Annual Report and Accounts 2024

View our Annual Report and Accounts, our Sustainability Report and other information about Macfarlane Group at www.macfarlanegroup.com

1 From continuing operations.

2 See page 98 for reconciliation of alternative profit measures (before amortisation and deferred contingent consideration adjustments) to statutory measures.

Revenue1

Adjusted profit before tax1,2

£270.4m

£25.0m

2023 £280.7m

2023 £25.8m

2022 £290.4m

Diluted earnings per share1

9.74p

2023 9.34p

2022 9.84p

Dividend per share

3.66p

2023 3.59p

2022 3.42p

(% of revenue)

Adjusted operating profit1,2

10.1%

2023 9.8%

2022 8.6%

(tCO2e per £m of revenue – market based)

Carbon intensity

17.4

2023 18.1

2022 19.0

(market based)

Carbon emissions

4,703 tCO2e

2023 5,083 tCO2e

2022 5,504 tCO2e

(‘AFR’)

Accident Frequency Rate

0.27

2023 0.22

2022 0.23

(% of revenue)

(% of revenue)

Gross margin1

Operating profit1

Profit before tax1

39.0%

8.6%

£20.9m

2023 37.6%

2023 7.9%

2023 £20.3m

2022 33.8%

2022 7.4%

2022 £19.9m

2022 £23.5m

Strategic report Governance Financial statements Shareholder information 01

Aleen Gulvanessian

The markets in which Macfarlane Group PLC1 operates have been challenging throughout 2024 and the management team has responded effectively, enabling the business to produce a profit performance for the year in line with market consensus.

We have also made good progress on implementing our sustainability agenda which has resulted in a further reduction in our carbon footprint.

The performance of the Group in 2024 has been achieved through the hard work and commitment of our people and I thank them for all their efforts, energy and enthusiasm.

Financial

The Group has delivered resilient financial results through improvement in new-business development, the completion of two high-quality acquisitions and effective control of operating costs. These actions have enabled us to offset sales price deflation and weaker demand. Management’s effective response to the difficult trading conditions is demonstrated through the improvement in the operating profit margin.

The Group’s strong operating cash flows enabled the continued allocation of capital to invest in the business, fund good-quality acquisitions, progressive dividend payments as well as maintaining a low level of net bank debt.

The Group has negotiated an improved borrowing facility of £40m with Bank of Scotland PLC and HSBC UK Bank plc. This facility, which is available until November 2027, provides options to extend it by a further two years and by an additional £20m. It will support the continuing investment in the Group’s organic growth and acquisition strategy in the medium term.

The pension scheme remains in surplus and, following conclusion of the latest triennial valuation, the Company is no longer making contributions to the scheme.

Sustainability

In 2024, the Group achieved a reduction in its Scope 1 and 2 carbon emissions and completed the mapping of its Scope 3 emissions. The Group is committed to reducing its direct impact on the environment through further electrification of our delivery fleet and expanding the use of renewable energy.

We continue to support our customers to help them navigate packaging regulations and to ensure their products are effectively protected using the minimum amount of packaging, made from the most sustainable materials and packed using the most cost-effective processes.

Board changes

On 1 January 2025, David Stirling was appointed to the Board as an independent Non-Executive Director following the retirement of Bob McLellan on 31 December 2023. Having previously been Group CEO of Zotefoams plc, David brings extensive listed-company and protective packaging industry experience which will be of significant benefit to the Board.

Proposed dividend

The Board proposes a final dividend of 2.70 pence per share, amounting to a full-year dividend of 3.66 pence per share (2023: 3.59 pence per share), an increase of 2% on 2023. Subject to the approval of shareholders at the Annual General Meeting on Tuesday 13 May 2025, the final dividend will be paid on Friday 13 June 2025 to those shareholders on the register on Friday 16 May 2025 (ex-dividend date 15 May 2025).

Outlook

We expect 2025 to be another challenging year within the markets in which we operate, particularly with increased employment costs resulting from the recent UK budget and the introduction by the UK Government of Extended Producer Responsibility (‘EPR’) fees. Management is taking actions to mitigate these incremental costs and we are working with our customers to help them manage the impact of EPR.

