Macfarlane Grp. Regulatory News (MACF)

11 Sep 2007 07:00

Macfarlane Group PLC11 September 2007 11 September 2007 MACFARLANE GROUP'S INTERIM RESULTS TO 30 JUNE 2007 Group profit before taxation from continuing operations for the six months of £0.5m Sales growth of 12% from continuing operations Increasing focus being brought to Group activities Net debt of £9.5m at June 2007, Group expects to be strongly cash positive in second half of 2007 Dividend intentions maintained Archie Hunter, Chairman of Macfarlane Group PLC today said:- "I am pleased to be able to report continuing improvement in Macfarlane Group'strading performance in the six months to 30 June 2007 and significant progressin bringing increased focus to the activities of the Group. In the six months to 30 June 2007, pre-tax profit from the Group's continuingoperations was £0.5 million compared with a loss of £0.4 million for the sixmonths to 30 June 2006 on sales up 12% from £51.2 million to £57.4 million. Our Packaging Distribution business is now benefiting from the investments madelast year in the management team and in new business development resources. Theoutcome is an operating profit for the half year of £0.3 million against a lossof £0.5 million a year ago on sales 15% ahead of the same period in 2006. Ourmarket-leading position creates clear potential for profitable growth in thisbusiness both organically and by acquisition. The operating profit from all ofour Manufacturing Operations was £0.4 million, a similar level to the previousyear. The Board has concluded that the Group's interests would be best served by theconcentration of management's attention on those business activities where wehave developed good market positions and growth potential. Accordinglydiscussions with prospective purchasers for certain non-strategic activitieswithin Manufacturing Operations are being pursued. As a result, these activitiesrequire to be categorised as discontinued operations in this statement withcomparative figures amended accordingly. Given the commercial sensitivities ofthese discussions, the Board believes that it would not be in the Group'sinterests to say anything further at this time. Further announcements will bemade when appropriate. The discontinued operations referred to above are expected to give rise to animpairment loss of £1.8 million for which provision has been made, however theywill have a considerable positive cash impact. This, together with anticipatednet cash generation from trading activities in the six months to 31 December2007 indicates that the Group will largely eliminate bank borrowings by the endof the year. The Board is actively seeking acquisitions to complement itsstrategic activities. As previously indicated, an interim dividend of 1p per share will be paid onThursday 25 October 2007 to those shareholders on the register at 28 September2007. It has been an active six months and the Board is satisfied that progress isbeing made. The second half of 2007 has maintained the momentum of the firsthalf with trading in July and August in line with our expectations. There areconsiderable opportunities to be pursued and in each of our business activitieswe are undertaking initiatives aimed at delivering sustained profitable growth." Further information: Archie S. Hunter Chairman 0141 333 9666Peter D. Atkinson Chief Executive 0141 333 9666John Love Finance Director 0141 333 9666 Trading performance Packaging Distribution Macfarlane's Packaging Distribution business is the leading UK distributor of acomprehensive range of packaging consumable products. In a highly fragmentedmarket, Macfarlane is the market leader with a 10% market share. The businessoperates through Regional Distribution Centres (RDCs) supplying customers on alocal, regional and national basis. The business enables customers to packagetheir products cost effectively by providing them with a comprehensive productrange, single source supply, just in time delivery and tailored stock managementprogrammes. In the first half of 2007, Packaging Distribution recorded an operating profitof £0.3m, compared to a loss of £0.5m in the same period in 2006. Our objectivein the remainder of the year is to strengthen our position in the UK marketthrough organic growth and targeted acquisitions. In the first half of 2007 sales are 15% ahead of the same period in 2006.Organic growth is 10% ahead of 2006 with the benefits of the investments in ourRDC managers and the New Business Development team beginning to be