TIDMMSLH
RNS Number : 1803I
Marshalls PLC
26 August 2016
Interim results for the half year ended 30 June 2016
Marshalls plc, the specialist Landscape Products Group,
announces its half year results
Financial Highlights Half Year ended Half Year ended Increase
30 June 2016 30 June 2015 %
Revenue GBP202.4m GBP199.1m 2
EBITDA GBP32.4m GBP29.7m 9
Operating profit GBP26.0m GBP22.0m 18
Profit before tax GBP25.1m GBP20.8m 21
Basic EPS 10.36p 8.50p 22
Interim dividend 2.90p 2.25p 29
470
ROCE 19.9% 15.2% basis points
Net debt to EBITDA 0.2 times 0.7 times
Highlights:
-- Revenue up 2% to GBP202.4 million (2015: GBP199.1 million)
-- EBITDA up 9% to GBP32.4 million (2015: GBP29.7 million)
-- Improvement in operating margins to 12.8% (2015: 11.1%)
-- Profit before tax up 21% to GBP25.1 million (2015: GBP20.8 million)
-- Strong operating cash flow with sustainable working capital improvements
-- Return on capital employed for the year ended 30 June 2016 up
31% (470 basis points) to 19.9% (2015: 15.2%)
-- EPS up 22% to 10.36 pence (2015: 8.50 pence)
-- Interim dividend increased by 29% to 2.90 pence (2015: 2.25 pence) per share
-- Net debt of GBP8.8 million (30 June 2015: GBP32.9 million)
with significant borrowing capacity
-- The Board is confident of achieving its expectations for 2016
Current priorities:
-- To deliver the growth initiatives set out in the 2020 strategy
-- To drive through sustainable cost reductions, innovation and
improvements in operational efficiency
-- To grow our business organically and selectively through acquisitions
-- To continue to develop and invest in our strategic growth
initiatives, particularly in Water Management, Street Furniture,
Rail and Newbuild Housing
-- To develop the Group's wide ranging digital strategy
Commenting on these results, Martyn Coffey, Chief Executive,
said:
"Following a strong first half, the Group's focus remains the
delivery of the growth initiatives set out in the 2020 Strategy,
whilst maintaining a strong balance sheet and flexible capital
structure. The underlying medium to long-term market indicators
remain supportive notwithstanding the heightened economic and
political uncertainty since the EU referendum. This increased
uncertainty has not impacted underlying trading to date although we
continue to monitor closely the wider business environment. The
Board is confident of achieving its expectations for 2016.
The Group continues to invest in product innovation and service
delivery initiatives and is driving through sustainable cost
reductions and improvements in operational efficiency. This
continues to improve the operational gearing across the Group
which, alongside Marshalls' growth strategy, will drive future
shareholder return."
There will be a presentation for analysts and investors today at
9.00 am with a telephone dial in facility available tel: number +44
(0)203 433 3570 - Access Code: 7494 9045 19#. Marshalls' Analyst
Presentation will be available for analysts and investors who are
unable to attend the presentation. The presentation can be viewed
on Marshalls' website at www.marshalls.co.uk.
Enquiries:
Martyn Coffey Chief Executive Marshalls plc 01422 314777
Jack Clarke Finance Director Marshalls plc 01422 314777
Andrew Jaques MHP Communications 020 3128 8540
James White
Interim Management Report
Group results
Marshalls' revenue for the 6 months ended 30 June 2016 grew by 2
per cent to GBP202.4 million (2015: GBP199.1 million). Despite
recent economic and political uncertainty following the EU
referendum, underlying trading conditions remain supportive. The
Group delivered a strong sales performance in May and June and the
moving average monthly revenue trend shows that 2016 sales still
exceed those of previous years for the same period. The Group has
continued to experience strong order intake during the second
half.
Sales to the Public Sector and Commercial end market, which
represent approximately 63 per cent of Group sales, were broadly
flat compared with the prior year period. Sales to the Domestic end
market, which represent approximately 32 per cent of Group sales,
were up 7.1 per cent. Revenue in May and June was particularly
strong in the Domestic end market, where growth was 12 per cent
year on year. The survey of domestic installers at the end of June
2016 revealed continuing strong order books of 11.7 weeks (2015:
12.0 weeks) and compares with 12.4 weeks at the end of April
2016.
Sales in the International business decreased by 10.8 per cent
in the 6 months ended 30 June 2016 and represent 5 per cent of
Group sales. However, despite the reduction in revenue, there has
been a reduced loss within the International business. The new
sales office in Dubai opened in January 2016 and this is having a
positive impact on sales and order generation in the Middle
East.
Operating profit increased to GBP26.0 million (2015: GBP22.0
million) and EBITDA also improved to GBP32.4 million (2015: GBP29.7
million).
Group return on capital employed ("ROCE") was 19.9 per cent for
the year ended 30 June 2016, which represents an increase of 470
basis points compared with the prior year. ROCE is defined as EBITA
divided by shareholders' funds plus net debt.
Net financial expenses were GBP0.8 million (2015: GBP1.2
million) and interest was strongly covered 31.4 times (2015: 18.5
times). The effective tax rate was 19.1 per cent (2015: 20.8 per
cent).
Basic EPS was 10.36 pence (2015: 8.50 pence) per share. The
interim dividend will be 2.90 pence (2015: 2.25 pence) per share,
reflecting the strong cash generation and the Board's confidence in
the future.
Significant cash generation and sustained working capital
improvements have seen the Group's net debt fall to GBP8.8 million
at 30 June 2016 (30 June 2015: GBP32.9 million).
2020 Strategy
The Group's strategy is to grow the business organically and
selectively through acquisitions. The strategic objectives include
the improvement of profit margins in all businesses and to increase
the Group's ROCE. The 2020 Strategy is being driven by a focus on
innovation and new product development. The aim is to extend the
product range and provide more integrated solutions to improve the
customer experience and differentiate the Marshalls brand. The
strategy is to maintain a conservative balance sheet and a flexible
capital structure that recognises cyclical risk, while focusing on
security, efficiency and liquidity.
