Good morning everybody. I'm Peter Atkinson.

I'm Macfarlane Group CEO, and I'm here today with my colleague, Ivor Gray, our CFO. We announced our 2025 results last week, and the objective today is to review those results with you and bring out some key points to give more colour on the numbers, and also, obviously, we want to respond to any questions that you want to raise during the meeting.

If we take a look at the agenda, following some brief introductory remarks from myself, Ivor will take you through the detail of numbers in terms of P&L and cash flow. Then I'll talk through the two divisions, packaging distribution and the manufacturing operations.

Ivor will then update you on where we are with the pension scheme, and I'll conclude with some final remarks, and then we'll pick up and respond to any questions. Let me begin just as a refresh to some of you, and for those of you new to Macfarlane, a little bit of detail about the business.

We're a protective packaging specialist. We both distribute, design, and assemble protective packaging products.

75% of our sales are through our distribution division, and then 25% of our sales are through our manufacturing division. Our customer base is split 80% industrial and 20% retail, with the majority of our retail business with e-commerce clients.

We've got strong market positions in each of the businesses. We deliver added value for customers as you can see on the chart, and we've got clear differentiation from our competition.

If we move on to the results, during 2025, we saw good sales growth. We saw marginal sales growth in the distribution division, just about 0.2% despite very difficult market conditions there.

We saw very good growth in our design and manufacturing division, 12% up versus the previous year. Partly that was through the Polyformes acquisition, but we also saw good organic growth, particularly in the aerospace, space, and defense sectors.

Obviously we had, during the year, the benefit of the Petriue acquisition that we acquired in January 2025. Despite the good sales growth, we saw a reduction in profit in the year, and there's a mixture of features in there that we'll go through during the presentation.

Partly, particularly distribution, we actually saw quite soft demand, partly due to the weak UK economy and also due to the impact of EPR with our retail customers, as they look to find a way of reducing EPR fees by reducing the amount of packaging they use. The industry in 2025 was extremely intense in terms of the competitive environment, and there was a lot of pricing pressure for us to have to retain market share against.

As a result of that, as you'll see in the presentation, we experienced lower margins in our distribution division. We also saw increased costs, primarily labor and property, and again we've got detail later on the breakdown of those cost increases.

Clearly, a key feature of 2025 was the emotional, operational, and financial impact of the tragic accident at Petriue. Again, we'll provide you with an update on where we are with the Petriue business later on the presentation.

The key issue for the management team is how we address the challenges that we experienced in 2025, and we'll talk you through a profit recovery plan that we're currently working on. The balance sheet remains strong.

We've got good cash generation and we're operating well within our banking facilities. I think as a demonstration of the confidence in how we now execute the recovery, the board is proposing the dividend to be maintained at 2024 levels.

Let me hand over to Ivor, who'll take you through the detail of financials, and then I'll come back on and we'll put some color to the numbers through the individual divisions. Good

morning, everyone. Just to take you through some of the kind of key financial performance measures for last year.

As you can see in the top left-hand, we grew revenue by 11%. 10% of that growth was driven by acquisitions, £28.1 million of the £30.4 million growth in revenue was down to the acquisition of Petriue at the beginning of last year and Polyformes, which was acquired in July 2024, and £2.3 million of the growth was organic.

Around 1% of that 11% is organic. When you look at the organic growth, it's primarily volume-driven, with prices, on average, being relatively flat year-on-year.

Again, the split down of the growth is £0.4 million distribution, £6.4 million of growth within manufacturing excluding Petriue, and £23.6 million of growth from the Petriue business. In terms of adjusted operating profit, 28% down on the previous year, a large proportion of that is down to the distribution business, £8.8 million down on last year.

That's primarily down to, even though we had flat sales year-on-year, we had pressures on our gross margins, lower gross margin, and as Peter described, higher operating costs, and Peter will describe that a bit more detail later. The manufacturing business, excluding Petriue, had a strong year, both the full year benefit of the Polyformes acquisition and again good underlying organic growth from some of the sectors that they supply into.

As Peter described, the Petriue business had a tough year. We acquired that business at the beginning of last year.

