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Macfarlane Group PLC (MACF)

Macfarlane Group PLC

Annual Results
RNS Number : 1411C
Macfarlane Group PLC
02 March 2011
 



 

2 March 2011

 

MACFARLANE GROUP ANNUAL RESULTS FOR THE YEAR TO 31 DECEMBER 2010

 

·    Group turnover increased by 9.6% to £135.5m (2009: £123.6m)

·    Profit before tax of £4.2m (2009: £2.5m)

·    Exceptional income benefits from curtailment gains in pension scheme of £1.1m

·    Profit before tax before exceptional items of £3.4m (2009: £3.2m)

·    Gross margin of 31.0% (2009: 32.5%)

·    Pension deficit reduced by 23% to £15.7m

Ÿ Proposed final dividend up 5% to 1.05p per share, providing full year total of 1.55p

____________________________________________________________________________________

 

Archie Hunter, Chairman of Macfarlane Group PLC today said: -

"2010 was a year in which Macfarlane Group responded to testing trading conditions and challenging cost price pressures.  The Group attained growth in both turnover and profits while reducing its pension deficit and total debt.

A year ago the challenge was clear - to deliver on the strategic action plans developed to take advantage of the strong foundations the group had created.  In the event, progress has been achieved in a number of areas but the main focus of attention had to be on the response to the largest supplier price increases the Group has had to deal with for many years.

Trading

Group turnover increased to £135.5m (2009: £123.6m) in a tough market and we converted this into a pre-exceptionals pre-tax profit of £3.4m (2009: £3.2m).  The absence of the restructuring costs of £0.7m in 2009, and a one-off benefit of £1.1m from a curtailment gain in the pension scheme offset by property provisions of £0.3m, resulted in the Group's post-exceptionals pre-tax profit increasing to £4.2m (2009: £2.5m).

In addition to the difficult conditions presented by the UK economy, the market was subject to unprecedented raw material price rises, accumulating through the year, in excess of 30% for corrugate and over 20% for plastics, requiring significant attention to be devoted to margin protection.  That the Group's gross margin has been held at 31.0% (2009: 32.5%) is a result of the significant focus on successfully recovering these price increases.  Of the Group turnover increase of 10%, an estimated 7% was through price recovery with 3% growth in volume.

In Packaging Distribution, sales increased by 10% to £109.1m (2009: £99.0m) and the gross margin for this division was 29.6%, down from last year's 31.3%.  I am pleased to report that despite the focus on price recovery, progress has also been achieved against the strategic actions particularly in the development of the Presentational Packaging business, market penetration in the Third Party logistics sector and enhancements to our online offering, macfarlanepackaging.com.

In our Manufacturing Operations, turnover increased by 7% to £26.4m (2009: £24.6m) and gross margins were broadly maintained at 36.5% (2009: 37.0%).  We experienced a recovery in volumes for packaging manufacturing - particularly from the automotive and aerospace sectors - but increasing price pressures subdued gross margins in our labels business.

Pension Deficit

A year ago I outlined our plans to deal with the group pension deficit.  We took the first steps in that plan this year with the application of a pensionable salary cap for active members and this, plus a combination of deficit funding contributions, the move from RPI to CPI for deferred members' entitlements, and better market conditions, led to a reduction in the pension deficit of £4.6m to £15.7m at the end of 2010.  Further actions to reduce the deficit are planned for 2011 but there are other market-related factors outside our control that can have a significant impact on the deficit. 

Net Debt

As envisaged in my statement at the half-year, the normal trading cycle has reduced net bank borrowings in the second half of the year and these stood at £6.3m at the end of 2010, compared with £6.4m a year previously and £8.9m at the half year.  In 2010, the Group made payments totalling £2.2m to reduce the pension deficit.

Dividend

The board is committed to a policy of a fair return to shareholders, through the payment of a regular and reliable dividend stream, alongside the establishment of sound dividend cover.  I am pleased to report that the Board proposes to recommend a 5% increase in the final dividend to 1.05p making 1.55p for the year, subject to shareholder approval at the Group's Annual General Meeting in May 2011.

Future Prospects

Having tackled the issues of 2010, the challenge facing the Group as attention focuses on the strategic actions, is an exciting one.  For most of our businesses, 2010 ended strongly and the momentum has carried into 2011, although we continue to experience pricing pressures on raw material costs.  Against a background of continuing economic uncertainty, we remain cautiously optimistic about trading prospects for 2011.

We have an able and committed complement of people and I am certain that they are focused on the exciting opportunities and challenges ahead."

 

 

 

 

Further enquiries:

Macfarlane Group

Tel: 0141 333 9666


Archie Hunter               Chairman



Peter Atkinson              Chief Executive



John Love                     Finance Director





 

Spreng & Co

Tel: 0141 229 0482


Callum Spreng

Mob: 07803 970103

 

 

Notes to Editors:

Macfarlane Group PLC is a UK-based group of companies focused on packaging-related activities.  The Packaging Distribution business is the leading UK distributor of a comprehensive range of packaging consumable products.  The Manufacturing Operations comprise two businesses, the manufacture of transit packaging and the manufacture of self-adhesive and re-sealable labels.  Headquartered in Glasgow, Scotland, Macfarlane Group employs 700 people at 22 sites, principally in the UK and Ireland, servicing 20,000+ customers, in a wide range of sectors including: consumer goods; logistics; electronics; food manufacturing and retailing; internet and home retailing.