Current Priorities
The Group's key priority is to deliver improvement in profit
margins in all businesses and end markets through the continued
focus on service, quality, design, innovation and a commitment to
research and development and sustainability. The aim is to drive
through sustainable cost reductions and improvements in operational
efficiency. Marshalls' digital strategy is increasing in its
importance, combining digital trading, digital marketing and
digital business. This strategy is focused on the customer
experience and the key touchpoints therein. Specifically we have
created web and mobile applications which allow customers to model
their requirements, allow digital access to the registered
installer base and allow real-time visibility of stock.
Operating Performance
Operating margins increased to 12.8 per cent in the 6 months
ended 30 June 2016 (2015: 11.1 per cent), representing an
improvement of 15.3 per cent and reflecting improved operational
efficiency.
Revenue increased by GBP2.0 million and operating profit by
GBP3.2 million in the Landscape Products business which serves both
the UK Public Sector and Commercial and UK Domestic end markets.
The increase in operating margins within the Landscape Products
business is due to the delivery of sustainable cost reductions and
operational efficiency improvements. The smaller UK businesses have
collectively delivered revenue growth of GBP2.5 million and
operating profit growth of GBP0.7 million in the 6 months ended 30
June 2016. Delivering growth in the smaller UK businesses is a key
part of the 2020 Strategy and these include Street Furniture,
Mineral Products and Stone Cladding.
In the Public Sector and Commercial end market, Marshalls'
continuing strategy is to enhance its market leading position as a
landscape products specialist. The Group's experienced technical
and sales teams continue to promote a full range of integrated
products and sustainable solutions to customers, architects and
contractors. Commercial order intake and demand continues to be
strong in Water Management, Newbuild Housing and Rail and
particular focus is being directed to these markets. Crossrail is a
particular focus with product opportunities for station platforms,
concourses and adjacent public spaces.
In the Domestic end market the Group continues to drive more
sales through the Marshalls Register of approved domestic
installers, which has now grown to nearly 1,900 teams. This
represents an increase of 5 per cent over the last 12 months. The
Group remains committed to improving the product mix and to
achieving a consistently high standard of quality, customer service
and marketing support.
As a key part of the 2020 Strategy, the Group continues to focus
on innovation and new product development to drive sales growth.
Research and development expenditure in the 6 months ended 30 June
2016 amounted to GBP1.6 million (2015: GBP1.6 million). Investment
in research and development includes project engineering to enhance
manufacturing capabilities, concrete and other materials technology
innovations and extending the new product pipeline. Revenue from
new products in the core Landscape Products business increased by
11 per cent in the 6 months ended 30 June 2016, and represents 13
per cent of its sales.
The Group's previously announced "Self-Help" capital investment
programme is on track and progressing well. This investment is in
addition to our normal annual capital expenditure and will total
GBP15 million over the next 3 years and is expected to deliver cost
savings of GBP5 million per annum by 2019. The detailed plan
includes various projects within Natural Stone, block paving and
automated material handling.
Ongoing progress is being made developing the International
business and the Group continues to improve its global
infrastructure, supply chains and routes to market. Whilst the
Belgium business has again improved, the market background in
mainland Europe remains subdued. Our US business looks to increase
the distribution of our natural stone products into the North
American market and the new sales office in Dubai is already
generating further sales growth in the Middle East.
Balance Sheet and Cash Flow
Net assets at 30 June 2016 were GBP204.9 million (June 2015:
GBP184.0 million).
In the 6 months ended 30 June 2016 net cash flows from operating
activities were GBP9.3 million (2015: GBP5.2 million). This strong
cash generation has enabled net debt at 30 June 2016 to be reduced
to GBP8.8 million (June 2015: GBP32.9 million) with gearing at 4.3
per cent (June 2015: 17.9 per cent).
The Group continues to focus on maintaining a strong balance
sheet supported by robust capital disciplines. Strong cash
management continues to be a high priority area. The Group operates
tight control over business, operational and financial procedures
and continues to focus on inventory and capital expenditure
management and trade receivables. Capital investment in property,
plant and equipment in the 6 months ended 30 June 2016 totalled
GBP5.8 million (2015: GBP5.5 million) and this compares with
depreciation of GBP5.9 million (2015: GBP7.0 million).
The Group's bank facilities support our current strategy and
continued strong cash management focus ensures headroom against
available facilities remains at appropriately conservative levels.
Our committed facilities have been extended one year to 2021 to
enhance the maturity profile and, in August 2016, the Group also
renewed its short-term working capital facilities with RBS.
Marshalls maintains a policy of having significant committed
facilities in place with a positive spread of medium-term
maturities.
The balance sheet value of the defined benefit pension scheme
was a surplus of GBP7.9 million at 30 June 2016 (December 2015:
GBP3.4 million surplus; June 2015: GBP0.8 million surplus). The
surplus has been determined by the scheme actuary using assumptions
that are considered to be prudent and in line with current market
levels. Significant market volatility has been evident in the first
6 months of 2016 and this volatility increased further following
the EU referendum on 23 June 2016. The most notable change has been
a reduction in the AA corporate bond rate from 3.7 per cent to 2.7
per cent, in line with market movements. This caused the IAS 19
pension liabilities to increase by GBP48.6 million. However, the
scheme assets have increased by GBP53.1 million due mainly to the
high proportion of liability-driven investments whose performance
matches the liabilities. The expected rate of inflation reduced to
2.9 per cent from 3.1 per cent at 31 December 2015.
Dividend
The Group has a progressive dividend policy with a stated
objective of achieving up to 2 times dividend cover over the
business cycle. The Board has declared an interim dividend of 2.90
pence (June 2015: 2.25 pence) per share, an increase of 29 per cent
which reflects the strong cash generation. This dividend will be
paid on 2 December 2016 to shareholders on the register at the
close of business on 21 October 2016. The ex-dividend date will be
20 October 2016.
Risks and Uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining 6 months of the financial year and could cause actual
results to differ materially from expected and historical results.
While recognising some increased economic uncertainty post the EU
referendum, the Directors do not consider that the principal risks
and uncertainties have changed since the publication of the Annual
Report for the year ended 31 December 2015. A detailed explanation
of the risks, and how the Group seeks to mitigate these risks, can
be found on pages 20 to 23 of the Annual Report, which is available
at
www.marshalls.co.uk/documents/reports/2015-full-annual-report.
Going concern
As stated in Note 1 of the 2016 Half-yearly Report, the
Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of not
less than 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing the
Half-yearly Report.