We anticipated that business contributing a profitability of just under £2 million this year in 2025, and it ended up making a loss of just under £200,000. That was really down to a combination of the trading conditions that business faced through the year, but a large proportion of that was the impact of the incident that Peter referred to earlier.

If we now move over to the adjusted profit before tax, we had higher interest costs from our bank from higher average bank borrowings through the year and also higher IFRS 16 lease interest, and that's primarily due to lease renewals on both property and commercial vehicles and the new property in East Midlands. If you move down, bank debt, £16.2 million at the end of 2025 compared to £1.9 million at the end of 2024.

An increase in our bank debt, but as Peter described earlier, well within our £40 million bank facilities and just under 1 times net debt to EBITDA, still relatively low level of bank debt. I'll come on to the cash flows in a bit more detail in a minute.

The pension surplus, we continue to be in surplus, albeit lower than last year at £6 million versus £9.6 million last year. We're very much in the process of preparing the scheme for buy-in.

As part of that process, we've taken an adjustment to reflect a change in the methodology to estimated historic equalization of pensions, which will need to be corrected. Effectively the goal and aim remains the same as what we've discussed before, albeit we're closer to that decision.

End goal with the pension scheme is to move towards a buy-in, clearly a buy-in that's priced at a level that the company doesn't have to put any further cash contributions or very limited cash contributions. Should that not be the case and pricing not be right in the marketplace, then we would continue to run the scheme on.

In terms of dividends, as Peter described, we maintained the dividend, albeit at a lower cover than we've historically seen previously. Part of that is primarily because we've got the cash flows to support it and we have confidence in the business going forward.

Clearly, if you look at dividend cover on an adjusted earnings per share basis, it's just over two times. Clearly the elements between the non-adjusted and adjusted are broadly non-cash adjustments.

Yes, the dividend cover is lower than historic levels, but given that confidence in the profitabilities going forward and the fact that we can support it with account cash flows and net debt position of the business, we've decided to maintain the dividend at its current levels. Moving on to the income statement, just a couple of things I want to pull out here.

Peter will pick up some of the detail when he goes through the various segmentations. Clearly, as you can see, gross margins, as I described, at a lower level than where they were last year, and that's primarily within our distribution business, where the gross margin has gone down from 37.2% to 35.3%, just related to kind of competitive pressures in the marketplace.

The manufacturing business, excluding Petriue, has held up well, with actually gross margin slightly improving year-on-year. The Petriue business had lower gross margins than we'd anticipate, and that's primarily due to the fact that in the final quarter of the year, the busiest part of the year for Petriue, we had to outsource quite a proportion of work due to the incident.

In terms of operating expenses, quite an increase in operating expenses of £14.5 million. £9.6 million of that is related to the acquisitions we've brought in, as I said, the full-year impact of Polyformes and the Petriue business.

£3.6 million of that is increases in employee costs, of which £1.1 million is the kind of enforced NI increases, and the balance due to kind of inflationary challenges within the employee costs. And £1.3 million is related to kind of property and logistics costs, primarily due to increases in our rental costs for property and some of the renewal for commercial vehicle fleet.

Just drawing your attention to the interest costs, higher last year, £0.8 million of that increase is due to bank interest costs due to the higher average borrowings through the year, and £1 million is due to IFRS 16 interest related to property renewals and commercial vehicle renewals. The next slide just gives you a kind of feel for the adjustments that have been made between kind of statutory measures and alternative profit measures.

Really, the key things to draw out here, the things that we're adjusting for are amortization related to intangibles related to acquisitions. The goodwill impairment, as you'd expect, is related to the Petriue business, reflecting the kind of gradual recovery of that business as we see going forward.

The £1.5 million benefit you see in deferred contingent consideration is also primarily related to Petriue, because that business is going to have zero earn-out, whereas we anticipated around £1.6 million of earn-out payments in the Petriue business. Of course, given the performance of the business, we won't be paying any earn-outs in that business.

And £1.9 million is related to that pension adjustment that I reflected earlier related to the equalization of pensions going back to an historic change in methodology. Those are the kind of key features in terms of reconciling our statutory measures to alternative profit measures.

