REG - Macfarlane Group PLC - Final Results <Origin Href="QuoteRef">MACF.L</Origin> - Part 2
22/02/2018 07:11
- Part 2: For the preceding part double click ID:nRSV5822Fa
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 principal bank borrowing arrangement with Lloyds Banking Group PLC
comprises a committed borrowing facility of £25 million available until June
2019 with an additional option to increase it further to £30 million. 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 debtors of the Group.
The Directors are of the opinion that the Group's cash forecasts and profit
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 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 2017.
Judgements, assumptions and estimation uncertainties
In preparing the 2017 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 for doubtful receivables is based on judgemental estimates over 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 constitutes 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. No individual business segment within Manufacturing Operations
represents more than 10% of Group revenue or income.
2017£000 2016£000
Packaging Distribution
Revenue 171,771 156,187
Cost of sales (121,323) (110,928)
Gross profit 50,448 45,259
Net operating expenses (41,012) (37,423)
Operating profit 9,436 7,836
Manufacturing Operations
Revenue 28,191 28,031
Cost of sales (18,335) (17,577)
Gross profit 9,856 10,454
Net operating expenses (9,203) (9,578)
Operating profit 653 876
2017£000 2016£000
Group segment - total revenue
Packaging Distribution 171,771 156,187
Manufacturing Operations 28,191 28,031
Inter-segment revenue (3,971) (4,446)
External revenue - continuing operations 195,991 179,772
Operating profit - continuing operations
Packaging Distribution 9,436 7,836
Manufacturing Operations 653 876
Operating profit - continuing operations 10,089 8,712
Finance costs (828) (901)
Profit before tax 9,261 7,811
Tax (1,837) (1,761)
Profit for the year 7,424 6,050
Assets Liabilities Net assets
£000 £000 £000
Group segments
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
Assets Liabilities Net assets
£000 £000 £000
Packaging Distribution 105,034 72,503 32,531
Manufacturing Operations 13,529 6,737 6,792
Net assets 2016 118,563 79,240 39,323
4. Finance costs 2017£000 2016£000
Interest on bank borrowings (462) (480)
Interest on obligations under finance leases (18) (48)
Net interest expense on retirement benefit obligation (see note 10) (348) (373)
Total finance costs (828) (901)
5. Tax 2017£000 2016£000
Current tax
United Kingdom corporation tax at 19.25% (2016: 20.00%) (1,551) (1,409)
Foreign tax (62) (79)
Prior period adjustments 49 83
Total current tax (1,564) (1,405)
Deferred tax
Current year (273) (196)
Prior period adjustments - (160)
Total deferred tax (see note 11) (273) (356)
Total (1,837) (1,761)
The standard rate of tax based on the UK average rate of corporation tax, is
19.25% (2016 - 20.00%). 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 19.25% (2016 - 20.00%) of the results as
set out in the consolidated income statement for the reasons set out in the
following reconciliation:-
2017£000 2016£000
Profit before taxation 9,261 7,811
Tax on profit at 19.25% (2016 - 20.00%) (1,783) (1,562)
Factors affecting tax charge for the year:-
Non-deductible expenses (95) (122)
Difference on overseas tax rates (8) -
Changes in estimates related to prior years 49 (77)
Tax charge for the year (1,837) (1,761)
Effective rate of tax for the year 19.8% 22.5%
6. Dividends 2017£000 2016£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2016 of 1.40p per share (2015 - 1.29p per share) 1,909 1,608
Interim dividend for the year ended 31 December 2017 of 0.60p per share (2016 - 0.55p per share) 945 750
2,854 2,358
In addition to the amounts shown above, a proposed dividend of 1.50p per share
will be paid on 7 June 2018 to those shareholders on the register at 18 May
2018. This is subject to approval by shareholders at the Annual General
Meeting on 15 May 2018 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:
2017£000 2016£000
Earnings for the purposes of earnings per shareProfit for the year from continuing operations 7,424 6,050
Number of shares in issue for the purposes of calculating basic and diluted earnings per share 2017No. ofshares '000 2016No. ofshares '000
Weighted average number of shares in issue for the purposes of basic earnings per share 142,228 129,496
Effect of dilutive potential ordinary shares due to share options - 859
Weighted average number of shares in issue for the purposes of diluted earnings per share 142,228 130,355
Basic Earnings per share 5.22p 4.67p
Diluted Earnings per share 5.22p 4.64p
8. Acquisitions
On 21 September 2017, the Group's subsidiary, Macfarlane Group UK Limited
acquired the packaging business and selected assets of Greenwoods Stock Boxes
Limited and 100% of the issued share capital of company Nottingham Recycling
Limited, for a consideration of approximately £17.2 million. £7.97 million
was paid in cash on acquisition, and £6.0 million was settled by the issue of
shares. The deferred consideration of £3.25 million is payable in the final
quarter of 2018, subject to certain trading targets being met in the twelve
month period ending on 20 September 2018.