Outlook
Following a strong first half, the Group's focus remains the
delivery of the growth initiatives set out in the 2020 Strategy,
whilst maintaining a strong balance sheet and flexible capital
structure. The underlying medium to long-term market indicators
remain supportive notwithstanding the heightened economic and
political uncertainty since the EU referendum. This increased
uncertainty has not impacted underlying trading to date although we
continue to monitor closely the wider business environment. The
Board is confident of achieving its expectations for 2016.
The Group continues to invest in product innovation and service
delivery initiatives and is driving through sustainable cost
reductions and improvements in operational efficiency. This
continues to improve the operational gearing across the Group
which, alongside Marshalls' growth strategy, will drive future
shareholder return.
Martyn Coffey
Chief Executive
Condensed Consolidated Half-yearly Income Statement
for the half year ended 30 June 2016
Half year Year ended
ended June December
2016 2015 2015
Notes GBP'000 GBP'000 GBP'000
Revenue 2 202,371 199,067 386,204
Net operating costs 3 (176,402) (177,053) (348,752)
Operating profit 2 25,969 22,014 37,452
Financial expenses 4 (826) (1,197) (2,181)
Financial income 4 - 5 7
Profit before tax 2 25,143 20,822 35,278
Income tax expense 5 (4,812) (4,335) (7,387)
Profit for the financial
period 20,331 16,487 27,891
Profit for the period
Attributable to:
Equity shareholders of
the Parent 20,411 16,711 28,149
Non-controlling interests (80) (224) (258)
20,331 16,487 27,891
Earnings per share
Basic 6 10.36p 8.50p 14.32p
Diluted 6 10.22p 8.39p 14.10p
Dividend
Pence per share 7 4.75p 4.00p 6.25p
Supplementary 2.00p - -
Dividends declared 7 13,314 7,866 12,291
All results relate to continuing operations.
Condensed Consolidated Half-yearly Statement of Comprehensive
Income
for the half year ended 30 June 2016
Half year Year ended
ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Profit for the financial period 20,331 16,487 27,891
Other comprehensive income / (expense)
Items that will not be reclassified to
the Income Statement:
Remeasurements of the net defined benefit
liability 4,759 (6,777) (3,866)
Deferred tax arising (857) 1,355 773
Total items that will not be reclassified
to the Income
Statement 3,902 (5,422) (3,093)
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 412 602 (940)
Fair value of cash flow hedges transferred
to the Income Statement 1,220 870 1,984
Deferred tax arising (327) (294) (209)
Impact of the change in rate of deferred
tax - - (375)
Exchange difference on retranslation
of foreign currency net
investment 2,275 (1,718) (980)
Exchange movements associated with borrowings (2,158) 1,719 847
Foreign currency translation differences
- non-controlling interests 137 (136) (78)
Total items that are or may be reclassified
subsequently to
the Income Statement 1,559 1,043 249
Other comprehensive income / (expense)
for the period,
net of income tax 5,461 (4,379) (2,844)
Total comprehensive income for the period 25,792 12,108 25,047
Attributable to:
Equity shareholders of the Parent 25,735 12,468 25,383
Non-controlling interests 57 (360) (336)
25,792 12,108 25,047
Condensed Consolidated Half-yearly Balance Sheet
as at 30 June 2016
June December
Notes 2016 2015 2015
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 147,736 148,025 147,489
Intangible assets 40,091 40,374 40,168
Investments in associates - 854 -
Trade and other receivables 415 - 415
Employee benefits 8 7,892 799 3,427
Deferred taxation assets 1,364 1,325 1,316
197,498 191,377 192,815
Current assets
Inventories 67,448 70,269 65,254
Trade and other receivables 65,847 69,713 44,542
Cash and cash equivalents 25,631 20,500 24,990
Assets classified as held for
sale 2,519 - 2,231
161,445 160,482 137,017
Total assets 358,943 351,859 329,832
Liabilities
Current liabilities
Trade and other payables 98,071 94,337 79,607
Corporation tax 6,887 4,443 5,281
Interest bearing loans and borrowings 33 33 34
Derivative financial instruments 515 1,719 2,149
105,506 100,532 87,071
Non-current liabilities
Interest bearing loans and borrowings 34,425 53,397 36,418
Deferred taxation liabilities 14,142 13,966 13,625
48,567 67,363 50,043
Total liabilities 154,073 167,895 137,114
Net assets 204,870 183,964 192,718
Equity
Capital and reserves attributable to equity shareholders
of the Parent
Share capital 49,845 49,845 49,845
Share premium account 22,695 22,695 22,695
Own shares (3,664) (5,532) (5,529)
Capital redemption reserve 75,394 75,394 75,394
Consolidation reserve (213,067) (213,067) (213,067)
Hedging reserve (348) (1,310) (1,653)
Retained earnings 272,819 254,824 263,894
Equity attributable to equity
shareholders of the Parent 203,674 182,849 191,579
Non-controlling interests 1,196 1,115 1,139
Total equity 204,870 183,964 192,718
Condensed Consolidated Half-yearly Cash Flow Statement
for the half year ended 30 June 2016
Half year ended Year ended
June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the financial period 20,331 16,487 27,891
Income tax expense 4,812 4,335 7,387
Profit before tax 25,143 20,822 35,278
Adjustments for:
Depreciation 5,916 7,006 13,054
Amortisation 496 645 1,322
Associates - (72) 582
(Gain) / loss on sale of property, plant
and equipment (86) 84 (149)
Equity settled share-based expenses 629 974 2,202
Financial income and expenses (net) 826 1,192 2,174
Operating cash flow before changes in
working capital and
pension scheme contributions 32,924 30,651 54,463
Increase in trade and other receivables (21,120) (39,119) (443)
(Increase) / decrease in inventories (1,308) (3,584) 1,706
Increase in trade and other payables 3,098 26,608 7,262
Operational restructuring costs paid - (260) (175)
Pension scheme contributions - (4,300) (4,350)
Cash generated from operations 13,594 9,996 58,463
Financial expenses paid (579) (1,074) (1,775)
Income tax paid (3,665) (3,724) (7,003)
Net cash flow from operating activities 9,350 5,198 49,685
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 490 93 933
Financial income received - 5 7
Net proceeds from disposal of associates - - 200
Acquisition of property, plant and equipment (5,764) (5,545) (14,016)
Acquisition of intangible assets (419) (441) (909)
Net cash flow from investing activities (5,693) (5,888) (13,785)
