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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 | |
---|---|---|---|---|---|---|---|---|---|---|
2.00 | 0.63% | 318.00 | 319.00 | 321.50 | 321.00 | 316.50 | 320.00 | 269,336 | 16:35:20 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Construction Matl-whsl, Nec | 674.4M | 18.6M | 0.0736 | 43.48 | 808.92M |
TIDMMSLH
RNS Number : 3524X
Marshalls PLC
28 August 2015
Interim results for the half year ended 30 June 2015
Marshalls plc, the specialist Landscape Products Group, announces its half year results
Financial Highlights Half Year ended Half Year ended Increase 30 June 2015 30 June 2014 % Continuing operations: Revenue GBP199.1m GBP180.0m 11 EBITDA GBP29.7m GBP22.2m 34 Operating profit GBP22.0m GBP15.6m 41 Profit before tax GBP20.8m GBP14.0m 48 Basic EPS 8.50p 6.11p 39 Interim dividend 2.25p 2.00p 13 510 ROCE 15.2% 10.1% basis points Net debt to EBITDA 0.7 times 1.4 times
Highlights:
-- Revenue up 11% to GBP199.1 million (2014: GBP180.0 million) -- Improvement in operating margins to 11.1% (2014: 8.7%) -- Profit before tax up 48% to GBP20.8 million (2014: GBP14.0 million) -- Return on capital employed for the year ended 30 June 2015 up 50% to 15.2% (2014: 10.1%) -- EPS up 39% to 8.50 pence (2014: 6.11 pence) -- Interim dividend increased by 13% to 2.25 pence (2014: 2.00 pence) per share
Current priorities:
-- To increase output to meet growing demand and to deliver benefits from operational gearing
-- To further strengthen the Marshalls brand by developing systems based solutions, service excellence and new product development
-- To grow our business organically and selectively through acquisitions
-- To continue to develop and invest in our strategic growth initiatives, particularly in Water Management, Street Furniture, Rail and Newbuild Housing
Commenting on these results, Martyn Coffey, Chief Executive, said:
"The Group is well positioned to grow organically and selectively through acquisitions. We will continue to focus on growth initiatives during the remainder of 2015 and in 2016.
The Construction Products Association supports this view of growth and its Summer Forecast predicts growth in UK market volumes of 4.9 per cent in 2015 and 4.2 per cent in 2016. In order to drive growth, the Group continues to develop the Marshalls brand and invest in product innovation and service delivery initiatives to deliver improved trading margins and increased return on capital employed."
Enquiries:
Martyn Coffey Chief Executive Marshalls plc 01422 314777 Jack Clarke Finance Director Marshalls plc 01422 314777 Jon Coles Brunswick Group 0207 404 5959 Simon Maine
Interim Management Report
Group results
Marshalls' revenue for the six months ended 30 June 2015 grew by 11 per cent to GBP199.1 million (2014: GBP180.0 million). Trading conditions continue to be positive and the Group experienced both strong order intake and sales growth. If these positive market conditions continue through the second half, noting the stronger comparables in the second half of 2014, it is likely that full year trading will be above original expectations.
Sales to the Public Sector and Commercial end market, which represent approximately 64 per cent of Group sales, were up 15 per cent, compared with the prior year. Sales to the Domestic end market, which represent approximately 30 per cent of Group sales, were up 4 per cent compared with the prior year. Sales in the International business have increased by 7 per cent in the six months ended 30 June 2015 and represent 6 per cent of Group sales.
Operating profit increased to GBP22.0 million (2014: GBP15.6 million). EBITDA also improved to GBP29.7 million (2014: GBP22.2 million).
Group return on capital employed ("ROCE") was 15.2 per cent for the year ended 30 June 2015 which represents an increase of 50 per cent compared with the prior year. ROCE is defined as EBITA / shareholders' funds plus net debt.
Net financial expenses were GBP1.2 million (2014: GBP1.6 million) and interest was strongly covered 18.5 times operating profit (2014: 9.9 times). The effective tax rate was 20.8 per cent (2014: 17.0 per cent).
Basic EPS was 8.50 pence (2014: 6.11 pence) per share. The interim dividend will be 2.25 pence (2014: 2.00 pence) per share, a 13% increase on the prior year.
Current strategy
The Group's focus is to grow the business organically and selectively through acquisitions. Our strategic objectives include the improvement of profit margins in all businesses and to increase the Group's ROCE. The long-term strategy continues to combine the delivery of sustainable shareholder value and profitability with organic expansion and the development of key "route to market" relationships.
Current priorities
The Group's priorities are to grow and develop the business and to leverage the benefits from the improving market conditions in order to generate volume growth and so benefit from operational gearing. A key objective is to deliver further improvement in profit margins in all businesses and end markets, and the operational priorities remain service, quality, design, innovation and a commitment to research and development, sustainability and an integrated product offer.
Operating performance
Operating margins increased to 11.1 per cent in the six months ended 30 June 2015 (2014: 8.7 per cent). This represents an improvement of 27 per cent reflecting improved operational gearing as a result of volume growth which continues to be ahead of the Construction Products Association's market forecasts. The continued focus on operational flexibility has enabled the Group to increase manufacturing output as the market has recovered and our network of manufacturing sites has enough capacity to absorb medium-term demand and the flexibility for further capacity and capability investment.
In the UK, sales price increases generated GBP5.6 million in additional revenue and exceeded the impact of cost inflation by GBP1.4 million. Volume growth has been particularly strong in the Public Sector and Commercial end market where the revenue increase attributable to volume and mix has been 11 per cent.
In the Public Sector and Commercial end market the Group's strategy is to build on its position as a market leading landscape products specialist. The Group's experienced technical and sales teams continue to focus on markets where future demand is greatest across a full range of integrated products and sustainable solutions for customers, architects and contractors. The Group continued to focus on innovation and new product development to drive sales growth in areas of particular opportunity. Commercial work from Water Management, Street Furniture, Rail and Newbuild Housing continues to increase and the Group is outperforming the market in these areas.
