TIDMMACF
RNS Number : 6741Q
Macfarlane Group PLC
21 February 2019
21 February 2019
ANNUAL RESULTS FOR THE YEAR TO 31 DECEMBER 2018 (UNAUDITED)
Financial Highlights Earnings per share
---------
2018 2017 Increase 2018 2017
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Turnover GBP217.3m GBP196.0m +11%
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Profit before tax and exceptional
item GBP11.2m GBP9.3m +20% 5.72p 5.22p
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Profit before tax GBP10.9m GBP9.3m +17% 5.55p 5.22p
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Proposed full year dividend 2.30p 2.10p +10%
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Macfarlane Group PLC achieved another year of significant growth
in 2018 with sales of GBP217.3m, (2017: GBP196.0m) 11% ahead of
2017 and profit before tax and exceptional items of GBP11.2m (2017:
GBP9.3m), 20% ahead of 2017. The trading performance continued the
positive trends of recent years and was in line with market
expectations.
Exceptional item
Following the High Court judgement involving Lloyds Banking
Group pension schemes on 26 October 2018, we have made a charge
against the 2018 results as an exceptional item. This charge of
GBP330k represents past service cost in respect of the equalisation
of Guaranteed Minimum Pensions ("GMP") benefits between 1990 and
1997. When the commentary on the following pages refers to items
before exceptional items, it excludes these charges. We believe
this information, provides a more meaningful basis for measuring
our financial performance in 2018.
Trading
Packaging Distribution increased sales by 11% to GBP189.8m
(2017: GBP171.8m) with 4% achieved from organic growth and 7% from
acquisitions, both the new acquisitions in 2018 and the full year
benefit from those completed in 2017, all of which continue to
perform well. Gross margin in Packaging Distribution rose to 29.5%,
(2017: 29.4%) reflecting the effective management of input price
increases in the second quarter as well as a full year contribution
from the Greenwoods' business acquired in 2017. The acquisitions of
Tyler Packaging (Leicester) Limited ("Tyler") and Harrisons
Packaging Limited ("Harrisons") were both concluded in the second
half of 2018 and have contributed as expected since
acquisition.
The growth in sales and gross margin, combined with good cost
control, resulted in Packaging Distribution achieving a 19%
increase in operating profit before exceptional items to GBP11.2m
(2017: GBP9.4m).
Sales in our Manufacturing Operations at GBP27.5m (2017:
GBP24.2m) grew by 14% on the previous year. Gross margin reduced
from 40.7% in 2017 to 38.4% in 2018, mainly due to first half
operational pressures in Packaging Design and Manufacture and an
adverse sales mix in our Labels business. Despite this, the overall
Manufacturing Division operating profit before exceptional items in
2018 was GBP0.9m, GBP0.2m above the 2017 result.
After charging interest of GBP0.8m (2017: GBP0.8m), Group profit
before tax and exceptional items totalled GBP11.2m, an increase of
20% on 2017. Basic and diluted earnings per share for 2018 before
exceptional items were 5.72p (2017: 5.22p).
Dividend
The Board is proposing a final dividend of 1.65 pence per share,
amounting to a full year dividend of 2.30 pence per share, a 10%
increase on the prior year's dividend of 2.10 pence per share.
Subject to the approval of shareholders at the Annual General
Meeting on Tuesday 14 May 2019, this dividend will be paid on
Thursday 6 June 2019 to those shareholders on the register at
Friday 17 May 2019.
Net Bank Debt
The Group's net bank borrowing at 31 December 2018 decreased by
GBP1.1m to GBP13.2m from GBP14.3m at the prior year-end. The
Group's bank facility of GBP30.0 million with Lloyds Banking Group
is available until June 2022 and accommodates normal working
capital requirements and supports acquisition funding.
Pension Scheme
The Group's pension deficit at 31 December 2018 decreased by
GBP2.0m to GBP9.8m, (2017: GBP11.8m) despite the exceptional charge
for equalising GMP benefits taken in 2018. Although the discount
rate increased, which reduced the value of the pension liabilities,
this was largely offset by reductions in the value of the scheme's
holding in liability-driven investments, reflecting an appropriate
prudent investment strategy for a mature pension scheme.
Outlook
The Board remains confident that its strategy to position the
business to serve key growth markets continues to be effective.
Commenting on the 2018 results, Stuart Paterson, Chairman,
said:
"The increase in profits in 2018 represents the ninth
consecutive year of profit growth for Macfarlane Group. 2019 has
started well and our profitability in the year to date is ahead of
the same period in 2018.
Our strategy continues to focus on the delivery of sustainable
profit growth by concentrating on added value products and services
in our target market sectors, combined with efficiency improvements
and the identification and completion of value-enhancing
acquisitions. This strategy, which is continuously refined, has
served all stakeholders well in recent years and we remain
confident that it will continue to do so. Macfarlane Group's
performance in 2018 reflects the successful implementation of this
strategy and despite the ongoing uncertainties surrounding Brexit
and the difficulties being experienced in the retail sector, we are
confident that the Group will demonstrate further progress in
2019."
Further enquiries: Macfarlane Group Tel: 0141 333 9666
Stuart Paterson Chairman
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Peter Atkinson Chief Executive
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John Love Finance Director
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Spreng Thomson Tel: 0141 548 5191
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Callum Spreng Mob: 07803 970103
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Legal Entity Identifier (LEI): 213800LVRYDERSJAAZ73
Notes to Editors:
-- Macfarlane Group PLC is listed on the London Stock Exchange
(LSE: MACF) in the Industrials Sector
-- The company is headquartered in Glasgow, Scotland and has
more than 60 years' experience in the UK packaging industry
-- Macfarlane Group's businesses are:
o Macfarlane Packaging is the leading UK distributor of a
comprehensive range of protective packaging products
o Labels designs and prints high quality self-adhesive and
resealable labels, principally for FMCG companies
o Packaging Design and Manufacture designs and produces
protective packaging for high value, fragile products
-- Macfarlane Group employs over 900 people at 30 sites,
principally in the UK, but also in Ireland and Sweden.
-- The company has 20,000+ customers in the UK, Europe and the
USA providing 600,000+ lines to a wide range of industry sectors
including: consumer goods; food manufacturing; logistics; internet
retail; mail order; electronics; defence and aerospace.
Operating Operating
Business Review Revenue profit Revenue profit
Group performance 2018 2018 2017 2017
Segment GBP000 GBP000 GBP000 GBP000
Packaging Distribution 189,835 11,172 171,771 9,436
Manufacturing Operations 27,455 853 24,220 653
Revenue from continuing
operations 217,290 195,991
Operating profit before
exceptional item 5.5% 12,025 5.1% 10,089
Exceptional item (330) -
Operating profit - continuing
operations 11,695 10,089
Macfarlane Packaging Distribution is the leading UK specialist
distributor of protective packaging materials. Macfarlane operates
a Stock and Serve supply model from 23 Regional Distribution
Centres (RDCs) and 3 satellite sites, supplying industrial and
retail customers with a comprehensive range of protective packaging
materials on a local, regional and national basis.
