Half-year Report

McBride plc

 ('McBride' or the 'Group')

Intention to reinstate annual dividends following continued revenue growth, profitability improvement and net debt reduction

25 February 2025

McBride, the leading European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning/hygiene markets, announces its unaudited interim results for the six months ended 31 December 2024 (the 'period').

Capitalising on the Group's higher performance levels

· Ongoing consumer and retailer switch to high-quality, excellent-value private label products supporting continued growth across the Group

· Total volume growth of 5.9%, with private label volumes increasing by 2.4% and contract manufacturing volumes rising 69.0% following launch of two key contracts

· Profitable performance delivered by all five divisions

· Effective cash management sees further net debt reduction of £13.9m since 30 June 2024

· Transformation programme progressing well and on track to deliver target of £50m net benefits over five years

· Significant progress with the Science Based Target initiative (SBTi) commitment as part of a wider sustainability agenda

· Intention to reinstate annual dividends post final 2025 results

Financial highlights

· Revenue of £471.4m (2023: £468.0m), up 0.7% (2.9% at constant currency(1))

· Adjusted operating profit(2) of £32.0m (2023: £30.5m), up 7.9% at constant currency(1)

· Operating profit of £31.0m (2023: £29.5m)

· Adjusted profit before taxation(2) of £26.7m (2023: £22.4m)

· Profit before taxation of £25.7m (2023: £17.4m)

· Adjusted basic earnings per share of 11.9p (2023: 9.5p), up 25.3%

· Net debt(2) at £117.6m (2023: £145.7m), representing 1.3x rolling twelve months adjusted EBITDA(2)

Positive outlook supported by market conditions and operational delivery

· Full-year earnings on track to be in line with internal expectations

· Private label markets expected to maintain higher share penetration as cost-of-living challenges continue

· Materials costs mostly stable going into the second half; other inflation remains a headwind

· Transformation initiatives maturing over the next twelve months, delivering further benefits

· Normalised funding position, providing the Group with optionality for value creation

(1)Comparatives translated at six months to 31 December 2024 exchange rates.

(2)Refer to note 2 for definition.

(3)See note 6.

Chris Smith, Chief Executive Officer, commented:

"McBride today reports excellent half-year results, which are in line with our new elevated financial performance expectations and on track with the medium-term targets outlined at our Capital Markets Day in March 2024. Our divisional teams continue to execute their respective strategies, with all five divisions healthily profitable. These results demonstrate a business delivering a consistently improved performance.

With the Group's prospects in a much healthier position and with a more normalised debt position, the Board recently announced its intention to reinstate an annual dividend, details of which will be communicated at the time of the final results in September 2025.

Our focus remains on driving performance excellence and maintaining the momentum we have built, whilst continuing the Transformation programme and achieving our sustainability targets. I would like to extend my gratitude to our employees for their hard work and to our investors for their continued support. Together, we are building a strong, resilient and reset McBride, poised for future success."

Analyst and investor presentation

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

Forward-looking statements

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

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

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

Overall business performance

McBride built on the momentum of the last financial year and delivered a solid performance both financially and operationally, demonstrating further evidence of the Group's higher performance levels. Despite the backdrop of inflation, strong operational delivery, careful management of costs and tight management of margins have contributed to a period of steady, sustainable growth.

At a Group level, revenue increased by 0.7% to £471.4 million, up 2.9% on a constant currency basis, with profit before taxation significantly up 47.7% at £25.7 million (2023: £17.4m).

Group volumes increased by 5.9%, with continued progress in our core strategic focus areas of Germany and laundry. During the period, the market continued to show a consumer trend towards high-quality private label products to mitigate cost-of-living pressures. Private label share in the overall household cleaning products market in Europe is estimated to have risen to 35.6% by volume, up 0.9ppts since 2023. In the past twelve months, McBride private label volumes in laundry and dishwash outperformed the market and contract manufacturing volumes increased by 69.0%, driven mostly by the launches of two new multi-year contracts with large FMCG clients. This resulted in contract manufacturing making up 13.4% of total revenue, up 1.9% on the same period last year. Our medium-term target is to grow this proportion to 25%.