We start 2025 with new-business momentum as customers increasingly recognise the added-value we can offer both on an environmental and cost-savings basis. The recently-announced purchase of The Pitreavie Group Limited (‘Pitreavie’) demonstrates our continued ability to identify and execute high-quality acquisitions and we have a strong pipeline of opportunities.

We are well positioned to continue our profitable growth in 2025.

Aleen Gulvanessian, Chair

27 February 2025

1 Macfarlane Group PLC (‘Macfarlane Group’, ‘the Group’, ‘Macfarlane’).

02 Macfarlane Group PLC Annual Report and Accounts 2024

Key financial highlights 2024

The key financial highlights of Macfarlane Group 2024 are set out below:

Group revenue reduced by 4% to £270.4m (2023: £280.7m).

Group profit before tax increased by 3% to £20.9m (2023: £20.3m).

Group adjusted operating profit as a percentage of revenue improved to 10.1% (2023: 9.8%).

Basic and diluted earnings per share were 9.76p per share (2023: 9.44p per share) and 9.74p per share (2023: 9.34p per share) respectively.

Strategic report Governance Financial statements Shareholder information 03

How we create value from innovative packaging solutions

This business model is underpinned by our five strategic focus areas:

Profitable organic growth

We are committed to growing organically through offering innovative and sustainable packaging solutions to customers in target markets.

Acquisition growth

We have an active pipeline of opportunities in both the UK and mainland Europe, and aim to execute around two per year.

The key capabilities and resources we have which provide sustainable competitive advantage in our marketplace.

The fundamental activities of our business that utilise these resources and capabilities.

Our inputs

Our business model

Financial

The funds available to us

Our consistent cash generation; the strength of our balance sheet and our financial discipline provide us with the capital to re-invest in the business and make quality acquisitions.

Value and quality

Organisational, knowledge-based intangibles

We use our packaging industry experience and skills to create sustainable packaging products and solutions for our customers.

Social and environmental

Our relationships with our stakeholders

We have a unique culture that is embedded throughout our business. We also actively engage with our key stakeholders.

Operations

Infrastructure, capability and tools

We stay close to our customers through our local service centres, and have flexible manufacturing capability as well.

Human

The skills and know-how of our employees

The commitment, expertise and diversity of our people, are the main drivers of our business and the key to our continued success.

How we do it

• Adapting our flexible geographic footprint to stay close to our customers

• Adopting a ‘stock and serve’ approach

• > 1,000 global suppliers of protective packaging

• Effective in-house specialist manufacturing supply

> 1,000global suppliers ofprotective packaging

> 20,000customers throughoutthe UK

39sites

04 Macfarlane Group PLC Annual Report and Accounts 2024

39.0% gross margin (2023: 37.6%)

Adjusted operating profit1 down 1% to £27.4m

£6.8m in taxes paid

£5.8m in dividends paid to our shareholders

£25.4m cash generated from operations

Enhancing career opportunities through training

Improving knowledge through innovation

Empowering customers through training and education

NPS score of 62 (2023: 60)

Reduced our absolute CO2 footprint by 7%

Achieved Ecovadis silver rating (top 10% of all companies)

Supporting local communities through > 400 volunteering hours

40% female representation on Board including Chair

Financial

Improving operating margins and strong cash generation.

Value and quality

Our customers value our people, and their passion for our products.

Retention

Strong staff retention at management level.

Human

Our diversity is our strength, demonstrated by our lack of a gender pay gap. Our employees continue to deliver solutions and strong service to customers.

Protecting the health of employees through Operational Integrity excellence and wellbeing programmes

Promoting from within where possible, creating growth opportunities in the Company

Enhanced Employee Assistance Programme (‘EAP’) including 24/7 support and focus on mental health

Social and environmental

We are fully committed to supporting local communities and the environment.

Operational efficiency

We invest to make all our assets more productive – property, transport and people.

