TIDMMSLH
RNS Number : 3524X
Marshalls PLC
28 August 2015
Interim results for the half year ended 30 June 2015
Marshalls plc, the specialist Landscape Products Group,
announces its half year results
Financial Highlights Half Year ended Half Year ended Increase
30 June 2015 30 June 2014 %
Continuing operations:
Revenue GBP199.1m GBP180.0m 11
EBITDA GBP29.7m GBP22.2m 34
Operating profit GBP22.0m GBP15.6m 41
Profit before tax GBP20.8m GBP14.0m 48
Basic EPS 8.50p 6.11p 39
Interim dividend 2.25p 2.00p 13
510
ROCE 15.2% 10.1% basis points
Net debt to EBITDA 0.7 times 1.4 times
Highlights:
-- Revenue up 11% to GBP199.1 million (2014: GBP180.0 million)
-- Improvement in operating margins to 11.1% (2014: 8.7%)
-- Profit before tax up 48% to GBP20.8 million (2014: GBP14.0 million)
-- Return on capital employed for the year ended 30 June 2015 up 50% to 15.2% (2014: 10.1%)
-- EPS up 39% to 8.50 pence (2014: 6.11 pence)
-- Interim dividend increased by 13% to 2.25 pence (2014: 2.00 pence) per share
Current priorities:
-- To increase output to meet growing demand and to deliver benefits from operational gearing
-- To further strengthen the Marshalls brand by developing
systems based solutions, service excellence and new product
development
-- 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
Commenting on these results, Martyn Coffey, Chief Executive,
said:
"The Group is well positioned to grow organically and
selectively through acquisitions. We will continue to focus on
growth initiatives during the remainder of 2015 and in 2016.
The Construction Products Association supports this view of
growth and its Summer Forecast predicts growth in UK market volumes
of 4.9 per cent in 2015 and 4.2 per cent in 2016. In order to drive
growth, the Group continues to develop the Marshalls brand and
invest in product innovation and service delivery initiatives to
deliver improved trading margins and increased return on capital
employed."
Enquiries:
Martyn Coffey Chief Executive Marshalls plc 01422 314777
Jack Clarke Finance Director Marshalls plc 01422 314777
Jon Coles Brunswick Group 0207 404 5959
Simon Maine
Interim Management Report
Group results
Marshalls' revenue for the six months ended 30 June 2015 grew by
11 per cent to GBP199.1 million (2014: GBP180.0 million). Trading
conditions continue to be positive and the Group experienced both
strong order intake and sales growth. If these positive market
conditions continue through the second half, noting the stronger
comparables in the second half of 2014, it is likely that full year
trading will be above original expectations.
Sales to the Public Sector and Commercial end market, which
represent approximately 64 per cent of Group sales, were up 15 per
cent, compared with the prior year. Sales to the Domestic end
market, which represent approximately 30 per cent of Group sales,
were up 4 per cent compared with the prior year. Sales in the
International business have increased by 7 per cent in the six
months ended 30 June 2015 and represent 6 per cent of Group
sales.
Operating profit increased to GBP22.0 million (2014: GBP15.6
million). EBITDA also improved to GBP29.7 million (2014: GBP22.2
million).
Group return on capital employed ("ROCE") was 15.2 per cent for
the year ended 30 June 2015 which represents an increase of 50 per
cent compared with the prior year. ROCE is defined as EBITA /
shareholders' funds plus net debt.
Net financial expenses were GBP1.2 million (2014: GBP1.6
million) and interest was strongly covered 18.5 times operating
profit (2014: 9.9 times). The effective tax rate was 20.8 per cent
(2014: 17.0 per cent).
Basic EPS was 8.50 pence (2014: 6.11 pence) per share. The
interim dividend will be 2.25 pence (2014: 2.00 pence) per share, a
13% increase on the prior year.
Current strategy
The Group's focus is to grow the business organically and
selectively through acquisitions. Our strategic objectives include
the improvement of profit margins in all businesses and to increase
the Group's ROCE. The long-term strategy continues to combine the
delivery of sustainable shareholder value and profitability with
organic expansion and the development of key "route to market"
relationships.
Current priorities
The Group's priorities are to grow and develop the business and
to leverage the benefits from the improving market conditions in
order to generate volume growth and so benefit from operational
gearing. A key objective is to deliver further improvement in
profit margins in all businesses and end markets, and the
operational priorities remain service, quality, design, innovation
and a commitment to research and development, sustainability and an
integrated product offer.