In 2016, Macfarlane Group UK Limited acquired the business of Colton Packaging
Teesside and the packaging business of Edward McNeil Limited for a combined
consideration of approximately £3.0 million. £2.7 million was paid in cash on
acquisition, with the deferred consideration of £0.3 million payable in 2017,
provided certain targets were achieved. £0.25 million was paid in 2017.
In 2016 the Group acquired 100% of Nelsons for Cartons & Packaging Limited for
a consideration of £7.2 million. £4.7 million was paid in cash on
acquisition, £1.0 million was settled by the issue of shares, with the
deferred consideration of £1.5 million payable in two equal instalments in the
final quarter of 2017 and 2018, subject to certain trading targets being met
in the two twelve month periods ending on 29 July 2017 and 29 July 2018
respectively. £0.75 million of this was paid in 2017 with the remainder
payable in 2018.
All of these businesses are accounted for in the Packaging Distribution
segment. Goodwill arising on these acquisitions is attributable to the
anticipated future profitability of the distribution of Group product ranges
in the UK 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:-
Greenwoods£000 Nelsons£000 Colton &McNeil£000 2017£000 2016£000
Net assets acquired
Other intangible assets 9,185 - - 9,185 4,552
Property, plant and equipment 712 - - 712 195
Inventories 1,109 - - 1,109 1,542
Trade and other receivables 2,736 - - 2,736 1,728
Cash and bank balances 625 - - 625 696
Trade and other payables (1,179) - - (1,179) (1,837)
Current tax liabilities (12) - - (12) (256)
Finance lease liabilities - - - - (7)
Deferred tax liabilities (1,587) - - (1,587) (828)
Net assets acquired 11,589 - - 11,589 5,785
Goodwill arising on acquisition 5,627 - - 5,627 4,386
Total consideration 17,216 - - 17,216 10,171
Contingent consideration on acquisitions
Current year (3,250) - - (3,250) (1,820)
Prior years - 750 246 996 2,063
Shares (6,000) - - (6,000) (1,000)
Total consideration 7,966 750 246 8,962 9,414
Net cash outflow arising on acquisition
Cash consideration (7,966) (750) (246) (8,962) (9,414)
Cash and bank balances acquired 625 - - 625 696
Net cash outflow (7,341) (750) (246) (8,337) (8,718)
9. Notes to the cash flow statement 2017£000 2016£000
Operating profit 10,089 8,712
Adjustments for:
Amortisation of intangible assets 1,580 1,117
Depreciation of property, plant and equipment 1,391 1,267
Loss/(gain) on disposal of property, plant and equipment 5 (18)
Operating cash flows before movements in working capital 13,065 11,078
Increase in inventories (1,370) (885)
Increase in receivables (1,163) (3,450)
Increase in payables 1,570 1,280
Adjustment for pension scheme funding (3,285) (2,906)
Cash generated by operations 8,817 5,117
Income taxes paid (1,855) (1,295)
Interest paid (480) (528)
Net cash inflow from operating activities 6,482 3,294
Movement in net debt
Increase in cash and cash equivalents 83 523
Decrease/(increase) in bank borrowings 860 (4,167)
Repayment of obligations under finance leases 455 329
Movement in net debt in the year 1,398 (3,315)
Opening net debt (16,073) (12,758)
Closing net debt (14,675) (16,073)
Net debt comprises:
Cash and cash equivalents in statement of cash flows 2,013 1,930
Bank borrowings (16,346) (17,206)
Net bank debt (14,333) (15,276)
Obligations under finance leases Due within one year (245) (395)
Due outwith one year (97) (402)
Closing net debt (14,675) (16,073)
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 after 1 May 2012. The Group will consider
continued actions to manage and control the deficit in 2018.