People development

Our people are our greatest asset, and we look to invest in our people at all levels to up-skill them to take on greater roles within the Company.

For more information on our people development see pages 43 to 44.

Environmental excellence

We are committed to reducing our environmental footprint, and supporting the communities we operate in.

For more information on our environmental excellence see pages 34 to 42.

By employing our capabilities and resources, we create the following value for our stakeholders including our customers, people, shareholders, suppliers, employees and the communities we operate within.

Creating value

Providing just-in-time service to our customers through ‘stock and serve’ distribution model

Utilising manufacturing division as a flexible support to distribution

Ensuring safety of customer products through protective packaging

Expanding our European offering through the ‘follow the customer’ strategy and acquisitions

Operations

Leading UK protective packaging distributor, with 27 Regional Distribution Centres (‘RDC’).

European expansion

Strong organic growth from ‘follow the customer’ strategy and benefit of PackMann acquired in 2022.

Growing manufacturing capability

Acquisition of Polyformes in 2024 and growing partnership with Packaging Distribution.

Note: In addition to the financial KPIs disclosed on this page and on page 1, the Group also uses the following non-financial KPIs: Net Promoter Score, GHG Emissions (tCO2e), Carbon Intensity (tCO2e per £m of revenue) and Accident Frequency Rate.

1 See page 98 for reconciliation of alternative profit measures (before amortisation and deferred contingent consideration adjustments) to statutory measures.

10.1%

adjusted operating profit1

32%

Female proportion of senior leadership team

89%

of our sites are now FSC certified (FSC® C149407)

Strategic report Governance Financial statements Shareholder information 05

 Packaging Distribution

 Manufacturing Operations

 Innovation Labs

 Head Offices

Macfarlane Group has the following third party support locations:

Italy, Greece, Spain

We design, manufacture and distributeprotective packaging to more than 20,000customers, across a diverse range of sectors, throughout the UK and Europe.

We are focused on customer needs with an established footprint in the UK and a growing presence in Europe.

06 Macfarlane Group PLC Annual Report and Accounts 2024

Employees by business segment (%)

2023

Revenue by region (%)

UK (£258.5m) 92%

Europe (£22.2m) 8%

2024

UK (£248.5m) 92%

Europe (£21.9m) 8%

2023

2023

Packaging Distribution (777) 72%

Manufacturing Operations (306) 28%

2024

Packaging Distribution (£244.9m) 87%

Manufacturing Operations (£35.8m) 13%

Revenue by business segment (%)

Packaging Distribution (£228.8m) 85%

Manufacturing Operations (£41.7m) 15%

2023

2024

Packaging Distribution (771) 69%

Manufacturing Operations (350) 31%

Employees by region (%)

UK (1,042) 95%

Europe (51) 5%

2024

UK (1,077) 95%

Europe (54) 5%

Strategic report Governance Financial statements Shareholder information 07

Group revenue reduced by 4% and adjusted operating profit by 1% in 2024 with continued weak demand from customers, sales price deflation and inflation in operating costs being offset by an improved new business performance, effective management of changes in input prices and the execution of two good quality acquisitions.

Operating profit grew by 7% due to the net effect of changes in the fair value of deferred contingent consideration related to acquisitions (2024: credit £0.8m; 2023 charge £1.5m). The Group has also made good progress against its ESG objectives, details of which are set out on pages 31 to 48.

2025 outlook

The Group continues to invest in actions to grow sales both organically and through acquisitions. Despite the challenging market conditions the Group is well positioned to benefit from improvements in the macroeconomic outlook.

Our strategy and business model have proved to be resilient and we expect 2025 to be another year of growth for the Group, underpinned by the acquisition of Pitreavie at the start of 2025 which enhances both our Packaging Distribution and Manufacturing operations, the strong new business pipeline building on the progress made in 2024 and planned mitigation actions to offset the pending increases in employment and regulatory costs impacting the UK.

Peter D. Atkinson, Chief Executive

27 February 2025

Peter Atkinson

A resilient business

We have a resilient business model, as outlined in the areas below.

