and is allocated to the cash-generating
unit (CGU) or group of CGUs that are expected to benefit
from the synergies of the acquisition.
Goodwill is not amortised but is tested for impairment
annually and whenever there are events or changes in
circumstances that indicate that its carrying amount may
not be recoverable.
Goodwill is carried at cost less any recognised impairment
losses. Impairment charges are recognised in administrative
expenses.
Financial statements
McBride plc Annual Report and Accounts 2022
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Other intangible assets
Other intangible assets are stated at cost less accumulated
amortisation and any recognised impairment loss.
Amortisation is recognised in administrative expenses.
(i) Assets acquired in business combinations
An intangible resource acquired in a business combination
is recognised as an intangible asset if it is separable from
the acquired business or arises from contractual or legal
rights. An acquired intangible asset with a definite useful
life is amortised on a straight-line basis so as to charge its
fair value at the date of acquisition to profit or loss over its
expected useful life as follows:
Patents, brands and trademarks – up to five years
Customer relationships – up to eight years
(ii) Product development costs
All research expenditure is charged to profit or loss in the
period in which it is incurred.
Development expenditure is charged to profit or loss in
the period in which it is incurred, unless it relates to the
development of a new or significantly improved product
or process whose technical and commercial feasibility
is proven at the time of development and therefore
capitalised as an intangible asset. Development expenditure
is measured at cost and amortised on a straight-line basis
over the expected useful life, which is in the range of three
to five years.
(iii) Computer software
Computer software and software licences are recognised
asintangible assets measured at cost and are amortised on
a straight-line basis over their expected useful lives, which
are in the range of three to five years.
Directly attributable costs that are capitalised as part
of computer software include the related software
development employee costs.
Property, plant and equipment
Property, plant and equipment is stated at cost less
accumulated depreciation and any recognised impairment
losses.
Cost includes the original purchase price of the asset and
the costs attributable to bringing the asset to its working
condition for its intended use by management.
Freehold land and freehold buildings are presented as land
and buildings. Freehold land and payments on account and
assets in the course of construction are not depreciated.
Otherwise, property, plant and equipment is depreciated
on a straight-line basis so as to charge its cost, less any
residual value, to profit or loss over the expected useful life
of the asset as follows:
Freehold buildings – 50 years
Plant and equipment – three to ten years
Property, plant and equipment acquired in a business
combination is depreciated on a straight-line basis so as
to charge its fair value at the date of acquisition, less any
residual value, to profit or loss over the remaining expected
useful life of the asset.
Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e. the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made on or
before the commencement date less any lease incentives
received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term,
the recognised right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful
life and the lease term. Right-of-use assets are subject
toimpairment.
Lease liabilities
The Group recognises lease liabilities measured at the
present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including
in-substance fixed payments), variable lease payments that
depend on an index or a rate, amounts expected to be paid
under residual value guarantees, less any lease incentives
receivable.
In determining the relevant cash flows within a contract
for each lease component, the Group has made use of the
practical expedient available under IFRS 16 not to separate
non-lease components from lease components, and instead
accounts for each lease component and any associated
non-lease components as a single lease component.
The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the
Group and payments of penalties for terminating a lease,
ifthe lease term reflects the Group exercising the option to
terminate. The variable lease payments that do not depend
on an index or a rate are recognised as an expense in the
period in which the event or condition that triggers the
payment occurs.
In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the
leaseis not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease
payments or a change in the assessment to purchase the
underlying asset.
The Group determines the lease term as the
non-cancellable term of the lease, together with any
periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably
certain not to be exercised.
Financial statements
McBride plc Annual Report and Accounts 2022
154
Notes to the consolidated financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
Principal accounting policies continued
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e. those leases that have a lease term of
twelve months or less from the commencement date and
do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leases
of oce equipment that are considered of low value
(i.e.below £5,000). Lease payments on short-term leases
and leases of low-value assets are recognised as an expense
on a straight-line basis over the lease term.
Impairment of non-financial assets
Goodwill, other intangible assets and property, plant and
equipment are tested for impairment whenever events or
circumstances indicate that their carrying amounts may
not be recoverable. Additionally, goodwill is subject to
an annual impairment test whether or not there are any
indicators of impairment.
An asset is impaired to the extent that its carrying amount
exceeds its recoverable amount, which represents the
higher of the asset’s value-in-use and its fair value less costs
of disposal. An asset’s value-in-use represents the present
value of the future cash flows expected to be derived from
the continued use of the asset. Fair value less costs of
disposal is the amount obtainable from the sale of the asset
in an arm’s length transaction between knowledgeable,
willing parties, less the costs of disposal.
Where it is not possible to estimate the recoverable
amount of an individual asset, the recoverable amount is
determined for the cash-generating unit (CGU) to which
the asset belongs. An asset’s CGU is the smallest group of
assets that includes the asset and generates cash inflows
that are largely independent of the cash inflows from other
assets or groups of assets. Goodwill does not generate cash
flows independently of other assets and is, therefore, tested
for impairment at the level of the CGU or group of CGUs to
which it is allocated.
Value-in-use is based on estimates of pre-tax cash flows
discounted at a pre-tax discount rate that reflects the risks
specific to the CGU to which the asset belongs.
Where necessary, impairment of non-financial assets other
than goodwill is recognised before goodwill is tested for
impairment. When goodwill is tested for impairment and
the carrying amount of the CGU or group of CGUs to
which it is allocated exceeds its recoverable amount, the
impairment is allocated first to reduce the carrying amount
of the goodwill and then to the other non-financial assets
belonging to the CGU or group of CGUs pro-rata on the
basis of their respective carrying amounts.
Impairment losses are recognised in profit or loss.
Impairment losses recognised in previous periods for assets
other than goodwill are reversed if there has been a change
in the estimates used to determine the asset’s recoverable
amount, but only to the extent that the carrying amount
of the asset does not exceed its carrying amount had
no impairment been recognised in previous periods.
Impairment losses recognised in respect of goodwill
cannotbe reversed.
Inventories
Inventories are stated at the lower of cost and net realisable
value with due allowance for any excess, obsolete or
slow-moving items. Cost represents the expenditure
incurred in bringing each product to its present location
and condition. The cost of raw materials is measured on a
first-in, first-out (FIFO) basis. The cost of finished goods
and work in progress comprises the cost of raw materials,
direct labour and other direct costs, together with related
production overheads based on normal operating capacity.
Net realisable value is the estimated selling price less
estimated costs of completion and estimated selling and
distribution costs.
Financial instruments
The Group classifies its financial assets in the following
categories:
• those to be measured subsequently at fair value (either
through other comprehensive income (OCI) or through
profit or loss); and
• those to be measured at amortised cost.
The classification depends on the Group’s business model
for managing the financial assets and the contractual
terms of the cash flows. For assets measured at fair value,
gains and losses will either be recorded in profit or loss or
OCI. The Group reclassifies debt instruments when, and
only when, its business model for managing those assets
changes.
At initial recognition, the Group measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs
that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried
at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Subsequent measurement of debt instruments depends
on the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three
measurement categories into which the Group classifies its
debt instruments:
• amortised cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest are
measured at amortised cost. Interest income from these
financial assets is included in finance income using the
eective interest rate method. Any gain or loss arising
on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with
foreign exchange gains and losses. Impairment losses
are presented as a separate line item in the statement of
profit or loss. The Group assesses on a forward-looking
basis the expected credit losses (ECL) associated
with its debt instruments carried at amortised cost.
Theimpairment methodology applied depends on
whether there has been a significant increase in credit
risk. ECLs are recognised in two stages. For credit
exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default
events that are possible within the next twelve months
(atwelve-month ECL).
Financial statements
McBride plc Annual Report and Accounts 2022
155
For those credit exposures for which there has been a
significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL);
• fair value through other comprehensive income
(FVOCI): Assets that are held for collection of
contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely
payments of principal and interest, are measured at
FVOCI. Movements in the carrying amount are taken
through OCI, except for the recognition of impairment
gains or losses, interest income and foreign exchange
gains and losses which are recognised in profit or loss.
When the financial asset is derecognised, the cumulative
gain or loss previously recognised in OCI is reclassified
from equity to profit or loss and recognised in other
gains/(losses). Interest income from these financial
assets is included in finance income using the eective
interest rate method. Foreign exchange gains and losses
are presented in other gains/(losses) and impairment
expenses are presented as a separate line item in the
statement of profit or loss; and
• fair value through profit or loss (FVPL): Assets that do
not meet the criteria for amortised cost or FVOCI are
measured at FVPL. A gain or loss on a debt investment
that is subsequently measured at FVPL is recognised
in profit or loss and presented net within other
gains/(losses) in the period in which it arises.
(i) Trade and other receivables
Trade and other receivables are recognised initially at
fair value and subsequently measured at amortised cost
using the eective interest method, less provision for
impairment. Under the Group’s business model, trade
andother receivables are held for collection of contractual
cash flows and represent solely payments of principal and
interest. Aprovision for impairment of trade receivables is
established based on the expected credit loss.
For trade receivables and contract assets, the Group
applies the IFRS 9 simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk,
but instead recognises a loss allowance based on lifetime
ECLs at each reporting date. The Group has established
a provision matrix that is based on shared credit risk
characteristics, its historical credit loss experience and days
past due, adjusted for forward-looking factors specific to
the debtors and the economic environment. The amount of
the provision is recognised in the balance sheet within trade
receivables. Movements in the provision are recognised in
the profit and loss account in administrative expenses.
(ii) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits
available on demand and other short-term, highly liquid
investments with a maturity on acquisition of three months
or less and bank overdrafts. Bank overdrafts are presented
as current liabilities to the extent that there is no right of
oset or intention to oset with cash balances.
(iii) Trade payables
Trade payables are initially recognised at fair value and
subsequently held at amortised cost.
(iv) Bank and other loans
Bank and other loans are initially recognised at fair value,
net of directly attributable transaction costs, if any, and
are subsequently measured at amortised cost using the
eective interest rate method.
(v) Net debt
Net debt comprises cash and cash equivalents, overdrafts,
bank and other loans and lease liabilities.
(vi) Derivative financial instruments
The Group uses derivative financial instruments, principally
forward currency contracts and interest rate swaps, to
reduce its exposure to exchange rate and interest rate
movements. The Group does not hold or issue derivatives
for speculative purposes.
Derivative financial instruments are recognised as assets
and liabilities measured at their fair values at the balance
sheet date. Changes in their fair values are recognised in
profit or loss. Derivative financial instruments are, therefore,
likely to cause volatility in profit or loss in situations
where the hedged item is not recognised in the financial
statements or is recognised but its carrying amount is
not adjusted to reflect fair value changes arising from
the hedged risk, or is so adjusted but that adjustment is
not recognised in profit or loss. Provided the conditions
specified by IFRS 9, ‘Financial instruments’ are met, hedge
accounting may be used to mitigate this volatility in profit
or loss.
Derivative financial instruments are classified as current
assets or liabilities unless they are in a designated
hedging relationship and the hedge item is classified
as a non-current asset or liability. Derivative financial
instruments that are not in a designated hedging
relationship are classified as FVPL.
(vii) Osetting financial instruments
Financial assets and liabilities are oset and the net amount
reported in the balance sheet where there is a legally
enforceable right to oset the recognised amounts, and
there is an intention to settle on a net basis or realise the
asset and settle the liability simultaneously.
Hedge accounting
For a hedging relationship to qualify for hedge accounting,
it must be documented on inception together with the
Group’s risk management objective and strategy for
initiating the hedge, and it must both be expected to be
highly eective in osetting the changes in cash flows or
fair value attributed to the hedged risk and actually be
highly eective in doing so. When hedge accounting is
used, the hedging relationship is classified as a cash flow
hedge or a net investment hedge.
When forward contracts are used to hedge forecast
transactions, the Group generally designates the change
in the fair value of the forward contract related to both
the spot component and forward element as the hedging
instrument. For option contracts the change in the fair
value of the option contract related to the intrinsic value is
designated as the hedging instrument. The time value of
money is treated as the cost of hedging.
Financial statements
McBride plc Annual Report and Accounts 2022
156
Notes to the consolidated financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
Principal accounting policies continued
Hedge accounting continued
(i) Cash flow hedge
Hedging relationships are classified as cash flow hedges
where the hedging instrument hedges exposure to
variability in cash flows that is attributable either to a
particular risk associated with a recognised asset or liability
(such as interest payments on variable rate debt), a highly
probable forecast transaction (such as forecast revenue)
ora firm commitment that could aect profit or loss.
Where a hedging relationship is classified as a cash flow
hedge, to the extent that the hedge is eective, the change
in the fair value of the hedging instrument is recognised
in other comprehensive income rather than in profit or
loss. The gain or loss relating to the ineective portion
is recognised immediately in profit and loss. When the
hedged item aects profit or loss (for example, when a
forecast sale that is hedged takes place), the cumulative
gain or loss recognised in other comprehensive income is
transferred to profit or loss. When a forecast transaction
that has been hedged results in the recognition of a
non-financial asset (for example, inventory), the cumulative
gain or loss recognised in other comprehensive income
is transferred from equity as an adjustment to the cost of
theasset.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time
remains in equity and is recognised when the forecast
transaction is ultimately recognised in the income
statement. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to the
incomestatement.
(ii) Net investment hedge
A net investment hedge is the hedge of the currency
exposure on the retranslation of the Group’s net investment
in a foreign operation. Net investment hedges are
accounted for similarly to cash flow hedges. Changes in the
fair value of the hedging instrument are, to the extent that
the hedge is eective, recognised in other comprehensive
income. In the event that the foreign operation is disposed
of, the cumulative gain or loss recognised in other
comprehensive income is transferred to profit or loss and
included in the gain or loss on disposal of the foreign
operation.
Pensions and other post-employment benefits
Post-employment benefits principally comprise pension
benefits provided to employees in the UK and Continental
Europe. The Group operates both defined benefit and
defined contribution pension schemes.
(i) Defined contribution schemes
Under a defined contribution pension scheme, the
Group makes fixed contributions to a separate pension
fund. The amount of pension that the employee will
receive on retirement is dependent entirely on the
investment performance of the Fund and the Group has
no obligationwith regard to the future pension values
receivedby employees.
Payments to defined contribution schemes are recognised
in profit or loss in the period in which they fall due. To the
extent defined contribution scheme contributions are due
but unpaid, amounts outstanding are recognised in other
payables.
(ii) Defined benefit schemes
Under a defined benefit pension scheme, the amount of
pension that an employee will receive on retirement is
fixed based on factors such as pensionable salary, years of
service and age on retirement. In most cases, the schemes
are funded by contributions from the Group and the
participating employees. The Group is obliged to make
additional contributions if the Fund has insucient assets
to meet its obligation to pay accrued pension benefits.
Actuarial valuations of the defined benefit schemes
are carried out annually at the balance sheet date by
independent qualified actuaries. Scheme assets are
measured at their fair value at the balance sheet date.
Benefit obligations are measured on an actuarial basis using
the projected unit credit method and are discounted using
the market yields on high-quality corporate bonds at the
balance sheet date. The defined benefit liability or asset
recognised in the balance sheet comprises the dierence
between the present value of the benefit obligations and
the fair value of the scheme assets. Where a scheme is in
surplus, the asset recognised is limited to the present value
of any amounts that the Group expects to recover by way
of refunds or a reduction in future contributions.
Defined benefit schemes are recognised in profit or loss
by way of the service cost and the net interest cost on the
benefit obligation. The service cost represents the increase
in the present value of the benefit obligation relating to
additional years of service accrued during the period, less
employee contributions.
Gains or losses on curtailments or settlements are
recognised in profit or loss in the period in which the
curtailment or settlement occurs.
Actuarial gains and losses are recognised in other
comprehensive income in the period in which they occur.
Share-based payments
The Group operates share schemes under which it grants
equity-settled and cash-settled awards over ordinary shares
in the Company to certain of its employees. The Group
recognises a compensation expense that is based on the
fair value of the awards measured using the Black-Scholes
option pricing formula or the Monte Carlo valuation model.
For equity-settled awards, the fair value reflects market
performance conditions and all non-vesting conditions.
Fair value is determined at the grant date and is not
subsequently remeasured unless the relevant conditions
are modified. Adjustments are made to the compensation
expense to reflect actual and expected forfeitures due
to failure to satisfy service conditions or non-market
performance conditions. For cash-settled awards, the fair
value reflects all the conditions on which the award is
made and is remeasured at each reporting date and at the
settlement date.
Financial statements
McBride plc Annual Report and Accounts 2022
157
Generally, the compensation expense is recognised
on a straight-line basis over the vesting period. For
equity-settled awards, a corresponding credit is recognised
in equity while for cash-settled awards a corresponding
liability to settle is recognised in the balance sheet.
In the event of the cancellation of an equity-settled
award, the compensation expense that would have been
recognised over the remainder of the vesting period is
recognised immediately in profit or loss.
Provisions
A provision is a liability of uncertain timing or amount
and is generally recognised when the Group has a present
obligation (legal or constructive) as a result of a past event,
it is probable that a payment will be required to settle the
obligation and the payment can be estimated reliably.
Provision is made for restructuring costs when a detailed
formal plan for the restructuring has been determined
and the plan has been communicated to the parties
that may beaected by it. Gains from the expected
disposal of assets are not taken into account in measuring
restructuringprovisions and provision is not made for
future operating losses.
At 30 June 2022, the Group held provisions amounting to
£7.2 million (2021: £6.4m), which principally represented
reorganisation and restructuring costs and environmental
remediation provisions. Adjustment to the amounts
recognised would arise if it becomes necessary to revise
the assumptions and estimates on which the provisions
are based, if circumstances change such that contingent
liabilities must be recognised or if management becomes
aware of obligations that are currently unknown.
Provisions are discounted where the eect of the time value
of money is material.
Contingent liabilities
The Group recognises provisions for liabilities when it is
more likely than not that a settlement will be required and
the value of such a payment can be reliably estimated.
There are a number of contingent liabilities that arise in
the normal course of business which, if realised, are not
expected to result in a material liability to the Group.
Taxation
Current tax is the amount of tax payable or recoverable in
respect of the taxable profit or loss for the period. Taxable
profit diers from accounting profit because it excludes
income or expenses that are recognised in the period for
accounting purposes but are either not taxable or not
deductible for tax purposes or are taxable or deductible
in earlier or subsequent periods. Current tax is calculated
using tax rates that have been enacted or substantively
enacted at the balance sheet date.
Deferred tax is tax expected to be payable or recoverable
on dierences between the carrying amount of an asset or
liability and its tax base used in calculating taxable profit.
Deferred tax is accounted for using the liability method,
whereby deferred tax liabilities are generally recognised for
all taxable temporary dierences and deferred tax assets
are recognised to the extent that it is probable that taxable
profits will be available in the future against which the
deductible temporary dierences may be utilised.
Deferred tax assets and liabilities are not recognised if the
temporary dierence arises from the initial recognition of
goodwill or from the initial recognition of other assets and
liabilities in a transaction other than a business combination
that aects neither accounting profit nor taxable profit.
Deferred tax is provided on temporary dierences arising
on investments in foreign subsidiaries, except where the
Group is able to control the reversal of the temporary
dierence and it is probable that it will not reverse in the
foreseeable future.
Deferred tax is calculated using the enacted or
substantively enacted tax rates that are expected to apply
when the asset is recovered or the liability is settled.
Current tax assets and liabilities are oset when there
is a legally enforceable right to set o the amounts and
management intends to settle on a net basis. Deferred
tax assets and liabilities are oset where there is a legally
enforceable right to set o current tax assets and liabilities
and the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority on the same
taxable entity.
Current tax and deferred tax is recognised in profit or loss
unless it relates to an item that is recognised in the same
or a dierent period outside profit or loss, in which case
it too is recognised outside profit or loss, either in other
comprehensive income or directly in equity.
Where there is uncertainty as to whether treatments in
the tax return will be accepted by a taxation authority,
the judgements and estimates made in recognising and
measuring the uncertainty are based on information
available at the time. The Group reassesses these
judgements and estimates if the facts and circumstances
change or new information becomes available. This may
include, but is not restricted to, examination by a taxation
authority, implicit or explicit acceptance by a taxation
authority of a particular tax treatment, the expiry of the
taxation authority’s right to examine or re-examine a tax
treatment and changes in legislation.
Payments to shareholders
Dividends paid and received are included in the Company
financial statements in the period 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.
It is the Board’s intention that any future dividends
will be final dividends paid annually in cash, not by the
allotment and issue of B Shares. Consequently, the Board
is not seeking shareholder approval at the 2022 AGM to
capitalise reserves for the purposes of issuing B Shares or
to grant Directors authority to allot such shares. Existing
B Shares will continue to be redeemable but limited to
one redemption date per annum in November of each
year. BShares issued but not redeemed are classified
ascurrentliabilities.
Own shares
Own shares represent the Company’s ordinary shares that
are held by the Company in treasury or by a sponsored
Employee Share Ownership Plan (ESOP) trust in relation to
the Group’s employee share schemes. When own shares are
acquired, the cost of purchase in the market is deducted
from equity. Gains or losses on the subsequent transfer or
sale of own shares are also recognised in equity.
Financial statements
McBride plc Annual Report and Accounts 2022
158
Notes to the consolidated financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
New accounting standards and interpretations
The following standards and amendments were eective for
periods beginning on or after 1 January 2021 and as such
have been applied in these financial statements. The Group
has not early adopted any other standard or interpretation
that is issued but not yet eective.
