TIDMMSLH
RNS Number : 2023O
Marshalls PLC
17 August 2017
Interim results for the half year ended 30 June 2017
Marshalls plc, the specialist Landscape Products group,
announces its half year results
Financial Highlights Half Year Half Year ended Increase
ended 30 June 2016 %
30 June
2017
Revenue GBP219.1m GBP202.4m 8
EBITDA GBP36.7m GBP32.4m 13
Operating profit GBP29.8m GBP26.0m 15
Profit before tax GBP29.1m GBP25.1m 16
Basic EPS 12.04p 10.36p 16
Interim dividend 3.40p 2.90p 17
380
ROCE 23.7% 19.9% basis points
Net cash / (debt) GBP1.2m (GBP8.8m)
Highlights:
-- Revenue up 8% to GBP219.1 million (2016: GBP202.4
million)
-- EBITDA up 13% to GBP36.7 million (2016: GBP32.4
million)
-- Continued improvement in operating margins to 13.6%
(2016: 12.8%)
-- Profit before tax up 16% to GBP29.1 million (2016:
GBP25.1 million)
-- Strong operating cash flow with sustainable working
capital improvements
-- Return on capital employed for the 12 months ended
30 June 2017 up 19% (380 basis points) to 23.7%
(2016: 19.9%)
-- EPS up 16% to 12.04 pence (2016: 10.36 pence)
-- Interim dividend increased by 17% to 3.40 pence
(2016: 2.90 pence) per share
-- Net cash of GBP1.2 million, after payment of GBP17.4
million final and supplementary dividend (30 June
2016: GBP8.8 million net debt)
-- The Board remains confident of delivering its expectations
for 2017
The 2020 Strategy remains on track:
-- EBITDA growth continues alongside improved ROCE
and strengthened brand
-- Self help programme well advanced
-- Organic capital investment continues
-- Research and development expenditure increased
in the period
-- Smaller UK Businesses in line with expectations
-- Focus on innovation and new product development
driving sales growth, particularly in Commercial
-- Digital strategy driving real benefits across the
business
-- Acquisition targets continue to be pursued
Commenting on these results, Martyn Coffey, Chief Executive,
said:
"The Construction Products Association's ("CPA") recent Summer
Forecast predicts growth in UK market volumes of 1.9 per cent in
2017, which represents a slight improvement on their Spring
Forecast. The Group continues to outperform the CPA growth figures
and the underlying short to medium term market indicators remain
supportive. The CPA's 2018 forecast has recently been reduced,
which reflects the continuing wider economic uncertainty.
The Group continues to invest in product innovation and service
delivery initiatives and is well placed to drive through further
sustainable improvements in operational efficiency gains. The Board
believes that Marshalls' innovative product range and strong market
positions will continue to support growth and operational profit
improvements during the delivery of the 2020 Strategy and will
drive future shareholder returns. The Group's focus remains the
delivery of the growth initiatives set out in the 2020 Strategy,
whilst maintaining a strong balance sheet and a flexible capital
structure.
The Board remains confident of achieving its expectations for
2017."
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)330 336 9411 - Access Code: 1815633. 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
Finance
Jack Clarke 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 2017
grew by 8 per cent to GBP219.1 million (2016: GBP202.4
million). The Group has continued to experience strong
order intake with the underlying indicators remaining
positive in Marshalls' end markets. The Group's positive
cash generation has continued.
Sales to the Domestic end market continued to grow particularly
strongly and increased by 17 per cent compared with
the prior year period. Domestic sales now represent
approximately 34 per cent of Group sales. The survey
of domestic installers at the end of June 2017 revealed
continuing strong order books of 11.9 weeks (June 2016:
11.7 weeks).
Sales to the Public Sector and Commercial end market,
which represent approximately 60 per cent of Group sales,
increased by 3 per cent compared with the prior year
period. The Group continues to target those parts of
the market where higher levels of growth are anticipated
including New Build Housing, Water Management and Rail.
Sales in the International business increased by 25
per cent in the 6 months ended 30 June 2017 and represent
6 per cent of Group sales. Revenue increased in all
our main International markets with the new sales office
in Dubai having a positive impact on sales and order
generation in the Middle East. Ongoing progress is being
made to develop our International business and the Group
continues to improve its global infrastructure, supply
chains and routes to market.
Operating profit increased to GBP29.8 million (2016:
GBP26.0 million) and EBITDA improved to GBP36.7 million
(2016: GBP32.4 million).
Group return on capital employed ("ROCE") was 23.7 per
cent for the 12 months ended 30 June 2017, which represents
an increase of 380 basis points compared with the prior
year. ROCE is defined as EBITA divided by shareholders'
funds plus cash / net debt.
Net financial expenses were GBP0.7 million (2016: GBP0.8
million) and interest was covered 42.4 times (2016:
31.4 times). The effective tax rate was 18.8 per cent
(2016: 19.1 per cent).
Basic EPS was 12.04 pence (2016: 10.36 pence) per share.
The interim dividend will be 3.40 pence (2016: 2.90
pence) per share, an increase of 17 per cent, reflecting
the strong cash generation and the Group's continuing
strategy of maintaining a progressive dividend policy.