Competition in the packaging distribution market is from local
and regional protective packaging specialist companies as well as
national/international distribution generalists who supply a range
of products, including protective packaging materials. In a
fragmented market, Macfarlane competes effectively on a local basis
through its strong focus on and regular monitoring of customer
service, its breadth and depth of product offer and through the
recruitment and retention of high-quality staff with good local
market knowledge. On a national basis Macfarlane has focus,
expertise and a breadth of product and service knowledge, all of
which enables it to compete effectively against non-specialist
packaging distributors.
Macfarlane Packaging benefits its customers by enabling them to
ensure their products are cost-effectively protected in transit and
storage through the supply of a comprehensive product range, single
source Stock and Serve supply, Just In Time delivery, tailored
stock management programmes, electronic trading and independent
advice on both packaging materials and packing processes.
Base Acquisition
Packaging Distribution Business impact 2018 2017 2018
GBP000 GBP000 GBP000 GBP000 Growth
Sales 176,395 13,440 189,835 171,771 11%
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Cost of sales (133,843) (121,323)
Gross margin 55,992 50,448 11%
Net operating expenses (44,820) (41,012) 9%
Operating profit before
exceptional item 9,730 1,442 11,172 9,436 18%
----------- -------------
Exceptional item (270) -
Operating profit 10,902 9,436
Macfarlane Packaging Distribution grew sales by 11% in 2018
comprising 4% organic growth as well as the incremental
contribution from the acquisitions of Tyler and Harrisons in 2018
and the full year contribution from the 2017 acquisitions.
There were well publicised challenges in UK Retail in 2018 and
as a result, our sales to this sector declined slightly due to
demand weakness and customer churn. However this was more than
offset by growth in the Industrial Sector with a number of contract
extensions and new business wins.
Gross margin in Packaging Distribution was 29.5%, (2017: 29.4%)
with effective management of input price increases as well as a
strong full year contribution from the 2017 acquisition of
Greenwoods.
Cost control remained strong with an improving operating
expenses to sales ratio of 23.6% (2017: 23.9%).
Operating profit before exceptional items for Packaging
Distribution at GBP11.2m grew 18% versus 2017, representing a
return on sales of 5.9% (2017: 5.5%).
Future Plans
2019 plans are focused on continuing to grow sales and improving
profitability by the following actions:
Sales Growth
l Maintaining our focus on the growth potential for protective
packaging in key market segments -
the e-commerce sector and the related Third-party logistics
("3PL") operators; and,
National Accounts in the industrial sector and the related 3PL
operators;
l Accelerating the growth in new business through effective use
of our Innovation Lab;
l Demonstrating our ability to add value to customers through
effective implementation of our "Significant Six" sales approach to
optimise their Total Cost of Packaging;
l Developing our web-based offerings through
www.macfarlanepackaging.com and Customer Connect to enable
customers to further improve access to our full range of products
and services;
l Growing sales of new products from recent acquisitions
throughout the Group; and
l Providing customers requiring our capabilities in Europe with
access to our offering.
Efficiency Improvements
l Improving our sourcing through strengthening our relationships
with key strategic suppliers;
l Implementing further operational savings in logistics by
expanding the use of the Paragon vehicle management system and
extending our warehouse best practice programme;
l Reducing operating costs by taking opportunities to
consolidate the existing property footprint;
l Integrating recent acquisitions following the completion of
the earn-out periods; and
l Maintaining our focus on working capital management to
generate additional funds to support growth opportunities.
Acquisition Growth
l Supplementing organic growth through completion of further
suitable quality acquisitions.
Manufacturing Operations comprise our Packaging Design and
Manufacture and our Labels business.
2018 2017
GBP000 GBP000
Sales 27,455 24,220
Cost of sales (16,906) (14,364)
Gross margin 10,549 9,856
Operating expenses (recurring) (9,696) (9,203)
Operating profit before exceptional
item 853 653
Operating expenses (exceptional) (60) -
Operating profit 793 653
The principal activity of the Packaging Design and Manufacture
business is the design, manufacture and assembly of custom-designed
packaging solutions for customers requiring cost-effective methods
of protecting high value products in storage and transit. The
primary raw materials are corrugate, timber and foam. The business
operates from two manufacturing sites in Grantham and Westbury,
supplying both directly to customers and also through the RDC
network of the Packaging Distribution business.
Key market sectors are defence, aerospace, medical equipment,
electronics and automotive. The markets in which we operate are
highly fragmented with a range of locally based competitors. We
differentiate our market offering through technical expertise,
design capability, industry accreditations and national coverage
through Macfarlane Packaging Distribution.
2018 sales for Packaging Design and Manufacture were 12% above
2017 with particularly strong growth from the aerospace sector.
Despite operational pressures in the first half of the year which
have now been resolved, profitability in 2018 was above that in
2017. Our sales team has continued to develop a strong pipeline of
new customer relationships, which should benefit the business in
2019.
Future Plans
2019 plans for Packaging Design and Manufacture include:
l Accelerating sales growth in target market sectors e.g.
Defence, Aerospace and Medical;
l Prioritising sales activity on the higher added-value bespoke
composite pack product range;
l Improving operational performance further; and
l Continuing to strengthen the relationship with our Packaging
Distribution business to create both sales and cost synergies.
Our Labels business designs and prints self-adhesive labels for
major Fast-moving Consumer Goods ("FMCG") customers in the UK and
Europe and resealable labels for major customers in the UK, Europe
and the USA. The business operates from production sites in
Kilmarnock and Wicklow and a sales and design office in Sweden,
which focuses on the development and growth of our resealable
labels business, Reseal-it.
The Labels business has a high level of dependence on a small
number of major customers. Management works closely with these key
customers to ensure high levels of service and to introduce product
and service development initiatives to achieve competitive
differentiation.
Sales increased by 15% in the year as penetration of our
resealable range improved and a number of new business wins were
achieved. Despite margin being impacted by the increasingly
competitive conditions in the UK retail sector, profits in the
Labels business increased by 15% vs. 2017.
Future Plans
2019 plans for Labels will focus on: -
-- Increasing business in higher added value products and
services through rebalancing sales between our resealable and
self-adhesive label ranges;
-- Generating efficiency and sales benefits from investments in
additional capacity and digital printing capability;
-- Continuing improvement in operational efficiency to mitigate sales price pressure; and
-- Developing the Reseal-it product in the US and in Europe
through ongoing partnerships, new business wins and increased
penetration with key retailers.