Operating performance
Operating margins increased to 11.1 per cent in the six months
ended 30 June 2015 (2014: 8.7 per cent). This represents an
improvement of 27 per cent reflecting improved operational gearing
as a result of volume growth which continues to be ahead of the
Construction Products Association's market forecasts. The continued
focus on operational flexibility has enabled the Group to increase
manufacturing output as the market has recovered and our network of
manufacturing sites has enough capacity to absorb medium-term
demand and the flexibility for further capacity and capability
investment.
In the UK, sales price increases generated GBP5.6 million in
additional revenue and exceeded the impact of cost inflation by
GBP1.4 million. Volume growth has been particularly strong in the
Public Sector and Commercial end market where the revenue increase
attributable to volume and mix has been 11 per cent.
In the Public Sector and Commercial end market the Group's
strategy is to build on its position as a market leading landscape
products specialist. The Group's experienced technical and sales
teams continue to focus on markets where future demand is greatest
across a full range of integrated products and sustainable
solutions for customers, architects and contractors. The Group
continued to focus on innovation and new product development to
drive sales growth in areas of particular opportunity. Commercial
work from Water Management, Street Furniture, Rail and Newbuild
Housing continues to increase and the Group is outperforming the
market in these areas.
Our objective is to continually strengthen and differentiate the
Marshalls brand, to improve the product mix and to ensure a
consistently high standard of quality and to provide good
geographical coverage.
In the Domestic end market the Group's strategy continues to be
to drive more sales through quality installers. The Marshalls
Register of approved domestic installers has grown to over 1,800
teams. The Group remains committed to increasing the marketing
support to the installer base through increased training, marketing
materials and sales support.
Historically, there has been a good correlation between consumer
confidence and installer order books. The survey of domestic
installers at the end of June 2015 revealed continuing strong order
books of 12.0 weeks (2014: 11.5 weeks) and compares with 10.6 weeks
at the end of April 2015. The position at 30 June 2015 is the
highest recorded order book at this time of year.
The Group's Landscape Products business is a reportable segment
servicing the UK Public Sector and Commercial and UK Domestic end
markets. The Group's smaller UK businesses include Street
Furniture, Mineral Products and Stone Cladding and their
performance has continued to improve in the first half of 2015,
delivering volume revenue growth of GBP3.8 million and profit
growth of GBP1.0 million. All these businesses are now
profitable.
Continued progress is being made in developing the International
business and activity levels have been increasingly encouraging.
Sales from our operations in Belgium increased by 15.8 per cent, in
local currency, in the six months ended 30 June 2015 despite a
market background in mainland Europe that continues to be subdued.
Trading performance in the Belgium business has improved markedly.
Marshalls continues to expand its geographical reach and to extend
its global supply chains and routes to market. Marshalls continues
to develop the distribution of natural stone products into the
North American market and the Group is now opening a sales office
in Dubai to facilitate further sales growth in the Middle East.
Balance sheet and cash flow as at 30 June 2015
Net assets at 30 June 2015 were GBP184.0 million (June 2014:
GBP177.0 million).
At 30 June 2015 net debt was markedly lower at GBP32.9 million
(June 2014: GBP50.9 million) with gearing at 17.9 per cent (June
2014: 28.8 per cent). Cash management continues to be a high
priority area and the Group continues to focus on inventory and
capital expenditure management, credit control and the maintenance
of credit insurance for trade receivables.
Capital investment in property, plant and equipment in the six
months to 30 June 2015 totalled GBP5.5 million (2014: GBP3.8
million) and compares with depreciation of GBP7.0 million (2014:
GBP6.0 million). Research and development expenditure amounted to
GBP1.6 million (2014: GBP1.1 million).
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In July 2015, following the continued steady reduction in net
debt, the Group undertook a full review of its bank facilities in
order to align them with current strategy and to ensure headroom
against available facilities remains at appropriate levels. We
reduced our total committed facility lines by GBP30 million to
GBP80 million and reduced our interest costs significantly through
the refinancing. New committed facility lines have been established
and Marshalls continues its policy of having significant committed
facilities in place with a positive spread of medium-term
maturities. The new facilities have extended maturities with some
going out to 2020. At the same time, the Group also renewed its
short-term working capital facilities with RBS.
The balance sheet value of the Group's defined benefit pension
scheme was a surplus of GBP0.8 million at 30 June 2015 (December
2014: GBP3.4 million surplus; June 2014: GBP0.1 million deficit).
The amount has been determined by the scheme actuary using
assumptions that are considered to be prudent and in line with
current market levels. The assumptions that have changed in the
last six months are an increase in the AA corporate bond rate from
3.6 per cent to 3.7 per cent, in line with market movements, and an
increase in the expected rate of inflation from 3.1 per cent to 3.3
per cent. The Company has agreed with the Trustee of the defined
benefit pension scheme that it will cease to make cash payments
under the funding and recovery plan, which totalled GBP4.6 million
in the previous year, with immediate effect.