The following standards and amendments had no impact
on the financial statements of the Group:
• Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 and IAS
39 regarding replacement issues in the context of the
IBOR reform; and
• Amendments to IFRS 16 to extend the exemption from
assessing whether a Covid-19-related rent concession is
a lease modification (only eective for periods beginning
on or after 1 April 2021).
New accounting standards and interpretations
issuedbut not yet eective
The new and amended standards and interpretations that
are issued, but not yet eective, up to the date of issuance
of the Group’s financial statements are disclosed below.
TheGroup intends to adopt these new and amended
standards and interpretations, if applicable, when they
become eective.
• Amendments to IFRS 1 resulting from Annual
Improvements to IFRS Standards 2018-2020 (subsidiary
as a first-time adopter) – eective for annual periods
beginning on or after 1 January 2022.
• Amendments to IFRS 3 updating a reference to the
Conceptual Framework – eective for annual periods
beginning on or after 1 January 2022.
• Amendments to IFRS 4 regarding the expiry date of
the deferral approach – the fixed expiry date for the
temporary exemption in IFRS 4 from applying IFRS 9
isnow 1 January 2023.
• Amendments to IFRS 9 resulting from Annual
Improvements to IFRS Standards 2018-2020 (fees in the
‘10 per cent’ test for derecognition of financial liabilities)
– eective for annual periods beginning on or after
1January 2022.
• The original issue of IFRS 17 and amendments to address
concerns and implementation challenges that were
identified after IFRS 17 was published – eective for
annual periods beginning on or after 1 January 2023.
• Amendments to IAS 1 regarding the classification of
liabilities and the disclosure of accounting policies
– eective for annual periods beginning on or after
1January 2023.
• Amendments to IAS 8 regarding the definition of
accounting estimates – eective for annual periods
beginning on or after 1 January 2023.
• Amendments to IAS 12 regarding the deferred tax on
leases and decommissioning obligations – eective for
annual periods beginning on or after 1 January 2023.
• Amendments to IAS 16 prohibiting a company from
deducting from the cost of property, plant and
equipment amounts received from selling items
produced while the company is preparing the asset for
its intended use – eective for annual reporting periods
beginning on or after 1 January 2022.
• Amendments to IAS 37 regarding the costs to include
when assessing whether a contract is onerous – eective
for annual reporting periods beginning on or after
1January 2022.
None of the amendments are expected to have a significant
impact on the Group; however, the Group will continue
to consider these and any additional amendments,
interpretations and new standards to identity potential
future impact.
Critical accounting judgements and key sources
ofestimation uncertainty
In applying the Group’s accounting policies as described in
this note, the Directors are required to make judgements,
and estimates and assumptions, that aect the reported
amounts of its assets, liabilities, income and expenses
that are not readily identifiable from other sources.
Theestimates and associated assumptions are based on
historical experience and other factors that are considered
to be relevant. Actual outcomes could dier from those
estimates and aect the Group’s results in future years.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision aects only that period, or in the period of
the revision and future periods if the revision aects both
current and future periods.
The Directors consider the following to be the critical
judgements and key sources of estimation uncertainty
made in preparing these financial statements that, if not
borne out in practice, may aect the Group’s results during
the next financial year.
Critical judgements
Determination of cash-generating units (CGUs)
A CGU is the smallest group of assets that generates cash
inflows that are largely independent of the cash inflows
from other assets or groups of assets. Impairment testing
requires management to determine the net discounted
cash flows expected to arise from a CGU. Management
are therefore required to determine the Group’s CGUs and
judgement is applied as to which groups of assets generate
largely independent cash flows.
In the year, the CGUs have been determined as Liquids,
Unit Dosing, Powders, Aerosols and Asia Pacific, these
being based on product technologies and the separate
Asia Pacific location. All CGUs are lower than, or equal to,
operating segments.
Key sources of estimation uncertainty
(i) Impairment of goodwill, other intangible assets
andproperty, plant and equipment
Impairment testing requires management to estimate
therecoverable amount of an asset or group of assets.
Therecoverable amount represents the higher of value-in-use
and fair value less costs of disposal. Where the recoverable
amount is lower than the carrying amount, an impairment
charge is recognised in profit and loss in the year in which the
impairment is identified.
Value-in-use represents the net present value of the net
cash flows expected to arise from an asset or group of
assets and its calculation requires management to estimate
those cash flows and to apply a suitable discount rate
tothem.
Financial statements
McBride plc Annual Report and Accounts 2022
159
Cash flows are estimated by applying assumptions to
budgeted sales, production costs and overheads over a
five-year forecast period and by applying a perpetuity
growth rate to the forecast cash flow in the fifth
year. Forecasts are reviewed and approved by the Board.
Cash flows are discounted using a discount rate that
reflects current market assessments of the time value of
money. The discount rate used in each CGU is adjusted for
risks specific to the asset or group of assets. The weighted
average cost of capital is aected by estimates of interest
rates, equity returns and market and country-related risks.
Carrying values of goodwill, other intangible assets and
property, plant and equipment are subject to a significant risk
of material adjustment due to reasonably possible changes
in assumptions in the next twelve months. Sensitivity analysis
has been performed in order to assess the extent to which
carrying values of such assets are at risk of impairment.
During the year, impairment charges of £0.8 million were
recognised (2021: £0.3m). At 30 June 2022, the carrying
amount of goodwill, other intangible assets and property,
plant and equipment was £149.9 million (2021: £157.7m).
Details of the assumptions applied and the sensitivity of the
carrying amount of goodwill in relation to the business are
presented in note 12.
(ii) Pensions and other post-employment benefits
Under IAS 19, ‘Employee benefits’, the cost of defined
benefit schemes is determined based on actuarial
valuations that are carried out annually at the balance sheet
date. Actuarial valuations are dependent on assumptions
about the future that are made by the Directors on
the advice of independent qualified actuaries. If actual
experience diers from these assumptions, there could
beamaterial change in the amounts recognised by the
Group in respect of defined benefit schemes in the next
financial year.
At 30 June 2022, the present value of defined benefit
obligations in relation to the UK scheme was £116.6 million
(2021: £161.9m). It was calculated using a number of
assumptions, including future Consumer Price Index rate
changes, increases to pension benefits and mortality rates.
The present value of the benefit obligation is calculated by
discounting the benefit obligation using market yields on
high-quality corporate bonds at the balance sheet date.
At 30 June 2022, the fair value of the scheme assets of the
UK scheme was £102.2 million (2021: £132.6m). Thescheme
assets consist largely of securities and managed funds
whose values are subject to fluctuation in response to
changes in market conditions. A portion of unquoted
investments have valuations which precede the reporting
date and where the valuations have been adjusted for
cash movements between the last valuation date and
30 June2022, using the valuation approach and inputs
as at the last valuation date. Changes in the actuarial
assumptions underlying the benefit obligation, changes in
the discount rate applicable to the benefit obligation and
eects of dierences between the expected and actual
return on the scheme’s assets are classified as actuarial
gains and losses and are recognised in other comprehensive
income. During 2022, the Group recognised a net actuarial
gain of £12.4 million (2021: loss of£4.2m).
An analysis of the assumptions that will be used by the
Directors to determine the cost of the defined benefit
scheme that will be recognised in profit or loss in the next
financial year and the sensitivity of the benefit obligation to
key assumptions is presented in note 23.
(iii) Taxation
Judgements and estimates are required in order to
determine the appropriate amount of tax provided for
issues under dispute with taxation authorities and for tax
matters which are considered uncertain and on which it is
probable that a future tax liability will arise. The amount
provided is management’s best estimate of the tax liability
taking into consideration external advice, known outcomes
on similar tax treatments and experience of tax authority
custom and practice.
At 30 June 2022, the Group estimated its maximum
possible tax exposure for ongoing tax audits and uncertain
tax treatments to be £16.2 million, of which £2.0 million is
provided against in current tax.
The Group operates across a number of jurisdictions and
tax risk can arise in relation to the pricing of cross-border
transactions, where a taxation authority’s interpretation of
the arm’s length principle can diverge from the approach
taken by the Group. Transfer pricing is inherently subjective
and in determining the appropriate level of provision, the
Group considers the probability of a range of outcomes,
using a weighted average methodology to focus risk on the
most likely outcomes in the event of an audit. The amount
provided also takes account of international dispute
resolution mechanisms, where available, to mitigate double
taxation. This analysis is reassessed at each period end and
the estimates refined as additional information becomes
available.
The Group believes it has made adequate provision for the
liabilities likely to arise from periods which are open and
not yet agreed by tax authorities. The ultimate liability for
such matters may vary from the amounts provided however
and is dependent upon the outcome of agreements with
relevant tax authorities, dispute resolution processes in the
relevant jurisdictions or litigation where appropriate.
The Group has tax losses and other deductible temporary
dierences that have the potential to reduce future tax
liabilities. Deferred tax assets are recognised to the extent
that recovery is probable against the future reversal of
taxable temporary dierences and projected taxable
income. At 30 June 2022, the Group recognised deferred
tax assets of £29.7 million (2021: £22.8m), including
£22.0million (2021: £8.9m) in respect of tax losses.
Deferred tax assets amounting to £8.3 million (2021:
£7.7m) were not recognised in respect of tax losses and
tax credits carried forward. The profit projections used to
estimate deferred tax asset recoverability are the same as
those used to assess the carrying value of goodwill and the
estimate is therefore sensitive to the same factors as those
set out in note 12. Management estimates that a reduction
in the perpetual growth rate to 0.0% would not result in an
impairment of the deferred tax asset.
Financial statements
McBride plc Annual Report and Accounts 2022
160
Notes to the consolidated financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
Alternative performance measures
Introduction
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. The non-GAAP measures used are: adjusted operating profit, adjusted EBITDA,
adjusted finance costs, adjusted profit before tax, adjusted earnings per share, free cash flow and cash conversion %,
adjusted return on capital employed and net debt. The rationale for using these measures, along with a reconciliation
fromthe nearest measures prepared in accordance with IFRS, are presented below.
The alternative performance measures we use may not be directly comparable with similarly titled measures used by
othercompanies.
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 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. 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.
2022 2021
£m £m
Operating (loss)/profit (27.1) 14.8
Add back: operating loss from discontinued operations 0.4 0.7
Operating (loss)/profit from continuing operations (26.7) 15.5
Exceptional items in operating profit (note 4) (0.4) 6.2
Amortisation of intangibles (note 13) 2.6 2.4
Adjusted operating (loss)/profit from continuing operations (24.5) 24.1
Depreciation of property, plant and equipment (note 14) 16.9 17.6
Depreciation of right-of-use assets (note 15) 4.0 3.8
Adjusted EBITDA (3.6) 45.5
Adjusted profit before tax is based on adjusted operating profit less adjusted finance costs. The table below reconciles
adjusted profit before tax to the Group’s reported profit before tax.
2022 2021
£m £m
(Loss)/profit before tax (35.7) 10.6
Add back: loss before tax from discontinued operations 0.4 0.7
(Loss)/profit before tax from continuing operations (35.3) 11.3
Exceptional items (note 4) 3.1 6.2
Amortisation of intangibles (note 13) 2.6 2.4
Adjusted (loss)/profit before tax from continuing operations (29.6) 19.9
Adjusted earnings per share is based on the Group’s profit 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 9).
Financial statements
McBride plc Annual Report and Accounts 2022
161
Free cash flow and cash conversion %
Free cash flow is one of the Group’s key performance indicators by which our financial performance is measured. It is
primarily a liquidity measure. However, we also believe that free cash flow and cash conversion % are important indicators
of our overall operational performance as they reflect the cash we generate from operations. Free cash flow is defined as
cash generated from continuing operations before exceptional items. Cash conversion % is defined as free cash flow as
a percentage of adjusted EBITDA. A reconciliation from net cash generated from operating activities, the most directly
comparable IFRS measure, to free cash flow, is set out as follows.
2022 2021
£m £m
Net cash (used in)/generated from operating activities (30.2) 14.6
Add back:
Taxation paid 0.1 7.3
Interest paid 3.3 3.2
Cash (inflow)/outflow from exceptional items 4.1 8.0
Free cash flow (22.7) 33.1
Adjusted EBITDA (3.6) 45.5
Cash conversion % n/a 73%
Adjusted return on capital employed (ROCE)
Adjusted ROCE serves as an indicator of how eciently we generate returns from the capital invested in the business.
Itisa Group KPI that is directly relatable to the outcome of investment decisions. Adjusted ROCE is defined as total
adjusted operating profit from continuing operations divided by the average year-end 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 return on capital employed is calculated as follows:
2022 2021 2020
£m £m £m
Goodwill (note 12) 19.7 19.7 19.9
Other intangible assets (note 13) 7.3 8.2 8.5
Property, plant and equipment (note 14) 122.9 129.8 134.7
Right-of-use assets (note 15) 11.3 10.0 7.3
Inventories (note 16) 118.9 92.9 97.5
Trade and other receivables (note 17) 145.4 117.9 138.3
Trade and other payables (note 19) (206.9) (169.2) (198.1)
Capital employed 218.6 209.3 208.1
Average year-end capital employed 214.0 208.7 221.1
Adjusted operating (loss)/profit from continuing operations (24.5) 24.1 28.3
Adjusted return on capital employed % (11.4)% 11.5% 12.8%
Financial statements
McBride plc Annual Report and Accounts 2022
162
Notes to the consolidated financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
Adjusted measures continued
Net debt
Net debt consists of cash and cash equivalents, overdrafts, bank and other loans and lease liabilities.
Net debt is a measure of the Group’s net indebtedness that provides an indicator of overall balance sheet strength. It is
a key indicator used by management to assess both the Group’s cash position and its indebtedness. The use of the term
‘net debt’ does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities
included in this measure.
Net debt is considered to be 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:
2022 2021
£m £m
Current assets
Cash and cash equivalents 4.5 24.9
Current liabilities
Borrowings (note 20) (60.5) (53.7)
Lease liabilities (note 15) (3.9) (3.4)
(64.4) (57.1)
Non-current liabilities
Borrowings (note 20) (96.4) (78.3)
Lease liabilities (note 15) (8.1) (7.9)
(104.5) (86.2)
Net debt (164.4) (118.4)
3. Segment information
Background
Segmental reporting
Financial information is presented to the Board by product technology for the purposes of allocating resources within
the Group and assessing the performance of the Group’s businesses. There are five separately managed and accountable
business divisions:
• 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 below figures. Programme
Compass is delivering an increased focus on cost optimisation and has meant that most overhead costs are now directly
attributed within the respective divisions’ income statements. The only costs now allocated out to the divisions are central
overheads, with corporate costs being retained at a Group level. 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 and certain central 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, asthe central 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 period-on-period 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.
Financial statements
McBride plc Annual Report and Accounts 2022
163
Unit Asia
Liquids Dosing Powders Aerosols Pacific Corporate Group
Year ended 30 June 2022 £m £m £m £m £m £m £m
Continuing operations
Segment revenue 383.9 171.5 68.6 31.9 22.4 — 678.3
Adjusted operating (loss)/profit (15.9) (0.8) (2.5) (1.5) 0.7 (4.5) (24.5)
Amortisation of intangible assets (2.6)
Exceptional items (note 4) 0.4
Operating loss (26.7)
Finance costs (8.6)
Loss before taxation (35.3)
Inventories 57.5 35.5 13.7 9.1 3.1 — 118.9
Capital expenditure 5.7 6.5 1.0 0.6 0.3 — 14.1
Amortisation and depreciation 13.7 6.5 1.4 0.5 1.4 — 23.5
Unit Asia
Liquids Dosing Powders Aerosols Pacific Corporate Group
Year ended 30 June 2021 £m £m £m £m £m £m £m
Continuing operations
Segment revenue 376.1 181.5 66.3 34.0 24.4 — 682.3
Adjusted operating profit/(loss) 11.7 16.7 (2.3) 0.8 1.9 (4.7) 24.1
Amortisation of intangible assets (2.4)
Exceptional items (note 4) (6.2)
Operating profit 15.5
Finance costs (4.2)
Profit before taxation 11.3
Inventories 45.0 24.6 12.4 8.4 2.5 — 92.9
Capital expenditure 12.4 5.7 0.7 0.5 2.3 3.0 24.6
Amortisation and depreciation 13.0 6.3 1.5 0.5 1.0 1.5 23.8
Geographical information
Revenue from
external customers Non-current assets
2022 2021 2022 2021
£m £m £m £m
United Kingdom 150.6 143.6 37.7 41.7
Germany 143.3 141.5 — —
France 140.3 137.7 9.2 9.1
Other Europe 217.8 227.9 108.0 109.9
Australia 8.5 12.0 — —
Other Asia Pacific 14.7 16.0 6.3 7.0
Rest of the World 3.1 3.6 — —
Total 678.3 682.3 161.2 167.7
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 2022 and 2021, no individual customer provided more than 10% of the Group’s revenue.
During 2022, the top ten customers accounted for 50% of total Group revenue (2021: 47%).
Financial statements
McBride plc Annual Report and Accounts 2022
164
Notes to the consolidated financial statements continued
Year ended 30 June 2022
4. Exceptional items
Analysis of exceptional items
2022 2021
£m £m
Continuing operations
Reorganisation and restructuring costs/(gains):
UK Aerosols closure 0.1 0.4
Factory footprint review (1.4) 0.3
Review of strategy, organisation and operations (0.4) 4.4
Logistics transformation programme 0.7 1.1
(1.0) 6.2
Environmental remediation 0.6 —
Total (credited)/charged to operating (loss)/profit (0.4) 6.2
Group refinancing:
Independent business review 3.5 —
Total charged to finance costs 3.5 —
Total continuing operations 3.1 6.2
Discontinued operations
Sale of PC Liquids business 0.5 0.7
Other (0.1) —
Discontinued operations before tax 0.4 0.7
Tax on discontinued operations (0.1) —
Total discontinued operations 0.3 0.7
Total exceptional items before tax 3.5 6.9
Total exceptional items of £3.5 million were recorded during the year (2021: £6.9m). The charge primarily comprises the
following:
Items relating to continuing operations
Total exceptional items incurred in relation to the continuing business of £3.1 million were recorded during the year
(2021:£6.2m). The charge comprises the following:
• £0.1 million in respect of one-o legacy costs in relation to the former UK Aerosols site in Hull;
• £1.8 million profit on the sale of the Barrow site, which ceased operations in October 2020, oset by £0.4 million
clearance and site closure costs;
• £0.4 million credit relating to Programme Compass, including £1.6 million profit on the sale of a factory in Malaysia,
oset by £0.9 million impairment of fixed assets and £0.3 million in consulting support and other project expenses;
• £0.7 million relating to the Group’s logistics transformation programme, including £0.8 million of consultancy costs and
£0.2 million of redundancy costs, oset by £0.3 million profit on sale of a warehouse in France;
• £0.6 million additional costs relating to the revaluation of the environmental remediation provision; and
• £3.5 million charged to finance costs in respect of the independent business review programme.
Items relating to discontinued operations
An exceptional charge of £0.5 million was incurred in respect of a provision for property repairs and onerous lease
obligations relating to the closed St Helens site.
Financial statements
McBride plc Annual Report and Accounts 2022
165
5. Employee information
The number of full-time equivalent persons employed by the Group (including Directors) during the year, analysed by
category, was as follows:
2021 2021
2022 2022 Year end Average
Year end Average Number Number
Number Number (restated) (restated)
Manufacturing 2,327 2,365 2,451 2,507
Sales, general and administration 594 592 597 583
Total 2,921 2,957 3,048 3,090
The number of persons employed during the financial year ended 30 June 2021, as previously disclosed, included
third-party contractors and agency workers used by the Group. Such workers are not employees of the Group, as defined
by section 411 of the Companies Act 2006, and have therefore been excluded from the numbers disclosed above.
Aggregate payroll costs were as follows:
2022 2021
£m £m
Wages and salaries 105.0 105.5
Social security costs 17.8 19.9
Share awards granted to Directors and employees — 0.3
Other pension costs 3.4 3.2
Total 126.2 128.9
Pension costs comprise the payments made by the Group to defined contribution schemes and the service and
administration costs on defined benefit schemes (net of employee contributions). See note 23.
Aggregate emoluments of the Directors of the Company were as follows:
2022 2021
£’000 £’000
Wages and salaries 1,166 1,031
Share awards granted to Directors 28 85
Other pension costs
(1)
56 45
Total 1,250 1,161
The remuneration for the highest paid Director was as follows:
2022 2021
£’000 £’000
Wages and salaries 453 451
Share awards granted 15 65
Other pension costs
(1)
35 35
Total 503 551
(1) The pension figure represents the value of the Company’s contribution to the individual’s pension scheme and/or the cash value of payments in lieu
of pension contribution.
The number of share awards granted during the year for the highest paid Director under the LTIP was 716,955 (2021:
877,016) and under the Restricted Share Unit (RSU) plan was 216,073 (2021: 173,246). The number of share awards
exercised by the highest paid Director during the year was nil (2021: 1,064) in relation to the Deferred Annual Bonus Plan.
Further information on Directors’ emoluments included above is in the Directors’ Remuneration report on pages 105 to 131.
Aggregate compensation for key management, being the Directors and members of the Executive Committee, is shown in
note 29.
Financial statements
McBride plc Annual Report and Accounts 2022
166
Notes to the consolidated financial statements continued
Year ended 30 June 2022
6. Auditor’s remuneration
Fees payable by the Group to the Company’s independent auditor, Pricewaterhouse Coopers LLP (PwC), and its
associates, were as follows:
2022 2021
£m £m
Audit fees:
Audit of the Company’s financial statements 0.1 0.1
Other services:
Audit of the financial statements of the Company’s subsidiaries 1.0 0.8
Total fees 1.1 0.9
Fees for the audit of the Company’s financial statements represent fees payable to PwC in respect of the audit of the
Company’s individual financial statements and the Group’s consolidated financial statements. Non-audit fees payable to
PwC in relation to other advisory services amounted to £2,000 (2021: £23,000).