2019 Outlook
Our sales efforts will focus on those segments of the market,
such as e-commerce, which are forecast to show continued above
average growth rates and those industrial markets where customers
recognise the added value brought to their operations by a
specialist national protective packaging distributor.
During 2019 we will continue to look to acquire further good
quality protective packaging businesses, improve our geographic
coverage, develop new products introduced by recent acquisitions,
work more closely with strategic suppliers and improve our
operational efficiency by leveraging our property and logistics
footprint.
Macfarlane businesses all have strong market positions with
differentiated product and service offerings. We have a flexible
business model and a clear strategic plan incorporating a range of
actions, which are being effectively implemented and are reflected
in our consistent, profitable growth in recent years.
Our future performance is largely dependent on the successful
execution of actions to grow sales, increase efficiencies and bring
high-quality acquisitions into the Group. With a focus on
attractive UK market sectors for our products and services,
combined with our successful track record of growth and
acquisitions, we expect 2019 to be another year of progress for
Macfarlane Group.
The principal risks and uncertainties faced by Macfarlane Group
and factors mitigating these risks are detailed below. These risks
are complemented by an overall governance framework including clear
and delegated authorities, business performance monitoring and
appropriate insurance cover for a wide range of potential risks.
There is a dependence on good quality local management, which is
supported by an investment in training and development and ongoing
performance evaluation.
Risk Description Mitigating Factors
Raw material prices
The Group's businesses are impacted The Group works closely with suppliers
by commodity-based raw material to manage the scale and timing of
prices and manufacturer energy price increases to end-users effectively.
costs, with profitability sensitive Our IT systems monitor and measure
to supplier price changes including effectiveness in recovering supplier
currency fluctuations. The principal price changes. Where possible, alternative
components are corrugated paper, supplier relationships are maintained
polythene films, timber and foam, to minimise supplier dependency.
with changes to paper and oil We work with customers to redesign
prices having a direct impact packs and reduce packing cost to
on the price we pay to our suppliers. mitigate the impact of cost increases.
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Property
Given the multi-site nature of Where a site is non-operational the
its business, the Group has a Group seeks to assign, sell or sub-lease
property portfolio comprising the building to mitigate the financial
3 owned sites and 35 leased sites impact. If this is not possible,
of which 3 are sublet. This portfolio rental voids are provided on vacant
gives rise to risks in relation properties taking into consideration
to ongoing lease costs, dilapidations the likely period of vacancy and
and fluctuations in value. incentives to re-let.
------------------------------------------------
Working capital
The Group has a significant investment Credit risk is controlled by applying
in working capital in the form rigour to the management of trade
of trade receivables and inventories. receivables by the Credit manager
There is a risk that this investment and the credit control team, and
is not fully recovered. is subject to additional scrutiny
from the Group Finance Director.
Inventory levels and order patterns
are regularly reviewed and risks
arising from holding bespoke stocks
are managed by obtaining order cover
from customers.
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Financial liquidity, debt covenants,
interest rates The Group seeks to maintain an appropriate
The Group needs continuous access level of committed bank facilities
to funding to meet its trading that provides sufficient headroom
obligations and to support organic above peak projected borrowing requirements.
growth and acquisitions. There The existing facility is in place
is a risk that the Group may be until June 2022.
unable to obtain funds or that
such funds will only be available The Group regularly monitors net
on unfavourable terms. debt and forecast cash flows to ensure
The Group's borrowing facility that it will be able to meet its
comprises a committed facility financial obligations as they fall
of up to GBP30m. This includes due. Compliance with debt covenants
requirements to comply with covenants, is monitored on a monthly basis and
with a breach potentially resulting sensitivity analysis is applied to
in borrowings being subject to forecasts to assess the impact on
more onerous conditions. covenant compliance.
------------------------------------------------
Defined benefit pension scheme
The Group's defined benefit pension The scheme was closed to new members
scheme is sensitive to a number in 2002.
of key factors; investment returns, Benefits for active members were
discount rates used to calculate amended by freezing pensionable salaries
scheme liabilities and mortality at 30 April 2009 levels.
assumptions. The IAS 19 valuation A Pension Increase Exchange option
of the Group's defined benefit is available to offer flexibility
pension scheme as at 31 December to new pensioners in the current
2018 estimated the scheme deficit level of pension benefits and the
to be GBP9.8m, a decrease of GBP2.0m rate of future increases.
during 2018. Small changes in The Group makes Deficit Reduction
these assumptions could mean that Contributions each year.
the deficit increases. The investment profile is constantly
reviewed to ensure continued matching
of investments with the liability
profile of the scheme.
------------------------------------------------
Decentralised structure
The Packaging Distribution business The Group ensures that our staff
model reflects a decentralised have the right working environment,
approach with a high dependency information and sales tools to enable
on effective local decision-making. them to meet corporate objectives.
There is a risk that the decentralised A comprehensive management information
management control is less effective system is maintained with key performance
and local decisions do not meet indicators monitored and actions
corporate objectives. taken when required.
------------------------------------------------
Acquisitions
The Group's growth strategy includes The Group carefully reviews potential
acquisitions as demonstrated in acquisition targets, ensuring that
recent years. There is a risk the focus is on high-quality businesses
that such acquisitions may not which complement the existing Group
be available on acceptable terms profile and provide opportunities
in the future. for growth. Having completed a number
It is also possible that acquisitions of acquisitions in recent years,
will not succeed due to the loss the Group has established due diligence
of key people or customers following and integration processes and procedures.
acquisition or the acquired business The Group has a comprehensive management
not performing at the level expected. information system to enable effective
This could potentially lead to monitoring of post-acquisition performance.
impairment in the carrying value Earn-out mechanisms also mitigate
of the related intangible assets. risk in the post-acquisition period.
Execution risks around the failure Goodwill and other intangible assets
to successfully integrate the are tested annually for impairment
acquired business after the conclusion as set out in the Annual Report.
of the earn-out period also exist.
------------------------------------------------
Macfarlane Group has carried out an impact analysis and
evaluated the potential short to medium-term implications of a
no-deal Brexit including reversion to World Trade Organisation
tariffs. Where practical, we have put in place contingency measures
to try to mitigate any immediate effects on the supply chain. As a
business with the majority of its trade in the UK, the principal
impact on Macfarlane Group of a no-deal Brexit would be reduced
levels of business caused by any significant downturn in the UK
economy.
There are a number of other risks that we manage which are not
considered key risks. The Group is subject to the impact of general
economic conditions, the competitive environment and risks
associated with business continuity including cyber-security. These
are mitigated in ways common to all businesses and not specific to
Macfarlane Group.
Viability statement
The Board has considered the Group's viability as part of the
ongoing programme to manage risk. Each year the Board reviews the
Group's strategic plan for the forthcoming three-year period and
challenges the Executive team on the plan's risks. The strategic
plan reflects the Group's businesses, which have a broad spread of
customers across a range of different sectors with some longer term
contracts in place. The assessment period of three years is
consistent with the Board's review of Group strategy, including
assumptions regarding future growth rates for our business and
acceptable levels of performance.