Customer service levels continued to improve, supported by our Transformation programme and an ongoing focus across the business. This critical performance improvement has ensured we are better serving customers, delivering increased volumes and supporting further opportunities for strategic partnerships with key customers.

The Group continued its progress on debt management, with net debt of £117.6 million at the end of the period, a year-on-year reduction of £28.1 million.

In November, McBride announced new long-term financing facilities, lifting the block on shareholder distributions, allowing the normalisation of its capital allocation options and providing it with a strong financial platform for the coming years. With lower debt levels and improved rates and margins, adjusted profit before tax improved by 19.2% and adjusted basic earnings per share rose by 25.3% to 11.9 pence.

McBride's Transformation agenda continues to progress well and remains on track to deliver £50 million net benefits over five years. The Commercial Excellence programme is now live and the Service Excellence and SAP S/4HANA programmes continue at pace, with the latter having progressed into the build phase. The programmes in delivery provided a net benefit of £0.7 million during the period.

Outlook

The Group's full-year adjusted operating profit estimate remains in line with internal expectations. Consumer cost-of-living challenges persist, supporting the ongoing strength of underlying private label demand across the Group's main markets. Materials costs are generally flat, with the rises in certain materials costs seen in the second quarter expected to moderate in the second half, but other inflation remains evident across our activities. Momentum in the business continues well, with a strong focus on growth, service excellence, cost management and margin delivery to support our medium-term financial performance and cash generation potential. The Transformation programme will intensify over the next twelve months with projects maturing and becoming embedded across the Group, leading to the delivery of the expected net benefits. Our normalised financial position now provides optionality on capital deployment, including the return of an annual divided.

Divisional performance review

Liquids performance review

Liquids revenue grew to £268.9 million (2023: £266.4m), a 3.0% increase on a constant currency basis, generating an adjusted operating profit of £19.4 million (2023: £22.8m) and resulting in an adjusted operating profit margin of 7.2% (2023: 8.6%).

This performance was driven by sales volume growth of 5.3%, with significant growth in contract manufacturing, offset by lower gross margins resulting from moderate input cost inflation and adverse product mix.

Contract manufacturing revenue increased by 58.5%, driven by the launch of a new long-term customer contract at the end of the previous financial year. Contract manufacturing share of total volumes doubled as a result.

Private label revenue increased by 0.9%, driven by volume growth of 1.5% as markets remained largely positive and the division's performance continued to outgrow the market. Private label volumes in the laundry category increased by 5.8%.

Volumes grew in key markets as the business continued to support its main customers in growing and developing their private label offering.

Several structural, transformational and R&D investments were made in the reporting period to set the business up for future innovation and growth. Capital investments in automation and capacity expansion are due to come online in the second half.

Unit Dosing performance review

Unit Dosing revenue grew to £118.1 million (2023: £116.5m), a 3.7% increase on a constant currency basis, generating an adjusted operating profit of £10.7 million (2023: £7.9m) and resulting in an adjusted operating profit margin of 9.1% (2023: 6.8%).

The result was realised through a combination of volume leverage, improving production efficiencies and effective control of overhead costs.

Sales volume in doses increased by 6.6% in the period, with growth in both private label and contract manufacturing. Both dishwash and laundry categories showed a positive doses volume development against the prior year. Production in doses increased by 10.9%, allowing the division to improve inventory composition and levels, supporting improved customer service performance.

The division continues to make good progress in finding the optimal balance between portfolio renewal and the introduction of new products, with further product launches planned in 2025.

Powders performance review

Powders revenue decreased to £44.0 million (2023: £47.2m), down 4.6% on a constant currency basis. However, adjusted operating profit increased by £0.9 million to £4.1 million (2023: £3.2m) and adjusted operating profit margin increased to 9.3% (2023: 6.8%).

Strong volume growth in Germany and consolidation of contract wins from the previous financial year were partially offset by a slowdown in demand from the UK. Against a competitive backdrop, private label laundry volumes grew in line with the market, supported by a number of long-term contract wins.

Delivery of growth in adjusted operating profit for Powders was achieved through strict cost controls and operational improvements. The division remains focused on implementing further improvements to operational delivery and is combining this with a focus on innovation, aligned to the specialist strategy to ensure we meet customer needs well into the future.