The Group continues to deliver strong operational cash
flows through the ongoing tight control of inventory
and effective management of working capital. Significant
cash generation has seen the Group move to a net cash
position of GBP1.2 million at 30 June 2017. This cash
position compares with net debt of GBP8.8 million at
30 June 2016 and is after the payment of the 2016 final
and supplementary dividends of GBP17.4 million made
to shareholders on 30 June 2016. The equivalent dividends
for the prior period were paid on 8 July 2016. The intention
is to normalise this payment being made during the first
half of the year going forward. Consequently, the net
cash position at 30 June 2017 represents a like-for-like
improvement of GBP27.4 million, compared with the prior
year.
2020 Strategy
Good progress continues to be made delivering the growth
objectives of the 2020 Strategy and increasing the Group's
ROCE. The Group is continuing to invest in the Marshalls
brand and to prioritise organic capital expenditure
projects. We continue to increase research and development
and new product development which are delivering an
encouraging pipeline of new products. The 2020 Strategy
remains driven by a focus on innovation and new product
development, and the aim is to extend the product range
and provide more integrated solutions to improve the
customer experience and differentiate the Marshalls
brand.
Our strategy looks to maintain a strong balance sheet,
a flexible capital structure and a clear capital allocation
policy that both drives growth and rewards shareholders.
Our acquisition focus remains centred on Minerals and
the protective Street Furniture and Water Management
markets. We have identified a good pipeline of potential
acquisition targets but remain selective and will not
compromise on the investment criteria and the hurdle
rates we have in place.
The Group's key priority is to deliver improvements
in profit margins across all businesses and end markets
through the continued focus on service, quality, design,
innovation and a commitment to research and development
and sustainability, with the ultimate aim of driving
through sustainable cost reductions and improvements
in operational efficiency.
Marshalls' digital strategy is increasing in its importance
across all Group operations. The strategy combines digital
trading, digital marketing and digital business and
is focused on the customer experience and the key touchpoints
therein. Web and mobile applications increasingly allow
the customer to model their requirements, allow digital
access to the registered installer base and allow real-time
visibility of stock. The Marshalls Premier Mortars "Ordering
App" is a good example of how our digital strategy is
driving growth through changing technology and working
practices.
Operating Performance
Operating margins increased to 13.6 per cent in the
6 months ended 30 June 2017 (2016: 12.8 per cent), representing
an improvement of 6.3 per cent year on year and reflecting
improved operational efficiency in line with our 2020
Strategy.
Revenue increased by GBP15.8 million and operating profit
by GBP3.4 million in the Landscape Products business,
which serves both the Public Sector and Commercial and
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 in line with our 2020 Strategy.
Revenue in the Smaller UK Businesses for the 6 months
ended 30 June 2017 decreased by GBP1.8 million compared
with the prior period, primarily due to specific short-term
issues in part of the Minerals business. However, despite
the decrease in revenue, operating profit in the Smaller
UK Businesses increased by 5 per cent. Increasing profitability
in the Smaller UK Businesses is a key part of the 2020
Strategy and Street Furniture, Mineral Products and
Stone Cladding remain important growth drivers for the
Group.
In the Domestic end market, the Group continues to drive
more sales through the Marshalls Register of approved
domestic installers. The number of installer teams continues
to grow and is now approximately 2,000. The Group remains
committed to improving the product mix and to achieving
a consistently high standard of quality, customer service
and marketing support. The new rules regarding pension
fund release continue to support growth in the Domestic
end market with the total value of cash release from
pensions continuing to grow. The average individual
cash withdrawal from pension funds is around GBP9,000.
The average cost of an installed driveway or patio is
between GBP5,000 and GBP6,000 and this remains a popular
use of pensions release funds.
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 market confidence indicators have continued
to improve over the last 12 months and the ABI's hard
landscape lead indicator shows demand increasing over
the next year. This indicator consolidates planning
information for all the sub-sectors requiring hard landscaping.
On average, there is a 12-month lag between contracts
being awarded and the landscape products being required,
so this provides 12-month advance information on likely
future demand. The ABI continues to highlight Transport,
Residential and Landscaping as the leading growth areas,
which is firmly in line with the key focus areas of
the Group's 2020 Strategy.
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 2017 was GBP1.7 million
(2016: 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.
Keypave and Urbex are 2 examples of recent successful
new product solutions for the New Build Housing sector.
Revenue from new products in the core Landscape Products
business continues to strengthen and represented 14
per cent of Group sales in the 6 months ended 30 June
2017.
The Group's previously announced self help capital investment
programme is an important part of our 2020 Strategy
and will incur additional capital expenditure of GBP15
million over the next 3 years. The 2017 financial year
is the first year of this enhanced investment, which
is expected to deliver sustainable cost savings of GBP5
million per annum by 2019. The detailed plan is on track
and progressing well. The programme includes various
projects within natural stone, block paving and automated
material handling. Capital investment in property, plant
and equipment in the 6 months ended 30 June 2017 totalled
GBP7.9 million (2016: GBP5.8 million) and this compares
with depreciation of GBP6.4 million (2016: GBP5.9 million).