demonstrated.Packaging2u.co.uk, our web-based packaging business, is continuing to make goodprogress. In the second half of 2006 we acquired Bloomfield Supplies. The business tradedsuccessfully in the first half of 2007 and its performance is in line with ourexpectations. During the second half of 2007 we will fully integrate theBloomfield business into the Macfarlane RDC network. We currently have nine of our RDCs performing at acceptable levels of return.Four RDCs are demonstrating levels of improvement in line with our expectationsand the three underperforming RDCs are progressing and will be majorbeneficiaries of the integration of the Bloomfield business, which will enablethem to exit the year in profit. The pricing environment remains volatile, however despite this pressure, ourgross margin in the first half of 2007 at 30.5% showed an encouragingimprovement on the 29.9% recorded in the same period in 2006. Gross marginimprovement continues to be a key area of management focus. Our priorities for the Distribution business in the second half of 2007 are to: •Accelerate the current strong sales momentum, particularly through the New Business Development and National Account teams; •Successfully integrate Bloomfield Supplies into the Macfarlane RDC network; •Continue to ensure effective recovery of supplier price increases to protect our gross margin; •Maintain the level of performance improvement in the underperforming RDCs; •Ensure the Packaging2u.co.uk business accelerates its current momentum; and •Enhance current organic growth with targeted acquisitions. Trading performance Manufacturing Operations Macfarlane operates a range of manufacturing businesses, producing self adhesiveand re-sealable labels, plastic injection moulded closures and dispensers,bespoke composite transit packaging and foam based packaging and protectivecomponents. Macfarlane Labels operates from two plants, Kilmarnock and Dublin, supplyingdesign and production of high quality self-adhesive and re-sealable labels forconsumer packs. In the first half of 2007 Labels sales were broadly in line with the same periodin 2006 and showed signs of stabilisation following the 11% reduction in 2006.During the first half sales improved in self-adhesive labels and a slowedslightly in re-sealable labels. However with our first US customer nowoperational we expect re-sealable label sales to strengthen in the second halfof the year. The cost savings implemented in the second half of 2006 are enabling thebusiness to operate with a lower cost base and the profitability of the Labelsbusiness in the first half of 2007 was ahead of the same period in 2006. Macfarlane Plastics operates from Wicklow in Ireland designing and producinginjection-moulded closures and dispensers primarily used in the packaging ofpowdered consumer products. The Plastics business experienced sales in the firsthalf of 2007 around the same level as 2006. However weaker margins resulted infirst half profits being slightly down on the equivalent period in 2006. We operate Packaging Manufacturing operations from two UK sites - Grantham andWestbury, both of which manufacture custom-designed packaging solutions forcustomers looking for cost-effective methods of protecting higher-value productsin storage and transit. Sales in our UK Packaging Manufacturing operations were ahead of the same periodin 2006 with good growth in sales to Macfarlane Distribution and new business.However pressure on raw material pricing and planned overhead investmentsresulted in first half profits only slightly ahead of the same period in 2006. Our US operations in California and Mexico focus on foam-based packagingcomponents primarily for use in the electronics, healthcare and fresh producesectors. First half sales in the US/Mexico were down on the same period in 2006primarily due to unfavourable market conditions. In order to counteract the weakdemand, cost reduction programmes have been implemented including the increaseduse of our low-cost manufacturing facility in Tijuana. Despite these actions theUS/Mexico business made a loss in the first half of 2007 compared with a smallprofit in the equivalent period in 2006. Our priorities for Manufacturing Operations in the second half of 2007 are to: • Maintain our momentum in the strategic repositioning of the self-adhesive labels business; • Improve our penetration in the re-sealable labels market, particularly in the USA; • Penetrate new geographic markets in our Plastics business through the leveraging of our strong