A robust financial model covering a three year period is
maintained and regularly updated. The model is subject to
sensitivity analysis which flexes a number of the main assumptions,
including future revenue growth, gross margins, operating costs,
finance costs and working capital management. The results of
flexing these assumptions, both individually and in aggregate, are
used to determine whether additional bank facilities will be
required during the three year period. The results of the exercise
indicated that no additional facilities would be required.
The Board has carried out a robust assessment of the principal
risks facing the Group and how these risks affect the Groups'
prospects and the strategic plan. The review includes consideration
of the principal risks facing the Group as described on the current
and previous page including the potential impact of Brexit, which
could prevent the Group from achieving its strategic plan and the
potential impact these risks could have on the Group's business
model, future performance, solvency and liquidity over the next
three years.
The Directors' assessment has been made with reference to the
resilience of the Group and the strength of its financial position,
the Group's current strategy, the Board's risk appetite and the
Group's principal risks including how these are managed. Based on
the assessment of these risks and the sensitivity analysis
undertaken, the Board of Directors have a reasonable expectation
that the Group will continue to operate and meet its liabilities,
as they fall due, for the next three years to December 2021.
Going Concern
The Directors, in their consideration of going concern, have
reviewed the Group's future cash flow forecasts and profit
projections, which are based on the Directors' past experience and
their assessment of the current market outlook for the business.
The Group's business activities, together with the factors likely
to affect its future development, performance and financial
position are set out in the Chairman's Statement and Business
Review on pages 1 to 8.
The Group's principal financial risks in the medium term relate
to liquidity and credit risk. Liquidity risk is managed by ensuring
that the Group's day-to-day working capital requirements are met by
having access to banking facilities with suitable terms and
conditions to accommodate the requirements of the Group's
operations. Credit risk is managed by applying considerable rigour
in managing the Group's trade receivables. The Directors believe
that the Group is adequately placed to manage its financial risks
effectively, despite any economic uncertainty.
The Group's principal banking facility is in place until June
2022. The Directors are of the opinion that the Group's cash
forecasts and revenue projections, taking account of reasonably
possible changes in trading performance given current market and
economic conditions, show that the Group should be able to operate
within its current facilities and comply with its banking
covenants.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for at least the next twelve
months. For this reason they continue to adopt the going concern
basis in preparing the financial statements.
Cautionary Statement
The Chairman's Statement and the Business Review on pages 1 to 8
have been prepared to provide additional information to members of
the Company to assess the Group's strategy and the potential for
the strategy to succeed. It should not be relied on by any other
party or for any other purpose.
This report and the financial statements contain certain
forward-looking statements relating to operations, performance and
financial status. By their nature, such statements involve risk and
uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors, including both economic and business risk factors that
could cause actual results or developments to differ materially
from those expressed or implied by these forward-looking
statements. These statements are made by the Directors in good
faith based on the information available to them up to the time of
their approval of this report.
Responsibility Statement of the Directors
The responsibility statement below has been prepared in
connection with the company's full annual report for the year
ending 31 December 2018. Certain parts of the full annual report
are not included within this announcement. The Directors of
Macfarlane Group PLC are
S.R. Paterson Chairman
P.D. Atkinson Chief Executive
J. Love Finance Director
R. McLellan Non-Executive Director and Senior Independent Director
J.W.F. Baird Non-Executive Director
A.M. Dunstan Non-Executive Director
To the best of the knowledge of the Directors (whose names and
functions are set out above), the financial statements, prepared in
accordance with International Financial Reporting Standards as
adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit for the Company and the
undertakings included in the consolidation taken as a whole;
and
Pursuant to Disclosure and Transparency Rules, Chapter 4, the
Directors' Report of the Company's annual report includes a fair
review of the development and performance of the business and the
position of the Company, and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties faced by the business.
Peter Atkinson John Love
Chief Executive Finance Director
21 February 2019 21 February 2019
Macfarlane Group PLC
Consolidated income statement
For the year ended 31 December 2018
Before
Exceptional Exceptional
Note Items Items 2018 2017
Unaudited Unaudited Unaudited Audited
GBP000 GBP000 GBP000 GBP000
Revenue 3 217,290 - 217,290 195,991
Cost of sales (150,749) - (150,749) (135,687)
Gross profit 66,541 - 66,541 60,304
Distribution costs (8,604) - (8,604) (8,208)
Administrative expenses (45,912) (330) (46,242) (42,007)
Operating profit 3 12,025 (330) 11,695 10,089
Finance costs 4 (809) - (809) (828)
Profit before tax 11,216 (330) 10,886 9,261
Tax 5 (2,201) 56 (2,145) (1,837)
Profit for the year 7 9,015 (274) 8,741 7,424
Earnings per share
Basic and diluted 7 5.72p (0.17p) 5.55p 5.22p
Consolidated statement of comprehensive income
For the year ended 31 December 2018
2018 2017
Note Unaudited Audited
GBP000 GBP000
Items that may be reclassified to profit
or loss
Foreign currency translation differences
- foreign operations (6) 45
Items that will not be reclassified to
profit or loss
Remeasurement of pension scheme liability 10 (32) (223)
Tax recognised in other comprehensive income
Tax on remeasurement of pension scheme
liability 11 6 38
Other comprehensive expense for the year,
net of tax (32) (140)
Profit for the year 8,741 7,424
Total comprehensive income for the year 8,709 7,284
Consolidated statement of changes in equity
For the year ended 31 December 2018
Share Share Revaluation Translation Retained
Capital Premium Reserve Reserve Earnings Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2017 (Audited) 34,084 4,641 70 254 274 39,323
Comprehensive income
Profit for the year - - - - 7,424 7,424
Foreign currency translation
differences - - - 45 - 45
Remeasurement of pension
liability 10 - - - - (223) (223)
Tax on remeasurement
of pension liability 11 - - - - 38 38
Total comprehensive income - - - 45 7,239 7,284
Transactions with shareholders
Dividends 6 - - - - (2,854) (2,854)
Credit for share-based
payments - - - - (180) (180)
Issue of share capital 12 5,303 8,334 - - - 13,637
Total transactions with
shareholders 5,303 8,334 - - (3,034) 10,603
At 31 December 2017
(Audited) 39,387 12,975 70 299 4,479 57,210
Comprehensive income
Profit for the year - - - - 8,741 8,741