Cash flows from financing activities
Payments to acquire own shares (1,175) (3,461) (4,582)
Net (decrease) in other debt and finance
leases - (117) (166)
(Decrease) / increase in borrowings (1,997) 4,465 (14,182)
Equity dividends paid - - (12,291)
Net cash flow from financing activities (3,172) 887 (31,221)
Net increase in cash and cash equivalents 485 197 4,679
Cash and cash equivalents at beginning
of the period 24,990 20,320 20,320
Effect of exchange rate fluctuations 156 (17) (9)
Cash and cash equivalents at end of the
period 25,631 20,500 24,990
Condensed Consolidated Half-yearly Statement of Changes in
Equity
for the half year ended 30 June 2016
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 half
year
At 1 January
2016 49,845 22,695 (5,529) 75,394 (213,067) (1,653) 263,894 191,579 1,139 192,718
Total
comprehensive
income /
(expense)
for the period
Profit /
(loss)
for the
financial
period
attributable
to equity
shareholders
of the Parent - - - - - - 20,411 20,411 (80) 20,331
Other
comprehensive
income /
expense)
Foreign
currency
translation
differences - - - - - - 117 117 137 254
Effective
portion
of changes in
fair value of
cash flow
hedges - - - - - 412 - 412 - 412
Net change in
fair value of
cash flow
hedges
transferred
to
the Income
Statement - - - - - 1,220 - 1,220 - 1,220
Deferred tax
arising - - - - - (327) - (327) - (327)
Defined
benefit
plan
actuarial
gain - - - - - - 4,759 4,759 - 4,759
Deferred tax
arising - - - - - - (857) (857) - (857)
Total other
comprehensive
income - - - - - 1,305 4,019 5,324 137 5,461
Total
comprehensive
Income for
the
period - - - - - 1,305 24,430 25,735 57 25,792
Transactions
with owners,
recorded
directly
in equity
Contributions
by and
distributions
to owners
Share-based
payments - - - - - - 629 629 - 629
Corporation
tax
on share-
based
payments - - - - - - 220 220 - 220
Dividends to
equity
shareholders - - - - - - (13,314) (13,314) - (13,314)
Purchase of
own
shares - - (1,175) - - - - (1,175) - (1,175)
Disposal of
own
shares - - 3,040 - - - (3,040) - - -
Total
contributions
by and
distributions
to owners - - 1,865 - - - (15,505) (13,640) - (13,640)
Total
transactions
with owners
of
the Company - - 1,865 - - 1,305 8,925 12,095 57 12,152
At 30 June
2016 49,845 22,695 (3,664) 75,394 (213,067) (348) 272,819 203,674 1,196 204,870
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 half
year
At 1 January
2015 49,845 22,695 (6,689) 75,394 (213,067) (2,488) 254,729 180,419 1,475 181,894
Total
comprehensive
income /
(expense)
for the period
Profit/ (loss)
for the
financial
period
attributable
to equity
shareholders
of the Parent - - - - - - 16,711 16,711 (224) 16,487
Other
comprehensive
income /
(expense)
Foreign
currency
translation
differences - - - - - - 1 1 (136) (135)
Effective
portion
of changes in
fair value of
cash flow
hedges - - - - - 602 - 602 - 602
Net change in
fair value of
cash flow
hedges
transferred
to
the Income
Statement - - - - - 870 - 870 - 870
Deferred tax
arising - - - - - (294) - (294) - (294)
Defined
benefit
plan
actuarial
losses - - - - - - (6,777) (6,777) - (6,777)
Deferred tax
arising - - - - - - 1,355 1,355 - 1,355
Total other
comprehensive
income /
(expense) - - - - - 1,178 (5,421) (4,243) (136) (4,379)
Total
comprehensive
income /
(expense)
for the
period - - - - - 1,178 11,290 12,468 (360) 12,108
Transactions
with
owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Share-based
payments - - - - - - 974 974 - 974
Deferred tax
on
share-based
payments - - - - - - 100 100 - 100
Corporation
tax
on share-
based
payments - - - - - - 215 215 - 215
Dividends to
equity
shareholders - - - - - - (7,866) (7,866) - (7,866)
Purchase of
own
shares - - (3,461) - - - - (3,461) - (3,461)
Disposal of
own
shares - - 4,618 - - - (4,618) - - -
Total
contributions
by and
distributions
to owners - - 1,157 - - - (11,195) (10,038) - (10,038)
Total
transactions
with owners
of
the Company - - 1,157 - - 1,178 95 2,430 (360) 2,070
At 30 June
2015 49,845 22,695 (5,532) 75,394 (213,067) (1,310) 254,824 182,849 1,115 183,964
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
2015 49,845 22,695 (6,689) 75,394 (213,067) (2,488) 254,729 180,419 1,475 181,894
Total
comprehensive
income /
(expense)
for the period
Profit /
(loss)
for the
financial
period
attributable
to equity
shareholders
of the Parent - - - - - - 28,149 28,149 (258) 27,891
Other
comprehensive
income /
(expense)
Foreign
currency
translation
differences - - - - - - (133) (133) (78) (211)
Effective
portion
of changes in
fair value of
cash flow
hedges - - - - - (940) - (940) - (940)
Net change in
fair value of
cash flow
hedges
transferred
to
the Income
Statement - - - - - 1,984 - 1,984 - 1,984
Deferred tax
arising - - - - - (209) - (209) - (209)
Defined
benefit
plan
actuarial
losses - - - - - - (3,866) (3,866) - (3,866)
Impact of
change
of rate of
deferred
tax - - - - - - (375) (375) - (375)
Deferred tax
arising - - - - - - 773 773 - 773
Total other
comprehensive
income /
(expense) - - - - - 835 (3,601) (2,766) (78) (2,844)
Total
comprehensive
income /
(expense)
for the
period
/ (expense)
for
the period - - - - - 835 24,548 25,383 (336) 25,047
Transactions
with
owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Share-based
payments - - - - - - 2,202 2,202 - 2,202
Deferred tax
on
share-based
payments - - - - - - (5) (5) - (5)
Corporation
tax
on share-
based
payments - - - - - - 445 445 - 445
Impact of the
change in
rate
of deferred
tax
on
share-based
payments - - - - - - 8 8 - 8
Dividends to
equity
shareholders - - - - - - (12,291) (12,291) - (12,291)
Purchase of
own
shares - - (4,582) - - - - (4,582) - (4,582)
Disposal of
own
shares - - 5,742 - - - (5,742) - - -
Total
contributions
by and
distributions
to owners - - 1,160 - - - (15,383) (14,223) - (14,223)
Total
transactions
with owners
of
the Company - - 1,160 - - 835 9,165 11,160 (336) 10,824
At 31 December
2015 49,845 22,695 (5,529) 75,394 (213,067) (1,653) 263,894 191,579 1,139 192,718
Notes to the Condensed Consolidated Half-yearly Financial
Statements
1. Basis of preparation
Marshalls plc (the "Company") is a company domiciled in the
United Kingdom. The Condensed Consolidated Half-yearly Financial
Statements of the Company for the half year ended 30 June 2016
comprise the Company and its subsidiaries (together referred to as
the "Group").