Balance sheet disclosures
The fair value of the scheme investments, present value of the scheme
liabilities and the expected rates of return have been based on the
provisional results of the actuarial valuation as at 1 May 2017, updated to
the year-end.
2017£000 2016£000 2015£000 2014£000 2013£000
Investment class
Equities 17,694 17,112 16,788 15,893 15,079
Multi-asset diversified funds 21,533 21,509 25,476 18,541 16,414
Liability-driven investment funds 28,534 26,532 14,107 22,195 -
Bonds - - 11,119 11,263 22,534
Secured property income fund 6,606 - - - -
European loan fund 6,562 6,334 - - -
Other (cash and similar assets) 31 6,321 303 98 211
Fair value of scheme assets 80,960 77,808 67,793 67,990 54,238
Present value of scheme liabilities (92,783) (92,345) (79,311) (81,863) (70,134)
Deficit in the scheme (11,823) (14,537) (11,518) (13,873) (15,896)
Related deferred tax asset (see note 11) 2,010 2,471 2,073 2,775 3,179
Net pension scheme liability (9,813) (12,066) (9,445) (11,098) (12,717)
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. During 2017, the short-term cash holding at 31 December 2016 was
invested in a Secured property income fund.
The ability to realise the Scheme's assets at, or very close to, fair value
was considered when setting the investment strategy. The Scheme's investment
strategy has 84% of the assets being able to 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 2017 2016 2015 2014 2013
Discount rate 2.50% 2.70% 3.70% 3.50% 4.50%
Rate of increase in salaries 0.00% 0.00% 0.00% 0.00% 0.00%
Inflation assumption (RPI) 3.30% 3.30% 3.10% 3.00% 3.40%
Inflation assumption (CPI) 2.30% 2.30% 2.10% 2.10% 2.50%
Life expectancy beyond normal retirement date of 65
Male 23.7 years 22.8 years 22.7 years 22.7 years 22.6 years
Female 25.7 years 25.3 years 25.3 years 25.1 year- Part 2: For the preceding part double click ID:nRSV5822Fa
assets acquired 11,589 - - 11,589 5,785
Goodwill arising on acquisition 5,627 - - 5,627 4,386
Total consideration 17,216 - - 17,216 10,171
Contingent consideration on acquisitions
Current year (3,250) - - (3,250) (1,820)
Prior years - 750 246 996 2,063
Shares (6,000) - - (6,000) (1,000)
Total consideration 7,966 750 246 8,962 9,414
Net cash outflow arising on acquisition
Cash consideration (7,966) (750) (246) (8,962) (9,414)
Cash and bank balances acquired 625 - - 625 696
Net cash outflow (7,341) (750) (246) (8,337) (8,718)
9. Notes to the cash flow statement 2017 2016
£000 £000
Operating profit 10,089 8,712
Adjustments for:
Amortisation of intangible assets 1,580 1,117
Depreciation of property, plant and equipment 1,391 1,267
Loss/(gain) on disposal of property, plant and equipment 5 (18)
Operating cash flows before movements in working capital 13,065 11,078
Increase in inventories (1,370) (885)
Increase in receivables (1,163) (3,450)
Increase in payables 1,570 1,280
Adjustment for pension scheme funding (3,285) (2,906)
Cash generated by operations 8,817 5,117
Income taxes paid (1,855) (1,295)
Interest paid (480) (528)
Net cash inflow from operating activities 6,482 3,294
Movement in net debt
Increase in cash and cash equivalents 83 523
Decrease/(increase) in bank borrowings 860 (4,167)
Repayment of obligations under finance leases 455 329
Movement in net debt in the year 1,398 (3,315)
Opening net debt (16,073) (12,758)
Closing net debt (14,675) (16,073)
Net debt comprises:
Cash and cash equivalents in statement of cash flows 2,013 1,930
Bank borrowings (16,346) (17,206)
Net bank debt (14,333) (15,276)
Obligations under finance leases Due within (245) (395)
one year
(97) (402)
Due outwith one year
Closing net debt (14,675) (16,073)
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 after 1 May 2012. The Group will consider
continued actions to manage and control the deficit in 2018.
