Profits and income rise
Macfarlane Group parcels up a ninth year of growth
Packaging company Macfarlane Group achieved another year of growth in 2018 with a 20% rise in profit before tax and exceptional items to £11.2 million (2017: £9.3m). Sales were 11% higher at £217.3m, (2017: £196m)
The trading performance continued the positive trends of recent years and was in line with market expectations.
Glasgow-based Macfarlane said that following a High Court judgement involving Lloyds Banking Group pension schemes on 26 October, it has made a £330,000 charge against the results as an exceptional item.
This charge represents past service cost in respect of the equalisation of Guaranteed Minimum Pension benefits between 1990 and 1997.
Stuart Paterson, chairman, (pictured), said: “The increase in profits in 2018 represents the ninth consecutive year of profit growth for Macfarlane Group. 2019 has started well and our profitability in the year to date is ahead of the same period in 2018.
“Our strategy continues to focus on the delivery of sustainable profit growth by concentrating on added value products and services in our target market sectors, combined with efficiency improvements and the identification and completion of value-enhancing acquisitions.
“This strategy, which is continuously refined, has served all stakeholders well in recent years and we remain confident that it will continue to do so.
“Macfarlane Group’s performance in 2018 reflects the successful implementation of this strategy and despite the ongoing uncertainties surrounding Brexit and the difficulties being experienced in the retail sector, we are confident that the group will demonstrate further progress in 2019.”
The board is proposing a final dividend of 1.65 pence per share, amounting to a full year dividend of 2.3 pence per share, a 10% increase on the prior year’s dividend of 2.1 pence per share. Subject to the approval of shareholders at the Annual General Meeting on 14 May, this dividend will be paid on 6 June to those shareholders on the register on 17 May.
The group’s net bank borrowing at 31 December decreased by £1.1m to £13.2m from £14.3m at the prior year-end. The bank facility of £30m with Lloyds Banking Group is available until June 2022 and accommodates normal working capital requirements and supports acquisition funding.
The pension deficit decreased by £2m to £9.8m, (2017: £11.8m) despite the exceptional charge for equalising GMP benefits taken in 2018. Although the discount rate increased, which reduced the value of the pension liabilities, this was largely offset by reductions in the value of the scheme’s holding in liability-driven investments, reflecting an appropriate prudent investment strategy for a mature pension scheme.