In terms of cash flows, as Peter described, the operating cash flows were very strong, £24.7 million compared to £27 million, and that's because of good working capital management, where you can see a positive inflow in working capital, and also the non-cash impact of the pension adjustment that I referred to earlier. That cash has been utilized in the year to continue the acquisitions that we did: £17.3 million in terms of acquisition activity, £13.9 million of that related to Petriue, and the balance related to earn-out payments for A&G Packaging, Gottlieb, and Polyformes, all of which are performing well; £4.5 million on capital expenditure, £1.8 million of that was on the Petriue business, the majority of that related to the new machine that we announced in the November update that we were bringing in to restore the capacity at that site following the incident.

We also invested in improving the capacity and design capability of our business in Grantham. We had the fit-out of our new site in East Midlands, and also we had an investment in a water treatment facility at our GWP business in Swindon.

We started the buyback program, the share buyback program that we announced in June last year, so that's a commitment to spend £4 million on buying back our shares over a 12-month period, of which £2.1 million of that was spent up to December 2025. As Peter mentioned earlier, we've maintained the dividend, we've spent £5.8 million on dividends through the course of 2025, and as we said, we're looking to maintain that as we go into 2026.

Again, although we've consumed cash in the year, we exit the year at £16.2 million of net debt, as I said, still a relatively low level of net debt compared to our facilities and also relative to EBITDA of the business. I'll pass over to Peter now to go through the kind of individual performance of each of the divisions.

Thanks, Ivor. To begin with the packaging distribution division, this represents 75% of group revenue, and as we're the market leader in the UK and a new entrant into Europe within this particular business.

During the year, very difficult market conditions, I mentioned earlier on the impact of EPR on our retail customer base and just generally weak conditions through the macroeconomics and uncertainty around what's happening in world economics generally. To deliver a marginal increase in revenue from our point of view was encouraging and gives us momentum as we go into 2020 2026.

The pressure that we've seen in terms of the revenue line has been impacted by customers just delaying decisions, and that has impacted our new business revenue. Our new business revenue was 20% down versus the previous year.

That's not because we've not got strong pipelines. We have rebuilt the sales team and strengthened the sales team.

We're very optimistic as we go into 2026 that we can execute against that new business pipeline and add more momentum into our sales line. Probably the most important figure from a distribution point of view in the year was the gross margin, and the gross margin fell back from the heights of the previous year.

That's mainly been down to a lot of very aggressive price competition. We've had to work really, really hard in defending customers from competitors where they've been using price as a major tool to win business, and we decided to make the decision that we'll retain market share and protect and defend those customers and then look to build the margins back over time.

I'll talk more about operating expenses on one of the later lines, but we have seen an increase in operating expenses, and within that you've got the increase in National Insurance costs on the minimum wage, you've got property rental increases coming through, and then we had the East Midlands consolidation during 2025, where we had some run-on costs in terms of both property and in terms of labor as part of that. If I move over to the next page, and we mentioned gross margin.

This gives you a flavor of how our gross margin has evolved over the last four or five years. As you see coming out of COVID, we had a very strong gross margin, probably a gross margin that was unsustainable going forward.

What we're now into is a gross margin level around about the 35% that we believe is sustainable, and that's part of our forward forecast. That's our assumption that we can retain that gross margin at 35%.

One of the reasons, a small part of the reason our gross margin declined in 2025, was we had a particular supplier in the corrugate industry that unfortunately went into administration, and they were a very effective low-cost supplier and we had to replace that supplier with a higher-cost source. That did have some impact on gross margin, but going forward, we can see that 35% is a gross margin that we can sustain.

I mentioned costs, and this schedule just describes for you the major cost changes in the year, and in reality it's broken into £3.1 million increases in labor costs and just under £1 million in property costs. If I just take the labor costs first, around about 3/4 of a million of that £3 million is the NI increase, and that's only eight months, we've got 12-month impact of that in 2026.

We've got inflation in salary costs, although we had a salary freeze during 2025 for part of our employee base, there was inflation in another part of our employee base to retain logistics, etc. Then we have made some significant new investments in people, particularly in the sales team, which gives me the confidence why that sales pipeline that we've got will come to fruition in 2026.