Aerosols performance review

Aerosols revenue grew to £28.7 million (2023: £25.4m), a 16.2% increase on a constant currency basis, generating adjusted operating profit of £1.6 million (2023: £0.5m) and resulting in an adjusted operating profit margin of 5.6% (2023: 2.0%).

The strong performance was supported by volume growth in the personal care category, led by product cost initiatives and product innovation, with the division gaining share across its key markets.

Capital investments to increase production capacity and flexibility, especially in the personal care business, are underway, with the first benefits being delivered in 2025. The division remains committed to building on its existing strong relationships with customers, continuing to drive operational excellence and developing products with high levels of sustainability.

Asia Pacific performance review

Asia Pacific revenue decreased to £11.7 million (2023: £12.5m), down 7.1% on a constant currency basis. The division delivered adjusted operating profit of £0.7 million (2023: £0.7m) and an adjusted operating profit margin of 6.0% (2023: 5.6%).

Despite volumes growing 8.5% due to active business development in the region and an increase in contract manufacturing activity, revenue and margins were impacted by adverse currency fluctuations. The division continues to focus on driving efficiencies to best serve the needs of its customers.

Group operating results

Operating profit of £31.0 million was £1.5 million higher than the prior year (2023: £29.5m).

Adjusted operating profit of £32.0 million was £1.5 million higher than the prior year (2023: £30.5m), with the adjusted operating profit margin increasing to 6.8% (2023: 6.5%).

Half-year adjusted EBITDA of £41.7 million (2023: £40.9m) reflected the Group's continued strong trading and operational performance and focus on margin management.

Exceptional items

No exceptional costs were incurred and recognised during the period (2023: £4.0m). The prior year charge related primarily to the termination of the upside sharing fee agreed on 25 October 2023.

Finance costs

At £5.3 million, adjusted finance costs(1) were £2.8 million lower than the prior year (2023: £8.1m), driven by decreases in overall market interest rates and a reduction in the cost of borrowing resulting from the lower levels of debt within the Group.

(1)Total finance costs less finance costs relating to exceptional items.

Taxation

Reported profit before taxation was £25.7 million (2023: £17.4m). Adjusted profit before taxation was £26.7 million (2023: £22.4m). The tax charge on adjusted profit before taxation for the period was £6.5 million (2023: £6.0m) and the effective tax rate was 25% (2023: 27%). The reduction in the effective tax rate was due to the overall increased profitability of the Group, allowing the utilisation of brought forward losses, mainly in the UK, as well as group relief of losses in the period.

The total tax charge was £6.3 million (2023: £4.7m) and the statutory effective tax rate for the period was 25% (2023: 27%).

Earnings per share

On an adjusted basis, basic earnings per share was 11.9 pence (2023: 9.5p). Total adjusted diluted earnings per share(1) was 11.4 pence (2023: 9.1p), with basic earnings per share at 11.4 pence (2023: 7.3p).

(1)See note 6.

Payments to shareholders

As announced previously, the Board's intention is to reinstate dividends at the end of the financial year. Further details will be communicated at the time of the final results in September 2025.

Cash flow and balance sheet

Free cash flow in the period was £38.3 million (2023: £48.6m), mostly attributable to the strong performance in adjusted EBITDA. Continued focus on working capital cash management resulted in a broadly neutral cash flow from changes in working capital.

Refinancing costs paid of £1.4 million (2023: £5.6m) relate to the renegotiation of the Group's Revolving Credit Facility (RCF) during the period. The increase in tax paid to £7.1 million (2023: £2.6m) reflects the return to taxable profit across the tax jurisdictions in which the Group operates.

During the period, net capital expenditure was £12.0 million (2023: £8.4m) in cash terms. The Group continues to prioritise capital expenditure to support divisional growth objectives and the SAP S/4HANA programme, with the increase reflecting a return to more normal levels of capital expenditure after a period of careful cash flow management to mitigate increases in net debt.

The Group's net assets increased to £81.0 million (30 June 2024: £63.4m). Gearing(4) decreased to 60.6% (30 June 2024: 66.0%) as net debt levels continued to fall. Adjusted return on capital employed(1) of 34.8% was higher than the prior year (2023: 22.8%), driven by the improvement in profitability over the past twelve months.

