Half-year Report

28 August 2025

MACFARLANE GROUP PLC

("MACFARLANE GROUP", "THE COMPANY", "THE GROUP")

INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2025

Full year outlook in line with market expectations

1 See note 2 for reconciliation of Alternative Performance Measures (before charging amortisation and deferred contingent consideration adjustments) to Statutory Measures.

Key Financial Highlights

· Group revenue increased by 13% to £146.6m (H1 2024: £129.6m).

· Group adjusted operating profit reduced by 22% to £9.8m (H1 2024: £12.5m).

· Basic and diluted earnings per share were 2.32p per share (H1 2024: 4.55p per share) and 2.32p per share (H1 2024: 4.51p per share) respectively.

· Distribution generated revenues of £110.4m (H1 2024: £110.9m) with adjusted operating profit of £4.8m (H1 2024: £9.3m).

· Manufacturing Operations increased revenues to £39.2m (H1 2024: £21.3m) and reported adjusted operating profit of £5.0m (H1 2024: £3.2m).

· Net cash inflow from operating activities of £12.4m (H1 2024: £14.1m) reflects continued management of working capital.

· Net bank debt was £15.2m on 30 June 2025, following a net cash outflow of £13.3m since 31 December 2024, after £16.5m (H1 2024: £5.0m) attributable to acquisitions and capital expenditure.

· The Group is operating well within its bank facility of £40.0m which runs until 30 November 2027 with options to extend to November 2029.

· Pension scheme surplus of £9.2m on 30 June 2025 (31 December 2024: £9.6m) with the Group not required to make any further contributions.

· Interim dividend of 0.96p per share (H1 2024: 0.96p per share) - to be paid on 9 October 2025 to shareholders on the register as at 12 September 2025 (ex-dividend date 11 September 2025).

2025 Trading Outlook

Performance improvement expected in H2 2025 through seasonal trading uplift and actions the management team is taking to manage input cost changes, mitigate operating cost increases, convert our strong pipeline of new business and deliver synergies from the Pitreavie acquisition. The full year outlook for 2025 is in line with market expectations.

Aleen Gulvanessian, Chair of Macfarlane Group PLC, commented on the interim results: "As noted in the trading update on 10 July, market conditions have been challenging in H1 2025 due to economic headwinds and uncertainty.

"Whilst Distribution has experienced weaker than expected demand, delays in new business decision-making and pressure on profit margins, Manufacturing Operations has performed more robustly. Manufacturing Operations' performance was driven by good contributions from the acquisitions of Polyformes Limited in July 2024 ("Polyformes") and The Pitreavie Group Limited in January 2025 ("Pitreavie") combined with stronger demand from customers, particularly in the defence and aerospace sectors.

"The recently launched share buyback programme will continue as planned.

"Despite the current market conditions, the Board remains confident that our strengthened sales team, differentiated customer proposition and proven executional skills mean the medium-term prospects for the Group are positive."

Legal Entity Identifier (LEI): 213800LVRYDERSJAAZ73

Notes to Editors:

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

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.

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

1. See note 2 for reconciliation of Alternative Performance Measures (before charging amortisation and deferred contingent consideration adjustments) to Statutory Measures.

The main features of Packaging Distribution performance in H1 2025 were as follows:

· Weak customer demand across most sectors has resulted in revenue being marginally lower than H1 2024.

· Despite a strong pipeline, new business in H1 2025 was £3.7m compared to £4.5m in H1 2024, reflecting delays in customer decision-making.

· Gross margins were lower in H1 2025 at 35.6% (H1 2024: 37.9%), but more consistent with H2 2024 (36.4%). This reflects the timing of the pass-through of increased input prices, the competitive environment in a weak market and one of our second-tier corrugate suppliers going into administration.

· Operating expenses at 31.2% of revenue (H1 2024: 29.5%) due to investment in the quality of our sales team, the deployment of our new website, the well-documented increases in National Insurance and National Minimum Wage, additional property costs relating to higher-than-expected rent increases and excess costs associated with the East Midlands consolidation which was completed at the end of July 2025.

· As a consequence, adjusted operating profit as a percentage of revenue decreased to 4.3% (H1 2024: 8.4%).

Interim Results - Management Report (continued)

The priorities for Packaging Distribution in H2 2025 are to:

· Accelerate new business momentum through effective application of our leading sales tools, processes, World Class Sales training and the recent sales recruitment programme.

· Continue to effectively manage raw material input price changes.

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

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

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

· Strengthen our key supplier relationships.

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

· Achieve benefits from information technology investments and our relaunched web-based solutions offer to provide customers with more effective online access to our full range of products and services.

· Accelerate the progress we have made in Europe through our "Follow the Customer" programme.

· Continue to develop a pipeline of high-quality acquisitions in the UK and Europe.

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

Manufacturing Operations comprises our nine Macfarlane Packaging Design and Manufacture business units focused on design, manufacture and assembly of 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 supply 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, household equipment, food and drink. 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.