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 2.25
pence (June 2014: 2.00 pence) per share, an increase of 13 per
cent. This dividend will be paid on 4 December 2015 to shareholders
on the register at the close of business on 23 October 2015. The
ex-dividend date will be 22 October 2015.
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 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 2014. Further information is
provided in Note 12 and a detailed explanation of the risks, and
how the Group seeks to mitigate these risks, can be found on pages
18 to 20 of the Annual Report which is available at
www.marshalls.co.uk/documents/reports/2014-full-annual-report.
Going concern
As stated in Note 1 of the 2015 Half-yearly Report, the
Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, being a period of
not less than 12 months from the date of the Half-yearly Report.
Accordingly, they continue to adopt the going concern basis in
preparing the Half-yearly Report.
Outlook
The Group is well positioned to grow organically and selectively
through acquisitions. We will continue to focus on growth
initiatives during the remainder of 2015 and in 2016.
The Construction Products Association supports this view of
growth and its Summer Forecast predicts growth in UK market volumes
of 4.9 per cent in 2015 and 4.2 per cent in 2016. In order to drive
growth, the Group continues to develop the Marshalls brand and
invest in product innovation and service delivery initiatives to
deliver improved trading margins and increased return on capital
employed.
Martyn Coffey
Chief Executive
Condensed Consolidated Half-yearly Income Statement
for the half year ended 30 June 2015
Half year Year ended
ended June December
2015 2014 2014
Total Total Total
Notes GBP'000 GBP'000 GBP'000
Revenue 2 199,067 179,955 358,516
Net operating costs 3 (177,053) (164,341) (333,211)
Operating profit 2 22,014 15,614 25,305
Financial expenses 4 (1,197) (1,587) (2,889)
Financial income 4 5 2 5
Profit before tax 2 20,822 14,029 22,421
Income tax expense 5 (4,335) (2,385) (4,198)
Profit for the financial
period 16,487 11,644 18,223
Profit for the period
Attributable to:
Equity shareholders of
the parent 16,711 11,975 19,857
Non-controlling interests (224) (331) (1,634)
16,487 11,644 18,223
Earnings per share
Basic 6 8.50p 6.11p 10.13p
Diluted 6 8.39p 6.00p 9.89p
Dividend
Pence per share 7 4.00p 3.50p 5.50p
Dividends declared 7 7,866 6,867 10,791
All results relate to continuing operations.
Condensed Consolidated Half-yearly Statement of Comprehensive
Income
for the half year ended 30 June 2015
Half year Year ended
ended June December
2014 2014
2015 (Restated) (Restated)
GBP'000 GBP'000 GBP'000
Profit for the financial period 16,487 11,644 18,223
Other comprehensive (expense) / income
Items that will not be reclassified to
the Income Statement:
Remeasurements of the net defined benefit
liability (6,777) 8 3,244
Deferred tax arising 1,355 (2) (649)
Total items that will not be reclassified
to the Income
Statement (5,422) 6 2,595
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 602 712 (3,984)
Fair value of cash flow hedges transferred
to the Income Statement 870 (482) 1,076
Deferred tax arising (294) (45) 582
Exchange difference on retranslation
of foreign currency net
investments (1,718) (505) (944)
Exchange movements associated with borrowings 1,719 491 869
Exchange differences - non-controlling
interests (136) (144) (186)
Total items that are or may be reclassified
subsequently to
the Income Statement 1,043 27 (2,587)
Other comprehensive (expense) / income
for the period,
net of income tax (4,379) 33 8
Total comprehensive income for the period 12,108 11,677 18,231
Attributable to:
Equity shareholders of the parent 12,468 12,152 20,051
Non-controlling interests (360) (475) (1,820)
12,108 11,677 18,231
Condensed Consolidated Half-yearly Balance Sheet
as at 30 June 2015
June December
Notes 2015 2014 2014
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 148,025 150,150 149,745
Intangible assets 40,374 40,850 40,581
Investments in associates 854 666 782
Employee benefits 8 799 - 3,449
Deferred taxation assets 1,325 1,698 1,394
191,377 193,364 195,951
Current assets
Inventories 70,269 71,588 67,323
Trade and other receivables 58,329 59,601 32,254
Cash and cash equivalents 20,500 3,789 20,320
149,098 134,978 119,897
Total assets 340,475 328,342 315,848
Liabilities
Current liabilities
Trade and other payables 82,953 76,308 60,720
Corporation tax 4,443 4,149 4,276
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Interest-bearing loans and borrowings 33 5,244 85
Derivative financial instruments 1,719 54 3,192
89,148 85,755 68,273
