REG - Macfarlane Group PLC - Half Yearly Report <Origin Href="QuoteRef">MACF.L</Origin> - Part 2
27/08/2015 07:02
- Part 2: For the preceding part double click ID:nRSa2121Xa
(95)
Prior year adjustments 84 42 -
Total current tax (123) (37) (325)
Total deferred tax (See note 11) (165) (220) (839)
Total (288) (257) (1,164)
Tax for the first six months has been charged at 21.5% (2014 - 23.5%)
representing the best estimate of the effective tax charge for the full year.
6. Dividends Six monthsto 30 June2015£000 Six monthsto 30 June2014£000 Year to 31December2014£000
Amounts recognised as distributions to equity holders in the period
Final Dividend (1.15p per share) (2014 1.10p per share) 1,433 1,265 1,265
Interim Dividend (2014 0.50p per share) - - 623
Distributions in the period 1,433 1,265 1,888
Dividends were not paid on the Own shares held in the Employee Share Ownership
Trust.
The dividend of 0.53p per share, payable on 15 October 2015 was declared on 27
August 2015 and has therefore not been included as a liability in these
condensed financial statements.
7. Earnings per share Six monthsto 30 June2015£000 Six monthsto 30 June2014£000 Year to 31December2014£000
Earnings
Earnings from continuing operations for the purposes of earnings per share being profit for the year from continuing operations 1,565 962 4,442
30 June2015 30 June2014 31 December 2014
Number of shares '000
Weighted average number of ordinary shares in issue 124,611 115,019 117,550
Weighted average number of shares in Employee Share Ownership Trusts - (368) (184)
Weighted average number of shares in issue for the purposes of basic earnings per share 124,611 114,651 117,366
Effect of dilutive potential ordinary shares due to share options 46 - -
Weighted average number of shares in issue for the Purposes of diluted earnings per share 124,657 114,651 117,366
Basic and Diluted Earnings per share 1.26p 0.84p 3.78p
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 of £0.2 million paid in the second quarter of
2015, after certain trading targets were 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:-
Six monthsto 30 June2015£000 Six monthsto 30 June2014£000 Year to 31December2014£000
Net assets acquired
Other intangible assets - 663 4,280
Property, plant and equipment - 76 195
Inventories - 72 538
Trade and other receivables - 453 2,219
Cash and bank balances - - 432
Bank loans and overdrafts - (532) (532)
Trade and other payables - (681) (2,315)
Current tax liabilities - (16) (312)
Finance lease liabilities - (56) (141)
Deferred tax liabilities - (133) (858)
Net (liabilities)/assets acquired - (154) 3,506
Goodwill arising on acquisition 83 1,001 4,858
Total consideration 83 847 8,364
Satisfied by:
Cash 246 684 4,951
Deferred consideration (163) 163 2,788
Shares - - 625
Total consideration 83 847 8,364
Net cash outflow arising on acquisition
Cash consideration (246) (684) (4,951)
Cash and bank balances acquired - - 432
Bank loans and overdrafts assumed - (532) (532)
Net cash outflow (246) (1,216) (5,051)
9. Notes to the cash flow statement Six monthsto 30 June2015£000 Six monthsto 30 June2014£000 Year to 31December2014£000
Operating profit 2,308 1,735 6,646
Adjustments for:
Amortisation of intangible assets 384 147 428
Depreciation of property, plant and equipment 530 487 1,020
Gain on disposal of property, plant and equipment (2) (35) (8)
Operating cash flows before movements in working capital 3,220 2,334 8,086
Increase in inventories (1,363) (1,224) (1,194)
Decrease/(increase) in receivables 1,606 1,069 (4,119)
(Decrease)/increase in payables (417) (784) 4,193
Decrease in provisions - (30) (30)
Employer pension contributions less amounts recognised in income statement (excluding additional contribution) (1,421) (1,395) (2,854)
Cash generated from/(absorbed by) operations 1,625 (30) 4,082
Income taxes paid (75) (385) (793)
Interest paid (225) (202) (446)
Net cash inflow/(outflow) from operating activities 1,325 (617) 2,843
Movement in net debt
(Decrease)/increase in cash and cash equivalents (591) 140 1,132
Increase in bank borrowings (230) (11,824) (11,349)
Decrease in bank loans - 6,000 6,000
New finance lease facilities (402) (56) (683)
Cash flows from payment of finance lease liabilities 100 35 83
Movement in net debt in the period (1,123) (5,705) (4,817)
Opening net debt (10,732) (5,915) (5,915)
Closing net debt (11,855) (11,620) (10,732)
Net debt comprises:-
Cash and cash equivalents 659 258 1,250
Bank borrowings (11,579) (11,824) (11,349)
Net bank debt (10,920) (11,566) (10,099)
Finance lease liabilities
Due within one year (284) (16) (155)
Due outwith one year (651) (38) (478)
Closing net debt (11,855) (11,620) (10,732)
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. Retirement benefit obligations
The figures below have been prepared by Aon Hewitt and are based on the
results of the triennial actuarial valuation as at 1 May 2014, updated to 30
June 2015, 30 June 2014 and 31 December 2014. The assets in the scheme and
the net liability position of the scheme as calculated under IAS 19 are as
follows:
Investment class 30 June2015£000 30 June2014£000 31 December2014£000
Equities
UK equities and equity funds 5,905 5,486 5,677
Overseas equity funds 10,948 9,654 10,216
Multi-asset diversified funds 25,514 17,974 18,541
Bonds
Liability Driven Investment funds 13,810 15,516 22,195
Corporate bond fund 11,003 10,082 11,263
Other
Cash 782 220 98
Fair value of assets 67,962 58,932 67,990
Present value of scheme liabilities (80,022) (72,117) (81,863)