Breadth of customers and markets served

Range of long establishedsupplier relationships

Focus and depth of expertise in protective packaging

Performance driven culture

Value added proposition

Bespoke product and service range

08 Macfarlane Group PLC Annual Report and Accounts 2024

Q&A with the Macfarlane Group Chief Executive, Peter Atkinson

Some ‘quick fire’ questions for Macfarlane’s CEO, Peter Atkinson, from corporate communications specialist, Callum Spreng.

Macfarlane is generally seen as a resilient business. Why is this?

The breadth of markets we serve means we’re not over exposed to the fortunes of any particular industry. This, coupled with our experienced team, our added value customer proposition and a blend of organic and acquisition growth plans, means that our performance has been resilient across a range of economic cycles.

Where do you see the key opportunities for future growth?

We have already seen significant new business wins in 2024 and our customer proposition – based on the ‘Significant Six’ factors for making protective packaging choices – adds value for customers. The protection of high value and fragile items is an important growth opportunity, particularly in the medical, aerospace and space markets, and our Manufacturing Division is well positioned to grow in these sectors. We will continue to grow our European presence in response to customer demand and with many further acquisition opportunities in the UK and Europe.

What cost pressures do you see for Macfarlane in 2025?

In common with many businesses, the standout cost increase that Macfarlane faces in 2025 is the increase in employers National Insurance contributions. It’s not something we can influence so we’re evaluating a number of options to offset this increase.

How are you managing the need for more sustainable packaging?

All companies have a responsibility to operate efficiently and sustainably and the recently-introduced Extended Producer Responsibility (‘EPR’) legislation brings that into sharp focus for our retail customers. Our role is to help all customers cost effectively protect their products in storage and transit using the least amount of packaging that is made from sustainable materials.

What are you doing to reduce the carbon footprint of Macfarlane Group?

We’ve devoted significant resource to addressing Macfarlane’s sustainability. Key initiatives are: 8% of our delivery fleet and 42% of our car fleet are fully electric; we are rolling out the installation of LED lighting and solar panels within our estate; and meanwhile 86% of the electricity we use comes from renewable sources. Macfarlane holds an EcoVadis silver accreditation too. We’ll continue to focus on reducing our Scope 1 and 2 emissions and we’ve now completed the mapping of our Scope 3 emissions.

How important is Europe to Macfarlane’s future?

It is critically important that we ‘follow the customer’ and this has driven our growth in Europe. Some of our larger customers want to source their protective packaging products in a consistent way across a broader geographic footprint and they want Macfarlane to be there to support them.

Can you talk a little about the recent Pitreavie acquisition?

Pitreavie is an excellent example of our acquisition criteria in action. It’s a strong, profitable business, with a good management team. It will be earnings-enhancing from the outset and it mirrors the larger Macfarlane business closely, being both a distributor and a manufacturer of protective packaging. There are potential synergies which we can build on and it improves our access to the important Scottish food and drink sector.

What will be different for Macfarlane in the next few years?

We’ve a well-developed strategy and we’ll continue to implement this, focusing our Packaging Distribution and Manufacturing businesses on both organic development and acquisitive growth. We’ll support our retail customers through the challenges of the EPR legislation. We will see more business being transacted online as we roll out our new website. I also expect our presence in Europe to grow as we increase support for our customers.

You lead an experienced leadership team. Do you have sufficient strength in depth?

The experience of the leadership team and their understanding of the markets in which we operate is critical. Recently we have added to our leadership strength with the recruitment of two new MDs for our Packaging Distribution business – one covering the UK and the other, Europe.

We will continue to grow our European presence in response to customer demand and with many further acquisition opportunities in the UK and Europe.

Strategic report Governance Financial statements Shareholder information 09

Macfarlane’s Packaging Distribution business is the UK’s leading specialist distributor of protective packaging materials, with a growing presence in Europe. Macfarlane operates in the UK, Ireland, the Netherlands and Germany from 27 Regional Distribution Centres (‘RDCs’) and three satellite sites, supplying industrial and retail customers with a comprehensive range of protective packaging materials on a local, regional, and national basis.

