Final Results

MCBRIDE PLC
22 September 1999
 
 
 
                                McBride plc
                                     
         Preliminary Announcement for the Year ended 30 June 1999
 
McBride  plc,  the  largest manufacturer of private  label  household  and
personal  care products in Europe, announces its preliminary  results  for
the year ended 30 June 1999.
 
 
Highlights
 
*Sales up 6.1% from £468.4 million to £496.8 million.
 
*Operating  profit  of £34.9 million, before operating  exceptional  items
 and goodwill amortisation, compared with £38.4 million.
 
*Profit  of  £30.0  million before operating exceptional  items  of  £11.7
 million, goodwill amortisation and taxation compared with £34.1 million.
 
*Proposed  final  dividend of 5.0 pence giving a  total  dividend  of  7.5
 pence.
 
*Earnings per share of 12.7 pence, before operating exceptional items  and
 goodwill amortisation, compared with 14.6 pence.
 
*Interest   cover   before  operating  exceptional  items   and   goodwill
 amortisation was 7.1 times.
 
*Acquisition  of  Vitherm  in France and Globol Chemicals  in  the  United
 Kingdom.
 
*New  product  launches in the year included textile washing tablets,  new
 aircare range and award winning fabric conditioner bottles.
 
*Rationalisation  programme  to  lower  the  cost  base  through   factory
 closures and other actions successfully implemented.
 
*Opened  new factory in Poland to supply customers in the growing  Central
 and Eastern  European markets.
 
Commenting on the results, Mike Handley, Chief Executive, said:
 
'We   have   encountered  a  difficult  trading  environment  in  1998/99,
particularly in the United Kingdom, but this has not deflected us from our
key  objectives  of  holding and improving market shares,  increasing  our
efficiency  and building for the future. During the last year McBride  has
made  further significant progress and we remain confident in  the  future
prospects  for  the  Group.  Today's announcement that  we  have  acquired
Wrafton Laboratories Limited gives McBride an entry into the strategically
important   OTC  medicines  market.   We  are  confident  that   McBride's
commercial skills combined with Wrafton's technical and product  expertise
will  provide exciting new opportunities for McBride.  The current trading
and outlook for the year are consistent with market expectations.'
 
 
 
For further information please contact:
 
McBride plc                                  01494 607050
Mike Handley, Chief Executive and Deputy Chairman
Terry Monks, Group Finance Director
 
Financial Dynamics                      0171 831 3113
Andrew Dowler
 
 
 
 
Preliminary Results Review
 
1998/99 was a challenging year for McBride with a mixed performance across
the  business. Our markets in the UK, where we are a key supplier  to  the
major  UK  retailers remained very competitive throughout  the  year.   In
Continental Europe, we achieved further sales growth and an improved level
of  profitability successfully integrating the businesses acquired in  the
previous financial year.
 
We  also  saw further evidence of the major Continental European retailers
recognising  the  consumer benefits and margin opportunities  of  retailer
brands.  During the last financial year retailer brand share of the  total
grocery  market in the UK was maintained at over 40% while  in  the  major
markets  of  Continental Europe the equivalent share was between  12%  and
20%.  The  levels  of  retailer  brand share  in  the  product  categories
manufactured  by  McBride was marginally down in  the  UK  with  household
categories  at 26% and in personal care a decline of 3% to  19%.   In  the
Continental Europe markets the private label and minor brand share rose by
1% to 20%.
 
It  was  also  a  year  of  considerable  structural  change  with  a  new
organisation   structure  announced  in  February  and  a  rationalisation
programme   which  has  involved  the  closure  of  three  factories   and
significant operational improvements in a fourth factory.
 
Sterling  reported  sales in the year were £496.8  million  compared  with
£468.4  million in the previous year which was an increase  of  6.1%.  The
trading   profit,   before  operating  exceptional  items   and   goodwill
amortisation, was £34.9 million compared with £38.4 million in 1997/98.
 
