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Macfarlane Group PLC (MACF)

Macfarlane Group PLC

AGM Statement
Macfarlane Group PLC
9 May 2001

At the Annual General Meeting, later today John Ward, Chairman, of Macfarlane
Group will make the following comments: 'The underlying results achieved by
Macfarlane Group in 2000 were in line with the Board's stated objective to
achieve double-digit earnings growth. The benefits of restructuring, together
with further initiatives, underpin our aspirations to achieve growth in future
years in competitive trading markets. Our executive team responded well to the
pressures in the market, maintaining strict control of overheads to achieve
our target of double-digit earnings growth in 2000.

At the start of 2001 we announced the consolidation of our Merchanting,
Packaging and Labels businesses. The aim of the consolidation into a new
stronger packaging division is to provide opportunities by focusing on a wider
range of packaging-related solutions to our customers. The Managing Director
of the new Packaging Division is Graham Casey who will play a key role in the
integration of recently acquired National Packaging. I am delighted to
announce that it is the Board's intention to invite Graham Casey to join the
board of Macfarlane Group PLC from 1st June 2001 and I know that he will make
a significant contribution to the Board.

In our Packaging Division, we are experiencing mixed trading conditions.
Clearly with the downturn due to the well-documented slowdown in demand in the
electronics sector in the West of Scotland and elsewhere in the UK, this
particular part of our business is being impacted. Otherwise the remainder of
our business continues to deliver opportunities for growth and good levels of
profitability. Overall, margins are being maintained and we will continue to
pursue opportunities to replace business from major Original Equipment
Manufacturers (OEM's) as they move to new locations thus attempting to
minimise the impact on this part of our business. Our strategy and focus
continues to transition from primarily selling what only that which we
traditionally manufactured to selling what the customers request. We will
however maintain value added manufacturing and assembly businesses where this
is determined to be a strategic customer requirement. Our Hungarian business
is progressing well whilst our operation in San Jose, California is being
impacted by the downturn in the electronics sector. Our Hungarian operation is
an excellent example of the realisation of our strategy and this will continue
as major OEM's move to lower cost production countries.

Our business supplying labels to the beauty-care, toiletries and food retail
channels has made a solid start to 2001, with a mixture of organic growth and
contribution from last years' acquisitions building on the strengths of its
excellent operations. This business continues to provide highest quality
self-adhesive and resealable labels to major customers after successfully
integrating two acquisitions based on technology for resealable labels in
2000. Further opportunities and new market sectors are also being targeted to
broaden the sales base in the business.

Macfarlane Plastics is now recognised as one of the market leaders in the UK
plastics industry. Incremental acquisitions continue to be targeted as an
alternative to capital expenditure driven organic growth and one small
acquisition was recently concluded. Our management team has consistently
bought good quality capacity and integrated it quickly, achieving overhead
savings and leveraging benefits through scale. A key focus in 2001 will be to
press forward with the integration of our existing businesses to fewer sites,
each with significant scale. Our Plastics Division, under Mike Clark's
leadership, is trading ahead of the levels achieved in 2000 and has made a
solid start to the year.

On 9 April 2001 Macfarlane Group acquired National Packaging, the packaging
distribution division of Charles Baynes, for a cash consideration of £21.7
million. Your board is delighted that we have acquired National Packaging.
This supports our strategy building upon the recently formed packaging
division, providing customers with a one-stop shop for packaging products. We
are confident that the acquisition is capable of delivering true value to
Macfarlane Group shareholders through the effective combination of the two
distribution businesses and will be earnings enhancing in the first full year
after acquisition. Whilst it is too early to comment on costs and benefits
from the combination, the acquisition represents a very exciting strategic
opportunity as we look to move from manufacturing to service and distribution

Despite constant warnings of a slow-down in the economy and problems in
individual sectors, particularly electronics, our management team remains
focused on its objectives and will take the necessary steps to maintain the
focus on our business and meet targets. Your board expects to make progress in
2001 and shall not shirk from tough decisions to deliver shareholder value.
Despite the competitive trading conditions in the year to date we see no need
to alter our expectations for the current year.'

Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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