relationships with global customers; • Utilise the strong relationship with Macfarlane Distribution to strengthen sales in UK Packaging Manufacture; • Ensure the planned overhead investments in UK Packaging Manufacture reflect in improved profitability; and • Fully utilise the lower cost benefits of our new Tijuana manufacturing facility to improve profitability in our US/Mexico foam business. Future Outlook The first half of 2007 has demonstrated an encouraging uplift in profitperformance primarily driven by our Packaging Distribution business. Themomentum we have created should strengthen in the second half of the year basedon the effective implementation of planned management actions. Macfarlane Group is intent on giving greater focus to the Group's activities inorder to concentrate management resources on accelerating growth and financialreturns from the key businesses. INDEPENDENT REVIEW REPORT TO MACFARLANE GROUP PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007, which comprises the group income statement,the group statement of recognised income and expense, the group reconciliationof movements in equity, the group balance sheet, the group cash flow statementand related notes 1 to 11. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Deloitte & Touche LLP Chartered Accountants Glasgow United Kingdom 11 September 2007 MACFARLANE GROUP PLC GROUP INCOME STATEMENT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months to Six months to Year to 30 June 2007 30 June 2006 31 December 2006 Note £000 £000 £000Continuing operationsRevenue 3 57,389 51,249 106,313Cost of sales (38,978) (35,019) (72,522) ------- ------- ------- Gross profit 18,411 16,230 33,791 Distribution expenses (2,998) (2,742) (5,490)Administrative expenses (14,674) (13,674) (26,294) ------- ------- ------- Operating profit/(loss) 3 739 (186) 2,007Finance costs 4 (1,758) (1,816) (3,296)Investment income 4 1,472 1,562 2,762 ------- ------- ------- Profit/(loss) before tax 453 (440) 1,473Tax 5 (187) (278) (315) ------- ------- ------- Profit/(loss) for theperiod from continuingoperations 8 266 (718) 1,158 Discontinued operations 7(Loss)/profit for theperiod from discontinuedoperations (1,989) 990 893 ------- ------- ------- (Loss)/profit for theperiod 8 (1,723) 272 2,051 ======= ======= ======= Earnings/(loss) perordinary share of 25p 8From continuing operationsBasic 0.24p (0.64p) 1.03p ======= ======= ======= Diluted 0.24p (0.63p) 1.02p ======= ======= ======= From continuing anddiscontinued operationsBasic (1.53p) 0.24p 1.82p ======= ======= ======= Diluted (1.53p) 0.24p 1.81p ======= ======= ======= MACFARLANE GROUP PLC GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months to Six months to Year to 31 30 June 2007 30 June December 2006 2006 Note £000 £000 £000 Exchangedifference ontranslation offoreign operations (135) (390) (764)Actuarial gains ondefined benefitpension schemes 10 2,055 2,186 5,835Tax on itemstaken directlyto equity (842) (655) (1,751) --------- --------- -------- Net incomerecogniseddirectly inequity 1,078 1,141 3,320(Loss)/profitfor the period (1,723) 272 2,051 --------- --------- -------- Totalrecognisedincome andexpense forthe period (645) 1,413 5,371 ========= ========= ======== MACFARLANE GROUP PLC GROUP RECONCILIATION OF MOVEMENTS IN EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months to Six Months to Year to 31 30 June 30 June December 2006 2007 2006 Note £000 £000 £000 (Loss)/profitfor the period (1,723) 272 2,051Dividends toequity holdersin the period 6 (1,125) (1,125) (1,125)Exchangedifferences ontranslation offoreignoperations (135) (390) (764)Actuarialgains onpensionschemes 10 2,055 2,186 5,835Taxation onitems takendirect toequity (842) (655) (1,751)Credit inrespect ofshare basedpayments 59 - 140 -------- --------- -------- Movements inequity in theperiod (1,711) 288 4,386Opening equity 29,825 25,439 25,439 -------- --------- -------- Closing equity 28,114 25,727 29,825 ======== ========= ======== MACFARLANE GROUP PLC GROUP BALANCE SHEET AT 30 JUNE 2007 (UNAUDITED) As at As at As at 31 December 30 June 30 June 2006 2007 2006 £000 £000 £000Non-current assets NoteGoodwill 18,646 17,195 18,973Property, plant and equipment 9,303 13,360 13,112Investment property 1,701 1,701 1,701Other receivables 1,059 1,049 1,057Deferred tax asset 11 3,610 5,806 4,560 -------- -------- -------- Total non-current assets 34,319 39,111 39,403 -------- -------- -------- Current assetsInventories 8,261 9,016 9,811Trade and other receivables 27,180 29,235 