Non-current liabilities
Interest-bearing loans and borrowings 53,397 49,495 50,715
Employee benefits 8 - 90 -
Deferred taxation liabilities 13,966 15,990 14,966
67,363 65,575 65,681
Total liabilities 156,511 151,330 133,954
Net assets 183,964 177,012 181,894
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 (5,532) (6,689) (6,689)
Capital redemption reserve 75,394 75,394 75,394
Consolidation reserve (213,067) (213,067) (213,067)
Hedging reserve (1,310) 23 (2,488)
Retained earnings 254,824 245,991 254,729
Equity attributable to equity shareholders
of the parent 182,849 174,192 180,419
Non-controlling interests 1,115 2,820 1,475
Total equity 183,964 177,012 181,894
Condensed Consolidated Half-yearly Cash Flow Statement
for the half year ended 30 June 2015
Half year ended Year ended
June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the financial period 16,487 11,644 18,223
Income tax expense 4,335 2,385 4,198
Profit before tax on total operations 20,822 14,029 22,421
Adjustments for:
Depreciation 7,006 5,986 11,982
Amortisation 645 605 1,231
Share of results of associates (72) (3) (118)
Loss / (gain) on sale of property, plant
and equipment 84 143 (360)
Equity settled share-based expenses 974 579 2,496
Financial income and expenses (net) 1,192 1,585 2,884
Operating cash flow before changes in
working capital and
pension scheme contributions 30,651 22,924 40,536
Increase in trade and other receivables (27,735) (27,166) (159)
(Increase) / decrease in inventories (3,584) (559) 3,102
Increase / (decrease) in trade and other
payables 15,224 3,506 (2,656)
Operational restructuring costs paid (260) - (235)
Pension scheme contributions (4,300) (4,300) (4,600)
Cash generated from / (absorbed by) the
operations 9,996 (5,595) 35,988
Financial expenses paid (1,074) (1,536) (2,840)
Income tax paid (3,724) (1,940) (4,031)
Net cash flow from operating activities 5,198 (9,071) 29,117
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 93 2,190 3,077
Financial income received 5 2 5
Acquisition of property, plant and equipment (5,545) (3,818) (11,269)
Acquisition of intangible assets (441) (393) (741)
Net cash flow from investing activities (5,888) (2,019) (8,928)
Cash flows from financing activities
Payments to acquire own shares (3,461) (4,266) (4,266)
Net (decrease) / increase in other debt
and finance leases (117) (49) 269
Increase / (decrease) in borrowings 4,465 1,567 (2,690)
Equity dividends paid - - (10,791)
Net cash flow from financing activities 887 (2,748) (17,478)
Net increase / (decrease) in cash and
cash equivalents 197 (13,838) 2,711
Cash and cash equivalents at beginning
of the period 20,320 17,652 17,652
Effect of exchange rate fluctuations (17) (25) (43)
Cash and cash equivalents at end of the
period 20,500 3,789 20,320
Condensed Consolidated Half-yearly Statement of Changes in
Equity
for the half year ended 30 June 2015
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
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 for the
financial
period
attributable
to
equity
shareholders
of
the parent - - - - - - 16,711 16,711 (224) 16,487
Other
comprehensive
income /
(expense)
Exchange
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
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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 Redemp-tion 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
2014 49,845 22,695 (9,512) 75,394 (213,067) (162) 246,944 172,137 3,295 175,432
Total
comprehensive
income /
(expense)
for the
period
Profit for the
financial
period
attributable
to
equity
shareholders
of
the parent - - - - - - 11,975 11,975 (331) 11,644
Other
comprehensive
income /
(expense)
Exchange
differences - - - - - - (14) (14) (144) (158)
Effective
portion
of
changes in
fair
value of
cash flow
hedges - - - - - 712 - 712 - 712
Net change in
fair value of
cash flow
hedges
transferred
to
the Income
Statement - - - - - (482) - (482) - (482)
Deferred tax
arising - - - - - (45) - (45) - (45)
Defined
benefit
plan
actuarial
gain - - - - - - 8 8 - 8
Deferred tax
arising - - - - - - (2) (2) - (2)
Total other
comprehensive
income /
(expense) - - - - - 185 (8) 177 (144) 33
Total
comprehensive
income /
(expense)
for the
period - - - - - 185 11,967 12,152 (475) 11,677
Transactions
with
owners,
recorded
directly in
equity
Contributions
by and
distributions
to
owners
Share-based
payments - - - - - - 579 579 - 579
Deferred tax
on
share-based
payments - - - - - - 291 291 - 291
Corporation
tax
on share-
based
payments - - - - - - 166 166 - 166
Dividends to
equity
shareholders - - - - - - (6,867) (6,867) - (6,867)
Purchase of
own
shares - - (4,266) - - - - (4,266) - (4,266)
Disposal of
