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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 |
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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