Balance Sheet and Cash Flow
Net assets at 30 June 2017 were GBP222.6 million (June
2016: GBP204.9 million).
In the 6 months ended 30 June 2017 net cash flows from
operating activities were GBP19.2 million (2016: GBP9.3
million). This strong cash generation delivered a net
cash position of GBP18.6 million at 30 June 2017, before
the dividend payments referred to above, and a reported
post dividend net cash balance of GBP1.2 million (June
2016: GBP8.8 million net debt). 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 levels
and the management of capital expenditure and trade
receivables.
The Group's existing bank facilities ensure headroom
against available facilities remains at appropriately
conservative levels. Our committed facilities are currently
in the process of being extended by 1 year to 2022 to
enhance the maturity profile and, on 1 August 2017,
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. We have
also secured additional facilities with our banking
partners which would be available to fund "bolt-on"
acquisitions.
The balance sheet value of the Group's defined benefit
pension scheme was a surplus of GBP3.6 million at 30
June 2017 (December 2016: GBP4.3 million surplus; June
2016: GBP7.9 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. During the last 6 months, the AA corporate
bond rate reduced from 2.65 per cent to 2.55 per cent,
in line with market movements. The expected rate of
inflation reduced to 2.15 per cent from 2.20 per cent
at 31 December 2016. The balance sheet value continues
to benefit from the high proportion of liability-driven
investments whose performance matches the liabilities.
The Group has established a new defined contribution
pension scheme within a Master Trust operated by Aviva
/ Friends Life. The new Marshalls Retirement and Savings
Plan was launched on 1 April 2017 and the transition
process is now complete. This will provide a much improved
pension proposition for the majority of Group employees.
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 3.40 pence (June 2016: 2.90 pence) per share,
an increase of 17 per cent, which reflects the Group's
strong cash generation. This dividend will be paid on
6 December 2017 to shareholders on the register at the
close of business on 20 October 2017. The ex-dividend
date will be 19 October 2017.
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. The Board does not
consider that the principal risks and uncertainties
have changed since the publication of the Annual Report
for the year ended 31 December 2016. A detailed explanation
of the risks, and how the Group seeks to mitigate these
risks, can be found on pages 20 to 24 of the 2016 Annual
Report which is available at www.marshalls.co.uk/investor/annual-and-interim-reports.
Going concern
As stated in Note 1 of the 2017 Half Year 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 Year Report.
Outlook
The Construction Products Association's ("CPA") recent
Summer Forecast predicts growth in UK market volumes
of 1.9 per cent in 2017, which represents a slight improvement
on their Spring Forecast. The Group continues to outperform
the CPA growth figures and the underlying short to medium
term market indicators remain supportive. The CPA's
2018 forecast has recently been reduced, which reflects
the continuing wider economic uncertainty.
The Group continues to invest in product innovation
and service delivery initiatives and is well placed
to drive through further sustainable improvements in
operational efficiency gains. The Board believes that
Marshalls' innovative product range and strong market
positions will continue to support growth and operational
profit improvements during the delivery of the 2020
Strategy and will drive future shareholder returns.
The Group's focus remains the delivery of the growth
initiatives set out in the 2020 Strategy, whilst maintaining
a strong balance sheet and a flexible capital structure.
The Board remains confident of achieving its expectations
for 2017.
Martyn Coffey
Chief Executive
Marshalls plc
Condensed Consolidated Income Statement
for the half year ended 30 June 2017
Half year Year ended
ended June December
2017 2016 2016
Notes GBP'000 GBP'000 GBP'000
Revenue 2 219,131 202,371 396,922
Net operating costs 3 (189,299) (176,402) (349,283)
Operating profit 2 29,832 25,969 47,639
Financial expenses 4 (703) (826) (1,594)
Financial income 4 - - 1
Profit before tax 2 29,129 25,143 46,046
Income tax expense 5 (5,477) (4,812) (8,539)
Profit for the financial
period 23,652 20,331 37,507
Profit for the period
Attributable to:
Equity shareholders
of the Parent 23,779 20,411 37,350
Non-controlling interests (127) (80) 157
23,652 20,331 37,507
Earnings per share
Basic 6 12.04p 10.36p 18.95p
Diluted 6 11.94p 10.22p 18.61p
Dividend
Pence per share 7 5.80p 4.75p 7.65p
Supplementary 3.00p 2.00p 2.00p
Dividends declared 7 17,387 13,314 19,034
All results relate to continuing operations.