The Condensed Consolidated Half-yearly Financial Statements have
been prepared in accordance with the Disclosure and Transparency
Rules of the UK Financial Conduct Authority and the requirements of
IAS 34 "Interim Financial Reporting" as adopted by the European
Union ("EU").
The Condensed Consolidated Half-yearly Financial Statements do
not constitute financial statements and do not include all the
information and disclosures required for full annual financial
statements. The Condensed Consolidated Half-yearly Financial
Statements were approved by the Board on 26 August 2016. The
Condensed Consolidated Half-yearly Financial Statements are not
statutory accounts as defined by Section 434 of the Companies Act
2006.
The Condensed Consolidated Financial Statements for the half
year ended 30 June 2016 and comparative period have not been
audited. The Auditor has carried out a review of the Half-yearly
Financial Information and their report is set out on page 23.
The financial information for the year ended 31 December 2015
has been extracted from the annual Financial Statements, included
in the Annual Report 2015, which has been filed with the Registrar
of Companies. The report of the Auditor was: (i) unqualified; (ii)
did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying their report;
and (iii) did not contain a statement under Section 498 (2) and (3)
of the Companies Act 2006.
The annual Financial Statements of the Group are prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the EU. As required by the Disclosure and
Transparency Rules of the Financial Conduct Authority, the
condensed set of Financial Statements has, other than in respect of
the matters referred to below, been prepared applying the
accounting policies and presentation that were applied in the
preparation of the Company's published Consolidated Financial
Statements for the year ended 31 December 2015.
The Condensed Consolidated Half-yearly 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 cash-settled share-based
payments.
The accounting policies have been applied consistently
throughout the Group for the purposes of these Condensed
Consolidated Half-yearly Financial Statements and are also set out
on the Company's website (www.marshalls.co.uk). The Condensed
Consolidated Half-yearly 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. In preparing these
Condensed Consolidated Half-yearly Financial Statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the Consolidated Financial
Statements of the Group for the year ended 31 December 2015.
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.
Details of the Group's funding position are set out in Note 10
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 August 2016.
Management believe that 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 that is not dependent on
facility renewals. After considering relevant uncertainties, 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 Condensed Consolidated
Half-yearly Financial Statements.
The June 2015 comparative amounts for trade receivables and
other payables have been restated by GBP11,384,000 to reflect
comparability with regards to gross settled transactions. Notes 2
and 11 have also been updated accordingly.
2. Segmental analysis
IFRS 8 "Operating Segments" requires operating segments to be
identified on the basis of discrete financial information about
components of the Group that are regularly reviewed by the Group's
Chief Operating Decision Maker ("CODM") to allocate resources to
the segments and to assess their performance. As far as Marshalls
is concerned, the CODM is regarded as being the Executive
Directors. The Directors have concluded that the detailed
requirements of IFRS 8 support the reporting of the Group's
Landscape Products business as a reportable segment, which includes
the UK operations of the Marshalls Landscape Products hard
landscaping business, servicing both the UK Domestic and the UK
Public Sector and Commercial end markets. Financial information for
Landscape Products is reported to the Group's CODM for the
assessment of segmental performance and to facilitate resource
allocation.
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 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 IFRS 8 reporting requirements.
Segment revenues and results
Half year ended June Half year ended June Year ended December
2016 2015 2015
Landscape Landscape Landscape
Products Other Total Products Other Total Products Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External
revenue 156,967 47,074 204,041 154,590 46,756 201,346 299,650 90,915 390,565
Inter-segment
revenue (58) (1,612) (1,670) (18) (2,261) (2,279) (123) (4,238) (4,361)
Total revenue 156,909 45,462 202,371 154,572 44,495 199,067 299,527 86,677 386,204
Segment
operating
profit 26,538 1,477 28,015 24,710 720 25,430 41,816 1,763 43,579
Unallocated
administration
costs (2,046) (3,488) (5,545)
Share of
profits of
associates - 72 (582)
Operating
profit 25,969 22,014 37,452
Finance charges
(net) (826) (1,192) (2,174)
Profit before
tax 25,143 20,822 35,278
Taxation (4,812) (4,335) (7,387)
Profit after
tax 20,331 16,487 27,891
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 administration
costs that are not capable of allocation. Centrally administered
overhead costs that relate directly to the reportable segments are
included within the segment results.
June June December
Segment assets 2016 2015 2015
GBP'000 GBP'000 GBP'000
Fixed assets and inventory:
Landscape Products 157,453 158,807 156,112
Other 57,731 59,487 56,631
Total segment fixed assets and inventory 215,184 218,294 212,743
Unallocated assets 143,759 133,565 117,089
Consolidated total assets 358,943 351,859 329,832
For the purpose of monitoring segment performance and allocating
performance between segments, the Group's CODM monitors the
property, plant and equipment and inventory. Assets used jointly by
reportable segments are not allocated to individual reportable
segments.