Competition in the packaging distribution market is from local and regional protective packaging specialist companies as well as national and international distribution generalists who supply a range of products, including protective packaging materials.

Macfarlane competes effectively on a local basis through its strong focus on customer service, its breadth and depth of product offering and through the recruitment and retention of high-quality staff with good local market knowledge. On a national and international basis, Macfarlane has market focus, expertise and a breadth of product and service knowledge, all of which enable it to compete effectively against non-specialist packaging distributors.

Packaging Distribution benefits its customers by enabling them to ensure their products are cost-effectively protected in transit and storage through the supply of a comprehensive product range, single source stock-and-serve supply, just-in-time delivery, tailored stock management programmes, electronic trading and independent advice on both packaging materials and packing processes. Through the ‘Significant Six’1 sales approach we

reduce our customers’ ‘Total Cost of Packaging’, improve their sustainability performance and reduce their carbon footprint. This is achieved through supplying effective packaging solutions, optimising warehousing and transportation, reducing damages and returns, and improving packaging efficiency.

2024 trading

The main features of Packaging Distribution’s performance in 2024 were:

Organic revenue reduced by 8% compared to 2023 due to:

 – Weak demand environment and selling price deflation; offset by

 – New business 23% higher than 2023, with continued success from our Innovation Labs and Significant Six programme.

Revenue growth of £4.0m from the acquisitions of Allpack Direct in March 2024 and Gottlieb in April 2023.

Effective management of input prices resulting in an improvement in gross margin to 37.1% (2023: 35.7%).

Operating costs decreased by 3%, despite inflation in property and labour costs, and represented 28.3% of revenue (2023: 27.1%).

Improvement in adjusted operating profit as a percentage of revenue to 8.8% (2023: 8.6%).

Adjusted operating profit decreased by 4% in 2024 due the factors above whilst operating profit increased by 5% due to the net effect of changes to the fair value of deferred contingent consideration related to acquisitions.

Macfarlane Group’s trading activities comprise Packaging Distribution and Manufacturing Operations.

Revenue

£228.8m

2023 £244.9m

2022 £259.7m

Operating profit

£17.3m

Return on sales

7.6%

2023 £16.5m

2023 6.7%

2022 £17.1m

2022 6.6%

10 Macfarlane Group PLC Annual Report and Accounts 2024

New business is 23% higher than 2023, with continued success from our Innovation Labs and Significant Six programme.

Future

The priorities for Packaging Distribution in 2025 are focused on growing revenue and improving profitability through the following actions:

Accelerate new business momentum through effective use of our leading sales tools and processes – ‘Packaging Optimiser’2, Significant Six and our Innovation Labs.

Accelerate the progress we have made in Europe through our ‘Follow the Customer’ programme and the PackMann acquisition.

Realise the benefits of the new distribution centre in the East Midlands.

Progress further high-quality acquisitions in the UK and Europe.

Support our customers to manage the impact of Extended Producer Responsibility legislation and reduce their carbon footprint through offering more sustainable packaging solutions.

Continue to effectively manage input price changes.

Strengthen our key supplier relationships.

Develop both sales and cost synergies through the relationship with our Manufacturing Operations, including the recent acquisition of Pitreavie.

Achieve benefits from our information technology investments.

Relaunch our web-based solutions offer to provide customers with more effective online access to our full range of products and services.

Reduce operating costs through efficiency programmes in sales, logistics and administration and, where possible, mitigate the impact of increases in National Insurance Contributions and National Minimum Wage.

Maintain our focus on working capital management to facilitate future investment and manage effectively the ongoing bad debt risk within the current economic environment.

1 ‘Significant Six’ represents the six key costs in a customers’ packing process being transport, warehousing, administration, damages and returns, productivity and customer experience.

2 Packaging Optimiser is a Macfarlane developed software tool that measures the financial and carbon benefits of the Significant Six selling approach.

Strategic report Governance Financial statements Shareholder information 11

We are constantly looking at ways to support our customers to deliver against their sustainability goals without compromising on quality.