7. Operating (loss)/profit
Operating (loss)/profit is stated after charging/(crediting):
2022 2021
£m £m
Cost of inventories (included in cost of sales) 441.8 397.4
Employee costs (note 5) 126.2 128.9
Amortisation of intangible assets (note 13) 2.6 2.4
Depreciation of property, plant and equipment (note 14) 16.9 17.6
Depreciation of right-of-use assets (note 15) 4.0 3.8
Impairment:
Property, plant and equipment (note 14) 0.8 0.3
Right-of-use assets (note 15) — 0.7
Inventories (note 16) 2.9 2.9
Trade receivables (note 17) 2.0 1.3
Expense relating to short-term leases (note 15) 0.3 1.0
Expense relating to low-value leases (note 15) 0.2 0.3
Research and development costs not capitalised 6.8 7.6
Net foreign exchange loss/(gain) 0.3 (0.4)
8. Finance costs
2022 2021
£m £m
Finance costs
Interest on bank loans and overdrafts 2.7 2.7
Interest on lease liabilities (note 15) 0.4 0.3
Net foreign exchange loss/(gain) 0.4 (0.2)
Amortisation of facility fees 0.5 0.4
Non-utilisation and other fees 0.6 0.6
4.6 3.8
Post-employment benefits:
Net interest cost on defined benefit obligation (note 23) 0.5 0.4
Adjusted finance costs 5.1 4.2
Costs associated with independent business review (note 4) 3.5 —
Total finance costs 8.6 4.2
Interest rate swaps are used to manage the interest rate profile of the Group’s borrowings. Accordingly, net interest
payable or receivable on interest rate swaps is included in finance costs.
Financial statements
McBride plc Annual Report and Accounts 2022
167
9. Taxation
Income tax expense/(credit)
2022 2021
UK Overseas Total UK Overseas Total
From continuing operations £m £m £m £m £m £m
Current tax expense/(credit)
Current year — 3.2 3.2 — 4.1 4.1
Adjustment for prior years (1.0) (0.9) (1.9) — (2.6) (2.6)
(1.0) 2.3 1.3 — 1.5 1.5
Deferred tax (credit)/expense
Origination and reversal of temporary dierences (7.9) (2.7) (10.6) (5.0) 0.6 (4.4)
Adjustment for prior years (6.4) 5.4 (1.0) 0.1 0.1 0.2
Impact of change in tax rate (1.0) — (1.0) — — —
(15.3) 2.7 (12.6) (4.9) 0.7 (4.2)
Income tax (credit)/expense (16.3) 5.0 (11.3) (4.9) 2.2 (2.7)
2022 2021
UK Overseas Total UK Overseas Total
From discontinued operations £m £m £m £m £m £m
Deferred tax credit
Origination and reversal of temporary dierences (0.1) — (0.1) (0.1) — (0.1)
(0.1) — (0.1) (0.1) — (0.1)
Income tax credit (0.1) — (0.1) (0.1) — (0.1)
2022 2021
Total attributable to UK Overseas Total UK Overseas Total
ordinary shareholders £m £m £m £m £m £m
Current tax expense/(credit)
Current year — 3.2 3.2 — 4.1 4.1
Adjustment for prior years (1.0) (0.9) (1.9) — (2.6) (2.6)
(1.0) 2.3 1.3 — 1.5 1.5
Deferred tax (credit)/expense
Origination and reversal of temporary dierences (8.0) (2.7) (10.7) (5.1) 0.6 (4.5)
Adjustment for prior years (6.4) 5.4 (1.0) 0.1 0.1 0.2
Impact of change in tax rate (1.0) — (1.0) — — —
(15.4) 2.7 (12.7) (5.0) 0.7 (4.3)
Income tax (credit)/expense (16.4) 5.0 (11.4) (5.0) 2.2 (2.8)
The current tax adjustment for the prior year includes £0.5 million (2021: £2.2m) credit for the release of a provision
following settlement of a tax enquiry and £0.4 million (2021: £0.3m) credit relating to the release of provisions for
uncertain tax treatments due to the expiry of statutes of limitation.
Transfer pricing is inherently subjective and in determining the appropriate level of provision, the Group considers the
probability of a range of outcomes, using a weighted average methodology to focus risk on the most likely outcomes
inthe event of an audit. The amount provided also takes account of international dispute resolution mechanisms,
whereavailable, to mitigate double taxation. This analysis is re-assessed at each period end and the estimates refined as
additional information becomes available.
At 30 June 2022, the Group estimated its maximum possible tax exposure for ongoing tax audits and uncertain tax
treatments to be £16.2 million, against which a provision of £2.0 million has been made, in line with IFRIC 23 requirements.
Financial statements
McBride plc Annual Report and Accounts 2022
168
Notes to the consolidated financial statements continued
Year ended 30 June 2022
9. Taxation continued
Reconciliation to UK statutory tax rate
The total tax charge on the Group’s (loss)/profit before tax for the year diers from the theoretical amount that would be
charged at the UK standard rate of corporation tax for the following reasons:
2022 2021
From continuing operations £m £m
(Loss)/profit before tax (35.3) 11.3
(Loss)/profit before tax multiplied by the UK corporation tax rate of 19.0% (2021: 19.0%) (6.7) 2.1
Eect of tax rates in foreign jurisdictions (1.7) 1.0
Non-deductible expenses 0.6 1.4
Tax incentives/non-taxable income (0.4) (0.1)
Tax losses and other temporary dierences for which no deferred tax recognised 0.6 (3.8)
Change in tax rate (1.0) (1.4)
Other dierences 0.2 0.5
Adjustment for prior years (2.9) (2.4)
Total tax credit in profit or loss (11.3) (2.7)
Exclude adjusting items (note 2) 2.0 1.6
Total tax credit in profit or loss before adjusting items (9.3) (1.1)
Taxation is provided at current rates on the profits earned for the year.
2022 2021
From discontinued operations £m £m
Loss before tax (0.4) (0.7)
Loss before tax multiplied by the UK corporation tax rate of 19.0% (2021: 19.0%) (0.1) (0.1)
Total tax credit in profit or loss (0.1) (0.1)
Exclude adjusting items (note 2) 0.1 0.1
Total tax credit in profit or loss before adjusting items — —
Taxation is provided at current rates on the profits earned for the year.
2022 2021
Total attributable to ordinary shareholders £m £m
(Loss)/profit before tax (35.7) 10.6
(Loss)/profit before tax multiplied by the UK corporation tax rate of 19.0% (2021: 19.0%) (6.8) 2.0
Eect of tax rates in foreign jurisdictions (1.7) 1.0
Non-deductible expenses 0.6 1.4
Tax incentives/non-taxable income (0.4) (0.1)
Tax losses and other temporary dierences for which no deferred tax recognised 0.6 (3.8)
Change in tax rate (1.0) (1.4)
Other dierences 0.2 0.5
Adjustment for prior years (2.9) (2.4)
Total tax credit in profit or loss (11.4) (2.8)
Exclude adjusting items (note 2) 2.1 1.7
Total tax credit in profit or loss before adjusting items (9.3) (1.1)
The taxation is provided at current rates on the profits earned for the year.
The main rate of UK corporation tax applicable for the financial year is 19.0% (2021: 19.0%).
Factors aecting future tax charges
On 24 May 2021, the increase in the UK corporation tax rate from 19.0% to 25.0% with eect from 1 April 2023 was
substantially enacted. Deferred tax has been calculated for the UK based on the expected reversal dates of the temporary
dierences. However, in the September 2022 UK Mini Budget it was announced that the increase to 25% would now not
occur and the UKCorporation Tax Rate would instead be held at 19%. This rate had not been substantively enacted at the
balance sheet date, and as the result the UK deferred tax balances as at 30 June 2022 continue to be measured at the 25%
rate noted above. The estimated impact of the reversal of the UK corporation tax rate increase would be to reduce the
deferred tax assets by £6.8million.
During 2021, the OECD published a framework for the introduction of a global minimum eective tax rate of 15.0%,
applicable to large multinational groups. On 20 July 2022, HM Treasury released draft legislation to implement
these ‘Pillar2’ rules with eect from 31 December 2023. The Group is reviewing these draft rules to understand any
potentialimpacts.
Financial statements
McBride plc Annual Report and Accounts 2022
169
Tax on items recognised in other comprehensive income
2022 2021
£m £m
Items that may be reclassified to profit or loss:
Cash flow hedges in the year 0.5 —
0.5 —
Items that will not be transferred to profit or loss:
Net actuarial gain/(loss) on post-employment benefits:
Deferred tax 3.1 (4.1)
Total tax charged/(credited) in other comprehensive income 3.6 (4.1)
Deferred tax
The movement in the net deferred tax balances during the year was:
Accelerated Share- Retirement
capital Intangible based Tax benefit
allowance assets payments losses obligations Other Total
£m £m £m £m £m £m £m
At 1 July 2020 0.2 (2.9) 0.2 0.3 6.1 3.3 7.2
(Charge)/credit to profit or loss (4.1) 0.2 0.2 7.8 (0.9) 1.1 4.3
Credit to other comprehensive income — — — — 4.1 — 4.1
Charge to equity — — (0.1) — — — (0.1)
Eect of the change in tax rate 1.3 (0.7) — 0.8 (1.4) — —
Exchange/other movements 0.5 — — — — 0.1 0.6
At 30 June 2021 (2.1) (3.4) 0.3 8.9 7.9 4.5 16.1
(Charge)/credit to profit or loss (2.9) 0.2 0.1 12.8 (0.9) 2.4 11.7
Charge to other comprehensive income — — — — (3.1) (0.5) (3.6)
Charge to equity — — (0.3) — — — (0.3)
Eect of the change in tax rate 0.4 — — 0.3 — 0.2 0.9
Exchange/other movements — — — — — 0.2 0.2
At 30 June 2022 (4.6) (3.2) 0.1 22.0 3.9 6.8 25.0
Deferred tax assets and liabilities are presented in the Group’s balance sheet as follows:
2022 2021
£m £m
Deferred tax assets 29.7 22.8
Deferred tax liabilities (4.7) (6.7)
Total 25.0 16.1
Deferred income tax assets are recognised for deductible temporary dierences to the extent that the realisation of the
related tax benefit through future taxable profits is probable.
The deferred tax asset represents mainly UK deductible temporary dierences which are not subject to time expiry.
Whilefurther tax losses have arisen in the UK in the current financial year, due to the exceptionally dicult trading
conditions detailed in the Strategic report, the Group’s three-year financial forecast indicates that these temporary
dierences will start to reverse in the following financial year, moving to 2024 after applying an 18% sensitivity, and
are considered to be fully recoverable. There is no significant risk of material adjustment to the carrying amount of the
deferred tax assetwithin the next twelve months.
To the extent that dividends remitted from overseas aliates are expected to result in additional taxes, these amounts
have been provided for. No deferred tax is recognised in respect of timing dierences associated with the unremitted
earnings of overseas subsidiaries as these are considered permanently employed in the business of these companies.
Unremitted earnings may be liable to overseas taxes and/or UK taxation (after allowing for double tax relief) if
distributedas dividends. Theaggregate amount of temporary dierences associated with investments in subsidiaries and
associates for which deferred tax liabilities have not been recognised totalled approximately £0.8 million at 30 June 2022
(2021: £1.0m).
Financial statements
McBride plc Annual Report and Accounts 2022
170
Notes to the consolidated financial statements continued
Year ended 30 June 2022
9. Taxation continued
Unrecognised deferred tax assets
At 30 June 2022, the Group had unused tax losses of £93.9 million (2021: £39.0m) available for oset against future
profits. No deferred tax asset has been recognised in respect of £5.5 million (2021: £2.3m) of these losses due to
restrictions over accessing these losses in the future. The majority of these tax losses arise in tax jurisdictions where they
do not expire.
No deferred tax asset has been recognised in relation to the surplus Advanced Corporation Tax (ACT) of £7.0 million (2021:
£7.0m) due to uncertainty as to future ACT capacity and taxable profits.
10. (Loss)/earnings per ordinary share
Basic (loss)/earnings per ordinary share is calculated by dividing the (loss)/profit 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.
Theweighted average number of the Company’s ordinary shares in issue excludes 629,200 shares (2021: 372,864 shares),
being the weighted average number of own shares held during the year in relation to employee share schemes (note 24).
Reference 2022 2021
Weighted average number of ordinary shares in issue (million) a 173.5 179.1
Eect of dilutive LTIP and RSU awards (million) 1.0 0.3
Weighted average number of ordinary shares for calculating diluted earnings per share (million) b 174.5 179.4
Diluted earnings 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)/earnings per share is considered equal to
the basic (loss)/earnings per share.
During the year, the Company had equity-settled LTIP and RSU awards with a nil exercise price that are potentially dilutive
ordinary shares.
Adjusted (loss)/earnings per share measures are calculated based on (loss)/profit for the year attributable to owners of
the Company before adjusting items as follows:
2022 2021
From continuing operations Reference £m £m
(Loss)/earnings for calculating basic and diluted (loss)/earnings per share c (24.0) 14.0
Adjusted for:
Amortisation of intangible assets (note 13) 2.6 2.4
Exceptional items (note 4) 3.1 6.2
Taxation relating to the above items (2.0) (1.6)
(Loss)/earnings for calculating adjusted (loss)/earnings per share d (20.3) 21.0
2022 2021
Reference pence pence
Basic (loss)/earnings per share c/a (13.8) 7.8
Diluted (loss)/earnings per share c/b
(1)
(13.8) 7.8
Adjusted basic (loss)/earnings per share d/a (11.7) 11.7
Adjusted diluted (loss)/earnings per share d/b
(1)
(11.7) 11.7
(1) Diluted loss per share for 2022 is considered equal to the basic loss per share as potentially dilutive ordinary shares cause a decrease in the
losspershare.
2022 2021
From discontinued operations Reference £m £m
Loss for calculating basic and diluted loss per share e (0.3) (0.6)
Adjusted for:
Exceptional items (note 4) 0.4 0.7
Taxation relating to the above items (0.1) (0.1)
Loss for calculating adjusted loss per share f — —
2022 2021
Reference pence pence
Basic loss per share e/a (0.2) (0.3)
Diluted loss per share e/b
(1)
(0.2) (0.3)
Adjusted basic loss per share f/a — —
Adjusted diluted loss per share f/b
(1)
— —
(1) Diluted loss per share for 2022 is considered equal to the basic loss per share as potentially dilutive ordinary shares cause a decrease in the
losspershare.
Financial statements
McBride plc Annual Report and Accounts 2022
171
2022 2021
Total attributable to ordinary shareholders Reference £m £m
(Loss)/earnings for calculating basic and diluted (loss)/earnings per share g (24.3) 13.4
Adjusted for:
Amortisation of intangible assets (note 13) 2.6 2.4
Exceptional items (note 4) 3.5 6.9
Taxation relating to the above items (2.1) (1.7)
(Loss)/earnings for calculating adjusted (loss)/earnings per share h (20.3) 21.0
2022 2021
Reference pence pence
Basic (loss)/earnings per share g/a (14.0) 7.5
Diluted (loss)/earnings per share g/b
(1)
(14.0) 7.5
Adjusted basic (loss)/earnings per share h/a (11.7) 11.7
Adjusted diluted (loss)/earnings per share h/b
(1)
(11.7) 11.7
(1) Diluted loss per share for 2022 is considered equal to the basic loss per share as potentially dilutive ordinary shares cause a decrease in the
losspershare.
11. Payments to shareholders
Dividends paid and received are included in the Company financial statements in the period 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.
It is the Board’s intention that any future dividends will be final dividends paid annually in cash, not by the allotment and
issue of B Shares. Consequently, the Board is not seeking shareholder approval at the 2022 AGM to capitalise reserves for
the purposes of issuing B Shares or to grant Directors authority to allot such shares. Existing B Shares will continue to be
redeemable but limited to one redemption date per annum in November of each year. B Shares issued but not redeemed
are classified as current liabilities.
No payments to ordinary shareholders were made or proposed in respect of this year or the prior year.
As set out in the Half-Year Report, the Group is targeting an accounting basis of net debt/adjusted EBITDA of 2.0x or
less. As the ratio at 31 December 2021 was over 2.0x, an interim payment to shareholders was not made. At 30 June 2022,
the ratio was also over 2.0x and in line with its revised Distribution Policy set out on pages 32 and 33, the Board is not
recommending afinal dividend in 2022.
Movements in the number of B Shares outstanding were as follows:
2022 2021
Nominal Nominal
Number value Number value
000 £’000 000 £’000
Issued and fully paid
At 1 July 747,399 747 713,130 713
Issued — — 2,010,780 2,011
Redeemed (81,511) (81) (1,976,511) (1,977)
At 30 June 665,888 666 747,399 747
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.
12. Goodwill
£m
Cost
At 1 July 2020, 30 June 2021 and 30 June 2022 36.0
Accumulated impairment
At 1 July 2020 (16.1)
Currency translation dierences (0.2)
30 June 2021 (16.3)
Currency translation dierences —
At 30 June 2022 (16.3)
Net book value
At 30 June 2022 19.7
At 30 June 2021 19.7
Financial statements
McBride plc Annual Report and Accounts 2022
172
Notes to the consolidated financial statements continued
Year ended 30 June 2022
12. Goodwill continued
From 1 January 2021, the European Household business was restructured into three product technology-led and separately
managed and accountable business divisions:
• Liquids: anything sold in a bottle or pouch, such as washing up liquid, bleach, disinfecting sprays;
• Unit Dosing: single-use products, typically auto dishwasher tablets and laundry capsules; and
• Powders: mostly laundry powders, but with some auto dishwasher powder products.
The Liquids, Unit Dosing and Powders divisions, plus our Aerosols and Asia Pacific businesses that already had separate
management teams and leadership, represent the lowest level within the Group at which goodwill is monitored for internal
management purposes.
Carrying amount of goodwill allocated to cash-generating units (CGUs):
2022 2021
£m £m
Liquids 15.9 15.9
Unit Dosing 3.3 3.3
Powders 0.3 0.3
Asia Pacific 0.2 0.2
At 30 June 19.7 19.7
Impairment tests carried out during the year
Goodwill is tested for impairment annually at the level of the CGU to which it is allocated. In each of the tests carried out
during the current financial year, the recoverable amount of the CGUs concerned was measured on a value-in-use basis.
Value-in-use represents the present value of the future cash flows that are expected to be generated by the CGU to which
the goodwill is allocated. Management based its cash flow estimates on the Group’s Board-approved budget for the 2023
financial year. Cash flows in the following two years were forecast by applying assumptions to budgeted sales, production
costs and overheads. Aggregate cash flows beyond the third year were estimated by applying a perpetuity growth rate to
the forecast cash flow in the fifth year that was based on long-term growth rates for the CGU’s products in its end markets.
Management estimates sales growth for each CGU based on forecasts of the future volume of the end markets for the
CGU’s products. CGUs to which significant goodwill is allocated supply the Liquids and Unit Dosing markets in Europe.
Management estimates the cost of material inputs and other direct and indirect costs based on current prices and market
expectations of future price changes. Beyond the budget year, unless there are reasons to suggest otherwise, management
assumes that future changes in material input prices are reflected in the price of the Group’s products. General cost
inflation is based on management’s expectations of cost increases in the business.
In order to forecast growth beyond the detailed cash flows into perpetuity, long-term average growth rates of 1.5%
(2021:1.5%) in Liquids, 2.0% (2021: 2.0%) in Unit Dosing, 1.6% (2021: 1.4%) in Powders, 1.4% (2021: 1.2%) in Aerosols and
3.9% (2021: 5.0%) in Asia Pacific have been applied. These rates are based on a weighted average of country-specific rates
that are not greater than the published International Monetary Fund average growth rates in gross domestic product in the
territories in which the CGUs operate.
Discount rates applied to the cash flow projections were determined using a capital asset pricing model and reflected
current market interest rates, relevant equity and size risk premiums and the risks specific to the CGU concerned. Pre-tax
discount rates used in calculating the value-in-use of CGUs in the current year were as follows: Liquids 10.8% (2021: 10.5%),
Unit Dosing 8.8% (2021: 8.7%), Powders 8.6% (2021: 9.0%), Aerosols 9.3% (2021: 9.7%) and Asia Pacific 13.5% (2021: 15.9%).
Sensitivity analysis
A sensitivity analysis has been performed, focusing on the change required in long-term average growth rates, discount
rates and forecast revenue and margin assumptions that would give rise to an impairment.
In the case of the Liquids CGU, sensitivities that result in the recoverable amount equalling the carrying value were:
• a decrease in long-term average growth rates to (3.5)%;
• an increase in pre-tax discount rates of 4.0ppts;
• a reduction in forecast revenue of 5.4%; and
• a reduction in forecast margins of 1.2ppts.
In the case of the Unit Dosing CGU, sensitivities that result in the recoverable amount equalling the carrying value were:
• a decrease in long-term average growth rates to (8.1)%;
• an increase in pre-tax discount rates of 9.4ppts;
• a reduction in forecast revenue of 9.9%; and
• a reduction in forecast margins of 2.1ppts.