Profit before taxation for the year before operating exceptional items and
goodwill  amortisation was £30.0 million compared with £34.1 million  last
year.  Earnings  per share, again before operating exceptional  items  and
goodwill  amortisation was 12.7 pence compared with 14.6 pence last  year.
The  Board  is recommending a final dividend of 5.0 pence, unchanged  from
last year, which brings the total dividend for the year to 7.5 pence which
is the same as the previous year.
 
The  discernible increase in competitor activity that was  noted  in  last
year's  report and commented on further at the time of our interim results
persisted  throughout  the  year.  However,  McBride  has  continued   the
programme  of new product innovation, competitive pricing and a  continued
focus  on  providing  high  levels of service to  all  our  customers.  In
general, whilst raw material prices remained broadly favourable during the
year  and  further efficiency improvements were achieved in the  factories
the  competitive  pressures, particularly in  the  UK  eroded  prices  and
margins. The rationalisation programme which was announced in February was
substantially completed by the end of June 1999 and the benefits  will  be
seen in the current financial year.
 
United Kingdom
The  heavy  brander marketing activity continued throughout the  year  and
resulted  in sales of the UK business declining to £265.1 million compared
with  £272.9 million in the previous year. The total market for  household
products  grew  further during the year but in the  face  of  the  brander
activity the retailer brand share did not keep pace with the growth of the
overall  market.  McBride successfully launched a number of  new  products
together  with  packaging initiatives with a number of key  customers.  In
particular  a  range  of  retailer  brand  textile  washing  tablets   was
successfully launched and gained significant market share during the year.
 
The  UK  market for personal care products remained competitive throughout
the  year  with  branded manufacturers spending heavily on  marketing  and
promotional initiatives.  As a consequence the retailer brand share of the
haircare  and bath products markets, in particular, declined in the  year.
In  this  difficult market McBride had particular success with Hairsprays,
Bath Foam, Shower Gels and Deodorants.
 
The programme of capital expenditure was maintained with investment in the
Barrow  textile  powder  and tablet factory and the integrated  management
information system using SAP R/3 software.
 
 
The  acquisition of Globol Chemicals in October 1998 took McBride into the
expanding  market for continuous aircare products. Globol  manufactures  a
range  of  home  fragrance  and  odour  neutralising  products  and  under
McBride's management new business opportunities were developed.
 
Continental Europe
Sales  in Continental Europe increased by 18.5% during the year to  £231.7
million compared with £195.5 million in the previous financial year.  This
substantial  improvement was achieved through organic growth  in  the  key
French  market helped by the contributions from acquisitions.  In  France,
which  is  McBride's  second largest market, the trend  in  selling  price
deflation  largely  abated and the value of the private  label  and  minor
brand  packaged  grocery sector grew by 11%. McBride  achieved  growth  in
sales volumes and increased market share in a number of product areas.  In
the  Netherlands  sales  grew further as McBride began  to  see  the  full
benefit  of the acquisition of Grada and the launch of a range of retailer
brand  household products towards the end of the financial year. In Spain,
where  sales  had  grown significantly in recent  years,  the  loss  of  a
contract  resulted  in  sales being flat in 1998/99.  In  both  Italy  and
Belgium satisfactory sales growth was achieved.
 
The  Polish  business,  which was acquired at  the  end  of  the  previous
financial year, grew substantially in 1998/99. Production was successfully
relocated to new factory premises which will provide considerable  further
capacity  together  with the facility to consolidate the  distribution  of
existing  sales  to Poland from other group factories. Demand  is  growing
rapidly  for  our  products in the Polish market which includes  providing
improved  retailer  brand  ranges  to  West  European  retailers  who  are
investing heavily in Central and Eastern European markets.
 