Business Review 

Trading performance
 
 
 
 
Group Segment
 
 
 
Revenue
2010
£000
Profit before exceptional items
2010
£000
 
 
Exceptional
items
2010
£000
 
Profit
before
tax
2010
£000
 
 
 
 
 
Packaging Distribution
109,093
4,424
180
4,604
Manufacturing Operations
26,357
94
666
760
 
 
 
 
 
Revenue from continuing operations
135,450
 
 
 
 
 
 
 
 
Operating profit
 
4,518
846
5,364
Net finance costs
 
(1,167)
-
(1,167)
 
 
 
 
 
Profit before tax - continuing operations
 
3,351
846
4,197
 
 
 
 
 
 

 
 
 
 
 
Group Segment
 
 
 
Revenue
2009
£000
Profit before exceptional items
2009
£000
 
 
Exceptional
items
2009
£000
 
Profit
before
tax
2009
£000
 
 
 
 
 
Packaging Distribution
98,989
4,256
(325)
3,931
Manufacturing Operations
24,607
150
(374)
(224)
 
 
 
 
 
Revenue from continuing operations
123,596
 
 
 
 
 
 
 
 
Operating profit
 
4,406
(699)
3,707
Net finance costs
 
(1,223)
-
(1,223)
 
 
 
 
 
Profit before tax - continuing operations
 
3,183
(699)
2,484
 
 
 
 
 
 

 

Following the UK economic slowdown in 2009 the key issue faced by the Macfarlane businesses in 2010 was a dramatic increase in the cost of raw materials. During the year there were five increases in the price of corrugate totalling 33% and two increases in polymer based products totalling 21%. The effect of these cost price rises required each of the Macfarlane businesses to focus their efforts on recovering the increases while at the same time minimising the risk of customer attrition. In overall terms our actions were successful and, although there was some gross margin erosion during the year, the Group increased its profit before tax from continuing operations by 5% to £3.4 million.

The Packaging Distribution business was most impacted by the increase in raw material prices and, despite an effectively managed price recovery programme, experienced a 1.5% gross margin reduction. However customer attrition was minimal, and the business achieved a number of significant new customer wins resulting in the Packaging Distribution business growing operating profit before exceptional items in 2010 by 4%.

The Manufacturing businesses had mixed results in 2010. The Packaging Manufacturing business realised the benefits of the restructuring carried out in response to the demand slowdown in 2009 and achieved a positive recovery in profitability.  The profitability of the Labels business reduced as a result of the difficulty in recovering raw material price increases and an unfavourable customer mix. In overall terms the Manufacturing businesses continued to be profitable before the impact of exceptional items in 2010.

The resilience displayed by the Group in 2009 in difficult demand conditions has been maintained in 2010 in the face of dramatic cost price inflation. The outlook for 2011 is difficult to judge: there remains a strong likelihood of further cost price increases and the fragile nature of the UK economy means that overall levels of demand are likely to remain weak. However Macfarlane Group has demonstrated it can continue to progress positively whilst managing its way through a variety of difficult market conditions. The Group has robust plans in place to increase sales and improve operational efficiency and the effective implementation of these plans remains the priority.



Business Review

Trading Performance (continued)

Packaging Distribution

The Macfarlane Packaging Distribution business is the leading UK distributor of a comprehensive range of packaging consumable products. In a highly fragmented market, Macfarlane is the market leader with a market share of approximately 20%.  The business operates through 17 Regional Distribution Centres (RDCs) supplying customers on a local, regional and national basis.  We benefit our customers by enabling them to ensure their products are cost-effectively protected in transit and storage by providing a comprehensive product range, single source supply, Just In Time delivery and tailored stock management programmes.

2010 Performance

In 2010 Packaging Distribution grew operating profit by 17% to £4.6 million, compared with £3.9 million in 2009.  The comparable amounts before exceptional items showed an increase in operating profit from £4.3 million to £4.4 million in 2010.  A number of factors contributed to these results:

l Sales revenue increased by 10% reflecting price inflation as well as a modest increase in volumes across a number of key customer sectors;

l There was another good year on new business with a number of high profile new customer wins resulting in new business sales at almost £8.0m;

l We relaunched our web-based packaging service in 2010, and revenue through this increasingly important channel increased by 19% versus 2009;

l Our 2010 customer satisfaction survey showed 84% of customers rating our service above average (2009 - 87%) and of these, 38% rated our service as excellent (2009 - 41%).  The slight reduction versus 2009 is a direct reflection of the difficult pricing environment;

l In 2010 our On-Time-In-Full ("OTIF") deliveries averaged 85% (2009 - 90%) against our benchmark of 90%. This result reflects some of the difficulty experienced due to the weather conditions. The method we use to measure OTIF is applied as an internal logistics efficiency monitor rather than a customer satisfaction measure;

l Supplier price inflation has been significant in 2010 and, due to the normal time lag in passing through these price increases, our gross margin reduced to 29.6% compared with 31.3% in 2009. As is traditionally the case, we would expect gross margin to recover gradually in the first half of 2011;

l Our Telford RDC was closed at the end of 2009 and has been integrated into our network, primarily benefiting the Coventry and Manchester RDCs;

l The 3 RDCs that were loss-making in 2009 were returned to profitability in 2010;

l We have maintained a strong focus on cost control and sales per employee increased as we improved productivity levels within the business;

l Net overheads as a percentage of sales reduced from 27.0% in 2009 to 25.6% in 2010, evidence of our cost control focus; and

l There has been good progress on a number of the key strategic initiatives with momentum building particularly in our development into the third party logistics sector, the increasing importance of our web-based presence through macfarlanepackaging.com and some encouraging early successes in the launch of our presentational packaging business.

Performance Potential

Each of the sites within our current network of 17 RDCs is a profit centre and based on our 2010 results we had eight RDCs performing at or above an acceptable return on sales level.  The remaining RDCs, which with one exception are all profitable, continue to demonstrate improvements that indicate their ability to achieve an acceptable return on sales level.

Acquisitions

One component of the Packaging Distribution strategy is the acquisition of quality businesses offering the opportunity to increase geographic penetration and to more effectively utilise our current RDC infrastructure.  Allpoint, acquired in October 2008 has now been successfully integrated into the Macfarlane Distribution network.