Financial statements
McBride plc Annual Report and Accounts 2022
173
In the case of the Powders CGU, sensitivities that result in the recoverable amount equalling the carrying value were:
• a decrease in long-term average growth rates to (3.1)%;
• an increase in pre-tax discount rates of 3.9ppts;
• a reduction in forecast revenue of 4.9%; and
• a reduction in forecast margins of 1.0ppts.
In the case of the Aerosols CGU, sensitivities that result in the recoverable amount equalling the carrying value were:
• a decrease in long-term average growth rates to (17.0)%;
• an increase in pre-tax discount rates of 13.5ppts;
• a reduction in forecast revenue of 6.5%; and
• a reduction in forecast margins of 1.4ppts.
In the case of the Asia Pacific CGU, sensitivities that result in the recoverable amount equalling the carrying value were:
• a decrease in long-term average growth rates to (6.8)%;
• an increase in pre-tax discount rates of 6.3ppts;
• a reduction in forecast revenue of 12.6%; and
• a reduction in forecast margins of 3.1ppts.
If forecast margins used in the value-in-use calculation for Liquids, Powders and Aerosols (being the CGUs most
sensitiveto reasonably possible changes in margin assumptions) had been 2ppts lower than management’s estimates as
at30 June 2022, the Group would have had to recognise impairments as follows:
• £15.9 million and £0.3 million against the carrying value of goodwill for Liquids and Powders respectively;
• £0.2 million and £0.5 million against the carrying value of other intangible assets for Liquids and Powders respectively; and
• £23.0 million, £11.6 million and £2.5 million against the carrying value of property, plant and equipment for Liquids, Powders
and Aerosols respectively.
Based on the impairment reviews performed, no impairment has been identified.
13. Other intangible assets
Patents,
brands and Computer Customer
trademarks software
relationships
Other Total
£m £m £m £m £m
Cost
At 1 July 2020 3.8 12.5 12.1 0.7 29.1
Additions — 2.1 — 0.1 2.2
Disposals — (0.6) — — (0.6)
Currency translation dierences (0.1) — (0.2) (0.1) (0.4)
At 30 June 2021 3.7 14.0 11.9 0.7 30.3
Additions — 0.8 — 0.9 1.7
Disposals — (2.6) — (0.2) (2.8)
At 30 June 2022 3.7 12.2 11.9 1.4 29.2
Accumulated amortisation and impairment
At 1 July 2020 (3.1) (6.9) (9.9) (0.7) (20.6)
Disposals — 0.6 — — 0.6
Charge for the year (0.4) (1.5) (0.5) — (2.4)
Currency translation dierences 0.1 — 0.1 0.1 0.3
At 30 June 2021 (3.4) (7.8) (10.3) (0.6) (22.1)
Disposals — 2.6 — 0.2 2.8
Charge for the year (0.3) (1.7) (0.5) (0.1) (2.6)
At 30 June 2022 (3.7) (6.9) (10.8) (0.5) (21.9)
Net book value
At 30 June 2022 — 5.3 1.1 0.9 7.3
At 30 June 2021 0.3 6.2 1.6 0.1 8.2
Customer relationships acquired upon the acquisition of McBride Denmark A/S have a carrying value of £1.5 million and
a remaining amortisation period of 3.25 years. In addition, a brand name was also acquired on acquisition of McBride
Denmark A/S that has a carrying value of £0.1 million and a remaining amortisation period of 0.25 years.
Financial statements
McBride plc Annual Report and Accounts 2022
174
Notes to the consolidated financial statements continued
Year ended 30 June 2022
14. Property, plant and equipment
Payments on account
Land and Plant and and assets in the
buildings equipment course of construction Total
£m £m £m £m
Cost
At 1 July 2020 76.6 416.0 6.8 499.4
Additions 1.4 17.9 3.1 22.4
Disposal of assets (0.6) (60.6) — (61.2)
Transfers to non-current assets held for sale (note 18) (2.4) — — (2.4)
Transfers — 2.2 (2.2) —
Currency translation dierences (5.1) (17.6) (0.3) (23.0)
At 30 June 2021 69.9 357.9 7.4 435.2
Additions 1.0 10.7 0.7 12.4
Disposal of assets (3.4) (102.8) (0.1) (106.3)
Transfers — 2.0 (2.0) —
Currency translation dierences (0.2) (0.5) — (0.7)
At 30 June 2022 67.3 267.3 6.0 340.6
Accumulated depreciation and impairment
At 1 July 2020 (33.1) (331.6) — (364.7)
Charge for the year (2.1) (15.5) — (17.6)
Disposals 0.6 60.0 — 60.6
Impairment — (0.3) — (0.3)
Transfers to non-current assets held for sale (note 18) 0.8 — — 0.8
Currency translation dierences 2.6 13.2 — 15.8
At 30 June 2021 (31.2) (274.2) — (305.4)
Charge for the year (2.0) (14.9) — (16.9)
Disposals 2.8 102.1 — 104.9
Impairment — (0.8) — (0.8)
Currency translation dierences — 0.5 — 0.5
At 30 June 2022 (30.4) (187.3) — (217.7)
Net book value
At 30 June 2022 36.9 80.0 6.0 122.9
At 30 June 2021 38.7 83.7 7.4 129.8
Financial statements
McBride plc Annual Report and Accounts 2022
175
15. Leases
Most of the Group’s leases are associated with leased properties. The Group also leases a small proportion of its plant and
machinery, for example forklift trucks, and vehicles.
The movements in the right-of-use assets were as follows:
Land and Plant and
buildings machinery Vehicles Other Total
£m £m £m £m £m
Right-of-use assets
Net book value at 1 July 2020 2.9 1.7 2.2 0.5 7.3
New leases recognised 4.3 2.0 0.8 1.0 8.1
Lease disposals (0.3) — (0.1) — (0.4)
Impairment (0.7) — — — (0.7)
Currency translation dierences (0.3) (0.1) — (0.1) (0.5)
Depreciation (1.6) (0.9) (1.0) (0.3) (3.8)
Net book value at 30 June 2021 4.3 2.7 1.9 1.1 10.0
New leases recognised 0.2 4.0 0.9 — 5.1
Currency translation dierences (0.3) 0.5 — — 0.2
Depreciation (1.3) (1.3) (1.2) (0.2) (4.0)
Net book value at 30 June 2022 2.9 5.9 1.6 0.9 11.3
The movements in the lease liabilities were as follows:
Total
£m
Lease liabilities
Net book value at 1 July 2020 8.7
New leases recognised 7.9
Lease disposals (0.3)
Lease payments (4.9)
Currency translation dierences (0.4)
Finance costs (note 8) 0.3
Net book value at 30 June 2021 11.3
New leases recognised 5.1
Lease payments (5.0)
Currency translation dierences 0.2
Finance costs (note 8) 0.4
Net book value at 30 June 2022 12.0
2022 2021
£m £m
Analysed as:
Amounts falling due within twelve months 3.9 3.4
Amounts falling due after one year 8.1 7.9
12.0 11.3
Financial statements
McBride plc Annual Report and Accounts 2022
176
Notes to the consolidated financial statements continued
Year ended 30 June 2022
15. Leases continued
Note 21 presents a maturity analysis of the payments due over the remaining lease term for those liabilities currently
recognised on the balance sheet. This analysis only includes payments to be made over the reasonably certain lease term.
Cash outflows may exceed these amounts as payments may be made in optional periods that are not currently considered
to be reasonably certain, and in respect of leases entered into in future periods.
For the year ended 30 June 2022, expenses for short-term and low-value leases were incurred as follows:
2022 2021
£m £m
Expenses relating to short-term leases (0.3) (1.0)
Expenses relating to leases of low-value assets not shown as short-term leases above (0.2) (0.3)
Total (0.5) (1.3)
At 30 June 2022 the Group was committed to future minimum lease payments of £1.5 million (2021: £3.0m) in respect of
leases which have not yet commenced and for which no lease liability has been recognised.
16. Inventories
2022 2021
£m £m
Raw materials, packaging and consumables 61.7 45.8
Finished goods and goods for resale 57. 2 47.1
Total 118.9 92.9
Inventories are stated net of an allowance of £5.6 million (2021: £4.1m) in respect of excess, obsolete or slow-moving items.
Movements in the allowance were as follows:
2022 2021
£m £m
At 1 July (4.1) (2.8)
Utilisation 1.4 1.5
Charged to profit or loss (2.9) (2.9)
Currency translation dierences — 0.1
At 30 June (5.6) (4.1)
The cost of inventories recognised in cost of sales as an expense amounted to £441.8 million (2021: £397.4m).
17. Trade and other receivables
2022 2021
£m £m
Trade receivables 130.3 106.8
Less: provision for impairment of trade receivables (2.2) (0.9)
Trade receivables – net 128.1 105.9
Other receivables 14.4 8.9
Prepayments and accrued income 2.9 3.1
Total 145.4 117.9
Trade receivables amounting to £53.7 million (2021: £47.8 m) are secured under the invoice discounting facilities described
in note 21.
Other receivables primarily consist of supplier rebates and recoverable VAT.
Trade terms are a maximum of 135 days of credit.
Due to their short-term nature, the fair value of trade and other receivables does not dier from the book value.
The impairment of trade receivables charged to the income statement was £2.0 million (2021: £1.3m). There are no
impairments of any receivables other than trade receivables.
Trade receivables are regularly reviewed for bad and doubtful debts. Bad debts are written o and an allowance is
established based on the expected credit loss model. The expected loss rates are based on payment profiles of sales over
a period of three years before 30 June 2022 or 30 June 2021, respectively, and the corresponding historical credit losses
experienced within this period adjusted for forward-looking factors specific to the debtors and the economic environment.
Financial statements
McBride plc Annual Report and Accounts 2022
177
On that basis, the credit loss allowance as at 30 June 2022 and 30 June 2021 was determined as follows:
More than More than More than More than
30 days 60 days 90 days 180 days
30 June 2022 Current past due past due past due past due Total
Expected loss rate — 0.1% 1.0% 0.8% 10.6%
Gross carrying amount (£m) 119.8 6.7 0.8 1.3 1.7 130.3
Credit loss allowance (£m) — — — — 0.2 0.2
More than More than More than More than
30 days 60 days 90 days 180 days
30 June 2021 Current past due past due past due past due Total
Expected loss rate — 0.1% 0.7% 0.9% 20.4%
Gross carrying amount (£m) 104.0 0.7 0.8 0.4 0.9 106.8
Credit loss allowance (£m) — — — — 0.2 0.2
In addition to the credit loss allowance, the provision for impairment of trade receivables includes £2.0 million (2021:
£0.7m) of credit note provisions.
Movements in the allowance for doubtful debts were as follows:
2022 2021
£m £m
At 1 July (0.9) (0.9)
Utilisation 0.7 1.3
Charged (2.0) (1.3)
At 30 June (2.2) (0.9)
Trade receivables are written o where there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the
Group, or a failure to make contractual payments for a period greater than 365 days past due. Impairment losses on trade
receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously
written o are credited against the same line item.
The carrying amounts of trade receivables are denominated in the following currencies:
2022 2021
£m £m
Sterling 25.5 15.0
Euro 86.4 86.3
Polish Zloty 1.8 0.7
Danish Krone 10.4 1.7
Malaysian Ringgit 4.1 1.5
Other 2.1 1.6
130.3 106.8
Trade receivables are generally not interest bearing.
18. Non-current assets classified as held for sale
There were no non-current assets held for sale at 30 June 2022 (2021: £1.6m).
During 2021, the Group reached a preliminary agreement with a prospective purchaser for the sale of land and buildings at
a former manufacturing site in Malaysia. The sale of this site completed during the year ended 30 June 2022. The land and
buildings were part of the Asia Pacific segment.
During 2021, as part of the logistics transformation programme, a decision was made to exit and actively market for sale
land and buildings at a former warehousing facility in Guesnain, France. The sale of the site completed during the year
ended 30 June 2022. The land and buildings are central assets.
During 2021, on classification as held for sale, the assets were tested for impairment by reference to whether the carrying
value of the assets was supported by the fair value less costs to sell. For the Malaysian assets, the indicated selling price
agreed with the prospective purchaser was used as the fair value for the impairment test, which was classified as Level
2 on the fair value hierarchy. For the French assets, an independent third-party valuation was used as the fair value for
the impairment test, which was classified as Level 2 on the fair value hierarchy. As a result, no impairment charges were
recognised.
Financial statements
McBride plc Annual Report and Accounts 2022
178
Notes to the consolidated financial statements continued
Year ended 30 June 2022
19. Trade and other payables
2022 2021
£m £m
Current liabilities
Trade payables 160.4 130.8
Taxation and social security 3.5 3.5
Other payables 26.7 23.9
Accrued expenses 14.6 7.9
Deferred income 1.0 2.4
B Shares (note 11) 0.7 0.7
Total 206.9 169.2
Trade payables are generally not interest bearing.
The Directors consider the carrying amount of trade and other payables to approximate their fair values.
20. Borrowings
Borrowings may be analysed as follows:
2022 2021
Current Non-current Total Current Non-current Total
liabilities liabilities liabilities liabilities liabilities liabilities
£m £m £m £m £m £m
Overdrafts 6.8 — 6.8 5.9 — 5.9
Bank and other loans:
Unsecured loans — 96.4 96.4 — 78.3 78.3
Invoice discounting facilities (note 21) 53.7 — 53.7 47.8 — 47.8
53.7 96.4 150.1 47.8 78.3 126.1
Lease liabilities 3.9 8.1 12.0 3.4 7.9 11.3
Total 64.4 104.5 168.9 57.1 86.2 143.3
Bank and other loans are repayable as follows:
2022 2021
£m £m
Within one year 53.7 47. 8
Between one and two years — —
Between two and five years 96.4 78.3
More than five years — —
Total 150.1 126.1
Details of the Group’s bank facilities are presented in note 21. Amounts payable under leases are presented in notes 15
and21.
Financial statements
McBride plc Annual Report and Accounts 2022
179
21. Financial risk management
Risk management policies
The Group’s Treasury function is responsible for procuring the Group’s capital resources and maintaining an ecient
capital structure, together with managing the Group’s liquidity, foreign exchange and interest rate exposures.
All treasury operations are conducted within strict policies and guidelines that are approved by the Board. Compliance
with those policies and guidelines is monitored by the regular reporting of treasury activities to the Board following
regular Treasury Committee meetings.
Financial assets and financial liabilities
Fair value
through Total
Amortised profit carrying Fair
cost or loss
(1)
amount value
£m £m £m £m
At 30 June 2022
Financial assets
Trade receivables 128.1 — 128.1 128.1
Other receivables 14.4 — 14.4 14.4
Cash and cash equivalents 4.5 — 4.5 4.5
147.0 — 147.0 147.0
Financial assets held at fair value
Derivative financial instruments (Level 2)
Forward currency contracts — 0.4 0.4 0.4
Interest rate swaps — 2.1 2.1 2.1
— 2.5 2.5 2.5
Total financial assets 147.0 2.5 149.5 149.5
Financial liabilities
Trade and other payables (202.4) — (202.4) (202.4)
Bank overdrafts (6.8) — (6.8) (6.8)
Lease liabilities (12.0) — (12.0) (12.0)
Bank and other loans (150.1) — (150.1) (150.1)
Total financial liabilities (371.3) — (371.3) (371.3)
Total (224.3) 2.5 (221.8) (221.8)
(1) Financial assets and financial liabilities classified as fair value through profit or loss are designated in hedge relationships as described within the
interest risk and foreign exchange risk sections of this note.
Financial statements
McBride plc Annual Report and Accounts 2022
180
Notes to the consolidated financial statements continued
Year ended 30 June 2022
21. Financial risk management continued
Financial assets and financial liabilities continued
Fair value
through Total
Amortised profit carrying Fair
cost or loss
(1)
amount value
£m £m £m £m
At 30 June 2021
Financial assets
Trade receivables 105.9 — 105.9 105.9
Other receivables 8.9 — 8.9 8.9
Cash and cash equivalents 24.9 — 24.9 24.9
139.7 — 139.7 139.7
Financial assets held at fair value
Derivative financial instruments (Level 2)
Forward currency contracts — 0.1 0.1 0.1
Interest rate swaps — 0.1 0.1 0.1
Contracts for Dierence (High-density polyethylene (HDPE)) — 0.1 0.1 0.1
— 0.3 0.3 0.3
Total financial assets 139.7 0.3 140.0 140.0
Financial liabilities
Trade and other payables (restated
(2)
) (163.3) — (163.3) (163.3)
Bank overdrafts (5.9) — (5.9) (5.9)
Lease liabilities (11.3) — (11.3) (11.3)
Bank and other loans (126.1) — (126.1) (126.1)
(306.6) — (306.6) (306.6)
Financial liabilities held at fair value
Derivative financial instruments (Level 2)
Forward currency contracts — (0.2) (0.2) (0.2)
Interest rate swaps — (0.1) (0.1) (0.1)
— (0.3) (0.3) (0.3)
Total financial liabilities (306.6) (0.3) (306.9) (306.9)
Total (166.9) — (166.9) (166.9)
(1) Financial assets and financial liabilities classified as fair value through profit or loss are designated in hedge relationships as described within the
interest risk and foreign exchange risk sections of this note.
(2) Prior year trade and other payables restated to exclude deferred income and corporation tax payable balances.
In the above tables, the financial assets and financial liabilities held by the Group are categorised according to the basis on
which they are measured. Financial assets and liabilities that are held at fair value are further categorised according to the
degree to which the principal inputs used in determining their fair value represent observable market data 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); and
• Level 3 – inputs that are not based on observable market data (unobservable inputs).
Financial statements
McBride plc Annual Report and Accounts 2022
181
Derivative financial instruments comprise the foreign currency derivatives, non-deliverable commodity 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. Commodity forward contracts are measured by
dierence to prevailing market prices. Foreign currency options are measured using a variant of the Monte Carlo valuation
model. Interest rate swaps and caps are measured by discounting the related cash flows using yield curves derived from
prevailing market interest rates.
Cash and cash equivalents and bank and other loans largely attract floating interest rates. Accordingly, management
considers that their carrying amount approximates to fair value.
Lease obligations attract fixed interest rates that are implicit in the lease rentals and their fair value has been assessed
relative to prevailing market interest rates.
There were no transfers between levels during the year and no changes in valuation techniques.
Credit risk
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has three types of financial assets that are subject to the expected credit loss model:
• trade receivables;
• other receivables; and
• cash and cash equivalents.
Information regarding expected credit losses on trade receivables is disclosed in note 17. While other receivables and
cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was
minimal. The Group’s cash balances are managed such that there is no significant concentration of credit risk in any one
bank or other financial institution. Management regularly monitors the credit quality of the institutions with which it holds
deposits. Similar considerations are given to the Group’s portfolio of derivative financial instruments.
The Group uses judgement to determine that the credit risk of financial assets has not significantly changed since initial
recognition and regularly monitors the value of the instruments. As such, credit risk is not considered to be a significant
factor in changes to the values of financial assets. All of the financial derivatives are deemed to have low credit risk on
initial recognition as they are predominantly hedges of foreign exchange risk and executed with a diverse and strong
portfolio of counterparties.
Before accepting a new customer, management assesses the customer’s credit quality and establishes a credit limit. Credit
quality is assessed using data maintained by reputable credit rating agencies, by the checking of references included in
credit applications and, where they are available, by reviewing the customer’s recent financial statements. Credit limits
are subject to multiple levels of authorisation and are reviewed on a regular basis. Credit insurance is employed where it is
considered to be cost eective. At 30 June 2022, the majority of trade receivables were due from major retailers in the UK
and Europe.
At 30 June 2022, the Group’s maximum exposure to credit risk was as follows (there was no significant concentration of
credit risk):
2022 2021
£m £m
Trade and other receivables:
Trade receivables 128.1 105.9
Other receivables 14.4 8.9
142.5 114.8
Derivative financial instruments 2.5 10.3
Cash and cash equivalents 4.5 24.9
Total 149.5 140.0
Financial statements
McBride plc Annual Report and Accounts 2022
182
Notes to the consolidated financial statements continued
Year ended 30 June 2022
21. Financial risk management continued
Liquidity risk
Liquidity risk is the risk that the Group will encounter diculty in meeting the obligations associated with its financial
liabilities.
The Group’s borrowing facilities are monitored against forecast requirements and timely action is taken to put in place,
renew or replace credit lines.
Throughout the year the Group had an unsecured €175 million multi-currency sustainability-linked revolving credit facility
(RCF). Thefacility was agreed initially for a five-year tenor to May 2026, with the option to be extended to 30 September
2027 and is provided by a syndicate of supportive international bank lenders. The facility also includes a €75 million
uncommitted accordion feature which could provide additional commitments for potential acquisitions in support of our
Programme Compass strategy.
Position prior to 29 September 2022
The Group’s revolving credit facility (RCF) funding arrangements are subject to banking covenants, representations and
warranties that are customary for unsecured borrowing facilities, including two financial covenants; debt cover
(1)
may not
exceed 3.0x and interest cover
(2)
may not be less than 4.0x. For the purpose of these calculations, net debt excludes IFRS
16 leases and amounts drawn under the Group’s invoice discounting facilities.
On 22 December 2021, the Group announced that its lender group waived the December 2021 covenant tests, following
the significant deterioration of EBITDA due to unprecedented levels of input cost inflation. In reaching the agreement
of the waiver, the Group agreed to maintain liquidity (cash plus facility headroom) of at least £40 million and not to pay
dividends until the Group evidences compliance with it existing covenants. On 29 June, the Group announced that its
lender group waived the June 2022 covenant tests until 30 September 2022, with the same conditions.