Then there were some carryover costs as a result in labor as a result of the East Midlands transition, where we had to use quite a lot of temporary labor to help us transfer from four sites down to one site, the new site in Nottingham. In terms of property costs, that's broadly half of that property cost increase is just the normal rent renewal, rates cost increases that we incurred during the period, and then about half that number was the additional property costs and dual running of property costs as part of the East Midlands transition.

We feel the step change in costs we've seen in 2025 will not repeat in 2026. We've got programs in place, I'll talk to you about later on, which will allow us to stabilize our cost base going forward and give us a degree more certainty of the cost base.

If we look at the the priorities now, obviously we've got to start the packaging distribution business recovering, and there's a number of things that we're doing. I won't go through all these points, but one of the key things is that, as I mentioned, the retail sector, which within distribution is represents about 25% of revenue, is under a lot of stress at the moment.

It's just very, very competitive. Prices are eroding, margins are eroding, and the impact of all the packaging legislation, the EPR, with more to come, is going to put extra stress on that sector.

As part of our medium-term plan, we're looking to refocus our business against the industrial market. It doesn't mean we're walking away from retail, but we're reallocating resources towards growing in the industrial market, which for us are higher margins, more sustainable business, and not under quite the same pressure from environmental legislation.

We're also pulling together and and creating a more connected customer proposition, where we are combining the benefits of our distribution, our design and manufacture, and our European capabilities for key strategic accounts. We've identified six key strategic accounts across both the UK and Europe who will fully benefit from the combination of those businesses with a new strategic account team, which is up and running and and is now operational.

In terms of operating cost reduction, we've seen the step change in 2025. We've got efficiency programs that we're implementing as we speak, both in terms of sales, in logistics, and administration.

As I say, we expect our our costs in 2026 to be flat to only marginally ahead of 2025, despite the fact we've got things like NI, which will still be an increased cost during the period. We're also looking, as part of the gross margin sustainability, to review our sourcing model.

At the moment, around about 60% of our sourcing is done with major national suppliers and 40% is done with local and regional suppliers, and we're looking to actually adjust that balance and believe in a time when the supply chain and the the suppliers we're dealing with are going through quite big changes themselves and also gives us an opportunity to reduce input prices. In terms of acquisitions, we've indicated that we don't plan to do any more acquisitions in 2026.

As acquisitions has been a key part of our growth platform, but with the Petriue story, which I'll come on to talk about, we feel we've got enough we need to allocate management bandwidth to actually developing what we've got, and we're putting acquisitions on hold certainly until the back end of 2027, 2028. We still work on warming up opportunities.

The gestation period between contact and execution can be 3 to 5 years, while we won't execute anything in the near term, we have to continue to work on opportunities to make sure the pipeline is strong. Then we'll continue to work on working capital management, and we've done a pretty good job this year and we'll continue to do that despite the the weak environment.

Going forward, one of the just one slide back, I'm going forward, one of the cost opportunities that give us give us confidence in being able to reduce our cost base is we've got a number of property leases that come up for renewal in '27 and '28, and we've got capacity available in the new Nottingham site and the site in the Northwest of England that we moved there 2 to 3 years ago now. As some of the leases come up in other sites, that gives us the opportunity to fully utilize the the new sites that we've developed.

Moving on to our design and manufacturing division, and I've taken Petriue out of this for the moment. Good sales growth, 12%.

That's a mixture of the full benefit of the Polyformes acquisition and organic growth of around about just over 3%. Despite the weakness in certain markets like automotive, we've seen good growth, particularly in the aerospace, space, and defense markets for reasons which will be apparent to you all.

That gives us extremely good momentum going into 2026, and we see this business now being a key contributor to profits in 2026 as well, and so representing now around about 40% of group profits. Really good performance from this division and we expect that to continue.

If we move on to Petriue, I think most of you are aware of the Petriue story. We acquired Petriue in January 2025, and then in October 2025, we had a tragic incident causing the death of one of our colleagues.

Clearly, that's taken an emotional burden on the business, as well as the operational financial burden, which we've been working through both with our employees and with the family that was affected. Where are we in terms of numbers?