Delivering sustainable packaging solutions for our customers

Childrensalon is an award-winning, British childrenswear retailer that provides clothing from fine designers around the world. Alongside their core values of family, creativity, innovation and heritage, Childrensalon is dedicated to helping build a fairer, greener and brighter future for today’s children.

Macfarlane has been working with Childrensalon for over ten years, continually improving their packaging, to reduce its environmental impact and help ensure a great overall customer experience.

Childrensalon challenged Macfarlane with a new project to provide gift and transit packaging for their products that reduces the amount of packaging material used, increases parcel security and recyclability, enhances customer experience, lowers transport costs and cuts emissions associated with packaging manufacture.

Macfarlane’s packaging solution removed 54 tonnes of material, increased the amount of recycled content and made the entire package fully recyclable through existing household collection services. Through smarter design the new packaging also helped improve operational efficiency and reduced the need for logistics vehicles in transportation.

12 Macfarlane Group PLC Annual Report and Accounts 2024

Working on this packaging project with Macfarlane has been an incredibly rewarding experience. Macfarlane’s commitment to innovation and environmental responsibility made it possible to achieve these impressive results.

Head of Logistics – Outbound, Childrensalon

Strategic report Governance Financial statements Shareholder information 13

Revenue

£47.5m

2023 £40.9m

2022 £35.0m

Operating profit

£6.3m

Return on sales

15.0%

2023 £5.6m

2023 15.5%

2022 £4.4m

2022 14.3%

Manufacturing Operations comprises our Macfarlane Packaging Design and Manufacture business, GWP acquired in February 2021, Suttons acquired in March 2023, B&D Group acquired in September 2023 and Polyformes acquired in July 2024.

Manufacturing Operations designs, manufactures, assembles, and distributes bespoke protective packaging solutions for customers requiring cost-effective methods of protecting high value products in storage and transit. The primary components we use are corrugate, timber, foam and specialist cases. The businesses operate from six manufacturing sites, in Grantham, Westbury, Swindon, Salisbury, Chatteris and Leighton Buzzard, and a sales/design office in Barnstaple supplying both directly to customers and through the national RDC network of the Packaging Distribution business.

Key market sectors are aerospace, space, medical equipment, electronics, automotive, e-commerce retail and household equipment. The markets we serve are highly fragmented, with a range of locally based competitors. We differentiate our market offering through technical expertise, design capability, industry accreditations and national coverage through the Packaging Distribution business.

2024 trading

The main features of Manufacturing Operations performance in 2024 were:

Increase in revenue of £6.5m, with growth from Suttons and B&D Group acquired in 2023 and Polyformes acquired in 2024 being offset by selling price deflation.

As expected, selling price deflation caused the gross margin to weaken slightly compared to 2023.

Higher operating expenses, due to the impact of the acquisitions.

Increase in adjusted operating profit of 10% but decrease in adjusted operating profit as a percentage of revenue to 15.3% (2023: 16.1%) due to selling price deflation.

Future

The priorities for Manufacturing Operations in 2025 are to:

Increase momentum of new business growth in target sectors, e.g. medical, aerospace and space.

Prioritise new sales activity in our higher added-value bespoke composite pack product range.

Work with our customers to effectively manage material price changes.

Continue strengthening the relationship with our Packaging Distribution businesses to create both sales and cost synergies.

Achieve both sales and cost synergies through closer working with the recently acquired businesses referred to above as well as Pitreavie acquired at the start of 2025.

Supplement organic growth through progressing further high-quality acquisitions in the UK.

14 Macfarlane Group PLC Annual Report and Accounts 2024

Strategic report Governance Financial statements Shareholder information 15

We are delighted to continue our growth within the Macfarlane Group, where we can leverage our expertise in foam conversion and bespoke manufacturing to add value for shareholders and customers alike.

Richard Belger, Director, Polyformes Limited

The Polyformes production facility in Leighton Buzzard.