29,508Cash and cash equivalents 890 942 2,195 -------- -------- -------- Total current assets 36,331 39,193 41,514Non current assets classified as heldfor sale 7 8,149 - - -------- -------- -------- 44,480 39,193 41,514 -------- -------- -------- -------- -------- -------- Total assets 78,799 78,304 80,917 ======== ======== ======== Current liabilitiesTrade and other payables 22,551 24,334 26,710Tax liabilities 220 726 663Obligations under finance leases 41 39 44Bank overdrafts and loans 11,107 7,368 7,747Liabilities directly associated withassets classified as held for sale 7 3,551 - - -------- -------- -------- Total current liabilities 37,470 32,467 35,164 -------- -------- -------- Net current assets 7,010 6,726 6,350 -------- -------- -------- Non-current liabilitiesRetirement benefit obligations 10 13,180 20,035 15,873Obligations under finance leases 35 75 55 -------- -------- -------- Total non-current liabilities 13,215 20,110 15,928 -------- -------- -------- -------- -------- -------- Total liabilities 50,685 52,577 51,092 ======== ======== ======== -------- -------- --------Net assets 28,114 25,727 29,825 ======== ======== ======== EquityShare capital 28,755 28,755 28,755Revaluation reserve 167 167 167Own shares held by employee share trust (1,406) (1,406) (1,406)Translation reserve Continuingactivities (149) (425) (800)Discontinued activities (787) - -Retained earnings 1,534 (1,364) 3,109 -------- -------- -------- Total equity 28,114 25,727 29,825 ======== ======== ======== MACFARLANE GROUP PLC GROUP CASH FLOW STATEMENT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months to Six months to Year to 31 30 June 30 June December Note 2007 2006 2006 £000 £000 £000 Net cash(outflow)/inflow fromoperatingactivities 9 (2,518) (2,291) 160 -------- -------- -------- Investing activitiesInterestreceived 11 - 9Disposal ofsubsidiaryundertaking 7 - 2,174 2,102Acquisition ofsubsidiaryundertaking - - (1,262)Proceeds ondisposal ofproperty,plant andequipment 29 1,522 1,472Purchases ofproperty,plant andequipment (288) (417) (604) -------- -------- -------- -------- -------- --------Net cash (usedin)/frominvestingactivities (248) 3,279 1,717 -------- -------- -------- Financing activitiesDividends paid (1,125) (1,125) (1,125)Repayments ofobligationsunder financeleases (23) (253) (268)Increase/(decrease) in bankoverdrafts 3,370 (462) (83) -------- -------- -------- -------- -------- --------Net cash usedin financingactivities 2,222 (1,840) (1,476) -------- -------- -------- Net decreasein cash andcashequivalents (544) (852) 401 Cash and cashequivalents atbeginning ofperiod 2,195 1,794 1,794 -------- -------- -------- ======== ======== ========Cash and cashequivalents atend of period 1,651 942 2,195 ======== ======== ======== MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 1. General information The information for the year ended 31 December 2006 does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985, but hasbeen extracted from the Group's statutory accounts which have been filed withthe Registrar of Companies. The auditors' report on these statutory accounts wasunqualified pursuant to Section 235 of the Companies Act 1985 and did notcontain a statement under sub-section 237 of that Act. 2. Basis of preparation These interim financial statements for the six months ended 30 June 2007 havebeen prepared on the basis of the accounting policies set out in the Group's2006 statutory accounts and which were approved by the Board of Directors on 11September 2007. The Group has not applied IAS 34 "Interim Financial Reporting"which is not mandatory for UK groups in the preparation of these interimfinancial statements. The financial statements have been prepared in accordancewith the recognition and measurement criteria of IFRS and the disclosurerequirements of the Listing Rules. The interim financial statements areunaudited but have been formally reviewed by the auditors and their report tothe Company is set out on page 4. The interim report will be sent to shareholders on 17 September 2007 and beavailable to members of the public at the Company's Registered Office, 21 NewtonPlace, Glasgow G3 7PY from 19 September 2007. 