own
shares - - 7,089 - - - (7,089) - - -
Total
contributions
by
and
distributions
to
owners - - 2,823 - - - (12,920) (10,097) - (10,097)
Total
transactions
with
owners of the
Company - - 2,823 - - 185 (953) 2,055 (475) 1,580
At 30 June
2014 49,845 22,695 (6,689) 75,394 (213,067) 23 245,991 174,192 2,820 177,012
Attributable to equity holders of the Company
Share Capital Consolid- Non-con-
Share premium Own Redemp-tion 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
2014 49,845 22,695 (9,512) 75,394 (213,067) (162) 246,944 172,137 3,295 175,432
Total
comprehensive
income /
(expense)
for
the period
Profit for the
financial
period
attributable
to
equity
shareholders
of
the parent - - - - - - 19,857 19,857 (1,634) 18,223
Other
comprehensive
income /
(expense)
Exchange
differences - - - - - - (75) (75) (186) (261)
Effective
portion
of
changes in
fair
value of
cash flow
hedges - - - - - (3,984) - (3,984) - (3,984)
Net change in
fair value of
cash flow
hedges
transferred
to
the Income
Statement - - - - - 1,076 - 1,076 - 1,076
Deferred tax
arising - - - - - 582 - 582 - 582
Defined
benefit
plan
actuarial
gains - - - - - - 3,244 3,244 - 3,244
Deferred tax
arising - - - - - - (649) (649) - (649)
Total other
comprehensive
income /
(expense) - - - - - (2,326) 2,520 194 (186) 8
Total
comprehensive
income /
(expense)
for the
period
/ (expense)
for
the period - - - - - (2,326) 22,377 20,051 (1,820) 18,231
Transactions
with
owners,
recorded
directly in
equity
Contributions
by and
distributions
to
owners
Share-based
payments - - - - - - 2,496 2,496 - 2,496
Deferred tax
on
share-based
payments - - - - - - 460 460 - 460
Corporation
tax
on share-
based
payments - - - - - - 332 332 - 332
Dividend to
equity
shareholders - - - - - - (10,791) (10,791) - (10,791)
Purchase of
own
shares - - (4,266) - - - - (4,266) - (4,266)
Disposal of
own
shares - - 7,089 - - - (7,089) - - -
Total
contributions
by
and
distributions
to
owners - - 2,823 - - - (14,592) (11,769) - (11,769)
Total
transactions
with
owners of the
Company - - 2,823 - - (2,326) 7,785 8,282 (1,820) 6,462
At 31 December
2014 49,845 22,695 (6,689) 75,394 (213,067) (2,488) 254,729 180,419 1,475 181,894
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 2015
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 28 August 2015. The
Condensed Consolidated Half-yearly Financial Statements are not
statutory accounts as defined by Section 434 of the Companies Act
2006.
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The Condensed Consolidated Financial Statements for the half
year ended 30 June 2015 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 below.
The financial information for the year ended 31 December 2014
has been extracted from the annual Financial Statements, included
in the Annual Report 2014, 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 2014.
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 2014.
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 10 July 2015.
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 Condensed Consolidated Statement of Comprehensive Income and
Condensed Consolidated Statement of Changes in Equity have been
restated in respect of the half year ended 30 June 2014 (GBP457,000
reduction to Other Comprehensive Income) and the year ended 31
December 2014 (GBP792,000 reduction to Other Comprehensive Income).
The restatement was in respect of deferred taxation and corporation
tax on share-based payments which were previously presented within
Other Comprehensive Income. The Statement has also been restated to
show the effects of net investment hedging on a gross basis in both
periods. There is no impact on retained profits or net assets for
any period.
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 Year ended December
Half year ended June 2014 2014
2015 (Restated) (Restated)
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 154,590 46,756 201,346 141,036* 41,659* 182,695 280,508* 82,933* 363,441
Inter-segment
revenue (18) (2,261) (2,279) (100) (2,640) (2,740) (194) (4,731) (4,925)
Total revenue 154,572 44,495 199,067 140,936* 39,019* 179,955 280,314* 78,202* 358,516
Segment
operating
profit 24,710 720 25,430 19,735 (1,591) 18,144 36,066 (4,549)** 31,517
Unallocated
administration
costs (3,488) (2,533) (6,330)
Share of
profits
of associates 72 3 118
Operating
profit 22,014 15,614 25,305
Finance
charges
(net) (1,192) (1,585) (2,884)
Profit before
tax 20,822 14,029 22,421
Taxation (4,335) (2,385) (4,198)
Profit after
tax 16,487 11,644 18,223
* The comparative revenue figures have been restated to ensure
consistent classification with the analysis reported for the half
year ended 30 June 2015.