1. See note 2 for reconciliation of Alternative Performance Measures (before charging amortisation and deferred contingent consideration adjustments) to Statutory Measures.

Interim Results - Management Report (continued)

The main features of Manufacturing Operations performance in H1 2025 were:

· Increase in revenue of £17.9m to £39.2m due to:

· £17.8m of revenue from the acquisitions of Polyformes in July 2024 and Pitreavie in January 2025.

· organic growth of 0.3% including increases in internal supply to Distribution.

· Gross margins have decreased to 41.0% (H1 2024: 44.3%) due primarily to the effect of Pitreavie, which operates at lower margins and, to a lesser extent, the impact of increasing input prices.

· Operating expenses remain well controlled.

· 55% increase in adjusted operating profit.

· Reduction in adjusted operating profit as a percentage of revenue to 12.7% (H1 2024: 15.1%).

The priorities for Manufacturing Operations in H2 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 raw 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.

· Develop a pipeline of further high-quality acquisitions in the UK.

Interim Results - Management Report (continued)

The Group operates a formal framework for the identification and evaluation of the major business risks faced by each business and determines an appropriate course of action to manage these risks.

The principal risks and uncertainties which could impact on the performance of the Group, together with the mitigating actions, were outlined on pages 26 to 30 in our Annual Report and Accounts for 2024 (available on our website at www.macfarlanegroup.com). These remain the same for the remaining six months of the current financial year with those considered highest priority for the Group summarised below:

· Given the range of prolonged geopolitical and economic uncertainties within the UK and other markets, there is an ongoing risk this will adversely affect our ability to deliver upon agreed strategic initiatives. We may also need to adapt our business quickly in order to limit the impact upon the Group's results, prospects and reputation.

· The markets we operate in are changing, with: customers increasingly aware of the environmental impact of their packaging; increasing environmental regulatory requirements for packaging suppliers, such as the Plastic Tax introduced in 2022 and the introduction of the Extended Producer Responsibility ("EPR") levy in 2025; increasing likelihood of disruption to the operations of the Group through extreme weather events such as flooding, storm damage and water stress, impacting the business directly and disrupting supply chains; investors looking to invest in companies that demonstrate strong environmental credentials; and UK Government's commitment to net zero carbon emissions by 2050 and the profound changes that is likely to drive across the economy.

· Failure to respond to strategic shifts in the market, including the impact of weaknesses in the economy as well as disruptive behaviour from competitors, changing customer needs (e.g. changing customer priorities between online and physical buying) and the increasing regulatory interventions targeted at improving sustainability could limit the Group's ability to continue to grow revenues or potentially contribute to a failure to meet market expectations.

· The Group's businesses are impacted by disruption to our supply chains as well as inflationary pressures. In particular, changes to commodity-based raw material prices, manufacturer energy costs, foreign exchange movements as well as increased bureaucracy, freight and tariff costs related to imports; lead to increases to supplier input pricing and the potential for erosion of profitability within the Group's businesses if we are unable to pass these onto customers.

· The increasing frequency and sophistication of cyber-attacks is a risk which potentially threatens the confidentiality, integrity and availability of the Group's data and IT systems. These attacks could also cause reputational damage and fines in the event of personal data being compromised.

Interim Results - Management Report (continued)

Cautionary Statement

This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategy and the potential for the strategy to succeed. It should not be relied on by any other party or for any other purpose.

This report and the condensed financial statements contain certain forward-looking statements relating to operations, performance and financial status. By their nature, such statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors, including both economic and business risk factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Nothing in this Interim Results Statement should be construed as a profit forecast or an invitation to deal in the securities of the Group.

Responsibility Statement

The Directors of Macfarlane Group PLC during the first six months of 2025 were

A. Gulvanessian Chair

P.D. Atkinson Chief Executive

I. Gray Finance Director

J.W.F. Baird Non-Executive Director

D.L. Whyte Non-Executive Director

D.B. Stirling Non-Executive Director

The Directors confirm that, to the best of their knowledge:-

(i) the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;

(ii) the interim management report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(iii) the interim management report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Approved by the Board of Directors on 28 August 2025 and signed on its behalf by

………………………….. ………………………

Peter D. Atkinson Ivor Gray

Chief Executive Finance Director

MACFARLANE GROUP PLC

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)

FOR THE SIX MONTHS ENDED 30 JUNE 2025

MACFARLANE GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE SIX MONTHS ENDED 30 JUNE 2025

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

FOR THE SIX MONTHS ENDED 30 JUNE 2025

MACFARLANE GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

FOR THE SIX MONTHS ENDED 30 JUNE 2024

MACFARLANE GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2024

MACFARLANE GROUP PLC

CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) AT 30 JUNE 2025

MACFARLANE GROUP PLC

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

FOR THE SIX MONTHS ENDED 30 JUNE 2025

1. Basis of preparation

Macfarlane Group PLC is a public company listed on the London Stock Exchange, incorporated and domiciled in the United Kingdom and registered in Scotland.