We expected Petriue in its first year of ownership to make just under £2 million operating profit, and obviously because of the Petriue incident, it fell into a loss. What we were doing post the incident, as well as all the emotional support, we were actually ensuring that we could retain customer loyalty by using external suppliers to supply customers, because the machine where the incident occurred, we had to take that out of the business.

We've retained high degree of customer loyalty, which is really really positive, and what we also did was very quickly turn around an order and a program to acquire a new replacement machine. The visual you have on display is the new machine out of China, which is now not quite running in the Petriue facility in Cumbernauld.

We expect it to be operational at the end of this month. It's just going through commissioning and training and so on and so forth the staff, and we expect it to be fully operational in Q2 of this year.

I think we can see the Petriue business recovering. The fact that we've got significant customer loyalty, no customers have exited, no customers have talked about dual sourcing going on, and the new machine also gives increased capacity.

As we start moving customers back into the facility from being outsourced, once we've settled those customers down, then we'll be looking to utilize that capacity to win new customers in the Scottish market. In terms of the priorities going forward for manufacturing, clearly the recovery of Petriue is critical, and we expect to get the the sort of £2 million operating profit that we were expecting to achieve through the acquisition.

We expect to deliver that in 2027, when we've got a full year. For 2026, we'll only have a part year with the new the new equipment, but we certainly expect the business to get back to the underlying profitability we we inherited through the acquisition in 2027.

As I mentioned, in terms of our core manufacturing operations, we've got some good opportunities around defense, aerospace, and space, which is giving us momentum gave us good momentum in 2025, and will continue to give us good momentum in 2026. Once we once we sort of get Petriue where it needs to be, pretty happy this division has got a very good medium-term outlook in terms of both growth and profitability.

Just moving on from the financials and picking up on ESG matters, in terms of the Macfarlane business, we've done well in terms of adding accreditations, which are important particularly with certain customers who need the accreditations for you to be part of their supply base. In terms of our own impacts on the environment, we continue to roll out more electric trucks.

As electric trucks work in our industry because the things we ship are light and the distances we travel are relatively short distances. We continue to roll out the electric truck program, and we're now close to 100% of our electricity we use in the facilities is now coming from renewable resources.

Good progress there. In terms of supporting our customers, our innovation labs are increasingly busy as we help customers through the EPR legislation by finding ways of supporting them on reducing their packaging use whilst still protecting their products and the packaging they use being made of sustainable materials, obviously helping from an environmental point of view.

In terms of legislation, I've mentioned EPR a number of times. I'm sure you'll be familiar with the challenge of EPR in that retail space, but I think going forward, there is more regulation coming down the pipe.

You've got the deforestation regulations and you've got the void fill regulations coming through, all of which are going to put extra stress and strain particularly in that retail space, and hence the point I made earlier on about how we begin to start pivoting more towards industrial markets, where there's not the same stress and strain that's coming through in terms of the sustainability legislation driven by the government and by the European authorities. I'll pause there and move on to the pension scheme and ask Ivor to touch on that.

I think I covered most of this earlier, but I think the key thing to note with the pension scheme, although the surplus has come down, principally due to the adjustment that I referred to earlier, the scheme is not drawing any cash from the group currently, and as I said, we've got a decision we'll be making over the next few months in terms of whether we progress the scheme to buy-out, and that decision will be based on the favorability of pricing in the market at that point. As I said, our goal and aim is to exit in the scheme through a buy-in without drawing further cash from the group.

If it required us to put a small amount of cash into the scheme, then we would probably still proceed. Beyond that, then we can continue to run the scheme on, and at this point, would not draw any further cash from the group.

In terms of the capital allocation, as you can see, this slide describes the kind of outcomes from the capital allocation for 2025, which I really covered within the kind of cash flows earlier. I think the key thing to mention here is a bit of reprioritization of our capital allocation.

Obviously, clearly, we'll continue to invest in the business. I suppose as number two, we've made a commitment to maintain the dividend, this year we will be looking to spend about £5.8 million on dividends in terms of maintaining it.

The third priority would be completing the buyback program, of which £1.9 million is still to be spent this year. Then the kind of final element is acquisitions.