Marshalls plc
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 30 June 2017
Half year Year ended
ended June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit for the financial period 23,652 20,331 37,507
Other comprehensive (expense)
/ income
Items that will not be reclassified
to the Income Statement:
Remeasurement of the net defined
benefit liability (517) 4,759 1,394
Deferred tax arising 88 (857) (237)
Total items that will not be
reclassified to the Income
Statement (429) 3,902 1,157
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 (704) 412 1,123
Fair value of cash flow hedges
transferred to the Income Statement (251) 1,220 1,681
Deferred tax arising 159 (327) (561)
Exchange difference on retranslation
of foreign currency net
investment 135 2,275 2,729
Exchange movements associated
with borrowings (412) (2,158) (2,641)
Foreign currency translation
differences - non-controlling
interests 213 137 169
Total items that are or may
be reclassified subsequently
to
the Income Statement (860) 1,559 2,500
Other comprehensive (expense)
/ income for the period,
net of income tax (1,289) 5,461 3,657
Total comprehensive income for
the period 22,363 25,792 41,164
Attributable to:
Equity shareholders of the
Parent 22,277 25,735 40,838
Non-controlling interests 86 57 326
22,363 25,792 41,164
Marshalls plc
Condensed Consolidated Balance Sheet
as at 30 June 2017
June December
Notes 2017 2016 2016
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 147,514 147,736 146,995
Intangible assets 40,386 40,091 40,093
Trade and other receivables 208 415 208
Employee benefits 8 3,622 7,892 4,276
Deferred taxation assets 2,390 1,364 1,821
194,120 197,498 193,393
Current assets
Inventories 70,380 67,448 68,713
Trade and other receivables 74,295 65,847 49,010
Cash and cash equivalents 26,862 25,631 20,681
Assets classified as held for
sale - 2,519 624
Derivative financial instruments - - 657
171,537 161,445 139,685
Total assets 365,657 358,943 333,078
Liabilities
Current liabilities
Trade and other payables 96,818 98,071 79,646
Corporation tax 7,555 6,887 7,388
Interest-bearing loans and
borrowings 34 33 34
Derivative financial instruments 276 515 -
104,683 105,506 87,068
Non-current liabilities
Interest-bearing loans and
borrowings 25,669 34,425 15,234
Deferred taxation liabilities 12,669 14,142 13,655
38,338 48,567 28,889
Total liabilities 143,021 154,073 115,957
Net assets 222,636 204,870 217,121
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 (2,470) (3,664) (3,622)
Capital redemption reserve 75,394 75,394 75,394
Consolidation reserve (213,067) (213,067) (213,067)
Hedging reserve (206) (348) 590
Retained earnings 288,894 272,819 283,821
Equity attributable to equity
shareholders of the Parent 221,085 203,674 215,656
Non-controlling interests 1,551 1,196 1,465
Total equity 222,636 204,870 217,121
Marshalls plc
Condensed Consolidated Cash Flow Statement
for the half year ended 30 June 2017
Half year ended Year ended
June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the financial period 23,652 20,331 37,507
Income tax expense 5,477 4,812 8,539
Profit before tax 29,129 25,143 46,046
Adjustments for:
Depreciation 6,438 5,916 12,146
Amortisation 501 496 1,009
Gain on sale of property, plant
and equipment (870) (86) (609)
Equity settled share-based expenses 736 629 2,884
Financial income and expenses
(net) 703 826 1,593
Operating cash flow before changes
in working capital 36,637 32,924 63,069
Increase in trade and other
receivables (24,569) (21,120) (4,602)
Increase in inventories (1,469) (1,308) (2,419)
Increase in trade and other
payables 14,842 3,098 1,868
Operational restructuring costs
paid - - (476)
Cash generated from operations 25,441 13,594 57,440
Financial expenses paid (513) (579) (940)
Income tax paid (5,723) (3,665) (7,107)
Net cash flow from operating
activities 19,205 9,350 49,393
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 4,171 490 3,839
Financial income received - - 1
Acquisition of property, plant
and equipment (7,922) (5,764) (12,939)
Acquisition of intangible assets (794) (419) (934)
Net cash flow from investing
activities (4,545) (5,693) (10,033)
Cash flows from financing activities
Payments to acquire own shares (1,054) (1,175) (1,175)
Decrease in other debt and finance
leases - - (40)
Increase / (decrease) in borrowings 10,000 (1,997) (23,791)
Equity dividends paid (17,387) - (19,034)
Net cash flow from financing
activities (8,441) (3,172) (44,040)
Net increase / (decrease) in
cash and cash equivalents 6,219 485 (4,680)
Cash and cash equivalents at
the beginning of the period 20,681 24,990 24,990
Effect of exchange rate fluctuations (38) 156 371
Cash and cash equivalents at
the end of the period 26,862 25,631 20,681
Marshalls plc
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2017
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
2017 49,845 22,695 (3,622) 75,394 (213,067) 590 283,821 215,656 1,465 217,121
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
Total
comprehensive
income /
(expense)
for the
period
Profit /
(loss) for
the financial
period
attributable
to
equity
shareholders
of
the Parent - - - - - - 23,779 23,779 (127) 23,652
Other
comprehensive
income /
(expense)
Foreign
currency
translation
differences - - - - - - (277) (277) 213 (64)
Effective
portion of
changes in
fair value
of
cash flow
hedges - - - - - (704) - (704) - (704)
Net change
in fair value
of cash flow
hedges
transferred
to the Income
Statement - - - - - (251) - (251) - (251)
Deferred
tax arising - - - - - 159 - 159 - 159
Defined
benefit
plan
actuarial
loss - - - - - - (517) (517) - (517)
Deferred
tax arising - - - - - - 88 88 - 88
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
Total other
comprehensive
(expense)
/ income - - - - - (796) (706) (1,502) 213 (1,289)
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
Total
comprehensive
(expense)
/ income
for the
period - - - - - (796) 23,073 22,277 86 22,363
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
Transactions
with owners,
recorded