** After charging GBP1,995,000 in respect of restructuring costs
in the Belgium business.
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 2015 2014 2014
GBP'000 GBP'000 GBP'000
Fixed assets and inventory:
Landscape Products 158,807 160,613 156,509
Other 59,487 61,125 60,559
Total segment fixed assets and
inventory 218,294 221,738 217,068
Unallocated assets 122,181 106,604 98,780
Consolidated total assets 340,475 328,342 315,848
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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
2015 2014 2014 2015 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Landscape Products 5,286 4,924 9,919 4,594 2,981 7,994
Other 2,365 1,667 3,294 1,392 1,230 4,016
7,651 6,591 13,213 5,986 4,211 12,010
Geographical destination of revenue
Half year Year ended
ended June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
(Restated) (Restated)
United Kingdom 187,062 168,732* 338,483*
Rest of the World 12,005 11,223* 20,033*
199,067 179,955 358,516
* The comparative figures that analyse revenue by geographical
destination have been restated to ensure consistent classification
with the analysis reported for the half year ended 30 June
2015.
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 to build up
inventories to meet demand and at the half year end this typically
leads to higher inventory and trade receivable levels.
3. Net operating costs
Half year Year ended
ended June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Raw materials and consumables 73,308 66,407 137,250
Changes in inventories of finished
goods and work
in progress (1,678) 781 (3,484)
Personnel costs 48,744 45,778 93,439
Depreciation - owned 7,006 5,946 11,907
- leased - 40 75
Amortisation of intangible assets 645 605 1,231
Own work capitalised (907) (561) (1,473)
Other operating costs 50,551 46,954 94,910
Restructuring costs in Marshalls
NV - - 1,995
Operating costs 177,669 165,950 335,850
Other operating income (628) (1,749) (2,161)
Net loss / (gain) on asset and
property disposals 84 143 (360)
Share of results of associates (72) (3) (118)
Net operating costs 177,053 164,341 333,211
4. Financial expenses and income
Half year Year ended
ended June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
(a) Financial expenses
Net interest expense on defined
benefit pension scheme 123 51 48
Interest expense on bank loans,
overdrafts and loan
notes 1,070 1,532 2,835
Finance lease interest expense 4 4 6
1,197 1,587 2,889
(b) Financial income
Interest receivable and similar
income 5 2 5
5. Income tax expense
Half year Year ended
ended June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Current tax expense
Current year 4,057 2,693 5,670
Adjustments for prior years 49 (1,240) (1,834)
4,106 1,453 3,836
Deferred taxation expense
Origination and reversal
of temporary
differences:
Current year 162 195 (319)
Adjustments for prior years 67 737 681
Total tax expense 4,335 2,385 4,198
Half year Year ended
ended June December
2015 2014 2014
% GBP'000 % GBP'000 % GBP'000
Reconciliation of effective
tax rate
Profit before tax:
Continuing operations 100.0 20,822 100.0 14,029 100.0 22,421
Tax using domestic corporation
tax rate 20.2 4,206 21.5 3,016 21.5 4,821
Disallowed amortisation
of intangible assets (0.1) (10) 1.4 196 0.1 20
Net income / (expenditure)
not taxable 0.1 23 (2.3) (324) 2.3 510
Adjustments for prior years 0.6 116 (3.6) (503) (5.2) (1,153)
20.8 4,335 17.0 2,385 18.7 4,198
6. Earnings per share
Basic earnings per share of 8.50 pence (30 June 2014: 6.11
pence; 31 December 2014: 10.13 pence) per share is calculated by
dividing the profit attributable to ordinary shareholders from
total operations and after adjusting for non-controlling interests
of 16,711,000 (30 June 2014: GBP11,975,000; 31 December 2014:
GBP19,857,000) by the weighted average number of shares in issue
during the period of 196,484,800 (30 June 2014: 196,034,036; 31
December 2014: 196,116,404).
Profit attributable to ordinary shareholders
Half year Year ended
ended June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Profit for the financial period 16,487 11,644 18,223
Loss attributable to non-controlling interests 224 331 1,634
Profit attributable to ordinary shareholders 16,711 11,975 19,857
Weighted average number of ordinary shares
Half year Year ended
ended June December
2015 2014 2014
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 (2,893,955) (2,205,907) (3,262,351)
Effect of treasury shares acquired - (1,138,812) -
Weighted average number of ordinary shares
at end of the period 196,484,800 196,034,036 196,116,404
Diluted earnings per share of 8.39 pence (30 June 2014: 6.00
pence; 31 December 2014: 9.89 pence) per share is calculated by
dividing the profit from total operations, after adjusting for
non-controlling interests, of GBP16,711,000 (30 June 2014:
GBP11,975,000; 31 December 2014: GBP19,857,000) by the weighted
average number of shares in issue during the period of 196,484,800
(30 June 2014: 196,034,036; 31 December 2014: 196,116,404), plus
potentially dilutive shares of 2,734,019 (30 June 2014: 3,711,426;
31 December 2014: 4,646,375), which totals 199,218,819 (30 June
2014: 199,745,462; 31 December 2014: 200,762,779).