As at 30 June 2022, the debt cover ratio under the RCF funding arrangements was (93.3)x (2021: 1.5x) and the interest
cover was (0.2)x (2020: 11.0x). The amount undrawn on the facility was €64.5 million (2021: €87.0m).
At 30 June 2022, 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 that was committed until October 2022. In France and Belgium, the Group
had an aggregate €30 million facility, on which a maximum of €25 million can be borrowed, with a rolling notice period
of six months for the French part and three months for the Belgian part. In Germany, the Group had a €35 million facility
committed until December 2023. The Group can borrow from the provider of the relevant facility up to the lower of the
facility limit and the value of the respective receivables.
The Group also has access to uncommitted working capital facilities amounting to £22.7 million (2021: £44.3m). At
30 June2022, £6.8 million (2021: £5.9m) was drawn against these facilities in the form of overdrafts and short-term
borrowings.
(1) Debt cover is the ratio of net debt (excluding lease liabilities and amounts borrowed under invoice discounting facilities) to adjusted EBITDA,
adding back cash rental payments in respect of leased.
(2) Interest cover is the ratio of adjusted EBITDA to net interest, excluding pension interest.
Financial statements
McBride plc Annual Report and Accounts 2022
183
Position post 29 September 2022
At 29 September 2022, the Group announced that it had agreed an amended RCF with its lender group, ensuring the
Group has sucient levels of liquidity headroom and can comply with revised covenant requirements. Key provisions
ofthe revised agreement are:
• €175 million sustainability-linked RCF confirmed to May 2026;
• the option to extend to 30 September 2027 and the €75 million accordion feature previously agreed have been
removed;
• RCF shall be secured against material asset, share and inter-company balances;
• RCF commitments to reduce, and be cancelled, in the amount of the Euro equivalent of £2.5 million every three months
from September 2024 up until the termination date;
• existing bilateral overdraft facilities shall become ancillary facilities committed until 30 September 2024;
• invoice discounting facilities shall be committed to 30 September 2024;
• liquidity shall not be less than £15 million when tested on or prior to 30 September 2024;
• liquidity shall not be less than £25 million when tested post-30 September 2024;
• net debt cover and interest cover covenants to be tested quarterly from 30 September 2024;
• no dividends will be paid to shareholders until there is 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; and
• the arrangement includes an ‘upside sharing’ mechanism whereby a fee will become payable by the Group to members
of the lender group upon the occurrence of an exit event. Such fee to be determined as a percentage of any increase
from the current market capitalisation of the Group to the market capitalisation of the Group at the date of such exit
event.
The Group considers that the arrangement achieves an appropriate balance between the interests of all stakeholders
of the Group. In particular, we have been in regular discussion and consultation with the Trustee of the Group’s defined
benefit pension scheme in the UK. In order to preserve and support the position of the scheme, with the support of the
lender group, we have agreed to provide in favour of the scheme a package of additional credit support in the UK, as well
as a new information sharing protocol to ensure ongoing communication between the Group and the Trustee remains
comprehensive.
The Group is currently negotiating to further increase liquidity by £25 million through extension of invoice discounting
facilities to unencumbered receivables ledgers. However there is no certainty that these negotiations will be successful.
We are fully appreciative of the support that the lender group have given the Group through this period of uncertainty
caused by macroeconomic factors, which have resulted in rapid and unprecedented rises in input costs, and ongoing
global supply chain challenges.
At 30 June 2022, the carrying amount of trade receivables eligible for transfer and the amounts borrowed under the
facility were as follows:
2022 2021
£m £m
Trade receivables available 53.7 47.8
Amount borrowed (53.7) (47.8)
Amount undrawn — —
The Group also has access to uncommitted working capital facilities amounting to £22.7 million (2021: £44.3m).
At30June2022, £6.8 million (2021: £5.9m) was drawn against these facilities in the form of overdrafts and short-term
borrowings.
Financial statements
McBride plc Annual Report and Accounts 2022
184
Notes to the consolidated financial statements continued
Year ended 30 June 2022
21. Financial risk management continued
Liquidity risk continued
In the following tables, estimated future contractual undiscounted cash flows in respect of the Group’s financial liabilities
are analysed according to the earliest date on which the Group could be required to settle the liability. Floating rate
interest payments are estimated based on market interest rates prevailing at the balance sheet date. Payments and
receipts in relation to derivative financial instruments are shown net if they will be settled on a net basis.
Between Between Between Between
Within 1 and 2 2 and 3 3 and 4 4 and 5 After 5
1 year years years years years years Total
£m £m £m £m £m £m £m
At 30 June 2022
Bank overdrafts (6.8) — — — — — (6.8)
Bank and other loans:
Principal (53.7) — — (96.4) — — (150.1)
Interest payments (0.5) — — — — — (0.5)
Lease liabilities (4.4) (3.5) (2.6) (2.2) (0.7) (0.3) (13.7)
Other liabilities (202.4) — — — — — (202.4)
Cash flows on non-derivative liabilities (267.8) (3.5) (2.6) (98.6) (0.7) (0.3) (373.5)
Cash flows on derivative liabilities
Payments (34.1) (0.3) — — — — (34.4)
Cash flows on financial liabilities (301.9) (3.8) (2.6) (98.6) (0.7) (0.3) (407.9)
Cash flows on derivative assets
Receipts 33.1 0.3 — — — — 33.4
(268.8) (3.5) (2.6) (98.6) (0.7) (0.3) (374.5)
Between Between Between Between
Within 1 and 2 2 and 3 3 and 4 4 and 5 After 5
1 year years years years years years Total
£m £m £m £m £m £m £m
At 30 June 2021
Bank overdrafts (5.9) — — — — — (5.9)
Bank and other loans:
Principal (47.8) (2.1) — — (76.8) — (126.7)
Interest payments (0.3) — — — — — (0.3)
Lease liabilities (3.9) (3.1) (2.3) (1.5) (1.2) (0.4) (12.4)
Other liabilities (169.2) — — — — — (169.2)
Cash flows on non-derivative liabilities (227.1) (5.2) (2.3) (1.5) (78.0) (0.4) (314.5)
Cash flows on derivative liabilities
Payments (66.2) (0.9) — — — — (67.1)
Cash flows on financial liabilities (293.3) (6.1) (2.3) (1.5) (78.0) (0.4) (381.6)
Cash flows on derivative assets
Receipts 66.1 0.9 — — — — 67.0
(227.2) (5.2) (2.3) (1.5) (78.0) (0.4) (314.6)
Financial statements
McBride plc Annual Report and Accounts 2022
185
Interest rate risk
Interest rate risk is the risk that the fair value of, or future cash flows associated with, a financial instrument will fluctuate
due to changes in market interest rates.
The Group is exposed to interest rate risk on its floating rate borrowings, which it has mitigated using interest rate
derivatives in the form of interest rate swaps and interest rate caps with maturities up to 2026.
Under the Group’s policy the critical terms of the derivatives must align with the hedged items. The interest rate
instruments executed are matched against the term, currency and entity where the borrowing exists, fixing the value of
interest paid in line with the Group policy. They are monitored to ensure that critical terms of the instrument continue to
match the transaction.
The hedge ratio is determined by the Group’s treasury policy, which states that the Group aims to be circa 50% hedged
against the potential adverse eects of interest exposure on its consolidated net debt. The instruments are matched
on a 1:1 ratio with the transaction. Hedge ineectiveness could be caused through fluctuating forecasts. Forecasts are
monitored regularly and the Group intends to repay debt in line with the timeframe of the hedges entered into. If this
changes additional hedges are executed in order to maintain the policy level.
The changes in the time value of the options that relate to hedged items are deferred in the cash flow hedge reserve and
are treated as the cost of hedging.
After taking into account the Group’s currency and interest rate hedging activities, the currency and interest rate profile
ofthe Group’s interest-bearing financial assets and financial liabilities was as follows:
2022 2021
Danish Polish Other Danish Polish Other
Euro Sterling Krone Zloty currencies Total Euro Sterling Krone Zloty currencies Total
£m £m £m £m £m £m £m £m £m £m £m £m
Floating rate
Bank overdrafts (6.6) — — — (0.2) (6.8) (5.9) — — — — (5.9)
Bank and
other loans (28.1) (35.6) (8.7) (3.6) — (76.0) (6.2) (19.6) (8.7) (3.8) (2.1) (40.4)
Cash and cash
equivalents 5.9 (4.8) 0.6 0.6 2.2 4.5 13.6 2.2 2.6 2.1 4.4 24.9
(28.8) (40.4) (8.1) (3.0) 2.0 (78.3) 1.5 (17.4) (6.1) (1.7) 2.3 (21.4)
Fixed rate
Bank and
other loans (53.2) (10.0) (6.3) (4.6) — (74.1) (74.7) — (6.3) (4.7) — (85.7)
(53.2) (10.0) (6.3) (4.6) — (74.1) (74.7) — (6.3) (4.7) — (85.7)
Total (82.0) (50.4) (14.4) (7.6) 2.0 (152.4) (73.2) (17.4) (12.4) (6.4) 2.3 (107.1)
Interest payable on bank overdrafts and floating rate loans is based on base rates and short-term interbank rates
(predominantly, EURIBOR and SONIA). At 30 June 2022, the weighted average interest rate payable on bank and other
loans was 1.9% (2021: 1.8%). At 30 June 2022, the weighted average interest rate receivable on cash and cash equivalents
was 0.0% (2021: 0.0%).
Financial statements
McBride plc Annual Report and Accounts 2022
186
Notes to the consolidated financial statements continued
Year ended 30 June 2022
21. Financial risk management continued
Interest rate risk continued
At 30 June 2022, the Group held interest rate caps, which cap the maximum rate payable but allow the rate to float
belowthis maximum.
Interest Interest
rate swaps rate caps
2022 £m £m
Carrying amount — 2.2
Notional amount — 65.4
Maturity date — June 2022-June 2026
Hedging ratio — 1.1
Change in value of outstanding hedge instruments since 1 July — —
Change in value of hedged item used to determine hedge eectiveness — —
Weighted average hedged rate for the year — 0.00% – 0.75%
Interest Interest
rate swaps rate caps
2021 £m £m
Carrying amount (0.1) 0.1
Notional amount 27.8 57.9
Maturity date June 2021-June 2022 June 2021-June 2024
Hedging ratio 1:1 1:1
Change in value of outstanding hedge instruments since 1 July 0.1 —
Change in value of hedged item used to determine hedge eectiveness (0.1) —
Weighted average hedged rate for the year 0.40%-0.53% 0.00%-0.50%
All interest rate derivatives held by the Group are indexed to three-month EURIBOR, SONIA, WIBOR or CIBOR.
Fixed or capped interest rates shown in the above table do not include the margin over market interest rates payable
onthe Group’s borrowings.
On the assumption that a change in market interest rates would be applied to the interest rate exposures that were in
existence at the balance sheet date and that designated cash flow hedges are 100% eective, an increase/decrease of
100basis points in market interest rates would have decreased/increased the Group’s profit before tax by £0.7 million
(2021: £0.2m).
Foreign currency risk
Transaction risk
Foreign currency transaction risk arises on sales and purchases denominated in currencies other than the functional
currency of the entity that enters into the transaction. While the magnitude of these exposures is relatively low, the
Group’s policy is to hedge committed transactions in full and to hedge a proportion of highly probable forecast
transactions on a twelve-month rolling basis. Foreign currency transaction risk also arises on financial assets and
liabilitiesdenominated in foreign currencies and Group policy allows for these exposures to be hedged using
forwardcurrency contracts.
The Group determines the economic relationship between the hedged item and the hedging instrument for the purpose of
assessing hedge eectiveness. The cost of the transaction increases as the exchange rate weakens, as the hedge instruments
in place are foreign currency liabilities. This same movement in exchange rates would result in an increase in the value of the
liability. The value of the invoices paid is regularly monitored to ensure the hedges in place continue to meet the monthly
exposures and that critical terms of the instrument continue to match the transaction. On maturity of the hedge the gain or
loss recorded against the spot rate is recorded in the same income statement line as the invoiced transaction.
The hedge ratio is determined by the Group’s treasury policy, which provides a maximum and minimum hedge level for a
number of time brackets. The compliance with this policy is monitored monthly and new hedges are also added monthly
if required. The level of hedges required is reviewed monthly during the Treasury Management Committee meeting.
Theinstruments are matched on a 1:1 ratio with the transaction. Hedge ineectiveness could be caused through the
dierent timing of the payment runs so that the hedges mature at a dierent point to the invoices being paid, fluctuating
forecasts or changes to the nature of the business. These risks are mitigated through the following measures:
• phasing hedges to cover the change of the timing of payments runs;
• monitoring forecasts monthly and adding hedges to reflect any changes;
• the percentage of hedges permitted allowing for the potential uncertainty towards the end of the forecast period; and
• building significant changes into the forecast, with any changes being allowed for the purchases made.
Financial statements
McBride plc Annual Report and Accounts 2022
187
At 30 June 2022, the notional principal amount of outstanding foreign currency contracts (net purchases) that are
held to hedge the Group’s transaction exposures was £13.6 million (2021: £14.8m). For accounting purposes, the Group
has designated the foreign currency contracts as cash flow hedges. At 30 June 2022, the fair value of the contracts
was £0.2million (2021: £(0.2)m). During 2022, a loss of £0.1 million (2021: loss of £0.7m) was recognised in other
comprehensive income and a loss of £0.4 million (2021: £0.7m) was transferred from the cash flow reserve totheincome
statement in respect of these contracts.
Translation risk
Foreign currency translation risk arises on consolidation in relation to the translation into Sterling of the results and net
assets of the Group’s foreign subsidiaries. The Group’s policy is to hedge a substantial proportion of overseas net assets
using a combination of foreign currency borrowings and foreign currency swaps. The Group hedges part of the currency
exposure on translating the results of its foreign subsidiaries into Sterling using average rate options. This exposure is also
mitigated by the natural hedge provided by the interest payable on the Group’s foreign currency borrowings. At 30 June
2022, the fair value of the average rate options was £nil (2021: loss of £nil).
The Group determines the economic relationship between the hedged item and the hedging instrument for the purpose of
assessing hedge eectiveness. The value of Group assets increases as the exchange rate weakens, as the hedge instrument
in place is a foreign currency liability. This same movement in exchange rates would result in an increase in the value of the
liability. When hedges mature, any settlements oset the gain or loss on translation of the hedged item and are monitored
to ensure critical terms of the instrument continue to match the transaction.
The hedge ratio is determined by the Group’s treasury policy, which states the Group will hedge up to 100% of the
budgeted exposure. The instruments are matched on a 1:1 ratio with the transaction. Hedge ineectiveness could be
caused through fluctuations in the forecasted numbers. This is mitigated by hedging a relatively low proportion of the
hedged item.
At 30 June 2022, the Group had designated as net investment hedges £42.6 million (2021: £25.7m) of its
Euro-denominated borrowings and three-month rolling foreign currency forward contracts with a notional principal
amount of £24.9 million (2021: £52.3m). During 2022, a gain of £0.5 million (2021: £3.7m) was recognised in other
comprehensive income in relation to the net investment hedges. At 30 June 2022, the fair value of the net investment
hedges was a gain of £0.2 million (2021: £0.1m).
The currency profile of the Group’s net assets (excluding non-controlling interests) before and after hedging currency
translation exposures was as follows:
2022 2021
Net assets Currency Net assets Net assets Currency Net assets
before forward after before forward after
hedging contracts hedging hedging contracts hedging
£m £m £m £m £m £m
Sterling 13.6 29.4 43.0 9.5 52.2 61.7
Euro 18.3 (17.2) 1.1 39.2 (38.6) 0.6
Polish Zloty 1.9 (1.8) 0.1 5.1 (4.8) 0.3
Danish Krone 12.8 (10.4) 2.4 7.5 (5.8) 1.7
Malaysian Ringgit 4.9 — 4.9 3.7 (3.0) 0.7
Other 5.5 — 5.5 4.8 — 4.8
Total 57.0 — 57.0 69.8 — 69.8
The Group’s exposure to a +/- 10% change in EUR/GBP exchange rate is as follows:
2022 2021
EUR +10% EUR -10% EUR +10% EUR -10%
£m £m £m £m
Impact on equity (1.3) 1.4 (1.3) 1.5
The impact on equity shown above predominantly relates to EUR/GBP contracts that qualify for net investment and cash
flow hedge accounting.
The Group uses a combination of foreign currency options and foreign currency forwards to hedge its exposure to foreign
currency risk. Under the Group’s policy the critical terms of the forwards and options must align with the hedged items.
When forward contracts are used to hedge forecast transactions, the Group generally designates the change in the
fair value of the forward contract related to both the spot component and forward element as the hedging instrument.
Foroption contracts the change in the fair value of the option contract related to the intrinsic value is designated as the
hedging instrument. The time value of money is treated as a cost of hedging.
Financial statements
McBride plc Annual Report and Accounts 2022
188
Notes to the consolidated financial statements continued
Year ended 30 June 2022
21. Financial risk management continued
Foreign currency risk continued
Translation risk continued
In relation to the hedging activities as described above, the eects of foreign currency related hedging instruments on the
Group’s financial position and performance are as follows:
Foreign currency forwards
2022 Transactional Translational
Carrying amount (£m) 0.2 0.2
Notional amount (£m) 16.3 20.9
Maturity date July 2022-July 2023 September 2022
Hedging ratio 1:1 1:1
Change in value of outstanding hedge instruments since 1 July (£m) — (0.1)
Change in value of hedged item used to determine hedge eectiveness (£m) — 0.1
Weighted average hedged rate for the year €1.1537:£1 Various
(1)
(1) The weighted average hedged rate for the year, by currency denomination, was €1.1757:£1, Zloty 5.4411:£1, Krone 8.7312:£1, Ringgit 5.5457:£1.
Foreign currency forwards
2021 Transactional Translational
Carrying amount (£m) (0.2) 0.1
Notional amount (£m) 17.0 52.3
Maturity date July 2021-Sept 2022 September 2021
Hedging ratio 1:1 1:1
Change in value of outstanding hedge instruments since 1 July (£m) 0.9 (3.5)
Change in value of hedged item used to determine hedge eectiveness (£m) (0.9) 3.5
Weighted average hedged rate for the year €1.1510:£1 Various
(1)
(1) The weighted average hedged rate for the year, by currency denomination, was €1.1037:£1, Zloty 5.0945:£1, Krone 8.3358:£1, Ringgit 5.4767:£1.
22. Capital and net debt
The Group’s capital comprises total equity and net debt.
Capital management
The Directors manage the Group’s capital to safeguard its ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders. The Directors aim to maintain an ecient capital structure with a
relatively conservative level of debt-to-equity gearing. This is to ensure continued access to a broad range of financing
sources in order to provide sucient flexibility to pursue commercial opportunities as they arise.
In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it
meets financial covenants attached to borrowings. Breaches in meeting the financial covenants would permit the bank to
call in loans and borrowings immediately. There have been no breaches in the financial covenants of any borrowings in the
current year.
The capital structure of the Group consists of debt, which includes borrowings disclosed in note 20, cash and cash
equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained
earnings.
The Group may maintain or adjust its capital structure by adjusting the amount of dividends paid to shareholders,
returning capital to shareholders, issuing new shares or selling assets to reduce debt. The Group manages the capital
structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the
Group, and in order to meet the financial covenants described in note 21. The Board regularly reviews the capital structure.
No changes were made in the objectives, policies or processes for managing capital during the years ended 30 June 2022
and 30 June 2021.
Financial statements
McBride plc Annual Report and Accounts 2022
189
The Group’s capital was as follows:
2022 2021 2020
£m £m £m
Total equity 57.0 69.8 66.9
Net debt 164.4 118.4 101.5
Capital 221.4 188.2 168.4
2022 2021
% %
Gearing
(1)
80.3 66.4
(1) Gearing represents net debt divided by the average of current and prior year year-end capital.
Movements in net debt were as follows:
IFRS 16 Currency
At 1 July non-cash Cash translation At 30 June
2021 movements
(1)
flows dierences 2022
£m £m £m £m £m
Cash and cash equivalents 24.9 — (20.3) (0.1) 4.5
Overdrafts (5.9) — (0.7) (0.2) (6.8)
Bank and other loans (126.1) — (24.0) — (150.1)
Lease liabilities (11.3) (5.5) 5.0 (0.2) (12.0)
Net debt (118.4) (5.5) (40.0) (0.5) (164.4)
(1) IFRS 16 non-cash movements includes additions (£5.1 million), disposals (£nil) and interest charged (£0.4 million).
IFRS 16 Currency
At 1 July non-cash Cash translation At 30 June
2020 movements
(1)
flows dierences 2021
£m £m £m £m £m
Cash and cash equivalents 44.2 — (18.1) (1.2) 24.9
Overdrafts (4.1) — (2.8) 1.0 (5.9)
Bank and other loans (132.9) — 1.7 5.1 (126.1)
Lease liabilities (8.7) (7.9) 4.9 0.4 (11.3)
Net debt (101.5) (7.9) (14.3) 5.3 (118.4)
(1) IFRS 16 non-cash movements includes additions (£7.9 million), disposals (£0.3 million) and interest charged (£0.3 million).