Business Review

Trading Performance (continued)

Packaging Distribution

Business Risks

The key risks associated with the Packaging Distribution business are detailed below:

As a distributor in a market where products are vulnerable to commodity-based raw material prices and manufacturer energy costs, profitability is sensitive to supplier price changes.  Macfarlane works closely with its supplier base to effectively manage the scale and timing of price increases to end-users and we have extensive IT support to monitor and measure our effectiveness in recovering supplier price changes;

Competition in the distribution market is primarily from local companies with good local connections and capability.  Macfarlane competes effectively on a local basis through its strong focus and regular monitoring of customer service, its breadth and depth of product offer and the recruitment and retention of staff with good local market knowledge; and

The Macfarlane Packaging Distribution business is decentralised with a high dependency on effective local decision-making. In order to ensure management control of local decision-making, there is a comprehensive management information system with all key sales, margin and working capital measures monitored consistently and regularly.

Future Plans

We expect demand in 2011 is likely to remain weak and that cost price inflation will continue. In this context, our plan for 2011 is to focus our management actions in the following areas:

·     Enhance existing customer relationships to ensure we maintain high customer retention levels and increase product penetration;

·     Ensure the effective management and recovery of supplier price changes;

·     Increase new business activity to accelerate new business growth and win market share both through the RDC sales teams and the dedicated National Account sales teams;

·     Expand our focus in specific industry sectors which benefit from Macfarlane's national coverage;

·     Accelerate the development of the Presentational and Retail Packaging business to existing and new customers;

·     Strengthen our web-based presence through macfarlanepackaging.com to improve online visibility and access to our products and services;

·     Continue the implementation of our productivity improvement initiatives to ensure all RDCs are operating to their full profit potential within the Macfarlane network; and

·     Maintain the focus on working capital management to reduce borrowing levels.

 

Manufacturing Operations

Macfarlane operates two manufacturing businesses, Labels and Packaging Manufacturing.

In 2010 Macfarlane's Manufacturing Operations recorded an operating profit of £0.8 million, compared to an operating loss of £0.2 million in 2009.  Before exceptional items the profit performance was broadly flat and the key features of the Manufacturing Operations performance in 2010 were:

·     Sales increased by 7% versus 2009 driven by increased demand from major customers in key sectors particularly aerospace and general industrial;

·     Gross margins reduced from 37.0% to 36.5% reflecting significant customer pressure on sales prices in the Labels business and a change in customer mix towards own label fast moving consumer goods ("FMCG") suppliers; and

·     Net overheads as a percentage of sales reduced from 36.4% in 2009 to 36.2% in 2010, evidence of our cost control focus.



Business Review

Trading Performance (continued)

Manufacturing Operations

Labels

The principal activity of the Labels business is the production of self-adhesive and resealable labels for major FMCG customers in Europe and the USA.  The business operates from two production sites in Kilmarnock and Dublin and a sales and design office in Sweden which focuses on the development and growth of our resealable labels business - Reseal-it™.

Business Performance

During 2010 Macfarlane Labels experienced significant price pressures from the customer base, reflecting the strong influence of the major retailers on our key customers. As a result gross margins reduced while an unfavourable customer mix exacerbated this situation.  In response Macfarlane Labels has been working to recover supplier price increases from its customers, focusing on improving operational performance, targeting the new business sales effort in the FMCG branded sector and investing in the higher added value Reseal-it product range.

2010 sales at Labels showed a 4% increase versus 2009 despite lower pricing levels, with volumes showing a 7% increase.  However despite the sales value reduction the Labels business remained profitable and succeeded in delivering a reduced but acceptable return on sales.

Reseal-it™ continued to progress well in 2010.  Although we have experienced some slowdown for this product range in Europe, as consumers look to reduce costs, we are experiencing the first signs of penetration in the UK market and we continue to show good progress in the North American market, which is being managed in partnership with our US distributor Printpack Inc.

Business Risks

The specific risks facing the business are detailed below:-

There is a high level of dependency on a small number of major customers.  Management work closely with these key customers to ensure high levels of service and introduce product and service development initiatives to create competitive differentiation;

In order to offset the margin pressure driven by the intensity of competition in the retail FMCG sector our sales team is focused on working closely with customers to manage price increases and also achieve a broader mix of customers for whom the added value of Macfarlane Labels' offering is clear;

Raw material price increases impact margins and further increases are a risk.  Where possible increases are mitigated through price negotiations and production efficiencies but some margin erosion is likely if material prices increase.  There is a level of dependence on a small number of suppliers, therefore alternative sources of material are being investigated in conjunction with major customers, consistent with maintaining quality and service; and

There is some currency risk as a number of Labels' customers reside in the Euro-zone and the US. This is considered within the context of Macfarlane Group's overall currency management framework.

Future Plans

The priorities for the Labels business in 2011 are to: -

·     Introduce new sales leadership;

·     Accelerate organic growth plans particularly in those customer sectors where the added value of Macfarlane Labels' offering is apparent;

·     Identify opportunities to rebuild margins;

·     Improve operational efficiencies to counterbalance retail price pressure; and

·     Further develop the Reseal-it™ product in the US market, identify additional geographic opportunities and explore new applications for the Reseal-it™ concept.



Business Review

Trading Performance (continued)

Manufacturing Operations

Packaging Manufacturing

The principal activity of the business is the design, manufacture and assembly of custom-designed packaging solutions for customers looking for cost-effective methods of protecting higher-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 via the Group's Packaging Distribution business.  Key market sectors serviced are aerospace, medical equipment, electronics and automotive.

Over 25% of Packaging Manufacturing sales are channelled through the Macfarlane Packaging Distribution business and the combination of in-house manufacturing and distribution allows us to differentiate our offering in the market.

Business Performance

2010 sales were 13% above those achieved in 2009 as demand in a number of the key sectors of UK industry we serve recovered and we achieved some significant new customer wins. The partnership with the Packaging Distribution business contributed effectively to the strong sales growth and good progress was made with our directly serviced customers particularly in the aerospace and electronics sectors.  The impact of all these factors resulted in Packaging Manufacturing returning to an acceptable overall level of profitability in 2010.  This represented a good performance after a loss-making year in 2009.