directly
in equity
Contributions
by and
distributions
to owners
Share-based
payments - - - - - - 736 736 - 736
Deferred
tax on
share-based
payments - - - - - - 702 702 - 702
Corporation
tax on share-
based
payments - - - - - - 155 155 - 155
Dividends
to equity
shareholders - - - - - - (17,387) (17,387) - (17,387)
Purchase
of own shares - - (1,054) - - - - (1,054) - (1,054)
Disposal
of own shares - - 2,206 - - - (2,206) - - -
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
Total
contributions
by
and
distributions
to owners - - 1,152 - - - (18,000) (16,848) - (16,848)
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
Total
transactions
with
owners of
the Company - - 1,152 - - (796) 5,073 5,429 86 5,515
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
At 30 June
2017 49,845 22,695 (2,470) 75,394 (213,067) (206) 288,894 221,085 1,551 222,636
-------- -------- -------- ----------- ---------- -------- --------- --------- ---------- ---------
Marshalls plc
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2017
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
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 - - - - - 1,305 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
Marshalls plc
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2017
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
2016 49,845 22,695 (5,529) 75,394 (213,067) (1,653) 263,894 191,579 1,139 192,718
Total
comprehensive
income for
the year
Profit for
the financial
period
attributable
to
equity
shareholders
of
the Parent - - - - - - 37,350 37,350 157 37,507
Other
comprehensive
income /
(expense)
Foreign
currency
translation
differences - - - - - - 88 88 169 257
Effective
portion of
changes in
fair value
of
cash flow
hedges - - - - - 1,123 - 1,123 - 1,123
Net change
in fair value
of cash flow
hedges
transferred
to the Income
Statement - - - - - 1,681 - 1,681 - 1,681
Deferred
tax arising - - - - - (561) - (561) - (561)
Defined
benefit
plan
actuarial
gain - - - - - - 1,394 1,394 - 1,394
Deferred
tax arising - - - - - - (237) (237) - (237)
Total other
comprehensive
income - - - - - 2,243 1,245 3,488 169 3,657
Total
comprehensive
income for
the year - - - - - 2,243 38,595 40,838 326 41,164
Transactions
with
owners,
recorded
directly
in equity
Contributions
by and
distributions
to
owners
Share-based
payments - - - - - - 2,884 2,884 - 2,884
Deferred
tax on
share-based
payments - - - - - - 122 122 - 122
Corporation
tax on share-
based
payments - - - - - - 442 442 - 442
Dividends
to equity
shareholders - - - - - - (19,034) (19,034) - (19,034)
Purchase
of own shares - - (1,175) -- - - - (1,175) - (1,175)
Disposal
of own shares - - 3,082 - - - (3,082) - - -
Total
contributions
by
and
distributions
to
owners - - 1,907 - - - (18,668) (16,761) - (16,761)
Total
transactions
with
owners of
the Company - - 1,907 - - 2,243 19,927 24,077 326 24,403
At 31 December
2016 49,845 22,695 (3,622) 75,394 (213,067) 590 283,821 215,656 1,465 217,121
Notes to the Condensed Consolidated Financial Statements
for the half year ended 30 June 2017
1. Basis of preparation
Marshalls plc (the "Company") is a company domiciled in the
United Kingdom. The Condensed Consolidated Financial Statements of
the Company for the half year ended 30 June 2017 comprise the
Company and its subsidiaries (together referred to as the
"Group").
The Condensed Consolidated 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 Financial Statements do not
constitute statutory financial statements and do not include all
the information and disclosures required for full annual financial
statements. The Condensed Consolidated Half Year Financial
Statements were approved by the Board on 17 August 2017. The
Condensed Consolidated Half Year 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 2017 and the comparative period have not been
audited. The Auditor has carried out a review of the Half Year
Financial Information and its report is set out on page 23.
The financial information for the year ended 31 December 2016
has been extracted from the annual Financial Statements, included
in the Annual Report 2016, 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 its 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 UK Financial Conduct Authority, the
condensed set of Financial Statements has 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 2016.
The Condensed Consolidated Half Year 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 Year Financial Statements and are also set out on
the Company's website (www.marshalls.co.uk). The Condensed
Consolidated Half Year 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 the
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 Year 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 2016.
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 1 August 2017.
Management believes 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 Year Financial Statements.
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 UK Domestic and UK
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 1 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 Half year ended Year ended December
June June 2016
2017 2016
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 163,924 57,624 221,548 148,057* 55,984* 204,041 293,287* 106,883* 400,170
Inter-segment
revenue (92) (2,325) (2,417) (58) (1,612) (1,670) (89) (3,159) (3,248)
Total
revenue 163,832 55,299 219,131 147,999* 54,372* 202,371 293,198* 103,724* 396,922
Segment
operating
profit 31,067 2,708 33,775 25,772* 2,243* 28,015 48,678* 4,920* 53,598
Unallocated
administration
costs (3,943) (2,046) (5,959)
Operating
profit 29,832 25,969 47,639
Finance
charges
(net) (703) (826) (1,593)
Profit
before
tax 29,129 25,143 46,046
Taxation (5,477) (4,812) (8,539)
Profit
after
tax 23,652 20,331 37,507
*Following a change to the way in which information is reported
internally, the comparative figures have been restated to ensure
consistent classification with the analysis reported for the half
year ended 30 June 2017.