Our objective is to continually strengthen and differentiate the Marshalls brand, to improve the product mix and to ensure a consistently high standard of quality and to provide good geographical coverage.
In the Domestic end market the Group's strategy continues to be to drive more sales through quality installers. The Marshalls Register of approved domestic installers has grown to over 1,800 teams. The Group remains committed to increasing the marketing support to the installer base through increased training, marketing materials and sales support.
Historically, there has been a good correlation between consumer confidence and installer order books. The survey of domestic installers at the end of June 2015 revealed continuing strong order books of 12.0 weeks (2014: 11.5 weeks) and compares with 10.6 weeks at the end of April 2015. The position at 30 June 2015 is the highest recorded order book at this time of year.
The Group's Landscape Products business is a reportable segment servicing the UK Public Sector and Commercial and UK Domestic end markets. The Group's smaller UK businesses include Street Furniture, Mineral Products and Stone Cladding and their performance has continued to improve in the first half of 2015, delivering volume revenue growth of GBP3.8 million and profit growth of GBP1.0 million. All these businesses are now profitable.
Continued progress is being made in developing the International business and activity levels have been increasingly encouraging. Sales from our operations in Belgium increased by 15.8 per cent, in local currency, in the six months ended 30 June 2015 despite a market background in mainland Europe that continues to be subdued. Trading performance in the Belgium business has improved markedly. Marshalls continues to expand its geographical reach and to extend its global supply chains and routes to market. Marshalls continues to develop the distribution of natural stone products into the North American market and the Group is now opening a sales office in Dubai to facilitate further sales growth in the Middle East.
Balance sheet and cash flow as at 30 June 2015
Net assets at 30 June 2015 were GBP184.0 million (June 2014: GBP177.0 million).
At 30 June 2015 net debt was markedly lower at GBP32.9 million (June 2014: GBP50.9 million) with gearing at 17.9 per cent (June 2014: 28.8 per cent). Cash management continues to be a high priority area and the Group continues to focus on inventory and capital expenditure management, credit control and the maintenance of credit insurance for trade receivables.
Capital investment in property, plant and equipment in the six months to 30 June 2015 totalled GBP5.5 million (2014: GBP3.8 million) and compares with depreciation of GBP7.0 million (2014: GBP6.0 million). Research and development expenditure amounted to GBP1.6 million (2014: GBP1.1 million).
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In July 2015, following the continued steady reduction in net debt, the Group undertook a full review of its bank facilities in order to align them with current strategy and to ensure headroom against available facilities remains at appropriate levels. We reduced our total committed facility lines by GBP30 million to GBP80 million and reduced our interest costs significantly through the refinancing. New committed facility lines have been established and Marshalls continues its policy of having significant committed facilities in place with a positive spread of medium-term maturities. The new facilities have extended maturities with some going out to 2020. At the same time, the Group also renewed its short-term working capital facilities with RBS.
The balance sheet value of the Group's defined benefit pension scheme was a surplus of GBP0.8 million at 30 June 2015 (December 2014: GBP3.4 million surplus; June 2014: GBP0.1 million deficit). The amount has been determined by the scheme actuary using assumptions that are considered to be prudent and in line with current market levels. The assumptions that have changed in the last six months are an increase in the AA corporate bond rate from 3.6 per cent to 3.7 per cent, in line with market movements, and an increase in the expected rate of inflation from 3.1 per cent to 3.3 per cent. The Company has agreed with the Trustee of the defined benefit pension scheme that it will cease to make cash payments under the funding and recovery plan, which totalled GBP4.6 million in the previous year, with immediate effect.
Dividend
The Group has a progressive dividend policy with a stated objective of achieving up to 2 times dividend cover over the business cycle. The Board has declared an interim dividend of 2.25 pence (June 2014: 2.00 pence) per share, an increase of 13 per cent. This dividend will be paid on 4 December 2015 to shareholders on the register at the close of business on 23 October 2015. The ex-dividend date will be 22 October 2015.
Risks and uncertainties
There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining 6 months of the financial year and could cause actual results to differ materially from expected and historical results. The Directors do not consider that the principal risks and uncertainties have changed since the publication of the Annual Report for the year ended 31 December 2014. Further information is provided in Note 12 and a detailed explanation of the risks, and how the Group seeks to mitigate these risks, can be found on pages 18 to 20 of the Annual Report which is available at www.marshalls.co.uk/documents/reports/2014-full-annual-report.
Going concern
As stated in Note 1 of the 2015 Half-yearly Report, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, being a period of not less than 12 months from the date of the Half-yearly Report. Accordingly, they continue to adopt the going concern basis in preparing the Half-yearly Report.
Outlook
The Group is well positioned to grow organically and selectively through acquisitions. We will continue to focus on growth initiatives during the remainder of 2015 and in 2016.
The Construction Products Association supports this view of growth and its Summer Forecast predicts growth in UK market volumes of 4.9 per cent in 2015 and 4.2 per cent in 2016. In order to drive growth, the Group continues to develop the Marshalls brand and invest in product innovation and service delivery initiatives to deliver improved trading margins and increased return on capital employed.
Martyn Coffey
Chief Executive
Condensed Consolidated Half-yearly Income Statement
for the half year ended 30 June 2015
Half year Year ended ended June December 2015 2014 2014 Total Total Total Notes GBP'000 GBP'000 GBP'000 Revenue 2 199,067 179,955 358,516 Net operating costs 3 (177,053) (164,341) (333,211) Operating profit 2 22,014 15,614 25,305 Financial expenses 4 (1,197) (1,587) (2,889) Financial income 4 5 2 5 Profit before tax 2 20,822 14,029 22,421 Income tax expense 5 (4,335) (2,385) (4,198) Profit for the financial period 16,487 11,644 18,223 Profit for the period Attributable to: Equity shareholders of the parent 16,711 11,975 19,857 Non-controlling interests (224) (331) (1,634) 16,487 11,644 18,223 Earnings per share Basic 6 8.50p 6.11p 10.13p Diluted 6 8.39p 6.00p 9.89p Dividend Pence per share 7 4.00p 3.50p 5.50p Dividends declared 7 7,866 6,867 10,791
All results relate to continuing operations.