Business Risks

The specific risks facing the business are:

Raw material prices - the primary material components are corrugate, timber and foam.  Both timber and foam raw materials have seen price increases in the last 12 months.  The business works extensively with suppliers to minimise increases and re-engineers products for customers in order to mitigate the increase whilst maintaining margins; and

Market risk - the main customer sectors are UK-based manufacturers and industrial companies who need to protect their high-value products in storage and transit.  Certain industries such as aerospace are large users of this type of packaging solution.  To the extent that there is any significant decline in the UK industrial and manufacturing sector then this would be expected to have an impact on the Packaging Manufacturing business.  This can be mitigated to some extent by accessing new customers using the extensive customer base in our Packaging Distribution business.

Future Plans

The priorities for 2011 are to:

·     Continually review the cost base of the business to ensure it is at a level consistent with the demand outlook;

·     Maintain gross margins through effective recovery of any further cost changes;

·     Identify additional sales growth opportunities both directly and through the relationship with Macfarlane Packaging Distribution;

·     At Grantham the primary focus will be to grow sales both directly and through the partnership with Packaging Distribution; and

·     Our Westbury location is focused on profit recovery through accelerating sales momentum and introducing a programme of productivity and service improvement initiatives.

2011 Outlook

The outlook for the UK economy in 2011 reflects a continuing period of uncertain demand levels and continuing cost price inflation.  It is clear that trading conditions will remain challenging.  However, the actions taken over recent years mean that Macfarlane Group has significantly greater capability and confidence to address the future market challenges.

Macfarlane Group has a clear business plan incorporating a number of key strategic initiatives, which it is committed to implementing. The early experience to date is that these initiatives will enable the business to continue to drive profitable growth and the effective implementation of these initiatives remains the highest of priorities.

The correct blend of tactical actions and strategic initiatives will ensure that 2011 will be another year of positive progress for Macfarlane Group.



 

Going Concern

The Directors, in their consideration of going concern, have reviewed the Group's future cash flow forecasts and revenue projections, which they believe are based on prudent market data and past experience.

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 7.

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, which is heightened as a result of the difficulties customers may face in the current climate, 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 the current uncertain economic outlook. 

The Group's principal banking facilities of £12.0 million have been renewed until 29 February 2012 and 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 the foreseeable future.  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 7 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 2010.  Certain parts of the full annual report are not included within this announcement.

The Directors of Macfarlane Group PLC are

A.S. Hunter      Chairman

P.D. Atkinson   Chief Executive

J. Love             Finance Director

K.D. Mellor      Non-Executive Director and Senior Independent Director

G. Bissett          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



Macfarlane Group PLC

Consolidated income statement

For the year ended 31 December 2010

 

 

2010

before

exceptional

items

 

2010

Exceptional

items

 

 

 

2010

2009

before

exceptional items

 

2009

Exceptional

items

 

 

 

2009

 

 

£000

£000

£000

£000

£000

£000

 

Note

 

See note 3 

 

 

See note 3   

 

Continuing operations

 

 

 

 

 

 

 

Revenue

3

135,450

135,450   

123,596  

-  

123,596  

Cost of sales

 

(93,510)

(93,510)  

(83,473)  

-  

(83,473)  

 

 

 

 

 

 

 

 

Gross profit

 

41,940

41,940  

40,123  

-  

40,123  

Distribution costs

 

(6,458)

(6,458)  

(5,890)  

-  

(5,890)  

Administrative expenses

 

(30,964)

846 

(30,118)  

(29,827)  

(699)  

(30,526)  

 

 

 

 

 

 

 

 

Operating profit

3

4,518

846 

5,364  

4,406  

(699)  

3,707  

Finance income

4

2,741

2,741  

2,331  

-  

2,331  

Finance expense

4

(3,908)

(3,908)  

(3,554)  

-  

(3,554)  

 

 

 

 

 

 

 

 

Profit before tax

 

3,351

846 

4,197  

3,183  

(699)  

2,484  

Tax

5

(972)

(239) 

(1,211)  

(691)  

177  

(514)  

 

 

 

 

 

 

 

 

Profit for the year from continuing operations

 

 

2,379

 

607 

 

2,986  

 

2,492  

 

(522)  

 

1,970  









Discontinued operations

 

 

 

 

 

 

 

Profit for the year from discontinued operations after tax

 

 

7

 

 

-

 

 

 

 

-  

 

 

351  

 

 

-  

 

 

351  

 

 

 

 

 

 

 

 

Profit for the year

 

2,379

607 

2,986  

2,843  

(522)  

2,321  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

 

 

 

 

      Basic and diluted *

 

2.10p

0.53p

2.63p

2.21p

(0.46p)

1.75p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing and discontinued operations

 

 

 

 

 

      Basic and diluted *

 

2.10p

0.53p

2.63p

2.52p

(0.46p)

2.06p

 

 

 

 

 

 

 

 

 

*    There is no dilution of earnings per share in either 2009 or 2010.

 

 

 



Macfarlane Group PLC

Consolidated statement of comprehensive income

For the year ended 31 December 2010


Note

2010  

£000  

2009  

£000  





Exchange differences on translation of overseas operations


(20)  

(170)  

Actuarial gain/(loss) on defined benefit pension schemes

11

1,540  

(4,282)  

Tax on items taken directly to equity



-  

     Actuarial (gain)/loss for the year

12

(420)  

1,199  

     Long-term corporation tax rate change on pension deficit

12

(174)  

-  



 

 

Other comprehensive income/(expense) for the year


926 

(3,253)

Profit for the year


2,986  

2,321  



 

 

Total comprehensive income/(expense) for the year


3,912  

(932)  



 

 

 

Macfarlane Group PLC

Consolidated statement of changes in equity

For the year ended 31 December 2010

 

 

 

Note

Share

Capital

£000

Revaluation

Reserve

£000

Own

Shares

£000

Translation

Reserve

£000

Retained

Earnings

£000

 

Total

£000

 

 

 

 

 

 

 

At 1 January 2009

28,755

70

(1,406)

506

(527)

27,398

Profit for the year

-

-

-

-

2,321

2,321

Dividends

-

-

-

-

(1,688)

(1,688)

Exchange differences on translation of foreign operations

 