The  purchase  of  Vitherm  in  France in  September  1998  represented  a
strategically important acquisition as it further enhanced our  leadership
position in household products. The company consolidated production  on  a
single  site  during  the year and will make an improved  contribution  to
Group results in the coming financial year.
 
Reorganisation
In December 1998 the Group announced a rationalisation programme involving
the  closure  of three factories.  These closures have been  substantially
achieved together with a programme to change working practices in  one  of
our Belgian factories. The cost of this reorganisation has been charged as
an  operating  exceptional  item  and  amounted  to  £11.7  million.  This
rationalisation programme was a fundamental part of McBride's strategy  to
reduce  the  structural  cost base and improve competitiveness  which  was
referred to in last year's Report and Accounts.
 
Summary
Although  the  results for 1998/99 were disappointing, McBride's  business
remains  sound.  The rationalisation of the cost base  together  with  the
management  reorganisation announced at the time of our  interim  accounts
will  both provide an improved business structure for the future.  All  of
our employees have responded well during a year of considerable change and
in  a  very  challenging business environment. McBride  will  continue  to
pursue  its strategy of growing its share of the private label  and  minor
brand markets in the current year.
 
Allen Sheppard, Chairman
Mike Handley, Chief Executive and Deputy Chairman
22 September 1999
 
Consolidated profit and loss account
 
                                   Before                                
                                operating  Operating                     
                                exception  exception       Year      Year
                                 al items   al items   ended 30  ended 30
                                       £m         £m       June      June
                                                           1999      1998
                                                             £m        £m
Turnover                                                                 
Continuing operations               483.4          -      483.4     468.4
Acquisitions                         13.4          -       13.4         -
Total turnover                      496.8          -      496.8     468.4
                                                                         
Operating profit                                                         
Continuing operations                33.7     (11.7)       22.0      38.4
Acquisitions (before goodwill                                            
 amortisation)                        1.2          -        1.2         -
                                     34.9     (11.7)       23.2      38.4
Goodwill amortisation (on                                                
 acquisition)                       (0.4)          -      (0.4)         -
Total operating profit               34.5     (11.7)       22.8      38.4
Interest receivable and                                                  
similar                               0.1          -        0.1       0.4
 income
Interest payable and similar        (5.0)          -      (5.0)     (4.7)
charges
Profit on ordinary activities                                            
before                               29.6     (11.7)       17.9      34.1
 taxation
Tax on profit on ordinary           (7.5)        1.2      (6.3)     (8.5)
activities
Profit on ordinary activities                                            
after                                22.1     (10.5)       11.6      25.6
 taxation
Equity minority interest            (0.1)          -      (0.1)         -
Profit for the financial year        22.0     (10.5)       11.5      25.6
Dividends                          (13.4)          -     (13.4)    (13.1)
Retained (loss)/profit for the                                           
 financial year                       8.6     (10.5)      (1.9)      12.5
                                                                         
Earnings per ordinary share                                              
(pence)
*    Basic                                                  6.5      14.6
*    Diluted                                                6.5      14.5
*    Adjusted basic before                                               
goodwill  amortisation and                                               
operating      exceptional           12.7                            14.6
items
 
 
Balance sheets
 
                                     Group     Group   Company   Company
                                     As at     As at     As at     As at
                                   30 June   30 June   30 June   30 June
                                      1999      1998      1999      1998
                                        £m        £m        £m        £m
Fixed assets                                                            
Intangible assets                      9.6         -         -         -
Tangible assets                      147.7     142.2       0.2       0.2
Investments                              -         -     164.0     158.2
Total fixed assets                   157.3     142.2     164.2     158.4
Current assets                                                          
Stocks                                52.6      55.2         -         -
Debtors                               93.1      91.4      63.7      51.6
Cash at bank and in hand               4.7       8.2         -         -
                                     150.4     154.8      63.7      51.6
Creditors: amounts falling due                                          
within                             (150.2)   (146.0)    (34.8)    (29.2)
 one year
Net current assets                     0.2       8.8      28.9      22.4
Total assets less current            157.5     151.0     193.1     180.8
liabilities
Creditors: amounts falling due                                          
after                               (90.2)    (73.3)    (18.0)     (5.0)
 more than one year
Provisions for liabilities and                                          
 charges                            (16.3)    (26.6)    (15.0)    (16.8)
Net assets                            51.0      51.1     160.1     159.0
                                                                        