Condensed Consolidated Half-yearly Statement of Comprehensive Income
for the half year ended 30 June 2015
Half year Year ended ended June December 2014 2014 2015 (Restated) (Restated) GBP'000 GBP'000 GBP'000 Profit for the financial period 16,487 11,644 18,223 Other comprehensive (expense) / income Items that will not be reclassified to the Income Statement: Remeasurements of the net defined benefit liability (6,777) 8 3,244 Deferred tax arising 1,355 (2) (649) Total items that will not be reclassified to the Income Statement (5,422) 6 2,595 Items that are or may in the future be reclassified to the Income Statement: Effective portion of changes in fair value of cash flow hedges 602 712 (3,984) Fair value of cash flow hedges transferred to the Income Statement 870 (482) 1,076 Deferred tax arising (294) (45) 582 Exchange difference on retranslation of foreign currency net investments (1,718) (505) (944) Exchange movements associated with borrowings 1,719 491 869 Exchange differences - non-controlling interests (136) (144) (186) Total items that are or may be reclassified subsequently to the Income Statement 1,043 27 (2,587) Other comprehensive (expense) / income for the period, net of income tax (4,379) 33 8 Total comprehensive income for the period 12,108 11,677 18,231 Attributable to: Equity shareholders of the parent 12,468 12,152 20,051 Non-controlling interests (360) (475) (1,820) 12,108 11,677 18,231
Condensed Consolidated Half-yearly Balance Sheet
as at 30 June 2015
June December Notes 2015 2014 2014 GBP'000 GBP'000 GBP'000 Assets Non-current assets Property, plant and equipment 148,025 150,150 149,745 Intangible assets 40,374 40,850 40,581 Investments in associates 854 666 782 Employee benefits 8 799 - 3,449 Deferred taxation assets 1,325 1,698 1,394 191,377 193,364 195,951 Current assets Inventories 70,269 71,588 67,323 Trade and other receivables 58,329 59,601 32,254 Cash and cash equivalents 20,500 3,789 20,320 149,098 134,978 119,897 Total assets 340,475 328,342 315,848 Liabilities Current liabilities Trade and other payables 82,953 76,308 60,720 Corporation tax 4,443 4,149 4,276
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Interest-bearing loans and borrowings 33 5,244 85 Derivative financial instruments 1,719 54 3,192 89,148 85,755 68,273 Non-current liabilities Interest-bearing loans and borrowings 53,397 49,495 50,715 Employee benefits 8 - 90 - Deferred taxation liabilities 13,966 15,990 14,966 67,363 65,575 65,681 Total liabilities 156,511 151,330 133,954 Net assets 183,964 177,012 181,894 Equity Capital and reserves attributable to equity shareholders of the parent Share capital 49,845 49,845 49,845 Share premium account 22,695 22,695 22,695 Own shares (5,532) (6,689) (6,689) Capital redemption reserve 75,394 75,394 75,394 Consolidation reserve (213,067) (213,067) (213,067) Hedging reserve (1,310) 23 (2,488) Retained earnings 254,824 245,991 254,729 Equity attributable to equity shareholders of the parent 182,849 174,192 180,419 Non-controlling interests 1,115 2,820 1,475 Total equity 183,964 177,012 181,894
Condensed Consolidated Half-yearly Cash Flow Statement
for the half year ended 30 June 2015
Half year ended Year ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Cash flows from operating activities Profit for the financial period 16,487 11,644 18,223 Income tax expense 4,335 2,385 4,198 Profit before tax on total operations 20,822 14,029 22,421 Adjustments for: Depreciation 7,006 5,986 11,982 Amortisation 645 605 1,231 Share of results of associates (72) (3) (118) Loss / (gain) on sale of property, plant and equipment 84 143 (360) Equity settled share-based expenses 974 579 2,496 Financial income and expenses (net) 1,192 1,585 2,884 Operating cash flow before changes in working capital and pension scheme contributions 30,651 22,924 40,536 Increase in trade and other receivables (27,735) (27,166) (159) (Increase) / decrease in inventories (3,584) (559) 3,102 Increase / (decrease) in trade and other payables 15,224 3,506 (2,656) Operational restructuring costs paid (260) - (235) Pension scheme contributions (4,300) (4,300) (4,600) Cash generated from / (absorbed by) the operations 9,996 (5,595) 35,988 Financial expenses paid (1,074) (1,536) (2,840) Income tax paid (3,724) (1,940) (4,031) Net cash flow from operating activities 5,198 (9,071) 29,117 Cash flows from investing activities Proceeds from sale of property, plant and equipment 93 2,190 3,077 Financial income received 5 2 5 Acquisition of property, plant and equipment (5,545) (3,818) (11,269) Acquisition of intangible assets (441) (393) (741) Net cash flow from investing activities (5,888) (2,019) (8,928) Cash flows from financing activities Payments to acquire own shares (3,461) (4,266) (4,266) Net (decrease) / increase in other debt and finance leases (117) (49) 269 Increase / (decrease) in borrowings 4,465 1,567 (2,690) Equity dividends paid - - (10,791) Net cash flow from financing activities 887 (2,748) (17,478) Net increase / (decrease) in cash and cash equivalents 197 (13,838) 2,711 Cash and cash equivalents at beginning of the period 20,320 17,652 17,652 Effect of exchange rate fluctuations (17) (25) (43) Cash and cash equivalents at end of the period 20,500 3,789 20,320
Condensed Consolidated Half-yearly Statement of Changes in Equity
for the half year ended 30 June 2015