Pension scheme deficit (12,060) (13,185) (13,873)
Deferred tax asset (see note 11) 2,412 2,637 2,775
Pension scheme deficit net of related deferred tax asset (9,648) (10,548) (11,098)
These amounts were calculated using the following principal assumptions as
required under IAS 19:
Assumptions 30 June 2015 30 June 2014 31 December 2014
Discount rate 3.60% 4.30% 3.50%
Rate of increase in salaries 0.00% 0.00% 0.00%
Rate of increase in pensions in payment 3% or 5% for fixed increases or 3.30% for LPI 3% or 5% for fixed increases or 3.30% for LPI 3% or 5% for fixed increases or 3.30% for LPI
Inflation assumption (RPI) 3.20% 3.30% 3.00%
Inflation assumption (CPI) 2.30% 2.40% 2.10%
Life expectancy beyond normal retirement age of 65
Male 22.8 years 22.7 years 22.7 years
Female 25.1 years 25.1 years 25.1 years
25.1 years
30 June2015£000 30 June2014£000 31 December2014£000
Movement in scheme deficit in the period
At start of period (13,873) (15,896) (15,896)
Current service cost (83) (67) (126)
Employer contributions 1,504 3,962 5,480
Net finance cost (230) (314) (594)
Remeasurement of pension scheme liability in the period 622 (870) (2,737)
At end of period (12,060) (13,185) (13,873)
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 Six monthsto 30 June2015£000 Six monthsto 30 June2014£000 Year to 31December2014£000
Discount rate movement of +0.1% 1,280 1,226 1,285
Inflation rate movement of +0.1% (380) (288) (393)
Mortality movement of +0.1 year in age rating 288 238 295
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.
Six monthsto 30 June2015£000 Six monthsto 30 June2014£000 Year to 31December2014£000
Movement in fair value of scheme assets
Scheme assets at start of period 67,990 54,238 54,238
Interest income 1,187 1,245 2,488
Return on scheme assets (exc. amounts shown in interest income) (901) 1,221 9,184
Contributions from sponsoring companies 1,504 3,962 5,480
Contribution from scheme members 42 38 79
Benefits paid (1,860) (1,772) (3,479)
Scheme assets at end of period 67,962 58,932 67,990
Movement in present value of defined benefit obligations
Obligations at start of period (81,863) (70,134) (70,134)
Current service cost (83) (67) (126)
Interest cost (1,417) (1,559) (3,082)
Contribution from scheme members (42) (38) (79)
Changes in assumptions underlying the defined benefit obligations 1,523 (2,091) (11,921)
Benefits paid 1,860 1,772 3,479
Obligations at end of period (80,022) (72,117) (81,863)
Investments
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. At the start of February 2014, the investment in fixed interest
government gilts was transferred into a liability-driven investment fund,
which concentrates solely on interest rate and inflation protection
strategies, to provide a more effective hedge against the impact of both
interest rates and inflation on the liabilities in the scheme.
As a result, despite the reductions in bond yields in 2014 causing a
significant increase in liabilities, improved investment returns helped offset
this position.
Funding
Following the completion of the triennial actuarial valuation at 1 May 2014,
Macfarlane Group PLC is now paying deficit reduction contributions in
accordance with an agreement with the scheme trustees to reduce the deficit
over 10 years. The next triennial actuarial valuation of the scheme is due at
1 May 2017.
11. Deferred tax 30 June2015£000 30 June20143000 31 December2014£000
Deferred tax asset on pension scheme deficit
At start of period 2,775 3,179 3,179
(Charge)/credit on actuarial movement in the period applied through statement of comprehensive income (124) 174 548
Charge through income statement based on payments made to reduce deficit in the period (239) (716) (952)
Deferred tax asset on pension scheme deficit (see note 10) 2,412 2,637 2,775
Deferred tax asset on other timing differences
At start of period 470 449 449
Acquisition (see note 8) - - (2)
Credit through income statement - 466 23
Deferred tax asset on other timing differences 470 915 470
Total deferred tax assets at end of period 2,882 3,552 3,245
Deferred tax liability on other intangible assets
At start of period (1,019) (253) (253)
Acquisition (see note 8) - (133) (856)
Credit through income statement
Movement in other intangible assets in the period 74 30 90
Deferred tax liability at end of period (945) (356) (1,019)
12. 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 2015 will be
disclosed in the Group's Annual Report for the year ending 31 December 2015.
On 8 May 2015, Peter Atkinson and John Love were granted options over 775,254
and 360,206 ordinary shares respectively under the Macfarlane Group PLC Long
Term Incentive Plan. These Performance Share Plan awards are based on targets
around Earnings per share, Total Shareholder Return and Sales levels for the
year ended 31 December 2017.
During 2014, Peter Atkinson, the Group's Chief Executive, exercised options
over 551,372 ordinary shares of 25p each. The consideration paid for the
shares was £143,357.
The directors are satisfied that there are no other related party transactions
occurring during the six month period which require disclosure.
13. Interim Report
The interim report will be posted to shareholders on 9 September 2015. Copies
will be available from the registered office, 21 Newton Place, Glasgow G3 7PY
and available on the Company's website, www.macfarlanegroup.com, from that
date.
This information is provided by RNS
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