As Peter described, we're not planning on doing any acquisitions in 2026. However, we do have an outstanding earn-out payment for Polyformes of £2.6 million, and that business has performed well, we would fully expect to make that payment around about July, August this year.

Other than that, I wouldn't expect any further movements in terms of acquisition activity this year. A bit of a refocusing in terms of our capital allocation, focusing on maintaining the dividend, then the buyback program for shareholders, returning cash to shareholders, and then obviously acquisitions at the bottom of the kind of priorities at the moment.

I'll pass back to Peter to kind of summarize the presentation, and then we'll move on to Q&A.

Thanks, Ivor. Just some concluding remarks before we move on to Q&A.

It's been a tough 20 a tough 2025 for the business, and we're not expecting 2026 for the market conditions to be any different. We see the market's continuing to be challenging, and you could probably see at the moment the industry is at the bottom of the cycle, and it's not necessarily that the next move is going to be upwards.

We probably could see a 12 to 18-month period where the industry continues to run at the bottom of the cycle. For us, it's all about actually the priorities to recover the business, to recover the distribution business and get it back to the 7.5%, 8% return on sales that is our mid-term target, and obviously to get the Petriue business to perform at the level that we expected to do when it was acquired.

From our point of view, 2026 is year one of the recovery program. We're well into implementing a lot of things that we've discussed already.

I think the balance of the year is going to be biased very much towards H2, because obviously Petriue in H1 will still lose money because we have a quarter where we're still working with outsource suppliers, but we should see and expect to see a step change in performance in the second half of the year in terms of like-for-like versus first half of the year, and we'll see 2026 showing profit growth versus 2025. The medium to short-term view, back into profit growth, and then a lot of things that we have got planned and the opportunities to improve the performance of the business, the medium term, from our point of view, continues to look very positive.

I will pause there and pick up on some of the questions that we can see coming through. Ivor, will you host?

Just some of the questions coming through. First question, Peter, is on the distribution business.

Clearly, the distribution business kind of dropped its operating margin to 5% this year. What are the kind of actions you see getting the business back to 8% and what kind of timelines are you looking at?

I think distribution clearly has had a difficult year. We described the reasons behind that.

Sales has been relatively robust despite the difficulties. It's really the gross margin reduction and the increasing costs.

Our objective is to get it back to 7.5% to 8%, and that will be a mixture of holding the gross margin line around that 35%, developing the pipeline of opportunities that we are very confident that we can execute this year despite the difficulties in 2025 to give ourselves round about 2% to 3% sales growth this year, and then holding the operational cost line. As I say, we saw a significant step change in '25 and '24, but with the programs we've got in terms of cost reductions, in terms of the squeeze on property, we believe we can actually probably hold our costs flat in 2026, and then it starts to reduce as a percentage of sales in 2027, 2028.

Certainly, we expect a 2 to 3-year This is year one, a year two, year three timeline to get ourselves back to around that 7.5% to 8% return on sales.

A question here on new business. Obviously, we reflected the fact that new business was down year-on-year.

Given that the pipelines have seen things improve [unclear]

Two main reasons why the new business pipeline didn't convert: one is the program we have to win new business is offering customers sort of medium-term cost savings. The priority for customers, with everything that's going on in their businesses at the moment, is jam today, save me money today.

The only way you can do that is by reducing prices, and so we didn't go down that route in terms of our new business program. We still believe our medium-term benefit is the way to go in terms of giving customers opportunities going forward.

The pipeline is extremely strong. The other thing that caused customers to not make positive decisions is just uncertainty.

We had a lot of customers where they're very close to the finishing line, but with everything in the world changing on a pretty frequent basis at the moment, we find customers just not prepared to actually press the button and go ahead with us. We're confident these customers will come on stream, and we have seen some early interesting new wins as we go into 2026.

The pipeline's strong, difficult in 2025, but we expect it to come through in 2026 for us.

There's a question on a buyback. Clearly, covering capital allocation, is this not time to be more aggressive in the buyback, given the weakness in the share price?

Maybe if I answer that one. This year, clearly, our net debt level moved to higher levels than it's been in prior years, albeit it's still relatively low at £16.2 million.

In terms of how we see the cash flows for this year, we see them broadly neutral. We see, clearly there's some recovery that needs to be done within distribution business and Petriue, there's a lot of work that's got to go into those businesses.

That recovery path will generate operating cash flows, which will then be consumed in I suppose four different areas, really. We've got the capital expenditure, we have to invest in the business.

We have about £4.5 million allocated for capital expenditure this year to reinvest both in distribution and manufacturing business to support some of the capacity and growth that we're seeing. We've got £5.8 million, which is, as I said earlier, is to maintain the dividend.

I know it's not important to some shareholders, but clearly a large proportion of our shareholders, clearly the dividend is very, very important. We believe that that investment in maintaining that dividend is important for those shareholders and the confidence that we see in the business going forward.

That kind of leaves us, maintaining our net debt level at £16.2 [million], leaves us something in the order of about £4 million to decide to spend in acquisitions or buybacks. At the moment, we've got £2.6 million that we have to allocate to the earn-out payment for Polyformes, and clearly we're looking to complete the buy-out program that we've got in play at the moment of £1.9 million.

As we go through into next year, then we can start to be a bit more aggressive in the buyback program because clearly we don't have any acquisition payments in 20 2027. Depending on where we are strategically from an acquisition point of view, we can, if the share price remains where it is in the lower levels as described by the person who raised the question, then we can start to be a bit more aggressive.

We don't intend, I suppose at this stage, leveraging up the balance sheet to do buyback at this point. Hopefully that answers the question on buyback for now.

In terms of the priorities, Peter, you described the priorities around distribution. I suppose I can probably answer this one as well.

What does success look like in 2026 for packaging distribution? I think if Peter described action plans for us, I think success comes in a number of different ways.

One, success is getting growth back into the business, and we're not looking for spectacular growth, but we are looking for growth around 2% to 3% this year in terms of distribution. That would be success.

Part of that is going to be the success in converting the new business pipeline. Maintaining the gross margins at the level we exited at in 2025, that would be success, and clearly there's work to be done on that because the competitive intensity doesn't change as we go into 2026.

Then the third element is kind of there's clearly still inflation coming through in 2026 related to the full year impact of NI and obviously continuing impacts within inflation on employee costs. We would still see the operating cost base not going down in 2026, but we want to try and keep it as flat as possible.

I think as we exit this year, a nudge up in the operating profit margins from 5% to somewhere between 5% and 6% is where we go for 2025, albeit that enhanced by that 2% to 3% organic growth in sales.

Thanks, Ivor. The only thing I would add to that is, as we touched on in one of the earlier questions, is demonstrating that new business pipeline can be executed against, getting the new business momentum back into the business that we haven't had in 2025.

Good question here clearly on very current events. How do you see the likely impact of the recent oil price spike?

It's very difficult and it's probably too early to make any clear judgments, but around about 20% of our revenue is polymer-related in distribution. There may be issues around that.

The team are working at the moment to understand what the implications are. I think probably the most obvious implication is going to be potential price pressure on polymer products and potentially supply restrictions on polymer products.

That's where the sourcing team are focusing their time at the moment to ensure that we can ensure a clear supply line of those products. We buy those products some from the Middle East, some from Turkey, and some from the Far East, but at the end of the day, it's polymer, and clearly that's exposed at the moment in terms of the Middle East.

That's the most immediate effect we're seeing. Or not seeing, but we expect to see.

Just to add to that, clearly that's the products we buy. Clearly, if you look at fuel costs and our kind of outside carriage costs, that represents round about 2.5% of our sales.

It's a significant cost, but not a cost that if it went up by 20%, 30% would cause us a significant problem. I think the main challenge will be the impact on our input pricing on the materials that we buy and how we translate that through to customers and to what extent it's a short-term spike versus a long-term change.

Yeah.

Thank you, everyone, for your time this morning. Appreciate you giving up your time for Macfarlane Group.

Tough '25, I think we explained the reasoning behind it. The most important thing now is we get away and get ahead with implementing the recovery plan.

Hopefully we described that to you. We're confident the business will start the recovery in 2026, and then we see medium-term outlook extremely positive.

That would be the key messages from my point of view to take away from today's session.