Foreign currency translation
differences - - - (6) - (6)
Remeasurement of pension
liability 10 - - - - (32) (32)
Tax on remeasurement
of pension liability 11 - - - - 6 6
Total comprehensive income - - - (6) 8,715 8,709
Transactions with shareholders
Dividends 6 - - - - (3,387) (3,387)
Total transactions with
shareholders - - - - (3,387) (3,387)
At 31 December 2018
(Unaudited) 39,387 12,975 70 293 9,807 62,532
Consolidated balance sheet at 31 December 2018
Note 2018 2017
Unaudited Audited
GBP000 GBP000
Non-current assets
Goodwill and other intangible assets 58,648 57,234
Property, plant and equipment 8,533 8,630
Other receivables 162 296
Deferred tax assets 11 1,851 2,407
Total non-current assets 69,194 68,567
Current assets
Inventories 16,940 15,465
Trade and other receivables 51,360 52,578
Cash and cash equivalents 9 4,611 2,013
Total current assets 72,911 70,056
Total assets 3 142,105 138,623
Current liabilities
Trade and other payables 47,891 49,100
Current tax payable 1,029 741
Finance lease liabilities 9 101 245
Bank borrowings 9 17,769 16,346
Total current liabilities 66,790 66,432
Net current assets 6,121 3,624
Non-current liabilities
Retirement benefit obligations 10 9,765 11,823
Deferred tax liabilities 11 2,993 3,048
Trade and other payables 25 13
Finance lease liabilities 9 - 97
Total non-current liabilities 12,783 14,981
Total liabilities 3 79,573 81,413
Net assets 62,532 57,210
Equity
Share capital 12 39,387 39,387
Share premium 12 12,975 12,975
Revaluation reserve 70 70
Translation reserve 293 299
Retained earnings 9,807 4,479
Total equity 3 62,532 57,210
Consolidated cash flow statement
For the year ended 31 December 2018
Note 2018 2017
Unaudited Audited
GBP000 GBP000
Cash inflow from operating activities 9 11,832 6,482
Investing activities
Acquisitions, net of cash acquired 8 (5,638) (8,337)
Proceeds on disposal of property, plant
and equipment 73 210
Purchases of property, plant and equipment (1,452) (1,740)
Cash outflow from investing activities (7,017) (9,867)
Financing activities
Dividends paid 6 (3,387) (2,854)
Proceeds from issue of share capital (net
of issue expenses) - 7,637
(Repayment)/drawdown on bank borrowing
facility 1,423 (860)
Repayments of obligations under finance
leases 9 (253) (455)
Cash (outflow)/inflow from financing activities (2,217) 3,468
Net increase in cash and cash equivalents 9 2,598 83
Cash and cash equivalents at beginning
of year 2,013 1,930
Cash and cash equivalents at end of year 9 4,611 2,013
Macfarlane Group PLC
Notes to the financial information
For the year ended 31 December 2018
1. General information
The financial information set out herein does not constitute the
Company's statutory accounts for the years ended 31 December 2018
or 2017. The financial information for 2017 is derived from the
statutory accounts for 2017 which have been delivered to the
registrar of companies. The auditor has reported on the 2017
accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006. The statutory accounts for 2018 will be finalised on the
basis of the financial information presented by the directors in
this preliminary announcement and will be delivered to the
registrar of companies in due course.
The Group has applied IFRS 15 "Revenue from Contracts with
Customers" and IFRS 9 "Financial Instruments" with effect from 1
January 2018. A number of other new standards took effect from 1
January 2018 but they did not have a material effect on the Group's
financial statements.
IFRS 16 "Leases" will be applied in the 2019 financial
statements using the modified retrospective approach but with no
application of the practical expedients available. IFRS 16 requires
that for all material operating leases, the Group's leased assets
will be recorded within land and buildings and plant and equipment
as "Right of Use" assets with a corresponding lease liability based
on the discounted value of future cash payments required under each
lease. Existing operating lease expenses will be replaced with a
smaller operating expense, a depreciation charge and a separate
financing cost. This will have no significant impact on reported
profit before tax or total equity.
2. Basis of preparation
The Group's business activities, together with the factors
likely to affect its future development, performance and financial
position are set out on pages 1 to 9.
The Group's principal financial risks in the medium term relate
to liquidity and credit risk. Liquidity risk is managed by ensuring
that the Group's day-to-day working capital requirements are met by
having access to committed banking facilities with suitable terms
and conditions to accommodate the requirements of the Group's
operations. Credit risk is managed by applying considerable rigour
in managing the Group's trade receivables. The Directors believe
that the Group is adequately placed to manage its financial risks
effectively despite any economic uncertainty.
The Group's has a committed borrowing facility of GBP30 million
with Lloyds Banking Group PLC in place until June 2022. The
facility bears interest at normal commercial rates and carries
standard financial covenants in relation to interest cover and
levels of headroom over certain trade receivables of the Group.
The Directors are of the opinion that the Group's cash forecasts
and revenue projections, which they believe are based on prudent
market data and past experience taking account of reasonably
possible changes in trading performance given current market and
economic conditions, show that the Group should be able to operate
within the current facility and comply with its banking
covenants.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for at least the next twelve
months. For this reason they continue to adopt the going concern
basis in preparing the financial statements for the year ended 31
December 2018.
Judgements, assumptions and estimation uncertainties
In preparing the 2018 financial statements from which this
financial information has been extracted, management has made
judgements, assumptions and estimates, which affect the application
of the Group's accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from the amounts estimated. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively.
The judgements, assumptions and estimation uncertainties made in
applying accounting policies that have the most significant effect
on the amounts recognised in these financial statements and
therefore have the most significant risk of resulting in a material
adjustment are as follows:-
(i) Retirement benefit obligations The valuation of the pension deficit
is affected by small movements
in key actuarial assumptions
(ii) Trade and other receivables The provision held against receivables
is based on applying an expected
credit loss model and related
estimates of recoverable amounts
3. Segmental information
The Group's principal business segment is Packaging
Distribution, comprising the distribution of packaging materials
and supply of storage and warehousing services in the UK. This
comprises over 85% of Group revenue and profit. The Group's
Manufacturing Operations segment comprises the design, manufacture
and assembly of timber, corrugated and foam-based packaging
materials in the UK, the design, manufacture and supply of
self-adhesive labels to a variety of FMCG customers in the UK &
Europe and the design, manufacture and supply of resealable labels
to a variety of FMCG customers in the UK, Europe and the USA. None
of the individual business segments within Manufacturing Operations
represents more than 10% of Group revenue or profit.
