REG - Macfarlane Group PLC - Final Results <Origin Href="QuoteRef">MACF.L</Origin> - Part 2
26/02/2015 07:10
- Part 2: For the preceding part double click ID:nRSZ8958Fa
ProfitbeforeExceptionalitems£000 Exceptionalitems£000 2013£000
Packaging Distribution
Revenue 116,280 - 116,280
Cost of sales (82,415) - (82,415)
Gross profit 33,865 - 33,865
Net operating expenses (28,905) (42) (28,947)
Operating profit 4,960 (42) 4,918
Manufacturing Operations
Revenue 27,591 - 27,591
Cost of sales (16,568) - (16,568)
Gross profit 11,023 - 11,023
Net operating expenses (9,732) (294) (10,026)
Operating profit 1,291 (294) 997
Exceptional items 2013 PackagingDistribution£000 ManufacturingOperations£000 2013£000
Costs to exit surplus properties (42) (294) (336)
During 2013 the Group incurred costs of £0.3 million to terminate the leases
for surplus properties and wrote-down an owned property to its realisable
value.
Exceptional items are those transactions material to the income statement
where separate disclosure is necessary for an appropriate understanding of the
Group's financial performance.
Group segment 2014£000 2013£000
Group segment - total revenue
Packaging Distribution 126,907 116,280
Manufacturing Operations 32,358 32,180
Inter-segment revenue (5,498) (4,589)
External revenue - continuing operations 153,767 143,871
Operating profit - continuing operations
Packaging Distribution 5,758 4,918
Manufacturing Operations 888 997
Operating profit - continuing operations 6,646 5,915
Finance costs (1,040) (1,199)
Profit before tax 5,606 4,716
Tax (1,164) (1,260)
Profit for the year 4,442 3,456
Assets Liabilities Net assets
£000 £000 £000
Group segments
Packaging Distribution 80,365 58,189 22,176
Manufacturing Operations 16,020 7,950 8,070
Net assets 2014 96,385 66,139 30,246
Assets Liabilities Net assets
£000 £000 £000
Group segments
Packaging Distribution 68,493 48,544 19,949
Manufacturing Operations 13,371 6,896 6,475
Net assets 2013 81,864 55,440 26,424
4. Finance costs 2014£000 2013£000
Interest on bank borrowings (438) (418)
Interest on obligations under finance leases (8) (6)
Net interest expense on retirement benefit obligation (see note 10) (594) (775)
Total finance costs (1,040) (1,199)
5. Tax 2014£000 2013£000
Current tax
United Kingdom corporation tax at 21.50% (2013: 23.25%) (230) (795)
Foreign tax (95) (62)
Total current tax (325) (857)
Total deferred tax (see note 11) (839) (403)
Total (1,164) (1,260)
The standard rate of tax based on the UK average rate of corporation tax, is
21.50% (2013 - 23.25%). 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 21.50% (2013 - 23.25%) of the results as
set out in the income statement for the reasons set out in the following
reconciliation:
2014£000 2013£000
Profit before taxation 5,606 4,716
Tax on profit at 21.50% (2013 - 23.25%) (1,205) (1,096)
Factors affecting tax charge for the year:-
Non-deductible expenses (1) (70)
Difference on overseas tax rates (1) (47)
Changes in estimates related to prior years 43 16
Exceptional items - (63)
Tax charge for the year (1,164) (1,260)
6. Dividends 2014£000 2013£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2013 of 1.10p per share (2012 - 1.05p per share) 1,265 1,202
Interim dividend for the year ended 31 December 2014 of 0.50p per share (2013 - 0.50p per share) 623 572
1,888 1,774
Dividends were not payable on the Own shares held in the employee share
trust.
In addition to the amounts shown above, a proposed dividend of 1.15p per share
will be paid on 4 June 2014 to those shareholders on the register at 8 May
2015. This is subject to approval by shareholders at the Annual General
Meeting in 2015 and 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:
2014£000 2013£000
Earnings from continuing operations for the purposes of earnings per share being profit for the year from continuing operations 4,442 3,456
Number of shares in issue for the purposes of calculating basic and diluted earnings per share 2014No. ofshares '000 2013No. ofshares '000
Weighted average number of ordinary shares in issue for the year 117,550 115,019
Weighted average number of shares in Employee Share Ownership Trusts (184) (846)
Weighted average number of shares in issue for the purposes of basic earnings per share 117,366 114,173
Effect of dilutive potential ordinary shares due to share options - 96
Weighted average number of shares in issue for the purposes of diluted earnings per share 117,366 114,269
Basic Earnings per share 3.78p 3.03p
Diluted Earnings per share 3.78p 3.02p
8. Acquisition of subsidiary companies
During 2014 the Group acquired two trading subsidiary companies.
On 2 May 2014, the Group's subsidiary, Macfarlane Group UK Limited, acquired
100% of the issued share capital of PSD Industrial Holdings Limited, the
immediate parent company of Lane Packaging Limited, for a consideration of
approximately £0.9 million. £0.7 million was paid in cash on acquisition,
with the deferred consideration payable in the second quarter of 2015, subject
to certain trading targets being met in the year to 30 April 2015.
On 5 September 2014, the Group acquired 100% of the issued share capital of
Network Packaging Limited for a consideration of approximately £7.5 million.
£4.3 million of the consideration was paid in cash on acquisition and £0.6
million was settled by the issue of shares. The deferred consideration of
£2.6 million, is payable in two instalments in the final quarter of 2015 and
the final quarter of 2016, subject to certain trading targets being met in the
two twelve month periods ending on 5 September 2015 and 5 September 2016
respectively.
Both businesses are packaging distributors and are accounted for in the
Packaging Distribution segment. Goodwill arising on these acquisitions is
attributable to the anticipated future profitability of the distribution of
the Group's product ranges in new geographical markets in the UK and
anticipated operating synergies from the future combination of activities with
the existing Packaging Distribution network.
Fair values assigned to net assets acquired and consideration paid and payable
are set out below:-
Lane Packaging£000 Network Packaging£000 Total£000
Net assets acquired
Other intangible assets 663 3,617 4,280
Property, plant and equipment 76 119 195
Inventories 72 466 538
Trade and other receivables 453 1,766 2,219
Cash and bank balances - 432 432
Bank loans and overdrafts (532) - (532)
Trade and other payables (681) (1,634) (2,315)
Current tax liabilities (16) (296) (312)
Finance lease liabilities (56) (85) (141)
Deferred tax liabilities (133) (725) (858)
Net (liabilities)/assets acquired (154) 3,660 3,506
Goodwill arising on acquisition 1,001 3,857 4,858
Total consideration 847 7,517 8,364
Satisfied by:
Cash 684 4,267 4,951
Deferred consideration 163 2,625 2,788
Shares - 625 625
Total consideration 847 7,517 8,364
Net cash outflow arising on acquisition
Cash consideration (684) (4,267) (4,951)
Cash and bank balances acquired - 432 432
Bank loans and overdrafts assumed (532) - (532)
Net cash outflow (1,216) (3,835) (5,051)
9. Notes to the cash flow statement 2014£000 2013£000
Operating profit before exceptional items 6,646 6,251
Adjustments for:
Amortisation of intangible assets 428 295
Depreciation of property, plant and equipment 1,020 1,036
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