Macfarlane Group

Website: Macfarlane Group
Index: FTSE Small Cap
EPIC: MACF
Supersector: Industrial Goods and Services
Sector: General Industrials
Subsector: Containers and Packaging
Market Cap: £99.86M
Payout Frequency: Semi-Annual

Macfarlane Group Dividend Analysis and Summary

Key Dividend Details

Proposed final dividend: 2.70p per share (unchanged year-on-year)
Total FY2025 dividend: 3.66p per share (interim 0.96p + final 2.70p; unchanged year-on-year)
Ex-dividend date: 14/05/2026
Record date: 15/05/2026
Payment date: 12/06/2026 (subject to AGM approval on 12/05/2026)
Estimated total FY2025 cash cost of dividends: ~£5.8m (interim £1.52m + proposed final £4.25m)
Indicative yield: ~4.1% if benchmarked to the Company’s 2025 average buyback price of 89.6p (for illustration only; actual yield depends on current share price)

Dividend Coverage and Cash Support

Statutory EPS: 3.98p; DPS 3.66p ? coverage ~1.1x (thin on reported earnings)
Adjusted diluted EPS: 7.62p ? coverage ~2.1x (healthier on underlying basis)
Operating cash flow FY2025: £24.8m; FY2025 DPS cash cost ~£5.8m ? cash cover ~4x
Net bank debt (31 Dec 2025): £16.2m; rolling 12-month EBITDA: £19.9m ? net debt/EBITDA ~0.8x
Facilities: £40m RCF to Nov 2028 with option to extend to 2029 and a further £20m accordion; operating comfortably within covenants

Analytical View: Sustainability and Growth

Sustainability: The dividend is maintained despite a sharp fall in statutory profitability (PBT down 61%). On a reported basis, coverage is tight (~1.1x), but on adjusted earnings and cash flow the dividend remains well supported. Strong operating cash generation and modest leverage underpin the payout.
Growth trajectory: Flat year-on-year at 3.66p. Given management’s cautious 2026 outlook (challenging markets, recovery required at Pitreavie, margin pressure in Distribution), near-term dividend growth looks unlikely. A return to growth likely hinges on H2-weighted operational improvements and Pitreavie’s recovery.
Capital allocation: Management balanced investments (capex, targeted recovery spend at Pitreavie), a measured buyback, and the dividend. The explicit ability to flex capex and dividends in downside scenarios signals discipline but also that the dividend is not sacrosanct if conditions worsen.

Structural/Capital Allocation Factors That Could Impact Future Dividends

M&A and integration: Acquisition of Pitreavie (Jan 2025) underperformed and incurred a £1.6m goodwill impairment. A £1.2m equipment investment is slated to restore full capacity in Q2 2026, supporting earnings recovery and dividend resilience if delivered.
Share buyback: Ongoing £4m programme (c. £2.1m spent by year-end 2025, shares cancelled). Slightly lowers future dividend cash outlay via reduced share count; however, it also competes for cash in the near term.
Banking: RCF extended to Nov 2028 with headroom; supports flexibility to maintain the dividend through the cycle.
Pension: Scheme in surplus (£6.0m) with a non-recurring £1.9m charge in 2025 as part of buy-in preparation. A future buy-in could de-risk liabilities; potential additional cash requirements would be assessed before proceeding.

Risks and Flags Relevant to Dividend Stability

Operational/legal: Ongoing investigation into the fatal incident at Pitreavie (no provision recorded). Potential for significant fines poses an overhang on cash and sentiment.
Profitability pressure: Distribution margins compressed; statutory profits weakened. If H2-weighted improvements and Pitreavie recovery slip, reported earnings cover could remain thin.
Cost inflation: Elevated property costs (rent reviews up 8–61%; rates up ~20%) and labour costs could further pressure margins and cash generation.
Downside scenario planning: The viability analysis notes that in a “severe but plausible” scenario, management may reduce operating expenses and curtail capital expenditure and dividends by ~25% to remain within covenants—an explicit signal that the payout could be flexed if required.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
15/05/2025	13/06/2025	Final	2.70p	GBX
11/09/2025	09/10/2025	Interim	0.96p	GBX

Total (Annual Dividends Per Share): 3.66p

Dividend Yield = Annual Dividends Per Share (3.66p) ÷ Share Price (65p) = 5.63%

Ex Dividend Date	Payment Date	Type	Amount	Currency
14/05/2026	12/06/2026	Final	2.7000p	GBX
11/09/2025	09/10/2025	Interim	0.96p	GBX
15/05/2025	13/06/2025	Final	2.70p	GBX
12/09/2024	10/10/2024	Interim	0.96p	GBX
09/05/2024	30/05/2024	Final	2.65p	GBX
14/09/2023	12/10/2023	Interim	0.94p	GBX
11/05/2023	01/06/2023	Final	2.52p	GBX
15/09/2022	13/10/2022	Interim	0.90p	GBX
12/05/2022	01/06/2022	Final	2.33p	GBX
16/09/2021	14/10/2021	Interim	0.87p	GBX
13/05/2021	03/06/2021	Final	1.85p	GBX
10/09/2020	08/10/2020	Interim	0.70p	GBX
14/05/2020	04/06/2020	Final	1.76p	GBX
19/09/2019	10/10/2019	Interim	0.69p	GBX
16/05/2019	06/06/2019	Final	1.65p	GBX
20/09/2018	11/10/2018	Interim	0.65p	GBX
17/05/2018	07/06/2018	Final	1.50p	GBX
21/09/2017	12/10/2017	Interim	0.60p	GBX
11/05/2017	08/06/2017	Final	1.40p	GBX
22/09/2016	13/10/2016	Interim	0.55p	GBX
12/05/2016	09/06/2016	Final	1.29p	GBX
08/10/2015	15/10/2015	Interim	0.53p	GBX
07/05/2015	04/06/2015	Final	1.15p	GBX
09/10/2014	16/10/2014	Interim	0.50p	GBX
07/05/2014	05/06/2014	Final	1.10p	GBX
04/09/2013	10/10/2013	Interim	0.50p	GBX

Year	Interim	Final	Currency	Total	Change
2024	0.960	2.650	GBX	3.610	4.330
2023	0.940	2.520	GBX	3.460	7.120
2022	0.900	2.330	GBX	3.230	18.750
2021	0.870	1.850	GBX	2.720	10.560
2020	0.700	1.760	GBX	2.460	5.120
2019	0.690	1.650	GBX	2.340	8.830
2018	0.650	1.500	GBX	2.150	7.500
2017	0.600	1.400	GBX	2.000	8.690
2016	0.550	1.290	GBX	1.840	9.520
2015	0.530	1.150	GBX	1.680	5.000
2014	0.500	1.100	GBX	1.600	220.000
2013	0.500		GBX	0.500

Number of Shares:

Payment	Paid	Amount
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