Attributable to equity holders of the Company Share Capital Consolid- Non-con- Share premium Own redemption ation Hedging Retained trolling Total capital account shares reserve reserve reserve earnings Total interests equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Current half year At 1 January 2015 49,845 22,695 (6,689) 75,394 (213,067) (2,488) 254,729 180,419 1,475 181,894 Total comprehensive income / (expense) for the period Profit for the financial period attributable to equity shareholders of the parent - - - - - - 16,711 16,711 (224) 16,487 Other comprehensive income / (expense) Exchange differences - - - - - - 1 1 (136) (135) Effective portion of changes in fair value of cash flow hedges - - - - - 602 - 602 - 602 Net change in fair value of cash flow hedges transferred to the Income Statement - - - - - 870 - 870 - 870 Deferred tax arising - - - - - (294) - (294) - (294) Defined benefit plan actuarial losses - - - - - - (6,777) (6,777) - (6,777) Deferred tax arising - - - - - - 1,355 1,355 - 1,355 Total other comprehensive income / (expense) - - - - - 1,178 (5,421) (4,243) (136) (4,379) Total comprehensive income / (expense) for the period - - - - - 1,178 11,290 12,468 (360) 12,108 Transactions with owners, recorded directly in equity Contributions by and distributions to owners Share-based payments - - - - - - 974 974 - 974 Deferred tax on share-based payments - - - - - - 100 100 - 100 Corporation tax on share- based payments - - - - - - 215 215 - 215 Dividends to equity shareholders - - - - - - (7,866) (7,866) - (7,866) Purchase of own shares - - (3,461) - - - - (3,461) - (3,461) Disposal of own shares - - 4,618 - - - (4,618) - - - Total contributions by
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and distributions to owners - - 1,157 - - - (11,195) (10,038) - (10,038) Total transactions with owners of the Company - - 1,157 - - 1,178 95 2,430 (360) 2,070 At 30 June 2015 49,845 22,695 (5,532) 75,394 (213,067) (1,310) 254,824 182,849 1,115 183,964 Attributable to equity holders of the Company Share Capital Consolid- Non-con- Share premium Own Redemp-tion ation Hedging Retained trolling Total capital account shares reserve reserve reserve earnings Total interests equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Prior half year At 1 January 2014 49,845 22,695 (9,512) 75,394 (213,067) (162) 246,944 172,137 3,295 175,432 Total comprehensive income / (expense) for the period Profit for the financial period attributable to equity shareholders of the parent - - - - - - 11,975 11,975 (331) 11,644 Other comprehensive income / (expense) Exchange differences - - - - - - (14) (14) (144) (158) Effective portion of changes in fair value of cash flow hedges - - - - - 712 - 712 - 712 Net change in fair value of cash flow hedges transferred to the Income Statement - - - - - (482) - (482) - (482) Deferred tax arising - - - - - (45) - (45) - (45) Defined benefit plan actuarial gain - - - - - - 8 8 - 8 Deferred tax arising - - - - - - (2) (2) - (2) Total other comprehensive income / (expense) - - - - - 185 (8) 177 (144) 33 Total comprehensive income / (expense) for the period - - - - - 185 11,967 12,152 (475) 11,677 Transactions with owners, recorded directly in equity Contributions by and distributions to owners Share-based payments - - - - - - 579 579 - 579 Deferred tax on share-based payments - - - - - - 291 291 - 291 Corporation tax on share- based payments - - - - - - 166 166 - 166 Dividends to equity shareholders - - - - - - (6,867) (6,867) - (6,867) Purchase of own shares - - (4,266) - - - - (4,266) - (4,266) Disposal of own shares - - 7,089 - - - (7,089) - - - Total contributions by and distributions to owners - - 2,823 - - - (12,920) (10,097) - (10,097) Total transactions with owners of the Company - - 2,823 - - 185 (953) 2,055 (475) 1,580 At 30 June 2014 49,845 22,695 (6,689) 75,394 (213,067) 23 245,991 174,192 2,820 177,012 Attributable to equity holders of the Company Share Capital Consolid- Non-con- Share premium Own Redemp-tion ation Hedging Retained trolling Total capital account shares reserve reserve reserve earnings Total interests equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Prior year At 1 January 2014 49,845 22,695 (9,512) 75,394 (213,067) (162) 246,944 172,137 3,295 175,432 Total comprehensive income / (expense) for the period Profit for the financial period attributable to equity shareholders of the parent - - - - - - 19,857 19,857 (1,634) 18,223 Other comprehensive income / (expense) Exchange differences - - - - - - (75) (75) (186) (261) Effective portion of changes in fair value of cash flow hedges - - - - - (3,984) - (3,984) - (3,984) Net change in fair value of cash flow hedges transferred to the Income Statement - - - - - 1,076 - 1,076 - 1,076 Deferred tax arising - - - - - 582 - 582 - 582 Defined benefit plan actuarial gains - - - - - - 3,244 3,244 - 3,244 Deferred tax arising - - - - - - (649) (649) - (649) Total other comprehensive income / (expense) - - - - - (2,326) 2,520 194 (186) 8 Total comprehensive income / (expense) for the period / (expense) for the period - - - - - (2,326) 22,377 20,051 (1,820) 18,231 Transactions with owners, recorded directly in equity Contributions by and distributions to owners Share-based payments - - - - - - 2,496 2,496 - 2,496 Deferred tax on share-based payments - - - - - - 460 460 - 460 Corporation tax on share- based payments - - - - - - 332 332 - 332 Dividend to equity shareholders - - - - - - (10,791) (10,791) - (10,791) Purchase of own shares - - (4,266) - - - - (4,266) - (4,266) Disposal of own shares - - 7,089 - - - (7,089) - - - Total contributions by and distributions to owners - - 2,823 - - - (14,592) (11,769) - (11,769) Total transactions with owners of the Company - - 2,823 - - (2,326) 7,785 8,282 (1,820) 6,462 At 31 December 2014 49,845 22,695 (6,689) 75,394 (213,067) (2,488) 254,729 180,419 1,475 181,894
Notes to the Condensed Consolidated Half-yearly Financial Statements
1. Basis of preparation
Marshalls plc (the "Company") is a company domiciled in the United Kingdom. The Condensed Consolidated Half-yearly Financial Statements of the Company for the half year ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as the "Group").