16 Macfarlane Group PLC Annual Report and Accounts 2024

Adding capability and expertise to our manufacturing operations

Established in 1977, Polyformes Limited designs and converts foam primarily for specialist protective packaging applications supplying to customers in the aerospace, medical, defence and industrial sectors, throughout the UK. There are significant opportunities for both Polyformes and Macfarlane to benefit from access to their respective industry expertise, ranges of bespoke protective packaging products and common supplier base.

Polyformes has partnered with Snap-on UK for over 20 years. With their unrivalled routing capability and laser etching, they have designed and developed bespoke foam inserts in a ruggedised outer case for the Snap-on loan tool programme. Their expensive specialist tools are hired and shipped between engineers across Europe as well as the UK. The reusable transit solution is virtually indestructible and makes the monitoring of loan tools much easier to control.

To enhance their offering, using the patented Imageforme™ technology, Polyformes has transformed the standard laser cut mechanics mats into a vibrant promotional statement, as well as providing a more durable working surface for the engineers they serve.

The Polyformes Limited acquisition in July 2024 demonstrates further progress in our ‘buy and build’ strategy to develop the Group’s protective packaging business through a combination of organic and acquisitive growth.

An example of a branded mechanics mat produced for Snap-on UK.

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Trading review

The Group saw a reduction in organic revenue of 8% during 2024, driven by weakness in demand and lower sales pricing to customers, in particular in Packaging Distribution (8% below 2023) with Manufacturing Operations performing more robustly (in line with 2023). This was offset by a strong contribution from the acquisitions made in 2023 and 2024. Group revenue was £270.4m, a decrease of £10.3m from 2023.

Profit before tax for 2024 increased to £20.9m (2023: £20.3m). This was after crediting £0.5m (2023: charge of £1.5m) for changes in the fair value of deferred contingent consideration related to acquisitions.

Adjusted profit before tax1 decreased by 3% to £25.0m (2023: £25.8m).

Each month our management reporting provides the information to review the productivity of all locations in the Packaging Distribution business using performance against benchmark metrics as a percentage of revenue for gross margin, payroll and related employment costs, property costs, other overheads and adjusted operating profit. The resultant adjusted operating profit by location is also compared to the original budget and prior year performance.

Our Manufacturing Operations also measure relevant operating costs to revenue ratios and adjusted operating profit generated.

Taxation

The tax charge for 2024 was £5.4m, a rate of 25.7%, above the prevailing rate of 25% mainly due to the share option costs, deferred contingent consideration adjustments and acquisition related costs not being deductible for tax purposes. This compared with a tax charge of £5.3m on the 2023 profit before tax, a rate of 26.2%.

The Group has no uncertain tax treatments with HMRC in the UK or any overseas tax authorities.

Earnings per share

Basic and diluted earnings per share amounted to 9.76p (2023: 9.44p) and 9.74p (2023: 9.34p) respectively, broadly reflective of the movement in profitability. The calculations take account of the dilution caused by the issue of LTIP awards and deferred bonus payable in shares.

Dividends

A dividend of 0.96p per share was paid on 10 October 2024. A further dividend of 2.70p per share is subject to approval by shareholders at the AGM in May 2025 and is not included as a liability in these financial statements.

Dividend cover is 2.7 times (2023: 2.6 times). The Group continues to balance the aim to pay an attractive level of dividend against the need to retain funds in the business to finance growth, fund acquisitions and meet capital expenditure requirements.

Cash flow and net bank debt

During 2024 the Group negotiated a new £40m revolving credit facility with Bank of Scotland PLC and HSBC UK Bank plc to replace the existing £35m invoiced discount facility which was committed until 31 December 2025. The new facility commenced on 28 November 2024 and comprises a committed borrowing facility of up to £40m to November 2027, with options to extend a further two years and an accordion of £20m. The facility is secured over the assets of Macfarlane Group PLC and its UK subsidiaries, bears interest at normal commercial rates and carries standard financial covenants in relation to interest cover and leverage. The Group has been in compliance with the covenants of both the invoice discounting facility, which terminated on 28 November 2024, and the new revolving credit facility throughout 2024 and 2025 to date.

20 acquisitions in 11 years