Macfarlane Group

Macfarlane Group PLC – 2020 Preliminary Results

Dylan MacdonaldMacfarlane Group, Macfarlane Packaging


Financial Highlights  






Turnover £230.0m £225.2m 2.1%
Profit before tax £13.0m £11.9m 9.6%
Proposed full year dividend 2.55p 0.69p 369.6%
Basic earnings per share 6.45p 6.09p 5.9%

*   Restatement resulting in a reduction in Turnover and Profit before tax of £0.2m relating to backdated duty with details set out on pages 21 and 22.

Macfarlane Group PLC (“the Group”) has performed well in 2020, achieving a resilient performance, which despite the challenging market conditions due to the impact of Covid-19, is ahead of our previous expectations.

At the outset of the Covid-19 pandemic, we acted decisively and responsibly to ensure that we protected the interests of our employees as well as other key stakeholders and all our sites remained operational serving customers throughout the year.  The Group performance in 2020 is a testament to the quality and commitment of our people, the diversity of our customer base and our strong added value proposition.

The Board wishes to thank all of our people for their exceptional hard work and dedication, which ensured that we effectively supported our customers throughout 2020 in the most difficult circumstances.


Macfarlane Group achieved a 2.1% increase in sales to £230.0m in 2020, (2019: Restated* £225.2m), with 2020 profit before tax increasing to £13.0m (2019: Restated* £11.9m), 9.6% ahead of 2019.

Packaging Distribution increased sales by 2.6% in 2020 to £201.7m (2019: £196.7m).  Sales revenue from existing customers benefited from underlying strength in the e-commerce, household essentials and medical sectors partially offset by weaker demand from sectors most affected by Covid-19, namely automotive, aerospace, high street retail and hospitality.  Sales also benefited from the 2019 acquisitions of Ecopac and Leyland Packaging, as well as the January 2020 acquisition of Armagrip.  Gross margin in Packaging Distribution at 32.5% showed improvement on the prior year (2019: 31.1%) and reflected effective management of input price movements, customer mix changes and increased online activity.  The growth in sales and margin was partially offset by an increase in bad debt and end of lease property provisions totalling £1.9m which resulted in Packaging Distribution achieving a 12.8% increase in operating profit to £14.0m (2019: £12.4m).

Sales in Manufacturing Operations at £28.3m (2019: Restated* £28.5m) showed a 0.9% decrease on the previous year.  Strong demand from the food, medical and household essentials sectors in the Labels business was more than offset by weaker demand from the aerospace and automotive sectors in the Packaging Design and Manufacture business.  Operating profit in 2020 decreased to £0.4m (2019: Restated* £1.1m).

After net finance costs of £1.4m (2019: £1.6m), Group profit before tax totalled £13.0m, £1.1m ahead of 2019.  Basic and diluted earnings per share were 6.45p (2019: Restated* 6.09p) and 6.42p (2019: Restated* 6.07p) respectively.


The Board is proposing a final dividend of 1.85 pence per share, amounting to a full year dividend of 2.55p pence per share, compared to the prior year dividend of 0.69 pence per share which was impacted by the cancellation of the proposed final dividend of 1.76 pence per share, as one of the key Covid-19 cash conservation measures. Subject to the approval of shareholders at the Annual General Meeting on Tuesday 11 May 2021, the final dividend will be paid on Thursday 3 June 2021 to those shareholders on the register at Friday 14 May 2021.

Net Bank Debt

The Group’s net bank borrowing at 31 December 2020 reduced to £0.5m from £12.7m at the previous year-end.  The improved cash position has been achieved primarily through effective management of working capital.  The full benefit of all government support and deferral programmes totalling £5.4m was repaid during the year.  Deferred considerations on the Ecopac and Leyland acquisitions in 2019 totalling £1.8m were paid during 2020.

The Group’s bank facility of £30.0m with Lloyds Banking Group has been extended until December 2025 and accommodates normal working capital requirements as well as supporting acquisition funding.

Pension Scheme

The Group’s pension deficit at 31 December 2020 reduced to £1.5m (2019: £6.5m).  Although the discount rate decreased, increasing the value of pension liabilities, this was offset by increases in the value of the scheme’s holding in liability-driven investments and other investments.

The triennial valuation of the pension scheme on 1 May 2020 has now been concluded and the Group has agreed with the Scheme’s Trustees to reduce contributions from £3.1m to £1.3m per annum with effect from 1 May 2021.  The recovery period for deficit contributions now runs until April 2024.


2021 has started well despite the ongoing impact of Covid-19.  There are still significant uncertainties about the duration of disruption caused by lockdowns and the consequential impact on demand levels which means that 2021 will be another challenging year.  However the Board is confident that, given the resilience seen in 2020, the strength of our business model and the commitment of our people, Macfarlane Group will progress in 2021 and is well positioned to benefit when the UK economy begins to recover.

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