The Condensed Consolidated Half-yearly Financial Statements have been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Conduct Authority and the requirements of IAS 34 "Interim Financial Reporting" as adopted by the European Union ("EU").
The Condensed Consolidated Half-yearly Financial Statements do not constitute financial statements and do not include all the information and disclosures required for full annual financial statements. The Condensed Consolidated Half-yearly Financial Statements were approved by the Board on 28 August 2015. The Condensed Consolidated Half-yearly Financial Statements are not statutory accounts as defined by Section 434 of the Companies Act 2006.
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The Condensed Consolidated Financial Statements for the half year ended 30 June 2015 and comparative period have not been audited. The Auditor has carried out a review of the Half-yearly Financial Information and their report is set out below.
The financial information for the year ended 31 December 2014 has been extracted from the annual Financial Statements, included in the Annual Report 2014, which has been filed with the Registrar of Companies. The report of the Auditor was: (i) unqualified; (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under Section 498 (2) and (3) of the Companies Act 2006.
The annual Financial Statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set of Financial Statements has, other than in respect of the matters referred to below, been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published Consolidated Financial Statements for the year ended 31 December 2014.
The Condensed Consolidated Half-yearly Financial Statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments and liabilities for cash-settled share-based payments.
The accounting policies have been applied consistently throughout the Group for the purposes of these Condensed Consolidated Half-yearly Financial Statements and are also set out on the Company's website (www.marshalls.co.uk). The Condensed Consolidated Half-yearly Financial Statements are presented in sterling, rounded to the nearest thousand.
The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In preparing these Condensed Consolidated Half-yearly Financial Statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Consolidated Financial Statements of the Group for the year ended 31 December 2014.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Details of the Group's funding position are set out in Note 10 and are subject to normal covenant arrangements. The Group's on-demand overdraft facility is reviewed on an annual basis and the current arrangements were renewed and signed on 10 July 2015. Management believe that there are sufficient unutilised facilities held, which mature after 12 months. The Group's performance is dependent on economic and market conditions, the outlook for which is difficult to predict. Based on current expectations, the Group's cash forecasts continue to meet half year and year end bank covenants and there is adequate headroom that is not dependent on facility renewals. After considering relevant uncertainties, the Directors believe that the Group is well placed to manage its business risks successfully. Accordingly, they continue to adopt the going concern basis in preparing the Condensed Consolidated Half-yearly Financial Statements.
The Condensed Consolidated Statement of Comprehensive Income and Condensed Consolidated Statement of Changes in Equity have been restated in respect of the half year ended 30 June 2014 (GBP457,000 reduction to Other Comprehensive Income) and the year ended 31 December 2014 (GBP792,000 reduction to Other Comprehensive Income). The restatement was in respect of deferred taxation and corporation tax on share-based payments which were previously presented within Other Comprehensive Income. The Statement has also been restated to show the effects of net investment hedging on a gross basis in both periods. There is no impact on retained profits or net assets for any period.
2. Segmental analysis
IFRS 8 "Operating Segments" requires operating segments to be identified on the basis of discrete financial information about components of the Group that are regularly reviewed by the Group's Chief Operating Decision Maker ("CODM") to allocate resources to the segments and to assess their performance. As far as Marshalls is concerned, the CODM is regarded as being the Executive Directors. The Directors have concluded that the detailed requirements of IFRS 8 support the reporting of the Group's Landscape Products business as a reportable segment, which includes the UK operations of the Marshalls Landscape Products hard landscaping business, servicing both the UK Domestic and the UK Public Sector and Commercial end markets. Financial information for Landscape Products is reported to the Group's CODM for the assessment of segmental performance and to facilitate resource allocation.
The Landscape Products reportable segment operates a national manufacturing plan that is structured around a series of production units throughout the UK, in conjunction with a single logistics and distribution operation. A national planning process supports sales to both of the key end markets, namely the Domestic and Public Sector and Commercial end markets and the operating assets produce and deliver a range of broadly similar products that are sold into each of these end markets. Within the Landscape Products operating segment the focus is on the one integrated production, logistics and distribution network supporting both end markets.
Included in "Other" are the Group's Street Furniture, Mineral Products, Stone Cladding and International operations which do not currently meet the IFRS 8 reporting requirements.
Segment revenues and results Half year ended June Year ended December Half year ended June 2014 2014 2015 (Restated) (Restated) Landscape Landscape Landscape Products Other Total Products Other Total Products Other Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 External revenue 154,590 46,756 201,346 141,036* 41,659* 182,695 280,508* 82,933* 363,441 Inter-segment revenue (18) (2,261) (2,279) (100) (2,640) (2,740) (194) (4,731) (4,925) Total revenue 154,572 44,495 199,067 140,936* 39,019* 179,955 280,314* 78,202* 358,516 Segment operating profit 24,710 720 25,430 19,735 (1,591) 18,144 36,066 (4,549)** 31,517 Unallocated administration costs (3,488) (2,533) (6,330) Share of profits of associates 72 3 118 Operating profit 22,014 15,614 25,305 Finance charges (net) (1,192) (1,585) (2,884) Profit before tax 20,822 14,029 22,421 Taxation (4,335) (2,385) (4,198) Profit after tax 16,487 11,644 18,223
* The comparative revenue figures have been restated to ensure consistent classification with the analysis reported for the half year ended 30 June 2015.