A reconciliation of the net cash flow to the movement in net debt is shown as follows:
2022 2021
£m £m
Decrease in net cash and cash equivalents (20.3) (18.1)
Net repayment of bank loans and overdrafts (24.7) (1.1)
Change in net debt resulting from cash flows (45.0) (19.2)
Currency translation dierences (0.3) 4.9
Movement in net debt in the year (45.3) (14.3)
Net debt at the beginning of the year excluding lease liabilities (107.1) (92.8)
Net debt at the end of the year excluding lease liabilities (152.4) (107.1)
Lease liabilities at 1 July (11.3) (8.7)
Lease liabilities non-cash movements (5.5) (7.9)
Repayment of IFRS 16 lease liabilities 5.0 4.9
Currency translation dierences (0.2) 0.4
Net debt at the end of the year (164.4) (118.4)
Financial statements
McBride plc Annual Report and Accounts 2022
190
Notes to the consolidated financial statements continued
Year ended 30 June 2022
23. Pensions and other post-employment benefits
Overview
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. From 1 July 2021, the Group also recognised 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.
The net impact of this on the balance sheet is £nil.
At 30 June 2022, the Group’s post-employment benefit obligations outside the UK amounted to £1.7 million (2021: £2.6m).
Non-governmental collected post-employment benefits had the following eect on the Group’s results and financial
position:
2022 2021
£m £m
Profit or loss
Operating profit
Defined contribution schemes
Contributions payable (2.4) (2.3)
Defined benefit schemes
Service cost and administrative expenses (net of employee contributions) (1.0) (0.9)
Net charge to operating (loss)/profit (3.4) (3.2)
Finance costs
Net interest cost on defined benefit obligation (0.5) (0.4)
Net charge to (loss)/profit before taxation (3.9) (3.6)
Other comprehensive income
Defined benefit schemes
Net actuarial gain/(loss) 12.4 (4.2)
Balance sheet
Defined benefit obligations
UK – funded (116.6) (161.9)
Other – unfunded (12.0) (2.6)
(128.6) (164.5)
Fair value of scheme assets
UK – funded 102.2 132.6
Other – unfunded 10.3 —
Deficit on the schemes (16.1) (31.9)
Related deferred tax asset 3.9 7.9
UK defined benefit pension scheme
(i) Background
In the UK, the Robert McBride Pension Fund (‘the Fund’) provides pension benefits based on the final pensionable
salaryand period of qualifying service of the participating employees. The UK defined benefit fund was closed to future
service accrual from 29 February 2016. Sta aected by this change were oered a new defined contribution scheme from
that date.
The Fund is administered and managed by Robert McBride Pension Fund Trustees Limited (‘the Trustee’), in accordance
with the terms of a governing Trust Deed and relevant legislation. Regular assessments of the Fund’s benefit obligations are
carried out by an independent actuary on behalf of the Trustee and long-term contribution rates are agreed between the
Trustee and the Company on the basis of the actuary’s recommendations. Following the triennial valuation at 31 March2021,
the Company and Trustee agreed a new deficit reduction plan based on the scheme funding deficit of £48.4million.
The current level of deficit contributions of £4.0 million per annum, payable until 31 March 2028, will continue and this is
expected to eliminate the deficit by 31 March 2028. The Company has separately agreed that (from1October 2024) if
EBITA exceeds £30 million in any year following the year ending 31 March 2023, additional annual deficit contributions of
£0.34 million for each £1 million of EBITA above £30 million, up to a maximum of £1.7 million, will become payable (monthly
in arrears). Also, the Company has agreed to make additional contributions such that the total deficit contributions in any
year match the value of any dividend paid. These arrangements will provide scope to de-risk and/or accelerate the recovery
plan, where aordability of the business allows. The funding arrangements and recovery plan willnext be reviewed by the
Company and Trustee as part of the 31 March 2024 valuation.
Financial statements
McBride plc Annual Report and Accounts 2022
191
(ii) Assumptions and sensitivities
For accounting purposes, the Fund’s benefit obligation 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’, which dier in certain respects from the assumptions made by the Trustee
forthe purpose of the actuarial valuation.
The principal assumptions used in calculating the benefit obligation at the end of the year were as follows:
2022 2021
Discount rate 3.70% 1.85%
Inflation rate:
Retail Prices Index 3.10% 3.20%
Consumer Prices Index 2.45% 2.35%
Revaluation of deferred pensions (in excess of GMP)
Accrued before 6 April 2009 2.45% 2.35%
Accrued on or after 6 April 2009 2.45% 2.35%
Increase in pensions in payment (in excess of GMP)
Accrued before 1 April 2011 3.04% 3.12%
Accrued on or after 1 April 2011 2.18% 2.20%
The duration of the Fund’s liabilities is estimated to be 18 years, i.e. the average time until a payment is made is 18 years.
Inpractice, the Fund’s liabilities continue for upwards of 50 years.
The mortality assumptions are based on a medically underwritten mortality study which was carried out in 2017 to identify
the current health of a sample group of Fund members, and a postcode analysis for the remainder of the membership.
Thiswas translated into mortality assumptions for use in calculating the IAS 19 scheme liabilities. Specifically, a rating
of 102% (2021: 102%) of the standard Self-Administered Pension Scheme (SAPS) S2 tables has been used for the IAS 19
disclosures as at 30 June 2022.
As at 30 June 2022, the future mortality improvement model has been updated to reflect the most recent Continuous
Mortality Investigation (CMI) 2021 projections with an allowance for long-term rates of improvement of 1.0% p.a. for males
and females. Previously, in 2021, this assumption had been CMI 2020 with a long-term rate of improvement of 1.0% p.a. for
males and females. In line with the 2020 CMI model, the 2021 CMI model has a smoothing parameter for which the default
value of 7.0 (2021: 7.0) has been adopted. There is also an initial addition parameter for which the default value of 0.25%
(2021: 0.25%) has been adopted. These assumptions are equivalent to a life expectancy at 65 of 21.2 years (2021: 21.6
years) for males and 23.4 years (2021: 23.6 years) for females.
2022 2021
Life expectancies at age 65 for: Years Years
Member retiring in the next year:
Male 21.2 21.6
Female 23.4 23.6
Member retiring 20 years from now:
Male 22.2 22.6
Female 24.6 24.8
At 30 June 2022, the sensitivity of the benefit obligation to changes in the principal assumptions was as follows (assuming
in each case that the other assumptions are unchanged):
Change in assumption Increase in assumption Decrease in assumption
Discount rate +/- 0.1% Decrease by £1.6m Increase by £1.6m
Inflation rate
(1)
+/- 0.1% Increase by £1.4m Decrease by £1.4m
Life expectancy +1 year Increase by £3.4m —
(1) This includes the impact on deferred and in-payment pension increase assumptions.
The assumption sensitivities are reasonable expectations of potential changes in the assumptions.
Financial statements
McBride plc Annual Report and Accounts 2022
192
Notes to the consolidated financial statements continued
Year ended 30 June 2022
23. Pensions and other post-employment benefits continued
UK defined benefit pension scheme continued
(iii) Fund’s assets
The Fund’s assets are held separately from those of the Group and are managed by professional investment managers on
behalf of the Trustee.
The Trustee and the Company review the investment strategy from time to time. The last review was carried out during
2018/19 and as part of the agreement, the Trustee amended the Fund’s investment strategy with the aim of de-risking the
scheme’s assets to align the cash inflows from the Fund’s assets with the cash flow requirements of the Fund. This Cash
flow Driven Investment (CDI) strategy was implemented during the first half of the financial year 2021. Through the use of
credit/bond investments, the CDI strategy delivers a stable, more certain expected return and will reduce volatility in the
reported accounting deficit as assets and liabilities are better matched.
The Fund holds no investment in securities issued by, nor any property used by, McBride plc or any of its subsidiaries.
Thefair value of the Fund’s assets at the end of the year was as follows:
2022 Asset 2021 Asset
£m classification £m classification
Private markets 19.3 Unquoted 19.3 Unquoted
Liability-driven investment 19.4 Quoted 25.1 Quoted
Credit default swaps 63.4 Unquoted 86.5 Unquoted
Cash and cash equivalents
(1)
0.1 Quoted 1.7 Quoted
Total 102.2 132.6
(1) Cash equivalents includes the net position of the Credit Default Swap held by the scheme.
Except for the liability-driven investment (LDI) assets and the credit default swaps (CDS), all of the Fund’s assets are held
in pooled funds. The liability-driven investment, cash and credit assets are classified as Level 2 instruments, as they are not
quoted on any stock exchange, although their value is directly related to the value of the underlying holdings. The private
market credit assets are Level 3 instruments, with no daily quoted price available.
The expected return on the Fund’s assets must be set to be in line with the discount rate used to value the Fund’s
liabilities. This equates to an expected return over the year of £2.4 million (2021: £2.1m).
The actual return on the Fund’s assets during the year was a loss of £26.8 million (2021: gain of £0.2m), which was more
adverse than expected, but was more than oset by the reduction in scheme liabilities, driven by increases in corporate
bond yields.
(iv) Movements in the Fund’s assets and liabilities
Movements in the fair value of the Fund’s assets during the year were as follows:
2022 2021
£m £m
At 1 July 132.6 135.5
Expected return on plan assets 2.4 2.1
Loss on assets in excess of interest income on Fund assets (29.2) (1.9)
Employer’s contributions 4.0 4.0
Benefits paid (7.6) (7.1)
At 30 June 102.2 132.6
Movements in the benefit obligation during the year were as follows:
2022 2021
£m £m
At 1 July (161.9) (163.9)
Interest cost (2.9) (2.5)
Remeasurement gain/(loss) arising from changes in financial assumptions 38.2 (1.2)
Remeasurement gain/(loss) arising from changes in demographic assumptions 2.4 (2.0)
Experience gains on liabilities — 0.6
Benefits paid 7.6 7.1
At 30 June (116.6) (161.9)
(v) Experience gains and losses
Actuarial gains and losses recognised in other comprehensive income represent the eect of the dierences between the
assumptions and actual outcomes.
At 30 June 2022, the cumulative net actuarial loss in relation to the Fund that has been recognised in other comprehensive
income amounted to £33.5 million (2021: £45.0m).
Financial statements
McBride plc Annual Report and Accounts 2022
193
Belgium defined contribution pension scheme
(i) Background
From 1 July 2021, the Group recognised 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.
(ii) Assumptions and sensitivities
The principal assumptions used in calculating the benefit obligation at the end of the year were as follows:
2022
Discount rate 3.10%
Inflation rate 2.00%
Salary increase rate on top of inflation 2.00%
Mortality tables MR-5/FR-5
Retirement age 65
Withdrawal rate 0.00%
At 30 June 2022, the sensitivity of the benefit obligation to a 0.5% increase and decrease in the discount rate assumptions
resulted in no change to the scheme liabilities.
(iii) Experience gains and losses
Actuarial gains and losses recognised in other comprehensive income represent the eect of the dierences between the
assumptions and actual outcomes.
At 30 June 2022, the cumulative net actuarial loss in relation to the Fund that has been recognised in other comprehensive
income amounted to £nil (2021: £nil).
24. Employee share schemes
Share awards
The Group operates a performance-based Long-Term Incentive Plan (LTIP) for the Executive Directors and certain other
senior executives. Awards made under the LTIP vest provided the participant remains in the Group’s employment during
the three-year vesting period and the Group achieves the related performance conditions. In the current year, 50% of the
awards granted vest dependent on the growth in the Group’s EPS (a vesting condition) and 50% of the awards granted
vest dependent on the growth in the Group’s adjusted ROCE (a vesting condition). In previous years, up to 50% of each
award vests dependent on the TSR of the Company’s ordinary shares compared with the TSR of the FTSE SmallCap Ex
Investment Companies Index (a market condition) and up to 50% of each award vests dependent on the growth in the
Group’s EPS (a vesting condition).
During the year Restricted Share Units (RSUs) were granted to Executive Directors and certain other senior executives.
Awards made under the RSU vest provided the participant remains in the Group’s employment during the three-year
vesting period.
Vested awards are settled either in the form of the Company’s ordinary shares (equity-settled) or by the payment of cash
equivalent to the market value of the Company’s ordinary shares on the vesting date (cash-settled). From 2017, allawards
granted result in equity-settled amounts.
Further information on the LTIP and RSU awards is set out in the Remuneration Committee report.
Movements in LTIP and RSU awards outstanding were as follows:
2022 2021
LTIP Equity- RSU Equity- Cash- LTIP Equity- RSU Equity- Cash-
settled settled settled settled settled settled
Number Number Number Number Number Number
Outstanding at 1 July 6,132,039 337,815 175,213 4,224,700 — 175,213
Granted 1,830,414 1,138,645 — 3,514,428 425,783 —
Vested — — — — (7,872) —
Forfeited (1,314,236) (211,966) — (1,064,215) (80,096) —
Lapsed (890,907) — — (542,874) — —
Outstanding at 30 June 5,757,310 1,264,494 175,213 6,132,039 337,815 175,213
Unvested at 30 June 5,757,310 1,264,494 — 6,132,039 337,815 —
Awards made under the LTIP and RSU have a £nil exercise price.
Financial statements
McBride plc Annual Report and Accounts 2022
194
Notes to the consolidated financial statements continued
Year ended 30 June 2022
24. Employee share schemes continued
Share awards continued
The maximum term of equity-settled awards granted in the year is three years. The weighted average remaining life of
equity-settled awards at 30 June 2022 is 1.2 years (2021: 1.6 years). The weighted average remaining life of cash-settled
awards at 30 June 2022 is 1.7 years (2021: 2.7 years).
During 2022, no cash LTIP awards vested (2021: £nil), no equity-settled LTIP awards vested (2021: £nil) and no RSU awards
vested (2021: £nil). The weighted average share price on the vesting date of equity-settled awards in 2021 was 60.0 pence.
At 30 June 2022, the liability recognised in relation to cash-settled awards was £0.3 million (2021: £0.3m).
At the grant date, the weighted average fair value of LTIP awards granted during the year was 74.2 pence (2021: 78.0p).
Fair value was measured using a variant of the Black-Scholes valuation model based on the following assumptions:
October September February October September November October
2021 2021 2021 2020 2020 2019 2019
issue issue issue issue issue issue issue
Risk-free interest rate n/a n/a n/a n/a n/a 0.3% 0.5%
Share price on grant date 71.0p 80.0p 84.0p 84.0p 84.0p 56.0p 69.0p
Dividend yield on the Company’s shares n/a n/a n/a n/a n/a nil nil
Volatility of the Company’s shares n/a n/a n/a n/a n/a 40.6% 41.9%
Expected life of LTIP awards 3 years 3 years 3 years 3 years 3 years 3 years 3 years
Risk-free rate and volatility have no impact on nil cost awards which are subject to non-market-based performance conditions.
For the 2019 awards, expected volatility was determined based on weekly observations of the Company’s share price and the
FTSE SmallCap Ex Investment Companies Index over the three-year period immediately preceding the grant date.
At the grant date, the weighted average fair value of RSU awards granted during the year was 69.3 pence (2021: 59.0p).
Fair value was based on the share price at the date of grant with the following assumptions:
Jun Feb Oct 22 Sep 13 Sep Jun Feb Oct Sep Jun
2022 2022 2021 2021 2021 2021 2021 2020 2020 2020
issue issue issue issue issue issue issue issue issue issue
Risk-free interest rate n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Share price on
grant date 30.8p 46.0p 71.0p 81.0p 80.0p 84.0p 83.0p 59.0p 63.0p 63.0p
Dividend yield on the
Company’s shares n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Volatility of the
Company’s shares n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Expected life of
RSU awards 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years
Risk-free rate and volatility have no impact on nil cost awards which are subject to non-market-based performance
conditions.
Compensation expense recognised in profit or loss in relation to employee share schemes was as follows:
2022 2021
£m £m
Equity-settled awards — 0.3
Total expense — 0.3
Deferred Annual Bonus Plan
The Group has in force a Deferred Annual Bonus Plan for the main Executive Directors. There is no exercise price for the
shares awarded under the plan, which are subject to a vesting period of three years and will normally vest on the expiry of
this period and are normally only payable if the Director remains employed by the Group at the end of that period. Awards
granted under the Deferred Annual Bonus Plan are eligible for dividend equivalent payments.
The total amount included in operating profit in relation to the Deferred Annual Bonus Plan was £nil (2021: £nil).
Financial statements
McBride plc Annual Report and Accounts 2022
195
25. Provisions
Reorganisation Independent
and Leasehold Environmental business
restructuring dilapidations remediation review Other Total
£m £m £m £m £m £m
At 1 July 2020 5.6 1.1 2.9 — 0.3 9.9
Charged to profit or loss 3.3 0.4 — — 0.1 3.8
Currency translation dierence (0.1) — (0.1) — — (0.2)
Utilisation (6.7) — (0.4) — — (7.1)
At 30 June 2021 2.1 1.5 2.4 — 0.4 6.4
Charged to profit or loss 0.4 — 0.6 1.7 0.6 3.3
Utilisation (1.7) — (0.3) — (0.5) (2.5)
At 30 June 2022 0.8 1.5 2.7 1.7 0.5 7.2
Analysis of provisions:
2022 2021
£m £m
Current 3.4 2.7
Non-current 3.8 3.7
Total 7.2 6.4
Reorganisation costs in the year of £0.4 million comprises £0.5 million of costs associated with the Group’s logistics
transformation programme and £0.1 million reversal of costs relating to Programme Compass. 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.
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 two years.
Environmental remediation provision relates to historical environmental contamination at a site in Belgium. The additional
costs in the year of £0.6 million result from a revaluation of the cost of environmental remediation. The closing provision is
expected to be utilised as the land is restored within a period of approximately eight years.
During the year, an independent business review (IBR) was initiated to support discussions with banking partners
regarding revisions to financing arrangements and banking covenants. A closing provision of £1.7 million has been
recognised in relation to consultancy costs directly associated with the IBR. The provision is expected to be utilised within
twelve months of the balance sheet date.
Other provisions of £0.5 million relate to costs concerning the sale of the PC Liquids business, property repairs and
onerous lease obligations. The liability is expected to be settled within twelve months of the balance sheet date.
The amount and timing of all cash flows related to the provisions are reasonably certain.
Financial statements
McBride plc Annual Report and Accounts 2022
196
Notes to the consolidated financial statements continued
Year ended 30 June 2022
26. Share capital and reserves
Share capital
Authorised,
allotted and fully paid
Number £m
Ordinary shares of 10 pence each
At 1 July 2020 182,840,301 18.3
Shares bought back on-market and cancelled (8,597,599) (0.9)
At 30 June 2021 174,242,702 17.4
Shares bought back on-market and cancelled (185,374) —
At 30 June 2022 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.
McBride plc announced on 2 November 2020 that it would commence a share buy-back programme of up to
£12millioninMcBride plc ordinary shares, running from 2 November 2020 through to the date of the Company’s next
AGM. The maximum number of shares that could have been repurchased by the Company under the programme was 18.3
million. Thepurpose of the share buy-back programme was to reduce the share capital of the Company (cancelling any
shares repurchased for this purpose). The Board believed that it was in the interests of all shareholders to commence this
programme based on the Board’s assessment that McBride plc’s share price at the time did not reflect the value of the
underlying business, which has resilient revenue, a strong balance sheet and highly visible cash flows.
In the year to 30 June 2022, the Group purchased and cancelled 185,374 (2021: 8,597,599) ordinary shares, representing
0.1% (2021: 4.7%) of the issued ordinary share capital as at 2 November 2020. The shares were acquired at an average price
of 77.0 pence (2021: 79.3p) per share, with prices ranging from 73.3 pence per share to 78.6 pence per share (2021: 61.0p
per share to 90.0p per share). The total cost of £0.1 million (2021: £6.8m) was deducted from equity as the purchase of
own shares. A transfer of £nil (2021: £0.9m) was made from share capital to the capital redemption reserve. As previously
announced, the Board ended the share buy-back programme during the year.
Reserves
(i) Share premium account
The share premium account records the dierence between the nominal amount of shares issued and the fair value of the
consideration received. The share premium account may be used for certain purposes specified by UK law, including to
write o expenses incurred on any issue of shares or debentures and to pay up fully paid bonus shares. The share premium
account is not distributable but may be reduced by special resolution of the Company’s ordinary shareholders and with
court approval.
(ii) Cash flow hedge reserve
The cash flow hedge reserve comprises the cumulative net change in the fair value of hedging instruments in designated
cash flow hedging relationships recognised in other comprehensive income.
(iii) Currency translation reserve
The currency translation reserve comprises cumulative currency translation dierences on the translation of the Group’s
net investment in foreign operations into Sterling together with the cumulative net change in the fair value of hedging
instruments in designated net investment hedging relationships recognised in other comprehensive income.
(iv) Capital redemption reserve
The capital redemption reserve records the cost of shares purchased by the Company for cancellation or redeemed in
excess of the proceeds of any fresh issue of shares made specifically to fund the purchase or redemption. The capital
redemption reserve is not distributable but may be reduced by special resolution of the Company’s ordinary shareholders
and with court approval.
Financial statements
McBride plc Annual Report and Accounts 2022
197
Own shares
Treasury shares Employee Benefit Trust Total
Number £m Number £m Number £m
At 1 July 2020 42,041 — 247,746 0.2 289,787 0.2
Own shares purchased — — 348,574 0.3 348,574 0.3
Shares paid out to employees — — (9,161) — (9,161) —
At 30 June 2021 42,041 — 587,159 0.5 629,200 0.5
Own shares purchased — — — — — —
Shares paid out to employees — — — — — —
At 30 June 2022 42,041 — 587,159 0.5 629,200 0.5
The treasury shares and the shares in trust represent the Company’s ordinary shares that are acquired to satisfy the
Group’s expected obligations under employee share schemes.
The market value of own shares held at 30 June 2022 was £0.1 million (2021: £0.6m).