Other segment information
Depreciation and amortisation Fixed asset additions
Half year ended Year ended Half year ended Year ended
June December June December
2016 2015 2015 2016 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Landscape Products 4,714 5,286 10,465 4,703 4,594 11,678
Other 1,698 2,365 3,911 993 1,392 3,816
6,412 7,651 14,376 5,696 5,986 15,494
Geographical destination of revenue
Half year Year ended
ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
United Kingdom 191,645 187,062 367,248
Rest of the World 10,726 12,005 18,956
202,371 199,067 386,204
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
Half year Year ended
ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Raw materials and consumables 76,547 73,124 141,471
Changes in inventories of finished goods and
work in progress (3,165) (1,494) (1,801)
Personnel costs 49,628 48,744 96,716
Depreciation - owned 5,916 7,006 13,054
Amortisation of intangible assets 496 645 1,322
Own work capitalised (782) (907) (1,810)
Other operating costs 48,660 50,551 100,707
Operating costs 177,300 177,669 349,659
Other income (812) (628) (1,340)
Net (gain) / loss on asset and property disposals (86) 84 (149)
Share of results of associates - (72) 582
Net operating costs 176,402 177,053 348,752
4. Financial expenses and income
Half year Year ended
ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
(a) Financial expenses
Net interest expense on defined benefit pension
scheme 244 123 406
Interest expense on bank loans, overdrafts
and loan notes 579 1,070 1,767
Finance lease interest expense 3 4 8
826 1,197 2,181
(b) Financial income
Interest receivable and similar income - 5 7
5. Income tax expense
Half year Year ended
ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Current tax expense
Current year 5,946 4,057 8,164
Adjustments for prior years (371) 49 289
5,575 4,106 8,453
Deferred taxation expense
Origination and reversal of temporary differences:
Current year (711) 162 (684)
Adjustments for prior years (52) 67 (382)
Total tax expense 4,812 4,335 7,387
Year ended
Half year ended June December
2016 2015 2015
% GBP'000% GBP'000 % GBP'000
Reconciliation of effective tax
rate
Profit before tax 100.0 25,143 100.0 20,822 100.0 35,278
Tax using domestic corporation
tax rate 20.0 5,029 20.2 4,206 20.2 7,144
Impact of capital allowances
in excess of depreciation 1.7 431 2.6 531 2.0 710
Short-term timing differences (0.2) (62)- - (0.2) (81)
Adjustment to tax charge in prior
period (1.5) (371) 0.2 49 0.8 289
Pension scheme movements - - (4.0) (835) (2.1) (755)
Expenses not deductible for tax
purposes 2.2 549 0.7 155 3.2 1,146
Corporation tax charge for the
period 22.2 5,576 19.7 4,106 23.9 8,453
Impact of capital allowances
in excess of depreciation (2.2) (556) (3.6) (732) (1.0) (355)
Short-term timing differences (0.2) (56)- (9) (0.2) (79)
Pension scheme movements - - 4.0 825 2.1 746
Other items (0.4) (99) 0.4 78 (0.3) (100)
Adjustment to tax charge in prior
period (0.2) (53) 0.3 67 (1.1) (382)
Impact of the change in the rate
of corporation tax on deferred
taxation - -- - (2.5) (896)
Total tax charge for the period 19.2 4,812 20.8 4,335 20.9 7,387
The net amount of deferred taxation (debited) / credited to the
Consolidated Statement of Comprehensive Income in the period was
GBP1,184,000 debit (30 June 2015: GBP1,061,000 credit; 31 December
2015: GBP189,000 credit). The effective tax rate used is
management's best estimate of the average annual effective tax rate
expected for the full year, applied to pre-tax income for the
6-month period.
6. Earnings per share
Basic earnings per share of 10.36 pence (30 June 2015: 8.50
pence; 31 December 2015: 14.32 pence) per share is calculated by
dividing the profit attributable to Ordinary shareholders for the
financial period, after adjusting for non-controlling interests, of
GBP20,411,000 (30 June 2015: GBP16,711,000; 31 December 2015:
GBP28,149,000) by the weighted average number of shares in issue
during the period of 197,013,990 (30 June 2015: 196,484,800; 31
December 2015: 196,574,435).
Profit attributable to Ordinary shareholders
Half year Year ended
ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Profit for the financial period 20,331 16,487 27,891
Loss attributable to non-controlling interests 80 224 258
Profit attributable to Ordinary shareholders 20,411 16,711 28,149
Weighted average number of Ordinary shares
Half year Year ended
ended June December
2016 2015 2015
Number Number Number
Number of issued Ordinary shares (at beginning
of the period) 199,378,755 199,378,755 199,378,755
Effect of shares transferred into employee
benefit trust (2,364,765) (2,893,955) (2,804,320)
Weighted average number of Ordinary shares
at end of the period 197,013,990 196,484,800 196,574,435
Diluted earnings per share of 10.22 pence (30 June 2015: 8.39
pence; 31 December 2015: 14.10 pence) per share is calculated by
dividing the profit for the financial period, after adjusting for
non-controlling interests, of GBP20,411,000 (30 June 2015:
GBP16,711,000; 31 December 2015: GBP28,149,000) by the weighted
average number of shares in issue during the period of 197,013,990
(30 June 2015: 196,484,800; 31 December 2015: 196,574,435), plus
potentially dilutive shares of 2,629,255 (30 June 2015: 2,734,019;
31 December 2015: 3,092,619), which totals 199,643,245 (30 June
2015: 199,218,819; 31 December 2015: 199,667,054).
Weighted average number of Ordinary shares (diluted)
Half year Year ended
ended June December
2016 2015 2015
Number Number Number
Weighted average number of Ordinary shares 197,013,990 196,484,800 196,574,435
Dilutive shares 2,629,255 2,734,019 3,092,619
Weighted average number of Ordinary shares
(diluted) 199,643,245 199,218,819 199,667,054
7. Dividends
After the balance sheet date, the following dividends were
proposed by the Directors. The dividends have not been provided and
there were no income tax consequences.
Pence per qualifying Half year Year ended
share ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
2016 interim 2.90 5,693 - -
2015 supplementary 2.00 - - 3,988
2015 final 4.75 - - 9,470
2015 interim 2.25 - 4,425 4,425
5,693 4,425 17,883
The following dividends were approved by the shareholders in the
period:
Pence per qualifying Half year Year ended
share ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
2015 supplementary 2.00 3,945 - -
2015 final 4.75 9,369 - -
2015 interim 2.25 - - 4,425
2014 final 4.00 - 7,866 7,866
13,314 7,866 12,291
The 2015 final dividend of 4.75 pence per qualifying ordinary
share alongside a supplementary dividend of 2.00 pence per
qualifying Ordinary share (total value GBP13,314,000) was paid on 8
July 2016 to shareholders registered at the close of business on 3
June 2016.