The Group's annual financial statements for the year ended 31 December 2024 were prepared in accordance with United Kingdom adopted international accounting standards. This condensed set of interim financial statements has been prepared in accordance with United Kingdom adopted International Financial Reporting Standard IAS 34 Interim Financial Reporting.

This condensed set of interim financial statements has been prepared applying the accounting policies that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 December 2024. There were no major changes from the adoption of new IFRS's in 2024.

Key sources of estimation uncertainty

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. Due to the nature of estimation, the actual outcomes may well differ from these estimates. The Directors have assessed the impact of climate change and consider that this does not have a significant impact on these financial statements. The key sources of estimation uncertainty that have a significant effect on the carrying amounts of assets and liabilities are discussed below:

Retirement benefit obligations

The determination of any defined benefit pension scheme liability is based on assumptions determined with independent actuarial advice. The key assumptions used include discount rate and inflation rate, for which a sensitivity analysis is provided in Note 11. The Directors consider that those sensitivities represent reasonable sensitivities which could occur in the next financial period.

Valuation of deferred contingent consideration

The valuation of deferred contingent consideration at both acquisition date and the balance sheet date is measured at fair value. This involves the assessment of forecast future cash flows against earn-out targets agreed with the sellers of acquired businesses over a period of up to two years. This assessment is based on the Directors' best estimate using the information available at the effective dates outlined above. However, there remains a risk that the actual payment differs from the amount assumed as consideration within the PPA accounting as detailed in note 9 and from the amount recorded as a liability at the balance sheet date. Deferred contingent considerations are recognised as a liability in trade and other payables and are remeasured to fair value of £6.3m at the balance sheet date, all due within one year, based on a range of outcomes between £Nil and £8.8m. Trading in the post-acquisition period supports the remeasured value of £6.3m.

MACFARLANE GROUP PLC

SIX MONTHS ENDED 30 JUNE 2025

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of preparation

Critical accounting judgements

Property provisions

Property provisions of £1.5m have been recognised as at 30 June 2025 (2024: £1.6m), representing the Directors' best estimate of dilapidations on property leases. The Directors have made the judgement that no provision is required for certain property leases where there is no intention to exit, having considered a number of factors including the extent of modifications to the property, the terms of the lease agreement, and the condition of the property.

No other significant critical judgements have been made in the current or prior year.

Business activities, risks and financing

The Group's business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the Interim Management Report.

The Group's principal financial risks in the medium term relate to liquidity and credit risk. Liquidity risk is managed by ensuring that the Group's day-to-day working capital requirements are met by having access to banking facilities with suitable terms and conditions to accommodate the requirements of the Group's operations. The Group has a committed borrowing facility of £40m with Bank of Scotland PLC and HSBC UK Bank plc in place until November 2027. The facility bears interest at normal commercial rates and carries standard financial covenants in relation to interest cover and leverage. Credit risk is mitigated by applying considerable rigour in managing the Group's trade receivables. The Directors believe that the Group is adequately placed to manage its financial risks effectively, despite any economic uncertainty.

The Directors have reviewed the Group's cash and profit projections, which they believe are based on prudent market data and past experience taking account of reasonably possible changes in trading performance given current market and economic conditions. The Directors are of the opinion that these projections show that the Group should be able to operate within its current facilities and comply with its banking covenants.

In assessing the going concern basis, the Directors have considered the Group's business activities, the financial position of the Group and the Group's risks and uncertainties. The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. For this reason, this condensed set of financial statements has been prepared on the going concern basis.

Approval and review of condensed financial statements

These condensed financial statements were approved by the Board of Directors on 28 August 2025. As in previous years, the set of condensed financial statements for the half-year is unaudited.

2. Alternative performance measure

In measuring the financial performance and position, the financial measures used in certain limited cases are derived from the reported results in order to eliminate factors which due to their unusual nature and size distort year-on-year comparisons to a material extent and/or provide useful information to stakeholders. Where such items arise, the Directors will classify such items as separately disclosed and provide details of these items to enable users of the accounts to understand the impact on the financial statements. To the extent that a measurement under Generally Accepted Accounting Principles ("GAAP") is adjusted for a separately disclosed item, this is referred to as an Alternative Performance Measure ("APM"). We believe that the APMs defined below, and the comparable GAAP measurement, provides a useful basis for measuring the underlying financial performance and position of the Group and its businesses when compared to similar companies.

Adjusted operating profit is defined as operating profit before customer relationships and brand values amortisation, and deferred contingent consideration adjustments.

Adjusted profit before tax is defined as profit before tax, customer relationships and brand values amortisation, and deferred contingent consideration adjustments.

Adjusted diluted earnings per share is defined as diluted earnings per share before, customer relationships and brand values amortisation per share and related tax per share and deferred contingent consideration adjustments per share.

MACFARLANE GROUP PLC

SIX MONTHS ENDED 30 JUNE 2025

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)