27. Acquisitions and disposals
Sale of Barrow site, UK
The Barrow production facilities ceased operations in October 2020. On 1 October 2021, proceeds of £2.6 million were
received for the sale of the site. After accounting for costs of disposal of £0.8 million, an exceptional gain of £1.8 million
has been recognised in the year.
Sale of factory in Malaysia
On 15 April 2022, the Group completed the sale of the land and buildings at a former manufacturing site in Malaysia.
Theland and buildings are part of the Asia Pacific segment. Proceeds of £2.8 million were received in respect of this sale.
After accounting for costs of disposal of £1.2 million, an exceptional gain of £1.6 million has been recognised in the year.
Sale of warehouse in Guesnain, France
On 24 June 2022, the land and buildings at a former warehousing facility in Guesnain, France were sold as part of the
Group’s logistics transformation programme. The land and buildings are central assets. Proceeds of £0.7 million were
received in respect of this sale. After accounting for costs of disposal of £0.4 million, an exceptional gain of £0.3 million
has been recognised in the year.
28. Capital commitments
Capital expenditure on property, plant and equipment
2022 2021
£m £m
Contracted but not provided 4.0 1.8
Financial instruments
McBride plc Annual Report and Accounts 2022
198
Notes to the consolidated financial statements continued
Year ended 30 June 2022
29. 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
As shown in note 23, contributions amounting to £6.2 million (2021: £6.3m) were payable by the Group to pension
schemes established for the benefit of its employees. At 30 June 2022, £0.5 million (2021: £0.4m) 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 payable to key management personnel in respect of their services to the Group was as follows:
2022 2021
£m £m
Short-term employee benefits 2.2 2.4
Post-employment benefits 0.1 0.1
Share-based payments — 0.2
Total 2.3 2.7
30. Events after the reporting date
An amended revolving credit facility agreement was agreed with the banking syndicate on 29 September 2022. Thenew
financing arrangements will ensure that the Group has sucient levels of liquidity headroom and can comply withrevised
covenant requirements. Key provisions of the revised agreement are detailed in note 21.
31. 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
2022 2021 2022 2021
Euro 1.18 1.13 1.17 1.17
US Dollar 1.33 1.35 1.21 1.39
Danish Krone 8.78 8.40 8.67 8.67
Polish Zloty 5.45 5.09 5.47 5.27
Czech Koruna 29.57 29.59 28.83 29.70
Hungarian Forint 433.28 403.41 462.64 409.86
Malaysian Ringgit 5.63 5.55 5.33 5.75
Australian Dollar 1.83 1.80 1.76 1.85
Financial statements
McBride plc Annual Report and Accounts 2022
199
Company balance sheet
At 30 June 2022
2022 2021
Note £m £m
Fixed assets
Investments 5 158.4 158.4
Current assets
Trade and other receivables 6 155.8 149.8
Cash and cash equivalents 1.0 1.1
Creditors: amounts falling due within one year 7 (86.1) (95.8)
Net current assets 70.7 55.1
Total assets less current liabilities 229.1 213.5
Creditors: amounts falling due after more than one year 8 (62.7) (40.2)
Provision for liabilities 10 (1.7) —
Net assets 164.7 173.3
Capital and reserves
Called-up share capital 12 17.4 17.4
Share premium account 68.6 68.6
Capital redemption reserve 77.2 77.1
Cash flow hedge reserve 1.2 0.3
Retained earnings brought forward 9.9 22.4
Loss for the financial year (8.3) (4.0)
Other movements (1.3) (8.5)
Closing retained earnings 0.3 9.9
Total shareholders’ funds 164.7 173.3
The financial statements on pages 199 to 208 were approved by the Board of Directors on 29 September 2022 and were
signed on its behalf by:
Chris Smith
Director
McBride plc
Registered number: 02798634
Financial statements
McBride plc Annual Report and Accounts 2022
200
Company statement of changes in equity
Year ended 30 June 2022
Issued Share Capital Total
share premium redemption Cash flow Profit
shareholders
’
capital account reserve hedge and loss funds
£m £m £m £m £m £m
At 30 June 2020 18.3 70.6 74.2 (0.3) 22.4 185.2
Year ended 30 June 2021
Loss for the year — — — — (4.0) (4.0)
Other comprehensive income
Items that may be reclassified to profit or loss:
Net changes in fair value — — — 0.4 — 0.4
Cash flow hedges transferred to profit and loss — — — 0.2 — 0.2
Total other comprehensive income — — — 0.6 — 0.6
Total comprehensive income/(expense) — — — 0.6 (4.0) (3.4)
Transactions with owners of the Parent
Issue of B Shares — (2.0) — — — (2.0)
Redemption of B Shares — — 2.0 — (2.0) —
Share-based payments — — — — 0.3 0.3
Purchase of own shares — — — — (6.6) (6.6)
Shares bought back on-market and cancelled (0.9) — 0.9 — — —
Taxation relating to the above — — — — (0.2) (0.2)
At 30 June 2021 17.4 68.6 77.1 0.3 9.9 173.3
Year ended 30 June 2022
Loss for the year — — — — (8.3) (8.3)
Other comprehensive income
Items that may be reclassified to profit or loss:
Net changes in fair value — — — 0.8 — 0.8
Cash flow hedges transferred to profit and loss — — — 0.1 — 0.1
Total other comprehensive income — — — 0.9 — 0.9
Total comprehensive income/(expense) — — — 0.9 (8.3) (7.4)
Transactions with owners of the Parent
Redemption of B Shares — — 0.1 — (0.1) —
Share-based payments — — — — 0.1 0.1
Purchase of own shares — — — — (0.6) (0.6)
Taxation relating to the above — — — — (0.7) (0.7)
At 30 June 2022 17.4 68.6 77.2 1.2 0.3 164.7
Financial statements
McBride plc Annual Report and Accounts 2022
201
Notes to the Company financial statements
Year ended 30 June 2022
1. Corporate information
McBride plc (‘the Company’) is the ultimate parent
Company of a group of companies that together is Europe’s
leading provider of private label household products.
TheCompany develops and manufactures products for the
majority of retailers and major brand owners throughout
the UK, Europe and Asia.
The Company is a public company limited by shares, with
shares traded on the London Stock Exchange, incorporated
and domiciled in the United Kingdom and registered in
England and Wales. The address of its registered oce
isMcBride plc, Middleton Way, Middleton, Manchester
M244DP.
2. Accounting policies
Accounting period
The Company’s annual financial statements are drawn up to
30 June. These financial statements cover the year ended
30 June 2022 (‘2022’) with comparative amounts for the
year ended 30 June 2021 (‘2021’).
Basis of preparation
The Company’s financial statements have been prepared
ona going concern basis in accordance with the Companies
Act 2006 (‘the Act’) as applicable to companies using
FRS 101. For further information on going concern, please
see note 2 in the consolidated financial statements on
page150. FRS 101 sets out a reduced disclosure framework
for a ‘qualifying entity’ as defined in the standard which
addresses the financial reporting requirements and
disclosure exemptions in the individual financial statements
of qualifying entities that otherwise apply the recognition,
measurement and disclosure requirements of UK adopted
international accounting standards.
These financial statements of the Company are prepared
in accordance with FRS 101, 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.
FRS 101 sets out amendments to IFRS that are necessary to
achieve compliance with the Act and related regulations.
As permitted by FRS 101, the Company has taken
advantage of the disclosure exemptions available under
that standard in relation to business combinations, financial
instruments, share-based payments, capital management,
presentation of comparative information in respect of
certain assets, presentation of a cash flow statement,
standards not yet eective, impairment of assets and
related party transactions. Where required, equivalent
disclosures are given in the consolidated financial
statements of McBride plc.
The Directors have taken advantage of the exemption
available under section 408 of the Companies Act 2006
and not presented an income statement or a statement of
comprehensive income for the Company alone. A summary
of the Company’s significant accounting policies is set out
below.
The accounting policies adopted are consistent with those
of the annual financial statements for the year ended
30June 2021.
Principal accounting policies
Investments in subsidiaries
Investments in subsidiaries are held at cost, less provision
for impairment. Any potential impairment is determined on
a basis of the carrying value of the investment against the
higher of net assets or discounted future cash flows.
Financial instruments
The Company classifies its financial assets in the following
categories:
• those to be measured subsequently at fair value (either
through other comprehensive income (OCI) or through
profit or loss); and
• those to be measured at amortised cost.
The classification depends on the Company’s business
model for managing the financial assets and the contractual
terms of the cash flows. For assets measured at fair value,
gains and losses will either be recorded in profit or loss or
OCI. The Company reclassifies debt instruments when, and
only when, its business model for managing those assets
changes.
At initial recognition, the Company measures a financial
asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction
costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried
at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Financial statements
McBride plc Annual Report and Accounts 2022
202
Notes to the Company financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
Principal accounting policies continued
Financial instruments continued
Subsequent measurement of debt instruments depends on
the Company’s business model for managing the asset and
the cash flow characteristics of the asset. There are three
measurement categories into which the Company classifies
its debt instruments:
• amortised cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest
are measured at amortised cost. Interest income from
these financial assets is included in finance income
using the eective interest rate method. Any gain or
loss arising on derecognition is recognised directly in
profit or loss and presented in other gains/(losses)
together with foreign exchange gains and losses.
Impairment losses are presented as a separate line
item in the statement of profit or loss. The Company
assesses on a forward-looking basis the expected credit
losses associated with its debt instruments carried at
amortisedcost. The impairment methodology applied
depends on whether there has been a significant
increase in credit risk;
• fair value through other comprehensive income
(FVOCI): Assets that are held for collection of
contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely
payments of principal and interest, are measured at
FVOCI. Movements in the carrying amount are taken
through OCI, except for the recognition of impairment
gains or losses, interest income and foreign exchange
gains and losses which are recognised in profit or loss.
When the financial asset is derecognised, the cumulative
gain or loss previously recognised in OCI is reclassified
from equity to profit or loss and recognised in other
gains/(losses). Interest income from these financial
assets is included in finance income using the eective
interest rate method. Foreign exchange gains and losses
are presented in other gains/(losses) and impairment
expenses are presented as a separate line item in the
statement of profit or loss; and
• fair value through profit or loss (FVPL): Assets that do
not meet the criteria for amortised cost or FVOCI are
measured at FVPL. A gain or loss on a debt investment
that is subsequently measured at FVPL is recognised
in profit or loss and presented net within other
gains/(losses) in the period in which it arises.
(i) Trade and other receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using
the eective interest method, less provision for impairment.
Under the Company’s business model, trade receivables are
held for collection of contractual cash flows and represent
solely payments of principal and interest.
(ii) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits
available on demand and other short-term, highly liquid
investments with a maturity on acquisition of three months
or less and bank overdrafts. Bank overdrafts are presented
as current liabilities to the extent that there is no right of
oset or intention to oset with cash balances.
(iii) Trade payables
Trade payables are initially recognised at fair value and
subsequently held at amortised cost.
(iv) Bank and other loans
Bank and other loans are initially recognised at fair value,
net of directly attributable transaction costs, if any, and
are subsequently measured at amortised cost using the
eective interest rate method.
(v) Derivative financial instruments
The Company uses derivative financial instruments to
hedge its exposure to foreign exchange and interest
rate risks arising from operating, financing and investing
activities. The Company does not hold or issue derivative
financial instruments for trading purpose; however, if
derivatives do not qualify for hedge accounting they are
accounted for as such.
Derivative financial instruments are recognised and stated
at fair value. Where derivatives do not qualify for hedge
accounting, any gains or losses on remeasurement are
immediately recognised in the Company income statement.
Where derivatives qualify for hedge accounting, recognition
of any resultant gain or loss depends on the nature of the
hedge relationship and the items being hedged. In order
to qualify for hedge accounting, the Company is required
to document from inception, the relationship between the
item being hedged and the hedging instrument.
The Company is also required to document and
demonstrate an assessment of the relationship between the
hedged item and the hedging instrument, which shows that
the hedge will be highly eective on an ongoing basis. This
eectiveness testing is performed at each reporting date to
ensure that the hedge remains highly eective.
Derivative financial instruments with maturity dates of more
than one year from the balance sheet date are disclosed as
non-current.
The Company has entered into a number of financial
derivative contracts and each is discussed in turn.
The Company enters into forward foreign exchange
contracts to mitigate the exchange risk for certain foreign
currency receivables.
At 30 June 2022, the outstanding contracts all mature
within twelve months (2021: twelve months) of the year
end. The Company is committed to sell PLN and EUR and
receive a fixed Sterling amount.
The Company also enters into interest rate swap contracts
to mitigate against the floating interest rates on revolving
credit facility debt. At 30 June 2022, there are six
outstanding contracts: three mature within twelve months
of the year end with the remaining three maturing more
than twelve months after the year end.
All contracts are measured at fair value, which is
determined using valuation techniques that utilise
observable inputs. The key assumptions used in valuing
derivatives are the exchange rates for GBP:EUR and
GBP:PLN as well as EUR and DKK interest rates.
Financial statements
McBride plc Annual Report and Accounts 2022
203
Foreign currency translation
Transactions denominated in foreign currencies are
translated into Sterling at the exchange rate ruling on the
date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the
exchange rate ruling on the balance sheet date. Currency
translation dierences are recognised in the income
statement.
Share-based payments
The Company operates incentive share schemes under
which it grants equity-settled and cash-settled awards
over its own ordinary shares to certain employees of its
subsidiaries. The Company recognises a capital contribution
to the subsidiaries concerned that is based on the fair value
of the awards measured using the Black-Scholes option
pricing formula or the Monte Carlo valuation model.
For equity-settled awards, the fair value reflects market
performance conditions and all non-vesting conditions.
Fair value is determined at the grant date and is not
subsequently remeasured unless the relevant conditions
are modified. Adjustments are made to the compensation
expense to reflect actual and expected forfeitures due
to failure to satisfy service conditions or non-market
performance conditions. For cash-settled awards, the
fair value reflects all the conditions on which the award
is made and is remeasured at each reporting date and at
thesettlement date.
Generally, the capital contribution is recognised on
a straight-line basis over the vesting period. For
equity-settled awards, a corresponding credit is recognised
directly in reserves, while for cash-settled awards a
corresponding liability to settle is recognised in the
balancesheet.
Taxation
Current tax is the amount of tax payable in respect of the
taxable profit or loss for the period. Taxable profit diers
from accounting profit because it excludes income or
expenses that are recognised in the period for accounting
purposes but are either not taxable or not deductible for
tax purposes or are taxable or not deductible in earlier or
subsequent periods.
Deferred tax is recognised on temporary dierences
between the recognition of items of income or expenses for
accounting purposes and their recognition for tax purposes.
A deferred tax asset in respect of a deductible temporary
dierence or a carried-forward tax loss is recognised only
to the extent that it is considered more likely than not that
sucient taxable profits will be available against which
the reversing temporary dierence or the tax loss can
be deducted. Deferred tax assets and liabilities are not
discounted.
Current and deferred tax is measured using tax rates that
have been enacted or substantively enacted at the balance
sheet date.
Guarantees
From time to time, the Company provides guarantees
to third parties in respect of the indebtedness of its
subsidiaries. The Directors consider these guarantees to
be insurance arrangements and, therefore, the Company
recognises a liability in respect of such guarantees only in
the event that it becomes probable that the guarantee will
be called upon and the Company will be required to make a
payment to the third party.
Payments to shareholders
Dividends paid and received are included in the Company
financial statements in the period 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.
It is the Board’s intention that any future dividends
will be final dividends paid annually in cash, not by the
allotment and issue of B Shares. Consequently, the Board
is not seeking shareholder approval at the 2022 AGM to
capitalise reserves for the purposes of issuing B Shares or
to grant Directors authority to allot such shares. Existing
B Shares will continue to be redeemable but limited to
one redemption date per annum in November of each
year. BShares issued but not redeemed are classified
ascurrentliabilities.
Own shares
Own shares represent the Company’s ordinary shares that
are held by the Company in treasury or by a sponsored
ESOP trust to employee share schemes. When own
shares are acquired, the cost of purchase in the market is
deducted from the profit and loss account reserve. Gains
and losses on the subsequent transfer or sale of own shares
are recognised directly in the profit and loss account.
Cash flow statement
A cash flow statement is not presented in these financial
statements on the grounds that the Company’s cash flows
are included in the consolidated financial statements of the
Company and its subsidiaries.
Critical judgements and key sources of
estimationuncertainty
In applying the Company’s accounting policies as described
in this note, the Directors are required to make judgements,
and estimates and assumptions, that aect the reported
amounts of its assets, liabilities, income and expenses
that are not readily identifiable from other sources.
Theestimates and associated assumptions are based on
historical experience and other factors that are considered
to be relevant. Actual outcomes could dier from those
estimates and aect the Company’s results in future years.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision aects only that period, or in the period of
the revision and future periods if the revision aects both
current and future periods.
The Directors consider that no critical judgements are made
in preparing these financial statements.
The Directors consider the following to be the key sources
of estimation uncertainty present in preparing these
financial statements.
Financial statements
McBride plc Annual Report and Accounts 2022
204
Notes to the Company financial statements continued
Year ended 30 June 2022
2. Accounting policies continued
Critical judgements and key sources of estimation uncertainty continued
Impairment of investments and amounts owed by subsidiary undertakings
The Directors have performed an impairment assessment of investments under IAS 36. In light of the forecast profitability
of subsidiary undertakings, and their ability to distribute dividends to McBride plc, the Directors have judged that no
impairment is required (2021: £nil).
An impairment assessment of amounts owed by subsidiary undertakings as at 30 June 2022 was undertaken using the
IFRS 9 simplified approach to measuring the expected credit loss. The Directors have judged that no impairment is
required (2021: £nil).
3. Profit for the financial year
As permitted by section 408(3) of the Act, the Company’s income statement or a statement of comprehensive income
arenot presented in these financial statements.
The auditor’s remuneration for audit and other services is disclosed in note 6 of the Group’s consolidated financial
statements.
The Company’s loss for the financial year was £8.3 million (2021: loss of £4.0m).
4. Employee information
The monthly average number of full-time equivalent persons employed by the Company during the year was as follows:
2021
2022 Number
Number (restated)
(1)
Directors 2 2
Non-Executive Directors 1 5
Finance — 4
Administration — 1
Total 3 12
Aggregate payroll costs were as follows:
2022 2021
£m £m
Wages and salaries 0.9 2.5
Social security costs 0.1 0.2
Other pension costs 0.1 0.1
Total 1.1 2.8
(1) Prior year restatement reflects full-time equivalent.
Executive Directors’ emoluments, which are included in the above, are detailed further in the Directors’ Remuneration
report on pages 105 to 131.
5. Investments
2022 2021
£m £m
Carrying amount
At 1 July 158.4 158.2
Additions — 0.2
At 30 June 158.4 158.4
Additions to investments represent the value of share options issued to employees employed by subsidiary undertakings
of McBride plc. In the current year, £nil (2021: £0.2m) has been recognised in respect of such share options.
The Directors have reviewed the recoverability of the carrying amount of the Company’s investments and have concluded
that there is no impairment in their value.
A full list of the Company’s subsidiaries at 30 June 2022 is set out on pages 207 and 208.
Details of the share-based payments provided by the Company to employees of its subsidiaries are presented in note 24
to the consolidated financial statements.
Financial statements
McBride plc Annual Report and Accounts 2022
205
6. Trade and other receivables
2022 2021
£m £m
Amounts falling due within one year
Amounts owed by subsidiary undertakings 154.4 148.6
Derivative financial instruments 0.9 0.1
Deferred tax asset (note 11) — 0.4
Prepayments and accrued income 0.5 0.7
155.8 149.8
Amounts are unsecured and repayable on demand. Amounts owed by subsidiary undertakings include a loan receivable
of£98.8 million (2021: £105.2m) which is non-interest bearing with no fixed repayment date, and a group relief receivable
of £11.5 million (2021: £11.5m). All remaining amounts owed bysubsidiary undertakings are interest bearing, based on
external borrowing interest rates.
7. Creditors: amounts falling due within one year
2022 2021
£m £m
Amounts owed to subsidiary undertakings 74.6 87. 9
B Shares (note 9) 0.7 0.7
Accruals and deferred income 0.7 1.3
Bank overdrafts 10.1 5.9
Total 86.1 95.8
Amounts are unsecured and repayable on demand. Amounts owed to subsidiary undertakings include loans payable of
£37.0 million (2021: £37.0m) which are non-interest bearing with no fixed repayment date. All remaining amounts owed to
subsidiary undertakings are interest bearing, based on external borrowing interest rates.
8. Creditors: amounts falling due after more than one year
2022 2021
£m £m
Bank and other loans 62.5 40.1
Derivative financial instruments — 0.1
Deferred tax liability 0.2 —
Total 62.7 40.2
Bank and other loans represent amounts drawn down under a €175 million revolving credit facility which is committed until
May 2026.
9. Payments to shareholders
Dividends paid and received are included in the Company financial statements in the period 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.
It is the Board’s intention that any future dividends will be final dividends paid annually in cash, not by the allotment and
issue of B Shares. Consequently, the Board is not seeking shareholder approval at the 2022 AGM to capitalise reserves for
the purposes of issuing B Shares or to grant Directors authority to allot such shares. Existing B Shares will continue to be
redeemable but limited to one redemption date per annum in November of each year. B Shares issued but not redeemed
are classified as current liabilities.
No payments to ordinary shareholders were made or proposed in respect of this year or the prior year.
As set out in the Half-Year Report, the Group is targeting an accounting basis of net debt/adjusted EBITDA of 2.0x or less.