Weighted average number of ordinary shares (diluted)
Half year Year ended
ended June December
2015 2014 2014
Number Number Number
Weighted average number of ordinary shares 196,484,800 196,034,036 196,116,404
Dilutive shares 2,734,019 3,711,426 4,646,375
Weighted average number of ordinary shares
(diluted) 199,218,819 199,745,462 200,762,779
7. Dividends
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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
2015 2014 2014
GBP'000 GBP'000 GBP'000
2015 interim 2.25 4,425 - -
2014 final 4.00 - - 7,975
2014 interim 2.00 - 3,924 3,924
4,425 3,924 11,899
The following dividends were approved by the shareholders in the
period:
Pence per qualifying share Half year Year ended
ended June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
2014 final 4.00 7,866 - -
2014 interim 2.00 - - 3,924
2013 final 3.50 - 6,867 6,867
7,866 6,867 10,791
The 2014 final dividend of 4.00 pence per qualifying ordinary
share (total value GBP7,866,000) was paid on 3 July 2015 to
shareholders registered at the close of business on 5 June
2015.
The Board has declared an interim dividend of 2.25 pence (June
2014: 2.00 pence) per share. This dividend will be paid on 4
December 2015 to shareholders on the register at the close of
business on 23 October 2015. The ex-dividend date will be 22
October 2015.
8. Employee benefits
The Company sponsors a funded defined benefit pension scheme
("the Scheme") in the UK. The Scheme is administered within a trust
which is legally separate from the Company. The Trustee Board is
appointed by both the Company and the Scheme's membership and acts
in the interest of the Scheme and all relevant stakeholders,
including the members and the Company. The Trustee is also
responsible for the investment of the Scheme's assets.
The defined benefit section of the Scheme closed to future
service accrual with effect from 30 June 2006 and members no longer
pay contributions to the defined benefit section. Company
contributions after this date are used to fund any deficit in the
Scheme as determined by regular actuarial valuations.
The Trustee is required to use prudent assumptions to value the
liabilities and costs of the Scheme whereas the accounting
assumptions must be best estimates.
The Scheme poses a number of risks to the Company, for example
longevity risk, investment risk, interest rate risk and inflation
risk. The Trustee is aware of these risks and uses various
techniques to control them. The Trustee has a number of internal
control policies, including a risk register, which are in place to
manage and monitor the various risks they face. The Trustee's
investment strategy incorporates the use of liability driven
investments ("LDIs") to minimise sensitivity of the actuarial
funding position to movements in interest rates and inflation
rates.
The Scheme is subject to regular actuarial valuations, which are
usually carried out every three years. An actuarial valuation has
been carried out with an effective date of 5 April 2015. These
actuarial valuations are carried out in accordance with the
requirements of the Pensions Act 2004 and include deliberate
margins for prudence. This contrasts with these accounting
disclosures which are determined using best estimate
assumptions.