** After charging GBP1,995,000 in respect of restructuring costs in the Belgium business.
The accounting policies of the Landscape Products operating segment are the same as the Group's accounting policies.
Segment profit represents the profit earned without allocation of the share of profit of associates and certain administration costs that are not capable of allocation. Centrally administered overhead costs that relate directly to the reportable segments are included within the segment results.
June June December Segment assets 2015 2014 2014 GBP'000 GBP'000 GBP'000 Fixed assets and inventory: Landscape Products 158,807 160,613 156,509 Other 59,487 61,125 60,559 Total segment fixed assets and inventory 218,294 221,738 217,068 Unallocated assets 122,181 106,604 98,780 Consolidated total assets 340,475 328,342 315,848
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For the purpose of monitoring segment performance and allocating performance between segments, the Group's CODM monitors the property, plant and equipment and inventory. Assets used jointly by reportable segments are not allocated to individual reportable segments.
Other segment information
Depreciation and amortisation Fixed asset additions Half year ended Year ended Half year ended Year ended June December June December 2015 2014 2014 2015 2014 2014 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Landscape Products 5,286 4,924 9,919 4,594 2,981 7,994 Other 2,365 1,667 3,294 1,392 1,230 4,016 7,651 6,591 13,213 5,986 4,211 12,010 Geographical destination of revenue Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 (Restated) (Restated) United Kingdom 187,062 168,732* 338,483* Rest of the World 12,005 11,223* 20,033* 199,067 179,955 358,516
* The comparative figures that analyse revenue by geographical destination have been restated to ensure consistent classification with the analysis reported for the half year ended 30 June 2015.
The Group's revenue is subject to seasonal fluctuations resulting from demand from customers. In particular, demand is higher in the summer months. The Group manages the seasonal impact through the use of a seasonal working capital facility to build up inventories to meet demand and at the half year end this typically leads to higher inventory and trade receivable levels.
3. Net operating costs Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Raw materials and consumables 73,308 66,407 137,250 Changes in inventories of finished goods and work in progress (1,678) 781 (3,484) Personnel costs 48,744 45,778 93,439 Depreciation - owned 7,006 5,946 11,907 - leased - 40 75 Amortisation of intangible assets 645 605 1,231 Own work capitalised (907) (561) (1,473) Other operating costs 50,551 46,954 94,910 Restructuring costs in Marshalls NV - - 1,995 Operating costs 177,669 165,950 335,850 Other operating income (628) (1,749) (2,161) Net loss / (gain) on asset and property disposals 84 143 (360) Share of results of associates (72) (3) (118) Net operating costs 177,053 164,341 333,211 4. Financial expenses and income Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 (a) Financial expenses Net interest expense on defined benefit pension scheme 123 51 48 Interest expense on bank loans, overdrafts and loan notes 1,070 1,532 2,835 Finance lease interest expense 4 4 6 1,197 1,587 2,889 (b) Financial income Interest receivable and similar income 5 2 5 5. Income tax expense Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Current tax expense Current year 4,057 2,693 5,670 Adjustments for prior years 49 (1,240) (1,834) 4,106 1,453 3,836 Deferred taxation expense Origination and reversal of temporary differences: Current year 162 195 (319) Adjustments for prior years 67 737 681 Total tax expense 4,335 2,385 4,198 Half year Year ended ended June December 2015 2014 2014 % GBP'000 % GBP'000 % GBP'000 Reconciliation of effective tax rate Profit before tax: Continuing operations 100.0 20,822 100.0 14,029 100.0 22,421 Tax using domestic corporation tax rate 20.2 4,206 21.5 3,016 21.5 4,821 Disallowed amortisation of intangible assets (0.1) (10) 1.4 196 0.1 20 Net income / (expenditure) not taxable 0.1 23 (2.3) (324) 2.3 510 Adjustments for prior years 0.6 116 (3.6) (503) (5.2) (1,153) 20.8 4,335 17.0 2,385 18.7 4,198 6. Earnings per share
Basic earnings per share of 8.50 pence (30 June 2014: 6.11 pence; 31 December 2014: 10.13 pence) per share is calculated by dividing the profit attributable to ordinary shareholders from total operations and after adjusting for non-controlling interests of 16,711,000 (30 June 2014: GBP11,975,000; 31 December 2014: GBP19,857,000) by the weighted average number of shares in issue during the period of 196,484,800 (30 June 2014: 196,034,036; 31 December 2014: 196,116,404).
Profit attributable to ordinary shareholders
Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Profit for the financial period 16,487 11,644 18,223 Loss attributable to non-controlling interests 224 331 1,634 Profit attributable to ordinary shareholders 16,711 11,975 19,857
Weighted average number of ordinary shares
Half year Year ended ended June December 2015 2014 2014 Number Number Number Number of issued ordinary shares (at beginning of the period) 199,378,755 199,378,755 199,378,755 Effect of shares transferred into employee benefit trust (2,893,955) (2,205,907) (3,262,351) Effect of treasury shares acquired - (1,138,812) - Weighted average number of ordinary shares at end of the period 196,484,800 196,034,036 196,116,404
Diluted earnings per share of 8.39 pence (30 June 2014: 6.00 pence; 31 December 2014: 9.89 pence) per share is calculated by dividing the profit from total operations, after adjusting for non-controlling interests, of GBP16,711,000 (30 June 2014: GBP11,975,000; 31 December 2014: GBP19,857,000) by the weighted average number of shares in issue during the period of 196,484,800 (30 June 2014: 196,034,036; 31 December 2014: 196,116,404), plus potentially dilutive shares of 2,734,019 (30 June 2014: 3,711,426; 31 December 2014: 4,646,375), which totals 199,218,819 (30 June 2014: 199,745,462; 31 December 2014: 200,762,779).