The Board has declared an interim dividend of 2.90 pence (June
2015: 2.25 pence) per share. This dividend will be paid on 2
December 2016 to shareholders on the register at the close of
business on 21 October 2016. The ex-dividend date will be 20
October 2016.
8. Employee benefits
The Company sponsors a pension scheme for employees in the UK
which incorporates a funded defined benefit section and a defined
contribution section ("the Scheme"). 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 interests 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, which closed to
future service accrual on 30 June 2006, provides pension and lump
sums to members on retirement and to dependants on death. Members
of the defined benefit section became entitled to a deferred
pension on closure. Members no longer pay contributions to the
defined benefit section. Company contributions to the defined
benefit section 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 defined benefit section of the Scheme poses a number of
risks to the Company, for example longevity risk, investment risk,
interest rate risk, inflation risk and salary 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 it faces. The Trustee's investment strategy incorporates the
use of liability-driven investments ("LDIs") to minimise
sensitivity of the actuarial funding position to movements in
interest rates and inflation rates.
The defined benefit section of the Scheme is subject to regular
actuarial valuations, which are usually carried out every 3 years.
The next actuarial valuation is expected to be carried out with an
effective date of 5 April 2018. These actuarial valuations are
carried out in accordance with the requirements of the Pensions Act
2004 and so include deliberate margins for prudence. This contrasts
with these accounting disclosures which are determined using best
estimate assumptions.
A formal actuarial valuation was carried out as at 5 April 2015.
The results of that valuation have been projected to 30 June 2016
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:
June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Present value of Scheme liabilities (347,452) (305,730) (298,812)
Fair value of Scheme assets 355,344 306,529 302,239
Net amount recognised (before any adjustment
for deferred tax) 7,892 799 3,427
The amounts recognised in Comprehensive Income were:
The current and past service costs, settlement and curtailments,
together with the net interest expense for the period are included
in the employee benefits expense in the Statement of Comprehensive
Income. Remeasurements of the net defined benefit liability are
included in other comprehensive income.
Half year Year ended
ended June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Service cost:
Net interest expense recognised in the Consolidated
Income Statement 294 123 506
Remeasurements of the net liability:
Return on scheme assets (excluding amount
included in interest expense) (54,879) 10,866 14,164
Loss / (gain) arising from changes in financial
assumptions 53,764 (1,727) (5,063)
Gain arising from changes in demographic assumptions - (4,461) (7,412)
Experience (gain) / loss (3,644) 2,099 2,177
(Credit) / charge recorded in other comprehensive
income (4,759) 6,777 3,866
Total defined benefit (credit) / charge (4,465) 6,900 4,372
The principal actuarial assumptions used were:
June December
2016 2015 2015
Liability discount rate 2.70% 3.70% 3.70%
Inflation assumption - RPI 2.90% 3.30% 3.10%
Inflation assumption - CPI 1.90% 2.30% 2.10%
Rate of increase in salaries n/a n/a n/a
Revaluation of deferred pensions 1.90% 2.30%
Increases for pensions in payment: 2.10%
CPI pension increases (maximum 5% per annum) 1.90% 2.30% 2.10%
CPI pension increases (maximum 5% per annum,
minimum 3% per annum) 3.10% 3.10% 3.10%
CPI pension increases (maximum 3% per annum) 1.80% 2.20% 2.00%
Proportion of employees opting for early retirement 0% 0% 0%
Proportion of employees commuting pension for
cash 50% 50% 50%
Mortality assumption - before retirement Same as post Same as post Same as post
retirement retirement retirement
Mortality assumption - after retirement S2PMA tables S2PMA tables S2PMA tables
(males)
Loading 105% 105% 105%
Projection basis Year of birth Year of birth Year of birth
CMI_2015 1.0% CMI_2014 1.0% CMI_2015 1.0%
Mortality assumption - after retirement S2PFA tables S2PFA tables S2PFA tables
(females)
Loading 105% 105% 105%
Projection basis Year of birth Year of birth Year of birth
CMI_2015 1.0% CMI_2014 1.0% CMI_2015 1.0%
Future expected lifetime of current
pensioner at age 65:
Male aged 65 at year end 86.5 86.7 86.5
Female aged 65 at year end 88.5 88.7 88.5
Future expected lifetime of future
pensioner at age 65:
Male aged 45 at year end 87.8 88.0 87.7
Female aged 45 at year end 90.0 90.2 89.8
9. Analysis of net debt
1 January Cash flow Other changes 30 June
2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 24,990 485 156 25,631
Debt due after 1 year (36,125) 4,155 (2,158) (34,128)
Finance leases (327) - (3) (330)
(11,462) 4,640 (2,005) (8,827)
Reconciliation of net cash flow to movement in net debt
Half year ended Year ended
June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Net increase in cash and cash equivalents 485 197 4,679
Cash outflow/ (inflow) from decrease / (increase)
in debt and lease financing 4,155 (4,348) 13,350
Effect of exchange rate fluctuations (2,005) 1,701 989
Movement in net debt in the period 2,635 (2,450) 19,018
Net debt at beginning of the period (11,462) (30,480) (30,480)
Net debt at the end of the period (8,827) (32,930) (11,462)
10. Borrowing facilities
The total bank borrowing facilities at 30 June 2016 amounted to
GBP115.0 million (30 June 2015: GBP145.0 million; 31 December 2015:
GBP95.0 million) of which GBP80.9 million (30 June 2015: GBP91.9
million; 31 December 2015: GBP58.9 million) remained
unutilised.
These figures include an additional seasonal working capital
facility of GBP20.0 million available between 1 February and 31
August each year.
The undrawn facilities available at 30 June 2016, in respect of
which all conditions precedent had been met, were as follows:
June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Committed:
- Expiring in more than 2 years but not more
than 5 years 45,872 31,934 43,875
- Expiring in 1 year or less - 25,000 -
Uncommitted:
- Expiring in 1 year or less 35,000 35,000 15,000
80,872 91,934 58,875
The total borrowing facilities at 26 August 2016 amounted to
GBP105.0 million. On 16 August 2016, the Group renewed its
short-term working capital facilities and reduced its seasonal
working capital facility to GBP10.0 million. The Group also
extended the maturity of each of its committed facilities by 12
months. The committed facilities are all revolving credit
facilities with interest charged at variable rate based on LIBOR.