 

-

 

 

-

 

 

-

 

 

(170)

 

 

-

 

 

(170)

Actuarial loss on defined benefit pension schemes

 

-

 

-

 

-

 

-

 

(4,282)

 

(4,282)

Tax on actuarial loss for the year

 

-

 

-

 

-

 

-

 

1,199

 

1,199

Transfer of own shares to pension scheme

 

-

 

-

 

463

 

-

 

(314)

 

149

Credit in respect of share-based payments

 

-

 

-

 

-

 

-

 

34

 

34

 

 

 

 

 

 

 

 

At 31 December 2009

28,755

70

(943)

336

(3,257)

24,961

Profit for the year

-

-

-

-

2,986

2,986

Dividends

-

-

-

-

(1,700)

(1,700)

Exchange differences on translation of foreign operations

 

 

-

 

 

-

 

 

-

 

 

(20)

 

 

-

 

 

(20)

Actuarial gain on defined benefit pension schemes

 

-

 

-

 

-

 

-

 

1,540

 

1,540

Tax on actuarial loss for the year

 

-

 

-

 

-

 

-

 

(594)

 

(594)

Transfer of own shares to pension scheme

 

-

 

-

 

88

 

-

 

(52)

 

36

Credit in respect of share-based payments

 

-

 

-

 

-

 

-

 

26

 

26

 

 

 

 

 

 

 

 

At 31 December 2010

28,755

70

(855)

316

(1,051)

27,235

 

 

 

 

 

 

 

 



Macfarlane Group PLC

Consolidated balance sheet at 31 December 2010

 


Note

2010

£000

2009

£000

Non-current assets




Goodwill


24,149

24,199

Other intangible assets


2,257

2,561

Property, plant and equipment


8,280

8,904

Other receivables


856

856

Deferred tax assets

12

4,672

6,555



 

 

Total non-current assets


40,214

43,075



 

 

Current assets




Inventories


9,080

8,882

Trade and other receivables


34,514

30,107

Cash and cash equivalents

10

138

536



 

 

Total current assets


43,732

39,525



 

 

Total assets


83,946

82,600



 

 

Current liabilities




Trade and other payables


32,568

28,558

Current tax liabilities


-

1

Provisions


291

-

Obligations under finance leases

10

296

272

Bank overdrafts and loans

10

6,408

6,908



 

 

Total current liabilities


39,563

35,739



 

 

Net current assets


4,169

3,786



 

 

Non-current liabilities




Retirement benefit obligations

11

15,725

20,366

Deferred tax liabilities

12

628

712

Provisions


291

-

Other creditors


120

136

Obligations under finance leases

10

384

686



 

 

Total non-current liabilities


17,148

21,900



 

 

Total liabilities


56,711

57,639



 

 

Net assets


27,235

24,961



 

 

Equity




Share capital


28,755

28,755

Revaluation reserve


70

70

Own shares


(855)

(943)

Translation reserve


316

336

Retained earnings


(1,051)

(3,257)



 

 

Total equity

3

27,235

24,961



 

 

 



Macfarlane Group PLC

Consolidated cash flow statement

For the year ended 31 December 2010

 


Note

2010

£000

2009

£000





Net cash inflow from operating activities

10

2,407

1,744



 

 





Investing activities




Interest received


47

6

Disposal of subsidiary undertaking


32

1,916

Acquisition of subsidiary undertakings

9

-

(1,190)

Proceeds on disposal of property, plant and equipment


-

119

Purchases of property, plant and equipment


(406)

(466)



 

 

Net cash (outflow)/inflow from investing activities


(327)

385



 

 





Financing activities




Dividends paid

6

(1,700)

(1,688)

Repayments of obligations under finance leases

10

(278)

(336)

Decrease in bank overdrafts

10

(500)

(346)



 

 

Net cash used in financing activities


(2,478)

(2,370)



 

 

Net decrease in cash and cash equivalents

10

(398)

(241)





Cash and cash equivalents at beginning of year


536

777



 

 

Cash and cash equivalents at end of year

10

138

536



 

 

 



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

1.       General information

          The financial information set out in this preliminary announcement does not constitute the Group's statutory financial statements as defined in Section 435 of the Companies Act 2006 and has been extracted from the full statutory accounts for the years ended 31 December 2010 and 31 December 2009 respectively. 

The financial statements for 2010 were approved by the Board of Directors on 2 March 2011.  The auditors' report on the statutory financial statements for the year ended 31 December 2010 was unqualified pursuant to Section 498 of the Companies Act 2006 and did not contain a statement under sub-section 498 (2) or (3) of that Act. 

The information for the year ended 31 December 2009 has been extracted from the Group's statutory accounts, which have been filed with the Registrar of Companies.  The auditors' report on these statutory accounts was unqualified pursuant to Section 498 of the Companies Act 2006 and did not contain a statement under either Section 498 (2) or Section 498 (3) of that Act.

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 7.

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, which is heightened as a result of the difficulties customers may face in the current climate, 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 the current uncertain economic outlook.

The Group's principal banking facility of £12.0 million has been renewed until 29 February 2012 and 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 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 the foreseeable future.  For this reason they continue to adopt the going concern basis in preparing the financial statements for the year ended 31 December 2010.

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 constitutes over 80% of the turnover and profit of Group operations.  As permitted by IFRS 8, the Group has elected to combine the remaining operations for the manufacture and supply of self-adhesive and resealable labels to a variety of FMCG customers in the UK & Europe and the design, manufacture and assembly of timber, corrugated and foam-based packaging materials in the UK into one segment headed Manufacturing Operations.