Weighted average number of ordinary shares (diluted)
Half year Year ended ended June December 2015 2014 2014 Number Number Number Weighted average number of ordinary shares 196,484,800 196,034,036 196,116,404 Dilutive shares 2,734,019 3,711,426 4,646,375 Weighted average number of ordinary shares (diluted) 199,218,819 199,745,462 200,762,779 7. Dividends
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After the balance sheet date, the following dividends were proposed by the Directors. The dividends have not been provided and there were no income tax consequences.
Pence per qualifying share Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 2015 interim 2.25 4,425 - - 2014 final 4.00 - - 7,975 2014 interim 2.00 - 3,924 3,924 4,425 3,924 11,899
The following dividends were approved by the shareholders in the period:
Pence per qualifying share Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 2014 final 4.00 7,866 - - 2014 interim 2.00 - - 3,924 2013 final 3.50 - 6,867 6,867 7,866 6,867 10,791
The 2014 final dividend of 4.00 pence per qualifying ordinary share (total value GBP7,866,000) was paid on 3 July 2015 to shareholders registered at the close of business on 5 June 2015.
The Board has declared an interim dividend of 2.25 pence (June 2014: 2.00 pence) per share. This dividend will be paid on 4 December 2015 to shareholders on the register at the close of business on 23 October 2015. The ex-dividend date will be 22 October 2015.
8. Employee benefits
The Company sponsors a funded defined benefit pension scheme ("the Scheme") in the UK. The Scheme is administered within a trust which is legally separate from the Company. The Trustee Board is appointed by both the Company and the Scheme's membership and acts in the interest of the Scheme and all relevant stakeholders, including the members and the Company. The Trustee is also responsible for the investment of the Scheme's assets.
The defined benefit section of the Scheme closed to future service accrual with effect from 30 June 2006 and members no longer pay contributions to the defined benefit section. Company contributions after this date are used to fund any deficit in the Scheme as determined by regular actuarial valuations.
The Trustee is required to use prudent assumptions to value the liabilities and costs of the Scheme whereas the accounting assumptions must be best estimates.
The Scheme poses a number of risks to the Company, for example longevity risk, investment risk, interest rate risk and inflation risk. The Trustee is aware of these risks and uses various techniques to control them. The Trustee has a number of internal control policies, including a risk register, which are in place to manage and monitor the various risks they face. The Trustee's investment strategy incorporates the use of liability driven investments ("LDIs") to minimise sensitivity of the actuarial funding position to movements in interest rates and inflation rates.
The Scheme is subject to regular actuarial valuations, which are usually carried out every three years. An actuarial valuation has been carried out with an effective date of 5 April 2015. These actuarial valuations are carried out in accordance with the requirements of the Pensions Act 2004 and include deliberate margins for prudence. This contrasts with these accounting disclosures which are determined using best estimate assumptions.
The results of the 5 April 2015 valuation have been projected to 30 June 2015 by a qualified independent actuary. The figures in the following disclosure were measured using the projected unit method.
The amounts recognised in the Consolidated Balance Sheet were as follows:
June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Present value of Scheme liabilities (305,730) (271,958) (309,067) Fair value of Scheme assets 306,529 271,868 312,516 Net amount recognised (before any adjustment for deferred tax) 799 (90) 3,449
The amounts recognised in Comprehensive Income were:
The current and past service costs, settlement and curtailments, together with the net interest expense for the period are included in the employee benefits expense in the Statement of Comprehensive Income. Remeasurements of the net defined benefit liability are included in Other Comprehensive Income.
Half year Year ended ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Service cost: Net interest expense recognised in the Consolidated Income Statement 123 51 48 Remeasurements of the net liability: Difference between actual and expected investment return 10,866 (7,494) (46,766) Loss arising from changes in financial assumptions (1,727) 7,064 44,242 Loss arising from changes in demographic assumptions (4,461) - - Experience loss / (gain) 2,099 422 (720) Charge / (credit) recorded in Other Comprehensive Income 6,777 (8) (3,244) 6,900 43 (3,196)
The principal actuarial assumptions used were:
June December 2015 2014 2014 Liability discount rate 3.70% 4.40% 3.60% Inflation assumption - RPI 3.30% 3.30% 3.10% Inflation assumption - CPI 2.30% 2.30% 2.10% Rate of increase in salaries n/a n/a n/a Revaluation of deferred pensions 2.30% 2.30% 2.10% Increases for pensions in payment: CPI pension increases (maximum 5% per annum) 2.30% 2.30% 2.10% CPI pension increases (maximum 5% per annum, minimum 3% per annum) 3.10% 3.10% 3.10% CPI pension increases (maximum 3% per annum) 2.20% 2.20% 2.00% June December 2015 2014 2014 Mortality assumption - before retirement Same as post Same as post Same as post retirement retirement retirement Mortality assumption - after retirement S2PMA tables S1PMA tables S1PMA tables (males) Loading 105% 105% 105% Projection basis Year of birth Year of birth Year of birth CMI_2014 1.0% CMI_2012 1.0% CMI_2012 1.0% Mortality assumption - after retirement S2PFA tables S1PFA tables S1PFA tables (females) Loading 105% 105% 105% Projection basis Year of birth Year of birth Year of birth CMI_2014 1.0% CMI_2012 1.0% CMI_2012 1.0% Future expected lifetime of current pensioner at age 65: Male aged 65 at year end 21.7 22.0 21.9 Female aged 65 at year end 23.7 24.2 24.2 Future expected lifetime of future pensioner at age 65: Male aged 45 at year end 23.0 23.3 23.3 Female aged 45 at year end 25.2 25.7 25.7 9. Analysis of net debt 1 January Cash flow Exchange 30 June 2015 differences 2015 GBP'000 GBP'000 GBP'000 GBP'000 Cash at bank and in hand 20,320 197 (17) 20,500 Debt due after one year (50,307) (4,465) 1,706 (53,066) Finance leases (493) 117 12 (364) (30,480) (4,151) 1,701 (32,930)
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Reconciliation of net cash flow to movement in net debt
Half year ended Year ended June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Net increase / (decrease) in cash and cash equivalents 197 (13,838) 2,711 Cash (inflow) / outflow from (increase) / decrease in debt and lease financing (4,348) (2,009) 1,552 Effect of exchange rate fluctuations 1,701 466 826 Movement in net debt in the period (2,450) (15,381) 5,089 Net debt at beginning of the period (30,480) (35,569) (35,569) Net debt at the end of the period (32,930) (50,950) (30,480) 10. Borrowing facilities
The total bank borrowing facilities at 30 June 2015 amounted to GBP145.0 million (30 June 2014: GBP165.0 million; 31 December 2014: GBP125.0 million) of which GBP91.9 million (30 June 2014: GBP110.4 million; 31 December 2014: GBP74.7 million) remained unutilised.
