Mpac Group plc Annual Report and Accounts 2024 We create faster, more efficient automation and packaging systems Accelerated strategic growth empowered by people mpac-group.com Mpac Group plc is an international company listed on the London Stock Exchange (symbol: MPAC), with a long and proud history of delivering innovation and excellence on a global basis. Our business is focused on the creation of manufacturing solutions that make and package the products millions of people worldwide depend on. Contents Strategic report 01 Year at a glance 02 Who we are and what we do 04 Chairman’s introduction 05 Strategy: Our mission, purpose and values 06 Strategy: Customer focussed business model 07 Strategy: Goals and priorities 09 Operating review 18 Financial review 21 Principal risks and uncertainties 26 Section 172 statement Corporate Governance 28 Chairman’s corporate governance statement 30 Board of Directors 32 Corporate governance report 36 Audit Committee report 40 Remuneration and Nomination Committee report 48 Directors’ report 53 Statement of Directors’ responsibilities Financial statements 55 Independent Auditor’s report 62 Consolidated income statement 63 Statement of comprehensive income 64 Statements of changes in equity 66 Statements of financial position 67 Statements of cash flow 68 Accounting policies 75 Notes to the accounts 111 Five-year record 112 Principal divisions and subsidiaries 113 Notice of Annual General Meeting 118 Corporate information 02 Strategic report 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Completed acquisitions of CSi Palletising, BCA & SIGA Vision 2024 order intake of £119.7m (2023: £118.5m) Group full year revenue £122.4m (2023: £114.2m) Statutory profit before tax of £3.4m (2023: £4.7m) Underlying profit before tax of £10.6m (2023: £7.1m) Basic earnings per share of 6.0p (2023: 13.1p) Underlying earnings per share of 35.2p (2023: 26.2p) ORDER INTAKE £119.7m (2023: £118.5m) BASIC EARNINGS PER SHARE 6.0p (2023: 13.1p) UNDERLYING PROFIT BEFORE TAX £10.6m (2023: £7.1m) REVENUE £122.4m (2023: £114.2m) UNDERLYING EARNINGS PER SHARE 35.2p (2023: 26.2p per share) NET ASSETS £108.0m (2023: £64.0m) Year at a glance REVENUE BY REGION REVENUE BY SECTOR Other £26.6m Healthcare £43.7m Food and beverage £52.1m Europe, Middle East & Africa £46.9m Americas £60.3m Asia £15.2m 02 Strategic report 1 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Who we are and what we do Our sectors Mpac is a provider of product manufacturing and packaging solutions. We serve customers globally in the essential and growing sectors of healthcare and food and beverage, with engineering and services that increase automation, safety, sustainability and cost effectiveness. Headquartered in the UK, we have strategically located manufacturing and Service hubs worldwide to provide our customers with local support and a global reach. We are ‘One Mpac’, with seven connected businesses that trade under the globally respected brand names and product ranges of Lambert, Langen, Switchback, SIGA Vision, BCA and CSi Palletising. Lambert specialises in solutions for the healthcare sector. Langen and Switchback provide secondary and tertiary packaging solutions for all sectors in which we operate. BCA provide conveying and primary packaging for the food and beverage sector. CSi provide tertiary packaging solutions for all sectors in which we operate and SIGA Vision provide vision systems across all of our product ranges. We provide packaging and automation solutions to fast-moving consumer goods customers, enabling their products to be packaged for distribution to their consumers, ensuring security, quality, sustainability and shelf appeal. We ensure manufacturing consistency through integration; from product assembly to primary packaging, cartoning to case packing and palletisation – designed, delivered and supported globally, while protecting the wider ecosystem we all live in. We don’t just build machines however, we create automation solutions to develop and optimise manufacturing processes. Our end-to-end capabilities help our customers thrive in a changing world. The Group leverages its engineering expertise with cutting-edge manufacturing technologies and proven machine design, and supports its customers with world class service support, delivered locally. We are a global organisation and can provide support to customers in any region. We support all brands and all locations with our global operations Our philosophy is ‘Ingenuity without limits’ Food and beverage Providing innovative solutions for secondary and end-of-line packaging. Cartoning and case packing of bags, stick packs, pouches, flow wrapped products, bottles and more, to our customers’ requirements. Healthcare Supporting healthcare industries as diverse as contact lenses, facial tissues and dentifrice. Mpac supplies innovative first-of-a-kind machinery as well as standard packing and testing equipment. 02 Strategic report 2 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 We create and service superior automation and packaging machines globally 6,500 Machines in service 8 Global manufacturing facilities 80 Countries served 6 Innovations centres 520 Global engineers and designers 10 Customer service hubs Original Equipment (OE) manufacturing combined with compelling service offerings Sales by Sector (%) Food & Beverage 43% Healthcare 36% Other 21% £122.4m (2023: £114.2m) Revenue Product assembly Filling & Dosing Product handling and infeed Cartoning Tray forming Case packing Palletising Conveying Mississauga (CA) 111 people 4,500m2 Tadcaster (UK) 215 people 6,500 m2 Cleveland (US) 46 people 5,000m2 Santiago de Queretaro (MX) 15 people Wijchen (NL) 213 people 4,700 m2 Singapore (SG) 14 people Manufacturing Sales Service Boston (US) 50 people 3,250 m2 Cluj (ROU) 220 people 13,100 m2 Reghin (ROU) 60 people 4,100 m2 Breda (NL) 155 people 3,500 m2 SIGA VISION LAMBERT LANGEN SWITCHBACK BCA CSi 02 Strategic report 3 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Andrew Kitchingman Chairman Chairman’s introduction Following the update to our strategic objectives and new five year plans, established in 2023, our focus has been on ensuring that these plans were executed on a timely and efficient basis and are delivering the results foreseen. These plans will be accelerated through the two acquisitions made during late 2024, which significantly develop our strategic position in our key sectors of Food and Beverage and Healthcare and bring us closer to completion of our full line product range, supported by our innovation and new product roadmap. The acquisitions are an excellent strategic fit for the Group and are already aligned with our existing operating segments. The five year plans included planning for the integration of acquisitions and the new members of the Group are being swiftly and efficiently integrated, with the commercial benefits anticipated now beginning to flow. The successful fundraising executed by the Group during 2024 was a highlight of the year, with the strong support received from both institutional and retail investors for the Group’s strategy and ability to execute, reinforced our view that the strategy is well placed to outperform. Our investment proposition remains one of organic growth, augmented by carefully selected acquisitions. On pages 28 to 35 I discuss corporate governance and the Board’s activities during the year. Summary of results Order intake in the year was £119.7m (2023: £118.5m) and Group revenues was £122.4m (2023: 114.2m). Timing of order intake in the second half of the year was impacted by uncertainty associated with US elections and the impact of potential tariffs, however we note that in the early months of 2025, the run rate of orders has been in line with expectations, indicating improving customer confidence. Underlying profit before tax was in line with long established market expectations at £10.6m (2023: £7.1m). Statutory profit before tax was £3.4m (2023: £4.7m), which is net of the costs of the acquisitions and the amortisation of acquired intangible assets. Group net debt at 31 December was £37.5m reflecting the funding of acquisitions (2023: net cash £2.1m). Dividend Having considered the trading results for 2024 and the opportunities for investment in the growth of the Group, the Board has decided that it is not appropriate to pay a final dividend. No interim dividend was paid in 2024. Future dividend payments will be considered by the Board in the context of 2025 trading performance and made when the Board believes it is prudent to do so. Outlook The Group starts 2025 in a strong position after successfully concluding on two strategically important acquisitions in 2024, which provide a wider product offering, access to new customers in attractive growth markets and a significant increase in scale. The opening order book is strong and diverse, providing good coverage over 2025 forecast revenue, and I consider the prospects for the Group over the medium term remain positive. I look forward to reporting on the progress that will be made during 2025. Andrew Kitchingman Chairman 28 April 2025 “I am pleased to report a continuation of the progress in financial performance and the successful execution of two transformative acquisitions in the latter part of 2024, in line with our strategic objectives aimed at building upon the existing sound foundations and delivering a growth agenda over a five-year period.” 02 Strategic report 4 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Strategy: Our mission, purpose and values OUR VALUES INTEGRITY We make and keep commitments. We make decisions in an ethical and transparent way. We value diversity and inclusivity. We care, respect and value others. We drive a safer, healthier and more sustainable future. DRIVE We act with a sense of urgency. We believe in simpler, faster, and focusing on what matters to our customers. We do not walk away from challenges. We celebrate success. EXPERTISE We value expertise, curiosity and shared insight. We take pride in our work, the machines that we create, and the services that we provide to our customers. We strive to continuously improve. COLLABORATION We work together, with our customers, and our partners; collaborating without boundaries for the collective goal. INNOVATION We use our expertise to push boundaries, creating exciting new tailored solutions for our customers. OUR MISSION We design, build and support the machines that assemble and package the products that millions of people around the world depend on. OUR PURPOSE Through innovative technology and exceptional service, we help our customers to provide food and beverage and healthcare across the world. MISSION PEOPLE PURPOSE VALUES 02 Strategic report 5 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 What we do We design, develop software, precision engineer and manufacture high speed packaging solutions, first-of-a-kind machinery and high specification automation, secondary packing equipment and end-of-line robotics with integrated testing solutions. We do not just build machines; we create full-line automation to develop and optimise manufacturing processes. Our end-to-end capabilities help our customers thrive in a changing world. Strategy: Customer focussed business model The Group offers its customers automation and packaging solutions, customised to their requirements using a portfolio of proven modules augmented with a customer specific product package handling solution. The implementation of our ‘One Mpac’ business model incorporates sales, service, and operations functions. Common processes are all monitored and controlled by effective project management. Service support is provided through the life of the product at the customers’ sites. The capital equipment market is cyclical by its nature with a high need for responsiveness and flexibility to adapt to customer demands and lead time needs, seizing the opportunities as they arise. The Group is able to exploit synergies, utilising best practice across the sites and a shared services resource in order to improve the operational efficiencies. This creates a model whereby we can increase utilisation with the ability to expand capacity with increased demand and reduce capacity in periods of lower demand. The ‘One Mpac’ business model ensures we deliver consistent high-quality services to our customers globally wherever they choose to locate a manufacturing site. Consult Our solutions live, breathe and evolve, and so should your business. That’s why we’re by your side at every stage, consulting with you to understand your challenges and solve your problems before they occur. Ingenious thinking is personal, so we take the time to listen to your needs and what you want from your machines and products. Install We install your new machine at a time that suits you. To get the most out of your machine, our effective employee training reduces start-up costs and allows your equipment to reach its target performance quickly. Design and build With your current and future needs in mind, we develop fresh ideas and design innovative machines to keep you ahead of the competition. Optimise We make sure your machine stays up-to- date with the latest modernisations and automation upgrades. This ensures minimal downtime and less risk of serious damage to your equipment throughout the lifetime of your lines. Our bespoke whole life service options, with remote monitoring and servicing, ensure unstoppable OEE and keeps your machines in prime condition, year after year. Monitor With your permission, our experts can connect to your control system to give you a complete review of your machine performance. By doing so, we can predict and prevent problems to ensure consistency and compliance. We also offer you actionable insights to maximise your equipment effectiveness. O P T I M I S E M O N I T O R I N S T A L L D E S I G N A N D B U I L D C O N S U L T I N N O V A TI O N I N T E L L I G E N T G L O B A L W H O L E P E R F O R M A N C E R & D A N D T E C H N O L O G IE S LI N E I N T E G R A TI O N S U S T A I N A B L E S E R V I C E W H O L E LI F E F O O D & B E V E R A G E H E A L T H C A R E 02 Strategic report 6 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 OPERATIONAL EXCELLENCE GOING FOR GROWTH INNOVATION PEOPLE OUTSTANDING CUSTOMER SERVICE Strategy: Goals and priorities GOING FOR GROWTH Offering customers automation and packaging solutions in our target markets and growing our capacity to support customers. OUTSTANDING CUSTOMER SERVICE Deployment of new business tools to support our Service teams, growing our field service capacity. INNOVATION A comprehensive programme to extend our product range, including packaging technologies. PEOPLE Increasing employee engagement, talent acquisition, development and retention. OPERATIONAL EXCELLENCE Focussing on project execution to drive shorter lead times and on-time, in-full delivery. 02 Strategic report 7 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Strategy: Goals and priorities 2024 progress Future plans Going for growth Customers As part of our strategic sales objective, we identified and prioritised key global accounts, enabling us to deliver more integrated, full-line solutions across our complete product portfolio, enhancing customer value and deepening long- term partnerships. Pipeline expansion Factored Original Equipment prospect pipeline increased by more than 50% over the prior year following the acquisition of CSi and BCA. Integration Cross selling of fuller line solutions incorporating technology of our acquired businesses. OE Growth We will continue to focus on developing new customer relationships, focusing on in-person customer interactions to extend our prospect pipeline. Outstanding customer service SIGA Vision Systems We concluded on the acquisitions of the trade and assets of SIGA Vision, which expanded our vision systems capabilities and opportunities. Response to customers We transferred our spare parts fulfilment operation to our site in the USA, minimising cross-border friction and delivery times. Capacity Developing the bandwidth of the technical service team and accessing the increased install base of CSi and BCA. Vision Systems Expansion of our vision systems offering to new OE orders and the broader install base Operational excellence Project execution We introduced key process improvement, including enhanced workflow automation and standardised project templates, that significantly increased efficiency, consistency, and delivery speed across all project team, delivering a 2.4pp gross margin increase over the prior year. Operating margins We implemented processes which provided increased security over margins while delivering revenue growth and controlled overheads to drive a 49% increase in operating profit One Mpac Excellence programmes for the project management, operations and engineering teams Systems Implementation of Mpac business systems blueprint to CSi and BCA and alignment of best practice into the wider Group Innovation Products Successful commercial launch of our mid-range Ostro cartoner, expanding out product portfolio and access to a wider market Cube Connect We successfully launched our Cube Connect programme, Mpac conditioning monitor and remote maintenance solution, securing our first orders. Technology Develop next generation cartoning capabilities, including extending our product offering Standardisation Development of standard platforms for Lambert and Langen product line and wider software engineering solutions People Organisational design Defined our leadership and organisational design to deliver on our growth agenda and to realise our integration synergies Succession planning We continued to strengten our succession planning by developing a robust pipeline of future talent, ensuring leadership continuity for the long-term success of Mpac Talent Development of a comprehensive talent acquisition and retention process Academy Next stage of the Mpac Academy roll-out to focus on development of our engineering leadership New five year strategic cycle The Group reviewed the overall strategy in the year and demonstrated it to be a clear and solid foundation for the future prosperity of the business, whilst developing a new and revised set of strategic initiatives to deliver double digit annual growth from the Group’s existing businesses and achieve a sustainable double digit return on sales. The five pillars were updated to reflect the progress made and the focus within each pillar revised to deliver the most effective long term value for the Group. 02 Strategic report 8 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Adam Holland Chief Executive Operating review “I am delighted to present my second full year report as Chief Executive of Mpac Group plc, announcing performance in line with expectations. We continue to place customers at the centre of everything that we do. I am pleased to report an increase in new equipment opportunities, record levels of order intake, revenue and a strong and diverse order book.” Introduction 2024 was a transformational year for the Group, completing the acquisitions of CSi Palletising, BCA and Siga Vision. The additions to the Group significantly enhance our customer offering and core technical capabilities, in addition to a step change in scale. The Group made good progress with our long-term strategic initiatives, growing revenue, improving financial performance and increasing our order book. We also increased the bandwidth of our senior management team, aligned to our five strategic pillars, ensuring that the Group is well placed to successfully integrate our acquisitions, to deliver the synergies identified, and to position the Group for further long-term growth. We continue to place customers at the centre of everything that we do. Our equipment sits at the heart of our customers’ operations, assembling and packaging the products that their businesses produce. Our increasingly broad product offering, specialist engineering expertise, and global service footprint means that we can offer and support customers’ solutions globally. As a result of this focus on customers, I am pleased to report an increase in new equipment opportunities and record levels of order intake and revenue, providing the Group with a solid pipeline and a strong and diverse order book going into January 2025. We have also maintained our focus on the Group’s innovation roadmap, delivering the first new product launches in our five-year product roadmap, and growing the development team. Further major development projects are in progress for future product launches, and along with the opportunities arising from the three acquisitions we believe we are well positioned to continue to drive above- market rates of growth well into the future. CSi Palletising (‘’CSi’’) We completed the acquisition of CSi in November 2024, bringing exciting new opportunities to the significantly enlarged Mpac Group. CSi is headquartered in the Netherlands and is a global leader in end-of- line packaging automation, with production facilities in Romania and additional presence in Europe and the Americas. CSi has 450 employees and reported full year 2023 revenue of €71.5m. The business has a longstanding, blue chip customer base, with excellent customer retention. Its top six strategic accounts each have a relationship of more than 30 years. Key customers include PepsiCo, Nestle, Mars, Lamb Weston, Mondelez, and Unilever, several of which are now new key accounts for the wider Group. CSi has a growing globally installed base of over 2,500 lines, growing by 80 to 90 solutions per year. The acquisition is complementary to Mpac’s existing business and significantly improves and increases its capability and offering in end-of-line and palletising solutions. The key attractions of the acquisition and the benefits that CSi bring to Mpac are as follows: • A high-quality provider of solutions for palletising and material handling; • An enhanced package of maintenance and aftermarket services across a growing global installed base; • Long-standing, “blue-chip” customer relationships in attractive sectors, with its top six customers all exceeding 30-year tenures; • Strong robotics and systems integration and fuller line capabilities; • Long-established, lower-cost manufacturing and assembly facilities in Romania; and • An established and self-sufficient leadership teams across all sites. The CSi team made good progress in delivering their strategic objectives in 2024, including a significant improvement in customer concentration, bringing the order intake from its largest customer to less than 10% of the enlarged Group. The integration of the CSi business into the Group is progressing well and to plan, and the business continues to perform in line with expectations. Revenue by geography Americas £60.3m Europe, Middle East & Africa £46.9m Asia £15.2m £119.7m Overall Group order intake (2023: £118.5m) £118.5m Order book for 2025 (2024: £72.5m) £122.4m Group revenue (2023: £114.2m) £31.2m Service revenue (2023: £31.8m) 02 Strategic report 9 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 BCA offers a wide range of process- oriented food handling, pick and place lines, hygienic conveyor systems, and primary packaging, specialising in customised turnkey systems. The acquisition of CSi in November 2024, brings exciting new opportunities to the significantly enlarged Mpac Group. CSi is headquartered in the Netherlands and is a global leader in end-of-line packaging automation, with production facilities in Romania. Operating review continued Boston Conveyor & Automation, Inc (‘’BCA’’) We were delighted to announce in September 2024 the acquisition of BCA, a provider of robotic automation and conveyer solutions, principally to the food and general industrial sectors. BCA is based in Newburyport, Massachusetts, employs 50 staff and reported unaudited revenue of US$14.0m (£11.2m) for the 12 months to 31 May 2024. The business offers a wide range of process-orientated food handling, pick and place lines, hygienic conveyor systems, and primary packaging, specialising in customised turnkey systems. Equipment supplied by BCA operates upstream of Langen and Switchback solutions and is a compelling fit, taking another step towards the Group’s strategic intent of being a market leader in the provision of full-line packaging solutions for the food and beverage and healthcare sectors. The range of solutions offered by BCA gives further breadth and depth to Mpac’s capabilities, with a particular focus on handling and primary packaging of products. BCA has several clients in common with other Mpac Group businesses, and BCA and Langen have historically featured together on customer projects in the US, underpinning the strategic value of the acquisition. Since acquisition, the integration of the BCA business has progressed well, developing a full-line offering to customers in the “meal line” segment with promising prospects for synergistic orders. We are excited about the synergies that the acquisition of both CSi and BCA bring to the Group, and we have gained traction in both regards in the months since we completed on the acquisitions with both an increase in cross selling quotations and redirecting manufacturing to our lower cost Romanian manufacturing site. Siga Vision Siga Vision provides machine vision solutions to the food, beverage and healthcare markets, using advanced software solutions to provide quality inspection and line control to production. The integration was completed in 2024, and prospects for development in 2025 are encouraging. Mpac and SIGA have a long history of working together to provide vision solutions on Mpac’s packaging machines as well as providing aftermarket support to our customers. The Acquisition provides a platform from which Mpac can provide fully integrated support to its existing and future customers with vision-related solutions, a key component in full line packaging automation. Acquisition strategy and update Our immediate focus in 2025 is on the integration of the substantial acquisitions made in 2024, delivering the synergies that we have identified, and realising the de-leveraging of our enlarged Group following the debt and equity capital raise in 2024 used to fund the acquisition of CSi and BCA. We also recognise that the evaluation and development of our acquisition prospect pipeline takes considerable time, and therefore we also continue to seek out and evaluate potential acquisition opportunities that fit with our well defined strategy. Our focus is to identify businesses that will enhance our customer proposition in automation and packaging solutions, extending our product range and our access to a broader range of customers in our target market sectors. The Company will provide updates on future acquisitions when appropriate to do so. 02 Strategic report 10 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Case study: CSi palletising • CSi offers customers comprehensive end-of-line solutions (from case transport and conveying, to integrated palletising and pallet handling systems) • The Company specialises in fixed-shape products (cases, bags etc.) with a low to medium capacity range (max 120 cases per minute) • CSi’s proprietary equipment and systems can be offered standalone or as part of an integrated turnkey palletising solution involving multiple vendors • Newly developed i-Pal palletiser offers flexible, modular solutions Robotics, conveying and systems integration capabilities within sanitary, food processing and packaging sector. Key highlights Employees 450 15 years Average length of customer relationship 80-90 Solutions delivered per year as key elements in systems Incorporated 1964 64% 23% 23% 2023 2024 2025 Customer Concentration Other Customers Customer 1 02 Strategic report 11 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 • Operates upstream of Mpac in the food processing and product handling segment of value chain • Increasing drive to automate customer lines – increasing labour costs and unreliability of contract labour are key drivers • Operating exclusively in the Americas – opportunity to grow geographically • Systems integration capabilities – simulation, layout and project management of turnkey solutions with multiple OEMs Robotics, conveying and systems integration capabilities within sanitary, food processing and packaging sector. Case study: BCA Key highlights Strong customer relationships through service -oriented sales propositions Employees 50 Incorporated 2017 +7% CAGR in BCA’s core addressable market 02 Strategic report 12 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Operating review continued In May 2024 we launched Ostro, a mid-range cartoner aimed at a new segment of the market. This was well received, winning orders in the months immediately following launch. Operational update The Group delivered a strong performance in 2024. Original Equipment (“OE”) and Service order intake and OE revenue above the prior year, and operating returns increased by 3pp from 6.8% to 9.8%, benefitting from the acquisitions completed in H2. Mpac operates in large, resilient long-term markets and has a significant opportunity to grow through increased market share. By remaining focused on executing the long-term strategy, growing the installed base through OE orders, improving margins through the development of our Service business, and driving increased operational efficiencies, the Group will continue to deliver profitable growth. Strategic update Under our stable and consistent Group strategy, we have continued to deliver strategic initiatives linked to our five-year financial plan, seeking to deliver double digit annual growth and achieve a sustainable double digit return on sales. A key element of our growth strategy is to focus on extending our customer base with new global blue chip key accounts and in 2024 we were again successful in securing orders from several of the newly targeted global customers. The range of new blue- chip accounts accessible to Mpac has increased with the acquisition of CSi and BCA, and preparing the Group to benefit from cross-selling is a key strategic focus for 2025. Our strategy remains focused on our core markets of food and beverage and healthcare, broadening our customer base within these markets, extending our product portfolio, and continuing to develop our service offering. Our strategy focuses on the following five pillars: Going for growth Our ambition to double revenue over our five-year strategic planning period was accelerated with the acquisitions completed in 2024, bringing that goal within reach over a compressed three-year period. Following the acquisitions, we have raised our horizon, with a new ambition to double the revenue of the enlarged group over the five-year period from January 2025. Our addressable end market is substantial, and has demonstrated resilience to wider macro-economic cycles. During recessionary periods for example, we have seen consumers shift demand from high value luxury products to more affordable products, resulting in increased production volume demand from our customers throughout the cycle. These mid and long term trends have proven reliable over many cycles, with transitionary periods resulting in lengthening of customer decision making over the short-term as FMCG businesses innovate to the change in consumer focus. This long term market stability provides a consistent long term objective for the Group, seeking to grow market share. The Group’s objective is therefore to deliver sustainable growth in our key end markets, capturing market share by cross selling to customers of the acquired businesses, increasing the number of touch points with our customers and the amount of time that we spend with them. In 2024 we increased the size of our commercial and applications teams, and invested in brand awareness and marketing, including exhibiting at the flagship Pack Expo trade show in the US. 02 Strategic report 13 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 At PackExpo in November we showcased our new Horizon top-load cartoner, with an intuitive user interface and the Mpac “replay” vision system. Operating review continued With the acquisitions comes a new opportunity to drive growth, cross-sell across the enlarged customer base, and offer fuller lines that combine offerings from more than one Mpac business. To coordinate our global marketing and sales team, in January 2025 we appointed a Chief Commercial Officer, selecting an experienced sales leader from the existing team. We look forward to providing an update on these activities with the 2025 half-year results. Outstanding Customer Service We remain focussed on our long-term goal to generate 30% of Group revenue from services and remain on track to meet this target, achieving 25% of revenue from Services in FY 2024. In the short-term following the CSi acqisition, we expect this percentage to reduce as we develop the Service potential from the acquired businesses. In 2024 we expanded our field service and technical resources, located in the regions where our customers operate, and continued to drive improvement in key service performance metrics. The acquisition of Siga Vision brought a new dimension to our service business, expanding our offering to modify and upgrade existing customer facilities. This includes upgrades to existing Mpac production lines, as well as upgrades to production systems originally provided by other manufacturers. Whilst this is expected to remain a small part of overall Group revenue in 2025, there is potential for this to grow over time as customers look for novel ways to improve production efficiency and reduce their labour cost through vision systems. With the acquisitions of BCA and CSi, the Group’s service offering is now significantly larger. Most notably, the global footprint has been expanded through the new teams, bringing us closer than ever to existing and target customers. The appointment of a Group Servies Director in January 2025 was made to maximise this opportunity and appoint from within the existing leadership team. Operational Excellence Our long term retention of customers depends on our reputation for delivering original equipment projects and the service support to our installed base. The Group’s track record is good, but we still see significant opportunity to improve, focusing on project execution through project management, engineering, operations and supply chain processes. Our objective is to drive shorter project lead times, on-time- in-full delivery performance, and improve working capital. With the acquisitions completed in 2024, our strategic objective remains consistent: building an increasingly flexible organisation which can respond with agility to our customers’ needs, leveraging our global resources. Our global ERP and business systems blueprint, already implemented in our facilities in Wijchen, Tadcaster, Mississauga and Cleveland will now be deployed at the facilities of our newly acquired businesses. We see opportunity to improve Group performance through the operations of the enlarged team, balancing activities across our operations, and driving our supply chain performance. In January 2025 we appointed a Chief Operating Officer to lead these activities, recruiting an experienced leader with a track record at and exceeding the scale of the enlarged Group. Innovation The Group made good progress in 2024 delivering the first new product launches from our five-year product roadmap, extending our product offering and building on our reputation as a global leader in high- speed packaging and automation solutions. 02 Strategic report 14 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 2024 was a transformational year for the Group and our people, nearly doubling the employee base, in response to this, we established our new Leadership Team to drive the Group towards its strategic objectives. Case study: Management restructure Board of Directors Adam Holland (CEO) and Will Wilkins (CFO) Mike joined Mpac in 2019 as Managing Director for the Americas and was appointed Chief Commercial Officer in January 2025. Prior to joining Mpac, Mike led Weber Packaging Solutions as EVP of North America and spent a significant period of his career in leadership roles at Domino Printing. With a track record of strong commercial growth, Mike brings a wealth of experience and global packaging industry knowledge. David joined Mpac in April 2023 as Managing Director, Lambert. He was appointed as Group Services Director in January 2025. Before joining Mpac, David led Surface Technology International, a leading electronic manufacturing company, where he oversaw worldwide operations. David brings over 15 years of executive leadership experience across global design and manufacturing businesses. Tammy joined Mpac as Group HR Director in August 2023. Tammy holds a CIPD Post Graduate Diploma in Human Resources Management and is an accomplished HR leader with over 15 years experience working in global organisations. Prior to joining Mpac, Tammy held senior roles in E.ON, Uniper and JCB and brings expertise in driving strategic people initiatives that align with organisational goals. Steve joined Mpac as Chief Operating Officer (“COO”) in January 2025. Before joining Mpac, Steve was the Vice President of Operations at Malvern Panalytical, part of Spectris plc. Prior to that, Steve worked for GKN Aerospace for 17 years in a variery of engineering, programme management and operational roles, latterly as the COO for the UK & Nordics regions. Mike was appointed Group Innovations Director in January 2022. Mike is a Chartered Mechanical Engineer with over 22 years experience in packaging machinery. Mike brings a strong foundation in all elements of automation and combines a deep understanding of customer operations and challenges with a passion for innovation that delivers tangible commercial value to our customers. Duncan joined Mpac in April 2000 and is currently Corporate Development Director. Duncan is a qualified Chartered Accountant and prior to his current role leading Mpac’s Merger & Acquisition activities, held a number of group and divisional finance leadership roles in the United Kingdom and overseas. Duncan excels in acquisition deal generation and execution & strategic business development. Going for Growth Mike Brown Service as a Business David Taylor Innovation Mike Lewis Operational Excellence Steve Blair Tammy Bristow People Duncan Tyler Corporate Development 02 Strategic report 15 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 In May 2024 we launched Ostro, a mid- range cartoner aimed at a segment of the market in which we had no previous offering. This was well received by the market, winning orders in the months immediately following launch, including bakery production lines which we continue to see as an attractive growing segment of the food market. At PackExpo in November we showcased our new Horizon top-load cartoner, with an intuitive user interface and the Mpac “replay” vision system. Our programme for launches in 2025 is exciting, and we look forward to providing an update in due course. People 2024 was a transformational year for our people, nearly doubling the employee base through recruitment and acquisition, to almost 1,100 people at year-end. The refresh of our succession planning processes in the first half of the year proved its value with the new leadership appointments made in response to acquisitions. We made improvements to our recruitment process, reducing the cost of recruitment through the introduction of an internal recruitment function in key regions. We also began the deployment of a Group-wide HR Information System, to prepare the Group to scale efficiently over the coming five-year plan. Our employee engagement programme continues to provide the backbone to our people initiative, with twice- yearly surveys ensuring our improvements were directed towards the topics that matter most to our people. We also made tremendous progress with our Health and Safety programme, making a substantial step from reactive to proactive management through the SafetyQube toolset first introduced in 2023. This approach aims to prevent complacency from setting into businesses where lost- time-reporting and major accident rates are already very low. In 2024 the team identified more than 1,500 opportunities to improve the safety of our operations, closing these out through preventative actions completed during the year. Clean Energy and Freyr Battery 2024 was a transformational year for Freyr Battery, completing the first successful unit cell production trials at the Customer Qualification Plant (“CQP”) in May, demonstrating the full functionality of the Casting and Unit Cell Assembly machine provided by Mpac. In H2, following leadership changes and a re-evaluation of their market, Freyr Battery relaunched as “T1 Energy” and re-directed investment plans from battery to solar. No further development is expected with Freyr Battery. Mpac continues to work with innovative customers in the Clean Energy sector. The enlarged scale of the Group following acquisitions completed in 2024 means that Clean Energy now represents a much smaller percentage of Group revenues than in prior years, and Clean Energy trading will be reported as part of “Other” in Group segmental analysis. Operating review continued 2024 was a transformational year for our people, nearly doubling the employee base through recruitment and acquisition, to more than 1,000 people at year-end. 02 Strategic report 16 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 In the early months of 2024 we published our ESG report. The CSi team achieved EcoVadis Bronze certification, further enhancing the Group performance in this measure. Environmental, Social & Governance We are committed to continuous improvement in our Environmental, Social & Governance (‘’ESG’’) performance. Sustainability is increasingly important to our customers. Our engineered automation and packaging solutions provide customers with sustainable and environmentally sound equipment that support the global megatrends of reduction in packaging, particularly single-use plastics, reducing waste and energy use, and increasing overall equipment effectiveness. Our end-to-end capabilities help our customers to achieve their sustainability goals. In early 2024 we published our ESG report, and later in the year we were delighted to see the CSi team achieve EcoVadis Bronze certification, further enhancing the Group performance in this measure. Pension Scheme update In February 2025, we announced the conclusion of negotiations with the Trustee of the legacy ‘Molins U.K. Pension Fund’ (the “Trustee”) in relation to the IAS 19 triennial actuarial valuation and associated schedule of contributions, undertaken as at 30 June 2024. The valuation identified an actuarial surplus of £21.1m on a technical provisions basis (June 2021: actuarial deficit of £28.4m) representing a funding level of 107.8%. Subsequently, the Trustee and the Group are investigating options for the transfer of the scheme to a third party and will provide updates as appropriate. Outlook We began 2025 with a strong order book, and good prospects in our short-cycle Service business, providing the Group with good order coverage over the forecast revenues in 2025. Performance of the acquired businesses is encouraging, and includes a strong pipeline of new opportunities from existing and new blue-chip customers. The Group continues to closely monitor the potential impact of changing tariffs and the possibility of a wider economic recession in 2025. Sudden changes in economic conditions historically have resulted in lengthening of some customer decision making processes, as customers adjust capital investment plans, which we are also monitoring. We note that our strong order book provides a measure of protection against short-term factors, in addition to the benefits and opportunities of scale deriving from our newly enlarged Group. The medium and longer-term effect of changing tariffs is likely to be an opportunity for the Group with increased demand from customers re-shoring, increasing their domestic production in new and expanded production facilities, and with increasing levels of automation to offset rising production costs. Notably, the expanded operational footprint of the Group now includes two build facilities in the US, along with facilities in Europe, Canada and the UK, positioning Mpac well to respond flexibly to these long-term trends. The commercial opportunities from the newly enlarged Group are significant and the Group remains on track to meet market expectations. The Board believes the Group’s long-term prospects are strong and that the Group is well positioned to meet its strategic objectives. Adam Holland Chief Executive 28 April 2025 02 Strategic report 17 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Will Wilkins Chief Financial Officer Financial review “The Group again delivered on its expectations, delivering a 7% revenue increase and a 49% increase in pre- tax profit, with the closing order book at a record level of £118.5m, providing excellent coverage over 2025 forecasts.’’ Revenue and operating results Group revenue of £122.4m (2023: £114.2m) represents an increase of 7% compared to the previous year. OE revenue increased by 11% at £91.2m (2023: £82.4m), underpinned largely by growth in the Americas and Asia. Services revenue decreased marginally to £31.2m (2023: £31.8m), largely attributable to the Americas and EMEA whilst Asia continued to grow. Overall order intake for the Group grew by 1% to £119.7m (2023: 118.5m). We made good progress with the closing 2024 order book which increased to £118.5m (2023: £72.5m). The value of the closing order book continues to provide excellent coverage over the forecast 2025 revenue. We remain vigilant to project execution risk and the operational efficiency of the business. As anticipated, revenue and profit before tax in H2 2024 were substantially above H1 2024, supported by the timing of project execution through 2024, with full year underlying operating profit of £12.0m (2023: £7.8m), a 54% increase on 2023 and in line with market guidance. The timing of execution of significant projects led to lower working capital and improved cash generation during the year, though it remains above historical levels Underlying profit before tax for the year of £10.6m (2023: £7.1m), net of third-party interest charges of £1.4m (2023: £0.7m), was 49% up on 2023 and in line with market guidance. Revenue by region was Americas £60.3m (2023: £56.7m), EMEA £46.9m (2023: £47.8m) and Asia £15.2m (2023: £9.7m). Revenue by sector was food & beverage £52.1m (2023: £45.8m), healthcare £43.7m (2023: £41.6m) and other £26.6m (2023: £26.8m). Individual OE contracts, and, to a lesser extent, contracts within the Service business, can be large. Accordingly, a few significant orders can have a disproportionate impact on the growth rates seen in individual sectors and regions from year to year. Original equipment OE order intake of £87.0m (2023: £86.3m) was 1% above the prior year due to the stable economic conditions in the markets in which we serve. OE revenues of £91.2m (2023: £82.4m) were 11% ahead of the prior year. OE revenue generated in the Americas region was 10% ahead of the prior year at £44.9m (2023: £40.8m). In EMEA, OE revenue in the year was £33.8m (2023: £34.0m), level with the prior year. OE revenue in Asia was £12.5m (2023: £7.6m) representing a 64% increase over the prior year. Service Order intake for the Service division was 2% up on the prior year at £32.7m (2023: £32.2m). Service revenue of £31.2m (2023: £31.8m) was 2% below the prior year after strong growth in 2023. Service revenue in the Americas was broadly unchanged at £15.4m compared to £15.9m in 2023. EMEA revenue in the year was £13.1m compared to £13.8m in 2023 and Asia revenue in the year was £2.7m compared to £2.1m in 2023. Key Performance Indicators: The Group uses a range of measures to monitor progress against its strategic and financial plans. The key performance indicators are presented below: 6.0p Basic EPS (2023: 13.1p) £3.4m Profit before tax (2023: £4.7m) 2.8% PBT return on sales (2023: 4.1%) Statutory Key Performance Indicators: The statutory measures relating to the underlying Key Performance Indicators above are as follows: £119.7m Overall Group order intake (2023: £118.5m) 8.7% Underlying PBT return on sales (2023: 6.2%) £35.2p Underlying EPS (2023: 26.2p) £122.4m Revenue (2023: £114.2m) £10.6m Underlying profit before tax (2023: £7.1m) 02 Strategic report 18 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Operating results Gross profit was £36.8m (2023: £31.6m) and underlying selling, distribution, administration costs and other operating income were £24.8m (2023: £23.8m). Underlying operating profit was £12.0m (2023: £7.8m). Underlying profit after tax was £7.9m (2023: £5.3m) and statutory profit for the year was £1.4m (2023: £2.7m). Non-underlying items merit separate presentation in the consolidated income statement to allow a better understanding of the Group’s financial performance, by facilitating comparisons with prior periods and assessments of trends in financial performance. Pension costs, acquisition- related items, contract termination costs, impairments, reorganisation costs and property transactions are considered non-underlying items as they are not representative of the core trading activities of the Group and are not included in the underlying profit before tax measure reviewed by key stakeholders. Net financing expenses were £nil (2023: income of £0.8m). Tax on underlying profit before tax was £2.7m (2023: £1.8m). The tax charge on the Group’s profit before tax was £2.0m (2023: £2.0m). Dividends Having considered the opportunities for investment in the growth of the Group, the Board has decided that it is not appropriate to pay a final dividend. No interim dividend was paid in 2024. Future dividend payments will be considered by the Board in the context of future growth opportunities and when the Board believes it is prudent to do so. Cash, treasury and funding activities Cash at the end of the year was £18.2m (2023: £11.0m) with £54.8m of borrowings drawn (2023: £8.9m). Net cash inflow before reorganisation was £5.6m (2023: £13.1m) after an increase in working capital of £7.4m (2023: decrease in working capital of £4.7m) and defined benefit pension payments of £2.3m (2023: £2.3m). Acquisition and reorganisation costs of £1.4m (2023: £0.8m) were paid in the year. Net taxation payments were £1.6m (2023: £1.1m). Capital expenditure on property, plant and equipment was £1.9m (2023: £1.1m), and capitalised product development expenditure was £3.2m (2023: £1.5m). Net current liabilities at the end of the year were £26.2m (2023: net current assets £15.1m) and net assets at the year end were £108.0m (2023: £64.0m). The Group entered into a three-year funding agreement with HSBC in 2024, which provides the Group with a £35.0m revolving credit facility (“Facility”) to support future growth. The Facility also provides several other opportunities to proactively manage the Group’s cash and ensure that the Group is well placed to react to opportunities, both organic and acquisition related, as they arise. The Group also entered into a two-year term-loan agreement for the value of £12.0m. The Group utilised £47.0m of these combined Facilities in the year. The Board has been grateful for the strong support of its current and new shareholders in the year. The Group completed both an equity placement and a retail offer as part of the funding for the acquisitions made in 2024, raising net proceeds of £28.4m at a price of £4.00 per share. Both placement and retail offer were substantially over- subscribed, reflecting the strength of the proposition and the enthusiasm for supporting the future growth of the Group. There were no significant changes during Reconciliation of underlying profit before tax to profit before tax 2024 £m 2023 £m Underlying profit before tax 10.6 7.1 Non-underlying items Defined benefit pension scheme – other costs and interest – 0.4 Acquisition costs (3.5) – Reorganisation costs – (1.2) Acquired intangible asset amortisation (2.1) (1.6) Freyr contract termination costs (0.6) – Intangible asset impairment (1.0) – Non-underlying items total (7.2) (2.4) Profit before tax 3.4 4.7 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Revenue (£m) Underlying profit before tax (£m) Underlying operating return on sales (%) Net assets (£m) 0 20 40 60 80 100 120 140 0 2 4 6 8 10 0 2 4 6 8 10 12 0 20 40 60 80 100 120 02 Strategic report 19 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 The IAS 19 valuation of the UK scheme’s assets and liabilities was undertaken as at 31 December 2024 and was based on the information used for the funding valuation work as at 30 June 2024, updated to reflect both conditions at the 2024 year end and the specific requirements of IAS 19. The smaller US defined benefit schemes were valued as at 31 December 2024, using actuarial data as of 1 January 2023, updated for conditions existing at the year end. Under IAS 19 the Group has elected to recognise all actuarial gains and losses outside of the income statement. The IAS 19 valuation of the UK scheme resulted in a net surplus at the end of the year of £39.4m (2023: £32.2m) which is included within the Group’s assets. The value of the scheme’s assets at 31 December 2024 was £275.8m (2023: £309.0m) and the value of the scheme’s liabilities was £236.4m (2023: £276.8m). Despite the continuing volatility in financial markets around the world in 2024, the scheme’s protection strategies, notably its use of liability driven investments, ensured that the surplus was protected. The IAS 19 valuations of the US pension schemes showed an aggregated net deficit of £1.5m (2023: £1.8m) with total assets of £7.5m (2023: £7.7m). During the year the Company made payments to the UK defined benefit scheme of £1.9m (2023: £2.0m). The UK scheme’s triennial valuation as at 30 June 2024 reported a surplus of £21.1m. The principal terms of the funding agreement between the Company and the Fund’s Trustees, which is effective until 31 December 2035, but is subject to reassessment every three years, are that the Company will continue to pay a sum of £2.0m per annum to the scheme escrow account (increasing at 2.1% per annum). Equity Group equity at 31 December 2024 was £108.0m (2023: £64.0m). The movement arises mainly from the profit for the year of £1.4m, a net actuarial gain in respect of the Group’s defined benefit pension schemes of £6.2m, changes in the translation reserve of £1.6m and the issue of new share capital and share premium of £38.2m; all figures are stated net of tax where applicable. Will Wilkins Chief Financial Officer 28 April 2025 2024 in the financial risks, principally currency risks and interest rate movements, to which the business is exposed, and the Group treasury policy has remained unchanged. The Group does not trade in financial instruments and enters into derivatives (mainly forward foreign exchange contracts) solely for the purpose of minimising currency exposures on sales or purchases in currencies other than the functional currencies of its various operations. Working capital The Group continues to focus on the high levels of working capital across the Group. The timing and phasing of project execution as well as the acquisition and integration of CSi and BCA into the Group has meant that working capital closed at £0.4m, representing an £12.8m reduction from the prior year. Pension schemes The Group is responsible for defined benefit pension schemes in the UK and the US, in which there are no active members. Financial review continued 02 Strategic report 20 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Principal risks and uncertainties The Board regularly considers the main risks that the Group faces and how to mitigate those risks. The principal risks and uncertainties to which the business is exposed are summarised as follows. Risk Mitigation 2024 Movement POLITICAL, ECONOMIC AND MARKET CYCLES The Group is potentially affected by global political and local and global economic cycles and changes in a number of industrial sectors, including Healthcare and Food and Beverage industries. Such potential changes include those arising as a consequence of changing economic factors and volatility, governmental activities, such as escalating political tensions, regulation and taxation or as a consequence of competitive developments within the packaging machinery market. Customers, suppliers, and Group operations are geographically diverse, and the Group sells a range of products and services to a number of industries in all parts of the world. Our One Mpac strategy allows the business to flex capacity between sites to help mitigate local cycles. The usual market cycles have been disrupted by the heightened global economic volatility, with shifts in sector demand and new opportunities being accelerated. Mpac has benefitted from new opportunities and sought to mitigate the impacts where possible, including those from political insecurity and protectionism. In respect of mitigating against the impact of political unrest, Mpac maintained a wide and diverse customer and supplier base which is not dependent upon any one jurisdiction and actively manages the production location of its equipment to minimise the impact of tariffs. In respect of mitigating against the impact of competitive disruption, the Group actively monitors (via publicly available information) and responds to both product and competitor innovation, as well as seeking opportunities for acquisitions where aligned to its strategic objectives. Increasing The political environment is less secure than in previous periods, with changes of regime in the UK, Europe, Canada and the US, resulting in delays and changes to customer investment intentions. The uncertainty experienced in our key markets, most notably North America where significant projects have been delayed, is expected to continue to be unusually volatile throughout 2025 as international trade policies are reconsidered. REGULATORY CHANGE The Group may be affected by changes in global or national regulations across any of its key sectors, examples of which include changes in regulations which significantly change the demand for our customer’s products or restrictions upon/ changes to the methods of packaging and distribution. The Group may also be affected by changes in regulations affecting its manufacturing and distribution processes, especially in areas such as health and safety and environmental compliance. The Group’s products are used to produce and package a very wide range of products and restrictions or changes to any one product, especially within our key sectors where individuals are reliant upon the sector daily, provides some mitigation against sudden change. The Group has extensive knowledge and experience in designing machines to accept all kinds of products and packaging materials, including those with the lowest environmental impact and machines designed to minimize packaging material usage whilst maintaining the customer’s product in perfect condition. The Group’s operations are closely monitored by internal processes, emergent risk reviews and ongoing risk assessments to ensure both regulatory compliance and a safe working environment. Unchanged The demand for new packaging and innovation in this area has continued unabated, to the benefit of the Group. The proposed new EU Packaging Directive may change the packaging market in Europe but represents a positive opportunity for Mpac Group as we support our customers on their journey to a more sustainable future. 02 Strategic report 21 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Principal risks and uncertainties continued Risk Mitigation 2024 Movement LOSS OF TRADING PARTNERS The Group faces the general risk of trading partners, including both customers and suppliers, ceasing to operate or trade with Mpac; the loss of any such partner could have an adverse effect on the Group’s operating results and financial condition, including potentially affecting the viability of a subsidiary company. A number of customers operate in countries which may face a higher degree of political risk than others. The Group has a diversified base of customers. In certain years sales to a customer may be more than 15% of Group revenue, although the sales would typically be both original equipment and service, and to a number of different geographic regions. The Group regularly reviews its trading relationships with suppliers with the aim of ensuring that alternative sources of supply are available. The expansion of the Group has significantly expanded the customer base in the past year, thus reducing the Group’s reliance upon a single customer. Customers – Unchanged Suppliers – Unchanged The group continues to enjoy a diverse, blue chip customer base, so the impact of a loss of a single customer is limited. The strength of our customer base has both increased and diversified during the period, including from the acquisitions, so this risk has decreased. The swift change in the value of EV batteries during the year did result in the loss of a small number of customers, but this was offset through growth elsewhere in the Group. Suppliers may be at greater risk of failure than our customers. The supplier diversification actions have continued during 2024, though no material supplier failures have been suffered in the period. LARGE ONE-OFF PROJECTS The Group undertakes large, one-off projects for its customers each year. Several risks follow from the nature of this type of business, including the potential for cost over-runs and delays in performing the contract, with a consequent impact on cash flows and profits. Also, the Group is prone to potentially large fluctuations in business levels, as demand can be volatile. The Group utilises good project management practices, including regular technical and commercial reviews of its major projects. Resource capacity is regularly reviewed, alongside reviews of order prospects lists. Our One Mpac strategy allows the business to flex capacity between sites to help manage fluctuations in business levels and demand. Unchanged The Group has expanded the number of projects it undertakes over recent periods and has not accepted any larger than usual projects recently, thus reducing the risk of a single large project having a material impact, though this is offset by the increasing frequency. The Group continues to utilise strong contract management processes which have ensured that the Group has partially mitigated and contained the risks from cost over-runs and delays. The Group continues to focus on plans to flex, optimise and grow our staff and factory resources to best manage expected growth. LOSS OF A KEY FACILITY The Group operates a number of sites around the world and the loss of any one of them would interrupt a revenue stream and could potentially have an adverse effect on the Group’s operating results and financial condition. The Group, and the Group’s customers and suppliers, may also be affected by sudden restrictions in global logistics. Disaster recovery plans are in place for each site. IT infrastructures are designed to have minimal inter dependence across the Group, thereby not exposing a number of facilities to the failure of one central system. The diverse locations and common skill sets around the Group, along with the Group’s investments in communication technology, means that production could be moved from one site to another at short notice if a site or its region were unable to function for a period of time. Unchanged The Group’s sites have demonstrated considerable resilience to remain operational in changing circumstances. The acquisitions in the period have further diversified the production options around the Group, delivering both resilience and cost flexibility. Appropriate contractual protections continue to be included in the Group’s contracts to mitigate the direct financial cost of such an event. 02 Strategic report 22 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Risk Mitigation 2024 Movement EXCHANGE RATE MOVEMENTS The majority of the Group’s trading is conducted outside of the UK and in currencies other than sterling. Consequently, its financial performance is affected by fluctuations in foreign exchange rates, particularly as a result of changes in the relative values of the US dollar, Canadian dollar, euro, and sterling. The Group has a wide supply base in different countries and monitors the relative values of currencies in making purchasing decisions. The Group enters into forward foreign exchange contracts to minimise currency exposures on sales and purchases in other than the functional currencies of its operations. Increased Volatility in the foreign exchange markets markedly increased in the second half of 2024 following the US election and has continued to fluctuate more than usual since. The use of hedging, short quote validity periods and matching of supply locations to customers continues to mitigate the impact. IT SECURITY The Group holds sensitive data relating to its employees, customers, and suppliers as well as intellectual property and financial data. Should security infringement occur the Group risks loss of customers, disruption of normal operations, fines, and reputational damage. The Group continually reviews the effectiveness of its IT security controls in consultation with external experts and invests in industry best practice security software. The security arrangements of the Group’s IT assets prevent unauthorised access to core IT hardware. IT infrastructures are designed to have minimal inter dependence across the Group. Cyber security user training is employed as a final line of defence. Unchanged The organisation and resource available to malicious actors seeking to breach IT security continues to develop rapidly. The group maintains best practice in this area and there has been no significant change in the period. AVAILABILITY OF FUNDING The banking facilities and/or the willingness of investors prove insufficient for the needs of the Group to meet its growth objectives. The Group has access to a £35.0m revolving credit facility with HSBC committed to September 2027 and a £12.0m Term Loan. These were fully drawn in support of the acquisitions during 2024, and the Group maintains suitable headroom through the use of cash and overdraft facilities. The Group held cash balances of £18.2m at the end of 2024. The Term loan amortises quarterly over three years. The Group received £28.4m of equity funding from its investors during 2024 via a placing which was substantially over-subscribed and indicated considerable additional appetite for further equity should suitable opportunities arise. It is considered that the Group has sufficient cash resources to carry on in operational existence for the foreseeable future without further drawdown of the facility, which thus provides a substantial buffer against the Group being constrained by restricted availability of funding. Unchanged The committed HSBC facility plus available free cash provide the Group with adequate funding to meet its longer term strategic objectives (other than acquisitions) and operating capital requirements. Whilst the level of available facility has reduced in the year, the proven potential for further equity funding has mitigated this reduction. 02 Strategic report 23 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Principal risks and uncertainties continued Risk Mitigation 2024 Movement LIABILITIES OF THE GROUP SPONSORED DEFINED BENEFIT PENSION SCHEMES The Group is responsible for the funding of a defined benefit pension scheme in the UK, which pays a levy to the Pension Protection Fund of an amount outside the control of the Group, as well as three smaller such schemes in the USA. Changes in the value of the liabilities of the pension schemes, which were valued in aggregate at £245.4m at 31 December 2024 in accordance with IAS 19, as a consequence of changes in interest rates and mortality rates, amongst others, and changes in the value of the assets of the pension schemes, which were valued in aggregate at £283.3m at 31 December 2024, are largely outside the control of the Group. The valuation of these schemes impact on the value of capital employed in the Group and the extent to which, as a matter of law, it has available as distributable profits. The triennial actuarial valuation of the UK scheme at 30 June 2024 identified a pre-tax surplus in the scheme of £21.1m, a funding level of 107%, which resulted in the contributions being redirected to an escrow account from 1 January 2025. The Group and the pension schemes implement liability reduction strategies where such opportunities exist, and the Group maintains regular dialogue with its pension advisors on such matters. Regular meetings are held with the trustee of the UK pension scheme, to input into their asset investment decisions and to apprise the trustee of the progress of the Group to help inform them in making decisions which may impact the scheme funding requirements. In particular, the Group and the trustees of the schemes have an active programme of risk mitigation for the schemes, including seeking to match investments to the underlying liabilities and to provide options for the membership which can benefit both themselves and the schemes. The funding arrangements for the UK scheme include the diversion of contributions to an escrow account once the actuarial valuation exceeds 103% of liabilities to ensure a surplus is not trapped in the scheme. However, many factors which impact the valuations and funding requirements of the pension schemes are outside the control of the Group. Reduced The investment strategy of the UK fund has been largely derisked to eliminate investment and inflation risk, though some asset valuation risk remains. The investment strategy of the UK scheme has been largely aligned to that employed by insurers. The UK scheme is currently investigating the availability of risk transfer to an insurer, but there is no certainty over the eventual outcome of this exercise. The pension schemes remain at the risk of being affected by regulatory changes. LITIGATION The Group from time to time may be subject to claims from third parties in relation to its current and past operations, which could result in legal costs and rulings against it that may have a material effect on the Group’s operating results and financial condition. The Group has a comprehensive risk management and review process, including contract risk management, which is aimed at minimising the risk of such claims arising because of its actions. Insurance policies are in place to cover some such incidences and third-party legal assistance is sought as required. Unchanged No new material litigation in the period. SUPPLY CHAIN Timely, efficient supply of parts and purchased components is critical to our ability to deliver to our customers. Manufacturing and supply chain continuity is exposed to external events that could have significant adverse consequences, including natural catastrophes, civil or political unrest, changes in regulatory conditions, terrorist attacks and disease pandemics – this applies to our own manufacturing sites and those of our key suppliers. The inability to deliver products/solutions to customers would impact financial performance and our reputation. Business continuity recovery plans are in place. We have undertaken mitigation plans for sole-source suppliers, sub-contractors and service providers to identify and qualify alternative sources of supply where appropriate. Reducing Lead times remain extended, which has extended the overall lead times for projects and the conversion of orders to cash, though considerable efforts are underway to reduce this. The inventory levels are under close review to reduce the working capital included within them. 02 Strategic report 24 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Risk Mitigation 2024 Movement ETHICAL BREACHES The Group operates in highly regulated markets requiring strict adherence to laws with risk areas including Bribery & Corruption, International Trade Laws, Human Rights, Modern Slavery and General Data Protection Regulation. Ethics or compliance breached could cause harm to the Group’s reputation, financial performance, customer relationships and internal morale. A Group wide ethics policy, which is reviewed by the Board annually sets out the principals that the Board expects all businesses and employees within the Group to adhere to. Unchanged No concerns raised in the year. CONTRACTUAL OBLIGATIONS The Group could fail to deliver contracted solutions and/or fail in our contractual execution due to delays, technical issues or breaches by our suppliers or other counterparties. Production delays, quality and warranty issues could all cause unexpected losses and could potentially lead to breach of contract and expenses due to disputes and claims. This could lead to loss of customers and reputational damage within the industry alongside loss of revenue and profit due to higher costs, liquidated damages and/or other penalties. Contracts are managed and delivered by programme management teams that regularly review risks and take appropriate action, including extensive validation processes, assessments of execution risks and tight focus upon both contract and change management. Review and approval process for significant and higher-risk contracts in place at Group level, including appropriate contract risk management processes prior to acceptance. Diversified nature of the Group mitigates exposure to single contracts. Unchanged The stabilisation of both the Group’s supply chains and labour supply has reduced the risks to the Group’s ability to deliver its contractual obligations. Expanding range of products and applications increases the risk of product delays and/or quality issues. Our drive for growth can expose us to more onerous contractual terms. SUSTAINABILITY AND CLIMATE CHANGE The Group’s operations and strategies could be deemed by stakeholders and potential investors to fail to comply with national and international targets on climate change reduction. This could lead to issues with trading and employment and financial penalties. The Group’s products and strategy naturally lend themselves to be well placed environmentally. We partner with our customers to drive their packaging solutions in a more environmentally friendly manner, and consequently help them reduce emissions. Increasing The global focus on Environmental Social and Governmental issues is increasing. The challenge is demonstrating the Group’s place in combatting these issues. Mpac is a low generator of emissions and waste, with the greatest potential impact of the Group to reduce emissions being in the production of operationally and energy efficient machinery. ACQUISITIONS The Group has expanded rapidly in 2024 and its strategy includes the potential for additional acquisitions in future. Should the Group either suffer a failure of due diligence prior to acquisition or a failure to successfully integrate the acquired businesses, significant shortfalls to either the ongoing business performance or assumed synergies may arise. The Group conducts extensive due diligence through both external third parties and through its own staff to ensure the income streams of the acquired businesses can be grown in line with the forecasts upon which the acquisitions are based. Where appropriate, warranties and representations are sought from the vendors, which may be backed by insurance. The Group also plans carefully for the integration phase and has, and will continue to, grow its management bandwidth to ensure that integrations can be integrated smoothly and the forecast synergies obtained. Increasing The rapid growth of the Group over 2024 and the ongoing focus upon growth does increase integration risk due to the scale of the businesses in the Group where there is not extensive corporate knowledge of the business’s operations. 02 Strategic report 25 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Section 172 statement Section 172(1) of the Companies Act 2006 (“S172”) requires the Directors’ to act in good faith and in the way that they consider to be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to have regard to the interests of other stakeholders. The Directors should also consider the desirability of maintaining high standards of business conduct, the need to act fairly between members of the Company, the impact of the Company’s operations on the community and the environment and the likely long-term consequences of their decisions. In the table below, we set out our key stakeholder groups and how we engage with each of them. Each type of engagement is designed to foster effective and mutually beneficial relationships so that we continue to work effectively with our stakeholders. Stakeholder group How we engage EMPLOYEES As at 31 December 2024, we employed 1,037 people in the Group, based in the UK, Canada, the United States, Mexico, the Netherlands, Germany, Romania, Singapore and Malaysia. Our employees bring a broad range of experience, expertise and perspective to Mpac that contributes to the delivery of our strategic objectives. The Board recognises that employees are the cornerstone of the business and develops the Group’s employment policies in line with best practice and providing equal opportunities for all, irrespective of gender, age, marital status, sexual orientation, ethnic origin, religious belief or disability. Full and fair consideration is given to applications for employment from people with disabilities having regard to their aptitudes and abilities. Every reasonable effort is made to support those who become disabled, either in the same job or, if this is not practicable, in suitable alternative work. Emphasis is placed on training, effective communication and the involvement of employees in the development of the business. During the year, the Group HR Director reviewed and implemented a new people strategy for the Group, which will include a five-year strategy to align with the overall business strategy; globally align the Group’s vision, mission and values statement; review the communications and engagement plan; update Group objectives; review the reward and benefit structure across the Group; and design and implement a new talent acquisition process. The Board is updated at each Board meeting on health and safety matters. There have been no significant accidents during the year. SUPPLIERS The Group has dedicated supplier managers based in both the Americas and EMEA who work closely with its suppliers to ensure that the relationships are productive for all parties. The Group’s Modern Slavery Act statement was reviewed and updated during the year. The Group Supplier Manual, of which the Modern Slavery Statement is part, also includes the Group’s Anti-Bribery and Ethics policies. The Group’s policy is to pay suppliers in line with its standard terms except where alternative arrangements have been agreed in advance with individual suppliers. The Group does not follow any external procurement or payment code. The Group’s trade creditor days outstanding at the year-end were 66. CUSTOMERS The Group has good relationships with its customers, some of whom are long-standing. Regular meetings and discussions are held with the customers to keep them informed of the progress of their projects and for them to provide details of any changes which they require to be made mid-project. COMMUNITIES We believe that business should be a force for good in the communities in which we operate. We aim to support and inspire our employees to make a difference in their communities. The responsibility for community engagement is devolved to the local business units. The Group encourages employees to be involved in charitable, educational or other social pursuits which contribute to the local community and aids local community projects through organisational support. Further details on the Company’s strategy and long-term decisions are set out in the Chairman’s introduction and Operating review on pages 4 to 17. Further details of our stakeholder engagement, including the impact of the Company’s operations on the environment, are set out in the Directors’ Report on pages 48 to 52. Ethics policy The Group’s Ethics policy is reviewed annually and updated as necessary. The policy, which is distributed to every Group employee and is available to view on the Group’s website at www.mpac-group. com, sets out the values which Mpac seeks to encourage and certain principles governing the way it does business. The strategic report was approved by the Board and signed by Andrew Kitchingman, Chairman, on 28 April 2025. 02 Strategic report 26 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Corporate governance 02 Strategic report 27 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Chairman’s corporate governance statement “We are committed to excellence in corporate governance, and maintain clear policies and practices that promote good corporate governance.” As Chairman of the Company, I have pleasure in presenting the Corporate Governance Statement for 2024. The QCA Corporate Governance Code 2018 (“QCA Code”) Sound governance is fundamental to ensuring that a Company is run effectively and responsibly, which assists in a Company’s long-term success. Accordingly, the Board has chosen to follow the QCA Code since 2018. The Board is aware that the QCA has introduced a new Code which will come into effect for the Company’s 2025 financial year. The Company is confident that it will be fully compliant with the 2023 QCA Code from 2025, and has taken steps to comply early, carrying out an externally facilitated Board Performance Review in 2024. The Company is reviewing other changes that may be required, for example, to review the Remuneration Policy with a view to requesting shareholder approval at the 2026 AGM. Due to the ever-changing nature of corporate governance, there is a need to ensure that policies and practices are kept under review to ensure that the Company meets the required standards, while also ensuring that these are in line with the growth and overall strategic plan for the Company. The Board considers that the policies, procedures and relevant systems, which have been implemented to date, have given us a firm foundation for our governance structure. The Company believes that during 2024 it has complied with the 10 principles set out within the QCA Code as shown in the following table. Andrew Kitchingman Chairman 28 April 2025 ANDREW KITCHINGMAN CHAIRMAN 02 Strategic report 28 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Principles of the QCA Code How the Company has complied Deliver Growth 1. Establish a strategy and business model which promote long-term value for shareholders. The strategic aims and objectives of the Group are set by the Board. The strategy is set out on pages 5 to 7 and on the Group’s website. 2. Seek to understand and meet shareholder needs and expectations. 3. Take into account wider stakeholder and social responsibilities, and their implications for long-term success. The Annual General Meeting serves as the perfect opportunity to meet and engage with its retail shareholders. When implementing the Group’s strategic aims, the Board takes into account expectations of the Company’s shareholders and also its wider stakeholders and social responsibilities. 4. Embed effective risk management, considering both opportunities and threats, throughout the organisation. The responsibility for the Group’s internal control and risk management systems also falls under the Board’s remit. The risks faced by the Group are regularly reviewed by the Board, which ensures that the mitigation strategies in place are the most effective and appropriate for the Group’s operations. The Group regularly reviews and updates its risk register, the principal risks to the Group are disclosed on pages 21 to 25 of the Strategic Report. Maintain a Dynamic Management Framework 5. Maintain the Board as a well-functioning, balanced team led by the Chair. In my role as Chairman, I regularly consider the operation of the Board as a whole and the performance of the Directors individually. There is a Board performance review carried out annually. 6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities. Directors attend seminars and industry events from time to time as appropriate to assist with training. All appointments to the Board are on merit, but with due consideration to the need for diversity on the Board. Such appointments are made to complement the existing balance of skills and experience on the Board. 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. The Board carries out a formal internal review annually in respect of its performance over the previous year. The evaluation is informed by detailed questionnaires completed by each Director, which are then summarised on an anonymous basis, considered by the Board and action taken as appropriate. This year, for the first time, the review was carried out by Ceredas, an external provider, in line with guidance included in the 2023 QCA Code. 8. Promote a corporate culture that is based on ethical values and behaviours. The Company is committed to the Group operating to the highest standards of ethical behaviour. In support of the Group’s business objectives, the Company strives for excellence in all it does through five key values: honesty & integrity, respect, empowerment & responsibility, delivery of commitments, and open communication. More information about the Group’s Ethics Policy is available on the Company’s website. 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board. The Company operates an open and inclusive culture and this is reflected in the way that the Board conducts itself. The Non-Executive Directors attend the Group’s offices and other Group events. Build Trust 10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. The application of the QCA Code is monitored by the Board which will revise its governance framework as necessary as the Group evolves. The Board recognises the importance of maintaining regular dialogue with institutional shareholders to ensure that the Group’s strategy is communicated and to understand the expectations of our shareholders. 02 Strategic report 29 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Board of Directors Andrew Kitchingman FCA Independent Non-Executive Chairman Appointment: Andrew joined the Board on 11 May 2016 as a Non-Executive Director and was appointed Chairman of the Board on 19 April 2018. Committees: Member of the Audit Committee and the Remuneration and Nomination Committee. Skills and experience: Andrew is a Fellow of the Institute of Chartered Accountants in England and Wales, and formerly worked in senior positions in corporate finance with a number of firms, including KPMG, Hill Samuel, Albert E Sharp, Brewin Dolphin and WH Ireland. Key strengths: Strong experience of financial control and good corporate governance Expertise in equity and debt capital raising Mergers & acquisitions External appointments: Chairman of H.C. Slingsby PLC Non-Executive Director of Andrew Sykes Group plc Chairman of British Board of Agrément Treasurer of Ripon Cathedral Adam Holland Chief Executive Officer Appointment: Adam joined the Board as Chief Operating Officer on 1 November 2022 and was appointed Chief Executive Officer on 17 May 2023. Skills and experience: Adam is a Chartered Engineer and Chartered Physicist, with a Masters degree in Natural Sciences from the University of Cambridge, and qualifications from Warwick Business School UK and the Tuck School of Business USA. Adam previously held a number of senior executive and company director positions in global engineering and technology companies including JCB, Siemens and Rolls-Royce plc., and in the space and defence sector at AEA Technology plc. Key strengths: Extensive Commercial and Operational experience gained from roles based in both the UK and internationally Proven track record in business development More than 20 years leading businesses to deliver market share growth Will Wilkins Chief Financial Officer Appointment: Will joined the Board as Chief Financial Officer on 22 June 2018. Skills and experience: Will is a Chartered Certified Accountant and, prior to his appointment, he held a variety of senior positions with the Company, including Group Financial Controller, Group Operations Director and a senior project director role. He previously held a senior financial position at BSH Home Appliances and began his career at Grant Thornton in 1992. Key strengths: Extensive experience in improving business systems, processes and controls More than 25 years’ proven track record as a senior finance professional with strong financial reporting discipline Cross functional practical experience in operations and finance Doug Robertson Independent Non-Executive Director Appointment: Doug joined the Board on 1 November 2018 as a Non-Executive Director. Committees: Chair of the Audit Committee and member of the Remuneration and Nomination Committee. Skills and experience: Doug is a Fellow of the Institute of Chartered Accountants in England and Wales and was Group Finance Director of SIG plc until he retired from the role in January 2017. Prior to joining SIG, Doug was Group Finance Director of Umeco plc and Seton House Group Limited. He spent his early career with Williams plc in a variety of senior financial and business roles. Key strengths: Extensive multinational financial management experience in both public and private companies Strategic planning Acquisitions and divestments External appointments: Non-Executive Director of Zotefoams plc Sara Fowler Independent Non-Executive Director Appointment: Sara joined the Board on 6 March 2020 as a Non-Executive Director. Committees: Chair of the Remuneration and Nomination Committee and a member of the Audit Committee. Skills and experience: Sara is a chartered accountant and former partner with Ernst & Young (“EY”), a former practising member of the Academy of Experts and a CEDR accredited mediator. She had been with EY for 30 years, a partner for 17 years and senior partner for EY Midlands for seven years until 30 June 2017. She was on the Board of the Compulsory Purchase Association and Chair of the CBI West Midlands. Key strengths: Extensive HR experience gained through her roles at EY and as an accredited mediator Extensive financial experience Experience of developing the skills agenda External appointments: Chair of BHSF Group Limited Matthew Taylor Independent Non-Executive Director Appointment: Matthew joined the Board on 21 October 2021 as an independent Non-Executive Director. Committees: Member of the Audit Committee and the Remuneration and Nomination Committee. Skills and experience: Matthew has over 20 years of Executive and Board of Directors experience within the automotive, steel and manufacturing sectors across the world, including Belgium, the UK and Hong Kong. He has previously held several executive- level roles including CEO of J C Bamford Excavators, CEO of Edwards Vacuum and more recently CEO of Bekaert SA, a role he held until 2020. Key strengths: Extensive senior executive experience Steel and Manufacturing industry experience of over 20 years Strong experience of good corporate governance External appointments: Non-Executive Director of Surface Transforms plc Non-Executive Director of Strip Tinning Holdings plc 02 Strategic report 30 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Left to right: Sara Fowler, Matthew Taylor, Doug Robertson, Adam Holland, Andrew Kitchingman, Will Wilkins. 02 Strategic report 31 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Corporate governance report Board meetings The Board has an established schedule of meetings throughout the year, with additional meetings convened when required. The Board addresses several recurring items at each Board meeting, including strategic, operational (including health & safety) and financial performance updates. The Directors maintain a dialogue between Board meetings on a variety of matters. In addition to the regular scheduled Board meetings, a further five adhoc Board meetings were held during the year to discuss matters related to the acquisitions of Siga Vision Limited, Boston Conveyor and Automation and CSi Palletising. Due to the short notice given for these adhoc meetings, not all directors were able to attend each meeting. Directors unable to attend received full Board briefing packs and were given the opportunity to provide comments to the Chairman and the CEO in advance of the meetings so that their views were heard. The table below sets out the attendance record of individual Directors at the Board meetings held during 2024: Directors Board Meeting Attendance A J Kitchingman 16/17 A P Holland 17/17 W C Wilkins 16/17 S A Fowler 14/17 D G Robertson 13/17 M G R Taylor 14/17 Composition and independence of the Board The Board currently consists of six Directors: the Non-Executive Chairman, two Executive Directors and three Non-Executive Directors. All the Non-Executive Directors are considered independent. Details of each Director’s experience and background are given in their biographies on page 30. Their skills and experience are relevant and cover areas including financial management and control, capital raising, capital goods industries, banking, engineering, strategic planning, business development, mergers and acquisitions and international management. Appointments to the Board and re-election The Board has delegated the tasks of reviewing Board composition, searching for appropriate candidates and making recommendations to the Board on candidates to be appointed as Directors to the Remuneration & Nomination Committee. Further details on the role of the Remuneration & Nomination Committee may be found on pages 40 to 47. All Directors will offer themselves for annual re-election, in accordance with best practice in corporate governance. The Board considers all Directors to be effective and committed to their roles. Division of responsibilities The Chairman and Chief Executive have separate, clearly defined roles. The Chairman leads the Board and is responsible for its overall effectiveness in directing the Company, and the Chief Executive is responsible for implementing the Group’s strategy and for its operational performance. Executive Directors The Executive Directors are full-time employees of the Company and have entered into service agreements with the Company. Neither Executive Director holds an external non- executive directorship. Our Board and Committee structure The Board delegates certain responsibilities to its Committees, so that it can operate efficiently and give an appropriate level of attention and consideration to relevant matters. The Company has an Audit Committee and a combined Remuneration and Nomination Committee, both of which operate within a scope and remit defined by specific terms of reference determined by the Board. The Annual Report includes a report from each of these Committees and describes the work each Committee has undertaken during the year. All of the Board Committees are authorised to obtain, at the Company’s expense, professional advice on any matter within their Terms of Reference and to have access to sufficient resources in order to carry out their duties. Chairman The Board Company Secretary Remuneration and Nomination Committee Audit Committee Executive Committee Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Commercial Officer Group Services Director Group Innovation Director Corporate Development Director Group HR Director 02 Strategic report 32 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Non-Executive Directors Each of the Non-Executive Directors has entered into a letter of appointment with the Company, which sets out the duties of the Director and the time commitment expected. They are expected to commit at least 24 days per annum to their role and are specifically tasked with: bringing independent judgement to bear on issues put to the Board; applying their knowledge and experience in considering matters such as strategy, company performance, use of resources and standards of conduct; and ensuring high standards of financial probity and corporate governance. The Board delegates certain responsibilities to its Committees, so that it can operate efficiently and give an appropriate level of attention and consideration to relevant matters. The Company has an Audit Committee and a combined Remuneration & Nomination Committee, both of which operate within a scope and remit defined by specific Terms of Reference determined by the Board. These Terms of Reference are available on the Company’s website. The Annual Report includes a report from each of these Committees describing the work each Committee has undertaken during the year. All of the Board Committees are authorised to obtain, at the Company’s expense, professional advice on any matter within their Terms of Reference and to have access to sufficient resources in order to carry out their duties. How the Board operates The Board is responsible for: developing Group strategy, business planning, budgeting and risk management; monitoring performance against budget and other agreed objectives; setting the Group’s values and standards, including policies on employment, health and safety, environment and ethics; relationships with shareholders and other major stakeholders; determining the financial and corporate structure of the Group (including financing and dividend policy); major investment and divestment decisions, including acquisitions, and approving material contracts; and Group compliance with relevant laws and regulations. The Board retains control of certain key decisions through the schedule of Matters Reserved for the Board. Anything falling outside of the schedule of Matters Reserved for the Board or the Committee Terms of Reference falls within the responsibility and authority of the Chief Executive Officer, including all executive management matters. Day-to-day management of the Company’s business is delegated to the Executive Directors and in turn to senior members of the leadership team in accordance with a clear and comprehensive statement of delegated authorities. The Board meets at regular intervals and met 17 times during the year. Directors also have contact on a variety of issues between formal meetings and there is also contact with the Executive Leadership Team of the Group. An agenda and accompanying detailed papers, covering key business; governance issues; and reports from the Executive Directors and other members of senior management, are circulated to the Board in advance of each Board meeting. All Directors have direct access to senior management should they require additional information on any of the items to be discussed. A calendar of matters to be discussed at each meeting is prepared to ensure that all key issues are captured. At each meeting, the Board reviews comprehensive financial and trading information produced by the management team and considers the trends in the Company’s business and its performance against strategic objectives and plans. It also regularly reviews the work of its formally constituted standing Committees as described below and compliance with the Group’s policies and obligations. All Directors are expected to attend all meetings of the Board and any Committees of which they are members, and to devote sufficient time to the Company’s affairs to fulfil their duties as Directors. Where Directors are unable to attend a meeting, they are encouraged to submit any comments on paper to be considered at the meeting to the Chairman in advance to ensure that their views are recorded and taken into account during the meeting. Directors are encouraged to question and voice any concerns they may have on any topic put to the Board for debate. The Board is supported in its work by Board Committees, which are responsible for a variety of tasks delegated by the Board. There is also an Executive Committee composed of the Chief Executive Officer, Chief Financial Officer, and representatives from senior management whose responsibilities are to implement the decisions of the Board and review the key business objectives and status of projects. The main activities of the Board during the year During the year, the majority of the meetings were held in-person, with five meetings taking place via video conferencing. There are a number of standing and routine items included for review on each Board agenda. These include the Chief Executive Officer’s trading update, a health and safety report, operations reports, financial reports, governance and investor relations updates. In addition, key areas put to the Board for consideration and review this financial year included: approval of annual and half-year report and financial statements; dividend strategy; review and approval of budget; strategy review and its implementation; going concern and cash flow; people strategy; review of pension arrangements; investor relations; and acquisitions and integration. 02 Strategic report 33 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Corporate governance report continued External advisers The Board seeks advice on various matters from its nominated adviser Shore Capital, joint-broker Panmure Liberum Capital, and other advisers as appropriate. Development, information and support Directors keep their skillset up to date with a combination of attendance at industry events, individual reading and study, and experience gained from other Board roles. The Company Secretary ensures the Board is aware of any applicable regulatory and governance changes and developments and updates the Board as and when relevant. Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. Directors also have direct access to the advice and services of the Company Secretary. The Company Secretary supports the Chairman in ensuring that the Board receives the information and support it needs to carry out its role effectively. Conflicts of interest Under the Company’s Articles, the Directors may authorise any actual or potential conflict of interest a Director may have and may impose any conditions on the Director that are felt to be appropriate. Directors are not able to vote in respect of any contract, arrangement or transaction in which they have a material interest and they are not counted in the quorum. A process is in place to identify and monitor any of the Directors’ potential or actual conflicts of interest. Performance evaluation The Chairman considers the operation of the Board and performance of the Directors on an ongoing basis as part of his duties and will bring any areas of improvement he considers are needed to the attention of the Board. Until this year, the Board has carried out an internal evaluation each year in respect of its performance over the previous year. In line with changes to the QCA Code, which will become effective from the 2025 reporting year, the Board made the decision to conduct an externally facilitated Board Performance Review for the first time in 2024. The intention is that in accordance with best practice, the Board will periodically carry out externally facilitated reviews, with internal reviews carried out in the intervening years. The Board appointed Ceredas Limited, to carry out the externally facilitated evaluation in 2024. Ceredas Limited does not have any connection with the Group nor with the individual Directors. The evaluation involved a combination of one-to-one interviews with the Directors and Company Secretary, review of Board papers, minutes and terms of reference of the Board and its Committees and observation of Board and Committee meetings held on 18 October 2024. The results of the evaluation were shared with the Board in December 2024 and discussed at their meeting in February 2025. The evaluation confirmed that the Board was operating effectively with good quality relationships between the directors and well-established governance processes. Ceradas made a number of recommendations (including reviewing the Board’s Committees structures and Board Reporting formats) for further enhancing the Board’s governance processes and approach. These recommendations are currently being reviewed and considered by the Board and an update will be provided in the Company’s 2025 Annual Report. Accountability The Company has in place a system of internal financial controls commensurate with its current size and activities, which is designed to ensure that the possibility of misstatement or loss is kept to a minimum. These procedures include the preparation of management accounts, forecast variance analysis and other ad-hoc reports. There are clearly defined authority limits throughout the Group, including matters reserved specifically for the Board. Risk management and internal control Risks throughout the Group are considered and reviewed on a regular basis. Risks are identified and mitigating actions put into place as appropriate. Principal risks identified are set out in the Strategic report on pages 21 to 25. Internal control and risk management procedures can only provide reasonable and not absolute assurance against material misstatement. The internal control procedures were in place throughout the financial year and up to the date of approval of this report. Financial and business reporting The Board seeks to present a fair, balanced and understandable assessment of the Group’s position and prospects in all half-year, final and any other ad-hoc reports, and other information as may be required from time to time. The Board receives a number of reports, including those from the Audit Committee, to enable it to monitor and clearly understand the Group’s financial position. Business ethics The Board is committed to the Group operating to the highest standards of ethical behaviour. The Group’s Ethics policy sets out certain principles that the Board expects all businesses within the Group to adhere to and certain values that should be embodied in the day-to-day activities of the Group. It expects all employees of the Group, led by the members of the Board and the Group’s senior management, to encourage and support all other employees in acting in accordance with the policy. In support of this policy and its principles, the Board has published guidance in the Group Ethics policy, which is available on the Company’s website at www.mpac-group.com/group-policies. Whistleblowing The Company has a whistleblowing procedure, details of which are provided to all employees. Staff may report any suspicion of fraud, financial irregularity or other malpractice to a senior manager, Executive Director, or an independent helpline. The policy is reviewed by the Audit Committee every year and updated as required. Details of any matters raised under this procedure are reported to the Audit Committee. 02 Strategic report 34 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Shareholders The Company welcomes contact with its shareholders and they can contact the Company via the Investors section of the website. Directors are available to discuss any matters that shareholders might wish to raise. They maintain communication with institutional shareholders, other investors and analysts through meetings, particularly following publication of the Group’s interim and full-year preliminary results. The Board also regularly receives copies of analysts’ and brokers’ briefings. The Company strives to provide a clear, balanced and comprehensive level of information and written material. The Company maintains a corporate website, which contains regularly updated regulatory and other information. The Annual Report and Accounts is a key communication document and is also available on the Company’s website. The Company also issues both statutory and non-statutory regulatory news announcements throughout the year to update on financial, operational and other matters. The Company offers its larger shareholders, either directly or via its brokers, face-to-face meetings on a bi-annual basis at a minimum to present and discuss performance and other matters and obtain any feedback. These meetings are hosted by the Company’s Chief Executive Officer and Chief Financial Officer. The Company also hosts a briefing for analysts, arranged by the Company’s financial public relations adviser, twice a year to coincide with the announcement of its half-year and full-year financial results to present and discuss the same matters. Annual General Meeting (AGM) All shareholders are encouraged to attend the AGM at which the Group’s activities will be considered and questions answered. The Directors are available to listen to the views of shareholders informally immediately following the AGM. This year’s AGM will be held on Thursday 12 June 2025. The Notice of Annual General Meeting is set out on pages 113 to 117 and will be available on the Company’s website at www.mpac-group.com. Separate resolutions are provided on each issue so that they can be given proper consideration. Andrew Kitchingman Chairman 28 April 2025 02 Strategic report 35 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Audit Committee report Dear Shareholders, I am pleased to present my report as Chair of the Audit Committee for the year ended 31 December 2024. In this Report I have sought to provide investors and other stakeholders with an understanding of the approach that the Audit Committee (the “Committee”) has taken to provide assurance over the 2024 Annual Report and Accounts. The Statement of Directors responsibilities in respect of the Annual Report can be found on page 53. The Committee has continued to play a key role within the Group’s governance framework to support the Board in matters relating to financial reporting, internal control and risk management. It has focused on ensuring that the interests of the shareholders are properly protected in relation to the Group’s financial reporting and internal control by challenging the decisions and approach taken by management relating to the content, judgements and disclosures within the Company’s financial statements. The Board directs the Committee to advise on whether the Annual Report is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. The Committee receives reports from management covering the key areas of estimation and judgement underpinning the financial statements and ensures that the related disclosures reflect supporting information. It challenges management to explain and justify their interpretation. The Committee is supported in this by the external auditors who present their findings to the shareholders in the Independent Auditor’s Report. The Committee is responsible for ensuring that the relationships between management, the external auditors and the Committee are appropriate and provides information on how the Committee assesses the independence of the external auditors in the Audit Committee Report. As Chair I ensure that the Committee’s agenda is kept under review and that the Committee is aware of relevant developments. As an externally facilitated Board Performance Review was carried out during the year, a separate internal evaluation of the Committee’s performance was not undertaken in 2024. Whilst the externally facilitated review did not specifically focus on the Committee’s performance, no key actions arose relating to the Committee as a result of the review. An internal evaluation of the Committee’s performance will be carried out in 2025 and the results reported in the 2025 Annual Report. Doug Robertson Chair of the Audit Committee Audit committee report The Committee met four times during 2024 and the following served as members during the year. Committee member Meeting attendance Doug Robertson – Chair 4/4 Andrew Kitchingman 4/4 Sara Fowler 4/4 Matthew Taylor 4/4 The following regularly attend meetings: the Executive Directors the Group Financial Controller representatives from the external auditors, PKF Littlejohn LLP (“PKF”) Other members of the management team may also be asked to attend meetings for discussion on specific issues. The Committee also meets with the external auditors at least twice each year without management being present and the Chair also has private meetings with the audit partners at least twice per year. The Committee is authorised to seek legal or other independent professional advice as it sees fit but has not done so during the year. The qualifications of Committee members are outlined in the Directors’ biographies on page 30. The members of the Committee are all independent non-executive directors. In addition to having extensive business experience as detailed in their biographies, members of the Committee also have extensive financial experience as recommended by the QCA Audit Committee Guide. Main responsibilities of the Committee Reviewing the financial statements and announcements relating to the financial performance of the Company, including reporting to the Board on the significant issues considered by the Committee in relation to the financial statements and how these were addressed; Reviewing the scope and results of the annual audit and reporting to the Board on the effectiveness of the audit process and how the independence and objectivity of the auditors have been safeguarded; Reviewing the scope, remit and effectiveness of the internal audit function and the Group’s internal control and risk management systems; Reviewing significant legal and regulatory matters; Overseeing the Company’s relations with the external auditor; Reviewing matters associated with the appointment, terms, remuneration, independence, objectivity and effectiveness of the external audit process and reviewing the scope and results of the audit; “I am pleased to present my report as Chair of the Audit Committee for the year ended 31 December 2024.” DOUG ROBERTSON CHAIR OF THE AUDIT COMMITTEE 02 Strategic report 36 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Reviewing the whistleblowing policy on an annual basis; Reporting to the Board on how the Committee has discharged its responsibilities; and An assessment of the risk management process including the identification of key risks and the monitoring and mitigation thereof. The Terms of Reference for the Audit Committee can be found on www.mpac-group.com. Activities during the year A summary of the Committee’s principal activities in 2024 is set out below: Review the draft Annual Report and Accounts 2023 and draft preliminary results announcement Consideration of the effectiveness of the external audit process Review of the half-year results announcement and review of external auditor’s memorandum Review of Going Concern Consideration of and approval of external audit fee quotation for 2024 Review and approval of the external audit plan for 2024 including the approach to auditing the newly acquired companies; Review and approval of the non-audit work policy Review of internal controls and risk management systems, including the 2024 internal audit plan Review of Group principal risks and uncertainties External auditor PKF Littlejohn LLP was appointed as the Company’s auditor at the annual general meeting on 17 May 2023 and was re-appointed at the annual general meeting held on 15 May 2024. The Committee monitors the relationship with PKF to ensure that auditor independence and objectivity are maintained. They assess auditor independence by obtaining assurances from PKF that all partners and staff involved are independent of any links to the Company and confirmation that all partners and staff comply with their ethics and independence policies and procedures which are fully consistent with the FRC’s Ethical Standard. Policies for non-audit services and engagement of former employees of the external auditor The Committee has in place policies that are reviewed annually relating to the employment of former employees of the external auditor and the engagement of the auditor, or advisers related to the auditor, on non-audit services which provide that the external auditor will not undertake any non-audit related work other than tax compliance or half year reporting services. These policies, which have been adopted formally by the Board, require, inter alia, the Committee’s consent to any engagements or employment, with appropriate confirmation of independence from the auditor. Financial reporting The primary role of the Committee in relation to financial reporting is to review with both management and the external auditors, and report to the Board the appropriateness of, the annual and half-year financial statements, considering amongst other matters: Clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements; Areas in which significant judgements have been applied, including discussions on such matters undertaken with the external auditors; and Whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy. In addition to the above, the Committee supports the Board in completing its assessment of the adoption of the going concern basis of preparing the financial statements. The Committee performed a robust review of the process and underlying assessment of the Group’s longer- term prospects made by management. These included: The review period and its alignment with the Group’s strategic plans; The assessment of the prospects of the Group after consideration of the Group’s principal risks, current financial position, and ability to generate cash; and The modelling of the financial impact of additional key scenarios which encompass the potential impact of crystallisation of one or more of the principal risks. 02 Strategic report 37 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Audit Committee report continued Significant issues considered by the Committee The Committee reviews accounting papers prepared by management that provide details of significant financial reporting issues, together with reports from the external auditor prepared in conjunction with the interim and full-year results. The significant issues considered by the Committee in respect of the period ended 31 December 2024 are set out on the following table. Significant issue/accounting judgement identified How it was dealt with Revenue recognition, the application of IFRS 15 and accounting for the significant judgements around open contracts The valuation of contracts is carefully monitored throughout the year, utilising both accounting data and inputs from all aspects of the business, to ensure contracts are always valued appropriately, with particular attention paid to contractual changes made in the course of contract performance. Acquisition accounting The Group carefully reviewed the valuation of the tangible assets acquired as part of the transactions in the year and ensured that the Group’s accounting policies were applied from the point of acquistion. An external, independent, firm of accountants, Crowe, valued intangible assets and goodwill. Carrying value of goodwill and acquired intangible assets The Group conducts extensive forecasting and stress testing exercises to review the carrying value of goodwill and acquired intangible assets in line with the strategic plans to ensure that the values are supportable. Pension accounting External experts are used on an ongoing basis to value the schemes in line with IAS19 and ensure a consistent and appropriate level of disclosure. Capitalisation and carrying value of internally developed intangible assets Detailed reviews of assets developed internally are undertaken internally by the Group, including engineering, commercial and innovations staff, to ensure capitalisation occurs where the criteria in IAS38 are met and that the carrying values of assets capitalised in prior periods are valued appropriately. Going concern and business disruption The Group conducts extensive forecasting and stress testing exercises for multiple scenarios, including market disruption, currency volatility and project uncertainty, the results of which are reviewed regularly by the Board, including both realistic worst-case scenarios and tests to determine what would be required to challenge the going concern basis. Assessing the Annual Report The Committee has the responsibility to assess whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for the shareholders to assess the Group’s position on performance, business model and strategy. The Committee made this assessment by: Reviewing key messages proposed for the Annual Report; Reviewing copies of the Annual Report at various stages during the drafting process to ensure the key messages were being followed and were aligned with the Company’s position, performance and strategy being pursued and that the narrative sections of the Annual Report were consistent with the financial statements; Ensuring that all key events and issues that had been reported to the Board in the executive Board reports during the year had been appropriately referenced or reflected within the Annual Report; Reviewing how alternative performance measures were used in the Annual Report, ensuring completeness and accuracy of definitions, consistency of use, relevance to users of the Annual Report and balance with statutory metrics; and Considering reports produced by both management and the external auditors on principal matters and judgements in areas underpinning the financial statements. Internal audit The Committee considers annually how the internal audit function operates in the Group, including its Terms of Reference and whether this gives sufficient assurance that the business and controls of the Group are reviewed adequately. The Committee also approves the internal audit work plan each year. This function is part of the Group’s finance department and its senior member reports to the Committee at each meeting on its activities and has direct access to the Chair as required. Internal audit reports are produced following a site visit and completion of an internal control questionnaire, providing details of how the internal controls are being followed and what areas, if any, need improving and amending as appropriate. 02 Strategic report 38 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Risk management and internal controls The Committee is responsible for reviewing the systems of risk management and internal control and has reviewed management’s progress in implementing and maintaining such control systems during the year. The Committee is satisfied that the internal control systems are operating effectively. The Board has taken, and will continue to take, appropriate measures to ensure that the chances of financial irregularities occurring are reduced as far as reasonably possible by improving the quality of information at all levels in the Group, fostering an open environment and ensuring that financial analysis is rigorously applied. Any system of internal control can, however, only provide reasonable, but not absolute, assurance against material misstatement or loss. The major elements of the system of internal control are as follows: major commercial, strategic and financial risks are formally identified, quantified and assessed during the annual budgeting exercise and presented to and discussed with executive directors, after which they are considered by the Board; there is a comprehensive system of planning, budgeting, reporting and monitoring. This includes monthly management reporting and monitoring of performance and forecasts. Monthly reviews are embedded in the internal control process and cover each principal site. Monthly reviews require the Executive Leadership Team to consider, among other things, business development, financial performance against budget and forecast, health and safety and capital expenditure proposals, as well as a review of longer-term business development and all other aspects of the business. In addition, quarterly business reviews are carried out at each principal site and are attended by the executive directors and local management teams as appropriate; there is an organisational structure with clearly defined lines of responsibility and delegation of authority; each site is required to comply with defined policies, financial controls and procedures and authorisation levels which are clearly communicated; a programme of internal control reviews and specific investigations is carried out. These are followed up during regular executive management visits. The internal control reviews include assessments of compliance with Group policies and procedures and findings are reported to the Committee and Board as appropriate; a formal risk management audit is regularly carried out by Group personnel and external risk management consultants, which covers physical damage, environmental and health and safety risks together with business continuity issues; and Formal reports including recommendations are sent to each site for action and reported back to Group management. Progress reports are issued to the Board for review and monitoring. Whistleblowing The Group has in place a Whistleblowing policy which details the formal process by which an employee of the Group may, in confidence, raise concerns about possible improprieties in financial reporting or other matters. Whistleblowing is an annual item on the Committee’s agenda, and any reported incidents will be notified to the Committee. During 2024, there were no reported incidents. Doug Robertson Chair of the Audit Committee 28 April 2025 02 Strategic report 39 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Remuneration and Nomination Committee report As Chair of the Remuneration and Nomination Committee (“the Committee”), I am pleased to present the Committee’s report, which is presented in three sections: the Committee Report, the Remuneration Report and the Remuneration Policy. The Remuneration report, on pages 41 to 42, details the amounts earned by the Directors in respect of the period to 31 December 2024 and is subject to an advisory shareholder vote. Committee report Committee Composition and Meetings The Committee’s members are the independent Non-Executive Directors, whose biographies are set out on page 30. The Terms of Reference of the Committee requires that it meets at least twice a year. During 2024, the Committee met five times and the table below sets out the attendance record of each member of the Committee: Member Meeting attendance Sara Fowler 5/5 Andrew Kitchingman 5/5 Doug Robertson 5/5 Matthew Taylor 5/5 Additionally, the Chief Executive Officer and Human Resources Director are invited to attend meetings as necessary. Duties and Terms of Reference The duties of the Committee are as set out in its Terms of Reference which is available on the Company’s website at www.mpac-group.com. The Committee deals with all aspects of remuneration of the Executive Directors and certain senior managers, and in identifying and nominating members of the Board. The Committee undertook the following main items of business during the year: reviewed the structure of the Long-Term Incentive Plan for 2024 awards onwards; reviewed the performance of the executive management incentive scheme against their 2023 objectives and approved bonus payments; approved executive management pay increases; set 2024 objectives and performance metrics for the executive management incentive scheme; reviewed the 2023 performance against the Long-Term Incentive Plan performance target; supported the recruitment process for a Chief Operating Officer; and board and senior management succession planning. Committee Evaluation As an externally facilitated Board Performance Review was carried out during the year, a separate internal evaluation of the Committee’s performance was not undertaken in 2024. Whilst the externally facilitated review did not specifically focus on the Committee’s performance, one of the key actions arising from the review was to separate the Committee’s roles regarding remuneration and nomination and establish a separate Nomination Committee. Further information on progress towards this action is included on page 34 of the Corporate Governance Report. Appointment of Chief Operating Officer and Group Services Director At the time Adam Holland was appointed CEO, the Committee agreed that the Chief Operating Officer (“COO”) role be left vacant whilst Adam established himself in role and reviewed the skills and experience required by the Group. After Adam had been in role for more than a year, consideration was given to when it would be appropriate to appoint a Chief Operating Officer (“COO”) to support Adam in his role as CEO. Following the successful acquisitions of BCA and CSi, it was felt the time was right to recruit to the COO vacancy so that the appointed individual could oversee and drive forward the operational integration required for the enlarged Group. Following interviews by management, the Committee met with and interviewed the two final candidates, one of whom was internal. Whilst it was agreed the COO would not be appointed as a member of the Board, the Committee supported the CEO’s decision to appoint Steve Blair as COO. Steve started in role in January 2025. The Committee also provided advice and guidance to management on the creation of, and appointment to, a new Group Services Director role. “I am pleased to present the Committee’s report which is presented in three sections: the Committee Report, the Remuneration Report and the Remuneration Policy.” SARA FOWLER CHAIR OF THE REMUNERATION AND NOMINATION COMMITTEE 02 Strategic report 40 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Diversity policy The Group values diversity among its employees. In their day-to-day behaviour, employees are expected not to discriminate in their relationships with each other and with customers, suppliers and other business partners, and also to encourage others to behave in a proper manner. Employment and promotion opportunities will be offered on the basis of merit regardless of race, colour, religion, age, gender, sexual orientation, disability and/or national origin. The Group aims to ensure freedom from harassment and bullying for all employees. It is the responsibility of each employee to act in non-discriminatory ways at all times and if an employee sees an example of possible discrimination, harassment or bullying taking place to bring those concerns to the attention of the Group’s management. 2024 Remuneration report Directors’ total remuneration The remuneration of the Executive Directors for 2024 is made up as follows: Executive Directors’ remuneration as a single figure (audited) 2024 Salary £000 All benefitsa £000 Short-term incentive schemeb £000 Discretionary share schemec £000 Pensiond £000 Total £000 2023 Totale £000 A P Holland 322 20 50 50 76 518 563 W C Wilkins 224 20 40 40 51 375 374 a Benefits include: Executive Directors – car allowance payments, income replacement insurance and private medical cover. b The performance criteria for the short-term incentive scheme is described in the Remuneration policy on page 43. c The discretionary share scheme is described below. d The values are the amounts contributed by the Company into the Company’s Personal Pension Plans for the Executive Directors. e A bonus payment of £150,000 was made to Dr Steels, a previous director of the Company, in respect of his performance in 2023. Mr Holland’s salary was increased to align with the previous Chief Executive Officer with effect from 1 February 2024. Mr Holland and Mr Wilkins received a 4% pay increase in line with the average pay increase awarded to employees in the UK with effect from 1 April 2024. The 2024 bonus awards for Mr Holland and Mr Wilkins were based upon the achievement of certain functional and personal targets, totalling 31% of salary for Mr Holland and 36% of salary for Mr Wilkins. The remuneration of the Non-Executive Directors for 2024 is made up as follows: Non-Executive Directors’ remuneration as a single figure (audited) 2024 Fees £000 All taxable benefits £000 Total £000 2023 Total £000 A J Kitchingman 90 – 90 86 D G Robertson 60 – 60 57 S A Fowler 60 – 60 57 M G R Taylor 60 – 60 58 Directors’ interests in shares (unaudited) The beneficial interests of Directors holding office at 31 December 2024 and persons connected with them in the ordinary shares of the Company (excluding share options) were as follows: Held at 1 January 2024 Acquired in the year Held at 31 December 2024 A Holland 12,680 5,000 17,680 W C Wilkins 86,194 5,000 91,194 M G R Taylor 18,000 5,000 23,000 A J Kitchingman 13,133 2,500 15,633 S Fowler 10,000 5,000 15,000 No Director holds, or held at any time during the year, a beneficial interest in the Company’s preference shares. There were no changes in the Directors’ interests in shares between 31 December 2024 and 28 April 2025. Discretionary share scheme (audited) The Remuneration Committee and the Board undertook a review of the incentives provided to the Executive Directors and observed that, especially at the commencement of their tenure, there was limited alignment between the interests of the shareholders and the Executive Directors. In addition, the Remuneration Committee determined that the overall incentive outcome did not adequately reflect the transformation of the Group in 2024. For these reasons, the Remuneration Committee, with the agreement of the Board, have recommended that the following share awards are made in May 2025 in relation to 2024: 2024 Total £000 2023 Totald £000 A Holland 50 – W C Wilkins 40 – Shares awarded under this scheme will be required to be held for a period of two years, except to the extent that shares may be sold to meet any personal tax arising on the award. Incentive scheme – Deferred share plan (audited) No award under the Deferred share plan was made in 2024. 02 Strategic report 41 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Remuneration and Nomination Committee report continued Long Term Incentive Plan (audited) Conditional grants under the LTIP are made on an annual basis. Details of conditional grants of Mpac Group plc ordinary shares under the LTIP for each Director who held office during the year and who is eligible to participate in the plan are as follows: Date of award End of three-year performance period Number of shares Face value at grant (£000) % of salary Lapsed Exercised Balance A Holland 9 April 2024 31 Dec 2026 123,711 541 163 – – 123,711 2 May 2023 31 Dec 2025 192,124 452 180 – – 192,124 W C Wilkins 9 April 2024 31 Dec 2026 56,357 246 109 – – 56,357 2 May 2023 31 Dec 2025 76,849 181 83 – – 76,849 10 June 2022 31 Dec 2024 37,548 163 79 (37,548) – – The face value of the 2024 awards are calculated based on the closing share price on the day of grant, being 437.5p. 60% of the shares are anticipated to vest under the 2024 awards. No shares are anticipated to vest under the 2023 awards. No shares were awarded to any participant of the 2022 scheme. Performance Conditions For the 2022 award: Metric Weighting Performance condition Threshold target Stretch target EPS 70% Cumulative Underlying EPS to exceed 180p over the three-year period to vest in full. Vesting is reduced to 20% on a pro-rata basis if cumulative Underlying EPS is 140p over the three-year period and is reduced to nil if it fails to reach 140p. 140p 180p ROCE 30% Average ROCE to exceed 40% over the three-year period to vest in full. Vesting is reduced to 20% on a pro-rata basis if average ROCE is 30% over the three-year period and is reduced to nil if it fails to reach 30%. 30% 40% Total 100% For the 2023 award: Metric Weighting Performance condition Threshold target Stretch target EPS 70% Cumulative Underlying EPS to exceed 140p over the three-year period to vest in full. Vesting is reduced to 20% on a pro-rata basis if cumulative Underlying EPS is 110p over the three-year period and is reduced to nil if it fails to reach 110p. 110p 140p ROCE 30% Average ROCE to exceed 40% over the three-year period to vest in full. Vesting is reduced to 20% on a pro-rata basis if average ROCE is 30% over the three-year period and is reduced to nil if it fails to reach 30%. 30% 40% Total 100% For the 2024 award: Metric Weighting Performance condition Threshold target Stretch target EPS 70% Cumulative Underlying EPS to exceed 150p over the three-year period to vest in full. Vesting is reduced to 40% on a pro-rata basis if cumulative Underlying EPS is 125p over the three-year period and is reduced to nil if it fails to reach 125p. 125p 150p Operating ROS 30% Average ROS to exceed 10% over the three-year period to vest in full. Vesting is reduced to 40% on a pro-rata basis if average ROS is 8.8% over the three-year period and is reduced to nil if it fails to reach 8.8%. 8.8% 10% Total 100% Awards will normally remain subject to a holding period of two years, commencing on the vesting date with the exception of sales to cover related personal tax liabilities. There is no minimum shareholding requirement for Executive Directors. Sara Fowler Chair of the Remuneration and Nomination Committee 28 April 2025 02 Strategic report 42 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Remuneration Policy This part of the Remuneration and Nomination Committee’s report sets out the Remuneration policy, which is designed to ensure that the remuneration packages offered, and the terms of the contracts of service, are competitive and designed to attract, retain and motivate Executive Directors of the right calibre. To achieve these goals, the Remuneration and Nomination Committee’s policy is to establish fixed salary at around half of the total obtainable in the case of excellent performance, with recognition and reward for achieving performance targets annually and growth in the long term. Remuneration packages The main components of the package for each Executive Director are: i. Basic salary Basic salary is determined by taking into account the performance of the individual and information on the rates of salary for similar jobs in companies of comparable size and complexity in a range of engineering and other technology industries. ii. Incentive schemes The Executive Directors participate in a short-term incentive scheme in which the minimum bonus payable is nil and the maximum bonus payable is 120% of relevant salaries. The incentive is payable wholly in cash. The targets against which performance is judged are primarily the Group’s key financial performance indicators and personal objectives. The Directors’ personal objectives are commercially sensitive and therefore remain, and are expected to continue to remain, confidential to the Company. In some years, the targets may be varied to reflect particular objectives determined by the Committee. iii. Long Term Incentive Plan (“LTIP”) An LTIP, which was adopted by the Board on 10 June 2019, has been introduced to incentivise Executive Directors and certain senior managers over the longer term and encourage retention. 70% of the award of shares is based on cumulative Earnings Per Share (“EPS”) performance over a three-year period. 30% of the award of shares is based on average Operating Return on Sales (“ROS”) over the same three-year period. Further details of the performance conditions can be found on page 42. An award granted under the LTIP in the form of a conditional right giving the participant a right to acquire ordinary shares in the Company at nil cost if certain conditions are met. Awards are made covering a three-year period. Awards will normally vest following the end of the three-year performance period, once it is determined whether and to what extent the performance conditions have been achieved. Awards will normally remain subject to a holding period of two years commencing on the vesting date. Standard malus, clawback and leaver provisions apply. iv. Pensions Directors may choose to join the Mpac Group Personal Pension Plan, which is a defined contribution scheme. Additionally, life assurance and income protection policies are put in place for the Executive Directors. Discretionary awards Whilst the remuneration packages for Executive Directors are designed to cover normal performance, the Remuneration Committee retain the ability to make awards of either cash or shares to recognise and incentivise performance or achievement which would not otherwise have been rewarded. Where shares are awarded, they are subject to a two year holding period, except to the extent required to settle any immediate tax liability. Contracts of service The Company’s policy is to offer contracts of employment that attract, motivate and retain skilled employees who are incentivised to deliver the Company’s strategy. These service contracts are terminable on notice of one year given by the Company and six months given by the Director. In the event of termination by the Company, the Company has the option of making a payment of liquidated damages equivalent to the value of 12 months’ salary, or the balance of the period to the date of expiry if less, or of negotiating appropriate compensation reflecting the principle of mitigation. In the event of a change of control in the Company, if the Company terminates an Executive Director’s contract within six months of the change of control, or if an Executive Director terminates the contract within six months of the change of control, the Company will be obliged to pay liquidated damages equivalent to the value of 12 months’ salary. The purpose of the change of control clause, which is reviewed regularly, is that the contracts should provide reasonable and appropriate security to the director concerned and to the Company. Any commitment contained within the current Directors’ service contracts, or a current employee’s contract of employment who is subsequently promoted to the role of Director, will be honoured even where it may be inconsistent with the Company’s Remuneration policy. The current service contracts for Mr Wilkins and Mr Holland were entered into on 22 June 2018 and 17 July 2022 respectively. 02 Strategic report 43 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Remuneration and Nomination Committee report continued Letters of appointment The Non-Executive Directors are not issued with a separate service contract on appointment. The terms of their appointment are set out in their letter of appointment. The Company does not make termination payments to Non- Executive Directors in the event that a Non- Executive Director’s appointment is terminated by the Company. Recruitment The Committee reserves the right to make payments outside the Remuneration policy in exceptional circumstances. The Committee would only use this right where it believes that this is in the best interests of the Company and when it would be disproportionate to seek the specific approval of the shareholders in a general meeting. When hiring a new Executive Director, the Committee will use the Remuneration policy to determine the Executive Director’s remuneration package. To facilitate the hiring of candidates of the appropriate calibre to implement the Group’s strategy, the Committee may include any other remuneration component or award not explicitly referred to in this Remuneration policy sufficient to attract the right candidate. In determining the appropriate remuneration, the Committee will take into consideration all relevant factors (including the quantum and nature of the remuneration) to ensure the arrangements are in the best interests of the Company and its shareholders. The Committee may buy-out incentive arrangements forfeited on leaving a previous employer after taking account of relevant factors including the form of the award, any performance conditions attached to the award and when they would have vested. The Committee may consider other components for structuring the buy-out, including cash or share awards where there is a commercial rationale for this. Where the recruitment requires the individual to relocate appropriate relocation costs may be offered. Recruitment awards will normally be liable to forfeiture or clawback if the Executive Director leaves the Company within the first two years of their employment. Any such awards will be linked to the achievement of appropriate and challenging performance measures and will be forfeited if performance or continued employment conditions are not met. Termination The Committee reserves the right to make additional liquidated damages payments outside the terms of the Directors’ service contracts where such payments are made in good faith in order to discharge an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement or compromise of any claim arising in connection with the termination of a director’s office or employment. Non-Executive Directors The fees of Non-Executive Directors are determined by the Board based upon comparable market levels. The Non-Executive Directors do not participate in the Company’s incentive schemes and nor do they receive any benefits or pension contributions. 02 Strategic report 44 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Future Remuneration policy table The following table provides a summary of the key components of the remuneration package for Directors: Salary Purpose and link to strategy This is a fixed element of the Executive Directors’ remuneration and is intended to be competitive and attract, retain and motivate. Operation Takes into account the performance of the individual and information on the rates of salary for similar jobs in companies of comparable size and complexity in a range of engineering and technology industries. Opportunity Salary is normally reviewed annually. Ordinarily, salary increases will be in line with increases awarded to other employees within the Group. However, increases may be made above this level at the Remuneration and Nomination Committee’s discretion to take account of individual circumstances such as: increase in scope and responsibility; to reflect the individual’s development and performance in the role; and alignment to market level. Performance metrics Not applicable, although individual performance is one of the considerations in determining the level of salary. Benefits Purpose and link to strategy The benefits provided to the Executive Directors are intended to be competitive and attract and retain the right calibre of candidate. Operation Benefits are paid to the Executive Directors in line with market practice. Opportunity Benefits are set at a level which the Remuneration and Nomination Committee considers: are appropriately positioned against comparable roles in companies of a similar size and complexity in the relevant market; and provide a sufficient level of benefit based upon the role and individual circumstances. Performance metrics Not applicable. 02 Strategic report 45 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Remuneration and Nomination Committee report continued Short-term incentive scheme Purpose and link to strategy The short-term incentive scheme is intended to reward Executive Directors for the performance of the Group in the financial year. Operation The Remuneration and Nomination Committee reviews the financial performance of the Group following the end of each financial year and determines the payments to be made. Opportunity Maximum of 120% of salary. Performance metrics The targets against which performance is judged are primarily the Group’s key performance metrics in each financial year set annually by the Remuneration and Nomination Committee as well as personal objectives. In some years, the targets for the short-term incentive scheme may be varied to reflect particular objectives determined by the Remuneration and Nomination Committee. The Remuneration and Nomination Committee retains the ability to adjust and/or set different performance measures if events occur (such as a change in strategy, a material acquisition/ divestment of a Group business, a change in prevailing market conditions, or a change in regulation which affects the Group) which cause the Remuneration and Nomination Committee to determine that the measures are no longer appropriate and that amendment is required so that they achieve their original purpose. Long Term Incentive Plan (“LTIP”) Purpose and link to strategy The LTIP is intended to incentivise Executive Directors and certain senior managers over the longer term in direct alignment with shareholders’ interests and encourage retention. Operation An award granted under the LTIP in the form of a conditional right giving the participant a right to acquire ordinary shares in Company if certain conditions are met. Awards were made covering a three-year period. Awards will normally vest following the end of the three-year performance period, once it is determined whether and to what extent the performance conditions have been achieved. Awards will normally remain subject to a holding period of two years, commencing on the vesting date with the exception of sales to cover related personal tax liabilities. Standard malus, clawback and leaver provisions apply. Opportunity The normal maximum award, covering the rolling three-year plan period, is 300% of salary based on the value of the award at the date of grant. Performance metrics Performance metrics selected reflect underlying business performance. 70% of the award of shares is based on cumulative Earnings Per Share (“EPS”) performance over a three-year period. 30% of the award of shares is based on average Operating Return on Sales (“ROS”) over the same three-year period. In respect of the percentage of the award that relates to EPS, 40% of the award is made if EPS is 125p. 100% of the award is made if EPS is equal to or exceeds 150p. Between these two points, allocation will be on a straight-line basis pro rata. If EPS is below 125p no award will be made in respect of EPS. In respect of the percentage of the award that relates to ROS, 40% of the award is made if ROS is 8.8%. 100% of the award is made if ROS equals or exceeds 10%. Between these two points, allocation will be on a straight-line basis pro rata. If ROS is below 8.8%, no award will be made in respect of ROS. 02 Strategic report 46 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Pension Purpose and link to strategy The payment of a pension benefit is intended to form an integral part of an Executive Director’s remuneration package that is competitive and attracts, retains and motivates the Director. Operation Directors may join the Mpac Group Personal Pension Plan, or alternatively, in lieu of payments to the pension scheme, the Company may pay additional emoluments. Opportunity Any percentage increase in pension contributions will not exceed the percentage increase in salary. Performance metrics Not applicable. Non-Executive Directors’ fees Purpose and link to strategy To attract and retain Non-Executive Directors of the right calibre. Operation The fees of Non-Executive Directors are determined by the Board based upon comparable market levels. The Non-Executive Directors do not participate in the Company’s incentive schemes and nor do they receive any benefits or pension contributions. Statement of consideration of employment conditions elsewhere in the Group The Group applies the same key principles to setting remuneration for its employees as those applied to the Directors’ remuneration. In setting salaries and benefits each business considers the need to retain and incentivise key employees and the impact such policy has on the continued success of the Group. 02 Strategic report 47 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Directors’ report Reporting requirements The following information is provided in other appropriate sections and is included in this Directors’ Report by reference and so is deemed to be part of it: Information Reported Strategic report Pages 1 to 26. Directors’ Remuneration Report Pages 41 to 42. Business review The Directors’ business review is set out as part of the Strategic report with the results of the Group being set out in the consolidated income statement on page 62 and in its related notes. The Group has overseas subsidiaries. Going concern The Group’s activities together with the factors likely to affect its future development, performance and position are as described within the Strategic report on pages 1 to 26 in particular the Outlook section on page 17. The Directors have considered the trading outlook, including the preparation of profit, balance sheet and cash flow forecasts, for the Group for a 24-month period ending 31 December 2026, its financial resources including its cash resources and access to borrowings, as set out in note 20 to the accounts on page 88, and its continuing obligations, including to its defined benefit pension schemes, details of which are set out in note 24 to the accounts on pages 90 to 94. These forecasts have been sensitised to cover a range of credible downside scenarios, including the potential future impacts of the pandemic and the conclusions remained unchanged. “Reverse stress tests”, where scenarios were run to determine the full extent of the Group’s resilience to downside risks, did not challenge the Group’s conclusions under any plausible scenario. Performance subsequent to the year-end suggests the forecasts remain appropriate. Having made enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Directors Biographical details of the Directors currently serving on the Board and their dates of appointment are set out on page 30. In accordance with Section 416(1)(a) of the Companies Act 2006, the Directors who served during the year are as follows: Executive Directors Non-Executive Directors Adam Holland Andrew Kitchingman Will Wilkins Sara Fowler Douglas Robertson Matthew Taylor The Company’s approach to the appointment and replacement of Directors is governed by its Articles of Association (together with relevant legislation) and takes into consideration any recommendations of the QCA Code. Subject to any restrictions in its Articles of Association and the Companies Act 2006, the Directors may exercise any powers which are not reserved for exercise by the shareholders. The Company maintained Directors’ and Officers’ Liability Insurance cover throughout 2024. The Articles of Association of the Company permit it to indemnify the Company’s officers, and officers of any associated company, against liabilities arising from conducting Company business, to the extent permitted by law. The Company’s Articles of Association, together with the Directors’ Service Contracts, will be available for inspection at the AGM. Directors and Directors’ interests Directors’ interests in the Company’s shares as at 31 December 2024 are shown on page 41. There are no shareholding requirements for Directors. 02 Strategic report 48 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Substantial shareholdings At 31 December 2024, the Company had been notified, or is aware of, the following interests in the issued ordinary share capital of the Company: Number of ordinary shares % of issued ordinary shares Schroder Investment Management Limited* 4,911,645 16.33% Charles Stanley & Co. Limited** 1,827,518 6.07% Mr J Laverdiere 1,059,349 3.52% * the Company was notified on 22 January 2025 that Schroder’s holding had reduced to 4,516,888 equating to 15.17% of the issued ordinary shares. ** the Company was notified of Charles Stanley’s holding on 7 January 2025. Results and dividends The Group’s profit for the year was £2.0m (31 December 2023: £2.7m). The Board has decided to not pay a final dividend. An interim dividend was not paid during 2024 (2023: none). Dividends on the 6% preference shares are due for payment on 30 June and 31 December in each year and in 2024 amounted to £0.1m (2023: £0.1m). Research and development Group policy is to retain and enhance its market position through the design and development of specialist machinery and services. To achieve this objective, engineering and product development facilities are maintained in the UK and overseas. Research and development expenditure for the Group incurred in 2024, net of third-party income, amounted to £3.5m (2023: £2.1m), of which £1.0m (2023: £1.2m) was charged to the consolidated income statement and £2.5m (2023: £0.9m) was capitalised and included in development costs. Share capital Authority for the allotment of up to 2,047,422 ordinary shares was granted at the 2024 Annual General Meeting and this authority expires at the end of the 2025 AGM. This authority was used during the year to satisfy the consideration required for the acquisition of BCA, where 1,059,349 ordinary shares were issued to the vendor. At a General Meeting held on 18 October 2024 shareholders approved an additional authority to allot 7,250,000 new ordinary shares of 25 pence each in connection with a placing, 1,039,500 new ordinary shares in settlement of the part of the consideration, 250,000 new ordinary shares in connection with a retail offer, all as part of the acquisition of CSi Palletising. At 31 December 2024, the Company’s issued share capital was £7,518,318.25 divided into 30,073,273 ordinary shares of £0.25 each plus 900,000 preference shares of £1.00 each. Details of movements in issued share capital in the year are set out in note 25 to the financial statements. Resolution 14 which will be proposed as a special resolution at the Group’s next Annual General Meeting, will seek the necessary authority to enable the Company to purchase for cancellation ordinary shares in the market for a period of up to 12 months from the date of the meeting, upon the terms set out in the resolution, up to a maximum number of 3,007,324 ordinary shares representing approximately 10% of the issued ordinary share capital at the date of the notice convening the Annual General Meeting. EES Trustees International Limited is the trustee for the Company’s long-term incentive arrangements for the benefit of the Group’s employees. As at 31 December 2024, it did not hold any shares. However, when the Trustee does hold shares, it has agreed to waive all dividends and not to exercise voting rights in respect of those shares. Disclosure of information to the auditor In accordance with section 418(2) of CA2006, as far as the Directors are aware, there is no relevant audit information of which the Group’s auditor is unaware, and each Director has taken all reasonable steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information to establish that the Group’s auditors are aware of that information. Auditor PKF Littlejohn LLP was appointed as statutory auditor on 17 May 2023 and a resolution to approve their re-appointment will be proposed at the forthcoming Annual General Meeting. Annual General Meeting The Annual General Meeting will take place on 12 June 2025. Notice of the meeting can be found on pages 113 to 117. Political donations The Company made no political donations during the year 31 December 2024. Financial instruments The financial risk management objectives of the Group, including details of the exposure of the Company and its subsidiaries to financial risks including credit risk, interest rate risk and currency risk, are provided in note 26 to the accounts on pages 96 to 103 Sustainability policy The Group is committed not only to compliance with environmental legislation but also to the progressive introduction of appropriate measures to limit the adverse effects of its operations upon the environment. In particular, efforts are made to minimise waste arising from operations, to recycle materials wherever possible and to consider alternative methods of design or operation. The Group aims both to reduce its costs by these means and to promote good practice in the use of resources at sustainable levels. 02 Strategic report 49 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Directors’ report continued Climate Related Financial Disclosures As the Group is listed on the LSE AIM market, we fall within the Climate-Related Financial Disclosures (“CRFDs”) requirement under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. The four pillars of this regime are governance, strategy, risk management, and metrics and targets. Governance The Board of Directors have oversight of climate related risks and opportunities. The member of the Mpac Group Executive Committee (“ExCom”) responsible for corporate development leads the Group’s ESG initiative and reports directly into the Board in relation to ESG matters. They, as well as the Group Risk Committee, are responsible for identifying, considering and managing climate-related risks and opportunities which the board then review and approve. At least twice a year, the Board considers climate-related matters including the review and approval of the Group’s ESG report, last published in April 2024 for the financial year 2023, the report for 2024 will be published later in 2025. Additionally, the Board will actively participate in setting the Group’s Science-Based Targets later in 2025. At the time of this report no climate related performance objectives have been set. Further details of the Group’s ESG initiative will be disclosed in the Group’s 2024 ESG report. In 2023, the Board approved the appointment of ClimatePartner, a leading solutions provider for climate action that helps organisations calculate their carbon emissions, set strategies for reducing emissions and set emissions reduction targets. We begun by creating an inventory of and measuring our Scope 1 and Scope 2 emissions and certain upstream emissions in our supply chain (Scope 3 emissions), using primary data in almost all instances. More details of the Group’s emissions can be found in the Streamlined Energy and Carbon Reporting (“SECR”) section of this report. In 2024 we have continued to expand our Scope 3 inventory to include a greater proportion of our supply chain. We are also exploring options to conduct product life cycle assessments on the products we supply. Additional information regarding the status of this exercise will be included in the 2025 annual report. Risk management Identification, assessment and management of the group’s climate-based risks and opportunities is embedded into the Board’s risk management process. Our risk management strategy, detailed on page 50, is consistently applied across all risks to evaluate and identify both current and emerging risks and opportunities, including those related to climate, the risks and opportunities specifically related to sustainability and climate change are disclosed on page 25. Climate based risks are identified both on a bottom-up basis at a site level and on a top- down basis by the Board and Executive Committee. Climate based risks are measured based on their likelihood and potential impact on the Group, which could be financial, operational disruption or reputational damage. As noted in the metrics and targets section below, we use our calculation of scope 1 & 2 carbon emissions as a tool to measure the progress made against the risks noted below. In addition to Group level risk management, risks and opportunities are identified at a subsidiary level and reported up through the Group. The principal climate-based risks and opportunities are summarised as follows: Risk Timeframe Business Impact Mitigation/Opportunity Transitional The Group’s operations and strategies could be deemed by stakeholders and potential investors to fail to comply with national and international targets on climate change reduction. Medium/long term Perceived non-compliance with climate targets could damage the Group’s reputation, leading to lost trust and sales, and hinder new business relationships. It may cause investors to withdraw, increasing capital costs, and result in regulatory penalties that impact profitability. The Group’s products and strategy naturally lend themselves to be well placed environmentally. We partner with our customers to drive their packaging solutions in a more environmentally friendly manner, and consequently help them reduce emissions. The global focus on Environmental Social and Governance issues is increasing. The challenge is demonstrating the Group’s place in combating these issues. Mpac is a low generator of emissions and waste, with the greatest potential impact of the Group to reduce emissions being in the production of operationally and energy efficient machinery. Transitional Delays in reducing carbon within our supply chain Short, medium and long term We depend on our suppliers to achieve their low carbon and net zero targets. The risk is that if they fail to meet these targets within the required timeframe, it could hinder our ability to meet our own goals. Our procurement strategy remains dedicated to partnering with suppliers who share our commitment to ESG principles throughout their operations. We incorporate sustainability assessments into every strategic procurement decision. Transitional Failure to act on climate change may impact our ability to attract and retain talent Short, medium and long term Attracting and retaining top talent is crucial for our future success. It’s essential that our team understands and supports our sustainability commitment, recognising our efforts as credible and authentic. This is central to fulfilling our purpose as a responsible business. We involve our colleagues in supporting our transition to net zero by offering opportunities to change their work practices. For example, we use a common engineering platform that allows engineers from different locations to collaborate on customer projects without needing to travel. Additionally, we have introduced a cycle-to-work scheme to encourage employees to reduce their carbon footprint during their commute. We define short term as a period of less than one year, medium term as extending to 2030, and long term as reaching until 2050. The short term was selected to address immediate climate- related risks and opportunities, allowing for quick responses to urgent environmental changes. The long term was chosen to align with our vision for sustainable climate resilience and to plan for significant environmental transformations. The medium term of five years has been selected to align with the timeframe considered when setting the Group’s strategy. We have assessed potential physical climate-related risks and determined that they are not material to the Group. At the time of this report none of the transitional risks above are assessed as having a material financial impact upon the Group. 02 Strategic report 50 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Scenario analysis In 2024 we conducted peer analysis to understand the different scenarios businesses are modelling. We have found that most comparable businesses are modelling the following 2 scenarios: 1. 1.5°C by 2100: Orderly transition to the Paris-aligned goal occurring by 2100, with temperature rising 1.5°C above pre-industrial levels. 2. 4.0°C by 2100: Failure of countries to meet their Paris-aligned goals, resulting in higher emissions and temperatures rising to an average of 4 degrees Celsius above industrial levels. We believe the scenarios above are sufficient for giving readers an opportunity to understand the possible transformational effects of climate change. We will keep our scenarios under review and may adjust them over time to reflect the evolving environmental landscape and maintain comparability with our peers. Our assessment of physical climate risks follows established climate scenarios, particularly the Intergovernmental Panel on Climate Change’s (“IPCC”) Representative Concentration Pathway (“RCP”) scenarios. These scenarios offer a standardised framework for examining potential climate changes and their impacts. RCPs are utilised worldwide for climate modelling, providing access to a broad array of peer-reviewed and accepted climate datasets, and ensuring consistency across different regions. 1.5°C Degrees Scenario We recognise that a 1.5-degree Celsius increase in global temperatures by 2100 could significantly impact our operations: 1. Extreme Weather Events: We anticipate more frequent and severe weather events, such as storms and floods, which could disrupt our supply chain, delay project timelines, and potentially damage our facilities or equipment. None of our locations are any more or less prone to extreme weather events than the others and clearly detailed business continuity plans are in place across the Group. This aims to ensure that, in an extreme occurrence, the impact on our business and customers would be minimal. 2. Supply Chain Disruptions: Climate changes may affect the availability and cost of materials we use in our packaging systems. For example, components sourced from regions prone to extreme weather might become more expensive or harder to obtain. The Group operates using a truly global supply-chain, thus minimising the risk of disruption caused by global warming or an extreme weather event in any specific part of the world. 3. Regulatory Changes: We expect stricter environmental regulations aimed at reducing carbon emissions. These regulations could require us to adopt more sustainable practices, potentially increasing our operational costs. We believe the impact of regulatory changes relating to carbon emissions will have an immaterial impact on the Group’s financial performance. 4. Market Shifts: We foresee a growing demand for eco-friendly packaging solutions. By adapting our designs to be more sustainable, we can gain a competitive edge and meet changing consumer preferences. The machines that we design and manufacture are at the cutting-edge of sustainability, assisting our blue-chip customer base to transition away from single use plastic packaging to more eco-friendly packaging solutions. 5. Health and Productivity: Higher temperatures could impact the health and productivity of our workforce, especially if our operations involve significant manual labour or are located in areas without adequate climate control. None of our locations have a high risk of health and productivity problems owing to rises in temperature, our locations are all modern facilities with adequate climate control, this position is regularly reviewed by the Global Head of Safety, Health, Environment and Quality. 6. Financial Risks: Investors and stakeholders are increasingly considering climate risks in their decisions. By demonstrating our commitment to sustainability and climate resilience, we can improve our attractiveness to investors. In 2023, we published our first ever ESG Report, which laid out the foundations for our intention to be carbon neutral by 2030, we are still fully committed to this goal and will be setting Science-Based Targets (“SBT’s”) to assist us on this journey in H2 of 2025. Our scenario analysis considers the Group as a whole and has considered all geographical locations that the Group operates in. None of our geographical locations have been identified as having a higher risk than the others. We believe that the Group’s business model and strategy is resilient enough to withstand the potential impact of the 1.5 degrees scenario described above. To address these potential impacts, we are investing in sustainable materials, improving energy efficiency, and developing climate-resilient strategies. These proactive measures will help us better position our business to thrive in a changing climate. 4°C Degrees Scenario A 4-degree Celsius increase in global temperatures by 2100 presents a far more severe scenario compared to a 1.5-degree increase. While both scenarios involve significant challenges, the 4-degree rise would lead to much more frequent and intense extreme weather events, greater disruptions to supply chains, stricter regulatory environments, and more profound shifts in market demands. Additionally, the health and productivity of the workforce would be more severely impacted, and financial risks would be heightened as investors increasingly prioritise climate resilience. However, the Group has positioned itself well to cope with these scenarios were any of them to come to fruition, the fact that Mpac operates using a truly global supply chain eases the pressure on any one location having an extreme 4-degree Celsius increase. The Group operates with a number of blue-chip customers whose markets lend resilience to this scenario, Food & Beverage and Healthcare markets will always be needed, more it could be argued, in a scenario where global temperatures reach a 4-degree Celsius increase. Strategy At Mpac we recognise the responsibility we have to protect our planet for current and future generations. We strive to act in ways that reduce the impact of our methods of operating as well as through the machines that we design and build for our customers. We also ensure we comply with environmental laws and regulations in all jurisdictions in which we are located. Mpac demonstrates a steadfast commitment to product sustainability. Through a holistic approach that integrates innovative design, responsible sourcing, and efficient manufacturing processes, we ensure that the machines we produce have a reduced environmental footprint. We actively seek out eco-friendly materials, minimise waste generation, and embrace energy- efficient production methods. Mpac designs and builds machines that assemble and package products that are essential to the lives of millions of people. Our machines are designed to ensure they achieve maximum operational efficiency for our customers, thus minimising their carbon footprint throughout their lifetime. We are in a continual dialogue with our customers to understand how we can support their journey of reduced carbon emissions in how we design and build machines for them, but also how those machines operate throughout their lifetime. Our innovations team operates from six centres around the world, leveraging around 500 engineers and designers to develop new products that meet the emerging needs of our customers, always with sustainability at the heart of our creative process. Our product development processes focus on analysing the life cycle of our products to reduce carbon emissions throughout. Future innovation initiatives will concentrate on minimisation of waste and emissions, sustainability partnerships and predictive maintenance advancements. 02 Strategic report 51 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Directors’ report continued Metrics and targets We have committed to being carbon neutral in respect of our Scope 1 and 2 emissions by 2030. Progress against this target is measured and assessed annually with the assistance of a report prepared by Climate Partner. Each site uses Climate Partner’s calculation portal to collect and enter input data for each scope of emission. Climate Partner review this data and prepare a calculation of carbon emissions by scope for each site including comparative information. These reports are reviewed, and individual movements are challenged at a site level. During 2024 we began to assess our full Scope 3 upstream emissions and establish a path to net zero. This is an evolving process and in 2025 we will set near term targets in accordance with the Science Based Targets Initiative (www.sciencebasedtargets.org). We plan to maintain our collaboration with ClimatePartner, utilising their expertise to help us to continue to refine and monitor our metrics and targets. Our disclosures in respect of carbon emissions can be found in the Streamlined Energy and Carbon Reporting (“SECR”) section of this report. We have introduced several initiatives to progressively reduce carbon emissions over time: Remote diagnostic functionality enabling service technicians to resolve machine issues without the need to travel to the customers’ facility Use of a common engineering platform enabling engineers from different locations to collaborate on customer projects without the need to travel Installation of EV charging points Transition of company vehicle fleet to fully electric models Introduced a “cycle to work” scheme Streamlined Energy and Carbon Reporting (“SECR”) In accordance with disclosure requirements of Part 7A of Schedule 7 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), Mpac Group is dedicated to annually reporting the Group’s emissions. Our carbon footprint calculation, performed with the assistance of Climate Partner, adheres to the methodology established by the GHG Protocol for corporate accounting. tCO2e 2024 2023 Scope 1 91.66 86.51 Scope 2 1,170.63 1,068.33 Total Scope 1 and 2 1,262.29 1,154.84 Scope 3* 4,020.55 3,187.24 Total 5,282.84 4,342.08 Scope 1 and 2 intensity kg CO2e / employee a 2,150 2,347 ª calculated using average number of employees in the year. How we decide what to measure We focus on Scope 1 and Scope 2 emissions, which encompass direct emissions from owned or controlled sources and indirect emissions from the generation of purchased energy, respectively. Additionally, we measure certain upstream Scope 3 emissions, which include indirect emissions from our supply chain. The selection of these metrics is based on their significance to our operations and their potential impact on our environmental footprint. By prioritising these areas, we aim to provide a transparent and thorough account of our climate-related performance, enabling stakeholders to make informed decisions. Scope 1 emissions refer to direct greenhouse gas (“GHG”) emissions from sources that are owned or controlled by the Group. This includes emissions from: Combustion of fuels in company-owned or controlled boilers, furnaces, and vehicles. Fugitive emissions, such as leaks from refrigerants or other equipment. Scope 2 emissions refer to the indirect greenhouse gas (“GHG”) emissions resulting from our consumption of purchased electricity, heat, steam, and cooling. These emissions occur at sources not owned or controlled by our organisation but are a direct consequence of our energy use. *Scope 3 emissions disclosed above are limited to business travel, employee commuting, generated waste and certain purchased goods and services. The emissions in relation to electricity and gas have been calculated by the multiplication of the metered usage by the emissions level provided by the supplier, or, where this is not available, by publicly available equivalents. In the case of transport, emissions are calculated based on the distances travelled multiplied by known emissions levels of the vehicles or, where this is not available, from equivalent publicly available data. Energy efficiency The Group continues to focus on reducing energy consumption and carbon emissions and reviews have been undertaken and recommendations implemented. Reviews of new and evolving technologies form an integral part of a continuous operational review programme. Travel The Group has significantly increased the level of travel in the year, predominantly associated with the acquisitions and the consequent integration into Mpac. Employee and other stakeholder engagement Details of the Group’s arrangements for engaging with employees, suppliers and customers are required to be disclosed in this Directors’ report and are set out under the s.172 statement on page 26. Such information is incorporated into this Directors report by reference and is deemed to form part of this report. Prism Cosec Limited Company Secretary 28 April 2025 02 Strategic report 52 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with UK-adopted international accounting standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and Group for that period. In preparing these financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. In the case of each Director in office at the date the Directors’ report is approved: so far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors are unaware; and they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group’s and Company’s auditors are aware of that information. This Responsibility statement was approved by the Board on 28 April 2025 and is signed on its behalf by: Adam Holland Chief Executive Officer Will Wilkins Chief Financial Officer 28 April 2025 Statement of Directors’ responsibilities in respect of the annual report and the financial statements 02 Strategic report 53 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 02 Strategic report 54 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Financial statements 02 Strategic report 54 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 02 Strategic report 55 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Opinion We have audited the financial statements of Mpac Group plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2024 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2024 and of the group’s profit for the year then ended; the group financial statements have been properly prepared in accordance with UK- adopted international accounting standards; the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included: obtaining the group cash flow forecasts for the period ending 31 December 2026 and ensuring mathematical accuracy of these forecasts; assessing the reasonableness of the underlying assumptions, including forecast levels of expenditure and contractual cash inflows used in preparing the forecasts. To assess the reasonableness and timings of the cash inflows and outflows, we used our knowledge of the business and compared the forecasts to the directors’ previously approved budgets, historic performance and information subsequent to the year end including board minutes and management accounts; verifying cash balances used in the forecast close to the date of sign off of these financial statements; reviewing management’s sensitivity analysis and performing our own sensitivities to understand the key drivers of the forecasts. Where necessary, we have evaluated potential mitigating factors that could be actioned by management in the sensitised scenarios; assessing the appropriateness of the going concern disclosures included in the financial statements against the requirements of the relevant auditing standards; and recalculated borrowing covenants during the going concern period to ensure ongoing compliance. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s or parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Our application of materiality The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. We determined materiality for the financial statements to be: Entity Materiality £’000 Performance materiality at 70% (2023: 70%) £’000 Triviality threshold (5%) £’000 Group 1,210 (2023: 1,100) 845 (2023: 770) 60 (2023: 55) Parent company 730 (2023: 640) 510 (2023: 448) 35 (2023: 32) The benchmark for group materiality was selected as 1% of revenue in the year. Revenue was deemed to be the most appropriate metric for group materiality as revenue growth is a key performance indicator. The benchmark selected for the parent company materiality was 1% of the net asset value, as the parent company is not revenue generating, and the significant balances in the financial statements are the investments in, and amounts advanced, to the trading subsidiaries. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures. We have set performance materiality at 70% of overall materiality for both the group and parent company (2023: 70%) as we did not identify any material errors or adjustments in the prior periods. While performance materiality for the group financial statements as a whole was set at £845,000, each significant component of the group was audited to a performance materiality ranging between £235,000 and £510,000 (2023: £536,000 and £940,000), with performance materiality set at 70%. We applied the concept of materiality in planning and performing our audit and in evaluating the effects of misstatement. Independent Auditor’s report to the members of Mpac Group plc 02 Strategic report 56 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 High Likelihood Low Low High Magnitude Carrying value of goodwill and acquired intangible assets Revenue recognition and accounting for long term contracts Acquisition accounting Accuracy of defined benefit pension liabilities and scheme valuation Independent Auditor’s report continued Independent Auditor’s report continued Our approach to the audit Our audit is risk based and is designed to focus our efforts on the areas at greatest risk of material misstatement, and areas subject to significant management judgement as well as greatest complexity, risk and size. As part of designing our audit, we determined materiality, as above, and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors and considered future events that are inherently uncertain. These areas of estimation and judgement included: Revenue recognition over time on long term contracts; Fair value assessment and purchase price allocation (“PPA”) in relation to the net assets acquired as part of the acquisitions in the year; Carrying value and impairment assessment of intangible assets, including goodwill and acquired intangibles; Carrying value of the investments and amounts advanced to the subsidiaries (at the parent company level); Pension asset/liability calculation and assumptions used thereon; and Recognition of deferred tax assets based on unutilised losses within the group. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. A full scope audit was completed on the financial information of all of the group’s significant operating subsidiaries by PKF Littlejohn LLP and no component auditors were engaged. The key audit matters and how these were addressed are outlined below. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 02 Strategic report 57 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Key audit matter How our scope addressed the matter Revenue recognition and accounting for long term contracts (Note 1 and Note 18) Under ISA (UK) 240, there is a rebuttable presumption that revenue recognition is a significant fraud risk. The group generates significant revenue through contracts with customers to design, engineer and manufacture machinery and packaging solutions. The majority of revenue is recognised over time. The group adopts an inputs based method for recognising contract revenue by estimating total material and labour costs at the outset of a contract. Revenue is then recognised over the life of the contract based on total labour hours incurred as a percentage of total expected hours. In applying this method, management judgement and estimation is required, and there is a risk that revenue is not being recognised in accordance with IFRS 15 Revenue from Contracts with Customers. This includes the risk that contract assets and liabilities, and contract fulfilment assets, at the year end are not accurate or complete. Due to the level of estimation uncertainty, revenue recognition over long term contracts has been designated as a key audit matter. Our audit work in this area included the following: General procedures: Updating our understanding of the information system and related controls relevant to each material income stream. Evaluating the appropriateness of the information system and the effectiveness of the design and implementation of the related controls, including those relating to the posting of employee’s time to specific projects/contracts. Performing a reasonableness check around the total labour hours recorded at each component versus the expected number of available labour hours (based on employee numbers and utilisation). Performing a proof in total, recalculating expected revenue per contract by comparing the total contract value to labour hours incurred over the expected labour hours forecast. Evaluating the revenue recognition in line with IFRS 15 ‘Revenue from Contracts with Customers’, specifically ensuring that performance obligations are met prior to revenue being recognised and that revenue over time as well as revenue at a point in time is recognised in line with the Group’s accounting policy, as well as IFRS 15. This included an assessment of the disclosures made within the financial statements. Ongoing contracts: Performing a risk assessment of the population of contracts and selecting a sample of higher-risk (value and/or complexity) contracts across the group. For the sample selected, we obtained an understanding of the contract terms, key operational or commercial/financial issues, significant judgements that impact the contract position and the appropriateness of revenue recognised during the year ended 31 December 2024. For the sample selected for testing we: Considered the appropriateness of supporting evidence and the requirements of IFRS 15 and the group’s accounting policies where contracts included additional entitlements to variations and claims, both for and against the group. Held discussions with the project managers to understand the project status and outstanding works remaining on the contracts, and to ensure that the financial information recorded was consistent. Challenged the reasonableness of management’s calculations of forecast labour hours, which included understanding the risks and outstanding works remaining on the contract, the impact of any delays or other delivery issues and the related cost assumptions and contingencies. Evaluated the expected margin and revenue recognised to date against the latest contract progress. Challenged the level of unbilled revenues and the adequacy of the evidence to prove recoverability through subsequent work certifications and cash collections. Completed contract – look back/forecasting accuracy assessment Testing a sample of closed contracts and assessing management’s historic forecasting accuracy by reviewing expected margins at contract inception to actual margins at completion. Onerous contract review: Reviewing contracts identified as potentially loss making by assessing post year end contract performance as well as future expected contract performance forecasting. Contract asset and contract liability: Testing year-end adjustments to revenue as well as the associated contract assets and contract liabilities recognised end to ensure these are recognised in accordance with the stated accounting policies. Testing the recoverability of contract assets at year end with reference to post year end contract performance and customer payments. 02 Strategic report 58 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Independent Auditor’s report continued Independent Auditor’s report continued Key audit matter How our scope addressed the matter Acquisition accounting (Note 31) The group completed the acquisition of the following businesses/assets throughout the 2024 financial year: SIGA Vision Ltd on 15 August 2024; Boston Conveyor & Automation Inc on 18 September 2024; and Elstar International BV and its subsidiaries (together “CSi”) on 29 November 2024. The accounting for the acquisitions and the subsequent PPA involves aligning accounting policies, determining the fair value of the consideration paid, identifying and assessing the fair value of assets and liabilities acquired, including intangible assets at the acquisition date, and assessing the subsequent goodwill. Management engaged an external expert to undertake the PPA assessments of the material acquisitions, being BCA and CSi. These transactions are material and include significant management estimates and judgements. As a result, the acquisition accounting has been designated as a key audit matter. Our audit work in this area included the following: Assessing whether each of the acquisitions qualifies as a business under the definition in IFRS 3, Business Combinations. Reviewing the sale and purchase agreements to understand the structure of the transaction and to confirm the consideration paid to be included within the acquisition accounting, including recalculating the fair value of any deferred or contingent consideration. Reviewing management’s PPAs and engaging with our own internal valuation experts to review and challenge the material balances and assumptions within the PPA, including the identification of any separately identifiable intangibles. Evaluating the capabilities, competence and objectivity of the external valuation experts engaged by management for the PPA to conclude on their appropriateness to perform the role. Performing audit procedures, on a sample basis, to confirm the completeness, accuracy and carrying value of the amounts included on the acquisition balance sheet. Confirming the acquisition accounting entries in the group financial statements and reperforming the calculation of goodwill. Reviewing management’s assessment of the alignment to group accounting policies (i.e. local GAAP to UK-adopted IAS) and any adjustments as a result. Reviewing the corporation and deferred tax entries associated with the transaction and the recoverability of the deferred tax asset recognised. The review was inclusive of input from our tax specialists. Reviewing the adequacy of the disclosure notes in the financial statements in relation to the acquisition to ensure it complied with the requirements of IFRS 3 Business Combinations. Carrying value of goodwill and acquired intangible assets (Note 12) The group has material goodwill and acquired intangible assets arising from historic and current year acquisitions. The process for assessing whether an impairment exists under IAS 36 ‘Impairment of Assets’ is complex. When carrying out the goodwill impairment review, determining the recoverable amount for the smallest identifiable part of the entity (cash-generating unit (“CGU”)) requires management to make judgements over several key inputs in the models for predicting future revenue levels (discounted cash flow models). Due to the high level of estimation uncertainty present in the impairment test and the sensitivity of the related assumptions in management’s model, we identified the valuation of acquired intangibles and goodwill as a key audit matter. Our audit work in this area included the following: Performing a walkthrough to understand management’s process with regards to the impairment analysis and preparation of the value in use calculations. Obtaining and reviewing management’s impairment papers and value in use calculations along with related workings to support the value in use of each CGU, including those acquired in the year. Testing the mathematical accuracy of the value in use calculations, as well as challenging key assumptions used in the preparation of the discounted cash-flow model, including the discount rate, growth rate of expected revenue (based on orderbook) and operating profit margins. Reviewing management’s identification of each CGU to ensure that it is consistent with the associated intangible asset and whether the discount rates are reasonable for each CGU. Assessing the accuracy of historic forecasts to actual results to evaluate management’s ability to forecast the CGU’s future cashflows. Considering the reasonableness of cash flows included in the calculation through comparison with current year performance and historic trends. We also confirmed the consistency of the model with that being used to assess going concern. Performing a sensitivity analysis on key assumptions to determine potential impact on value in use in the event of an adverse movement in assumptions. Reviewing the disclosures in the financial statements in relation to the intangible assets and associated estimates. The performance at one of the CGU’s continues to be below forecast despite the proposed turnaround plan in 2024. Should performance not improve from FY24 actuals, there would be no headroom over the carrying value of the assets and there would be an indicator of impairment as at the next reporting period end. However, management have forecast a turnaround of the business in 2025 as outlined in Note 12. This plan relies on a significant increase in revenue and return to profitability to avoid an impairment. Should this turnaround plan not be successful in 2025, there will be a requirement to impair the carrying value of the intangible asset. 02 Strategic report 59 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Key audit matter How our scope addressed the matter Accuracy of defined benefit pension liabilities and scheme valuation (Note 24) The group operates defined benefit pension schemes in the UK and US that provide benefits to a number of employees. At the year end, the net defined benefit asset was £37.9m (2023: £30.4m). The total fair value of scheme assets and present value of defined benefit obligations which form the net defined benefit asset amounted to £283.3m (2023: £316.7m) and £245.4m (2023: £286.3m), respectively. IAS 19 ‘Employee Benefits’ describes the recognition and measurement of defined benefit pension schemes. The valuation of the schemes’ liabilities at year end involves complex judgements and assumptions. Variations in key assumptions such as discount rates or mortality rates has the ability to significantly influence the net asset/liability position of these schemes, and as such the schemes’ valuations are considered to be a key audit matter. Our audit work in this area included the following: Updating our understanding of the processes surrounding the valuation of pension scheme assets and defined benefit obligations. Obtaining management’s valuation assessment and actuarial report and assessing the scope, competence and independence of the group’s actuarial expert. Using an auditors actuarial expert to inform our challenge of the assumptions used, including discount rates, growth rates, mortality rates and the calculation methods employed in the calculation of the pension liability. Challenging the underlying data and inputs used in the expert valuation, for example contributions paid into the scheme during the year. Testing scheme asset valuation and ownership, agreeing to corroborating external valuation and custody reports where available. Reconciling the pension balances disclosed within the financial statements to management’s actuarial reports. Reviewing funding agreements between the pension trustees and the Group, including the latest triennial review to corroborate deficit reduction payments from the administrator. Reviewing disclosures relating to pension assets and liabilities to ensure in line with IAS 19 ‘Employee Benefits’. 02 Strategic report 60 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Independent Auditor’s report continued Independent Auditor’s report continued Other information The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the group and parent company financial statements, the directors are responsible for assessing the group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, and our expertise of the sector. We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from the Companies Act 2006, UK-adopted international accounting standards, the AIM Rules for Companies, as well as local laws and regulations in the jurisdiction in which the group and parent company operate. 02 Strategic report 61 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to: – conducting enquiries of management and those charged with governance regarding potential instances of non-compliance; – discussing with external legal counsel regarding any material litigation or claims; – reviewing RNS announcements; – reviewing legal and professional fees ledger accounts for evidence of any litigation or claims against the group; – discussing with local management with regards to the good standing of the subsidiaries; and – reviewing board minutes and other correspondence from management for evidence of non-compliance. We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, whether key management judgements could include management bias was identified in relation to: – the recognition of revenue and contract assets/liabilities in relation to the long-term contracts with customers; – the fair value assessment in relation to the assets and liabilities acquired as part of the business combinations in the year; – the carrying value of the intangible assets (goodwill and acquired intangible as well as internally generated intangibles); and – the valuation of the pension assets/liabilities. We addressed these as outlined in the Key audit matters section above. The potential for management bias also existed in the recognition of deferred tax assets, valuation of the hedging arrangements and carrying value in the parent company’s investments in subsidiaries in the year. Audit procedures were performed in this regard to recalculate the balances with reference to the underlying agreements or assess the carrying value of investments with reference to the value in use calculations used for the going concern and intangible asset impairment assessment. We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. Compliance with laws and regulations at the subsidiary level was ensured through enquiry of management, communication with local specialists and review of correspondence for any instances of non-compliance. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Adam Humphreys (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD 28 April 2025 02 Strategic report 62 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Consolidated income statement for the year ended 31 December 2024 2024 2023 Note Underlying £m Non-underlying £m Total £m Underlying £m Non-underlying £m Total £m Revenue 1 122.4 – 122.4 114.2 – 114.2 Cost of sales (85.6) – (85.6) (82.6) – (82.6) Gross profit 36.8 – 36.8 31.6 – 31.6 Distribution expenses (10.5) – (10.5) (8.8) – (8.8) Administrative expenses 4,5 (15.1) (8.6) (23.7) (14.6) (3.9) (18.5) Other operating income/(expenses) 3 0.8 – 0.8 (0.4) – (0.4) Operating profit 1,4 12.0 (8.6) 3.4 7.8 (3.9) 3.9 Financial income 8 – 1.4 1.4 – 1.5 1.5 Financial expenses 8 (1.4) – (1.4) (0.7) – (0.7) Net financing (expense)/income (1.4) 1.4 – (0.7) 1.5 0.8 Profit before tax 10.6 (7.2) 3.4 7.1 (2.4) 4.7 Taxation 9 (2.7) 0.7 (2.0) (1.8) (0.2) (2.0) Profit for the period 7.9 (6.5) 1.4 5.3 (2.6) 2.7 Earnings per ordinary share Basic 11 6.0p 13.1p Diluted 11 6.0p 13.1p 02 Strategic report 63 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Statement of comprehensive income for the year ended 31 December 2024 Group Note 2024 £m 2023 £m Profit for the period 1.4 2.7 Other comprehensive income/(expense) Items that will not be reclassified to profit or loss Actuarial gains/(losses) 24 5.3 (1.7) Tax on items that will not be reclassified to profit or loss 9 0.9 – 6.2 (1.7) Items that may be reclassified subsequently to profit or loss Currency translation movements arising on foreign currency net investments (1.6) (0.9) Effective portion of changes in fair value of cash flow hedges 26 (0.3) 0.4 Reclassified to income statement from hedging reserve 0.1 1.3 (1.8) 0.8 Other comprehensive income/(expense) for the period 4.4 (0.9) Total comprehensive income for the period 5.8 1.8 02 Strategic report 64 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Group Note Share capital £m Share premium £m Translation reserve £m Capital redemption reserve £m Hedging reserve £m Retained earnings £m Total equity £m Balance at 1 January 2023 5.1 26.0 2.4 3.9 (1.8) 26.6 62.2 Profit for the period – – – – – 2.7 2.7 Other comprehensive (expense)/ income for the period – – (0.9) – 1.7 (1.7) (0.9) Total comprehensive (expense)/ income for the period – – (0.9) – 1.7 1.0 1.8 Balance at 31 December 2023 5.1 26.0 1.5 3.9 (0.1) 27.6 64.0 Profit for the period – – – – – 1.4 1.4 Other comprehensive (expense)/ income for the period – – (1.6) – (0.2) 6.2 4.4 Total comprehensive (expense)/ income for the period – – (1.6) – (0.2) 7.6 5.8 Equity issues 25 2.4 35.8 – – – – 38.2 Total transactions with owners, recorded directly in equity 2.4 35.8 – – – – 38.2 Balance at 31 December 2024 7.5 61.8 (0.1) 3.9 (0.3) 35.2 108.0 Statements of changes in equity for the year ended 31 December 2024 02 Strategic report 65 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Company Note Share capital £m Share premium £m Translation reserve £m Capital redemption reserve £m Hedging reserve £m Retained earnings £m Total equity £m Balance at 31 January 2023 5.1 26.0 – 3.9 – 31.8 66.8 Profit for the period – – – – – 2.1 2.1 Other comprehensive (expense)/ income for the period – – – – – (2.3) (2.3) Total comprehensive (expense)/ income for the period – – – – – (0.2) (0.2) Balance at 31 December 2023 5.1 26.0 – 3.9 – 31.6 66.6 Profit for the period – – – – – 2.5 2.5 Other comprehensive (expense)/ income for the period – – 0.6 – – 6.0 6.6 Total comprehensive (expense)/ income for the period – – 0.6 – – 8.5 9.1 Equity issues 25 2.4 35.8 – – – – 38.2 Balance at 31 December 2024 7.5 61.8 0.6 3.9 – 40.1 113.9 02 Strategic report 66 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Statements of financial position as at 31 December 2024 Group Company Note 2024 £m 2023 £m 2024 £m 2023 £m Non-current assets Intangible assets 12 117.4 24.0 0.7 0.9 Property, plant and equipment 13 5.8 4.1 0.2 0.3 Investment property 14 0.8 0.8 0.8 0.8 Right-of-use assets 27 9.4 5.9 0.3 0.2 Investments 15 – – 63.8 63.8 Amounts owed by group undertakings 15 – – 105.4 22.3 Employee benefits 24 39.4 32.2 39.4 32.2 Deferred tax assets 16 5.3 0.9 – – 178.1 67.9 210.6 120.5 Current assets Inventories 17 15.9 11.1 – – Trade and other receivables 19 59.4 46.8 5.3 11.7 Current tax assets 10 0.8 1.1 0.8 – Cash and cash equivalents 21 18.2 11.0 0.5 0.4 94.3 70.0 6.6 12.1 Current liabilities Lease liabilities 27 (2.2) (1.3) (0.1) – Interest-bearing loans and borrowings 20 (41.2) (8.0) (40.0) (8.0) Trade and other payables 22 (72.1) (43.8) (45.5) (45.5) Current tax liabilities 10 (2.2) (0.9) – – Provisions 23 (2.8) (0.9) – – (120.5) (54.9) (85.6) (53.5) Net current assets/(liabilities) (26.2) 15.1 (79.0) (41.4) Total assets less current liabilities 151.9 83.0 131.6 79.1 Non-current liabilities Interest-bearing loans and borrowings 20 (14.5) (0.9) (7.9) (0.9) Employee benefits 24 (1.5) (1.8) – – Other payables 22 (1.3) – – – Deferred tax liabilities 16 (19.1) (11.4) (9.6) (11.3) Lease liabilities 27 (7.5) (4.9) (0.2) (0.3) (43.9) (19.0) (17.7) (12.5) Net assets 108.0 64.0 113.9 66.6 Equity Issued capital 25 7.5 5.1 7.5 5.1 Share premium 61.8 26.0 61.8 26.0 Reserves 3.6 3.8 3.9 3.9 Retained earnings 35.1 29.1 40.7 31.6 Total equity 108.0 64.0 113.9 66.6 The Company has taken the exemption conferred by s.408 of the Companies Act 2006 not to publish the income statement of the Company with these consolidated accounts. The Company profit for the year was £2.5m (2023: £2.1m). These financial statements were approved by the Directors on 28 April 2025 and signed on their behalf by: Adam Holland Director Will Wilkins Director Registered number: 124855 02 Strategic report 67 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Statements of cash flow for the year ended 31 December 2024 Group Company Note 2024 £m 2023 £m 2024 £m 2023 £m Operating activities Operating profit/(loss) 3.4 3.9 – – Non-underlying items included in operating profit 5 8.6 3.9 4.5 1.7 Amortisation of internally developed intangible assets 12 1.0 0.8 0.5 0.4 Depreciation 13,27 2.3 2.1 0.1 0.1 Pension payments 24 (2.3) (2.3) (1.9) (2.1) Working capital movements: – decrease/(increase) in inventories 1.3 (1.7) – – – decrease in contract assets 3.6 1.7 – – – (increase)/decrease in trade and other receivables 2.0 (0.3) 4.4 3.9 – increase in trade and other payables 0.6 1.8 0.6 (1.4) – decrease in provisions (0.2) (0.1) – – – (decrease)/increase in contract liabilities (14.7) 3.3 – – Cash flows from continuing operations before reorganisation 5.6 13.1 8.2 2.6 Acquisition and reorganisation costs paid (1.4) (0.8) (1.1) (0.4) Cash flows from operations 4.2 12.3 7.1 2.2 Taxation paid (1.6) (1.1) – – Cash flows from operating activities 2.6 11.2 7.1 2.2 Investing activities Capitalised development expenditure 12 (3.1) (1.5) (0.2) (0.2) Acquisition of property, plant and equipment 13 (1.9) (1.1) – (0.3) Proceeds from sale of property, plant and equipment 0.4 – – – Loans with subsidiaries – – (73.7) (0.2) Net cash flow on acquisition of subsidiaries 31 (54.9) – – – Cash flows used in investing activities (59.5) (2.6) (73.9) (0.7) Financing activities Interest paid (1.2) (0.7) (1.0) (0.6) Proceeds from borrowings 38.5 – 38.5 – Proceeds from equity raise 25 28.4 – 28.4 Principal elements of lease payments (1.2) (1.1) – – Cash flows from/(used in) financing activities 64.5 (1.8) 65.9 (0.6) Net increase/(decrease) in cash and cash equivalents 21 7.6 6.8 (0.9) 0.9 Cash and cash equivalents at 1 January 11.0 4.2 0.4 (0.3) Effect of exchange rate fluctuations on cash held (0.4) – 1.0 (0.2) Cash and cash equivalents at 31 December 18.2 11.0 0.5 0.4 Group Company 2024 £m 2023 £m 2024 £m 2023 £m Cash and cash equivalents as at 31 December comprise: Cash at bank and in hand 18.2 11.0 0.5 0.4 Bank overdrafts – – – – 18.2 11.0 0.5 0.4 02 Strategic report 68 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 The significant accounting policies as set out below apply to both the Group and Company financial statements, as appropriate. Basis of accounting Mpac Group plc (the “Company”) is a company incorporated and domiciled in the UK. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the Group). The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and UK-adopted international accounting standards and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The financial statements have been prepared on the historical cost basis except that derivative financial instruments, principally forward foreign exchange contracts, are stated at fair value and non-current assets are stated at the lower of previous carrying amount and fair value less costs to sell. The preparation of financial statements in conformity with international accounting standards requires the Directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and assumptions are based on historical experience and other factors considered reasonable at the time, but actual results may differ from these estimates. Revisions to these estimates are made in the period in which they are recognised. The accounting policies, presentation and methods of computation applied by the Group and Company in these financial statements are in the main consistent with those applied in the 2023 financial statements. No new accounting standards have been adopted in the year. A number of amendments to accounting standards became effective during the period, but did not have a material impact on the Group’s and Company’s accounting policies. IFRS 16 Leases The Group leases various factories, equipment and cars. Rental contracts are typically made for fixed periods of three to five years for equipment and 10-20 years for properties. These may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. An assessment of how likely it is for the option to extend the lease to be exercised is performed and if it is determined that the lessee is reasonably certain to exercise the option then the term covered by the option is included in the lease term. Leases are recognised as a right-of-use asset and a corresponding liability at the lease commencement date. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right- of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. IFRS 16 requires the capital element of the leases to be disclosed as a financing cost, with the amortisation of the assets being treated as a non-cash item. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments (where they exist within a lease): fixed payments (including in-substance fixed payments), less any lease incentives receivable; variable lease payments that are based on an index or a rate; amounts expected to be payable by the lessee under residual value guarantees; the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost, comprising the following: the amount of the initial measurement of lease liability; any lease payments made at or before the commencement date less any lease incentives received; any initial direct costs; and restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise small items of workshop equipment, office furniture and machines. Derivative financial instruments The Group’s derivative financial instruments are measured at fair value and are summarised below. The Group uses forward foreign exchange contracts to mitigate exchange rate exposure arising from forecast trade receivables in currencies other than the functional currency of the operating entity. Hedge effectiveness is determined at inception of the hedge relationship and at every reporting year end through the assessment of the hedged items and hedging instrument to determine whether there is still an economic relationship between the two. The critical terms of the foreign currency forwards entered into exactly match the terms of the hedged item. Hedge ineffectiveness may arise if the critical terms of the forecast transaction no longer meet those of the hedging instrument, for example, if there was a change in the timing of the forecast transactions from what was initially estimated. Accounting policies 02 Strategic report 69 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 The hedged items and the hedging instrument are denominated in the same currency and, as a result, the hedging ratio is always one to one. All forward exchange contracts had been designated as hedging instruments in cash flow hedges under IFRS 9. All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the statement of financial position. To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in the income statement. At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. If a forecast transaction is no longer expected to occur, any related gain or loss recognised in other comprehensive income is transferred immediately to the income statement. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued, and the related gain or loss is held in the equity reserve until the forecast transaction occurs. Non-underlying items and alternative performance measures Non-underlying items are income and expenditure that, because of the nature of the item, merit separate presentation in the income statement to allow a better understanding of the Group’s financial performance by facilitating comparisons with prior periods and assessments of trends in financial performance. Non-underlying items may include, but are not limited to, the impact on the income statement of the Group’s defined benefit pension schemes including administration charges and pension interest, acquisition or disposal costs and the amortisation of acquired intangible assets, significant reorganisation costs, profits or losses arising on discontinued operations, significant impairments of tangible or intangible assets and related taxation. The Group elects to include costs relating to the defined benefit pension scheme in non-underlying as there is only one active employee of the Group in the scheme, so the costs would be immaterial to the Group should the scheme not exist. Accordingly, the Group uses alternative performance measures (“APMs”), in addition to those reported under IFRS, as management believe these measures enable the users of these financial statements to better assess the underlying trading performance of the Group. The APMs used include underlying operating profit, underlying profit before tax and underlying earnings per share. A full breakdown of non-underlying items is provided in note 5 to the financial statements, and a reconciliation of underlying profit back to the closest IFRS measure is provided as part of note 11, which also includes a reconciliation of underlying EPS back to its closest IFRS measure. Recent accounting developments At the date of this report, there were no new standards in issue which were relevant to the Group and Company. Going concern The Group’s activities together with the factors likely to affect its future development, performance and position are described within the Operating review on pages 9 to 17, Financial review on pages 18 to 20 and in the Principal risks and uncertainties on pages 21 to 25. The Directors have considered the trading outlook of the Group and Company for a 24 month period ending 31 December 2026, its financial position, including its cash resources and access to borrowings, as set out in the Financial review on pages 18 to 21 and in note 20 to the accounts on page 88, and its continuing obligations, including to its defined benefit pension schemes, details of which are set out in note 24 to the accounts on pages 90 to 94. Having made due enquiries, the Directors have a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Basis of consolidation The Group financial statements comprise the consolidated results of the Company and all of its subsidiary companies together with the Group’s share of the results of its associated companies on an equity accounting basis. A separate income statement dealing only with the results of the Company has not been presented in accordance with section 408 of the Companies Act 2006. A subsidiary is a company controlled, directly or indirectly, by the Group. Control is the power to govern the financial and operating policies of the subsidiary company so as to obtain benefits from its activities. A subsidiary’s results are included in the Group financial statements from the date that control commences until the date that control ceases. Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Business combinations The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the: fair values of the assets transferred; liabilities incurred to the former owners of the acquired business; fair value of equity interests issued by the Group; fair value of any asset or liability resulting from a contingent consideration arrangement; and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred. 02 Strategic report 70 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Accounting policies continued Accounting policies continued The excess of the: consideration transferred; amount of any non-controlling interest in the acquired entity; and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified as a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. Foreign currency Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non- monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at foreign exchange rates ruling at the date the fair value was determined. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated at foreign exchange rates ruling at the statement of financial position date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Exchange differences arising from the translation of foreign operations, and of related qualifying hedges, are taken directly to the translation reserve. They are released into the income statement upon disposal. Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of the subsidiary or associated undertaking at the date of acquisition. Goodwill is recognised as an asset and is not amortised but is reviewed for impairment at least annually on the basis of its value in use. Any impairment is recognised immediately through the income statement and is not subsequently reversed. Impairment losses recognised are allocated first to reduce the carrying value of the goodwill the business relates to, and then to reduce the carrying value of the other assets of that business on a pro-rata basis. Annual impairment reviews of goodwill are undertaken and are determined from value in use calculations for each cash generating unit (“CGU”) using cash flow projections based on the latest three-year plan approved by the Board. The key assumptions for the value in use calculations are those regarding discount rates, growth rates and expected changes to selling prices and direct costs during the period and are consistent with external sources of information and the Board’s view of long-term growth. Cash flows beyond the period of the projections are extrapolated at growth rates that do not exceed the long-term average growth rate for the relevant countries. The discount rate applied to the cash flow forecasts for each CGU is based on a market participant’s pre-tax weighted average cost of capital of between 13.6% to 14.4%, dependent on the CGU being assessed (2023: 11.8% to 17.9%). On disposal of a subsidiary or associated undertaking, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Research and development Research and development and related product development costs are charged to the income statement in the year in which they are incurred unless they are specifically chargeable to and recoverable from customers under agreed contract terms or the expenditure meets the criteria for capitalisation. Where the expenditure relates to the development of a new product for which the technical feasibility and commercial viability of the product is identified, where development costs can be measured reliably and where future economic benefits are probable, development costs are capitalised and amortised over their useful economic lives, up to a maximum of ten years. The expenditure capitalised includes costs of materials, direct labour and an appropriate proportion of overheads. Such intangible assets are assessed for indicators of impairment at least annually and any impairment is charged to the income statement. Other intangible assets Other intangible assets are valued at cost less accumulated amortisation and impairment charges and amortised on a straight-line basis over their estimated useful economic life which is set on an item by item basis. All intangible assets are tested for indicators of impairment at least annually and any impairment is charged to the income statement. The estimated useful economic lives of the Group’s intangible assets are as follows: Acquired intangible assets – 8 to 10 years Product development – 3 to 10 years Software development – 5 years 02 Strategic report 71 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Property, plant and equipment Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and any provision for impairment in value. Depreciation is provided on a straight-line basis to write off the cost, less the estimated residual value, of property, plant and equipment over its estimated useful life. The annual depreciation rates used are as follows: Freehold land – nil Freehold buildings – 3% on cost or deemed cost Leasehold property – over life of lease Plant and machinery – 8% to 25% Fixtures, fittings and vehicles – 10% to 33% The carrying value of property, plant and equipment is reviewed at least annually for indicators of impairment. Any change in value arising from impairment is charged or credited (up to the carrying value prior to any previous impairment) to the income statement for the year. The useful lives and residual value of the Group’s fixed assets are reviewed at least annually. Investment property Investment property, which is property held to earn rentals and/or for capital appreciation, is stated at cost. Depreciation is based on cost less residual value over its estimated useful life. Where the expected residual value exceeds cost no depreciation is provided. Investment property is valued annually for monitoring purposes only. Investments Investments in subsidiary undertakings are held at cost less provision for any impairment in value. The carrying value of investments in subsidiary undertakings are reviewed at least annually for indicators of impairment. Revenue and contracts Revenue Revenue represents income derived from contracts for the provision of goods and services by the Group and its subsidiary undertakings to customers in exchange for consideration in the ordinary course of the Group’s activities. Revenue is recognised in the Consolidated Income Statement when the performance obligations in the contract with the customer are met. Performance obligations A proportion of the Group’s contracts recognised over time comprise a variety of promises within the contracts, including, but not limited to, design and engineering, procurement, machinery testing, delivery, installation and commissioning and after sales services. Under IFRS 15, the Group must evaluate the separability of the promised goods or services based on whether they are ‘distinct’. A promised good or service is ‘distinct’ if both: the customer benefits from the item either on its own or together with other readily available resources; and it is separately identifiable (i.e. the Group does not provide a significant service integrating, modifying or customising it). It is the Group’s judgement that the vast majority of promises included within contracts to customers are not distinct because a customer cannot benefit from certain promises being fulfilled without others; therefore, promises are bundled into set performance obligations. For the majority of contracts, design, procurement, engineering and manufacture are considered to be one performance obligation, installation and commissioning are considered to be one performance obligation and after sales contracts are generally negotiated and entered into at a later date and considered to be a separable performance obligation. Where contracts include more than one performance obligation, the transaction price is allocated on a relative stand-alone selling price basis. The stand-alone selling price is normally determined based on the observable price of a good or service when the Group sells that good or service separately in similar circumstances and to similar customers. If an observable price is not available, the stand-alone selling price is determined based on an expected cost plus margin approach. Transaction price At the start of the contract, the total transaction price is estimated as the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods and services to the customer, excluding sales taxes. The transaction price does not include estimates of consideration resulting from contract modifications, such as change orders, until they have been approved by the parties to the contract. The transaction price is calculated after taking into account variable consideration. Variable consideration includes, but is not limited to rebates and penalties. In determining the transaction price, variable consideration linked to potential penalties or rebates arising under the terms of a contract is included only to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration is estimated using the “most likely amount” method. Product warranties are included as part of the standard terms and conditions of the majority of contracts; however, are not sold separately and; therefore, do not constitute a separate performance obligation. Product warranty provisions are accounted for based on historical data and a weighting of all possible outcomes against their associated possibilities. 02 Strategic report 72 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Accounting policies continued Accounting policies continued Revenue and profit recognition Revenue is recognised as performance obligations are satisfied as control of the goods and services is transferred to the customer. For each performance obligation within a contract, the Group determines whether it is satisfied over time or at a point in time. Performance obligations are satisfied over time if one of the following criteria is satisfied: the customer simultaneously receives and consumes the benefits provided by the Group’s performance as it performs; the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or the Group’s performance does not create an asset with an alternative use to the Group and it has an enforceable right to payment for performance completed to date. With the exception of the supply of spare parts, installation services and certain other service-based contracts, all of Mpac’s contracts are accounted for over time. Supply of spare parts and installation services are recognised once the supply or service is complete. Those recognised over time satisfy the third criteria, above. For each performance obligation to be recognised over time, the Group recognises revenue using an input method, based on labour hours incurred in the period. Labour hours have been selected as the most faithful depiction of progress (and hence the transfer of goods and services) as this most accurately reflects how Mpac provides value to the customer. Mpac delivers innovative, efficient, and technically robust solutions, with the time allocated to projects of Mpac engineers and technicians being the main driver to bring projects to fruition. Material costs incurred are not considered to be proportionate to the Group’s progress in satisfying progress on contracts for which revenue is recognised over time and therefore revenue in respect of materials is recognised at an amount equal to the cost of goods used to satisfy the performance obligation. Material costs are recognised on contracts as incurred. Revenue and attributable margin are calculated by reference to reliable estimates of the total labour hours and labour hours to be incurred, after making suitable allowances for technical and other risks. Revenue and associated margin are therefore recognised progressively as labour hours are incurred, and as risks have been mitigated or retired. The Group has determined that this method faithfully depicts the Group’s performance in transferring control of the goods and services to the customer. If the over time criteria for revenue recognition are not met, revenue is recognised at the point in time that control is transferred to the customer, which is usually when legal title passes to the customer and the business has the right to payment, for example, on delivery. Contract modifications The Group’s contracts are often amended for changes in customers’ requirements and specifications. A contract modification exists when the parties to the contract approve a modification that either changes existing or creates new enforceable rights and obligations. The effect of a contract modification on the transaction price and the Group’s measure of progress towards the satisfaction of the performance obligation to which it relates is recognised in one of the following ways: 1. prospectively as an additional, separate contract; 2. prospectively as a termination of the existing contract and creation of a new contract; or 3. as part of the original contract using a cumulative catch-up. The majority of the Group’s contract modifications are treated under 3 (for example, a change in the specification of the distinct goods or services for a partially completed contract), although the facts and circumstances of any contract modification are considered individually as the types of modifications will vary contract-by-contract and may result in different accounting outcomes. Costs to obtain a contract The Group does not typically incur costs to obtain contracts that it would not have incurred had the contracts not been awarded, such as sales commission. Costs to fulfil a contract Contract fulfilment costs in respect of over time contracts are expensed as incurred. Contract fulfilment costs in respect of point in time contracts are accounted for under IFRS 15.95 and are recognised as contract fulfilment assets providing they: are not within the scope of other standards; relate directly to a contract (or an anticipated contract); generate or enhance resources that will be used in satisfying performance obligations in the future; and are expected to be recovered from the customer. Contract fulfilment assets are expensed at the point the corresponding revenue is recognised. Where assets have been recognised in respect of costs to fulfil a contract, these are tested for impairment under IFRS 15. Contract assets A contract asset is a right to consideration conditional on something other than the passage of time. Contract assets are tested for impairment under IFRS 9. Contract liabilities The contract liabilities represent the obligation to transfer goods or services to a customer for which consideration has been received, or consideration is due, from the customer. 02 Strategic report 73 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Inventories Inventories includes raw materials, work in progress and finished goods recognised in accordance with IAS 2 in respect of contracts with customers which have been determined to fulfil the criteria for point in time revenue recognition under IFRS 15. Inventories are stated at the lower of cost, including all relevant overhead expenditure, and net realisable value. Cash and cash equivalents Cash and cash equivalents comprise cash balances and short-term fixed deposits, and for the statements of cash flows they also include bank overdrafts. Short-term deposits all have a maturity of less than 3 months from the date of acquisition. Share capital When share capital is repurchased, the amount of consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from total equity. Preference share capital is classified as a liability as dividend payments are not discretionary. Dividends on the preference shares are disclosed as interest charges, are recognised as a liability and are accounted for on an accruals basis. Dividends on ordinary shares are only recognised in the period in which they are paid. Where shares are issued in exchange for cash, the proceeds received from the equity raise are recognised as an increase in equity, specifically under Share Capital and Share Premium. The nominal value of the shares are recorded in Share Capital and any excess over the nominal value will be credited to Share Premium. Any incremental costs directly attributable to the equity raise, including legal, underwriting and advisory fees, will be recognised as reduction in equity, in line with IAS 32. Where shares are issued for non-cash consideratiom to a third party (such as in connection with an acquisition), these are valued at the prevailing share price at the date of issue, notwithstanding any valuation applied within the transaction documents. Any excess of the market value over the nominal value of the shares is credited to Share Premium. Financial instruments IFRS 9 Financial instruments requires the classification of financial instruments into different types for which the accounting requirement is different. The Group has classified its financial instruments as follows: short-term fixed deposits, principally comprising funds held with banks and other financial institutions; trade and other receivables are held at amortised cost; trade and other payables are held at amortised cost; borrowings are classified as other liabilities held at amortised cost; and derivatives, comprising forward foreign exchange contracts and the deferred contingent consideration on acquisition are classified as instruments with fair value through profit or loss. Financial instruments are initially measured at fair value. Their subsequent measurement depends on their classification: loans and receivables and other liabilities are held at amortised cost; and instruments that are measured at fair value through profit or loss. Changes in fair value are included in the income statement unless the instrument is included in a cash flow hedge. The Group applies cash flow hedge accounting to forward foreign exchange contracts, held to reduce the exposure to movements in the future value of foreign currency receipts and payments. For those contracts included in an effective cash flow hedging relationship, changes in the fair value of the hedging instrument are recognised in other comprehensive income and taken to equity. When the hedged forecast transaction occurs, amounts previously recorded in equity are recognised in the income statement. Any ineffectiveness in the hedging arrangement is included in the income statement. Trade and other receivables and contract assets The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets, recording the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating the lifetime credit losses, the Group uses its historical experience, external indicators and forward looking information to calculate the expected losses. Refer to note 26 for further details. Post-retirement and other employee benefits The Group and Company account for pensions and other post-retirement benefits under IAS 19 Employee benefits. For defined benefit schemes, the net obligation is calculated separately for each scheme by estimating the amount of future benefits that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value, and the fair value of the schemes’ assets (at bid price) is deducted. The liability discount rate is either the yield at the statement of financial position date on AA credit rated bonds that have maturity dates approximating to the terms of the obligations or by a cash flow matching method reflecting the duration of the liabilities, whichever more accurately reflects the schemes’ pattern of cash flows. The calculations are performed by qualified actuaries using the projected unit credit method. The expense of administering the pension schemes and financing income/expense of the schemes are recognised in the income statement. Past service costs/credits and curtailment costs/credits are recognised in the periods in which they arise. Actuarial gains and losses are recognised in the period in which they arise in other comprehensive income. Payments to defined contribution schemes are charged to the income statement as incurred. The net obligation in respect of long-term service benefits, other than pension plans, is the amount of the future benefit that employees have earned in return for their service in the current and prior periods. Obligations are measured at their present value. 02 Strategic report 74 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Accounting policies continued Accounting policies continued Share-based payments The Group has applied the requirements of IFRS 2 Share- based payments. The Group issues equity-settled share-based payments to certain employees. These are measured at their fair value at the date of grant and are expensed on a straight-line basis over the vesting period, based on an estimate of the number of shares that will eventually vest, and adjusted for the effect of non-market related conditions. Charges made to the income statement in respect of share-based payments are credited to retained earnings. Provisions A provision is recognised when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. Interest receivable Interest receivable is recognised in the income statement using the effective interest method as defined in IFRS 9 Financial instruments. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets. All other borrowing costs are recognised in the income statement in the period in which they are incurred. Taxation Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income, in which case it is recognised in the statements of comprehensive income, or to items recorded directly in equity in which case it is recorded directly in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill; the initial recognition of other assets and liabilities that affect neither the taxable profit nor the accounting profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Operating segments An operating segment is a component of the Group that is engaged in business activities from which it may earn revenues and incur expenses, and for which discrete financial information is available. All operating segments’ results are regularly reviewed by the Group’s chief operating decision maker, which is the Board of Directors, in order to assess performance and make decisions about the allocation of resources to each segment. Errors Where errors are discovered in respect of prior periods, adjustments are made in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and revised statements are presented as required. Where adjustments are made, the heading at the top of the note will state ‘Restated’ and a separate note detailing the nature, amount of correction and a reconciliation between the balances provided. Where appropriate, a statement of financial position for the opening position will be presented. 02 Strategic report 75 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts 1. Revenue and operating segments All revenue information is prepared in accordance with the Group accounting policies shown on pages 71 to 72. The following is a description of the principal activities, separated by reportable segments, from which the Group generates its revenue. The Board identifies the reportable segments as the ones for which it regularly reviews financial information to assess their performance and make decisions around strategy and resource allocation. Original Equipment (“OE”) The OE segments of the Group principally generate revenue from the make, pack and test of high-speed packaging solutions, first-of-a-kind machinery and high specification automation, secondary packaging equipment and at line instrumentation solutions. The typical length of a contract for OE Equipment is 4 to 12 months but may be up to 48 months. The contracts are accounted for over time unless the installation and commissioning consideration of the contact is a distinct performance obligation that could be undertaken by a third party, in which case the contract is disaggregated with the equipment consideration recognised over time and the installation consideration is recognised at a point in time. Where contracts are recognised over time, the consideration recognised is based on an estimate of labour costs completed at the statement of financial position date as a proportion of total expected labour costs for the contract. Service The Service segment of the Group generates revenue from sales of spare parts and providing service engineers and support staff to customers enabling them to maximise the benefits of their high-speed packaging solutions, first-of-a-kind machinery and high-specification automation, secondary packaging equipment, end-of-line robotics and at line instrumentation solutions. Service contracts are usually short-term contracts and either have a fixed price or are based on time and materials. The Group’s revenue reflects the basis of the Group’s management and internal reporting structure. A commentary on the performance of the operating segments during the year is provided in the Operating review on pages 9 to 17. In the following table, revenue is disaggregated by primary geographical market, major product lines, sector and timing of revenue recognition. Disaggregation of revenue 2024 £m 2023 £m Sector Healthcare 43.7 41.6 Food and beverage 52.1 45.8 Other 26.6 26.8 Total 122.4 114.2 Timing of revenue recognition Products and services transferred at a point in time 29.1 34.0 Products and services transferred over time 93.3 80.2 Total 122.4 114.2 The Group disaggregates revenue of OE and Service, together with the regional split, Americas, EMEA and Asia Pacific. Information regarding the results of each operating segment is included overleaf. Performance is measured based on underlying segment gross profit. Unallocated items comprise distribution and administrative expenditure. The unallocated items are excluded from segment profit or loss as they are not region specific. 02 Strategic report 76 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 1. Revenue and operating segments continued The measurement of segment assets and liabilities excludes central items that are not allocated to the regions. Unallocated items comprise mainly of goodwill and acquired intangible assets, net debt/funds (excluding the lease liabilities), pension assets/liabilities, taxation balances and net liabilities attributable to the Group’s Head Office. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one period. Segment information 2024 2023 OE £m Service £m Total £m OE £m Service £m Total £m Revenue Americas 44.9 15.4 60.3 40.8 15.9 56.7 EMEA 33.8 13.1 46.9 34.0 13.8 47.8 Asia Pacific 12.5 2.7 15.2 7.6 2.1 9.7 Total 91.2 31.2 122.4 82.4 31.8 114.2 Gross profit 21.7 15.1 36.8 18.6 13.0 31.6 Selling, distribution and administration (24.8) (23.8) Underlying operating profit 12.0 7.8 Unallocated non-underlying items included in operating profit (8.6) (3.9) Operating profit 3.4 3.9 Net financing income/(expense) - 0.8 Profit before tax 3.4 4.7 2024 2023 Segment assets Segment liabilities Segment net assets/(liabilities) Segment assets Segment liabilities Segment net assets Americas 31.7 (20.2) 11.5 31.5 (19.0) 12.5 EMEA 85.0 (139.7) (54.7) 53.5 (41.3) 12.2 Asia 2.0 (0.8) 1.2 0.9 (0.3) 0.6 Total 118.7 (160.7) (42.0) 85.9 (60.6) 25.3 Unallocated net assets 150.0 38.7 Total net assets 108.0 64.0 02 Strategic report 77 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 1. Revenue and operating segments continued Geographical information By location of customer Revenue 2024 £m 2024 % 2023 £m 2023 % UK 15.1 12 18.4 16 Europe (excl. UK) 29.1 24 28.4 25 Africa and Middle East 2.7 2 1.1 1 USA 52.7 43 49.8 44 Americas (excl. USA) 7.6 6 6.8 6 Asia Pacific 15.2 13 9.7 8 122.4 100 114.2 100 The contract balances that relate to the revenue traded above are disclosed in note 18. By location of assets Non-current assets 2024 £m 2023 £m UK 60.0 58.2 Canada and USA 26.1 5.7 Rest of the world 90.0 4.2 176.1 68.1 2. Major customers In 2024, the Group generated 19.6% (2023: 21.9%) of revenue from two customers. The most significant customer accounted for 12.2% (2023: 13.9%) of Group revenue. The sales constituted both equipment and service, and were spread across a number of different geographic regions. 3. Other operating (income)/expense 2024 £m 2023 £m Research and development costs (expensed as incurred) 1.0 1.2 Research and development UK tax credit (1.8) (0.8) (0.8) 0.4 02 Strategic report 78 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 4. Operating profit 2024 £m 2023 £m Operating profit is arrived at after charging/(crediting): Amortisation of software and product development (Note 12) 1.0 0.8 Depreciation of owned assets (Note 13) 1.1 0.9 Depreciation of right of use assets (Note 27) 1.2 1.2 Employee benefits (Company £2.6m; 2023: £2.8m) (Note 6) 40.9 34.0 Cost of inventories recognised as an expense 48.5 55.3 Distribution and transport costs 1.6 1.5 Operating lease charges (Note 27) – – Sales, marketing and office expenses 8.9 7.3 Product development expensed 1.0 1.2 Administrative expenses 15.1 14.6 Non-underlying amortisation of acquired intangible assets (Note 12) 2.1 1.6 Other non-underlying items (Note 5) 6.5 2.3 Fees payable to the Company’s auditor for the audit of the Company’s annual Financial Statements 0.1 0.1 Fees payable to the Company’s auditor and its associates for the audit of the Company’s subsidiaries pursuant to legislation 0.6 0.3 Other fees paid to the current auditor – audit related assurance services* – – – taxation compliance or other services** – – * Audit related assurance services include £35,000 (2023: £30,000) for the review of the half-year report. ** The current auditor does not provide non-audit services to the Group. 5. Non-underlying items 2024 £m 2023 £m Non-underlying items Acquisition costs (3.5) – Reorganisation costs – (1.2) Amortisation of acquired intangible assets (2.1) (1.6) Impairment of intangible assets (1.0) – Freyr contract termination costs (0.6) – Defined benefit pension schemes administration costs (1.4) (1.1) Total non-underlying operating expenditure (8.6) (3.9) Net financing income on pension scheme balances 1.4 1.5 Total non-underlying expense before tax (7.2) (2.4) Deferred tax on acquired intangible assets – – Deferred tax on pension scheme costs 0.7 (0.2) Total non-underlying expense after tax (6.5) (2.6) The Group uses alternative performance measures (“APMs”), in addition to those reported under IFRS, as management believe these measures enable the users of financial statements to assess the underlying trading performance of the business. The APMs used include underlying operating profit, underlying profit before tax and underlying earnings per share. These measures are calculated using the relevant IFRS measure as adjusted for non-underlying income/(expenditure) listed above. These measures are not defined by UK IAS and therefore may not be directly comparable to similar measures adopted by other companies. These alternative performance measures should be considered in addition to, and are not intended to be a substitute for or superior to, UK IAS measures but provide useful information on the performance of the Group and underlying trends. 02 Strategic report 79 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 6. Employee information Period end Average 2024 2023 2024 2023 The number of people employed by the Group was: Americas 220 147 173 146 EMEA 783 330 380 316 Asia Pacific 14 14 14 14 Head Office 20 17 20 16 Total 1,037 508 587 492 Period end Average 2024 2023 2024 2023 The number of people employed by the Company in EMEA was: 20 17 20 16 Group Company 2024 2023 2024 2023 Employment costs were: Wages and salaries 32.9 27.3 2.0 2.3 Social security costs 5.6 4.7 0.3 0.2 Employee benefits – defined contribution schemes 2.4 2.0 0.3 0.3 – equity-settled share-based transactions – – – – 40.9 34.0 2.6 2.8 The costs of the defined benefit pension schemes are disclosed in note 24. £2.1m of employment costs were capitalised in the year in relation to product development. 7. Emoluments of Directors and interests in shares Information on the emoluments of the Directors (page 41), together with information regarding the beneficial interests of the Directors and persons connected with them in the ordinary shares of the Company, is included in the Remuneration report on pages 41 to 47. 02 Strategic report 80 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 8. Net financing (expense)/income 2024 £m 2023 £m Financial income: Amounts receivable on cash and cash equivalents – – Net interest received on pension scheme balances 1.4 1.5 1.4 1.5 Financial expenses: Preference dividends paid (0.1) (0.1) Interest on borrowings (1.1) (0.5) Lease interest (IFRS 16) (0.2) (0.1) (1.4) (0.7) Net financing (expense)/income – 0.8 Net interest received on pension scheme balances is included in non-underlying items. 9. Taxation 2024 £m 2023 £m Tax charge/(credit): Current tax 2.7 1.8 Deferred tax (0.7) 0.2 Total 2.0 2.0 Included within the total taxation is a tax credit of £0.7m (2023: charge of £0.2m) attributable to the non-underlying items set out in note 5. Reconciliation of effective tax rate 2024 £m 2023 £m Profit before tax 3.4 4.7 Income tax using the UK corporation tax rate of 25.00% (2023: 25.00%) 0.9 1.2 Deferred tax movements on pension payments – – Change in deferred tax rate on pension surplus (0.7) – Tax adjustments related to prior periods 0.8 – Tax effect of expenses that are not deductible in determining taxable profit 1.0 Change in unrecognised deferred tax assets 0.1 0.8 Foreign tax charged at higher rates than UK corporation tax rate (0.1) – Total charge/(credit) 2.0 2.0 The main rate of UK corporation tax is 25% (2023: 25%) as enacted in the Finance Act 2022. The rate of deferred tax liability arising from the surplus in respect of the UK defined benefit pension scheme reduced from 35% to 25% with effect from 1 April 2024. In view of probable timing of the utilisation of brought forward losses, deferred tax assets have not been recognised on tax losses and timing differences in respect of the Group companies in the UK. 02 Strategic report 81 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 9. Taxation continued Factors that may affect future tax charges No changes to future tax rates have been announced which are anticipated to affect the Group’s tax rate. Closing deferred tax balances have therefore been valued at 25% (2023: 25%), including the deferred tax on the UK defined benefit pension scheme asset, which was previously valued at 35%. Deferred tax charge/(credit) on items in other comprehensive (expense)/income 2024 £m 2023 £m Arising from actuarial gains/(losses) 1.6 – Arising from the change in tax rate (2.5) – Total (0.9) – 10. Current tax assets and liabilities Current tax assets of £0.8m (2023: £1.1m) and current tax liabilities of £2.2m (2023: £0.9m) for the Group, and current tax assets of £0.8m (2023: £nil) and current tax liabilities of £nil (2023: £nil) for the Company, represent the amount of income taxes recoverable and payable in respect of current and prior periods. 11. Earnings per share Basic earnings/(loss) per ordinary share The calculation of basic earnings per ordinary share of 6.0p (2023: profit of 13.1p) is based upon the profit for the year of £1.4m (2023: profit of £2.7m) and the weighted average number of ordinary shares in issue during the year. The weighted average number of shares excludes shares held by the employee trust,if any, in respect of the Company’s deferred share plan arrangements. Diluted earnings per ordinary share The calculation of diluted earnings per ordinary share is based upon the profit for the year of £1.4m (2023: profit of £2.7m) and the diluted weighted average number of ordinary shares in issue during the year. The calculation of diluted earnings per ordinary share from continuing activities is based upon the profit for the period from continuing activities of £1.4m (2023: profit of £2.7m). For diluted earnings per ordinary share, the weighted average number of shares includes the diluting effect, if any, of own shares held by the employee trust. Where a loss is made in a period, the basic and diluted loss per share will be equal. 2024 2023 Weighted average number of ordinary shares (non-diluted) at 31 December 22,551,963 20,474,424 Effect of own shares and shares conditionally granted under the LTIP 60,486 – Weighted average number of ordinary shares (diluted) at 31 December 22,612,449 20,474,424 Underlying and diluted underlying earnings per share Underlying earnings per ordinary share and diluted underlying earnings per ordinary share, which are calculated on profit before non-underlying items, amounted to 35.2p (2023: 26.2p) in respect of underlying earnings per share and 35.1p (2023: 26.2p) in respect of diluted underlying earnings per share. The calculations of underlying earnings per ordinary share and diluted underlying earnings per ordinary share are based upon an underlying profit for the period of £7.9m (2023: £5.3m) which is calculated as follows: 2024 £m 2023 £m Profit/(loss) for the period 1.4 2.7 Non-underlying items (net of tax) 6.5 2.6 Underlying profit for the period 7.9 5.3 02 Strategic report 82 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 12. Intangible assets Group Company Goodwill £m Acquired intangible assets £m Product development £m Software development £m Assets under construction £m Total £m Software development £m Assets under construction £m Total £m Cost: Balance at 1 January 2023 13.2 14.2 5.3 3.2 – 35.9 1.9 – 1.9 Additions – – 0.9 0.7 – 1.6 0.2 – 0.2 Disposals – – (0.1) – – (0.1) – – – Reclassification – – – – – – – – – Retranslation – (0.5) (0.1) – – (0.6) – – – Balance at 31 December 2023 13.2 13.7 6.0 3.9 – 36.8 2.1 – 2.1 Additions 60.9 33.8 2.5 0.6 – 97.8 0.2 – 0.2 Disposals – – – – – – – – – Reclassification – – – – – – – – – Impairment – – (1.0) – – (1.0) – – – Retranslation – (0.2) (0.2) (0.1) – (0.5) – – – Balance at 31 December 2024 74.1 47.3 7.3 4.4 – 133.1 2.3 – 2.3 Amortisation and impairment losses: Balance at 1 January 2023 – 5.7 3.3 1.5 – 10.5 0.8 – 0.8 Amortisation for the period – 1.6 0.3 0.5 – 2.4 0.4 – 0.4 Disposals – – (0.1) – – (0.1) – – – Reclassification – – – – – – – – – Retranslation – – – – – – – – – Balance at 31 December 2023 – 7.3 3.5 2.0 – 12.8 1.2 – 1.2 Amortisation for the period – 2.1 0.4 0.6 – 3.1 0.4 – 0.4 Disposals – – (0.1) – – (0.1) – – – Reclassification – – – – – – – – – Retranslation – – (0.1) – – (0.1) – – – Balance at 31 December 2024 – 9.4 3.7 2.6 – 15.7 1.6 – 1.6 Carrying amounts: At 31 December 2023 13.2 6.4 2.5 1.9 – 24.0 0.9 – 0.9 At 31 December 2024 74.1 37.9 3.6 1.8 – 117.4 0.7 – 0.7 The amortisation for development costs is included in cost of sales in the consolidated income statement. The carrying amounts of goodwill are £5.7m (2023: £5.7m) in respect of Mpac Lambert (acquired in 2019) £7.5m (2023: £7.5m) in respect of Switchback Group (acquired in 2020), £50.8m in respect of CSi Palletising (acquired in 2024) and £10.1m in respect of Boston Conveyor & Automation (acquired in 2024). The Group tests goodwill at least annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the goodwill have been determined based on value in use calculations, using cash flow projections from the Group’s mid-range plan, the key assumptions included within this mid-range plan that affect the value in use calculations are revenue growth, margin growth and working capital requirements. These assumptions have been sensitised (as per Investments – note 15) as part of current year testing. The discount and growth rates within these assumptions are estimated using a pre-tax weighted-average cost of capital (“WACC”) that are indicative of current market assessments of the time value of money, based on risks specific to the market in which the Group operates. The primary reasons for differences in the rates between the CGUs are the differences in underlying risk-free rates and cost of debt across the geographical regions in which the Group’s CGUs are located. 02 Strategic report 83 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 12. Intangible assets continued The calculation uses pre-tax cash flow projections from the 3 year mid-range plan for the period ending 31 December 2027. At the end of the discrete budget period, a terminal value is calculated based on terminal growth rate assumptions for each CGU. The WACC and terminal growth rates assessed for each CGU are 14.3% & 2.0% for the UK and 14.3% & 2.0% to 2.5% for the Americas, respectively. In respect of Switchback, the recoverable amount exceeds the carrying amount by £2.0m. If the WACC was increased by 2%, without any other changes, the carrying amount would equal the recoverable amount. Switchback is forecasting a 27% growth in revenue for the 2025-2027 period vs 2022 to 2024. If the revenue growth was reduced to 11%, without any other changes, the carrying amount would equal the recoverable amount. The forecast is considered achievableachievable due to management changes, investments in the site and the execution of a revised strategy. 13. Property, plant and equipment Group Company Land and buildings £m Plant and machinery £m Fixtures, fittings and vehicles £m Total £m Land and buildings £m Fixtures, fittings and vehicles £m Total £m Cost: Balance at 1 January 2023 2.1 3.6 4.5 10.2 – 0.4 0.4 Additions 0.1 0.1 0.8 1.0 – 0.3 0.3 Disposals – (0.9) – (0.9) – – – Reclassification – (0.3) 0.3 – – – – Retranslation – – (0.1) (0.1) – – – Balance at 31 December 2023 2.2 2.5 5.5 10.2 – 0.7 0.7 Additions 0.7 0.5 0.7 1.9 – – – Acquired through business combinations 0.1 0.2 1.1 1.4 – – – Disposals – (0.8) (0.7) (1.5) – – – Reclassification – – – – – – – Retranslation – (0.1) (0.2) (0.3) – – – Balance at 31 December 2024 3.0 2.3 6.4 11.7 – 0.7 0.7 Depreciation: Balance at 1 January 2023 0.3 1.9 4.0 6.2 – 0.3 0.3 Charge for the period 0.1 0.3 0.5 0.9 – 0.1 0.1 Disposals – (0.9) – (0.9) – – – Reclassification – – – – – – – Retranslation – – (0.1) (0.1) – – – Balance at 31 December 2023 0.4 1.3 4.4 6.1 – 0.4 0.4 Charge for the period 0.1 0.4 0.6 1.1 – 0.1 0.1 Disposals – (0.4) (0.6) (1.0) – – – Reclassification – – – – – – – Retranslation – (0.1) (0.2) (0.3) – – – Balance at 31 December 2024 0.5 1.2 4.2 5.9 – 0.5 0.5 Carrying amounts: At 31 December 2023 1.8 1.2 1.1 4.1 – 0.3 0.3 At 31 December 2024 2.5 1.1 2.2 5.8 – 0.2 0.2 02 Strategic report 84 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 14. Investment property Group Company 2024 £m 2023 £m 2024 £m 2023 £m Balance at 1 January 2023 and 31 December 2023 0.8 0.8 0.8 0.8 Balance at 31 December 2024 0.8 0.8 0.8 0.8 Investment property is shown at cost. The fair value of the investment property at 31 December 2024 is £1.2m (2023: £1.2m) and has been arrived at on the basis of a valuation carried out by independent valuers, Wilks Head & Eve LLP. The valuation, which conforms to International Valuation Standards, was arrived at by reference to market evidence of transaction prices for similar properties. 15. Investments Cost of shares in subsidiaries 2024 £m 2023 £m Balance at 1 January 63.8 63.8 Movement in year – – Balance at 31 December 63.8 63.8 The Company’s subsidiary undertakings are shown in note 32. Impairment review of investments The Group tests the carrying value of investments at least annually or more frequently if there are indications that the value might be impaired. The recoverable amounts of the carrying value have been determined based on value in use calculations, using cash flow projections from the Group’s mid-range plan, the key assumptions included within this mid-range plan that affect the value in use calculations are revenue growth, margin growth and working capital requirements. These assumptions have been prudently sensitised as part of current year testing. The discount and growth rates within these assumptions are estimated using a pre-tax weighted-average cost of capital (“WACC”) that are indicative of current market assessments of the time value of money, based on risks specific to the market in which the Group operates. The primary reasons for differences in the rates between the investments are the differences in underlying risk-free rates and cost of debt across the geographical regions in which the Group’s investments are located. The calculation uses pre-tax cash flow projections from the 3 year mid-range plan for the period ending 31 December 2027. At the end of the discrete budget period, a terminal value is calculated based on terminal growth rate assumptions for each investment. The WACC and terminal growth rates assessed for each investment are 14.3% & 2.0% for the UK, 13.6% & 2.0% to 2.5% for the Netherlands and 14.3% & 2.0% to 2.5% for the Americas, respectively. Amounts owed by Group undertakings Amounts owed by Group undertakings for the Company are not repayable within 12 months of the year end of these financial statements. A rate of interest of 2% above the HSBC base rate of the prevailing currency has been charged on the loans, resulting in an interest receivable of £2.0m in the year for the Company. 02 Strategic report 85 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 16. Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities Net Group 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m Employee benefits – – (9.6) (11.4) (9.6) (11.4) Tax losses / (gains) 5.3 2.2 (0.1) – 5.2 0.9 Acquired intangible assets – – (9.4) (1.3) (9.4) – Deferred tax assets/(liabilities) 5.3 2.2 (19.1) (12.7) (13.8) (10.5) Net deferred tax assets/(liabilities) 5.3 2.2 (19.1) (12.7) (13.8) (10.5) Assets Liabilities Net Company 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m Employee benefits – – (9.6) (11.3) (9.6) (11.3) Deferred tax liabilities – – (9.6) (11.3) (9.6) (11.3) Net deferred tax liabilities – – (9.6) (11.3) (9.6) (11.3) Deferred tax is measured at the rates that are expected to apply in the period when the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries and associates. As the earnings are continually reinvested by the Group, no tax is expected to be payable on them in the foreseeable future. Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of temporary differences arising in certain subsidiary companies. These assets are only recognised to the extent that it is probable that taxable profits will be available against which the deferred tax asset can be utilised. At the year end, the Group had £8.8m of unrecognised deferred tax assets (2023: £10.1m) and the Company had £3.5m of unrecognised deferred tax assets (2023: £4.3m) which would become recoverable if the relevant companies were to make sufficient profits in the future. Under current tax legislation, these tax assets expire as follows: Group Expiry 2024 £m 2023 £m 10 to 20 years – – No expiry date 8.8 10.1 8.8 10.1 02 Strategic report 86 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 16. Deferred tax assets and liabilities continued Movement in temporary differences during the year Group Balance at 1 January 2024 £m Recognised in profit or loss £m Investment tax credits utilised Recognised in other comprehensive income/(expense) £m Acquired as part of CSi and BCA acquisition £m Balance at 31 December 2024 £m Employee benefits (11.4) 0.9 – 0.9 – (9.6) Corporation tax losses 2.2 (0.4) – – 3.4 5.2 Acquired intangible assets (1.3) 0.4 – – (8.5) (9.4) (10.5) 0.9 – 0.9 (5.1) (13.8) Group Balance at 1 January 2023 £m Recognised in profit or loss £m Investment tax credits utilised Recognised in other comprehensive income/(expense) £m Recorded on acquisition £m Balance at 31 December 2023 £m Employee benefits (11.1) (0.3) – – – (11.4) Tax losses 2.9 (0.7) – – – 2.2 Investment tax credits 0.2 – (0.2) – – – Acquired intangible assets (1.8) 0.5 – – – (1.3) (9.8) (0.5) (0.2) – – (10.5) Company Balance at 1 January 2024 £m Recognised in profit or loss £m Recognised in other comprehensive income/(expense) £m Balance at 31 December 2024 £m Employee benefits (11.4) 0.9 0.9 (9.6) (11.4) 0.9 0.9 (9.6) Company Balance at 1 January 2023 £m Recognised in profit or loss £m Recognised in other comprehensive income/(expense) £m Balance at 31 December 2023 £m Employee benefits (11.0) (0.3) – (11.3) (11.0) (0.3) – (11.3) 17. Inventories Group Company 2024 £m 2023 £m 2024 £m 2023 £m Work in progress and raw materials 9.0 4.0 – – Finished goods 6.9 7.1 – – 15.9 11.1 – – An amount of £0.1m (2023: £nil) has been charged in the year in respect of inventory write-downs. Finished goods are stated net of a provision for obsolete and slow-moving inventory of £0.8m (2023: £0.5m) 02 Strategic report 87 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 18. Contract assets and liabilities; contract fulfilment assets The following table provides information about receivables, contract assets and contract liabilities from contracts with customers traded over time. Group Company 2024 £m 2023 £m 2024 £m 2023 £m Receivables, which are included in ‘Trade and other receivables’ 17.5 12.2 – – Contract assets 17.7 16.2 – – Contract liabilities (29.3) (17.5) – – Group Company Contract assets Contract liabilities Contract assets Contract liabilities Revenue recognised which is included in the contract liability balance at the beginning of the period – 17.5 – – Increases due to cash received, excluding amounts recognised as revenue during the period – (29.3) – – Transfers from contract assets recognised at the beginning of the period to receivables (16.2) – – – Increases as a result of changes recognised in the measure of progress 17.7 – – – The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Group applies the practical expedient in paragraph 94 of IFRS 15 and recognises the incremental costs of obtaining contracts as an expense when incurred if the amortisation period of the asset that the Group otherwise would have recognised is one year or less. The Group’s contracts with customers are predominantly for one year or less, accordingly the Group applies the practical expedient in paragraph 63 of IFRS 15 and does not adjust the promised amount of consideration for the effects of any financing component. Contract fulfilment assets These assets are recognised under paragraph 95 of IFRS 15 in respect of expenditure incurred which will satisfy future performance obligations. Group Company 2024 £m 2023 £m 2024 £m 2023 £m Contract fulfilment assets 0.6 2.0 – – 19. Trade and other receivables Group Company 2024 £m 2023 £m 2024 £m 2023 £m Current assets: Contract assets – see note 18 17.7 16.2 – – Contract fulfilment assets – see note 18 0.6 2.0 – – Trade receivables 28.8 18.0 – – Amounts owed by Group undertakings – – 3.5 10.8 Other receivables 2.9 1.4 0.3 0.1 Prepayments and accrued income 8.9 9.0 0.7 0.3 Foreign currency derivatives 0.5 0.2 0.8 0.5 59.4 46.8 5.3 11.7 Trade receivables are stated net of a provision for doubtful debts, details of which are disclosed in note 26. 02 Strategic report 88 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 20. Interest-bearing loans and borrowings Group Company 2024 £m 2023 £m 2024 £m 2023 £m Current liabilities: Repayable in less than one year 41.2 8.0 40.0 8.0 Non-current liabilities: Repayable between one and five years 13.6 – 7.0 – Repayable in more than five years 0.9 0.9 0.9 0.9 55.7 8.9 47.9 8.9 Interest at a margin of 2.75% above the HSBC base rate of the prevailing currency is charged on the above loan repayable in less than one year, generating an expense of £1.1m (2023: £0.5m) that has been recognised as part of the underlying finance expense in the income statement. An interest rate of 6% is charged on the above loan repayable in more than five years, generating an expense of £0.1m (2023: £0.1m) that has been recognised as part of the underlying finance expense in the income statement. The Group entered into the following additional interest bearing loan and borrowing facilities in the year: a £12m term loan repayable in quarterly instalments with a final repayment date of 30 September 2027. Interest at a margin of 2.75% above the HSBC base rate of the prevailing currency is charged on this loan. a £35m term revolving capital facility repayable on demand. Interest at a margin of 2.75% above the HSBC base rate of the prevailing currency is charged on this loan. This replaced the previous £25m revolving capital facility. €6.5m vendor loans and €3.5m of deferred consideration in connection with the acquisition of CSi Palletising. Interest is charged at 10% the vendor loans, no interest is charged on the deferred consideration. Both are repayable between one and five years. The term loan and the revolving capital facility, both provided by HSBC, are secured by a fixed and floating charge over all of the Group’s assets. Preference shares The preference shares carry a fixed cumulative preferential dividend at the rate of 6% per annum and on the winding-up of the Company entitle the holders to repayment of the capital paid up thereon (together with a sum equal to any arrears or deficiency of the fixed dividend calculated to the date of the return of capital and to be payable irrespective of whether such dividend has been declared or earned or not) in priority to any payment to the holders of the ordinary shares. The preference shares do not entitle the holders to any further participation in the profits or assets of the Company. The preference shareholders are not entitled to receive notice of or to attend or vote at any general meeting unless either: at the date of the notice convening the meeting, the dividend on the preference shares is six months in arrears (for this purpose the dividend on the preference shares is deemed to be payable half-yearly on 30 June and 31 December); or the business of the meeting includes the consideration of a resolution for the winding-up of the Company, or for reducing its share capital or for sanctioning a sale of the undertaking, or any resolution directly and adversely affecting any of the special rights or privileges attached to the preference shares. There were no arrears in the payment of preference dividends at the statement of financial position date. Preference dividends paid amounted to £0.1m (2023: £0.1m). 02 Strategic report 89 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 21. Reconciliation of net cash flow to movement in net funds Group Company 2024 £m 2023 £m 2024 £m 2023 £m Net increase/(decrease) in cash and cash equivalents 7.6 6.8 0.1 0.9 Change in net funds resulting from cash flows 7.6 6.8 (0.9) 0.9 Translation movements (0.4) – 1.0 (0.2) Movement in net funds in the period 7.2 6.8 0.1 0.7 Opening net (debt)/funds (4.1) (10.0) (8.8) (9.2) Movement in interest-bearing loans and borrowings: Revolving credit facility (27.0) – (27.0) – Term loan (12.0) – (12.0) – Vendor loans and deferred consideration (7.8) – – – Movement in lease liabilities under IFRS 16: Non-cash movement (4.6) (2.1) – (0.3) Cash movement 1.1 1.2 – – Closing net debt (47.2) (4.1) (47.7) (8.8) Analysis of net funds: Cash and cash equivalents – Current assets 18.2 11.0 0.5 0.4 Interest-bearing loans and borrowings – Current liabilities (41.2) (8.0) (40.0) (8.0) Interest-bearing loans and borrowings – Non current liabilities (14.5) (0.9) (7.9) (0.9) Lease liabilities (9.7) (6.2) (0.3) (0.3) Closing net (debt)/funds (47.2) (4.1) (47.7) (8.8) At 31 December 2024, £2.5m was held in CSi’s bank in support of existing bank guarantees. These guarantees were transferred to the Group’s supplier by 28th February 2025. 22. Trade and other payables Group Company 2024 £m 2023 £m 2024 £m 2023 £m Current liabilities: Contract liabilities – see note 18 29.3 17.5 – – Trade payables 25.2 17.4 1.5 0.4 Amounts owed to Group undertakings – – 39.5 42.0 Other taxes and social security 1.4 1.2 – – Other payables due within 1 year 7.2 3.0 2.7 0.8 Accruals and deferred income 8.7 4.6 1.0 1.8 Foreign currency derivatives 0.3 0.1 0.8 0.5 Current liabilities: Trade and other payables 72.1 43.8 45.5 45.5 Other payables due after 1 year 1.3 – – – 02 Strategic report 90 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 23. Provisions Group 2024 £m 2023 £m Balance at 1 January 0.9 1.0 Provisions created in the year 0.2 – Acquired through business combinations 2.3 – Utilised during the year (0.6) (0.1) Unused amounts reversed – – Balance at 31 December 2.8 0.9 Provisions are based on historical data and a weighting of all possible outcomes against their associated possibilities. Group provisions relate primarily to product warranties. Except for specific identifiable claims, they are generally utilised within one year of the statement of financial position date. 24. Employee benefits Defined contribution pension schemes The Group operates a number of defined contribution pension schemes for employees. Contributions to these schemes are recognised as an expense in the consolidated income statement as they fall due. Defined benefit pension schemes The Group is responsible for defined benefit pension schemes in the UK and the USA. All schemes are funded by Group companies as necessary, at rates determined by independent actuaries and as agreed between the trustees of the schemes and the sponsoring company. The defined benefit pension schemes are administered by bodies that are legally separate from the Group. The trustees of the schemes are required by law to act in the interest of the schemes and of all relevant stakeholders in the schemes. The trustees of the schemes are responsible for the investment policies in respect of the assets of the schemes. The pension schemes typically expose the Group to certain risks. These include the risk of investment under-performance, a fall in interest rates, an increase in life expectancy and an increase in inflation. UK pension scheme The Group operated one defined benefit pension scheme in the UK in which future accruals ceased in November 2012. The assets of the scheme are held separately from those of the Company and it is funded by the Company as necessary in order to ensure that the scheme can meet the expected benefit obligations. The funding policy is to ensure that the assets held by the scheme in the future are adequate to meet expected liabilities, allowing for future increases in pensions. The only assets of the scheme which are invested in the Company are an interest in the cumulative preference shares of the Company with an estimated current market value of £0.2m. The most recent formal actuarial valuation of the scheme was carried out as at 30 June 2024 using the projected unit credit method. The market value of the scheme assets at that date was £290.2m and the funding level was 107.8% of liabilities, which represented a surplus of £21.1m. The principal terms of the funding agreement between the Company and the Fund’s Trustees, which is effective until 31 December 2035, but is subject to reassessment every three years, are that the Company will continue to pay a sum of £2.0m per annum to the scheme escrow account (increasing at 2.1 per cent. per annum). The funding agreement focuses the scheme and the company on achieving a funding level which should permit the scheme to achieve risk transfer to an alternative arrangement which the company would not be liable for the performance of. Based on annual tests, as the funding level on a technical provisions basis exceeded 103%, contributions have been redirected to an escrow account from 1 January 2025 which can only be used by the scheme to either enable risk transfer or remedy a future deficit arising and would be returned to the company should risk transfer be achieved without the funds being required. Should the funding level reach 110% of technical provisions (including the value of the escrow account), contributions cease. As there is no longer a deficit in the scheme, there is no deficit recovery period. During the year, the Company paid contributions of £1.9m (2023: £2.0m). The Company accounts for pension costs under IAS 19 Employee benefits and the valuation used has been based on detailed actuarial valuation work carried out as at 30 June 2024, updated by the Company’s actuary to assess the value of the liabilities of the scheme at 31 December 2024. Scheme assets are stated at their market value at 31 December 2024. 02 Strategic report 91 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 24. Employee benefits continued USA pension schemes In the USA, the Group has three defined benefit pension schemes, all of which are closed to future accrual. Formal independent actuarial valuations of the USA pension schemes were carried out as at 1 January 2024 using the projected unit credit method. The valuations under IAS 19 at 31 December 2024 have been based on these actuarial valuations, updated for conditions existing at the year end. Employer contributions of £0.4m (2023: £0.2m) were paid during the year. Assumptions The key financial assumptions used to calculate scheme liabilities and the financing expense on pension scheme balances are as follows: UK (Company) USA 2024 2023 2024 2023 Discount rate 5.4% 4.5% 5.4% 4.8% Inflation rate – CPI 2.8% 2.6% n/a n/a – RPI 3.3% 3.1% n/a n/a Increases to pensions in payment – final salary benefits 2.8% 2.6% n/a n/a – career average benefits 2.1% 2.1% n/a n/a The assumptions relating to longevity underlying the pension liabilities of the defined benefit pension schemes at the statement of financial position date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting an individual to live for a number of years as follows: UK scheme USA schemes Current pensioner aged 65 – male 20.5 years 21.2 years Current pensioner aged 65 – female 22.6 years 23.2 years Future retirees currently aged 45 upon reaching age 65 – male 21.9 years 20.0 years Future retirees currently aged 45 upon reaching age 65 – female 24.0 years 22.7 years At 31 December 2024, the weighted average duration of the defined benefit obligation in the UK scheme was 11 years (2023: 11 years) and in the USA schemes was 7 years (2023: 8 years). Significant actuarial assumptions for the determination of the defined benefit obligations are discount rate, inflation rate and mortality. The sensitivity analysis below has been determined assuming that all other assumptions are held constant. Changes in values of pension schemes’ liabilities before tax as at 31 December 2024 UK scheme USA schemes 0.25% change in discount rate £5.8m £0.2m 0.25% change in inflation rate £4.6m n/a Change in life expectancy by one year on average £10.6m £0.3m 02 Strategic report 92 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 24. Employee benefits continued Categories of assets and funded status The fair values of scheme assets were as follows: UK (Company) USA Group 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m UK equities – – – – – – Overseas equities 0.2 9.9 1.7 1.9 1.9 11.8 Bonds – index linked gilts 103.3 137.2 – – 103.3 137.2 Bonds – other 100.4 116.1 5.8 5.8 106.2 121.9 Properties – funds 21.6 25.9 – – 21.6 25.9 Properties – directly owned 2.0 2.0 – – 2.0 2.0 Absolute return funds 41.5 12.7 – – 41.5 12.7 Other 6.8 5.2 – – 6.8 5.2 Total fair (bid) value of scheme assets 275.8 309.0 7.5 7.7 283.3 316.7 Present value of defined benefit obligations 236.4 276.8 9.0 9.5 245.4 286.3 Defined benefit asset/(liability) 39.4 32.2 (1.5) (1.8) 37.9 30.4 All equities, bonds, property funds and absolute return funds have quoted prices in active markets. Directly owned properties are subject to an independent valuation. Disclosed defined benefit pension income/expense for financial year A) Components of defined benefit pension income/expense Net defined benefit pension expense recognised in the consolidated income statement comprises: UK (Company) USA Group 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m Past service costs/(gains) – – – – – – Interest expense/(income) (1.5) (1.6) 0.1 0.1 (1.4) (1.5) Administration costs 1.3 0.9 0.1 0.2 1.4 1.1 (Income)/expense recognised in income statement (0.2) (0.7) 0.2 0.3 – (0.4) The net pension expense/(income) is included in non-underlying items. B) Statements of comprehensive income (“SOCI”) The actuarial gains recognised in the SOCI in respect of pensions were £5.3m (2023: losses of £1.7m), comprising actuarial gains of £5.1m (2023: losses of £2.0m) for the UK defined benefit pension scheme and actuarial gains of £0.2m (2023: gains of £0.3m) for the USA schemes, all figures before tax. Actual return on scheme assets The actual return on scheme assets were losses of £27.0m (2023: gains of £1.4m), comprising losses of £27.4m (2023: gains of £0.9m) for the UK defined benefit pension scheme and gains of £0.4m (2023: gains of £0.5m) for the USA schemes, all figures before tax. 02 Strategic report 93 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 24. Employee benefits continued Reconciliation of the present value of defined benefit obligations UK (Company) USA Group 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m Present value of defined benefit obligations at 1 January 276.8 279.7 9.5 10.2 286.3 289.9 Past service cost/(gains) – – – – – – Interest cost 12.0 13.0 0.4 0.4 12.4 13.4 Actuarial losses/(gains) – changes in demographic assumptions (11.6) (3.5) – – (11.6) (3.5) – changes in financial assumptions (18.7) 5.2 (0.2) 0.2 (18.9) 5.4 – experience (2.2) 1.3 – – (2.2) 1.3 Benefit payments (19.9) (18.9) (0.8) (0.9) (20.7) (19.8) Retranslation – – 0.1 (0.4) 0.1 (0.4) Present value of defined benefit obligations at 31 December 236.4 276.8 9.0 9.5 245.4 286.3 Reconciliation of the fair value of scheme assets UK (Company) USA Group 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m Fair value of scheme assets at 1 January 309.0 311.2 7.7 8.1 316.7 319.3 Interest income 13.5 14.7 0.3 0.4 13.8 15.1 Actuarial gains/(losses) – return on scheme assets (27.4) 0.9 0.4 0.5 (27.0) 1.4 Company contributions 1.9 2.0 0.4 0.2 2.3 2.2 Administration expenses (1.3) (0.9) (0.1) (0.2) (1.4) (1.1) Benefit payments (19.9) (18.9) (0.8) (0.9) (20.7) (19.8) Retranslation – – – (0.4) – (0.4) Fair value of scheme assets at 31 December 275.8 309.0 7.9 7.7 283.7 316.7 02 Strategic report 94 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 24. Employee benefits continued Experience gains and losses for the year UK (Company) USA Group 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m Fair value of scheme assets 275.8 309.0 7.5 7.7 283.3 316.7 Defined benefit obligations (236.4) (276.8) (9.0) (9.5) (245.4) (286.3) Net asset/(liability) 39.4 32.2 (1.5) (1.8) 37.9 30.4 Actuarial gains/(losses) on scheme assets (27.4) 0.9 – 0.5 (27.4) 1.4 Actuarial (losses)/gains on defined benefit obligations 32.5 (2.9) 0.2 (0.2) 32.7 (3.1) Net gain/(loss) recognised in the SOCI during the year 5.1 (2.0) 0.2 0.3 5.3 (1.7) Movements in the net liability/asset of defined benefit pension schemes recognised in the Statements of financial position UK (Company) USA Group 2024 £m 2023 £m 2024 £m 2023 £m 2024 £m 2023 £m Net asset/(liability) for employee benefits at 1 January 32.2 31.5 (1.8) (2.1) 30.4 29.4 (Income)/expense recognised in the income statement (see above) 0.2 0.7 (0.2) (0.3) – 0.4 Company contributions 1.9 2.0 0.3 0.2 2.2 2.2 Actuarial (losses)/gains recognised in the SOCI 5.1 (2.0) 0.2 0.3 5.3 (1.7) Retranslation – – – 0.1 – 0.1 Net asset/(liability) for employee benefits at 31 December 39.4 32.2 (1.5) (1.8) 37.9 30.4 At the end of the life of the UK defined benefit pension scheme the Company has an unconditional right to a refund and any such refund would be paid out only on a net of tax basis. Share-based payments The Company currently operates a deferred share plan, though no options are currently outstanding under it. Own shares are held in trust and granted to plan participants when certain conditions are met. Further details of the deferred share plan, including the performance conditions and vesting periods, are in the Remuneration report on page 42 and in this note. The Company operates a Long Term Incentive Plan (“LTIP”) for certain members of its senior management. Awards are anticipated to be made annually and were awarded in 2023 and 2024. The key terms of both plans are set out in the Remuneration report on page 42 and were unchanged since inception. The total number of shares conditionally granted under the 2022 LTIP was 187,740, at a market value of £4.33 per share, at the date of grant on 10 June 2022 and remained outstanding at the year end. An expense of £nil has been recognised during the year (2023: £nil) within administration costs. All of the options have expired unexercised during the period as the performance criteria were not met. The total number of shares conditionally granted under the 2023 LTIP was 504,247, at a market value of £2.35 per share, at the date of grant on 2 May 2023 and remained outstanding at the year end. An expense of £nil has been recognised during the year within administration costs. No shares were forfeited, exercised, expired or exercisable during the period. The total number of shares conditionally granted under the 2024 LTIP was 303,517 at a market value of £4.40 per share, at the date of grant on 9 April 2024 and 291,345 remained outstanding at the year end. An expense of £0.3m has been recognised during the year within administration costs. No shares were exercised, expired or exercisable during the period, with 12,172 forfeited. The valuation is based upon the 2024 actual performance and the forecast 2025 and 2026 performance of the Group, with 174,182 shares assumed to vest in 2027, being the average assumed outstanding in the year. All shares will vest in early 2027. 02 Strategic report 95 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 25. Capital and reserves Share capital Allotted, called up and fully paid 2024 £m 2023 £m Ordinary shares of 25p each 7.5 5.1 On 18 September 2024, the Company issued 1,059,349 new ordinary shares of 25p each as consideration in the acquisition of Boston Conveyor & Automation. On 21 October 2024, the Company conducted a placing and retail offer issuing 7,500,000 new ordinary shares of 25p each raising gross proceeds of £30m before fees and expenses. Fees and expenses totalled £1.6m and were deducted from the share premium account. On 29 November 2024, the Company issued 1,039,500 new ordinary shares of 25p each as consideration in the acquisition of CSi Palletising. There were 30,073,273 (2023: 20,474,424) ordinary shares in issue at the year end. The holders of the ordinary shares are entitled to one vote per share at meetings of the Company and to receive dividends as declared from time to time. At the year end, an employee trust held none of the ordinary shares and it has agreed to waive all dividends and not to exercise voting rights in respect of any future shares it owns. The Company also has in issue 900,000 6% fixed cumulative preference shares of £1 each (see note 20); these are classified as borrowings. Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. Capital redemption reserve The capital redemption reserve records the historical repurchase of the Company’s own shares. Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. Investment in own shares Included within retained earnings is the carrying value of own shares held in trust for the benefit of employees. These shares are used to service the obligations of the Company’s Deferred share plan and discretionary share scheme. Further details of the Deferred share plan and discretionary share scheme can be found in the Remuneration report on page 41 and on page 94 in note 24. At 31 December 2024, the employee trust held no ordinary shares of 25p each (2023: nil), representing 0.0% of the issued shares (2023: 0.0%). The shares held by the trust at 31 December 2024 were purchased at an aggregate cost of £nil (2023: £nil). The trust purchased no additional shares in the year at a cost of £nil (2023: £nil). Included within retained earnings is the charge of £nil (2023: £nil) in respect of the share-based payments, as disclosed in the Remuneration report on page 41. The market value of the shares held by the trust at 31 December 2024 was £nil (2023: £nil). Dividends 2024 £m 2023 £m Dividends to shareholders paid in the period: – – Having considered the trading results for 2024 and the opportunities for investment in the growth of the Group, the Board has decided that it is not appropriate to pay a final dividend. No interim dividend was paid in 2024. Future dividend payments will be considered by the Board in the context of 2025 trading performance and when the Board believes it is prudent to do so. 02 Strategic report 96 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 26. Financial risk management The Group has exposure to credit, liquidity and market risks from its use of financial instruments. These risks are regularly considered and the impact of these risks on the Group, and how to mitigate them, assessed. The Board of Directors is responsible for the Group’s system of internal controls and has established risk management policies to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Audit Committee assists the Board in the discharge of its duty in relation to the maintenance of proper internal controls. Further details regarding the Audit Committee can be found in its report on pages 36 to 39. Categories of financial instruments Group Company 2024 £m 2023 £m 2024 £m 2023 £m Financial assets: Derivative instruments in designated hedge accounting relationships 0.5 0.2 – – Derivative instruments measured at fair value through income statement – – 1.3 0.5 Financial assets measured at amortised cost 49.9 30.4 105.4 22.3 50.4 30.6 106.7 22.8 Financial liabilities: Derivative instruments in designated hedge accounting relationships 0.3 0.1 – – Fair value through income statement – – 0.8 0.5 Amortised cost 101.8 40.9 47.1 50.9 102.1 41.0 47.9 51.4 Financial assets measured at amortised cost comprises cash and cash equivalents and trade and other receivables, excluding foreign currency derivatives. Financial liabilities at amortised cost comprises interest-bearing loans and borrowings, lease liabilities, trade payables, other payables and accruals. IFRS 7 Financial instruments: disclosures for financial instruments that are measured in the Statements of financial position at fair value requires disclosure of fair value measurements in the form of a three level fair value hierarchy, by class, for all financial instruments recognised at fair value. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). At 1 January 2024 and 31 December 2024, derivative instruments in designated hedge relationships have been identified as Level 2. Derivative instruments in designated hedge relationships The Group has relied on analysis from third party specialists for complex valuations of forward exchange contracts. Valuation techniques have utilised observable forward exchange rates corresponding to the maturity of the contract. The effects of non-observable inputs are not significant to this type of financial instrument. 02 Strategic report 97 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 26. Financial risk management continued Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers and cash held at financial institutions. In addition, for the Company, a credit risk exists in respect of amounts owed by Group undertakings. Trade receivables and contract assets The Group ensures that the provision of credit to customers is adequately managed by each individual business in order that the risk of non-payment or delayed payment is minimised. The Group’s exposure to risk is influenced mainly by the individual characteristics of each customer, the industry and country in which customers operate. The Group has a diversified base of customers. In certain years, sales to a customer may be more than 5%, although the sales would typically be both original equipment and service, and to a number of different geographic regions. The Group has written credit control policies which cover procedures for accepting new customers, setting credit limits, dealing with overdue amounts and delinquent payers. An impairment loss provision against trade receivables is created where it is anticipated that the value of trade receivables is not fully recoverable. No impairments due to credit losses on contract assets have ever been experienced and none are predicted. Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk for the Group and the Company at 31 December was: Group Company 2024 £m 2023 £m 2024 £m 2023 £m Trade receivables 28.8 18.0 – – Amounts owed by Group undertakings – – 105.4 33.1 Other receivables 2.9 1.4 – – Foreign currency derivatives 0.5 0.2 0.8 0.5 Cash and cash equivalents 18.2 11.0 0.5 – 50.4 30.6 106.7 33.6 The Group applies the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring the expected credit losses, the trade receivables have been assessed on an individual basis as the risk depends upon the circumstances of the receivable, including the financial strength of the counterparty and the terms of the contract. They have been grouped based on the days past due. Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangements, amongst others, are considered indicators of no reasonable expectation of recovery. 02 Strategic report 98 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 26. Financial risk management continued Credit loss provisions The ageing of trade receivables and the expected credit loss provisions for the Group at 31 December were: 2024 2023 Group Gross £m Credit loss provisions £m Total £m Gross £m Credit loss provisions £m Total £m Not past due 13.5 – 13.5 10.5 – 10.5 Past due up to 30 days 7.1 – 7.1 4.2 – 4.2 Past due 31–60 days 2.8 – 2.8 1.1 – 1.1 Past due 61–90 days 4.7 – 4.7 1.7 – 1.7 Past due more than 91 days 1.3 (0.6) 0.7 0.5 – 0.5 29.4 (0.6) 28.8 18.0 – 18.0 The only receivable balances held by the Company are amounts owed by Group undertakings and expected credit losses arising are not considered to be material. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to hold cash and cash equivalents and maintain undrawn committed facilities at a level sufficient to ensure that the Group has available funds to meet its liabilities as they become due. Further details of the Group’s treasury policies can be found in the Financial review on pages 18 to 20. Contractual maturities of non-derivative financial liabilities The non-derivative financial liabilities for the Group and the Company at 31 December were: Group Company 2024 £m 2023 £m 2024 £m 2023 £m Current liabilities: Interest-bearing loans and borrowings 41.2 8.0 40.0 8.0 Trade and other payables (excluding derivatives) 36.4 25.6 5.3 42.0 Lease liabilities 2.2 1.3 – – Non-current liabilities: Interest-bearing loans and borrowings 14.5 0.9 7.9 0.9 Lease liabilities 7.5 4.9 0.3 0.3 Interest rates of 6% and 2.75% above the HSBC base rate of the prevailing currency are charged on the above interest-bearing loans, generating an expense of £1.1m (2023: £0.5m). The loans relate to preference shares and the revolving credit facility drawdown. The preference share loan has no fixed maturity, the revolving credit facility is due to be repaid in less than one year. The Group entered into the following additional interest bearing loan and borrowing facilities in the year: a £12m term loan repayable in quarterly instalments with a final repayment date of 30 September 2027. Interest at a margin of 2.75% above the HSBC base rate of the prevailing currency is charged on this loan. a £35m term revolving capital facility repayable on demand. Interest at a margin of 2.75% above the HSBC base rate of the prevailing currency is charged on this loan. This replaced the previous £25m revolving capital facility. €6.5m vendor loans and €3.5m of deferred consideration in connection with the acquisition of CSi Palletising. Interest is charged at 10% on the vendor loans, no interest is charged on the deferred consideration. Both are repayable between one and five years. Trade and other payables shown as current liabilities are expected to mature within six months of the statement of financial position date. The contractual maturities of forward foreign exchange contracts that the Group and Company had committed at 31 December are shown in the foreign currency risk section in this note. The contractual maturity of lease liabilities is disclosed in note 27. 02 Strategic report 99 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 26. Financial risk management continued Market risk Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Group’s income or the value of its holdings of financial instruments. Exposure to interest rate and currency risks arises in the normal course of the Group’s business. The Group does not trade in financial instruments and enters into derivatives (principally forward foreign exchange contracts) solely for the purpose of minimising currency exposure on sales or purchases in other than the functional currencies of its various operations. The Group’s treasury policies are explained in the Financial review on pages 18 to 20. Interest rate risk Cash and cash equivalents The cash profile at 31 December was: 2024 2023 Group Cash at floating rates £m Cash on which no interest received £m Total £m Cash at floating rates £m Cash on which no interest received £m Total £m Currency: Sterling 1.3 – 1.3 2.8 – 2.8 Canadian dollar 0.4 – 0.4 1.5 – 1.5 US dollar 5.2 – 5.2 3.2 – 3.2 Euro 10.7 – 10.7 3.5 – 3.5 Mexican peso 0.4 – 0.4 – – – Singapore dollar 0.2 – 0.2 – – – 18.2 – 18.2 11.0 – 11.0 2024 2023 Company Cash at floating rates £m Cash on which no interest received £m Total £m Cash at floating rates £m Cash on which no interest received £m Total £m Currency: Sterling 0.4 – 0.4 0.4 – 0.4 Canadian dollar – – – – – – US dollar – – – – – – Euro 0.1 – 0.1 – – – 0.5 – 0.5 0.4 – 0.4 All cash surplus to immediate operational requirements is placed on deposit at floating rates of interest. 02 Strategic report 100 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 26. Financial risk management continued Interest-bearing loans and borrowings The profile of interest-bearing loans and borrowings at 31 December was: 2024 2023 Group Borrowings at floating rates £m Borrowings at fixed rates £m Total £m Borrowings at floating rates £m Borrowings at fixed rates £m Total £m Currency: Sterling 23.8 0.9 24.7 8.0 0.9 8.9 Euro 12.0 7.9 19.9 – – – US dollar 11.1 – 11.1 – – – 46.9 8.8 55.7 8.0 0.9 8.9 2024 2023 Company Borrowings at floating rates £m Borrowings at fixed rates £m Total £m Borrowings at floating rates £m Borrowings at fixed rates £m Total £m Currency: Sterling 23.9 0.9 24.8 8.0 0.9 8.9 Euro 12.0 – 12.0 – – – US dollar 11.1 – 11.1 – – – 47.0 0.9 47.9 8.0 0.9 8.9 The borrowings at fixed rates in sterling are the fixed cumulative preference shares which are explained in more detail in note 20. The average rate of interest on the Group’s operating lease liabilities is 3.3%, details of the contractual maturity of the leases can be found in note 27. Sensitivity to interest rate risk If interest rates had been 100 basis points higher/lower throughout the period, net financial expenses (excluding on pension scheme balances) for the Group would have increased/decreased by £0.2m (2023: increased/decreased by £0.1m). This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect of financial instruments with variable interest rates. The analysis is performed on the same basis as for the year ended 31 December 2023. Foreign currency risk The majority of the Group’s operations are outside of the UK, and therefore a significant portion of its business is conducted overseas in currencies other than sterling. As explained on page 23, foreign currency risk is one of the principal risks and uncertainties to which the Group is exposed. The Group is exposed to both transaction and translation risk. Transactions in foreign currency are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. The revenues and expenses of foreign operations are translated at an average rate for the period. The assets and liabilities of foreign operations are translated at foreign exchange rates ruling at the statement of financial position date and foreign exchange differences are taken directly to the translation reserve. The following exchange rates (relative to sterling), which are significant to the Group, applied during the period: Average rate Closing rate 2024 2023 2024 2023 US dollar 1.28 1.24 1.28 1.27 Canadian dollar 1.75 1.68 1.80 1.68 Euro 1.18 1.15 1.21 1.15 02 Strategic report 101 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 26. Financial risk management continued Forward foreign exchange contracts The Group enters into forward foreign exchange contracts solely for the purpose of minimising currency exposures on sale and purchase transactions. The Group classifies its forward foreign exchange contracts used for hedging as cash flow hedges and states them at fair value. Fair values The fair value of forward foreign exchange contracts at 31 December was: Group Company Cash flow hedges 2024 £m 2023 £m 2024 £m 2023 £m Gain – – – – Loss (0.3) (0.1) – – (0.3) (0.1) – – The fair value is the gain/loss on all open forward foreign exchange contracts at the period end. These amounts are based on the market values of equivalent instruments at the period end date and all relate to those forward foreign exchange contracts that have been designated as effective cash flow hedges under IFRS 9 Financial instruments: recognition and measurement. There were no open forward foreign exchange contracts, as at either 31 December 2024 or 2023, that had been designated as fair value hedges under IFRS 9 Financial instruments: recognition and measurement. During the period, a credit of £0.2m for the Group (2023: £1.7m credit) and £nil for the Company (2023: £nil) was recognised in the statements of comprehensive income in respect of cash flow hedges. Contractual maturity date and future cash flows The contractual maturity date and period when cash flows are expected to occur in relation to open forward foreign exchange contracts at 31 December were: 2024 2023 Group Less than 6 months £m Between 6 and 12 months £m Between 12 and 24 months £m Total £m Less than 6 months £m Between 6 and 12 months £m Between 12 and 24 months £m Total £m Outflow – – – – – – – – Inflow 6.2 2.6 0.6 9.4 16.4 6.0 1.4 23.8 6.2 2.6 0.6 9.4 16.4 6.0 1.4 23.8 2024 2023 Company Less than 6 months £m Between 6 and 12 months £m Between 12 and 24 months £m Total £m Less than 6 months £m Between 6 and 12 months £m Between 12 and 24 months £m Total £m Outflow – – – – – – – – Inflow – – – – – – – – – – – – – – – – 02 Strategic report 102 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 26. Financial risk management continued The following movements in the cash flow hedge reserve relate to the hedges relating to cash flows from foreign currency trade receivables. Group 2024 £m Opening balance 1 January 2024 (0.1) Change in fair value of hedging instrument recognised in other comprehensive income (“OCI”) (0.2) Reclassified from OCI to profit or loss – Closing balance at 31 December 2024 (0.3) The effect of hedge accounting on the Group’s financial position and performance is as follows, including the outline timing and profile of the hedging instruments: Group 2024 Carrying amount GBP£0.2m Notional amount US dollar to Canadian dollar CA$12.1m Canadian dollar to euro €1.2m US dollar to euro €2.0m GBP to US dollar – Hedge ratio 1:1 Average forward rates US dollar to Canadian dollar 1US$:1.38CA$ Canadian dollar to euro 1CA$:0.67€ US dollar to euro 1US$:0.90€ Change in the fair value of the currency forward (excluding amounts reclassified) £0.2m Change in the fair value of the hedged item used to determine hedge effectiveness £0.2m Amounts in the cash flow hedge reserve (£0.3m) No other currency pairs at 31 December 2024 or during the year had a material value to the Group. Currency profile The currency profiles at 31 December of cash and cash equivalents and interest-bearing loans and borrowings are shown within the interest rate risk section in this note. The following analysis of financial assets and liabilities (excluding net funds/debt) shows the Group and Company exposure after the effects of forward foreign exchange contracts used to manage currency exposure. The amounts shown represent the transactional exposures that give rise to net currency gains and losses which are recognised in the consolidated income statement. Such exposures represent the financial assets and liabilities of the Group and the Company that are not denominated in the functional currency of the business involved. 02 Strategic report 103 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 26. Financial risk management continued 2024 2023 Group US dollar £m Euro £m Total £m US dollar £m Euro £m Total £m Functional currency: Sterling (0.1) (0.1) (0.2) – – – Canadian dollar 3.5 – 3.5 5.1 0.3 5.4 Euro – 0.1 0.1 – – – Romanian leu – (0.8) (0.8) – – – Mexican peso 0.1 0.7 0.8 – – – 3.5 (0.1) 3.4 5.1 0.3 5.4 2024 2023 Company US dollar £m Euro £m Total £m US dollar £m Euro £m Total £m Functional currency: Sterling 22.6 52.6 75.2 12.5 – 12.5 Sensitivity to foreign currency risk Average exchange rates are used to translate the profits of foreign operations in the consolidated income statement. If sterling had been 10% stronger against all foreign currencies during the year, the effect of this on the average exchange rates used to translate profits would have decreased Group profit for the year by £nil (2023: £0.3m). If sterling had been 10% weaker against all foreign currencies during the year, the effect of this on the average exchange rates used to translate profits would have increased Group profit for the year by £nil (2023: £0.3m). If sterling had been 10% stronger against all foreign currencies at 31 December 2024, Group equity would have decreased by £2.8m (2023: £3.4m decrease). Conversely, if sterling had been 10% weaker against all foreign currencies at 31 December 2024, Group equity would have increased by £3.1m (2023: £3.7m increase). This analysis assumes that all other variables remain constant. Fair values The fair value of borrowings at fixed rates for the Group at 31 December 2024 is £8.8m (2023: £0.9m) and has been calculated by discounting the expected future cash flows at prevailing interest rates. The fair value of borrowings at fixed rates for the Company at 31 December 2024 is £0.9m (2023: £0.9m) and has been calculated by discounting the expected future cash flows at prevailing interest rates. There are no other significant differences between book and fair values for any of the other financial assets or liabilities included in either the Group or Company statement of financial position. Capital management Capital comprises total equity as shown in the statements of financial position. The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain the future development of the business. The Group manages its capital structure and makes adjustments to it in light of the economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group monitors capital through measures of earnings per share (see note 11), return on capital employed (profit for the period divided by average equity) and tangible net worth (total equity before intangible assets and employee benefits, net of tax). There were no changes to the Group’s approach to capital management during the year and neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 02 Strategic report 104 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 27. Leases The right-of-use assets held at the balance sheet date relates to the following asset types: Group Company Land & buildings £m Plant & machinery £m Motor vehicles £m Total £m Land & buildings £m Cost Balance at 31 January 2023 7.8 0.1 0.9 8.8 – Additions 2.1 – – 2.1 0.3 Disposals – – (0.1) (0.1) – Transfers – – – – – FX Translation (0.1) – – (0.1) – Balance at 31 December 2023 9.8 0.1 0.8 10.7 0.3 Additions – 0.3 0.1 0.4 – Acquired through business combinations 3.7 0.3 0.5 4.5 – Disposals – (0.1) – (0.1) – Transfers – – – – – FX Translation (0.3) – – (0.3) – Balance at 31 December 2024 13.2 0.6 1.4 15.2 0.3 Depreciation Balance at 1 January 2023 3.2 – 0.6 3.8 – Charge for the period 1.0 0.1 0.1 1.2 – Disposals – – (0.1) (0.1) – Transfers – – – – – FX Translation (0.1) – – (0.1) – Balance at 31 December 2023 4.1 0.1 0.6 4.8 – Charge for the period 1.0 0.1 0.1 1.2 – Disposals – (0.1) – (0.1) – Transfers – – – – – FX Translation (0.1) – – (0.1) – Balance at 31 December 2024 5.0 0.1 0.7 5.8 – NBV of ROU assets 2023 5.7 – 0.2 5.9 0.3 NBV of ROU assets 2024 8.2 0.5 0.7 9.4 0.3 Group Company Lease liabilities 31 December 2024 £m 31 December 2023 £m 31 December 2024 £m 31 December 2023 £m Opening liability (6.2) (5.3) (0.3) – Additions (4.7) (2.1) – (0.2) Disposals – – – – Payments made 1.2 1.1 – – Interest charge (0.1) (0.1) – – Effect of movements in foreign exchange rates 0.1 0.2 – – Closing liability (9.7) (6.2) (0.3) (0.2) Amounts falling due after more than one year (7.5) (4.9) (0.2) (0.2) Amounts falling due in less than one year (2.2) (1.3) (0.1) – The Group took advantage of the exemptions available not to capitalise short-term leases with a duration of less than 12 months or leases of low-value assets. These leases have been treated as off-balance-sheet operating leases. There was no expense relating to either of these types of lease in the year (2023: £nil). 02 Strategic report 105 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 27. Leases continued The undiscounted payments under the leases fall due as follows: Group Company 31 December 2024 £m 31 December 2023 £m 31 December 2024 £m 31 December 2023 £m Up to one year 3.2 1.5 0.1 – One to five years 9.6 4.2 0.2 0.3 Over five years 0.6 1.0 0.1 – Total undiscounted payments due under leases 13.4 6.7 0.4 0.3 28. Capital commitments Group Company 2024 £m 2023 £m 2024 £m 2023 £m Capital investment contracted but not provided for – 0.1 – 0.1 29. Contingent liabilities Group Company 2024 £m 2023 £m 2024 £m 2023 £m Contingent liabilities in respect of guarantees and indemnities related to sales and other contracts 9.4 4.8 – 4.8 No contingent liabilities have been required to be reimbursed or are expected to do so. Litigation is in progress between the Group and a customer over the completion of a project. The information usually required by IAS 37 is not disclosed on the grounds that it can be expected to seriously prejudice the outcome of the litigation. The directors are of the opinion that the claim can be successfully resisted by the Group. 30. Related parties Transactions with key management personnel The compensation of key management personnel is disclosed in the Remuneration report on pages 40 to 47. Key management personnel comprise the Executive Directors only: 31 December 2024 £m 31 December 2023 £m Short-term employment benefits 0.1 0.1 Share based payments – – Total key management personnel compensation 0.1 0.1 Identity of related parties The Company has a related party relationship with its subsidiaries (see note 31), Directors and the UK and USA defined benefit pension schemes. In the course of normal operations, related party transactions entered into by the Group have been contracted on an arm’s-length basis. Details regarding transactions involving the Directors and their remuneration can be found in the Remuneration report on pages 40 to 47. The Group recharges the UK defined benefit pension scheme with the costs of administration incurred by the Group. The total amount recharged in the year to 31 December 2024 was £0.1m (2023: £0.1m). The vendor of BCA, a current employee of the Group, indirectly benefits from the income from the building occupied by BCA. The building is leased by the Group on a five year term at an initial rent of US$0.3m per year (£0.2m), increasing at 2% per year throughout the term. This is considered to be the open market rent for the site. 02 Strategic report 106 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 31. Business combinations Acquisition of CSi Palletising On 29 November 2024 Mpac Group plc acquired the entire share capital of Elstar International B.V., a private limited liability company incorporated under the laws of the Netherlands. Elstar International is the parent of a group of entities operating under the name CSi Palletising, a leading provider of design, manufacturing and installation services for end-of-line automation and palletising solutions. The amounts provisionally recognised in respect of identifiable assets acquired and liabilities assumed are as set out in the table below: Pre acquisition carrying amount £m Fair value adjustments £m Total £m Intangible asset relating to customer relationships, orderbook & technology – 29.3 29.3 Property, plant and equipment 4.7 – 4.7 Inventories 8.7 – 8.7 Cash 5.5 – 5.5 Trade receivables 14.3 – 14.3 Prepayments and accrued income 5.0 – 5.0 Deferred tax 2.5 – 2.5 Total assets 40.7 29.3 70.0 Trade payables (5.1) – (5.1) Accruals and other payables (12.4) – (12.4) Corporation tax (0.5) – (0.5) Contract liabilities (26.9) – (26.9) Deferred tax – (7.3) (7.3) Provisions (2.9) – (2.9) Total liabilities (47.8) (7.3) (55.1) Total identifiable net (liabilities)/assets at fair value (7.1) 22.0 14.9 Goodwill arising on acquisition 50.8 Total consideration 65.7 Satisfied by Cash consideration 52.7 Issue of 1,039,500 new ordinary shares in Mpac Group plc 5.2 Vendor loans 5.2 Deferred consideration 2.6 Total consideration 65.7 Net cash outflow arising on acquisition Cash paid (52.7) Net cash acquired 5.5 Net cash outflow arising on acquisition (47.2) The primary reasons for the acquisition are disclosed in the CSi Palletising Case study on page 11. The goodwill on acquisition is attributable to synergies across all operating functions which are expected to significantly transform the Group’s customer offering and substantially expand the breadth of the Group’s technology and global customer reach. Key opportunities include increasing CSi Palletising’s product sales in North America through Mpac’s established presence and relationships, developing a stronger sales presence in Latin America with support from a Mexico location, and driving Mpac sales through CSi Palletising’s experience. Additionally, the plan involves securing a lower-cost manufacturing and assembly facility in Romania to enhance cost-saving efficiencies, cross-selling Mpac’s equipment to CSi Palletising’s strategic accounts, generating pull-through sales of CSi Palletising’s palletisers to Mpac’s existing customers, and utilising Mpac’s after-sales service expertise to achieve further cost-saving synergies. 02 Strategic report 107 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 31. Business combinations continued None of the goodwill or acquired intangible assets are expected to be deductible for tax purposes, though this is to be confirmed. In the event that a deduction is available, an adjustment may be required to the values of acquired intangible assets and goodwill, so the values disclosed should be considered provisional. IFRS3 permits adjustments to be made within 12 months of acquisition. The amortisation of the acquired intangible assets in the period totalled £0.4m and is included in non-underlying items in the income statement. The vendor loans attract interest at 10% and the fair value of the loans has been established via discounting to market rates. There are two vendor loans, €1.5m (£1.3m) repayable 12 months following completion and €4.5m (£3.8m) repayable 24 months following completion respectively. The deferred consideration is payable in two tranches of €1.5m (£1.3m) in January 2026 and January 2027. There are no performance conditions associated with the payment and the value of any discounting is immaterial. Acquired receivables The gross contractual amount due in respect of trade receivables acquired was £14.8m with a fair value of 14.3m, the difference of £0.5m is expected to be uncollectable. Revenue and profit contribution From the date of acquisition CSi Palletising has contributed £6.0m of revenue to the Group’s Statement of Comprehensive Income together with after tax profit of £1.0m. If the acquisition had been completed on the first day of the financial year, Group revenue and profit after tax would have been higher by £64.2m and £3.8m respectively. Acquisition of Boston Conveyor & Automation On 18 September 2024 Mpac Group plc acquired the entire share capital of Boston Conveyor & Automation Inc. (“BCA”). BCA are a US-based supplier of robotic automation and conveyor solutions to the food, life sciences and general industry sectors. The amounts recognised in respect of identifiable assets acquired and liabilities assumed are as set out in the table below: Pre acquisition carrying amount £m Fair value adjustments £m Total £m Intangible asset relating to customer relationships and trademark – 4.5 4.5 Property, plant and equipment 1.1 – 1.1 Cash 2.9 – 2.9 Trade receivables 0.5 – 0.5 Prepayments and accrued income 0.1 – 0.1 Total assets 4.6 4.5 9.1 Trade payables (0.2) – (0.2) Accruals and other payables (3.6) – (3.6) Deferred tax – – – Total liabilities (3.8) – (3.8) Total identifiable net assets at fair value 0.8 4.5 5.3 Goodwill arising on acquisition 10.1 Total consideration 15.4 Satisfied by Cash consideration 8.8 Issue of 1,059,349 new ordinary shares in Mpac Group plc 4.8 Cash and working capital adjustments 1.8 Total consideration 15.4 Net cash outflow arising on acquisition Cash paid (10.6) Net cash acquired 2.9 Net cash outflow arising on acquisition (7.7) 02 Strategic report 108 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 31. Business combinations continued The primary reasons for the acquisition are disclosed in the BCA Case study on page 12. The goodwill is attributable to sales and service synergies through the leverage of the enlarged Group’s customer base and the pull-through of Mpac’s existing technologies. The acquisition provides a significant growth opportunity into EMEA through Mpac’s sales presence, a geography previously unaddressed by BCA. In addition, Mpac will benefit from BCA’s position of strength in standard and complex conveyor solutions, and food and material handling automation. None of the goodwill is expected to be deductible for tax purposes. The amortisation of the acquired intangible assets in the period totalled £0.1m and is included in non-underlying items in the income statement. Upon the acquisition of BCA, the Group has recognised a deferred tax liability of £1.2m in relation to the recognition of the fair value adjustments shown in the table above and a deferred tax asset of £1.2m in relation to offsettable tax losses levied by the same taxation authority. Acquired receivables The gross contractual amount due in respect of acquired trade receivables of £0.6m is equal to their fair value. Revenue and profit contribution From the date of acquisition Boston Conveyor & Automation Inc. has contributed £4.3m of revenue to the Group’s Statement of Comprehensive Income together with after tax profit of £0.5m. If the acquisition had been completed on the first day of the financial year, Group revenue and profit after tax would have been higher by £8.7m and £0.9m respectively. 32. Group entities All intra-group related party transactions and outstanding balances are eliminated in the preparation of the consolidated financial statements of the Group and therefore in accordance with IAS 24 Related party disclosures are not disclosed. Subsidiary undertakings Details of all subsidiary undertakings are shown below. Subsidiary undertakings are, unless otherwise shown in brackets below, registered in England and Wales. Unless otherwise specified below, all subsidiaries are 100% owned by the Company. Principal subsidiary undertakings Registered office Subsidiary undertakings 6500 Kitimat Road, Unit 1, Mississauga, Ontario LN5 2B8, Canada Mpac Langen, Inc. (Canada) Edisonstraat 14, 6604 BV Wijchen, The Netherlands Mpac Langen B.V. (Netherlands) 8 Burn Road, #09-01 Trivex, Singapore 369977 Mpac Langen Pte. Ltd (Singapore) Station Estate, Tadcaster, North Yorkshire, LS24 9SG Mpac Lambert Limited (UK) 5638 Transportation Blvd., Garfield Heights, OH 44125, USA Mpac Switchback Inc. (USA) Mpac USA Inc. (USA) 7 Opportunity Way, Newburyport, MA 01950, USA Boston Conveyor & Automation, Inc. (USA) Lissenveld 39, 4941 VL Raamsdonksveer, The Netherlands CSi Industries B.V. (Netherlands) 400641 Bd. Muncii 12, Cluj-Napoca, Romania CSi Romania Srl (Romania) Alpha Las Srl (Romania) Carretera estatal 431 Km 1.3 – 29S, El Marques Queretaro, Mexico Conveyor Systems Integrators de Mexico SRL (Mexico) 4870 Sadler Road, Suite 300, Glen Allen, VA 23060, USA CSi Logistic Systems Inc. (USA) Florastraße 12, 46459 Rees, Germany CSi GmbH (Germany) 02 Strategic report 109 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 32. Group entities continued Subsidiary undertakings registered at Mpac Group plc registered office Arista Laboratories Europe Limited Mpac Machine Company Limited Molmac Engineering Limited Hartsvale Limited Mpac Machinery Limited Thrissell Limited Mpac Corporate Services Limited Mpac Overseas Holdings Limited Mpac Group Holdings Limited Mpac ITCM Limited Mpac Tobacco Machinery Limited SIGA Vision Limited Overseas subsidiary undertakings Registered office Subsidiary undertakings 6500 Kitimat Road, Unit 1, Mississauga, Ontario LN5 2B8, Canada 1456074 Ontario, Inc. (Canada) 928142 Ontario, Inc. (Canada) Mpac Corporation (USA) ITCM North America, Inc. (USA) Mpac Delaware, Inc. (USA) Mpac Laboratories, Inc. (USA) SASIB Corporation of America (USA) Mpac Richmond, Inc. (USA) 6 Jalen Damanlela, Kuala Lumpur, Malaysia Mpac Malaysia SDN BHD (Malaysia) Edisonstraat 14, 6604 BV Wijchen, The Netherlands Mpac Bidco B.V. (Netherlands) Lissenveld 39, 4941 VL Raamsdonksveer, The Netherlands Elstar International B.V. (Netherlands) Lissenveld 39, 4941 VL Raamsdonksveer, The Netherlands Echo Enterprises B.V. (Netherlands) Lissenveld 39, 4941 VL Raamsdonksveer, The Netherlands Echo Roemenië B.V (Netherlands) During the year ended 31 December 2024, the Company received interest income from subsidiary undertakings of £2.0m (2023: £1.3m), management fees of £2.5m (2023: £2.7m) and brand fees of £4.2m (2023: £4.0m). At 31 December 2024, amounts owed by subsidiary undertakings to the Company were £105.4m (2023: £21.9m) and amounts owed by the Company to subsidiary undertakings were £39.5m (2023: £41.6m) and are unsecured. The amounts owed by subsidiary undertakings to the Company are stated after a provision of £13.5m (2023: £13.6m) representing amounts owed to the Company which are no longer considered recoverable. At 31 December 2024, investments in subsidiaries by the Company were £63.8m (2023: £63.8m). 02 Strategic report 110 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notes to the accounts continued 33. Accounting estimates and judgements The development, selection and disclosure of the Group’s critical accounting policies and estimates, and the application of these policies and estimates, are considered as part of the remit of the Audit Committee. Estimates and judgements Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the year in which the estimates are revised and in any future years affected. The areas involving significant risk resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: Significant judgements Revenue recognition The Group recognises revenue and gross margin on long-term contracts over time, in accordance with IFRS 15, based upon the total number of hours expected to be used on the contract and the number of hours required to complete the contract. Labour hours have been selected as the most faithful depiction of progress (and hence the transfer of goods and services) as this most accurately reflects how Mpac provides value to the customer. Mpac delivers innovative, efficient, and technically robust solutions, with the time allocated to projects of Mpac engineers and technicians being the main driver to bring projects to fruition. Total expected revenue, the number of hours and cost of materials to complete the contract reflect management’s best estimate of the probable future benefits and obligations associated with the contract. Obligations on contracts may result in penalties due to late completion of contractual milestones or unanticipated costs due to project modifications, unexpected conditions or events. Further detail in respect of revenue recognition is shown in the accounting policies note and note 1. Labour hours have been selected as the most faithful depiction of progress (and hence the transfer of goods and services) as this most accurately reflects how Mpac provides value to the customer. Material costs incurred are not considered to be proportionate to the Group’s progress in satisfying progress on contracts for which revenue is recognised over time and therefore revenue in respect of materials is recognised at an amount equal to the cost of good used to satisfy the performance obligation. Capitalisation of development costs The Group capitalises costs for product development projects. Initial capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model, and all other recognition criteria within IAS 38 can be demonstrated. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The net book value of capitalised development costs was £3.6m (2023: £2.5m). Areas of significant estimation Pension accounting Changes to key assumptions used for calculating the net pension asset/liability of the Group can have a significant impact on the accounting valuation of the Group’s defined benefit pension schemes. The key assumptions used in calculating the net pension asset/liability for the Group are disclosed in note 24. The value of the schemes’ liabilities is particularly sensitive to the discount, inflation and mortality rates used, along with the evolving regulation of pension schemes. The Group is aware of a case involving Virgin Media and NTL Pension Trustee, which could potentially lead to additional liabilities for some pension schemes but the Trustee believes there not to be an impact for the UK scheme. An analysis of the impact on the net pension asset/ liability to changes in these assumptions is also disclosed in note 24. Deferred tax Management have recognised a deferred tax asset of £5.3m (2023: £2.2m) based on historic losses and investment tax credits. The assessment of this utilisation is based on the Group’s latest budget, which is adjusted for significant non-taxable income and expenses, along with specific limits to the utilisation of the tax credits. Further details of the asset is in note 16. Impairment of goodwill The Group considers whether intangible assets and/or goodwill are impaired. Where an indication of impairment is identified the estimation of recoverable value requires assessment of the recoverable value of the cash generating units (“CGUs”). Determining whether goodwill balances are impaired requires an estimation of the value in use of the CGUs to which the value has been allocated. The value in use calculation requires the Group to estimate the future cash flows anticipated to arise from the CGUs and to apply a reasonable discount rate in order to calculate present value. The Group is required to perform an impairment review to determine whether the carrying value of goodwill balances are less than the recoverable amount annually. The recoverable amount is based on a calculation of expected future cash flows, which include estimates of future performance. Details of assumptions used in the review of goodwill balances are detailed in note 12. Fair value of acquired businesses and goodwill The Group assesses and recognises the fair value of the acquired assets, both tangible and intangible, and the consequent goodwill, in line with IFRS3. This process is supported by a suitably qualified, independent, accountancy firm. Determining the value of the fixed assets requires an estimate of either value in use or market value. Determining the value of the intangible assets requires the Group to estimate the future cash flows arising from each asset identified, discounted to determine the net present value of the asset acquired. Details of the acquired intangible assets and goodwill are detailed in notes 12 and 31. 02 Strategic report 111 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Five-year record 2024 £m 2023 £m 2022 £m 2021 £m 2020 £m Revenue 122.4 114.2 97.7 94.3 83.7 Underlying operating profit1 12.0 7.8 3.9 8.8 6.5 Non-underlying items (8.6) (3.9) (3.9) (0.5) (3.6) Operating profit 3.4 3.9 – 8.3 2.9 Net financing income/(expense) – 0.8 0.2 (0.1) – Profit before tax 3.4 4.7 0.2 8.2 2.9 Taxation (2.0) (2.0) (0.6) (0.4) 1.3 Profit/(Loss) for the period from continuing operations 1.4 2.7 (0.4) 7.8 4.2 Profit for the period from discontinued operations – – – – – Profit/(Loss) for the period 1.4 2.7 (0.4) 7.8 4.2 Underlying operating return on sales1 9.8% 6.8% 4.0% 9.3% 7.8% Underlying earnings per share1 35.2p 26.2p 13.3p 39.7p 31.4p Basic earnings/(loss) per share 6.0p 13.1p (2.2)p 39.1p 20.8p Dividends per ordinary share in respect of the year – – – – – Intangible assets 117.4 24.0 25.4 25.3 27.4 Property, plant and equipment and investment property 16.0 10.8 9.8 10.6 9.9 Inventories 15.9 11.1 9.6 5.5 3.5 Trade and other receivables (including taxation) 59.4 48.8 49.2 36.5 36.6 Employee benefits 37.9 30.4 29.4 33.2 11.0 Trade and other payables (including taxation and provisions) (156.8) (72.1) (65.4) (60.2) (57.7) 89.8 53.0 58.0 50.9 30.7 Cash 18.2 11.0 4.2 14.5 15.5 Net assets 108.0 64.0 62.2 65.4 46.2 1. Before non-underlying items 02 Strategic report 112 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Principal divisions and subsidiaries The divisions and subsidiary undertakings shown include those which principally affect the profits and net assets of the Group as at the date of this report. Overseas companies operate and are incorporated in the countries in which they are based. In all cases, the class of shares held is ordinary equity shares (or equivalent) and the proportion held is 100% unless otherwise indicated. Shares in the UK companies are held directly by Mpac Group plc and those in the other overseas subsidiaries by intermediate holding companies. Americas Mpac Langen, Inc. 6500 Kitimat Road, Unit 1 Mississauga Ontario L5N 2B8 Canada Tel: +1 905 670 7200 E-mail: info.americas@mpac-group.com Mpac Switchback Group 5638 Transportation Blvd Garfield Heights OH 44125 USA Tel: +1 216 290 6040 E-mail: info.switchback@mpac-group.com Boston Conveyor & Automation, Inc. 7 Opportunity Way Newburyport MA 01950 USA Tel: +1 978 255 1921 E-mail: Info@bcasystems.com Asia Pacific Mpac Langen Pte. Ltd 8 Burn Road, #09–01 Trivex, Singapore 369977 Tel: +65 63 39 96 66 E-mail: info.asia@mpac-group.com Europe, Middle East & Africa Mpac Langen B.V. Edisonstraat 14 6604 BV Wijchen The Netherlands Tel: +31 24 648 6655 E-mail: info.emea@mpac-group.com Mpac Lambert Limited Station Estate Tadcaster North Yorkshire LS24 9SG United Kingdom Tel: +44 (0)1937 832921 E-mail: sales.emea@mpac-group.com CSi Industries B.V. Lissenveld 39 4941 VL Raamsdonksveer The Netherlands Tel: +31 162 575 180 E-mail: frontoffice@csiportal.com CSi Romania Srl 400641 Bd. Muncii 12 Cluj-Napoca Romania Tel: +40 372 116 600 E-mail: inforomania@csiportal.com 02 Strategic report 113 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notice of Annual General Meeting Notice is hereby given that the 113th Annual General Meeting (the “Meeting”) of Mpac Group plc (the Company) will be held at the offices of the Company at 2 Argosy Court, Coventry CV3 4GA on Thursday 12 June 2025 at 12 noon, to consider and, if thought appropriate, to pass the following resolutions, of which resolutions 1 to 11 will be proposed as ordinary resolutions and resolutions 12 to 14 will be proposed as special resolutions: Ordinary resolutions Report and Accounts 1. To receive the audited annual accounts of the Company for the year ended 31 December 2024 together with the Directors’ report and the auditors’ report on those annual accounts. 2. To approve the Remuneration report, excluding the Remuneration Policy, set out on pages 41 to 47 of the Annual Report and Accounts 2024. Directors 3. To re-elect Mr. A J Kitchingman as a Director. 4. To re-elect Mr. A P Holland as a Director. 5. To re-elect Mr. W C Wilkins as a Director. 6. To re-elect Mr. D G Robertson as a Director. 7. To re-elect Mrs. S A Fowler as a Director. 8. To re-elect Mr. M G R Taylor as a Director Auditors 9. To re-appoint PKF Littlejohn LLP as auditors of the Company to hold office from the conclusion of this Meeting until the conclusion of the next general meeting at which accounts are laid before the Company. 10. To authorise the Audit Committee to determine the remuneration of the auditors. Directors’ authority to allot shares. 11. To generally and unconditionally authorise the Directors pursuant to and in accordance with Section 551 of the Companies Act 2006 (the Act), in substitution for all previous authorities to the extent unused, to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company: a) up to an aggregate nominal amount of £2,505,855 (representing approximately one third of the total ordinary share capital in issue at 28 April 2025, being the latest date prior to publication of this notice of meeting); and b) comprising equity securities (as defined in Section 560 (1) of the Act) up to a further aggregate nominal value of £2,505,855 in connection with an offer by way of a rights issue, such authorities to expire at the conclusion of the 2025 Annual General Meeting (AGM) or if earlier, at close of business on 12 September 2025, save that the Company may before such expiry make an offer or agreement which would or might require shares to be allotted or rights to subscribe for or convert any security into shares to be granted after the authority ends. For the purposes of this Resolution, ‘rights issue’ means an offer to: shareholders in proportion (as nearly as may be practicable) to their existing holdings; and holders of other equity securities if this is required by the rights of those securities or, if the Directors consider it necessary, as permitted by the rights of those securities; to subscribe for further securities by means of the issue of a renounceable letter (or other negotiable document) which may be traded for a period before payment for the securities is due, but subject in both cases to such exclusions or other arrangements as the Directors consider necessary or appropriate in relation to treasury shares, fractional entitlements, record dates or legal, regulatory or practical problems in, or under the laws of, any territory. Special resolutions Disapplication of pre-emption rights 12. That if resolution 11 is passed, the Board be authorised to allot equity securities (as defined in the Act) for cash under the authority given by that resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale, such authority to be limited: a) to allotments for rights issues and other pre-emptive issues; and b) to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph (a) above) up to a nominal amount of £751,831; such authority to expire at the conclusion of the 2026 AGM of the Company (or, if earlier, at close of business on 12 September 2026) but, in each case, prior to its expiry the Company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the authority expires and the Board may allot equity securities (and sell treasury shares) under any such offer or agreement as if the authority had not expired. 02 Strategic report 114 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notice of Annual General Meeting continued Notice of Annual General Meeting continued 13. That if resolution 11 is passed, the Board be authorised in addition to any authority granted under resolution 12 to allot equity securities (as defined in the Act) for cash under the authority given by that resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale, such authority to be limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of £751,831 such authority to be used only for the purposes of financing (or refinancing, if the authority is to be used within 12 months after the original transaction) a transaction which the Board of the Company determines to be either an acquisition or a specified capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this notice; such authority to expire at the end of the 2026 AGM of the Company (or, if earlier, at close of business on 12 September 2026) save that, in each case, the Company may before such expiry make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the authority expires and the Board may allot equity securities (and sell treasury shares) under any such offer or agreement as if the authority had not expired. Authority to purchase of own shares. 14. That the Company be generally and unconditionally authorised for the purpose of Section 701 of the Act to make market purchases (as defined in Section 693 of the Act) of ordinary shares of 25 pence each in the capital of the Company (‘ordinary shares’) provided that: a) the maximum number of ordinary shares hereby authorised to be purchased is 3,007,327; b) the minimum price (exclusive of expenses) which may be paid for such ordinary shares is 25 pence per share, being the nominal amount thereof; c) the maximum price (exclusive of expenses) which may be paid for such ordinary shares shall be an amount equal to the higher of: (i) 5% above the average of the middle market quotations for such shares taken from The London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the purchase is made; and (ii) the price of the last independent trade of an ordinary share and the highest current independent bid for an ordinary share as derived from the London Stock Exchange Trading System (“SETS”); and d) the authority hereby conferred shall (unless previously renewed or revoked) expire at the end of the 2026 AGM, save that the Company may before such expiry make a contract or agreement to make a market purchase of its own ordinary shares which will or may be executed wholly or partly after the expiry of such authority and the Company may purchase such shares as if the authority conferred hereby had not expired. By order of the Board PRISM COSEC LIMITED Company Secretary 28 April 2025 Registered in England and Wales No. 124855 Registered office: Station Estate Station Road Tadcaster North Yorkshire LS24 9SG 02 Strategic report 115 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Explanatory Notes Relating to the Resolutions Resolutions 1 to 11 are ordinary resolutions; resolutions 12 to 14 are special resolutions. To be passed, ordinary resolutions require more than 50% of votes cast to be in favour of the resolution whilst special resolutions require at least 75% of the votes cast to be in favour of the resolution. Ordinary Resolutions To receive the Annual Report and Accounts 2024 Resolution 1 is a standard resolution. The Companies Act 2006 requires the Directors to lay before the Company in a general meeting copies of the Company’s annual accounts, and the Directors’ report and auditor’s report on those accounts. The Annual Report and Accounts 2024, which includes this Notice of Annual General Meeting, will be available online at www.mpac-group.com. Remuneration Report Resolution 2 seeks shareholders’ approval for the Directors’ Remuneration report which is set out on pages 41 to 42 of the Annual Report and Accounts 2024, for the year ended 31 December 2024. The vote is advisory only. Re-election of Directors In accordance with best practice in corporate governance, resolutions 3 to 8 seek approval for the re-election of all Directors who served during the year. Biographical information for each of the Directors is provided on page 30 of the Annual Report and Accounts 2024. The Board has no hesitation in recommending the re-election of the Directors to shareholders. In making these recommendations, the Board confirms that it has given careful consideration to the Board’s balance of skills, knowledge and experience and is satisfied that each of the Directors putting themselves forward for re-election has sufficient time to discharge their duties effectively, taking into account their other commitments. Auditors The auditors of a company must be appointed or re-appointed at each general meeting at which the accounts are laid. Resolution 9 seeks approval to re-appoint PKF Littlejohn LLP as the Company’s auditors until the conclusion of the next general meeting of the Company at which accounts are laid. Resolution 10 seeks consent for the Audit Committee to determine the remuneration of the auditors. Directors’ authority to allot shares. Resolution 11 seeks consent for shareholders to grant the Directors authority to allot shares or grant rights to subscribe for or convert securities into shares, up to a maximum aggregate nominal value of £5,011,710, which is approximately two-thirds of the nominal value of the issued ordinary share capital of the Company as at 28 April 2025, being the latest practicable date prior to the publication of this notice. £2,505,855 of this authority is reserved for a fully pre-emptive rights issue only which is the maximum permitted amount under best practice corporate governance guidelines. The authority will expire at the next Annual General Meeting of the Company or if earlier, at close of business on 12 September 2026. The Directors have no current intention of exercising such authority and will exercise this power only when they believe that such exercise is in the best interests of the shareholders. Special resolutions Disapplication of pre-emption rights Resolutions 12 and 13 will be proposed as special resolutions, each requiring a majority of 75% of those voting to be in favour. If the Directors wish to allot new shares and other equity securities, or sell treasury shares, for cash (other than in connection with an employee share scheme), company law requires that these shares are offered first to shareholders in proportion to their existing holdings. Resolution 12 deals with the authority of the Directors to allot new shares or other equity securities pursuant to the authority given by resolution 11, or sell treasury shares, for cash without the shares or other equity securities first being offered to shareholders in proportion to their existing holdings. Such authority shall only be used in connection with a pre-emptive offer, or otherwise, up to an aggregate nominal amount of £751,831, being approximately 10% of the total issued ordinary share capital of the Company as at 28 April 2025. The Pre-Emption Group Statement of Principles 2022 issued on 4 November 2022 supports the annual disapplication of pre-emption rights in respect of allotments of shares and other equity securities (and sales of treasury shares for cash) representing no more than an additional 10% of issued ordinary share capital (exclusive of treasury shares), to be used only in connection with an acquisition or specified capital investment. The Pre-Emption Group’s Statement of Principles defines ‘specified capital investment’ as meaning one or more specific capital investment related uses for the proceeds of an issuance of equity securities, in respect of which sufficient information regarding the effect of the transaction on the Company, the assets that are the subject of the transaction and (where appropriate) the profits attributable to them is made available to shareholders to enable them to reach an assessment of the potential return. Accordingly, and in line with the template resolutions published by the Pre-Emption Group, resolution 13 seeks to authorise the Directors to allot new shares and other equity securities pursuant to the authority given by resolution 11, or sell treasury shares, for cash up to a further nominal amount of £751,831, being approximately 10% of the total issued ordinary share capital of the Company as at 28 April 2025, only in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue. If the authority given in resolution 13 is used, the Company will publish details of the placing in its next Annual Report. If these resolutions are passed, the authorities will expire at the end of the 2026 Annual General Meeting or at close of business on 12 September 2026, whichever is the earlier. The Board considers the authorities in resolutions 12 and 13 to be appropriate in order to allow the Company flexibility to finance business opportunities or to conduct a rights issue or other pre-emptive offer without the need to comply with the strict requirements of the statutory pre-emption provisions. 02 Strategic report 116 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Notice of Annual General Meeting continued Notice of Annual General Meeting continued Authority to purchase own shares. Resolution 14 seeks authority for the Company to make market purchases of its own ordinary shares up to a maximum number of 3,007,327 ordinary shares, representing approximately 10% of the issued ordinary share capital at 28 April 2025. The authority requested would replace a similar authority granted last year and would expire at the end of the 2026 Annual General Meeting, or if earlier, at close of business on 12 September 2026 In reaching a decision to purchase ordinary shares, the Directors will take account of the Company’s cash resources and capital and the general effect of such purchase on the Company’s business. The authority would only be exercised by the Directors if they considered it to be in the best interests of the shareholders generally and if the purchase could be expected to result in an increase in earnings per ordinary share. Notes Relating to the Notice The following notes explain your general rights as a shareholder and your right to vote at this Meeting or to appoint someone else to vote on your behalf. Entitlement to attend and vote. 1. To be entitled to vote at the Meeting (and for the purpose of the determination by the Company of the number of votes they may cast), shareholders must be registered in the Register of Members of the Company at close of trading on Tuesday 10 June 2025, or if the meeting is adjourned, close of business on the day which is two days’ prior to the adjourned meeting. In each case, changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the Meeting. Voting at the Meeting 2. Voting at the Meeting will be by way of poll rather than on a show of hands. This is a more transparent method of voting as shareholder votes are counted according to the number of shares held and will help to ensure an exact and definitive result. If you will not be participating in the meeting in person and wish to vote in advance, you may appoint a proxy as further detailed in notes 3 to 11 below. Appointment of proxies 3. Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights to vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided that each proxy is appointed to exercise the rights attached to a different ordinary share or ordinary shares held by that shareholder. A proxy need not be a shareholder of the Company. 4. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s Register of Members in respect of the joint holding (the first named being the most senior). 5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. 6. In order to reduce the Company’s environmental impact, our intention is to remove paper from the voting process as far as possible. You are therefore asked to vote in one of the following ways: Register your vote online through Investor Centre app or web browser at https://uk.investorcentre.mpms.mufg.com/. You will need your investor code which is printed on your share certificate or may be obtained from the Company’s registrar, MUFG Corporate Markets via email on shareholderenquiries@cm.mpms.mufg.com or on 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. Investor Centre is a free app for smartphone and tablet provided by MUFG Corporate Markets (the company’s registrar). It allows you to securely manage and monitor your shareholdings in real time, take part in online voting, keep your details up to date, access a range of information including payment history and much more. The app is available to download on both the Apple App Store and Google Play, or by scanning the relevant QR code below. CREST members may use the CREST electronic proxy appointment service as detailed in note 9 below. Proxymity Voting – if you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity. io. Your proxy must be lodged by 12noon on Tuesday 10 June 2025 in order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time of the adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity platform may be revoked completely by sending an authenticated message via the platform instructing the removal of your proxy vote. If you prefer, you may request a hard copy form MUFG Corporate Markets using the details provided above and return it to MUFG Corporate Markets, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL All proxy appointments, whether electronic or hard copy, must be received by the Company’s registrar no later than 12 noon. on Tuesday 10 June 2025 (or, in the event that the meeting is adjourned, no later than 48 hours (excluding any part of the day that is not a working day) before the time of any adjourned meeting). 02 Strategic report 117 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 7. If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged. 8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available from www.euroclear.com CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 9. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & International Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID RA10) by the latest time for receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. 10. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & International Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. Corporate representatives 11. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder provided that no more than one corporate representative exercises powers in relation to the same shares. Issued shares and total voting rights 12. As at 28 April 2025 (being the latest practicable business day prior to the publication of this Notice), the Company’s ordinary issued share capital consists of 30,073,273 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 28 April 2025 are 30,073,273. Questions 13. We always welcome questions from our shareholders and we request that shareholders submit their questions to the Board before the Meeting. We will ensure that answers to questions are placed on the Company’s website. You can submit questions up until 11 a.m. on 10 June 2025 by emailing them to cosec@mpac-group.com Communication 14. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this Notice or any related documents (including the form of proxy) to communicate with the Company for any purposes other than those expressly stated. Website giving information regarding the meeting. 15. A copy of this Notice can be found on the Company’s website at www.mpac-group.com. 02 Strategic report 118 27 Corporate governance 54 Financial statements Mpac Group plc Annual Report & Accounts 2024 Corporate information Registered office Station Estate Station Road Tadcaster North Yorkshire LS24 9SG Head office – Coventry 2 Argosy Court Coventry CV3 4GA Tel: +44 (0)2476 421100 Email: ho@mpac-group.com Registered number: 124855 Secretary Prism Cosec Limited Auditors PKF Littlejohn LLP 15 Westferry Circus Canary Wharf London E14 4HD Nominated Advisor & Broker Shore Capital and Corporate Limited 57 St James’s Street London SW1A 1LD Joint Broker Panmure Liberum Capital Limited Ropemaker Place Level 12 25 Ropemaker Street London EC2Y 9LY Registrars MUFG Pension & Market Services Central Square 29 Wellington Street Leeds LS1 4DL Tel: +44 (0)371 664 0300 www.signalshares.com Share price Available from: FT Cityline – tel: +44 (0)905 817 1690 Certain national newspapers Financial PR Hudson Sandler LLP 25 Charterhouse Square London EC1M 6AE Website Further information is available at www.mpac-group.com Timetable Annual General Meeting 12 June 2025 Payment dates for preference dividend 30 June 2025 and 31 December 2025 Half-year announcement September 2025 Designed and produced by Printed sustainably in the UK by Pureprint, a CarbonNeutral® company with FSC® chain of custody and an ISO 14001- certified environmental management system recycling over 99% of all dry waste. Mpac Group plc Station Estate Station Road Tadcaster North Yorkshire LS24 9SG Tel: +44 (0)2476 421100 Email: ho@mpac-group.com mpac-group.com