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

3.       Segmental information (continued)

 

 

 

Packaging Distribution

2010

Before

Exceptional

Items £000

 

2010

Exceptional

items

£000

 

 

 

2010

£000





Revenue

109,093

-

109,093

Cost of sales

(76,782)

-

(76,782)


 

 

 

Gross profit

32,311

-

32,311

Net operating expenses

(27,887)

180

(27,707)


 

 

 

Operating profit

4,424

180

4,604


 

 

 

Manufacturing Operations




Revenue

26,357

-

26,357

Cost of sales

(16,728)

-

(16,728)


 

 

 

Gross profit

9,629

-

9,629

Net operating expenses

(9,535)

666

(8,869)


 

 

 

Operating profit

94

666

760


 

 

 

Exceptional items 2010



Total

 



£000

Exceptional credit




Freezing pensionable salaries of active members of pension scheme


1,200

Professional cost of the above exercise



(63)




 

Exceptional pension credit



1,137

Provisions against vacant properties



(291)




 

Total exceptional items



846




 

During 2010, the principal employer in the Group final salary pension scheme, Macfarlane Group PLC, made the decision to amend benefits for active members in the scheme by freezing pensionable salaries at the levels current at 30 April 2009.  Following a consultation process with the active members affected, the change took effect on 30 April 2010.  As a result no further salary inflation applies for active members who elected to remain in the scheme and a curtailment gain of £1,200,000 was recorded as a result of this change.

 

The Group has a number of vacant and partly sub-let leasehold properties, with the majority of the head leases expiring before 2020.  Following the previous year's restructuring, the company has reclassified amounts of £291,000, previously held as short-term accruals into provisions.  The company has also reassessed the provision made for residual lease commitments together with other outgoings for dilapidations, after taking into account existing sub-tenant arrangements and assumptions relating to later periods of vacancy, and as a result an additional provision of £291,000 was made during the year which gives total provisions of £582,000.



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

 

3.       Segmental information (continued)

 

 

 

Packaging Distribution

2009

Before

Exceptional

Items

£000

 

2009

Exceptional

items

£000

 

 

 

2009

£000





Revenue

98,989

-

98,989

Cost of sales

(67,971)

-

(67,971)


 

 

 

Gross profit

31,018

-

31,018

Net operating expenses

(26,762)

(325)

(27,087)


 

 

 

Operating profit

4,256

(325)

3,931


 

 

 

Manufacturing Operations




Revenue

24,607

-

24,607

Cost of sales

(15,502)

-

(15,502)


 

 

 

Gross profit

9,105

-

9,105

Net operating expenses

(8,955)

(374)

(9,329)


 

 

 

Operating profit/(loss)

150

(374)

(224)


 

 

 

Given the ongoing uncertainty in the UK economy in 2009, action plans were implemented to align the cost base with lower levels of demand.  The total costs of £699,000 comprised redundancy costs of £596,000 and costs to exit premises of £103,000 and are those costs, which the directors consider directly related to these plans and are of a non-recurring nature.

 

Group segment


2010

£000

 

2009

£000

Packaging Distribution


4,604

3,931

Manufacturing Operations


760

(224)



 

 

Operating profit - continuing operations

5,364

3,707

Net finance costs


(1,167)

(1,223)



 

 

Profit before tax


4,197

2,484

Tax


(1,211)

(514)



 

 

Profit after tax


2,986

1,970

Profit on discontinued activities (see note 7)


-

351



 

 

Profit for the year


2,986

2,321



 

 


Assets

Liabilities

Total


£000

£000

£000

Group segments




Packaging Distribution

67,361

47,687

19,674

Manufacturing Operations

16,585

9,024

7,561


 

 

 

Net assets 2010

83,946

56,711

27,235


 

 

 

Packaging Distribution

64,473

46,669

17,804

Manufacturing Operations

18,127

10,970

7,157


 

 

 

Net assets 2009

82,600

57,639

24,961


 

 

 



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

 

4.       Net finance expense

 

2010

£000

2009

£000




Interest on bank loans and overdrafts

(415)

(260)

Interest on obligations under finance leases

(64)

(53)

Interest cost of pension scheme liabilities

(3,429)

(3,241)


 

 

Total finance expense

(3,908)

(3,554)


 

 

Expected return on pension scheme assets

2,694

2,325

Investment income

47

6


 

 

Total finance income

2,741

2,331


 

 




Net finance expense

(1,167)

(1,223)


 

 

 

5.      Tax

2010

£000

2009

£000

Current tax



  United Kingdom corporation tax at 28% (2009: 28%)

2

-

  Foreign tax

(6)

(32)

  Adjustments in respect of prior periods

-

81


 

 

Current tax credit/(charge)

(4)

49

Deferred taxation charge

(1,207)

(563)


 

 

Total tax (charge)/credit

(1,211)

(514)


 

 

The standard rate of tax for the year, based on the UK average rate of corporation tax is 28% (2009 - 28%).  Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. 

The actual tax charge for the current and previous year varies from 28% (2009 - 28%) of the results as set out in the income statement for the reasons set out in the following reconciliation:


2010

£000

2009

£000




Profit before taxation

4,197

2,484


 

 

Tax on profit at 28% (2009 - 28%)

(1,175)

(696)

Factors affecting tax charge for the year:-



Depreciation in excess of capital allowances

(53)

34

Other timing differences  

9

(78)

Utilisation of tax losses not previously recognised

-

151

Difference on overseas tax rates

8

(6)

         Adjustments in respect of prior periods

-

81


 

 

         Tax charge for the year

(1,211)

(514)


 

 

 



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

 

6.      Dividends

2010

£000

2009

£000

         Amounts recognised as distributions to equity holders in the year:



Final dividend for the year ended 31 December 2009 of 1.00p per share

   (2008 - 1.00p per share)

 

1,133

 

1,126

Interim dividend for the year ended 31 December 2010 of 0.50p per share

   (2009 - 0.50p per share)

 

567

 

562


 

 


1,700

1,688


 

 

         Dividends are not payable on own shares held in the employee share trust.

In addition to the amounts shown above, a proposed dividend of 1.05p per share will be paid on 9 June 2011 to those shareholders on the register at 13 May 2011 and is subject to approval by shareholders at the Annual General Meeting in 2011 and has not been included as a liability in these financial statements.