2018 2017
GBP000 GBP000
Packaging Distribution
Revenue 190,227 171,771
Cost of sales (134,235) (121,323)
Gross profit 55,992 50,448
Net operating expenses (44,820) (41,012)
Operating profit before exceptional
item 11,172 9,436
Exceptional item (270) -
Operating profit 10,902 9,436
Manufacturing Operations
Revenue 32,189 28,191
Cost of sales (21,640) (18,335)
Gross profit 10,549 9,856
Net operating expenses (9,696) (9,203)
Operating profit before exceptional
item 853 653
Exceptional item (60) -
Operating profit 793 653
Exceptional item Guaranteed Minimum Pension ("GMP") equalisation
On 26 October 2018, the High Court judgement involving Lloyds
Banking Group defined benefits pension schemes concluded that
schemes should equalise pension benefits for men and women in
relation to GMP benefits. The judgement has implications for most
defined benefit schemes, including the scheme operated by
Macfarlane Group. We have worked with the scheme's actuary to
understand the implications of the judgement for our scheme and the
GBP330,000 exceptional expense recorded in the consolidated income
statement for 2018 as a past service cost in respect of the
equalisation of GMP benefits represents our best estimate of the
effect on our reported pension scheme liabilities. We believe this
information provides a more meaningful basis for measuring our
financial performance in 2018
The Directors have made the judgement that the estimated effect
of GMP equalisation on the Group's pension liabilities is a past
service cost in respect of pensionable service between 1990 and
1997 that should be reflected as an exceptional item and that any
subsequent change in the estimate should be recognised in other
comprehensive income. This judgement is based on the fact that the
pension liabilities for the Macfarlane scheme at 31 December 2017
in note 10 did not include any amount in respect of GMP
equalisation.
2018 2017
GBP000 GBP000
Group segment - total revenue
Packaging Distribution 190,227 171,771
Manufacturing Operations 32,189 28,191
Inter-segment revenue (5,126) (3,971)
External revenue 217,290 195,991
Operating profit
Packaging Distribution 10,902 9,436
Manufacturing Operations 793 653
Operating profit 11,695 10,089
Finance costs (809) (828)
Profit before tax 10,886 9,261
Tax (2,145) (1,837)
Profit for the year 8,741 7,424
Assets Liabilities Net assets
GBP000 GBP000 GBP000
Group segments
Packaging Distribution 125,060 71,173 53,887
Manufacturing Operations 17,045 8,400 8,645
Net assets 2018 142,105 79,573 62,532
Packaging Distribution 124,069 74,324 49,745
Manufacturing Operations 14,554 7,089 7,465
Net assets 2017 138,623 81,413 57,210
4. Finance costs 2018 2017
GBP000 GBP000
Interest on bank borrowings (530) (462)
Interest on obligations under finance leases (17) (18)
Net interest expense on retirement benefit obligation
(see note 10) (262) (348)
Total finance costs (809) (828)
5. Tax 2018 2017
GBP000 GBP000
Current tax
United Kingdom corporation tax at 19.00% (2017:
19.25%) (1,953) (1,551)
Foreign tax (98) (62)
Adjustments in respect of prior years 42 49
Total current tax (2,009) (1,564)
Deferred tax
Current year (136) (273)
Total deferred tax (see note 11) (136) (273)
Total tax charge (2,145) (1,837)
The standard rate of tax based on the UK average rate of
corporation tax, is 19.00% (2017 - 19.25%). Taxation for other
jurisdictions is calculated at the rates prevailing in these
jurisdictions. The actual tax charge for the current and previous
year varies from the standard rate of tax on the results in the
consolidated income statement for the reasons set out in the
following reconciliation:-
2018 2017
GBP000 GBP000
Profit before tax 10,886 9,261
Tax on profit at 19.00% (2017 -19.25%) (2,068) (1,783)
Factors affecting tax charge for the year:-
Non-deductible expenses (107) (95)
Difference on overseas tax rates (12) (8)
Changes in estimates related to prior years 42 49
Tax charge for the year (2,145) (1,837)
Effective rate of tax for the year 19.7% 19.8%
6. Dividends 2018 2017
GBP000 GBP000
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year ended 31 December 2017
of 1.50p per share (2016 - 1.40p per share) 2,363 1,909
Interim dividend for the year ended 31 December
2018 of 0.65p per share (2017 - 0.60p per share) 1,024 945
3,387 2,854
A proposed dividend of 1.65p per share will be paid on 6 June
2019 to those shareholders on the register at 17 May 2019. This is
subject to approval by shareholders at the Annual General Meeting
on 14 May 2019 and therefore has not been included as a liability
in these financial statements.
7. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2018 2017
GBP000 GBP000
Earnings for the purposes of earnings per share
Profit for the year before exceptional items 9,015 7,424
Profit for the year 8,741 7,424
Number of shares in issue for the purposes of calculating 2018 2017
basic and diluted earnings per share No. of No. of
shares shares
'000 '000
Weighted average number of shares in issue for
the
purposes of basic earnings per share
Weighted average number of shares in issue 157,548 142,228
Earnings per share before exceptional item 5.72p 5.22p
Earnings per share after exceptional item 5.55p 5.22p
8. Acquisitions
On 31 July 2018, the Group's subsidiary, Macfarlane Group UK
Limited acquired 100% of the issued share capital of Tyler
Packaging (Leicester) Limited for a consideration of approximately
GBP2.1 million. GBP1.5 million was paid in cash on acquisition. The
deferred consideration of GBP0.6 million is payable in the third
quarter of 2019, subject to certain trading targets being met in
the twelve month period ending on 31 July 2019.
On 2 August 2018 Macfarlane Group UK Limited also acquired 100%
of the issued share capital of Harrisons Packaging Limited for a
consideration of approximately GBP2.8 million. GBP1.8 million was
paid in cash on acquisition. The deferred consideration of GBP1.0
million is payable in the third quarter of 2019, subject to certain
trading targets being met in the twelve month period ending on 2
August 2019.
The contingent considerations are recognised as a liability in
trade and other payables and are remeasured to fair value of GBP1.6
million at the balance sheet date based on a range of outcomes
between GBPNil and GBP1.6 million. Trading in the post-acquisition
period to 31 December 2018 supports the remeasured value of
GBP1.6m.
On 21 September 2017, Macfarlane Group UK Limited acquired the
packaging business and selected assets of Greenwoods Stock Boxes
Limited and 100% of Nottingham Recycling Limited, for a
consideration of approximately GBP17.2 million. GBP7.97 million was
paid in cash and GBP6.0 million settled by the issue of shares on
acquisition. The deferred consideration of GBP3.25 million was paid
in 2018.
In 2016, Macfarlane Group PLC acquired 100% of Nelsons for
Cartons & Packaging Limited for a consideration of GBP7.2
million. GBP4.7 million was paid in cash and GBP1.0 million settled
by the issue of shares on acquisition. Of the total deferred
consideration of GBP1.5 million, GBP0.75 million was paid in 2017
and GBP0.75 million paid in 2018.
The impact of the acquisitions on the 2018 results is set out in
the Strategic Report on page 3.
All the businesses are part of the Packaging Distribution
segment. Goodwill arising on these acquisitions is attributable to
the anticipated future profitability of the distribution of Group
product ranges and anticipated operating synergies from future
combinations of activities with the Packaging Distribution
network.