(1) Refer to note 2 for definition.

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

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

(4) Gearing represents net debt divided by the average period-end capital, being total equity plus net debt.

Bank facilities and net debt

Net debt at 31 December 2024 was £117.6 million (2023: £145.7m).

During the period, the Group renegotiated its €175 million multi-currency, sustainability-linked RCF, increasing the facility size to €200 million and securing a four-year term to November 2028, with the option to extend by up to two years. This facility ensures the Group continues to have significant levels of liquidity headroom.

Additionally, the Group now also has access to a €75 million accordion facility.

At 31 December 2024, liquidity(1) was £117.6 million (30 June 2024: £98.3m). This measure will continue to be monitored by the Group but is no longer a covenant requirement of the RCF.

At 31 December 2024, the net debt cover ratio(1), as defined under the RCF funding arrangements, was 0.6x (30 June 2024: 0.8x) and the interest cover(1) was 8.8x (30 June 2024: 6.8x). The amount undrawn on the facility was £107.0 million (30 June 2024: £82.9m).

At 31 December 2024, the Group had a number of facilities whereby it could borrow against certain of its trade receivables. In the UK, the Group had a £20 million facility; in Germany and Denmark the Group had a €45 million facility; and in France, Belgium and Spain the Group had an unlimited facility. All such facilities are committed until May 2026. The Group can borrow from the provider of the relevant facility up to the lower of the facility limit and the value of the qualifying receivables.

(1)Refer to note 2 for definition.

Pensions

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

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

At 31 December 2024, the Group recognised a deficit in the scheme of £25.9 million (30 June 2024: £27.5m). The decrease in deficit is due to deficit reduction contributions, an increase in discount rate placing a lower value on the liabilities and lower-than-expected inflation. These were offset to some extent by interest on the deficit and a decrease in asset values due to liability-matching assets that the Fund invests in.

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

As detailed in note 22 (page 165) of McBride plc's Annual Report and Accounts 2024, the NTL vs Virgin Media case could have implications for the Company. Following the Court of Appeal upholding the 2023 High Court ruling on 25 July 2024, the Trustees initiated the process of investigating any potential impact for the Fund. As the detailed investigation is in progress, the Company considers that the amount of any potential impact on the defined benefit obligation cannot be confirmed and/or measured with sufficient reliability as at 31 December 2024. The Company is therefore disclosing this issue as a potential contingent liability at 31 December 2024 and will review again in conjunction with the 2025 year end, based on the findings of the detailed investigation.

The Group had other post-employment benefit obligations outside the UK that amounted to £1.9 million (30 June 2024: £1.9m).

Sustainability

A commitment to sustainability that is relevant and aligned with the needs of stakeholders and wider society is core to the Group's strategy and corporate proposition.

McBride's dedicated sustainability team continues to drive environmental impact reduction, with highlights in the first half including improvements in energy efficiency, increasing the use of PCR in PET from 66.0% to 68.4%, engaging with suppliers to understand their carbon maturity and emission reduction plans and facilitating internal training in carbon literacy. Research and development teams continue to work to ensure that each new product launched is less carbon intense than the one it replaces.

As a listed company, McBride operates strong levels of governance and continues to engage with its workforce and local communities. The Employee Voice engagement surveys, introduced in December 2023, provide ongoing insights into employee experience and a greater understanding of how improvements can be made. McBride remains committed to recruiting, developing and rewarding colleagues based on performance and role, regardless of identity, background or circumstance.

Principal risks and uncertainties

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

· Changing market, customer and consumer dynamics;

· Disruption to systems and processes;

· Financing risks;

· Supply chain resilience;

· Safe and high-quality products;

· Health and safety;

· Climate change and environmental concerns;

· Challenges in attracting and retaining talent;

· Increased regulation;

· Economic, political and macro environment instability; and

· Business transformation challenges.

Responsibility statement

The Directors confirm that to the best of their knowledge:

• The condensed set of financial statements has been prepared in accordance with UK-adopted IAS 34 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4 of the Disclosure and Transparency Rules.

• The interim management report includes a fair review of the information required by:

(a) DTR 4.2.7 of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8 of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any material changes in the related party transactions described in the last annual report that could do so.