3. Segmental information The Group's activities are centred around two principal activities, with thoseManufacturing Operations being classified as discontinued in the current andprior years disclosed separately. (i) Packaging Distribution The distribution of packaging materials from a network of 16 RegionalDistribution Centres in the UK. (ii) Manufacturing Operations The manufacture and supply of self-adhesive and re-sealable labels andplastic-injection moulded products to a variety of FMCG customers in the UK andEurope and the manufacture, assembly and supply of timber, corrugated and foambased packaging materials in the UK and US/Mexico. MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 3. Segmental information (continued) Packaging Distribution Six months to Six Months to Year to 31------------------------ 30 June 30 June 2006 December 2006 2007 --- £000 £000 £000 Revenue 44,329 38,491 80,853Cost of sales (30,793) (26,984) (56,650) -------- --------- -------- Gross profit 13,536 11,507 24,203 Net operatingexpenses (13,268) (11,982) (23,767) -------- --------- -------- Operatingprofit/(loss) 268 (475) 436 ======== ========= ======== Manufacturing Operations Six months to Six Months to Year to 31-------------------------- 30 June 30 June 2006 December 2006 2007 --- £000 £000 £000 Revenue 13,060 12,758 25,460Cost of sales (8,185) (8,035) (15,872) -------- --------- -------- Gross profit 4,875 4,723 9,588Net operatingexpenses (4,404) (4,434) (8,017) -------- --------- -------- Operatingprofit 471 289 1,571 ======== ========= ======== Trading results Six months to Six Months to Year to 31 30 June 30 June 2006 December 2006 2007Group segment £000 £000 £000 PackagingDistribution 44,329 38,491 80,853ManufacturingOperations 13,060 12,758 25,460 -------- --------- -------- Revenue continuingoperations 57,389 51,249 106,313 ======== ========= ======== PackagingDistribution 268 (475) 436ManufacturingOperations 471 289 1,571 -------- --------- -------- Operatingprofit/(loss)continuingoperations 739 (186) 2,007 ======== ========= ======== Net assets 30 June 30 June 2006 31 December 2006 2007Group segment £000 £000 £000 PackagingDistribution 16,729 11,784 16,425ManufacturingOperations 6,787 13,943 13,400 -------- --------- -------- Continuingoperations 23,516 25,727 29,825Discontinuedoperations 4,598 - - -------- --------- -------- Net assets 28,114 25,727 29,825 ======== ========= ======== MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 4. Finance costs Six months to Six Months to Year to 31 30 June 30 June 2006 December 2006 2007 £000 £000 £000 Interest onbank loans andoverdrafts (206) (305) (292)Interest onobligationsunder financeleases (4) (8) (12)Interest costof pensionschemeliabilities (1,548) (1,503) (2,992) -------- --------- --------- -------- --------- ---------Total financecosts (1,758) (1,816) (3,296) -------- --------- --------- Expectedreturn onpension schemeassets 1,453 1,364 2,631Investmentincome 19 198 131 -------- --------- ---------Totalinvestmentincome 1,472 1,562 2,762 -------- --------- --------- -------- --------- --------- Net financecosts (286) (254) (534) 5. Tax Six months to Six Months to Year to 31 30 June 30 June December 2006 2007 2006 £000 £000 £000Current taxUK corporationtax - - (57)Overseastaxation (21) (51) (86)Prior year 65 - 186 -------- --------- -------- Current tax 44 (51) 43Deferred tax (231) (227) (358) -------- --------- -------- Total (187) (278) (315) ======== ========= ======== Corporation tax has been provided for the period to 30 June 2007, reflecting theexpected tax rate for the full year on overseas earnings. The deferred taxcharge of £231,000 relates to the pension deficit and includes a charge inrespect of the reduction in the long-term rate of corporation tax from 30% to28% with effect from 31 March 2008. No tax has been provided on the UK results,reflecting the expected tax rate for the full year. 6. Dividends Six months to Six Months to Year to 31 30 June 30 June December 2006 2007 2006 £000 £000 £000Amounts recognised as distributionsto equity holders in the periodFinal dividendin respect ofthe year ended31 December2006 (1.00ppershare) (2006Interim 1.00pper share) 1,125 1,125 1,125 ======== ========= ======== Dividends are not payable on shares held in the employee share trust. The interim dividend payable on 25 October 2007 was declared on 11 September2007 and has therefore not been included as a liability in these financialstatements. MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 7. Discontinued operations The results for current and comparative periods are as follows:- Six months to Six Months to Year to 30 June 30 June 2007 2006 31 December 2006 £000 £000 £000 Revenue 10,836 13,154 23,753Cost of sales (7,183) (8,921) (15,977) -------- --------- --------- Gross profit 3,653 4,233 7,776Net operatingexpenses (3,742) (4,096) (7,537) -------- --------- --------- Operating(loss)/profit (89) 137 239Net interest paid (100) (115) (197)Impairment loss onremeasurement ofdiscontinuedoperations (1,800) - -Gain on disposal ofsubsidiaryundertaking - 920 849 -------- --------- --------- (Loss)/profit beforetax (1,989) 942 891Tax - 48 2 -------- --------- --------- Post-tax(loss)/profit fromdiscontinuedoperations (1,989) 990 893 ======== ========= ========= Non-current assets held for sale The major classes of assets and liabilities comprising the operations classifiedas held for sale at 30 June 2007 are as follows:- 30 June 2007 £000 Property, plant and equipment 2,078Inventories 1,148Trade and other receivables 4,162Cash and cash equivalents 761 -------- Total assets classified as held for sale 8,149Total liabilities associated with assets classified as held for sale (3,551) -------- Net assets classified as held for sale 4,598 ======== MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 7. Discontinued operations (continued) In January 2006, the Group's Hungarian subsidiary was sold, with the resultantgain on disposal being disclosed in the financial statements for 2006. Theamounts treated as disposed of in the comparative periods are as follows:- Six Months to Year to 30 June 2006 31 December 2006 £000 £000 Cash consideration (net of attributableexpenses) 2,174 2,102Deferred consideration 186 187 --------- ---------Total consideration (net of attributableexpenses) 2,360 2,289 --------- --------- Assets sold 1,925 1,925Liabilities directly associated with assetsheld for sold (485) (485) --------- --------- --------- --------- 1,440 1,440 --------- --------- --------- ---------Gain on disposal of subsidiary undertaking 920 849 ========= ========= 8. Earnings/(loss) per share Six months to Six Months to Year to 30 June 30 June 2007 2006 31 December 2006Earnings £000 £000 £000Earnings fromcontinuing anddiscontinuedoperations for thepurposes of earningsper share being netprofit attributableto equity holders ofthe parent (1,723) 272 2,051Add/(less):Loss/(profit) forthe year fromdiscontinuedoperations 1,989 (990) (893) -------- -------- --------- Earnings/(loss) fromcontinuingoperations for thepurposes of earningsper share being netprofit/(loss)attributable toequity holders ofthe parent 266 (718) 1,158 30 June 30 June 31 December 2006 2007 2006 Weighted averagenumber of ordinaryshares in issue '000 115,019 115,019 115,019Own shares inEmployee ShareOwnership Trusts'000 (2,491) (2,491) (2,491) -------- -------- --------- Weighted averagenumber of shares inissue for the 112,528 112,528 112,528Purposes of basic earnings per share'000Effect of dilutivepotential ordinaryshares due to shareoptions 192 970 601 -------- -------- --------- ======== ======== =========Weighted averagenumber of shares inissue for the 112,720 113,498 113,129Purposes of diluted earnings pershare '000 ======== ======== ========= MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 9. Notes to the cash flow statement Six months to Six Months to Year to 31 30 June 30 June December 2006 2007 2006 £000 £000 £000 Operatingprofit/(loss)Continuingoperations 739 (186) 2,007Discontinuedoperations (89) 137 239 -------- -------- ---------Profit/(loss)fromoperations 650 (49) 2,246Adjustments for:Depreciationof property,plant andequipment 1,048 1,521 2,136Gain ondisposal ofproperty,plant andequipment (24) (2) (191) -------- -------- --------- Operating cashflows beforemovements inworkingcapital 1,674 1,470 4,191 Decrease/(increase) ininventories 402 (213) (681)(Increase)/decrease inreceivables (1,834) (913) 58Decrease inpayables (1,338) (1,296) (999)Adjustment forpension schemefunding (736) (736) (1,630) -------- -------- --------- Cash generatedby operations (1,832) (1,688) 939Income taxespaid (389) (123) (195)Interest paid (297) (480) (584) -------- -------- --------- Net cash(outflow)/inflow fromoperatingactivities (2,518) (2,291) 160 ======== ======== ========= Cash outflows in respect of the discontinued operations for operating activitiesamounted to £509,000 for 2007 (2006, Inflow of £83,000 in the six months to 30June 2006 and an inflow of £1,277,000 for the year to 31 December 2006). Cashoutflows in respect of investing activities totalled £121,000 (2006, £65,000 inthe six months to 30 June 2006 and £440,000 for the year to 31 December 2006). Six months to Six Months to Year to 31 30 June 30 June December 2006 2007 2006Movement innet debt £000 £000 £000 (Decrease)/increase in cashand cashequivalents inperiod (544) (852) 