Balance sheet disclosures
The fair value of the scheme investments, present value of the scheme
liabilities and the expected rates of return have been based on the
provisional results of the actuarial valuation as at 1 May 2017, updated to
the year-end.
2017 2016 2015 2014 2013
£000 £000 £000 £000 £000
Investment class
Equities 17,694 17,112 16,788 15,893 15,079
Multi-asset diversified funds 21,533 21,509 25,476 18,541 16,414
Liability-driven investment funds 28,534 26,532 14,107 22,195 -
Bonds - - 11,119 11,263 22,534
Secured property income fund 6,606 - - - -
European loan fund 6,562 6,334 - - -
Other (cash and similar assets) 31 6,321 303 98 211
Fair value of scheme assets 80,960 77,808 67,793 67,990 54,238
Present value of scheme liabilities (92,783) (92,345) (79,311) (81,863) (70,134)
Deficit in the scheme (11,823) (14,537) (11,518) (13,873) (15,896)
Related deferred tax asset
(see note 11) 2,010 2,471 2,073 2,775 3,179
Net pension scheme liability (9,813) (12,066) (9,445) (11,098) (12,717)
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. During 2017, the short-term cash holding at 31 December 2016 was
invested in a Secured property income fund.
The ability to realise the Scheme's assets at, or very close to, fair value
was considered when setting the investment strategy. The Scheme's investment
strategy has 84% of the assets being able to 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 2017 2016 2015 2014 2013
Discount rate 2.50% 2.70% 3.70% 3.50% 4.50%
Rate of increase in salaries 0.00% 0.00% 0.00% 0.00% 0.00%
Inflation assumption (RPI) 3.30% 3.30% 3.10% 3.00% 3.40%
Inflation assumption (CPI) 2.30% 2.30% 2.10% 2.10% 2.50%
Life expectancy beyond normal retirement date of 65
Male 23.7 years 22.8 years 22.7 years 22.7 years 22.6 years
Female 25.7 years 25.3 years 25.3 years 25.1 years 25.1 years
2017 2016 2015 2014 2013
Movement in scheme deficit £000 £000 £000 £000 £000
At 1 January (14,537) (11,518) (13,873) (15,896) (18,898)
Current service cost (105) (95) (152) (126) (148)
Employer contributions 3,390 3,001 2,834 5,480 2,748
Net finance cost (348) (373) (438) (594) (775)
Remeasurement of pension scheme liability
(223) (5,552) 111 (2,737) 1,177
At 31 December (11,823) (14,537) (11,518) (13,873) (15,896)
Funding
UK pension legislation requires that pension schemes are funded prudently.
Following the triennial actuarial valuation of the scheme at 1 May 2014, the
Company agreed a new schedule of contributions with the Pension Scheme
Trustees, which assumed a recovery plan period of 10 years. The next
triennial actuarial valuation being carried out at 1 May 2017 is in progress
and likely to be concluded in the first half of 2018.