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 certain 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.
June June December
Segment assets 2017 2016 2016
GBP'000 GBP'000 GBP'000
Fixed assets and inventory:
Landscape Products 152,538 148,392* 152,900*
Other 65,357 66,792* 62,808*
Total segment fixed
assets and inventory 217,895 215,184 215,708
Unallocated assets 147,762 143,759 117,370
Consolidated total
assets 365,657 358,943 333,078
*Following a change to the way in which information is reported
internally, the comparative figures have been restated to ensure
consistent classification with the analysis reported for the half
year ended 30 June 2017.
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
Year Year
Half year ended ended Half year ended ended
June December June December
2017 2016 2016 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Landscape Products 4,988 4,581* 9,200* 8,376 4,703* 9,131*
Other 1,951 1,831* 3,955* 451 993* 3,883*
6,939 6,412 13,155 8,827 5,696 13,014
*Following a change to the way in which information is reported
internally, the comparative figures have been restated to ensure
consistent classification with the analysis reported for the half
year ended 30 June 2017.
Geographical destination of revenue
Half year Year ended
ended June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
United Kingdom 205,613 191,645 377,659
Rest of the
World 13,518 10,726 19,263
219,131 202,371 396,922
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
2017 2016 2016
GBP'000 GBP'000 GBP'000
Raw materials and consumables 79,779 76,547 142,011
Changes in inventories
of finished goods and work
in progress 2,019 (3,165) 2,591
Personnel costs 51,086 49,628 98,128
Depreciation 6,438 5,916 12,146
Amortisation of intangible
assets 501 496 1,009
Own work capitalised (666) (782) (1,381)
Other operating costs 51,785 48,660 97,069
Restructuring costs 1,003 - 476
Operating costs 191,945 177,300 352,049
Other operating income (1,776) (812) (2,157)
Net gain on asset and property
disposals (870) (86) (609)
Net operating costs 189,299 176,402 349,283
4. Financial expenses and income
Half year Year ended
ended June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
(a) Financial expenses
Net interest expense on
defined benefit pension
scheme 187 244 445
Interest expense on bank
loans, overdrafts and loan
notes 513 579 1,143
Finance lease interest
expense 3 3 6
703 826 1,594
(b) Financial income
Interest receivable and
similar income - - 1
Net interest expense on the defined benefit pension scheme is
disclosed net of Company recharges.
5. Income tax expense
Half year Year ended
ended June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Current tax expense
Current year 6,363 5,946 10,611
Adjustments for prior
years (289) (371) (921)
6,074 5,575 9,690
Deferred taxation
expense
Origination and reversal
of temporary
differences:
Current year (478) (711) (1,098)
Adjustments for prior
years (119) (52) (53)
Total tax expense 5,477 4,812 8,539
Year ended
Half year ended June December
2017 2016 2016
% GBP'000 % GBP'000 % GBP'000
Reconciliation of effective
tax rate
Profit before tax 100.0 29,129 100.0 25,143 100.0 46,046
------ -------- ------ -------- ------ --------
Tax using domestic corporation
tax rate 19.2 5,608 20.0 5,029 20.0 9,209
Impact of capital allowances
in excess of depreciation 0.5 136 1.7 431 0.4 173
Short-term timing differences 1.1 310 (0.2) (62) 1.0 480
Adjustment to tax charge
in prior period (1.1) (289) (1.5) (371) (2.0) (921)
Expenses not deductible
for tax purposes 1.1 309 2.2 548 1.6 749
------ -------- ------ -------- ------ --------
Corporation tax charge
for the year 20.8 6,074 22.2 5,575 21.0 9,690
Impact of capital allowances
in excess of depreciation (1.9) (545) (2.2) (556) (1.0) (443)
Short-term timing differences 0.1 30 (0.2) (56) (0.1) (66)
Pension scheme movements 0.1 23 - - 0.3 127
Other items 1.8 509 (0.4) (99) (0.9) (397)
Adjustment to tax charge
in prior period (0.4) (119) (0.2) (52) (0.1) (53)
Impact of the change
in the rate of corporation
tax on deferred taxation (1.7) (495) - - (0.7) (319)
------ -------- ------ -------- ------ --------
Total tax charge for
the year 18.8 5,477 19.2 4,812 18.5 8,539
------ -------- ------ -------- ------ --------
The net amount of deferred taxation credited to the Consolidated
Statement of Comprehensive Income in the period was GBP247,000
credit (30 June 2016: GBP1,184,000 debit; 31 December 2016:
GBP798,000 debit). 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 12.04 pence (30 June 2016: 10.36
pence; 31 December 2016: 18.95 pence) per share is calculated by
dividing the profit attributable to Ordinary Shareholders for the
financial period after adjusting for non-controlling interests of
GBP23,779,000 (30 June 2016: GBP20,411,000; 31 December 2016:
GBP37,350,000) by the weighted average number of shares in issue
during the period of 197,440,624 (30 June 2016: 197,013,990; 31
December 2016: 197,130,419).