Capital and reserves                                                    
Called up share capital               17.8      17.5      17.8      17.5
Share premium account                139.3     139.3     139.3     139.3
Profit and loss account            (106.2)   (105.8)       3.0       2.2
Equity shareholders' funds            50.9      51.0     160.1     159.0
Equity minority interest               0.1       0.1         -         -
Net assets                            51.0      51.1     160.1     159.0
 
 
These financial statements were approved the Board of Directors on 22
September 1999 and were signed on its behalf by:
 
M Handley
T J Monks
Directors
 
Consolidated cash flow statement
 
                                      Year      Year      Year      Year
                                  ended 30  ended 30  ended 30     ended
                                      June      June      June   30 June
                                      1999      1999      1998      1998
                                        £m        £m        £m        £m
Cash flow from operating                        48.2                61.5
activities
Returns on investments and                                              
servicing of finance                           (5.1)               (4.7)
Taxation                                       (6.8)               (9.8)
Operating cash flow after                                               
taxation and finance costs                      36.3                47.0
Capital expenditure                                                     
Cash expenditure on fixed           (20.6)              (21.8)          
assets
Disposal of fixed assets               1.4                 0.3          
                                              (19.2)              (21.5)
Acquisitions                                                            
Purchase of subsidiary and                                              
 undertakings                        (8.1)               (6.0)
(Overdraft)/cash acquired with                                          
 subsidiaries                        (0.6)                 0.4
Other payments                       (2.0)                   -          
Deferred consideration payments     (11.8)               (0.9)          
                                              (22.5)               (6.5)
Equity dividends paid                         (13.2)              (12.5)
Cash flow before financing                    (18.6)                 6.5
Financing                                       14.8               (7.9)
Decrease in cash in the year                   (3.8)               (1.4)
 
Reconciliation of net cash flow to movement in net debt
 
                                                Year                Year
                                            ended 30               ended
                                                June             30 June
                                                1999                1998
                                                  £m                  £m
Decrease in cash in the year                   (3.8)               (1.4)
Cash outflow from movement in debt and                                  
lease                                         (16.5)                 7.4
 financing
Movement on finance leases                       1.8                 0.5
Change in net debt resulting from cash        (18.5)                 6.5
flows
Loans and finance leases acquired with         (1.5)               (7.8)
subsidiary
Translation differences                          0.1                 1.9
Movement in net debt in the year              (19.9)                 0.6
Net debt at the beginning of the year         (66.4)              (67.0)
Net debt at the end of the year               (86.3)              (66.4)
 
 
 
 
 
Consolidated statement of total recognised gains and losses
 
                                                   Year       Year
                                                  ended      ended
                                                30 June    30 June
                                                   1999       1998
                                                     £m         £m
Profit for the financial year                      11.5       25.6
Unrealised foreign currency differences             0.5      (1.2)
Total recognised gains and losses relating to                     
the financial year                                 12.0       24.4

 
 
Reconciliation of movements in shareholders' funds
 
                                                   Year       Year
                                                  ended      ended
                                                30 June    30 June
                                                   1999       1998
                                                     £m         £m
Profit for the financial year                      11.5       25.6
Equity dividends                                 (13.4)     (13.1)
Retained (loss)/profit for the financial year     (1.9)       12.5
New share capital subscribed (including                           
merger                                              2.8          -
 reserve)
Unrealised foreign currency differences             0.5      (1.2)
Goodwill written off                              (1.5)     (17.1)
Opening shareholders' funds                        51.0       56.8
Closing shareholders' funds                        50.9       51.0
 