The results of the 5 April 2015 valuation have been projected to
30 June 2015 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
2015 2014 2014
GBP'000 GBP'000 GBP'000
Present value of Scheme liabilities (305,730) (271,958) (309,067)
Fair value of Scheme assets 306,529 271,868 312,516
Net amount recognised (before any adjustment
for deferred tax) 799 (90) 3,449
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
2015 2014 2014
GBP'000 GBP'000 GBP'000
Service cost:
Net interest expense recognised in the Consolidated
Income Statement 123 51 48
Remeasurements of the net liability:
Difference between actual and expected investment
return 10,866 (7,494) (46,766)
Loss arising from changes in financial assumptions (1,727) 7,064 44,242
Loss arising from changes in demographic assumptions (4,461) - -
Experience loss / (gain) 2,099 422 (720)
Charge / (credit) recorded in Other Comprehensive
Income 6,777 (8) (3,244)
6,900 43 (3,196)
The principal actuarial assumptions used were:
June December
2015 2014 2014
Liability discount rate 3.70% 4.40% 3.60%
Inflation assumption - RPI 3.30% 3.30% 3.10%
Inflation assumption - CPI 2.30% 2.30% 2.10%
Rate of increase in salaries n/a n/a n/a
Revaluation of deferred pensions 2.30% 2.30% 2.10%
Increases for pensions in payment:
CPI pension increases (maximum 5%
per annum) 2.30% 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) 2.20% 2.20% 2.00%
June December
2015 2014 2014
Mortality assumption - before retirement Same as post Same as post Same as post
retirement retirement retirement
Mortality assumption - after retirement S2PMA tables S1PMA tables S1PMA tables
(males)
Loading 105% 105% 105%
Projection basis Year of birth Year of birth Year of birth
CMI_2014 1.0% CMI_2012 1.0% CMI_2012 1.0%
Mortality assumption - after retirement S2PFA tables S1PFA tables S1PFA tables
(females)
Loading 105% 105% 105%
Projection basis Year of birth Year of birth Year of birth
CMI_2014 1.0% CMI_2012 1.0% CMI_2012 1.0%
Future expected lifetime of current
pensioner at age 65:
Male aged 65 at year end 21.7 22.0 21.9
Female aged 65 at year end 23.7 24.2 24.2
Future expected lifetime of future
pensioner at age 65:
Male aged 45 at year end 23.0 23.3 23.3
Female aged 45 at year end 25.2 25.7 25.7
9. Analysis of net debt
1 January Cash flow Exchange 30 June
2015 differences 2015
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 20,320 197 (17) 20,500
Debt due after one year (50,307) (4,465) 1,706 (53,066)
Finance leases (493) 117 12 (364)
(30,480) (4,151) 1,701 (32,930)
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Reconciliation of net cash flow to movement in net debt
Half year ended Year ended
June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Net increase / (decrease) in cash and cash
equivalents 197 (13,838) 2,711
Cash (inflow) / outflow from (increase) /
decrease in debt and
lease financing (4,348) (2,009) 1,552
Effect of exchange rate fluctuations 1,701 466 826
Movement in net debt in the period (2,450) (15,381) 5,089
Net debt at beginning of the period (30,480) (35,569) (35,569)
Net debt at the end of the period (32,930) (50,950) (30,480)
10. Borrowing facilities
The total bank borrowing facilities at 30 June 2015 amounted to
GBP145.0 million (30 June 2014: GBP165.0 million; 31 December 2014:
GBP125.0 million) of which GBP91.9 million (30 June 2014: GBP110.4
million; 31 December 2014: GBP74.7 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 2015, in respect of
which all conditions precedent had been met, were as follows:
June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Committed:
- Expiring in more than two years but not
more than five years 31,934 50,641 34,693
- Expiring in one year or less 25,000 14,795 25,000
Uncommitted:
- Expiring in one year or less 35,000 45,000 15,000
91,934 110,436 74,693
The total borrowing facilities at 28 August 2015 amounted to
GBP115.0 million. In July 2015, following the continued steady
reduction in net debt, the Group undertook a full review of its
bank facilities in order to align them with current strategy and to
ensure headroom against available facilities remains at appropriate
levels. On 10 July 2015, the Group decreased its committed facility
levels by GBP30.0 million to GBP80.0 million, comprising new
committed facilities with extended maturities. The committed
facilities are all revolving credit facilities with interest
charged at variable rate based on LIBOR.
On 10 July 2015, the Group also renewed its short-term working
capital facilities.
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: 2020 20,000 20,000
Q3: 2019 20,000 40,000
Q3: 2018 20,000 60,000
Q3: 2017 20,000 80,000
On-demand facilities:
Available all year 15,000 95,000
Seasonal (February to August inclusive) 20,000 115,000
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 2015
is shown below:
June December
2015 2014
(Restated)
Book Fair Book Fair
amount value amount value
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 52,548 52,548 24,830* 24,830*
Cash and cash equivalents 20,500 20,500 20,320 20,320
Bank loans (53,066) (52,697) (50,307) (49,451)
Finance lease liabilities (364) (400) (493) (539)
Trade and other payables (82,953) (82,953) (60,720) (60,720)
Interest rate swaps, forward
contracts and
fuel hedges (1,719) (1,719) (3,192) (3,192)
Financial liabilities - net (65,054) (69,562)
Other assets - net 249,018 251,456
183,964 181,894
* The amount of financial assets included within trade and other
receivables at 31 December 2014 has been restated to remove the
impact of prepayments and accrued income, which were previously
shown as financial assets. There was no difference between the book
value and the fair value of those assets.
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
one 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 2015
Derivative financial liabilities - 1,719 - -
31 December 2014
Derivative financial liabilities - 3,192 - -
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 18 to 20 of the 2014 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-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 2015 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 2015 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
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:00 ET (06:00 GMT)
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