Profit attributable to Ordinary Shareholders
Half year Year ended
ended June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit for the financial period 23,652 20,331 37,507
Result attributable to non-controlling
interests 127 80 (157)
Profit attributable to Ordinary
Shareholders 23,779 20,411 37,350
Weighted average number of Ordinary Shares
Half year Year ended
ended June December
2017 2016 2016
Number Number Number
Number of issued Ordinary Shares 199,378,755 199,378,755 199,378,755
Effect of shares transferred into employee benefit trust (1,938,131) (2,364,765) (2,248,336)
Weighted average number of Ordinary Shares 197,440,624 197,013,990 197,130,419
Diluted earnings per share of 11.94 pence (30 June 2016: 10.22
pence; 31 December 2016: 18.61 pence) per share is calculated by
dividing the profit for the financial period, after adjusting for
non-controlling interests, of GBP23,779,000 (30 June 2016:
GBP20,411,000; 31 December 2016: GBP37,350,000) by the weighted
average number of shares in issue during the period of 197,440,624
(30 June 2016: 197,013,990; 31 December 2016: 197,130,419), plus
potentially dilutive shares of 1,722,526 (30 June 2016: 2,629,255;
31 December 2016: 3,561,243), which totals 199,163,150 (30 June
2016: 199,643,245; 31 December 2016: 200,691,662).
Weighted average number of Ordinary Shares (diluted)
Half year Year ended December
ended June
2017 2016 2016
Number Number Number
Weighted average number of Ordinary Shares 197,440,624 197,013,990 197,130,419
Dilutive shares 1,722,526 2,629,255 3,561,243
Weighted average number of Ordinary Shares (diluted) 199,163,150 199,643,245 200,691,662
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 share Half year Year ended
ended June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
2017 interim 3.40 6,718 - -
2016 supplementary 3.00 - - 5,927
2016 final 5.80 - - 11,460
2016 interim 2.90 - 5,720 5,720
6,718 5,720 23,107
The following dividends were approved by the shareholders in the
period:
Pence per qualifying share Half year Year ended
ended June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
2016 supplementary 3.00 5,927 - -
2016 final 5.80 11,460 - -
2016 interim 2.90 - - 5,720
2015 supplementary 2.00 - 3,945 3,945
2015 final 4.75 - 9,369 9,369
17,387 13,314 19,034
The 2016 final dividend of 5.80 pence per qualifying Ordinary
Share alongside a supplementary dividend of 3.00 pence per
qualifying Ordinary Share (total value GBP17,387,000) was paid on
30 June 2017 to shareholders registered at the close of business on
16 June 2017.
The Board has declared an interim dividend of 3.40 pence (June
2016: 2.90 pence) per share. This dividend will be paid on 6
December 2017 to shareholders on the register at the close of
business on 20 October 2017. The ex-dividend date will be 19
October 2017.
8. Employee benefits
The Company sponsors a funded defined pension scheme in the UK
("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 provides pension and
lump sums to members on retirement and to dependants on death. The
defined benefit section closed to future accrual of benefits on 30
June 2006 with then active members becoming entitled to a deferred
pension. 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 2017
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
2017 2016 2016
GBP'000 GBP'000 GBP'000
Present value of Scheme liabilities (353,971) (347,452) (355,793)
Fair value of Scheme assets 357,593 355,344 360,069
Net amount recognised (before any adjustment for deferred tax) 3,622 7,892 4,276
The current and past service costs, settlements 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
2017 2016 2016
GBP'000 GBP'000 GBP'000
Service cost:
Net interest expense recognised in the Consolidated Income Statement 137 294 545
Remeasurements of the net liability:
Return on scheme assets (excluding amount included in interest
expense) (507) (54,879) (59,979)
Loss arising from changes in financial assumptions 5,565 53,764 62,474
Gain arising from changes in demographic assumptions (3,628) - -
Experience gain (913) (3,644) (3,889)
Charge / (credit) recorded in other comprehensive income 517 (4,759) (1,394)
Total defined benefit charge / (credit) 654 (4,465) (849)
The principal actuarial assumptions used were:
June December
2017 2016 2016
Liability discount rate 2.55% 2.70% 2.65%
Inflation assumption - RPI 3.15% 2.90% 3.20%
Inflation assumption - CPI 2.15% 1.90% 2.20%
Rate of increase in salaries n/a n/a n/a
Revaluation of deferred pensions 2.15% 1.90% 2.20%
Increases for pensions in payment:
CPI pension increases (maximum 5% per annum) 2.15% 1.90% 2.20%
CPI pension increases (maximum 5% per annum,
minimum 3% per annum) 3.10% 3.10% 3.10%
CPI pension increases (maximum 3% per annum) 2.05% 1.80% 2.10%
Proportion of employees opting for early retirement 0% 0% 0%
Proportion of employees commuting pension for cash 50% 50% 50%
Mortality assumption - before Same as post retirement Same as post retirement Same as post 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_2016 1.0% CMI_2015 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_2016 1.0% CMI_2015 1.0% CMI_2015 1.0%
Future expected lifetime of current
pensioner at age 65:
Male aged 65 at year end 86.5 86.5 86.5
Female aged 65 at year end 88.4 88.5 88.5
Future expected lifetime of future
pensioner at age 65:
Male aged 45 at year end 87.6 87.8 87.8
Female aged 45 at year end 89.6 90.0 89.8
9. Analysis of net debt
1 January Cash Other 30 June
2017 flow changes 2017
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 20,681 6,219 (38) 26,862