Fair values assigned to net assets acquired and consideration
paid and payable are set out below:-
Tyler Previous
Packaging Harrisons Years'
(Leicester) Packaging Acquisitions 2018 2017
GBP000 GBP000 GBP000 GBP000 GBP000
Net assets acquired
Other intangible assets 814 1,298 - 2,112 9,185
Property, plant and equipment 17 68 - 85 712
Inventories 92 191 - 283 1,109
Trade and other receivables 437 394 - 831 2,736
Cash and bank balances 916 817 - 1,733 625
Trade and other payables (451) (624) - (1,075) (1,179)
Current tax liabilities (78) (83) - (161) (12)
Finance lease liabilities - (12) - (12) -
Deferred tax liabilities (138) (233) - (371) (1,587)
Net assets acquired 1,609 1,816 - 3,425 11,589
Goodwill arising on acquisition 524 1,022 - 1,546 5,627
Total consideration 2,133 2,838 - 4,971 17,216
Contingent consideration
on acquisitions
Current year (600) (1,000) - (1,600) (3,250)
Prior years - 4,000 4,000 996
Shares - - - - (6,000)
Total consideration 1,533 1,838 4,000 7,371 8,962
Net cash outflow arising
on acquisition
Cash consideration (1,533) (1,838) (4,000) (7,371) (8,962)
Cash and bank balances acquired 916 817 - 1,733 625
Net cash outflow (617) (1,021) (4,000) (5,638) (8,337)
9. Notes to the cash flow statement 2018 2017
GBP000 GBP000
Operating profit after exceptional items 11,695 10,089
Adjustments for:
Amortisation of intangible assets 2,244 1,580
Depreciation of property, plant and equipment 1,593 1,391
Loss/(gain) on disposal of property, plant and
equipment (32) 5
Operating cash flows before movements in working
capital 15,500 13,065
Increase in inventories (1,192) (1,370)
Decrease/(increase) in receivables 2,183 (1,163)
Increase in payables 122 1,570
Adjustment for pension scheme funding (2,352) (3,285)
Cash generated by operations 14,261 8,817
Income taxes paid (1,882) (1,855)
Interest paid (547) (480)
Cash inflow from operating activities 11,832 6,482
Movement in net debt
Increase in cash and cash equivalents 2,598 83
Decrease/(increase) in bank borrowings (1,423) 860
Finance leases inherited on acquisition (12) -
Repayment of obligations under finance leases 253 455
Movement in net debt in the year 1,416 1,398
Opening net debt (14,675) (16,073)
Closing net debt (13,259) (14,675)
Net debt comprises:
Cash and cash equivalents in statement of cash
flows 4,611 2,013
Bank borrowings (17,769) (16,346)
Net bank debt (13,158) (14,333)
Obligations under finance leases Due within one
year (101) (245)
Due outwith one year - (97)
Closing net debt (13,259) (14,675)
Cash and cash equivalents (which are presented as a single class
of asset on the face of the balance sheet) comprise cash at bank
and other short-term highly liquid investments with maturity of
three months or less.
10. Pension scheme
Macfarlane Group PLC sponsors a defined benefit pension scheme
for certain active and former UK employees - the Macfarlane Group
PLC Pension & Life Assurance Scheme (1974) ("the scheme").
The scheme is administered by a separate Board of Trustees
composed of employer nominated representatives and member nominated
Trustees and is legally separate from the Group. The assets of the
scheme are held separately from those of the Group in managed funds
under the supervision of the Trustees. The Trustees are required by
law to act in the interest of all classes of beneficiary in the
scheme and are responsible for investment policy and the day-to-day
administration of benefits. The scheme was closed to new entrants
during 2002.
The scheme provides qualifying employees with an annual pension
of 1/60 of pensionable salary for each completed year's service on
attainment of a normal retirement age of 65. Pensionable salaries
were frozen for the remaining active members at the levels current
at 30 April 2009 with the change taking effect from 30 April 2010
and as a result no further salary inflation applies for active
members who remained in the scheme. Active members' benefits also
include life assurance cover, albeit the payment of these benefits
is at the discretion of the scheme's Trustees.
On withdrawing from active service a deferred member's pension
is revalued from the time of withdrawal until the pension is drawn.
Revaluation in deferment is statutory and since 2010 has been
revalued on the Consumer Price Index ("CPI") measure of inflation.
Revaluation of pensions in payment is a blend of fixed increases
and inflationary increases depending on the relevant periods of
accrual of benefit. For pensions in payment, the inflationary
increase is currently based on the Retail Price Index ("RPI")
measure of inflation or based on Limited Price Indexation ("LPI")
for certain defined periods of service.
During 2012, Macfarlane Group PLC agreed with the Board of
Trustees to amend benefits for pensioner, deferred and active
members in the defined benefit pension scheme by offering a Pension
Increase Exchange ("PIE") option for deferred and active members at
retirement after 1 May 2012.
Balance sheet disclosures
The fair value of scheme investments, the present value of
scheme liabilities and expected rates of return are based on the
results of the actuarial valuation as at 1 May 2017, updated to the
year-end.
2018 2017 2016 2015 2014
GBP000 GBP000 GBP000 GBP000 GBP000
Investment class
Equities 16,025 17,694 17,112 16,788 15,893
Multi-asset diversified
funds 17,512 21,533 21,509 25,476 18,541
Liability-driven investment
funds 28,379 28,534 26,532 14,107 22,195
Bonds - - - 11,119 11,263
Secured property income
fund 7,112 6,606 - - -
European loan fund 6,645 6,562 6,334 - -
Other (cash and similar
assets) 154 31 6,321 303 98
Fair value of scheme investments 75,827 80,960 77,808 67,793 67,990
Present value of scheme
liabilities (85,592) (92,783) (92,345) (79,311) (81,863)
Scheme deficit (9,765) (11,823) (14,537) (11,518) (13,873)
Related deferred tax asset
(see note 11) 1,660 2,010 2,471 2,073 2,775
Net pension scheme liability (8,105) (9,813) (12,066) (9,445) (11,098)
The Trustees review the investments of the scheme on a regular
basis and consult with the Company regarding any proposed changes
to the investment profile. Liability-Driven Investment Funds are
intended to provide a match of 100% against the impact of movements
in inflation on pension liabilities and a match of 80% against the
impact of movements in interest-rates on pension liabilities.
During 2018, an additional diversified growth fund was introduced
to the portfolio and the funds with an existing diversified growth
fund were reduced.
The ability to realise the Scheme's investments at, or close to,
fair value was considered when setting the investment strategy. 82%
of the Scheme's investments can be realised at fair value on a
daily or weekly basis. The remaining assets have monthly or
quarterly liquidity, however, whilst the income from these helps to
meet the Scheme's cash flow needs, they are not expected to require
to be realised at short notice.