As the ratio as at 31 December 2021 was over 2.0x, an interim payment to shareholders was not made. At 30 June 2022,
the ratio was also over 2.0x and in line with its revised Distribution Policy set out on pages 105 to 131, the Board is not
recommending a final dividend in 2022.
Financial statements
McBride plc Annual Report and Accounts 2022
206
9. Payments to shareholders continued
Movements in the number of B Shares outstanding were as follows:
2022 2021
Nominal Nominal
Number value Number value
000 £’000 000 £’000
Issued and fully paid
At 1 July 747,399 747 713,130 713
Issued — — 2,010,780 2,011
Redeemed (81,511) (81) (1,976,511) (1,977)
At 30 June 665,888 666 747,399 747
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. Provisions for liabilities
£m
At 1 July 2021 —
Charge for the year 1.7
At 30 June 2022 1.7
Provision for consultancy support for the independent business review programme, expected to be utilised within twelve
months.
11. Deferred tax
The elements and movements of deferred tax are as follows:
Other
Share-based short-term
payments dierences Total
£m £m £m
At 1 July 2020 0.2 0.2 0.4
Credit to income statement 0.2 — 0.2
Charge to other comprehensive income — (0.1) (0.1)
Charge to equity (0.1) — (0.1)
At 30 June 2021 0.3 0.1 0.4
Credit to income statement 0.1 — 0.1
Charge to other comprehensive income — (0.4) (0.4)
Charge to equity (0.3) — (0.3)
At 30 June 2022 0.1 (0.3) (0.2)
Deferred tax assets are recognised to the extent that recovery is probable against the future reversal of taxable temporary
dierences and projected taxable income. Based on the latest profit projections, management considers the deferred tax
assets to be recoverable.
12. Called-up share capital
Allotted and fully paid
Number £m
Ordinary shares of 10 pence each
At 30 June 2021 174,242,702 17.4
Shares bought back on-market and cancelled (185,374) —
At 30 June 2022 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.
McBride plc announced on 2 November 2020 that it would commence a share buy-back programme of up to
£12million in McBride plc ordinary shares, running from 2 November 2020 through to the date of the Company’s next
AGM. Themaximum number of shares that could have been repurchased by the Company under the programme was
18.3million. Thepurpose of the share buy-back programme was to reduce the share capital of the Company (cancelling
any shares repurchased for this purpose). The Board believed that it was in the interests of all shareholders to commence
this programme based on the Board’s assessment that McBride plc’s share price at that time did not reflect the value of
the underlying business, which has resilient revenue, a strong balance sheet and highly visible cash flows.
Notes to the Company financial statements continued
Year ended 30 June 2022
Financial statements
McBride plc Annual Report and Accounts 2022
207
In the year to 30 June 2022, the Group purchased and cancelled 185,375 (2021: 8,597,599) ordinary shares, representing
0.1% (2021: 4.7%) of the issued ordinary share capital as at 2 November 2020. The shares were acquired at an average price
of 77.0 pence (2021: 79.3p) per share, with prices ranging from 73.3 pence per share to 78.6 pence per share (2021: 61.0p
per share to 90.0p per share). The total cost of £0.1 million (2021: £6.8m) was deducted from equity as the purchase of
own shares. A transfer of £nil (2021: £0.9m) was made from share capital to the capital redemption reserve. As previously
announced the Board ended the share buy-back programme during the year.
At 30 June 2022, awards were outstanding over 7,021,804 ordinary shares (2021: 6,469,854 ordinary shares) in relation to
the equity-settled employee share schemes that are operated by the Company. Further information on the employee share
schemes is presented in note 24 to the consolidated financial statements.
13. Guarantees
The Company has guaranteed the indebtedness of certain of its subsidiaries up to an aggregate amount of £4.8 million
(2021: £4.9m).
14. Related party transactions
Other than payments made to Directors, which are set out in the Remuneration Committee report on pages 105 to 131 and
note 5 of the consolidated financial statements, there are no other related party transactions to disclose. The Company has
taken the exemption available under FRS 101 not to disclose transactions with wholly owned subsidiary companies.
15. Subsidiaries
Details of the Company’s subsidiaries at 30 June 2022 are as follows. In each case, the Company’s equity interest is in the
form of ordinary shares which, unless stated otherwise, are indirectly owned.
The business activity of each of the Company’s trading subsidiaries is the manufacture, distribution and sale of household
and personal care products.
Equity interest Country of
Subsidiaries and operation incorporation
Trading subsidiaries
McBride Australia Pty Ltd
(a)
100% Australia
McBride S.A.
(b)
100% Belgium
McBride Denmark A/S
(c)
100% Denmark
Robert McBride Ltd
(d)
100% England
McBride S.A.S.
(e)
100% France
Problanc S.A.S.
(f)
100% France
Vitherm France S.A.S.
(g)
100% France
Chemolux Germany GmbH
(h)
100% Germany
McBride Hong Kong Limited
(i)
100% Hong Kong
McBride S.p.A.
(j)
100% Italy
Chemolux S.a.r.l.
(k)
100% Luxembourg
McBride Malaysia Sdn. Bhd
(l)
100% Malaysia
Fortune Organics (F.E.) Sdn. Bhd.
(l)
100% Malaysia
Intersilesia McBride Polska Sp. z o.o
(m)
100% Poland
McBride S.A.U.
(n)
100% Spain
Newlane Cosmetics Company Limited
(o)
100% Vietnam
McBride B.V.
(p)
100% Netherlands
Holding companies
McBride Holdings Limited
(1), (d)
100% England
McBride Asia Holdings Limited
(i)
100% Hong Kong
McBride Hong Kong Holdings Limited
(i)
100% Hong Kong
Fortlab Holdings Sdn. Bhd.
(l)
100% Malaysia
CNL Holdings Sdn. Bhd.
(l)
100% Malaysia
Financial statements
McBride plc Annual Report and Accounts 2022
208
15. Subsidiaries continued
Equity interest Country of
Subsidiaries and operation incorporation
Dormant
(2)
Breckland Mouldings Limited
(d)
100% England
Camille Simon Holdings Limited
(d)
100% England
Camille Simon Limited
(d)
100% England
Culmstock Limited
(d)
100% England
Darcy Bolton Limited
(d)
100% England
Darcy Bolton Property Limited
(d)
100% England
Darcy Limited
(d)
100% England
Detergent Information Limited
(d)
100% England
G.Garnett & Sons Limited
(d)
100% England
G.Garnett Estates Limited
(d)
100% England
Globol Properties (UK) Limited
(d)
100% England
H.H. Limited
(d)
100% England
HomePride Limited
(d)
100% England
Hugo Personal Care Limited
(d)
100% England
International Consumer Products Limited
(d)
100% England
Longthorne Laboratories Limited
(d)
100% England
McBride Aircare Limited
(d)
100% England
McBride UK Limited
(d)
100% England
McBrides Limited
(d)
100% England
Milstock Limited
(d)
100% England
RMG (Droylsden) Limited
(d)
100% England
Robert McBride (Aerosols) Limited
(d)
100% England
Robert McBride (Bradford) Limited
(d)
100% England
Robert McBride (Properties) Limited
(d)
100% England
Robert McBride Household Limited
(d)
100% England
Savident Limited
(d)
100% England
Other
Robert McBride Pension Fund Trustees Limited
(d)
100% England
(1) McBride plc directly owns 100% of McBride Holdings Limited.
(2) Dormant companies listed here are exempt from filing with the registrar individual accounts by virtue of s448A of the Companies Act 2006.
Registered oces:
(a) Level 4, 147 Collins Street, Melbourne, Victoria 3000, Australia.
(b) 6 Rue Moulin Masure, 7730 Estaimpuis, Belgium.
(c) Lægårdvej 90-94, 7500 Holstebro, Denmark.
(d) Middleton Way, Middleton, Manchester M24 4DP, UK.
(e) 20 rue Gustave Flaubert 14590 Moyaux, France.
(f) ZAC of Saint René 45 boulevard Ambroise Croizat F-59287 Guesnain, France.
(g) Rue des Casernes, 55400 Etain, France.
(h) Heinrichstrasse 73, 40239 Düsseldorf, Germany.
(i) Unit 2001-02, 20th Floor, Prosperity Place, 6 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.
(j) Corso Garibaldi 49, 20121 Milan, Italy.
(k) Rue de I’industrie, Foetz, Luxembourg 3895.
(l) Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia.
(m) Ul. Matejki 2a, 47100 Strzelce Opolskie, Poland.
(n) Polígon Industrial I’Ila, C/ Ramon Esteve 20-22, 08650 Sallent, Barcelona, Spain.
(o) 22 VSIP II, Street 1, Vietnam Singapore, Industrial Park II, Hoa Phu Ward, Thu Dau Mot City, Binh Duong Province, Vietnam.
(p) Prins Bernhardplein 200, 1097 JB Amsterdam, Netherlands.
Notes to the Company financial statements continued
Year ended 30 June 2022
Additional information
McBride plc Annual Report and Accounts 2022
209
Year ended 30 June
2022 2021 2020 2019 2018
£m £m £m £m £m
Total revenue 678.3 682.3 706.2 743.2 755.0
Continuing revenue 678.3 682.3 706.2 721.3 689.8
Adjusted operating (loss)/profit from continuing operations (24.5) 24.1 28.3 28.1 36.2
Amortisation of intangible assets (2.6) (2.4) (2.1) (1.9) (1.4)
Exceptional items — (6.9) (11.1) (5.4) (21.7)
Operating (loss)/profit (27.1) 14.8 15.1 20.8 13.1
Net finance costs (8.6) (4.2) (4.2) (4.6) (5.3)
(Loss)/profit before tax (35.7) 10.6 10.9 16.2 7.8
Taxation 11.4 2.8 (4.4) (8.1) (4.4)
(Loss)/profit after tax (24.3) 13.4 6.5 8.1 3.4
(Loss)/earnings per share
Diluted (14.0p) 7.5p 3.6p 4.4p 1.9p
Adjusted diluted (11.7p) 11.7p 9.5p 9.4p 12.1p
Payments to shareholders (per ordinary share) — — 1.1p 3.3p 4.3p
At 30 June
2022 2021 2020 2019 2018
£m £m £m £m £m
Non-current assets
Property, plant and equipment 122.9 129.8 134.7 136.0 135.6
Goodwill and other intangible assets 27.0 27.9 28.4 29.5 29.9
Other assets 42.9 32.9 21.1 11.6 13.6
192.8 190.6 184.2 177.1 179.1
Current assets 273.3 241.2 287.6 258.0 269.0
Current liabilities (280.0) (233.5) (253.9) (237.2) (256.4)
Non-current liabilities (129.1) (128.5) (151.0) (133.7) (124.1)
Net assets 57.0 69.8 66.9 64.2 67.6
Net debt
(1)
164.4 118.4 101.5 120.9 114.3
(1) Following the adoption of IFRS 16, ‘Leases’ as at 1 July 2019, leases are recognised as a right-of-use asset and a corresponding lease liability.
TheGroup adopted this new standard with the modified retrospective approach. Comparative information has not been restated and is presented,
as previously reported, under IAS 17 and therefore may not be directly comparable.
Group five-year summary
Additional information
McBride plc Annual Report and Accounts 2022
210
Useful information for shareholders
Financial calendar
Next key dates for shareholders in 2022 and 2023:
Record date for dividend payable
on B Shares previously issued
and not redeemed 21 October 2022
Latest date for receipt by registrar
of completed election forms and
submitting CREST elections 11 November 2022 (by 1pm)
Annual General Meeting 16 November 2022
Despatch of cheques in respect of
B Shares which have been redeemed 25 November 2022
Payment into bank accounts in
respect of B Shares which have
been redeemed by certificated
shareholders who have valid
mandate instructions in place 25 November 2022
Payments on redeemed B Shares
issued in CREST 25 November 2022
Dividend payments on B Shares
issued and not previously redeemed 25 November 2022
2022/23 Half year end 31 December 2022
2022/23 Half-year trading statement January 2023
Interim results announced February 2023
2022/23 Year end 30 June 2023
2022/23 Year end trading statement July 2023
Full-year preliminary statement September 2023
These dates are provisional and may be subject to change.
Payments to shareholders
At the Company’s 2011 General Meeting, shareholders
approved the issue of non-cumulative redeemable
preference shares with a nominal value of 0.1 pence
each (‘the B Shares’) as a method of making payments
to shareholders. At the Company’s 2021 Annual General
Meeting, the Company did not put forward a resolution
to approve the issue of non-cumulative redeemable
preference shares. It is the Board’s intention that any future
dividends will be final dividends paid annually in cash, not
by the allotment and issue of B Shares.
In accordance with the terms of the scheme, any B Shares
may be redeemed immediately for cash and such a
redemption would result in a payment to the redeeming
shareholder. Shareholders are able to redeem any number
of their B Shares for cash. B Shares that are retained
currently attract a dividend which is currently 75.0% of
Bank of England Base Rate on the 0.1 pence nominal value
of each share, paid on a twice-yearly basis.
As announced in the 2021 Annual Report, B Share
redemptions will only take place in November of each
year going forward. Details of the scheme can be found in
the booklet entitled ‘Your Guide to B Shares’ and on the
Company’s website at www.mcbride.co.uk.
Shareholders who have valid mandate instructions in
place may choose to have payments made directly into
their bank or building society account. Confirmation
of paymentis contained in a payment advice which is
posted to shareholders’ registered addresses at the time
of payment. This payment advice should be kept safely for
future reference.
Shareholders who wish to benefit from this service
should complete the relevant section of the election form
accompanying the Notice of Annual General Meeting.
Alternatively, the required documentation can be obtained
by contacting the Company’s registrar using one of the
methods outlined below.
Shareholder queries
Our share register is managed by Link Group (formerly
Capita Asset Services), who can be contacted:
by telephone 0371 664 0300 or on +44 371 644 0300
if calling from overseas. Calls are charged
at the standard geographic rate and
will vary by provider. Calls outside the
United Kingdom will be charged at the
applicable international rate. Lines are
open between 09:00 and 17:30, Monday
to Friday (excluding public holidays in
England and Wales).
by email shareholderenquiries@linkgroup.co.uk
by post Link Group, Central Square, 10th Floor,
29Wellington Street, Leeds LS1 4DL
When writing, please indicate that you are a McBride plc
shareholder.
Shareholders are also able to access and amend details
of their shareholding (such as address and distribution
payment instructions), via the registrar’s website at
www.signalshares.com. If you have not previously
registered to use this facility you will need your investor
code, which can be found on your proxy card, or on any
share certificate issued by Link Asset Services.
ShareGift
McBride plc supports ShareGift, the share donation charity
(registered charity no. 1052686). ShareGift was set up so
that shareholders who have only a very small number of
shares which might be considered uneconomic to sell are
able to dispose of them by donating them for the benefit of
UK charities. Donating shares to charity gives rise neither
to a gain nor a loss for UK capital gains purposes and UK
taxpayers may also be able to claim income tax relief on the
value of the donation. Even if the share certificate has been
lost or destroyed, the gift can be completed.
Further information about donating shares to ShareGift is
available either from its website at www.sharegift.org or by
contacting them on +44 (0)20 7930 3737.
Additional information
McBride plc Annual Report and Accounts 2022
211
Share price history
The following table sets out, for the five financial years to
30 June 2022, the reported high, low, average and financial
year end (30 June or immediately preceding business day)
closing middle market quotations of McBride plc’s ordinary
shares on the London Stock Exchange.
Share price (pence)
Financial
High Low Average year end
2018 232 121 177 132
2019 158 77 119 81
2020 89 49 66 62
2021 94 58 74 91
2022 89 16 58 16
Shareholder security
The Company is required by law to make its share register
publicly available. As a consequence, shareholders may
receive unsolicited mail from organisations that use it as
a mailing list. Shareholders wishing to limit the amount
of such mail should either write to Mailing Preference
Service, DMA House, 70 Margaret Street, London W1W
8SS, register online at www.mpsonline.org.uk or call the
MailingPreference Service (MPS) on 020 7291 3310. MPS is
an independent organisation which oers a free service to
the public.
Each year in the UK shareholders lose money due to
investment fraud. Investment scams are becoming ever
more sophisticated – designed to look like genuine
investments, they are increasingly dicult to spot.
REMEMBER, if it sounds too good to be true, it probably is!
If you suspect you have been approached by fraudsters
please tell the Financial Conduct Authority using the share
fraud reporting form at www.fca.org.uk/scams, where you
can find out more about investment scams. You can also
call the FCA Consumer Helpline on 0800 111 6768. If you
have lost money to investment fraud, you should report it
toAction Fraud on 0300 123 2040 or online at
www.actionfraud.police.uk. Find out more at
www.fca.org.uk/scamsmart
Electronic communications
Shareholders are able to register to receive communications
from McBride plc electronically. McBride plc encourages
shareholders to elect to receive all communications
electronically, to enable more secure and prompt
communication which reduces cost and environmental
impact through saving paper, mailing and transportation.
You can register directly by visiting www.signalshares.com
and following the online instructions. Alternatively, you
can access the service via the investor relations section
ofMcBride plc’s website at www.mcbride.co.uk.
Online shareholder services
McBride plc provides a number of services online
intheinvestor relations section of its website at
www.mcbride.co.uk, including:
• view and/or download annual and interim reports;
• check current or historic share prices (there is an historic
share price download facility);
• check the amounts and dates of historic payments to
shareholders;
• use interactive tools to calculate the value of
shareholdings and chart McBride plc ordinary share price
changes against indices; and
• register to receive email alerts regarding press releases,
including regulatory news announcements, Annual
Reports and Company presentations.
Cautionary statement
This Annual Report has been prepared for the
shareholdersof McBride plc, as a body, and no other
persons. Its purpose is to assist shareholders of the
Company to assess the strategies adopted by the Group,
the potential for those strategies to succeed and for no
other purpose. TheCompany, its Directors, employees,
agents or advisers do not accept or assume responsibility
to any other person to whom this document is shown or
into whose hands it may come and any such responsibility
or liability is expressly disclaimed.
This Annual Report contains certain forward-looking
statements that are subject to risk factors associated
with, amongst other things, the economic and business
circumstances occurring from time to time in the countries,
sectors and markets in which the Group operates. It is
believed that the expectations reflected in these statements
are reasonable but they may be aected by a wide range
of variables which could cause actual results to dier
materially from those currently anticipated.
No assurances can be given that the forward-looking
statements in this Strategic report will be realised.
Theforward-looking statements reflect the knowledge
and information available at the date of preparation of the
Strategic report and the Company undertakes no obligation
to update these forward-looking statements. Nothing in this
Report shall constitute a profit forecast.
Both the Strategic report and the Directors’ report have
been prepared and presented in accordance with the laws
of England and Wales and the liabilities of the Directors
in connection with those reports shall be subject to
the limitations and restrictions provided by such law.
Inparticular, the Directors would be liable to the Company
(but not to any third party) if the Strategic report and/or
Directors’ report contain errors as a result of recklessness
or knowing misstatement or dishonest concealment of a
material fact, but would not otherwise be liable.
Additional information
McBride plc Annual Report and Accounts 2022
212
Registered oce and advisers
Company’s registered oce
McBride plc
Middleton Way
Middleton
Manchester M24 4DP
Telephone: +44 (0)161 203 7401
www.mcbride.co.uk
Company number: 02798634
Independent auditor
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory
Auditor
No 1 Spinningfields
1 Hardman Square
Manchester M3 3EB
Corporate brokers
Investec plc
30 Gresham Street
London EC2V 7QP
Peel Hunt LLP
7th Floor, 100 Liverpool St
London EC2M 2AT
Registrars
Link Group
Central Square
10th Floor
29 Wellington Street
Leeds LS1 4DL
Financial public relations advisers
FTI Consulting LLP
200 Aldersgate
London EC1A 4HD
Principal bankers
HSBC Bank plc
2nd Floor, Landmark
St. Peter’s Square
1 Oxford Street
Manchester M1 4PB
BayernLB
Moor House
120 London Wall
London EC2Y 5ET
BNP Paribas London Branch
10 Harewood Avenue
London NW1 6AA
KBC Bank N.V.
111 Old Broad Street
London EC2N 1BR
Bank of China, London Branch
1 Lothbury
London EC2R 7DB
BBVA London Branch
Floor 44
1 Canada Square
London E14 5AA
Designed and produced by
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The Group’s commitment to the environment is reflected in this report, which has been printed
on Munken Kristall Smooth, an FSC® certified material. It also has EU Ecolabel, EMAS, ISO-14001
certification. Arctic Paper Munkedals AB is one of the most environmentally-friendly paper mills
in the world and meets the requirements for FSC® Chain-of-Custody (“CoC”) certification. FSC®
CoCcertification assures that products sold with an FSC® claim originate from well-managed
forests,controlled sources, and/or reclaimed materials in their supply chain. It confirms that
throughout the production process there is: respect for human rights, adherence to all local
applicabletimber legislation and no involvement in the destruction of high conservation areas.
ArcticPaper Munkedals’ Munkedal mill is committed to reducing its long-term environmental
impactand has the lowest waterconsumption per kilogram of paper in the entire industry, whilst
thecompany’s energy usage iswithin or below the EU’s Best Available Techniques.
This document was printed by Pureprint Group using its environmental print technology, with 100%
ofdry waste diverted from landfill, minimising the impact of printing on the environment. The printer
is a CarbonNeutral® company and ISO 14001 registered.
McBride plc
Middleton Way
Middleton, Manchester
M24 4DP United Kingdom
Telephone: +44 (0)161 203 7401
www.mcbride.co.uk
McBride plcAnnual Report and Accounts 2022
McBride plcAnnual Report and Accounts 2022