Debt due after 1 year (14,975) (10,000) (432) (25,407)
Finance leases (293) - (3) (296)
5,413 (3,781) (473) 1,159
Reconciliation of net cash flow to movement in net debt
Half year ended Year ended December
June
2017 2016 2016
GBP'000 GBP'000 GBP'000
Net increase / (decrease) in cash and cash equivalents 6,219 485 (4,680)
Cash (outflow) / inflow from decrease in debt and lease financing (10,000) 4,155 23,831
Effect of exchange rate fluctuations (473) (2,005) (2,276)
Movement in net debt in the period (4,254) 2,635 16,875
Net cash / (debt) at beginning of the period 5,413 (11,462) (11,462)
Net cash / (debt) at the end of the period 1,159 (8,827) 5,413
10. Borrowing facilities
The total bank borrowing facilities at 30 June 2017 amounted to
GBP105.0 million (30 June 2016: GBP115.0 million; 31 December 2016:
GBP95.0 million), of which GBP79.6 million (30 June 2016: GBP80.9
million; 31 December 2016: GBP80.0 million) remained
unutilised.
These figures include an additional seasonal working capital
facility of GBP10.0 million available between 1 February and 31
August each year.
The undrawn facilities available at 30 June 2017, in respect of
which all conditions precedent had been met, were as follows:
June December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Committed:
- Expiring in more than 2 years but not more than 5 years 54,593 45,872 65,025
- Expiring in 1 year or less - - -
Uncommitted:
- Expiring in 1 year or less 25,000 35,000 15,000
79,593 80,872 80,025
The total borrowing facilities at 17 August 2017 amounted to
GBP105.0 million. On 1 August 2017, the Group renewed its
short-term working capital facilities of GBP25.0 million. The
committed facilities are all revolving credit facilities with
interest charged at variable rates 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 2017
is shown below:
June June December
2017 2016 2016
Book Fair Book Fair Book Fair
amount value amount value amount value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 70,217 70,217 65,847 65,847 46,033 46,033
Cash and cash equivalents 26,862 26,862 25,631 25,631 20,681 20,681
Bank loans (25,407) (24,322) (34,128) (33,582) (14,975) (14,192)
Finance lease liabilities (296) (317) (330) (360) (293) (320)
Trade and other payables (81,638) (81,638) (98,071) (98,071) (70,939) (70,939)
Interest rate swaps, forward contracts and fuel hedges (276) (276) (515) (515) 657 657
Financial instrument assets and liabilities - net (10,538) (41,566) (18,836)
Non-financial instrument assets and liabilities - net 233,174 246,436 235,957
222,636 204,870 217,121
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 2017
Derivative financial liabilities - (276) - (276)
30 June 2016
Derivative financial liabilities - (515) - (515)
31 December 2016
Derivative financial assets - 657 - 657
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 24 of the 2016 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.
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 Year Financial Statements
have been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union; and
-- the Half Year 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 2017 and their impact on the Condensed Consolidated Half Year 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 2017 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 2017
were as follows:
Andrew Allner Chairman
Janet Ashdown Senior Non-Executive Director
Jack Clarke Finance Director
Martyn Coffey Chief Executive
Mark Edwards Non-Executive Director - retired on 10 May 2017
Tim Pile Non-Executive Director
Graham Prothero Non-Executive Director - appointed on 10 May 2017
The responsibilities of the Directors during their period of
service were as set out on pages 34 and 35 of the 2016 Annual
Report.
By order of the Board
Cathy Baxandall
Group Company Secretary
17 August 2017
Cautionary statement
This Half Year 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 Year 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 Year 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 Year Financial Report for the 6
months ended 30 June 2017, which comprises the Condensed
Consolidated Half Year Income Statement, the Condensed Consolidated
Half Year Statement of Comprehensive Income, the Condensed
Consolidated Half Year Balance Sheet, the Condensed Consolidated
Half Year Cash Flow Statement, the Condensed Consolidated Half Year
Statement of Changes in Equity and related Notes 1 to 12. We have
read the other information contained in the Half Year 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 Year Financial Report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the Half Year 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 Year 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 Year
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 Year 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 Year Financial Report for the 6 months ended 30 June
2017 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
Statutory Auditor
Manchester, United Kingdom
17 August 2017
Shareholder Information
Financial calendar
Half Year results for the year ending Announced 17 August 2017
December 2017
Half Year dividend for the year ending Payable 6 December 2017
December 2017
Results for the year ending December 2017 Announcement March 2018
Report and accounts for the year ending April
December 2017 2018
Annual General Meeting May
2018
Final dividend for the year ending December Payable June 2018
2017
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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