 
Notes to the financial statements
Segmental Information
 
                                                   Year       Year
                                                  ended      ended
                                                30 June    30 June
                                                1999 £m       1998
                                                                £m
Turnover by destination is analysed by                            
geographical
area as follows:
United Kingdom                                    258.1      266.6
Continental Europe                                232.9      197.0
Rest of World                                       5.8        4.8
                                                  496.8      468.4
Turnover by geographical origin is analysed                       
as
follows:
United Kingdom                                    265.1      272.9
Continental Europe                                231.7      195.5
                                                  496.8      468.4
Turnover by class of business is analysed as                      
follows:
Household products                                406.1      371.2
Personal care products                             90.7       97.2
                                                  496.8      468.4
Operating profit by geographical origin is                        
analysed
as follows:
United Kingdom                                     18.6       27.5
Continental Europe                                  4.2       10.9
Operating profit                                   22.8       38.4
Net interest payable                              (4.9)      (4.3)
Profit on ordinary activities before tax           17.9       34.1
 
Operating  profit is after charging operating exceptional  items  of  £3.0
million  in  respect of the United Kingdom business and  £8.7  million  in
respect  of  the  Continental Europe business.   In  addition  the  United
Kingdom  business includes goodwill amortisation of £0.3 million  and  the
Continental  Europe  business  includes  goodwill  amortisation  of   £0.1
million.
 
Household products                                 27.2       35.4
Personal care products                            (4.4)        3.0
Operating profit                                   22.8       38.4
Net interest payable                              (4.9)      (4.3)
Profit on ordinary activities before tax           17.9       34.1
 
Operating  profit is after charging operating exceptional  items  of  £4.8
million  in respect of the household business and £6.9 million in  respect
of  the  personal  care  business.   In addition  the  household  business
includes goodwill amortisation of £0.4 million.
 
Operating profit by class of business is                          
analysed as follows:
                                                  As at      As at
                                                30 June    30 June
                                                   1998       1997
                                                     £m         £m
 Net assets by geographical origin are                            
analysed as
 follows:
 United Kingdom                                    81.6       75.1
 Continental Europe                                88.5       76.1
                                                  170.1      151.2
 Non operating liabilities                      (119.1)    (100.1)
 Net assets                                        51.0       51.1
 
Non   operating   liabilities  include  cash  less  short  and   long-term
borrowings, provisions for liabilities and charges and dividends.
 
It  is  not possible to provide an analysis of the net assets by class  of
business  as  a  number  of the Group's operating sites  manufacture  both
Household and Personal care products.
 
 
Notes:
 
1.    The  financial information set out above for the year ended 30  June
  1999 does not constitute statutory accounts as defined in section 240 of
  the Companies Act 1985, but is derived from those accounts.  The statutory
  accounts  for  the  year ended 30 June 1998 have been delivered  to  the
  Registrar of Companies and those for 1999 will be delivered following the
  Company's Annual General Meeting.  The auditors have reported  on  those
  accounts;  their reports were unqualified and did not contain statements
  under Section 237 (2) of (3) of the Companies Act 1985.
 
2.    The  Annual  Report  for 1999 will be issued to  shareholders  on  6
  October  1999  and will be available from the Company Secretary  at  the
  Company's  registered  office, McBride House, Penn  Road,  Beaconsfield,
  Buckinghamshire HP9 2FY; the Annual General Meeting will be held  on  28
  October 1999.
 
3.    The  calculation  of earnings per share is based on  the  profit  on
  ordinary activities after taxation divided by the average number of shares
  in issue during the year of 176,869,413 (1998: 175,088,010).
 
4.    If  approved at the Annual General Meeting on 28 October  1999,  the
  final  dividend  of 5.0p per share will be paid on 22 November  1999  to
  shareholders on the register at 22 October 1999.