The present value of the scheme liabilities is derived from cash
flow projections over a long period of time and is thus inherently
uncertain.
The scheme's liabilities were calculated on the following bases
as required under IAS 19:
Assumptions 2018 2017 2016 2015 2014
Discount rate 2.80% 2.50% 2.70% 3.70% 3.50%
Rate of increase in salaries 0.00% 0.00% 0.00% 0.00% 0.00%
Inflation assumption (RPI) 3.30% 3.30% 3.30% 3.10% 3.00%
Inflation assumption (CPI) 2.30% 2.30% 2.30% 2.10% 2.10%
Life expectancy beyond normal retirement date of
65
Male 23.5 years 23.7 years 22.8 years 22.7 years 22.7 years
Female 25.7 years 25.7 years 25.3 years 25.3 years 25.1 years
In 2018, the Directors have made the judgement that the
estimated effect of GMP equalisation on the Group's pension
liabilities is a past service cost in respect of pensionable
service between 1990 and 1997. The average uplift for GMP service
for impacted members has been reflected through the consolidated
income statement as an exceptional item as set out in note 3, with
any subsequent changes in the estimate to be recognised in other
comprehensive income. This treatment is based on the fact that the
reported pension liabilities for the scheme as at 31 December 2017
did not include any amount in respect of GMP equalisation.
2018 2017 2016 2015 2014
Movement in scheme deficit GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January (11,823) (14,537) (11,518) (13,873) (15,896)
Current service costs (120) (105) (95) (152) (126)
Past service costs for
GMP equalisation (330) - - - -
Employer contributions 2,802 3,390 3,001 2,834 5,480
Net finance cost (262) (348) (373) (438) (594)
Remeasurement of pension
scheme liability (32) (223) (5,552) 111 (2,737)
At 31 December (9,765) (11,823) (14,537) (11,518) (13,873)
Funding
UK pension legislation requires that pension schemes are funded
prudently. Following the triennial actuarial valuation of the
scheme at 1 May 2017, the Company agreed a new schedule of
contributions with the Pension Scheme Trustees, which assumed a
recovery plan period of 7 years. The next triennial actuarial
valuation is due at 1 May 2020.
2018 2017
Movement in fair value of scheme investments GBP000 GBP000
Scheme investments at start of period 80,960 77,808
Interest income 1,987 2,065
Return on scheme investments (excluding interest
income) (4,143) 3,730
Contributions from sponsoring companies 2,802 3,390
Contribution from scheme members 72 72
Benefits paid (5,851) (6,105)
Scheme investments at end of period 75,827 80,960
2018 2017
Movement in present value of scheme liabilities GBP000 GBP000
Scheme liabilities at start of period (92,783) (92,345)
Current service cost (120) (105)
Past service costs for GMP equalisation (330) -
Interest cost (2,249) (2,413)
Contribution from scheme members (72) (72)
Changes in assumptions underlying the scheme liabilities 4,111 (3,953)
Benefits paid 5,851 6,105
Scheme liabilities at end of period (85,592) (92,783)
Sensitivity to key assumptions
The key assumptions used for IAS 19 are discount rate, inflation
and mortality. If different assumptions were used, then this could
have a material effect on the results disclosed. Assuming all other
assumptions are held static then a movement in the following key
assumptions would affect the level of the deficit as shown
below:-
2018 2017
Assumptions GBP000 GBP000
Discount rate movement of +0.1% 1,369 1,485
Inflation rate movement of +0.1% (436) (473)
Mortality movement of +0.1 year in age
rating 257 278
Positive figures reflect a reduction in the scheme liabilities
and therefore a reduction in the scheme deficit. The sensitivity
information has been prepared using the same method as adopted when
adjusting the results of the latest funding valuation to the
balance sheet date and is consistent with the approach adopted in
previous years.
All sensitivity information assumes that the average duration of
Scheme liabilities is seventeen years.
11. Deferred tax 2018 2017
GBP000 GBP000
At 1 January (641) 1,181
Acquisitions (371) (1,587)
Charged in income statement (see note 5) (136) (273)
Credited/(charged) in other comprehensive income
Remeasurement of pension scheme liability 6 38
At 31 December (1,142) (641)
Deferred tax assets
On retirement benefit obligations (see note 10) 1,660 2,010
Corporation tax losses 191 397
Disclosed as deferred tax assets 1,851 2,407
Deferred tax liabilities
On accelerated capital allowances (199) (231)
On other intangible assets (2,794) (2,817)
Disclosed as deferred tax liabilities (2,993) (3,048)
At 31 December (1,142) (641)
A reduction in the UK corporation tax rate to 17% effective from
1 April 2020 was substantively enacted on 6 September 2016. This
will reduce the Company's future current tax charge. Deferred tax
assets and liabilities have been calculated based on this rate.
12. Share capital 2018 2017
GBP000 GBP000
Allotted, issued and fully paid:
At 1 January 39,387 34,084
Issued during the year - 5,303
At 31 December 39,387 39,387
Share premium
At 1 January 12,975 4,641
Issue of new shares during the year - 8,697
Expenses of share issue - (363)
At 31 December 12,975 12,975
The Company has one class of ordinary shares of 25p each, which
carry no right to fixed income. Each ordinary share carries one
vote in any General Meeting of the Company.
On 18 September 2017, the Company announced a placing of
12,121,212 ordinary shares at a price of 66p per share for a total
value of GBP8,000,000. These shares were admitted to the Official
List of the London Stock Exchange on 21 September 2017. On 21
September 2017, the Company's subsidiary, Macfarlane Group UK
Limited acquired the trade, goodwill and selected assets of the
packaging business of Greenwoods Stock Boxes Limited and the whole
of the issued share capital of Nottingham Recycling Limited. As
part of the initial consideration, the Company issued 9,090,909
ordinary shares at a value of 66p per share as non-cash
consideration to the Vendors, an effective value of GBP6,000,000.
These shares were also admitted to the Official List of the London
Stock Exchange on 21 September 2017.
13. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed.
Details of individual and collective remuneration of the
Company's Directors and dividends received by the Directors for
calendar year 2018 will be disclosed in the Group's 2018 Annual
Report and Accounts.
The directors are satisfied that there are no other related
party transactions occurring during the year which require
disclosure.
14. Posting to shareholders and Annual General Meeting
The Annual Report and Accounts will be sent to shareholders on
Wednesday 3 April 2019 and will be available to members of the
public at the Company's Registered Office from Friday 5 April
2019.
The Annual General Meeting will take place at the Double Tree by
Hilton Hotel, Cambridge Street Glasgow G2 3HN at 12 noon on Tuesday
14 May 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEEEESFUSESE
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Macfarlane (LSE:MACF)
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From Apr 2024 to May 2024
Macfarlane (LSE:MACF)
Historical Stock Chart
From May 2023 to May 2024