These figures include an additional seasonal working capital facility of GBP20.0 million available between 1 February and 31 August each year.
The undrawn facilities available at 30 June 2015, in respect of which all conditions precedent had been met, were as follows:
June December 2015 2014 2014 GBP'000 GBP'000 GBP'000 Committed: - Expiring in more than two years but not more than five years 31,934 50,641 34,693 - Expiring in one year or less 25,000 14,795 25,000 Uncommitted: - Expiring in one year or less 35,000 45,000 15,000 91,934 110,436 74,693
The total borrowing facilities at 28 August 2015 amounted to GBP115.0 million. In July 2015, following the continued steady reduction in net debt, the Group undertook a full review of its bank facilities in order to align them with current strategy and to ensure headroom against available facilities remains at appropriate levels. On 10 July 2015, the Group decreased its committed facility levels by GBP30.0 million to GBP80.0 million, comprising new committed facilities with extended maturities. The committed facilities are all revolving credit facilities with interest charged at variable rate based on LIBOR.
On 10 July 2015, the Group also renewed its short-term working capital facilities.
The maturity profile of borrowing facilities is structured to provide balanced, committed and phased medium-term debt. Following the recent refinancing of bank facilities, the current facilities are set out as follows:
Facility Cumulative facility GBP'000 GBP'000 Committed facilities: Q3: 2020 20,000 20,000 Q3: 2019 20,000 40,000 Q3: 2018 20,000 60,000 Q3: 2017 20,000 80,000 On-demand facilities: Available all year 15,000 95,000 Seasonal (February to August inclusive) 20,000 115,000
11. Fair values of financial assets and financial liabilities
A comparison by category of the book values and fair values of the financial assets and liabilities of the Group at 30 June 2015 is shown below:
June December 2015 2014 (Restated) Book Fair Book Fair amount value amount value GBP'000 GBP'000 GBP'000 GBP'000 Trade and other receivables 52,548 52,548 24,830* 24,830* Cash and cash equivalents 20,500 20,500 20,320 20,320 Bank loans (53,066) (52,697) (50,307) (49,451) Finance lease liabilities (364) (400) (493) (539) Trade and other payables (82,953) (82,953) (60,720) (60,720) Interest rate swaps, forward contracts and fuel hedges (1,719) (1,719) (3,192) (3,192) Financial liabilities - net (65,054) (69,562) Other assets - net 249,018 251,456 183,964 181,894
* The amount of financial assets included within trade and other receivables at 31 December 2014 has been restated to remove the impact of prepayments and accrued income, which were previously shown as financial assets. There was no difference between the book value and the fair value of those assets.
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table.
(a) Derivatives
Derivative contracts are either marked to market using listed market prices or by discounting the contractual forward price at the relevant rate and deducting the current spot rate. For interest rate swaps broker quotes are used.
(b) Interest-bearing loans and borrowings
Fair value is calculated based on the expected future principal and interest cash flows discounted at the market rate of interest at the balance sheet date.
(c) Finance lease liabilities
The fair value is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous lease agreements. The estimated fair values reflect changes in interest rates.
(d) Trade and other receivables / payables
For receivables / payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All other receivables / payables are discounted to determine the fair value.
(e) Fair value hierarchy
The table below analyses financial instruments, measured at fair value, into a fair value hierarchy based on the valuation techniques used to determine fair value.
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 1 Level 2 Level 3 Total GBP'000 GBP'000 GBP'000 GBP'000 30 June 2015 Derivative financial liabilities - 1,719 - - 31 December 2014 Derivative financial liabilities - 3,192 - -
12. Principal risks and uncertainties
The principal risks and uncertainties that could impact the Group for the remainder of the current financial year are those detailed on pages 18 to 20 of the 2014 Annual Report. These cover the strategic, financial and operational risks and have not changed during the period.
Strategic risks include those relating to general economic conditions, Government policy, the actions of customers, suppliers and competitors and also weather conditions. The Group also continues to be subject to various financial risks in relation to access to funding and to the pension scheme, principally the volatility of the discount (AA corporate bond) rate, any downturn in the performance of equities and increases in the longevity of members. The other main financial risks arising from the Group's financial instruments are liquidity risk, interest rate risk, credit risk and foreign currency risk. Operational risks include those relating to business integration, employees and key relationships. The Group continues to monitor all these risks and pursue policies that take account of, and mitigate, the risks where possible.
Responsibility Statement
The Directors who held office at the date of approval of these Financial Statements confirm that to the best of their knowledge:
-- the Condensed Consolidated Half-yearly Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union; and
-- the Half-yearly Management Report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the half year ended 30 June 2015 and their impact on the Condensed Consolidated Half-yearly Financial Statements and a description of the principal risks and uncertainties for the remaining second half of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the half year ended 30 June 2015 and that have materially affected the financial position or performance of the entity during that period and any changes in the related party transactions described in the last Annual Report that could do so.
The Board
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