2017 2016
Movement in fair value of scheme assets £000 £000
Scheme assets at start of period 77,808 67,793
Interest income 2,065 2,470
Return on scheme assets (excluding interest income) 3,730 9,610
Contributions from sponsoring companies 3,390 3,001
Contribution from scheme members 72 72
Benefits paid (6,105) (5,138)
Scheme assets at end of period 80,960 77,808
2017 2016
Movement in present value of defined benefit obligations £000 £000
Defined benefit obligations at start of period (92,345) (79,311)
Current service cost (105) (95)
Interest cost (2,413) (2,843)
Contribution from scheme members (72) (72)
Changes in assumptions underlying the defined benefit obligations (3,953) (15,162)
Benefits paid 6,105 5,138
Defined benefit obligations at end of period (92,783) (92,345)
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:-
2017 2016 2015
Assumptions £000 £000 £000
Discount rate movement of +0.1% 1,485 1,478 1,142
Inflation rate movement of +0.1% (473) (471) (404)
Mortality movement of +0.1 year in age rating 278 277 214
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 of the sensitivity information assumes that the average duration of
liabilities in the scheme is seventeen years.
11. Deferred tax 2017 2016
£000 £000
At 1 January 1,181 1,511
Acquisitions (1,587) (828)
Charged in income statement Current year (273) (196)
- (160)
Change in estimates for prior years
Credited/(charged) in other comprehensive income
Remeasurement of pension scheme 38 1,000
liability
Long-term corporation tax rate change - (146)
At 31 December (641) 1,181
Deferred tax assets
On retirement benefit obligations (see note 10) 2,010 2,471
Corporation tax losses 397 407
Disclosed as deferred tax assets 2,407 2,878
Deferred tax liabilities
On accelerated capital allowances (231) (160)
On other intangible assets (2,817) (1,537)
Disclosed as deferred tax liabilities (3,048) (1,697)
At 31 December (641) 1,181
Reductions in the UK corporation tax rate to 17% (effective from 1 April 2020)
were substantively enacted on 6 September 2016. This will reduce the
Company's future current tax charge accordingly. The deferred tax assets at
2016 and 2017 have been calculated based on this rate.
12. Share capital 2017 2016
£000 £000
Allotted, issued and fully paid:
At 1 January 34,084 31,153
Issued during the year 5,303 2,931
At 31 December 39,387 34,084
Share premium
At 1 January 4,641 1,018
Issue of new shares during the year 8,697 3,869
Expenses of share issue (363) (246)
At 31 December 12,975 4,641
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 £8,000,000. 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
£6,000,000. These shares were also admitted to the official List of the
London Stock Exchange on 21 September 2017.
On 26 July 2016, the Company announced a placing of 10,000,000 ordinary shares
at a price of 58p per share. These shares were admitted to the official List
of the London Stock Exchange on 29 July 2016. On 29 July 2016, the Company
acquired the whole issued share capital of Nelsons for Cartons & Packaging
Limited. As part of the initial consideration, the Company issued 1,724,137
ordinary shares at a value of 58p per share as non-cash consideration to the
Vendors, for a total value of £1,000,000, which were also admitted to the
official List of the London Stock Exchange on 29 July 2016.
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 2017 will be
disclosed in the Group's Annual Report for the year ending 31 December 2017.
On 8 May 2015, Peter Atkinson and John Love were granted option awards ovs 25.1 years
25.1 years
2017 2016 2015 2014 2013
Movement in scheme deficit £000 £000 £000 £000 £000
At 1 January (14,537) (11,518) (13,873) (15,896) (18,898)
Current service cost (105) (95) (152) (126) (148)
Employer contributions 3,390 3,001 2,834 5,480 2,748
Net finance cost (348) (373) (438) (594) (775)
Remeasurement of pension scheme liability (223) (5,552) 111 (2,737) 1,177
At 31 December (11,823) (14,537) (11,518) (13,873) (15,896)
Funding
UK pension legislation requires that pension schemes are funded prudently.
Following the triennial actuarial valuation of the scheme at 1 May 2014, the
Company agreed a new schedule of contributions with the Pension Scheme
Trustees, which assumed a recovery plan period of 10 years. The next
triennial actuarial valuation being carried out at 1 May 2017 is in progress
and likely to be concluded in the first half of 2018.