Chris Smith Mark Strickland

Chief Executive Officer Chief Financial Officer

25 February 2025

Condensed Interim Consolidated Income Statement

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed interim consolidated balance sheet

Condensed Interim Consolidated Cash Flow Statement

Condensed Interim Consolidated Statement of Changes in Equity

Notes to the Consolidated Financial Information

1. Corporate information

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

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

2. Accounting policies

Basis of preparation

The interim financial information for the six months period ended 31 December 2024 has been prepared on the basis of the accounting policies set out in the 2024 Annual Report and Accounts and in accordance with UK-adopted IAS 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority.

This interim financial information should be read in conjunction with the annual consolidated financial statements for the year ended 30 June 2024, which were prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006. The financial statements have been prepared under the historical cost convention, modified in respect of financial assets and liabilities (derivative financial instruments) at fair value through profit or loss, assets held for sale and defined benefit pension scheme assets.

The results for each half year are unaudited and do not represent the Group's statutory accounts within the meaning of section 434 of the Companies Act 2006. The interim financial information has not been reviewed or audited. The Group's statutory accounts were approved by the Directors on 16 September 2024 and have been reported on by PricewaterhouseCoopers LLP and delivered to the Registrar of Companies. The report of PricewaterhouseCoopers LLP was (i) unqualified and (ii) did not contain a statement under section 498 of the Companies Act 2006.

Going concern

In determining the appropriate basis of preparation of the financial statements for the six months to 31 December 2024, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

The Group meets its funding requirements through internal cash generation and bank credit facilities. The Group has access to a €200 million multi-currency RCF, with covenants in respect of debt cover and interest cover. The Group also has facilities whereby it can borrow against certain of its trade receivables. At 31 December 2024, liquidity, as detailed in note 16, amounted to £117.6 million.

In assessing the going concern assumptions, the Board has reviewed the Group's base case scenario and considered severe but plausible downside scenarios.

The Group's base case scenario to 30 June 2026 assumes:

· revenue growth driven predominantly by volume increases resulting from net contract wins;

· interest rates remaining unchanged from current levels; and

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

The Directors have considered severe but plausible downside scenarios to stress test the Group's financial forecasts, with the following assumptions:

· no year-on-year revenue growth for the remainder of 2025;

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

· interest rates increasing by 100 basis points; and

· Sterling appreciating significantly against the Euro to £1:€1.30.

If such a severe but plausible downside risk scenario were to occur, the Group would remain within low-risk levels of liquidity and be compliant with current banking covenants.

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 sufficient resources to continue in operational existence and without significant curtailment of operations for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis of accounting in preparing the Group financial statements.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the consolidated financial statements from which this preliminary announcement is derived requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported assets, liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 30 June 2024.

Alternative performance measures (APMs)

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

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

Adjusted measures

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

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

See note 16 'Additional information' for further information on alternative performance measures.

3. Segment information

Segmental reporting

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

· Liquids;

· Unit Dosing;

· Powders;

· Aerosols; and

· Asia Pacific.

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

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

4. Exceptional items

No exceptional costs were incurred and recognised during the period (2023: £4.0m). The prior year and prior year end charge primarily relate to the termination of the upside sharing fee agreed on 25 October 2023.

5. Taxation

Reported profit before taxation was £25.7 million (2023: £17.4m). Adjusted profit before taxation was £26.7 million (2023: £22.4m).

The tax charge on adjusted profit before taxation for the period was £6.5 million (2023: £6.0m) and the effective tax rate was 25% (2023: 27%).

The Group forecasts an adjusted effective tax rate for the full year of 27%, before discrete items, which is higher than the UK corporation tax rate of 25% due to non-UK tax rates, non-deductible items and local taxes payable.

6. Earnings per ordinary share

Basic earnings per ordinary share is calculated by dividing the profit for the period attributable to owners of the Company by the weighted average number of the Company's ordinary shares in issue during the financial period. The weighted average number of the Company's ordinary shares in issue excludes 4,207,173 shares (2023: 501,172 shares), being the weighted average number of own shares held during the year in relation to employee share schemes.

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 per share is considered equal to the basic loss per share.

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

Adjusted earnings per share measures are calculated based on profit for the period attributable to owners of the Company before adjusting items as follows: