TIDMMSLH
RNS Number : 7004G
Marshalls PLC
06 March 2015
Preliminary results for the year ended 31 December 2014
Marshalls plc, the specialist Landscape Products Group,
announces its full year results
Financial Highlights Year ended Year ended Increase
31 December 2014* 31 December 2013 %
Continuing operations:
Revenue GBP358.5m GBP307.4m 17
EBITDA GBP38.5m GBP30.2m 27
Operating profit GBP25.3m GBP16.1m 57
Profit before tax GBP22.4m GBP13.0m 72
Basic EPS 10.13p 6.94p 46
Basic EPS on total operations 10.13p 7.20p 41
Dividends declared and
paid 5.50p 5.25p
Final dividend recommended 4.00p 3.50p 14
440
ROCE 12.5% 8.1% basis points
Net debt to EBITDA 0.8 times 1.2 times
* After GBP2.0m restructuring costs in the Belgium business in
2014
Highlights:
-- Good revenue growth of 17% to GBP358.5 million (2013:
GBP307.4 million) driven by volume growth of 13%
-- Improvement in operating margins to 7.1% (2013: 5.2%)
-- Strong profit before tax growth of 72% to GBP22.4 million
(2013: GBP13.0 million) with benefits being delivered from
operational gearing
-- Return on capital employed improved 54% (440 basis points) to
12.5% (2013: 8.1%) due to operational flexibility, manufacturing
efficiency and effective management of working capital
-- EPS from continuing operations up 46% to 10.13p (2013: 6.94p)
-- Final dividend increased by 14% to 4.00p (2013: 3.50p) per share
Current priorities:
-- To increase output to meet growing demand and to deliver benefits from operational gearing
-- To further strengthen the Marshalls brand by focusing on
innovation, service and new product development
-- To grow our business both organically and selectively through acquisitions
-- To continue to develop and invest in our strategic growth
initiatives, particularly in Rail, Newbuild Housing, Water
Management and Street Furniture
-- To develop and grow the International business profitably
Commenting on these results, Martyn Coffey, Chief Executive,
said:
"2014 has been a strong year for Marshalls with significant
revenue and profit growth. Trading conditions remain positive and
the Group continues to experience strong order intake and sales
growth in all its end markets.
The market outlook remains strong with the CPA's current
forecast for construction output standing at 5.3 per cent growth in
2015 and growth of 4.2 per cent, 3.4 per cent and 3.9 per cent in
the following 3 years.
2015 has started well with sales in January and February up 13
per cent against the prior year comparatives. We are planning for
further progress in 2015 against a background of continuing
favourable market conditions."
Enquiries:
Martyn Coffey Chief Executive Marshalls plc 01422 314777
Jack Clarke Finance Director Marshalls plc 01422 314777
Jon Coles
Simon Maine Brunswick Group 0207 404 5959
Group Results
Marshalls' revenue, from continuing operations, for the year
ended 31 December 2014 was up 17 per cent at GBP358.5 million
(2013: GBP307.4 million). Revenue for the six months ended 31
December 2014 was up 18 per cent compared with the second half of
2013. This continued growth in the second half has been seen in the
Public Sector and Commercial and also the Domestic end markets.
Sales to the Public Sector and Commercial end market, which
represent approximately 64 per cent of Group sales, were up 20 per
cent for the year, on a continuing basis, compared with 2013.
Sales to the UK Domestic end market, which represent
approximately 30 per cent of Group sales, were up 9 per cent
compared with the prior year. The survey of domestic installers at
the end of February 2015 revealed order books of 9.0 weeks (2014:
9.3 weeks).
Operating profit from continuing operations increased strongly
to GBP25.3 million (2013: GBP16.1 million). EBITDA from continuing
operations increased to GBP38.5 million (2013: GBP30.2
million).
International revenue grew by 27 per cent during 2014 and is now
almost 6 per cent of Group sales. Activity levels in Belgium have
been encouraging despite the subdued market background in mainland
Europe. During the second half we have taken action to ensure that
the operations in Belgium are better aligned with market
opportunities and this has resulted in a charge of GBP2 million in
relation to the restructuring of Marshalls NV.
Return on capital employed has increased markedly to 12.5 per
cent (2013: 8.1 per cent). Capital expenditure investment has
increased to GBP12.0 million from GBP6.1 million in 2013 and net
debt has reduced to GBP30.5 million (2013: GBP35.6 million).
Net finance costs were GBP2.9 million (2013: GBP3.1 million) and
interest was covered 8.8 times (2013: 5.3 times). External charges
were GBP2.8 million and, in addition, there was an IAS 19 notional
interest debit of GBP0.1 million (2013: GBP0.6 million credit) in
relation to the Group's Pension Scheme.
The effective tax rate on continuing operations was 18.7 per
cent (2013: 0.5 per cent), benefiting from a further reduction in
the rate of corporation tax and a credit arising on the
finalisation of prior year tax computations. The effective tax rate
in 2013 also benefited from a corporation tax rate reduction and a
prior year credit. An additional deferred tax credit of GBP2.6
million arose in 2013 due to substantively enacted reductions in
the rate of corporation tax to 20 per cent by April 2015. The Group
paid GBP4.0 million of corporation tax during the year. Deferred
tax of GBP0.6 million in relation to the actuarial loss arising on
the defined benefit pension scheme in the year has been taken to
the Consolidated Statement of Comprehensive Income.
Basic EPS from continuing operations was 10.13 pence (2013: 6.94
pence), an increase of 46 per cent. Reported EPS from total
operations was 10.13 pence (2013: 7.20 pence).
Operating Performance
Marshalls is a leading, trusted brand with a strong market
position and maintains clear values and excellent sustainability
and environmental credentials. The Group has maintained its
national geographic coverage and retains industry-leading customer
service.
Marshalls' operating flexibility has enabled manufacturing
output to be increased without significant increase in the Group's
cost base and this is delivering benefits from our operational
gearing. The Group's underlying operating margin has increased from
5.2 per cent to 7.6 per cent (before restructuring costs) during
the year and volume growth of 13 per cent in 2014 has been
significantly ahead of Construction Products Association ("CPA")
market forecasts.
The Group operates its own concrete production facilities as
well as quarries throughout the UK producing paving, walling,
masonry and cladding products and is supported by a centrally
managed logistics and distribution operation. The structure gives
the Group operational flexibility through the optimisation of the
production and logistics footprint to provide nationwide lowest
cost to market products.
In the UK, the Group has a unique manufacturing network of 13
concrete manufacturing sites with enough capacity to absorb medium
term demand and the opportunity for further capacity and capability
investment. The well invested capital equipment provides the
ability to manufacture products for both the Public Sector and
Commercial and the UK Domestic end markets and this operational
flexibility remains a key objective. Manufactured products from
this network are combined with ethically sourced natural stone
products imported from India, China and Vietnam and are supplied to
distributors' depots or, at their request, direct to site.
The Group operates its own fleet of 44-tonne delivery vehicles
equipped with crane offloading capability and is in the process of
expanding this further in 2015 in order to continue to guarantee
continuity of our high service levels, as the construction industry
is currently experiencing shortages of both vehicles and drivers.
This manufacturing, sourcing and distribution network enables the
Group to supply products to 97 per cent of its customers within a 2
hour drive. The proximity to our customers enables costs to be
controlled and unparalleled service levels to be maintained.
There has been a significant performance improvement in our
smaller UK businesses during 2014 and they have collectively
delivered volume revenue growth of GBP9.3 million and related
profit growth of GBP2.7 million. These businesses include Street
Furniture, Mineral Products and Stone Cladding. Stone Cladding is a
particular growth area and Marshalls has been supplying stone for a
prestigious office building in the City of London.
Internationally the Group has placed a key geographic focus on
northern Europe, North America and the Middle East. Marshalls now
has a sales presence in North America and is supplying natural
stone to commercial projects via distribution relationships with a
small number of US companies. The Group continues to supply a
number of high profile projects in the Middle East, in particular
focusing on driving sales in the United Arab Emirates, Qatar and
Saudi Arabia. In 2014, Marshalls supplied King Abdulaziz
International Airport in Saudi Arabia with GBP1 million of bespoke
lighting, as well as paving to the world's largest shopping centre
in Kuwait.
Product Innovation
The Group continues to target those parts of the market where
higher levels of growth are expected, such as Rail, Newbuild
Housing, Water Management and Street Furniture.
In 2014, the Commercial side of the business extended its water
management range with a number of innovative new drainage products,
including Mono Beany, a market-first concrete combined kerb and
drainage product. Marshalls has also continued to develop its range
of market-leading permeable paving products.
On the Domestic side there has been a contemporary extension to
the Drivesys range of patented driveway products, as well as the
launch of Pavesys, the patio version of this product range. As well
as being technically superior, these products are 50 per cent
quicker to install assisting installers with lengthy order
books.
Marshalls has added a new material to its Domestic range with
vitrified paving. As well as being aesthetically pleasing this
material is exceptionally hard wearing and has ultra low water
absorbency qualities meaning that it will not become discoloured.
This product is already proving to be exceptionally popular in
northern Europe.
Marshalls has a world class Manufacturing, Innovation and
Development team of engineers and technicians which is integrated
to provide competitive advantage through combining machinery design
and installation with process improvement. This capability and
competency is a key component of the Group's success and will be
invested in further to accelerate new product development across
the business in 2015.
Current Priorities
The Group has a number of current priorities that will grow and
develop the business this year and into the future.
The current focus for Marshalls is to maximise the benefits from
the improved market conditions in order to generate volume growth
and benefit from operational gearing. We have already seen
operating margins improve during 2014 and a key objective will be
to deliver further improvement in profit margins in all businesses
and end markets. We continue to experience strong growth in a
number of key areas, for example, Rail, Newbuild Housing, Water
Management and Street Furniture.
The operational priorities remain service, quality, design,
innovation and a commitment to research and development,
sustainability and an integrated product offer.
The Group has continued to focus on innovation and new product
development to drive sales growth in areas of particular
opportunity and to further strengthen and differentiate the
Marshalls brand. The Group intends to invest further resource over
the medium term to drive further innovation and new product
development. One specific area of opportunity is "intelligent
street furniture," which would see the incorporation of new
technology into street lighting systems and items such as bollards
and bins. The technology facilitates the communication of
information; for example, bins that can signal when they need
emptying and bollards that can inform pedestrians where to go.
Developing the International market is also a key priority and
the Group will continue to invest in its International structures
in order to grow this part of the business profitably and to
develop opportunities to promote growth.
The Group is well positioned to grow both organically and
through acquisition. We will put increasing focus on our growth
objectives in 2015 and 2016.
Balance Sheet and Net Debt
Net assets at 31 December 2014 were GBP181.9 million (2013:
GBP175.4 million).
At 31 December 2014 net debt was GBP30.5 million (2013: GBP35.6
million) resulting in gearing of 16.8 per cent (2013: 20.3 per
cent). This reduction is due to the operating cash flow impact of
improved trading together with a continuation of the close control
of inventory and the effective management of working capital. Cash
management continues to be a high priority.
The Group has a strong balance sheet with a good range of medium
term bank facilities available to fund investment initiatives to
generate growth as market conditions improve.
Risk management has been a key focus for the Group's Pension
Scheme over recent years and the actions taken by the Group and the
Pension Trustee have reduced actuarial volatility and risk. In
accordance with the Scheme specific funding and recovery plan, the
Group made cash contributions of GBP4.6 million into the Scheme in
the year ended 31 December 2014. The fair value of the Scheme
assets at 31 December 2014 was GBP312.5 million (2013: GBP258.6
million) and the present value of the Scheme liabilities is
GBP309.1 million (2013: GBP262.9 million). This has given rise to
an accounting surplus of GBP3.4 million (2013: GBP4.3 million
deficit) at the balance sheet date.
Dividends
The Group has a progressive dividend policy with the objective
of achieving up to 2 times dividend cover over the business cycle.
As earnings increase we plan to share the increase between
strengthening cover and progressively raising the rate of dividend.
Accordingly the Board is recommending a final dividend of 4.00
pence (2013: 3.50 pence) per share which, together with the interim
dividend of 2.00 pence (2013: 1.75 pence ) per share, makes a
combined dividend of 6.00 pence (2013: 5.25 pence ) per share. This
represents dividend cover of 1.7 times (2013: 1.3 times) and an
increase in the total dividend for the year of 14 per cent.
Outlook
2014 has been a strong year for Marshalls with significant
revenue and profit growth. Trading conditions remain positive and
the Group continues to experience strong order intake and sales
growth in all its end markets.
The market outlook remains strong with the CPA's current
forecast for construction output standing at 5.3 per cent growth in
2015 and growth of 4.2 per cent, 3.4 per cent and 3.9 per cent in
the following 3 years.
2015 has started well with sales in January and February up 13
per cent against the prior year comparatives. We are planning for
further progress in 2015 against a background of continuing
favourable market conditions.
Martyn Coffey
Chief Executive
MARSHALLS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
Notes 2014 2013
GBP'000 GBP'000
Revenue 2 358,516 307,390
Net operating costs 3 (333,211) (291,300)
Operating profit 2 25,305 16,090
Financial expenses 4 (2,889) (3,649)
Financial income 4 5 585
Profit before tax 2 22,421 13,026
Income tax expense 5 (4,198) (67)
Profit for the financial period before post
tax profit of
discontinued operations 18,223 12,959
Post tax profit of discontinued operations 6 - 503
Profit for the financial period 18,223 13,462
Profit for the period
Attributable to:
Equity shareholders of the parent 19,857 14,096
Non-controlling interests (1,634) (634)
18,223 13,462
Earnings per share (total operations):
Basic 7 10.13p 7.20p
Diluted 7 9.89p 7.07p
Earnings per share (continuing operations):
Basic 7 10.13p 6.94p
Diluted 7 9.89p 6.82p
Dividend:
Pence per share 8 5.50p 5.25p
Dividends declared 8 10,791 10,292
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
GBP'000 GBP'000
Profit for the financial period 18,223 13,462
Other comprehensive income / (expense)
Items that will not be reclassified to the Income
Statement:
Remeasurements of the net defined benefit liability 3,244 (18,735)
Deferred tax arising (649) 3,747
Deferred tax on share-based payments 460 176
Corporation tax on share-based payments 332 -
Total items that will not be reclassified to the
Income Statement 3,387 (14,812)
Items that are or may in the future be reclassified
to the Income Statement:
Effective portion of changes in fair value of
cash flow hedges (3,984) 2,787
Fair value of cash flow hedges transferred to
the Income Statement 1,076 (1,447)
Deferred tax arising 582 (286)
Impact of the change in rate of deferred taxation - 275
Foreign currency translation differences - foreign
operations (75) (51)
Foreign currency translation differences - non-controlling
interests (186) 45
Total items that are or may be reclassified subsequently
to the Income
Statement (2,587) 1,323
Other comprehensive income / (expense) for period,
net of income tax 800 (13,489)
Total comprehensive income / (expense) for the
period 19,023 (27)
Attributable to:
Equity shareholders of the parent 20,843 562
Non-controlling interests (1,820) (589)
19,023 (27)
CONSOLIDATED BALANCE SHEET
31 DECEMBER 2014
Notes 2014 2013
Assets GBP'000 GBP'000
Non-current assets
Property, plant and equipment 149,745 154,721
Intangible assets 40,581 41,071
Investment in associates 782 664
Employee benefits 9 3,449 -
Deferred taxation assets 1,394 1,626
195,951 198,082
Current assets
Inventories 67,323 70,807
Trade and other receivables 32,254 32,373
Cash and cash equivalents 20,320 17,652
119,897 120,832
Total assets 315,848 318,914
Liabilities
Current liabilities
Trade and other payables 63,912 65,882
Corporation tax 4,276 4,802
Interest bearing loans and borrowings 85 3,453
68,273 74,137
Non-current liabilities
Interest bearing loans and borrowings 50,715 49,768
Employee benefits 9 - 4,347
Deferred taxation liabilities 14,966 15,230
65,681 69,345
Total liabilities 133,954 143,482
Net assets 181,894 175,432
Equity
Capital and reserves attributable to equity shareholders
of the parent
Called-up share capital 49,845 49,845
Share premium account 22,695 22,695
Own shares (6,689) (9,512)
Capital redemption reserve 75,394 75,394
Consolidation reserve (213,067) (213,067)
Hedging reserve (2,488) (162)
Retained earnings 254,729 246,944
Equity attributable to equity shareholders
of the parent 180,419 172,137
Non-controlling interests 1,475 3,295
Total equity 181,894 175,432
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
GBP'000 GBP'000
Cash flows from operating activities
Profit for the financial period 18,223 13,462
Income tax expense on continuing operations 4,198 67
Profit on disposal and closure of discontinued
operations - (272)
Income tax expense on discontinued operations - 110
Profit before tax on total operations 22,421 13,367
Adjustments for:
Depreciation 11,982 13,455
Amortisation 1,231 938
Share of results of associates (118) (14)
Gain on sale of property, plant and equipment (360) (131)
Equity settled share-based expenses 2,496 2,353
Financial income and expenses (net) 2,884 3,064
Operating cash flow before changes in working
capital and pension scheme
contributions 40,536 33,032
Increase in trade and other receivables (159) (2,933)
Decrease in inventories 3,102 2,840
(Decrease) / increase in trade and other payables (2,656) 5,146
Operational restructuring costs paid (235) (870)
Pension scheme contributions (4,600) (5,600)
Cash generated from the operations 35,988 31,615
Financial expenses paid (2,840) (3,649)
Income tax paid (4,031) (842)
Net cash flow from operating activities 29,117 27,124
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 3,077 175
Financial income received 5 9
Net proceeds from disposal of discontinued operations - 16,999
Acquisition of property, plant and equipment (11,269) (5,462)
Acquisition of intangible assets (741) (596)
Net cash flow from investing activities (8,928) 11,125
Cash flows from financing activities
Payments to acquire own shares (4,266) -
Net increase / (decrease) in other debt and finance
leases 269 (95)
Decrease in borrowings (2,690) (21,328)
Equity dividends paid (10,791) (10,292)
Net cash flow from financing activities (17,478) (31,715)
Net increase in cash and cash equivalents 2,711 6,534
Cash and cash equivalents at beginning of the
period 17,652 11,101
Effect of exchange rate fluctuations (43) 17
Cash and cash equivalents at end of the period 20,320 17,652
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Attributable to equity holders of the Company
Share Capital Consolid- Non-con-
Share premium Own redemption ation Hedging Retained trolling Total
capital account shares reserve reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Current year
At 1 January
2014 49,845 22,695 (9,512) 75,394 (213,067) (162) 246,944 172,137 3,295 175,432
Total
comprehensive
income /
(expense)
for
the period
Profit for the
financial
period
attributable
to
equity
shareholders
of
the parent - - - - - - 19,857 19,857 (1,634) 18,223
Other
comprehensive
income /
(expense)
Foreign
currency
translation
differences - - - - - - (75) (75) (186) (261)
Effective
portion
of
changes in
fair
value of
cash flow
hedges - - - - - (3,984) - (3,984) - (3,984)
Net change in
fair value of
cash flow
hedges
transferred
to
the Income
Statement - - - - - 1,076 - 1,076 - 1,076
Deferred tax
arising - - - - - 582 - 582 - 582
Defined
benefit
plan
actuarial
gains - - - - - - 3,244 3,244 - 3,244
Deferred tax
arising - - - - - - (649) (649) - (649)
Deferred tax
on
share-based
payments - - - - - - 460 460 - 460
Corporation
tax
on share-
based
payments - - - - - - 332 332 - 332
Total other
comprehensive
income /
(expense) - - - - - (2,326) 3,312 986 (186) 800
Total
comprehensive
income /
(expense)
for
the period - - - - - (2,326) 23,169 20,843 (1,820) 19,023
Transactions
with
owners,
recorded
directly in
equity
Contributions
by and
distributions
to
owners
Share-based
expenses - - - - - - 2,496 2,496 - 2,496
Dividends to
equity
shareholders - - - - - - (10,791) (10,791) - (10,791)
Purchase of
own
shares - - (4,266) - - - - (4,266) - (4,266)
Disposal of
own
shares - - 7,089 - - - (7,089) - - -
-
Total
contributions
by
and
distributions
to
owners - - 2,823 - - - (15,384) (12,561) - (12,561)
Total
transactions
with
owners of the
Company - - 2,823 - - (2,326) 7,785 8,282 (1,820) 6,462
At 31 December
2014 49,845 22,695 (6,689) 75,394 (213,067) (2,488) 254,729 180,419 1,475 181,894
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Attributable to equity holders of the Company
Share Capital Consolid- Non-con-
Share premium Own redemption ation Hedging Retained trolling Total
capital account shares reserve reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Prior year
At 1 January
2013 49,845 22,695 (9,571) 75,394 (213,067) (1,216) 255,610 179,690 3,884 183,574
Total
comprehensive
income /
(expense)
for
the period
Profit for the
financial
period
attributable
to
equity
shareholders
of
the parent - - - - - - 14,096 14,096 (634) 13,462
Other
comprehensive
income /
(expense)
Foreign
currency
translation
differences - - - - - - (51) (51) 45 (6)
Effective
portion
of
changes in
fair
value of
cash flow
hedges - - - - - 2,787 - 2,787 - 2,787
Net change in
fair value of
cash flow
hedges
transferred
to
the Income
Statement - - - - - (1,447) - (1,447) - (1,447)
Deferred tax
arising - - - - - (286) - (286) - (286)
Defined
benefit
plan
actuarial
gains - - - - - - (18,735) (18,735) - (18,735)
Deferred tax
arising - - - - - - 3,747 3,747 - 3,747
Deferred tax
on
share-based
expenses - - - - - - 176 176 - 176
Impact of the
change in
rate of
deferred
taxation - - - - - - 275 275 - 275
Total other
comprehensive
income /
(expense) - - - - - 1,054 (14,588) (13,534) 45 (13,489)
Total
comprehensive
income /
(expense)
for
the period - - - - - 1,054 (492) 562 (589) (27)
Transactions
with
owners,
recorded
directly in
equity
Contributions
by and
distributions
to
owners
Share-based
expenses - - - - - - 2,177 2,177 - 2,177
Dividends to
equity
shareholders - - - - - - (10,292) (10,292) - (10,292)
Disposal of
own
shares - - 59 - - - (59) - - -
-
Total
contributions
by
and
distributions
to
owners - - 59 - - - (8,174) (8,115) - (8,115)
Total
transactions
with
owners of the
Company - - 59 - - 1,054 (8,666) (7,553) (589) (8,142)
At 31 December
2013 49,845 22,695 (9,512) 75,394 (213,067) (162) 246,944 172,137 3,295 175,432
MARSHALLS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
CONSOLIDATED NOTES
FOR THE YEAR ENDED 31 DECEMBER 2014
1 Basis of preparation
Whilst the Financial Information included in this Preliminary
Announcement has been prepared on the basis of the requirements of
IFRSs in issue, as adopted by the European Union and effective at
31 December 2014, this announcement does not itself contain
sufficient information to comply with IFRS. The Group expects to
publish full Consolidated Financial Statements in April 2015.
The Financial Information set out in this Preliminary
Announcement does not constitute the Company's Consolidated
Financial Statements for the years ended 31 December 2014 or 2013,
but is derived from those Financial Statements. Statutory Financial
Statements for 2013 have been delivered to the Registrar of
Companies and those for 2014 will be delivered following the
Company's Annual General Meeting. The auditor, KPMG LLP, has
reported on those Financial Statements. The audit reports were
unqualified, did not draw attention to any matters by way of
emphasis without qualifying the reports and did not contain
statements under Section 498(2) or (3) of the Companies Act 2006 in
respect of the Financial Statements for 2014 or 2013.
The Consolidated Financial Statements have been prepared in
accordance with IFRSs as adopted for use in the EU. The Group has
applied all accounting standards and interpretations issued by the
IASB and International Financial Reporting Committee relevant to
its operations and which are effective in respect of these
Financial Statements.
The following new accounting standards and amendments to
standards are mandatory and have been adopted for the first time in
the year ended 31 December 2014:
IFRS 10 - "Consolidated Financial Statements" and IAS 27 -
"Separate Financial Statements", IFRS 11 - "Joint Arrangements" and
IAS 28 - "Investments in Associated and Joint Ventures". These are
part of a new suite of standards on consolidation and related
standards, replacing the existing accounting for subsidiaries and
joint ventures (now joint arrangements) and making limited
amendments in relation to associates.
IFRS 12 - "Disclosure of Interest in Other Entities". This
contains the disclosure requirements for entities that have
interests in subsidiaries, joint arrangements (i.e. joint
operations or joint ventures), associates and/or unconsolidated
structured entities.
These standards have not had a material impact on the
Consolidated Financial Statements.
Details of the Group's funding position are set out in Note 11
and are subject to normal covenant arrangements. The Group's
on-demand overdraft facility is reviewed on an annual basis and the
current arrangements were renewed and signed on 16 July 2014. In
the opinion of the Directors there are sufficient unutilised
facilities held which mature after 12 months. The Group's
performance is dependent on economic and market conditions, the
outlook for which is difficult to predict. Based on current
expectations, the Group's cash forecasts continue to meet half-year
and year end bank covenants and there is adequate headroom which is
not dependent on facility renewals. The Directors believe that the
Group is well placed to manage its business risks successfully.
Accordingly, they continue to adopt the going concern basis in
preparing the Consolidated Financial Statements.
The Consolidated Financial Statements are prepared on the
historical cost basis except that the following assets and
liabilities are stated at their fair value: derivative financial
instruments and liabilities for share-based payments.
The accounting policies have been applied consistently
throughout the Group for the purposes of these Consolidated
Financial Statements and are also set out on the Company's website
(www.marshalls.co.uk).
The Consolidated Financial Statements are presented in sterling,
rounded to the nearest thousand.
The preparation of financial statements in conformity with
adopted IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision
affects only that period, or in the period of the revision and
future periods if the revision affects both current and future
periods.
2 Segmental analysis
Segment revenues and results
2014 2013
Landscape Landscape
Products Other Total Products Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 279,500 83,941 363,441 242,386 69,938 312,324
Inter-segment revenue (194) (4,731) (4,925) (87) (4,847) (4,934)
External revenue 279,306 79,210 358,516 242,299 65,091 307,390
Segment operating
profit 36,066 (4,549)* 31,517 25,591 (4,850) 20,741
Unallocated administration
costs (6,330) (4,665)
Share of profits
of associates 118 14
Operating profit 25,305 16,090
Finance charges
(net) (2,884) (3,064)
Profit before tax 22,421 13,026
Taxation (4,198) (67)
Profit after tax 18,223 12,959
*After charging GBP1,995,000 in respect of restructuring costs
in the Belgium business.
The Landscape Products reportable segment operates a national
manufacturing plan that is structured around a series of production
units throughout the UK, in conjunction with a single logistics and
distribution operation. A national planning process supports sales
to both of the key end markets, namely the UK Domestic and Public
Sector and Commercial end markets and the operating assets produce
and deliver a range of broadly similar products that are sold into
each of these end markets. Within the Landscape Products operating
segment the focus is on the one integrated production, logistics
and distribution network supporting both end markets.
Included in "Other" are the Group's Street Furniture, Mineral
Products, Stone Cladding and International operations which do not
currently meet the IRFS 8 reporting requirements.
The accounting policies of the Landscape Products operating
segment are the same as the Group's accounting policies. Segment
profit represents the profit earned without allocation of the share
of profit of associates and certain central administration costs
that are not capable of allocation. Centrally administered overhead
costs that relate directly to the reportable segment are included
within the segment's results.
Segment assets
2014 2013
GBP'000 GBP'000
Fixed assets and inventory:
Landscape Products 156,509 163,276
Other 60,559 62,252
Total segment fixed assets and inventory 217,068 225,528
Unallocated assets 98,780 93,386
Consolidated total assets 315,848 318,914
For the purpose of monitoring segment performance and allocating
resources between segments the Group's Chief Operating Decision
Maker ("CODM") monitors the tangible fixed assets and inventory.
Assets used jointly by reportable segments are not allocated to
individual reportable segments.
Depreciation and amortisation Fixed asset additions
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Landscape Products 9,919 10,467 7,994 3,243
Other 3,294 3,670 4,016 2,815
13,213 14,137 12,010 6,058
2014 2013
GBP'000 GBP'000
United Kingdom 337,475 290,855
Rest of the World 21,041 16,535
358,516 307,390
The Group's revenue is subject to seasonal fluctuations
resulting from demand from customers. In particular, demand is
higher in the summer months. The Group manages the seasonal impact
through the use of a seasonal working capital facility.
3 Net operating costs
2014 2013
GBP'000 GBP'000
Raw materials and consumables 137,250 117,176
Changes in inventories of finished goods and work
in progress (3,484) 1,470
Personnel costs 93,439 80,549
Depreciation - owned 11,907 13,041
- leased 75 158
Amortisation of intangible assets 1,231 938
Own work capitalised (1,473) (1,071)
Other operating costs 94,910 80,425
International "start-up" costs - 84
Restructuring costs in Marshalls NV 1,995 -
Operating costs 335,850 292,770
Other operating income (2,161) (1,325)
Net gain on asset and property disposals (360) (131)
Share of results of associates (118) (14)
Net operating costs 333,211 291,300
4 Financial expenses and income
2014 2013
GBP'000 GBP'000
(a) Financial expenses
Interest expense on defined benefit pension scheme 48 -
Interest expense on bank loans, overdrafts and
loan notes 2,835 3,638
Finance lease interest expense 6 11
2,889 3,649
(b) Financial income
Expected return on the defined benefit pension
scheme - 576
Interest receivable and similar income 5 9
5 585
5 Income tax expense
2014 2013
GBP'000 GBP'000
Current tax expense
Current year 5,670 4,251
Adjustments for prior years (1,834) (1,642)
3,836 2,609
Deferred taxation expense
Origination and reversal of temporary differences:
Current year (319) (2,944)
Adjustments for prior years 681 402
Income tax expense in the Consolidated Income
Statement (continuing
operations) 4,198 67
Tax on discontinued operations - 210
Total tax expense 4,198 277
% 2014 % 2013
GBP'000 GBP'000
Reconciliation of effective tax
rate
Profit before tax:
Continuing operations 100.0 22,421 100.0 13,026
Tax using domestic corporation
tax rate 21.5 4,821 23.3 3,051
Disallowed amortisation of intangible
assets 0.1 20 0.3 33
Net income / (expenditure) not
taxable 2.3 510 6.4 839
Adjustments for prior years (5.2) (1,153) (9.5) (1,240)
Impact of the change in the rate
of
corporation tax on deferred
taxation - - (20.0) (2,616)
18.7 4,198 0.5 67
The net amount of deferred taxation (debited) / credited to the
Consolidated Statement of Comprehensive Income in the year was
GBP393,000 credit (2013: GBP3,912,000 credit).
6 Discontinued operations
On 30 April 2013 the Group completed the sale of aggregate
quarries to Breedon Aggregates England Limited for cash
consideration of GBP17.5 million. The assets sold comprised
quarries solely supplying aggregates, sand and gravel. The Group
has retained all of its dimensional stone quarries, some of which
produce aggregate as an ancillary product. The disposed quarries
were the freehold and leasehold quarries at Clearwell, near Lydney,
Gloucestershire, which produces primarily high quality limestone
aggregates and the Group's sand and gravel quarries located at
Dunsville, near Hatfield, South Yorkshire, Astley Moss in Greater
Manchester and Mold in North Wales which operates under the Lloyds
Sand and Gravel trading name and the business carried on from these
quarries. Also included was an option to develop sand and gravel
resources near Saredon, Staffordshire. On 23 August 2013 additional
consideration of GBP1.2 million was received following the
satisfactory completion of a post completion condition. This
condition had required the commissioning of a sand extraction plant
to the satisfaction of the purchaser. The additional consideration,
net of attributable costs, gave rise to a post tax profit of
discontinued operations of GBP0.5 million.
2014 2013
GBP'000 GBP'000
Revenue - 2,989
Net operating costs - (2,648)
Profit before tax - 341
Income tax expense - (110)
Profit after tax - 231
Profit on disposal and closure of discontinued
operations - 272
Net profit attributable to discontinued operations - 503
Basic earnings per share (pence) - 0.26
Diluted earnings per share (pence) - 0.25
7 Earnings per share
Basic earnings per share from total operations of 10.13 pence
(2013: 7.20 pence) per share is calculated by dividing the profit
attributable to ordinary shareholders from total operations, after
adjusting for non-controlling interests, of GBP19,857,000 (2013:
GBP14,096,000) by the weighted average number of shares in issue
during the period of 196,116,404 (2013: 195,742,757).
Basic earnings per share from continuing operations of 10.13
pence (2013: 6.94 pence) per share is calculated by dividing the
profit from continuing operations, after adjusting for
non-controlling interests, of GBP19,857,000 (2013: GBP13,593,000)
by the weighted average number of shares in issue during the year
of 196,116,404 (2013: 195,742,757).
Profit attributable to ordinary shareholders
2014 2013
GBP'000 GBP'000
Profit from continuing operations 18,223 12,959
Profit from discontinued operations - 503
Profit for the financial period 18,223 13,462
Loss attributable to non-controlling interests 1,634 634
Profit attributable to ordinary shareholders 19,857 14,096
Weighted average number of ordinary shares
2014 2013
Number Number
Number of issued ordinary shares (at beginning
of the period) 199,378,755 199,378,755
Effect of shares transferred into employee
benefit trust (3,262,351) (1,210,998)
Effect of treasury shares acquired - (2,425,000)
Weighted average number of ordinary shares
at end of the period 196,116,404 195,742,757
Diluted earnings per share from total operations of 9.89 pence
(2013: 7.07 pence) per share is calculated by dividing the profit
from total operations, after adjusting for non-controlling
interests, of GBP19,857,000 (2013: GBP14,096,000) by the weighted
average number of shares in issue during the period of 196,116,404
(2013: 195,742,757) plus potentially dilutive shares of 4,646,375
(2013: 3,635,998) which totals 200,762,779 (2013: 199,378,755).
Diluted earnings per share from continuing operations of 9.89
pence (2013: 6.82 pence) per share is calculated by dividing the
profit from continuing operations, after adjusting for
non-controlling interests, of GBP19,857,000 (2013: GBP13,593,000)
by the weighted average number of shares in issue during the period
of 196,116,404 (2013: 195,742,757) plus potentially dilutive shares
of 4,646,375 (2013: 3,635,998) which totals 200,762,779 (2013:
199,378,755).
Weighted average number of ordinary shares (diluted)
2014 2013
Number Number
Weighted average number of ordinary shares 196,116,404 195,742,757
Potentially dilutive shares 4,646,375 1,210,998
Effect of treasury shares acquired - 2,425,000
Weighted average number of ordinary shares
(diluted) 200,762,779 199,378,755
8 Dividends
After the balance sheet date a dividend of 4.00 pence (2013:
3.50 pence) per qualifying ordinary share was proposed by the
Directors. The dividend has not been provided for and there are no
income tax consequences. The total dividends proposed in respect of
the year are as follows:
Pence per qualifying 2014 2013
share GBP'000 GBP'000
2014 final 4.00 7,975
2014 interim 2.00 3,924
6.00 11,899
2013 final 3.50 6,861
2013 interim 1.75 3,431
5.25 10,292
The following dividends were approved by the shareholders and
recognised in the period:
Pence per qualifying 2014 2013
share GBP'000 GBP'000
2014 interim 2.00 3,924
2013 final 3.50 6,867
5.50 10,791
2013 interim 1.75 3,431
2012 final 3.50 6,861
5.25 10,292
The final dividend of 4.00 pence per qualifying ordinary share,
with a total value of GBP7,975,000, will be paid on 3 July 2015 to
shareholders registered at the close of business on 5 June
2015.
9 Employee benefits
The Company sponsors a funded defined benefit pension scheme
("the Scheme") in the UK. The Scheme is administered within a trust
which is legally separate from the Company. The Trustee Board is
appointed by both the Company and the Scheme's membership and acts
in the interest of the Scheme and all relevant stakeholders,
including the members and the Company. The Trustee is also
responsible for the investment of the Scheme's assets.
The defined benefit section of the Scheme closed to future
service accrual with effect from 30 June 2006 and members no longer
pay contributions to the defined benefit section. Company
contributions after this date are used to fund any deficit in the
Scheme and the expenses associated with administering the Scheme,
as determined by regular actuarial valuations.
The Trustee is required to use prudent assumptions to value the
liabilities and costs of the Scheme whereas the accounting
assumptions must be best estimates.
The Scheme poses a number of risks to the Company, for example
longevity risk, investment risk, interest rate risk and inflation
risk. The Trustee is aware of these risks and uses various
techniques to control them. The Trustee has a number of internal
control policies including a risk register which are in place to
manage and monitor the various risks they face. The Trustee's
investment strategy incorporates the use of liability driven
investments ("LDIs") to minimise sensitivity of the actuarial
funding position to movements, interest rates and inflation
rates.
The Scheme is subject to regular actuarial valuations, which are
usually carried out at intervals of no less than every 3 years. The
next actuarial valuation is due to be carried out with an effective
date of 5 April 2015. These actuarial valuations are carried out in
accordance with the requirements of the Pensions Act 2004 and
include deliberate margins for prudence. This contrasts with these
accounting disclosures which are determined using best estimate
assumptions.
An interim actuarial valuation was carried out as at 5 April
2014. The results of that valuation have been projected to 31
December 2014 by a qualified independent actuary. The figures in
the following disclosure were measured using the projected unit
method.
The amounts recognised in the Consolidated Balance Sheet were as
follows:
2014 2013 2012
GBP'000 GBP'000 GBP'000
Present value of a Scheme liabilities (309,067) (262,900) (246,573)
Fair value of Scheme assets 312,516 258,553 254,785
Net amount recognised at year end (before
any
adjustments for deferred tax) 3,449 (4,347) 8,212
The amounts recognised in Comprehensive Income were:
The current and past service costs, settlement and curtailments,
together with the net interest expense for the year are included in
the employee benefits expense in the Statement of Comprehensive
Income. Re-measurements of the net defined benefit surplus /
(liability) are included in Other Comprehensive Income.
2014 2013
GBP'000 GBP'000
Service cost:
Net interest expense / (credit) recognised in
the Consolidated Income
Statement 48 (576)
Remeasurements of the net liability:
Difference between actual and expected investment
return (46,766) 5,108
Loss arising from changes in financial assumptions 44,242 13,437
Loss arising from changes in demographic assumptions - 987
Experience gain (720) (797)
(Credit) / charge recorded in Other Comprehensive
Income (3,244) 18,735
(3,196) 18,159
The principal actuarial assumptions used were:
2014 2013
GBP'000 GBP'000
Liability discount rate 3.60% 4.60%
Inflation assumption - RPI 3.10% 3.40%
Inflation assumption - CPI 2.10% 2.40%
Rate of increase in salaries n/a n/a
Revaluation of deferred pensions 2.10% 2.40%
Future expected lifetime of current pensioner
at age 65:
Male aged 65 at year end 21.9 21.9
Female age 65 at year end 24.2 24.1
Future expected lifetime of future pensioner at
age 65:
Male aged 45 at year end 23.3 23.2
Female age 45 at year end 25.7 25.6
10 Analysis of net debt
1 January 31 December
2014 Cash flow Other changes 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 17,652 2,711 (43) 20,320
Debt due within one year (3,370) 3,370 - -
Debt due after one year (49,627) (1,536) 856 (50,307)
Finance leases (224) (282) 13 (493)
(35,569) 4,263 826 (30,480)
Reconciliation of Net Cash Flow to Movement in Net Debt
2014 2013
GBP'000 GBP'000
Net increase in cash equivalents 2,711 6,534
Cash outflow from decrease in debt and lease financing 1,552 21,568
Effect of exchange rate fluctuations 826 (128)
Movement in net debt in the period 5,089 27,974
Net debt at 1 January (35,569) (63,543)
Net debt at 31 December (30,480) (35,569)
11 Borrowing facilities
The total bank borrowing facilities at 31 December 2014 amounted
to GBP125.0 million (2013: GBP145.0 million) of which GBP74.7
million (2013: GBP92.0 million) remained unutilised. There are
additional seasonal bank working capital facilities of GBP20.0
million available between 1 February and 31 August each year. The
undrawn facilities available at 31 December 2014, in respect of
which all conditions precedent had been met, were as follows:
2014 2013
GBP'000 GBP'000
Committed:
- Expiring in more than two years but not more
than five years 34,693 50,373
- Expiring in one year or less 25,000 16,630
Uncommitted:
- Expiring in one year or less 15,000 25,000
74,693 92,003
The committed facilities are all revolving credit facilities
with interest charged at a variable rate based on LIBOR.
The total borrowing facilities at 31 December 2014 amounted to
GBP125.0 million. This was due to the Group's decision to reduce
uncommitted loan facilities by GBP10.0 million on 16 July 2014 and
the refinancing on 21 August 2014 of two existing committed loan
facilities totalling in aggregate GBP50.0 million with extended
maturity dates to 2017 and 2018 at newly arranged levels totalling
GBP40.0 million. An additional loan facility of GBP20.0 million
reached maturity on 20 August 2014 and has been refinanced with an
extended maturity date to 2019.
Cumulative
Facility Facility
GBP'000 GBP'000
Committed facilities:
Q3 2019 20,000 20,000
Q3 2018 20,000 40,000
Q3 2017 20,000 60,000
Q3 2016 25,000 85,000
Q3 2015 25,000 110,000
On demand facilities:
Available all year 15,000 125,000
Seasonal (February to August inclusive) 20,000 145,000
12 Principal risks and uncertainties
The principal risks and uncertainties which could impact the
Group for the remainder of the current financial year are those
detailed in the Group's Annual Report. These cover the Strategic,
Financial and Operational Risks and have not changed during the
period.
Strategic risks include those relating to general economic
conditions, Government policy, the actions of customers, suppliers
and competitors and also weather conditions. The Group also
continues to be subject to various financial risks in relation to
access to funding and to the Pension Scheme, principally the
volatility of the discount (AA corporate bond) rate, any downturn
in the performance of equities and increases in the longevity of
members. The other main financial risks arising from the Group's
financial instruments are liquidity risk, interest rate risk,
credit risk and foreign currency risk. Operational risks include
those relating to business integration, employees and key
relationships. The Group continues to monitor all these risks and
pursue policies that take account of, and mitigate, the risks where
possible.
13 Annual General Meeting
The Annual General Meeting will be held at The Cedar Court
Hotel, Ainley Top, Huddersfield, HD3 3RH at 11.00am on Wednesday 20
May 2015.
The Board
The Directors serving during the year ended 31 December 2014
were as follows:
Andrew Allner Non-Executive Chairman
Martyn Coffey Chief Executive
Jack Clarke Finance Director (appointed 1 October
2014)
Ian Burrell Finance Director (resigned 1 October
2014)
David Sarti Chief Operating Officer (resigned
1 December 2014)
Alan Coppin Senior Independent Director
Mark Edwards Non-Executive Director
Tim Pile Non-Executive Director
By order of the Board
Cathy Baxandall
Company Secretary
6 March 2015
Cautionary Statement
This Report contains certain forward looking statements with
respect to the financial condition, results, operations and
business of Marshalls plc. These statements and forecasts involve
risk and uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward looking
statements and forecasts. Nothing in this Report should be
construed as a profit forecast.
Directors' Liability
Neither the Company nor the Directors accept any liability to
any person in relation to this Report except to the extent that
such liability could arise under English law. Accordingly, any
liability to a person who has demonstrated reliance on any untrue
or misleading statement or omission shall be determined in
accordance with section 90A of the Financial Services and Markets
Act 2000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLGDXCGGBGUU
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