2017 2016
Movement in fair value of scheme assets £000 £000
Scheme assets at start of period 77,808 67,793
Interest income 2,065 2,470
Return on scheme assets (excluding interest income) 3,730 9,610
Contributions from sponsoring companies 3,390 3,001
Contribution from scheme members 72 72
Benefits paid (6,105) (5,138)
Scheme assets at end of period 80,960 77,808
2017 2016
Movement in present value of defined benefit obligations £000 £000
Defined benefit obligations at start of period (92,345) (79,311)
Current service cost (105) (95)
Interest cost (2,413) (2,843)
Contribution from scheme members (72) (72)
Changes in assumptions underlying the defined benefit obligations (3,953) (15,162)
Benefits paid 6,105 5,138
Defined benefit obligations at end of period (92,783) (92,345)
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:-
Assumptions 2017£000 2016£000 2015£000
Discount rate movement of +0.1% 1,485 1,478 1,142
Inflation rate movement of +0.1% (473) (471) (404)
Mortality movement of +0.1 year in age rating 278 277 214
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 of the sensitivity information assumes that the average duration of
liabilities in the scheme is seventeen years.
11. Deferred tax 2017£000 2016£000
At 1 January 1,181 1,511
Acquisitions (1,587) (828)
Charged in income statement Current year (273) (196)
Change in estimates for prior years - (160)
Credited/(charged) in other comprehensive income Remeasurement of pension scheme liability 38 1,000
Long-term corporation tax rate change - (146)
At 31 December (641) 1,181
Deferred tax assets
On retirement benefit obligations (see note 10) 2,010 2,471
Corporation tax losses 397 407
Disclosed as deferred tax assets 2,407 2,878
Deferred tax liabilities
On accelerated capital allowancesOn other intangible assets (231)(2,817) (160)(1,537)
Disclosed as deferred tax liabilities (3,048) (1,697)
At 31 December (641) 1,181
Reductions in the UK corporation tax rate to 17% (effective from 1 April 2020)
were substantively enacted on 6 September 2016. This will reduce the
Company's future current tax charge accordingly. The deferred tax assets at
2016 and 2017 have been calculated based on this rate.
12. Share capital 2017£000 2016£000
Allotted, issued and fully paid:
At 1 January 34,084 31,153
Issued during the year 5,303 2,931
At 31 December 39,387 34,084
Share premium
At 1 January 4,641 1,018
Issue of new shares during the year 8,697 3,869
Expenses of share issue (363) (246)
At 31 December 12,975 4,641
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 £8,000,000. 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
£6,000,000. These shares were also admitted to the official List of the
London Stock Exchange on 21 September 2017.
On 26 July 2016, the Company announced a placing of 10,000,000 ordinary shares
at a price of 58p per share. These shares were admitted to the official List
of the London Stock Exchange on 29 July 2016. On 29 July 2016, the Company
acquired the whole issued share capital of Nelsons for Cartons & Packaging
Limited. As part of the initial consideration, the Company issued 1,724,137
ordinary shares at a value of 58p per share as non-cash consideration to the
Vendors, for a total value of £1,000,000, which were also admitted to the
official List of the London Stock Exchange on 29 July 2016.
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 2017 will be
disclosed in the Group's Annual Report for the year ending 31 December 2017.
On 8 May 2015, Peter Atkinson and John Love were granted option awards over
775,254 and 360,026 ordinary shares respectively under the Macfarlane Group
PLC Long Term Incentive Plan. These awards lapsed on 22 February 2018.
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 4
April 2018 and will be available to members of the public at the Company's
Registered Office, 21 Newton Place, Glasgow G3 7PY from Friday 6 April 2018.
The Annual General Meeting will take place at the Double Tree by Hilton Hotel,
Cambridge Street Glasgow G2 3HN at 12 noon on Tuesday 15 May 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
er
775,254 and 360,026 ordinary shares respectively under the Macfarlane Group
PLC Long Term Incentive Plan. These awards lapsed on 22 February 2018.
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 4
April 2018 and will be available to members of the public at the Company's
Registered Office, 21 Newton Place, Glasgow G3 7PY from Friday 6 April 2018.
The Annual General Meeting will take place at the Double Tree by Hilton Hotel,
Cambridge Street Glasgow G2 3HN at 12 noon on Tuesday 15 May 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
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