401(Increase)/decrease in bankoverdrafts (3,370) 462 83Cash flowsfrom debt andleasefinancing 23 253 268 -------- -------- --------- Movement innet debt inthe year (3,891) (137) 752Opening netdebt (5,651) (6,403) (6,403) -------- -------- --------- Closing netdebt (9,542) (6,540) (5,651) ======== ======== ========= Net debt comprises:-Cash and cashequivalents 890 942 2,195Cash and cashequivalents inbusiness heldfor resale 761 - -Bankoverdrafts inbusiness heldfor resale (10) - -Bankoverdrafts andloans (11,107) (7,368) (7,747)Obligationsunder financeleases (76) (114) (99) -------- -------- --------- Closing netdebt (9,542) (6,540) (5,651) ======== ======== ========= Cash and cash equivalents (which are presented as a single class of assets onthe face of the balance sheet) comprise cash at bank and other short-term highlyliquid investments with maturity of three months or less. MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 10. Retirement benefit obligations The figures below have been based on the results of the triennial actuarialvaluation as at 1 May 2005, updated to 30 June 2007, 31 December 2006 and 30June 2006. The assets in the scheme, the net liability position of the scheme ascalculated under IAS 19 and the principal assumptions were: 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Fair value of assets 44,143 41,037 43,630Present value of scheme liabilities (57,323) (61,072) (59,503) -------- --------- -------- Pension scheme deficit (13,180) (20,035) (15,873)Deferred tax asset 3,689 6,011 4,762 -------- --------- -------- Pension scheme deficit net of relateddeferred (9,491) (14,024) (11,111)tax asset ======== ========= ======== The scheme's liabilities were calculated on the following bases as requiredunder IAS 19:Assumptions 30 June 2007 30 June 2006 31 December 2006Discount rate 5.80% 5.25% 5.25%Rate of increase in salaries 3.20% 3.00% 2.75%Rate of increase in pensions in 3% or 5% 3% or 5% 3% or 5%payment for fixed for fixed for fixed increases increases increases or 3.20% for or 2.75% for or 2.75% for LPI LPI LPIInflationassumption 3.20% 3.00% 2.75%Life expectancy beyond normalretirement date of 65Male 19.5 19.5 19.5Female 22.4 22.4 22.4 Six months to Six Months to Year to 30 June 30 June 2007 2006 31 December 2006Movement in schemedeficit in theperiod £000 £000 £000 At start of period (15,873) (22,977) (22,977)Current service cost (149) (221) (353)Employercontributions 798 1,116 1,925Curtailment gains 84 - 58Net finance costs (95) (139) (361)Actuarial gain inthe period 2,055 2,186 5,835 -------- --------- --------- At end of period (13,180) (20,035) (15,873) ======== ========= ========= MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2007 NOTES TO THE GROUP ACCOUNTS (UNAUDITED) 10. Retirement benefit obligations Six months to Six Months to Year to(continued) 30 June 30 June 2007 2006 31 December 2006Movement in assetsduring the period £000 £000 £000 Assets at start ofperiod 43,630 40,776 40,776Expected return onassets 1,453 1,364 2,631Actual less expectedreturn on assets (563) (1,542) 203Employercontributions 798 1,116 1,925Employeecontributions 98 110 248Benefits paid (1,273) (787) (2,153) -------- --------- --------- Assets at end ofperiod 44,143 41,037 43,630 ======== ========= ========= Six months to 30 June Six Months to 30 June Year to 2007 2006 31 December 2006Movement inliabilities duringthe period £000 £000 £000 Liabilities at startof period (59,503) (63,753) (63,753)Service costs (149) (221) (353)Interest costs (1,548) (1,503) (2,992)Curtailment gain 84 - 58Employeecontributions (98) (110) (248)Actuarial gain onliabilities in theperiod 2,618 3,728 5,632Benefits paid 1,273 787 2,153 -------- --------- --------- Liabilities at endof period (57,323) (61,072) (59,503) ======== ========= ========= 11. Deferred tax asset 30 June 30 June 31 December 2006 2007 2006 £000 £000 £000 Deferred tax asset on pension schemedeficit at start of period 4,762 6,893 6,893Charge on actuarial movement in theperiod applied through statement ofrecognised income and expense (842) (655) (1,751)Charge through income statement basedon payments made to reduce deficit inthe period (231) (227) (380) -------- --------- --------- Deferred tax asset on pension schemedeficit (see note 10) 3,689 6,011 4,762Deferred tax liabilities on timingdifferences (79) (205) (202) -------- --------- --------- Net deferred tax asset 3,610 5,806 4,560 ======== ========= ========= This information is provided by RNS The company news service from the London Stock Exchange