The Group's bank facilities continue to be aligned with the current
strategy to ensure that headroom against available facilities
remains at appropriate levels.
The maturity profile of borrowing facilities is structured to
provide balanced, committed and phased medium-term debt. Following
the recent refinancing of bank facilities, the current facilities
are set out as follows:
Facility Cumulative
facility
GBP'000 GBP'000
Committed facilities:
Q3: 2021 20,000 20,000
Q3: 2020 20,000 40,000
Q3: 2019 20,000 60,000
Q3: 2018 20,000 80,000
On-demand facilities:
Available all year 15,000 95,000
Seasonal (February to August inclusive) 10,000 105,000
11. Fair values of financial assets and financial liabilities
A comparison by category of the book values and fair values of
the financial assets and liabilities of the Group at 30 June 2016
is shown below:
June December
2016 2015
Book Fair Book Fair
amount value amount value
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 65,847 65,847 44,542 44,542
Cash and cash equivalents 25,631 25,631 24,990 24,990
Bank loans (34,128) (33,582) (36,125) (34,906)
Finance lease liabilities (330) (360) (327) (360)
Trade and other payables (98,071) (98,071) (79,607) (79,607)
Interest rate swaps, forward
contracts and fuel hedges (515) (515) (2,149) (2,149)
Financial liabilities - net (41,566) (48,676)
Other assets - net 246,436 241,394
204,870 192,718
Estimation of fair values
The following summarises the major methods and assumptions used
in estimating the fair values of financial instruments reflected in
the table.
(a) Derivatives
Derivative contracts are either marked to market using listed
market prices or by discounting the contractual forward price at
the relevant rate and deducting the current spot rate. For interest
rate swaps broker quotes are used.
(b) Interest-bearing loans and borrowings
Fair value is calculated based on the expected future principal
and interest cash flows discounted at the market rate of interest
at the balance sheet date.
(c) Finance lease liabilities
The fair value is estimated as the present value of future cash
flows, discounted at market interest rates for homogeneous lease
agreements. The estimated fair values reflect changes in interest
rates.
(d) Trade and other receivables / payables
For receivables / payables with a remaining life of less than 1
year, the notional amount is deemed to reflect the fair value. All
other receivables / payables are discounted to determine the fair
value.
(e) Fair value hierarchy
The table below analyses financial instruments, measured at fair
value, into a fair value hierarchy based on the valuation
techniques used to determine fair value.
-- Level 1: quoted prices (unadjusted) 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).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
30 June 2016
Derivative financial liabilities - 515 - -
31 December 2015
Derivative financial liabilities - 2,149 - -
12. Principal risks and uncertainties
The principal risks and uncertainties that could impact the
Group for the remainder of the current financial year are those
detailed on pages 20 to 23 of the 2015 Annual Report. These cover
the strategic, financial and operational risks and, other than some
increased economic uncertainty post the EU referendum, 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.
Responsibility Statement
The Directors who held office at the date of approval of these
Financial Statements confirm that to the best of their
knowledge:
the Condensed Consolidated Half-yearly Financial Statements have
been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union; and
the Half-yearly Management Report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the half year ended 30 June 2016 and their impact on the Condensed Consolidated Half-yearly Financial Statements and a description of the principal risks and uncertainties for the remaining second half of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the half year
ended 30 June 2016 and that have materially affected the financial
position or performance of the entity during that period and any
changes in the related party transactions described in the last
Annual Report that could do so.
The Board
The Directors serving during the half year ended 30 June 2016
were as follows:
Andrew Allner Chairman
Janet Ashdown Non-Executive Director
Jack Clarke Finance Director
Martyn Coffey Chief Executive
Alan Coppin Non-Executive Director - retired on 18 May 2016
Mark Edwards Non-Executive Director
Tim Pile Non-Executive Director
The responsibilities of the Directors during their period of
service were as set out on pages 34 and 35 of the 2015 Annual
Report.
Cathy Baxandall
Company Secretary
By order of the Board
26 August 2016
Cautionary statement
This Half-yearly 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
Half-yearly 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 Half-yearly 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.
Independent Review Report to Marshalls plc
Introduction
We have been engaged by the Company to review the condensed set
of Financial Statements in the Half-yearly Financial Report for the
6 months ended 30 June 2016, which comprises the Condensed
Consolidated Half-yearly Income Statement, the Condensed
Consolidated Half-yearly Statement of Comprehensive Income, the
Condensed Consolidated Half-yearly Balance Sheet, the Condensed
Consolidated Half-yearly Cash Flow Statement, the Condensed
Consolidated Half-yearly Statement of Changes in Equity and related
Notes 1 to 12. We have read the other information contained in the
Half-yearly Financial Report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the Condensed set of Financial Statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to it in an
independent review 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, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The Half-yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Half-yearly Financial Report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in Note 1, the annual Financial Statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of Financial Statements included
in this Half-yearly Financial Report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of Financial Statements in the Half-yearly
Financial Report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of Half-yearly Financial Information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of Financial Statements
in the Half-yearly Financial Report for the 6 months ended 30 June
2016 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants
Leeds, United Kingdom
26 August 2016
Shareholder Information
Financial calendar
Half-yearly results for the year ending Announced 26 August 2016
December 2016
Half-yearly dividend for the year Payable 2 December 2016
ending December 2016
Results for the year ending December Announcement March 2017
2016
Report and accounts for the year ending April 2017
December 2016
Annual General Meeting 10 May 2017
Final dividend for the year ending Payable July 2017
December 2016
Registrars
All administrative enquiries relating to shareholdings should,
in the first instance, be directed to Computershare Investor
Services PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol
BS99 6ZZ (telephone: 0870 707 1134) and should clearly state the
registered shareholder's name and address.
Dividend mandate
Any shareholder wishing dividends to be paid directly into a
bank or building society should contact the Registrar for a
dividend mandate form. Dividends paid in this way will be paid
through the Bankers' Automated Clearing System ("BACS").
Website
The Group has a website that gives information on the Group and
its products and provides details of significant Group
announcements. The address is www.marshalls.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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