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MSLH Marshalls Plc

274.80
10.20 (3.85%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Marshalls Plc LSE:MSLH London Ordinary Share GB00B012BV22 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  10.20 3.85% 274.80 273.20 273.80 273.80 263.60 264.80 599,969 16:35:28
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Construction Matl-whsl, Nec 721.4M 26.79M 0.1060 25.83 692.14M

Marshalls PLC Half-year Report (2023O)

17/08/2017 7:00am

UK Regulatory


Marshalls (LSE:MSLH)
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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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