7.       Discontinued operations

 

 

Discontinued Manufacturing Operations



2010

£000

2009

£000





Profit on disposal of discontinued activities


-

351



 

 

 

 

Basic and diluted earnings per share

 

-

 

0.31p


 

 

During 2009, the Group reached final settlements for remaining sums due and obligations relating to previous years' disposals, resulting in a credit of £351,000 in respect of discontinued operations.

8.      Earnings per share

         The calculation of the basic and diluted earnings per share is based on the following data:


2010

£000

2009

£000

Earnings from continuing and discontinued operations for the purposes of earnings per share being profit for the year

 

2,986

 

2,321

(Less):     Profit for the year from discontinued operations

-

(351)


 

 

Earnings from continuing operations for the purposes of earnings per share being profit for the year from continuing operations

 

2,986

 

1,970


 

 




Number of shares in issue for the purposes of calculating basic and diluted earnings per share

2010

No. of

shares '000

2009

No. of

shares '000




Weighted average number of ordinary shares in issue

115,019

115,019

Weighted average number of shares in Employee Share Ownership Trusts

(1,646)

(2,354)


 

 

Weighted average number of shares in issue for the

purposes of basic earnings per share

 

113,373

 

112,665

Effect of dilutive potential ordinary shares due to share options

-

-


 

 

         Weighted average number of shares in issue for the

purposes of diluted earnings per share

 

113,373

 

112,665


 

 

 



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

 

9.       Acquisition of subsidiary undertakings

 

Fair values of net assets acquired

2010 

2009 


£000

£000 




Goodwill arising on acquisition

(50)  

(200)  


 

 

Total consideration

(50)  

(200)  


 

 

Satisfied by:



Cash

-  

(1,190)  

Deferred consideration

50  

1,390  


 

 

Total consideration

50  

200  


 

 

Net cash outflow arising on acquisition



Cash consideration

-  

(1,190)  


 

 

On 3 October 2008, the Group acquired 100% of the issued share capital of Allpoint Packaging Limited, for a consideration assessed at £4.3 million at 31 December 2008.  £4.0 million of the consideration was paid in 2008 and 2009.  The deferred consideration originally assessed on acquisition was reduced by £0.2 million in 2009 with a corresponding reduction in goodwill. 

The maximum additional consideration payable at 31 December 2009 was £0.1 million, however, this did not become payable.  As a result the deferred consideration assessed on acquisition was reduced by the sum shown above in 2010, with a corresponding reduction in goodwill.  The business is a Packaging Distributor and is accounted for in the Packaging Distribution segment.

 

10.    Notes to the cash flow statement

2010

£000  

2009

£000  




Operating profit             Continuing operations

5,364  

3,707  




Adjustments for:



   Amortisation of intangible assets

304  

310  

   Depreciation of property, plant and equipment

1,004  

1,155  

   Gain on disposal of property, plant and equipment

-  

(51)  

   Exceptional credit relating to pension scheme

(1,200)  

-  


 

 

Operating cash flows before movements in working capital

5,472  

5,121  

   Increase in inventories

(198)  

(418)  

   Increase in receivables

(4,449)  

(481)  

   Increase in payables

4,711  

584  

   Adjustment for pension scheme funding

(2,636)  

(2,309)  


 

 

Cash generated by operations

2,900  

2,497  

   Income taxes received/(paid)

5  

(423)  

   Interest paid

(498)  

(330)  


 

 

Net cash inflow from operating activities

2,407  

1,744  


 

 



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

10.       Notes to the cash flow statement (continued)

2010

£000

2009

£000 




Decrease in cash and cash equivalents in the year

(398) 

(241) 

Decrease in bank overdrafts

500 

346 

New finance leases in the year

(564) 

Repayment of obligations under finance leases      

278 

336 


 

 

Movement in net debt in the year

380 

(123) 

Opening net debt

(7,330) 

(7,207) 


 

 

Closing net debt

(6,950) 

(7,330) 


 

 

Net debt comprises:



Cash and cash equivalents

138 

536 

Bank overdrafts and loans

(6,408) 

(6,908) 


 

 

Net bank debt

(6,270) 

(6,372) 

Obligations under finance leases                Due within one year

(296) 

(272) 

                                                               Due outwith one year

(384) 

(686) 


 

 

Closing net debt

(6,950) 

(7,330)  


 

 

Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with maturity of three months or less.  Cash inflows in respect of discontinued operations for operating activities amounted to £Nil, (2009 - £Nil) cash outflows in respect of investing activities totalled £32,000 (2009 - outflows £1,916,000) and cash outflows from financing activities amounted to Nil (2009 £Nil).

11.     Pension scheme

The Group operates a pension scheme based on final pensionable salary.  Under the scheme, the employees accrue benefits of 1/60 of pensionable salary for each completed year's service on attainment of a normal retirement age of 65.  The assets of the scheme are held separately from those of the Group in managed funds under the overall supervision of the scheme trustees.

The contributions are determined by the scheme's qualified actuary on the basis of triennial valuations using the projected unit method.  The most recent triennial valuation was at 1 May 2008.  The principal assumptions adopted were that investment returns would average 7.00% per annum and that salary increases would average 4.75% per annum for pre-2007 service and 2.5% for post-2007 service.  The results of the valuation showed that the market value of the relevant assets of the scheme was £43,645,000 and the actuarial value of these assets represented 71% of the value of benefits that had accrued to members.

The final salary scheme was closed to new entrants during 2002.  Following the 2008 actuarial valuation, the Board has agreed to make additional payments to the scheme to reduce the net pension deficit.  These additional payments will increase the pension scheme assets; they are not a charge against Group profits.  The minimum employer contribution to the pension scheme in 2011, including these additional deficit payments, is £2.2 million.

The employer contribution rate is now 11.3% of pensionable salary, and the employee contribution rate is 7% of pensionable salary from 1 July 2009 following actuarial advice.

During 2010, Macfarlane Group PLC made the decision to amend benefits for active members in the scheme by freezing pensionable salaries at the levels current at 30 April 2009.  Following a consultation process with the active members affected, the change took effect on 30 April 2010.  As a result no further salary inflation applies for active members who elected to remain in the scheme and a curtailment gain of £1.2 million was recorded as a result of this change.



