Ann: Half Year Results Presentation, page-2

Great to see a small dividend of two cents a share. GNC (which I also hold) will benefit as well as other holders.

The revenue decline of 11 per cent is less than some may have expected, given numerous headwinds. On a constant currency basis, UMG says the drop was four per cent.

Seasonal interest bearing liabilities are down $40m compared with March 2020, so that's a positive, although the net debt to EBITDA rate of 2.4x is close to Directors' stipulated upper range of 2.5x. Nonetheless, net debt is down from $584.1 million at the end of March 2020 to $344.1 million as at the end of March 2021, a 41.1 per cent drop. I didn't receive UMG shares at the demerger but there was commentary at the time that UMG had too much debt.

This is pleasing, but should interest rates rise as many suspect, over time as funding is renegotiated, this will be a significant extra expense for UMG. I'd like to see debt drop further, which may be possible as trading gradually returns to normal in countries like the UK and USA, although Canada (and potentially Australia) remain a worry.

Given it's a volume business, and is trading at 95 per cent of previous volumes, the significant decline in processing margins is probably excusable. Good to see, conversely, that the EBITDA margin in the smaller warehouse and distribution (covers areas such as sales to craft brewers, who typically use more malt per stubbie or keg) rose more than 25 per cent.

That 'restructuring is in progress" (from page 7) with associated costs suggests there's a redundancy program. That 'r' word is omitted.

There's a continued failure to complete Inverness, Scotland's new malting plant works on time (and IIRC on budget).

Where UMG talks of 'pent up demand for beer', TillLindemann of 'HC' (and me) have already attached media that suggest this is occurring in a big way in the UK (or more specifically, England). That's a real positive and should assist earnings to rise somewhat from these depressed levels. Let's raise a toast to that!

Good also that Arbroath, Scotland's distillery is 'producing at full capacity' (that is) 'fully sold'.

Note the comment on page 19 about 'malt inclusion in non-alcoholic beers'. No show without Punch.

It's prudent UMG remains 'cautious' and expects 'some level of restrictions' to remain in 2H 21. Given Australia's risk-averse politicians - Gladys Berejiklian in NSW is about the only significant parliamentarian who is more businesslike - I couldn't see a complete end to curbs on our social activities, particularly if a state reports even 'one case of community transmission'. The Victorian, WA, Queensland, Tasmanian and South Australian Premiers love imposing restrictions, particularly the first three.

I am no expert but the 10 per cent inventory drop (March 2020 to same time in 2021) suggests that the company is not tying up more funds than needed in stock.

Overall, the outlook is uncertain but we ought take heart from how (while maybe not a magic bullet) vaccinations have gone well in the UK and the USA, and some sort of optimism seems to be returning, particularly in the UK, although IIRC recently consumer confidence in the USA has dropped a little.