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

11.     Pension scheme (continued)

The Government announced its intention that statutory minimum increases should be based on the increase in the Consumer Price Index measure of inflation rather than the Retail Price Index measure of inflation.  As the Macfarlane Group final salary pension scheme rules define revaluation in deferment to be statutory, this change has been effected in 2010 with a resultant reduction in liabilities of £2.3 millon.

Balance sheet disclosures

The assets in the scheme, the net liability position for the scheme and the expected rates of return have been based on the results of the actuarial valuation as at 1 May 2008, updated to the year-end.

 

 

Asset class

Fair value

2010

£000

Fair value

2009

£000

Fair value

2008

£000

Fair value

2007

£000

Fair value

2006

£000







Equities

26,577

23,315

18,332

28,162

26,785

Bonds

18,436

17,277

17,506

16,859

16,661

Other (cash)

280

30

105

11

184


 

 

 

 

 

Fair value of assets

45,293

40,622

35,943

45,032

43,630

Present value of scheme liabilities

 

(61,018)

 

(60,988)

 

(53,420)

 

(59,304)

 

(59,503)


 

 

 

 

 

Deficit in the scheme

(15,725)

(20,366)

(17,477)

(14,272)

(15,873)

Related deferred tax asset

4,246

5,702

4,894

3,996

4,762


 

 

 

 

 

Net pension liability

(11,479)

(14,664)

(12,583)

(10,276)

(11,111)


 

 

 

 

 

The scheme's liabilities were calculated on the following bases as required under IAS 19:

Assumptions

2010

2009

2008

2007

2006







Discount rate

5.50%

5.75%

6.25%

5.80%

5.25%

Rate of increase in salaries

0.00%

3.50%

2.75%

3.25%

2.75%

Inflation assumption

3.50%

3.50%

2.75%

3.25%

2.75%

Life expectancy beyond normal retirement date of 65






Male

21.5 years

21.3 years

21.3 years

21.3 years

19.5 years

Female

24.0 years

24.0 years

24.0 years

24.0 years

22.4 years

 


2010

2009

2008

2007

2006

Movement in scheme deficit

£000

£000

£000

£000

£000

At 1 January

(20,366)

(17,477)

(14,272)

(15,873)

(22,977)

Current service cost

(119)

(240)

(237)

(272)

(353)

Settlement gains

50

134

86

84

58

Curtailment gain

1,200

-

-

-

-

Employer contributions

2,705

2,415

1,558

1,571

1,925

Net finance costs

(735)

(916)

(445)

(175)

(361)

Actuarial gain/(loss) in year

1,540

(4,282)

(4,167)

393

5,835


 

 

 

 

 

At 31 December

(15,725)

(20,366)

(17,477)

(14,272)

(15,873)


 

 

 

 

 

The investment in equities of £45,293,000 (2009 - £23,315,000) includes a holding of 1,065,918 ordinary shares in Macfarlane Group PLC (2009 - 819,506) held at a value of £320,000 (2009 - £160,000).



Macfarlane Group PLC

Notes to the financial information

For the year ended 31 December 2010

11.     Pension scheme (continued)

During 2010, the pension scheme's investments in equities increased by nearly 14% reflecting the positive growth in equity markets.  Returns on scheme assets in 2010 were £2.1 million above expected returns for the year.  However this was partly offset by a decrease from 5.75% to 5.50% in the bond yields used to discount pension scheme liabilities and other actuarial assumptions, which had a negative impact of £2.9 million on the liabilities recorded in our balance sheet.

Accordingly the overall result was an actuarial gain of £1.5 million in 2010.

Assumptions in relation to mortality are consistent with 2009.

The Company's pension scheme deficit is sensitive to movements in interest rates, inflation and longevity assumptions.  This constitutes an ongoing risk, creating significant volatility in the charges and equity in each financial year.

12.    Deferred tax

2010

£000  

2009

£000  




At 1 January

5,843  

5,203  

(Charged)/credited in income statement

(1,207)  

(563)  

Charged in other comprehensive income 

               Deferred tax on actuarial gain

 

(420)  

 

1,199  

               Long-term corporation tax rate change

(174)  

-  

Exchange differences

2  

4  


 

 

At 31 December

4,044  

5,843  


 

 

Retirement benefit obligations (see note 11)

4,246  

5,702  

Corporation tax losses

1,753  

2,222  

Accelerated tax depreciation and tax on held over gains

(1,327)  

(1,369)  


 

 

Disclosed as deferred tax asset

4,672  

6,555  

 

Other intangible assets

Disclosed as a deferred tax liability

 

 

(628)  

 

 

(712)  


 

 

At 31 December

4,044  

5,843  


 

 

 

The Finance Act 2010, which provides for a reduction in the main rate of corporation tax from 28% to 27% effective from 1 April 2011, was substantively enacted on 21 July 2010. As it was substantively enacted at the balance sheet date, the rate reduction is reflected within the financial statements. The impact of the rate reduction, which can be seen in the table above is a reduction in the UK deferred tax asset at 31 December 2010 of £174,000.  The Government has also indicated that it intends to enact future reductions in the main tax rate of 1% each year down to 24% by 1 April 2014. The future 1% main tax rate reductions are expected to have a similar impact on our financial statements as outlined above, however the actual impact will be dependent on our deferred tax position at that time.

13.     Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed.

The fair value of investments at 31 December 2010, shown in the pension scheme disclosures in note 11, include 1,065,918 (2009 - 819,506) shares in Macfarlane Group PLC with a value of £320,000 (2009 - £160,000).

14.     Posting to shareholders and Annual General Meeting

The Annual Report and Accounts will be sent to shareholders on Thursday 31 March 2011 and will be available to members of the public at the Company's Registered Office, 21 Newton Place, Glasgow G3 7PY from 5 April 2011. The Annual General Meeting will take place at the Thistle Hotel, Cambridge Street Glasgow at 12 noon on Tuesday 10 May 2011.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR LLFVTVDILIIL
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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