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Marshalls PLC  -  MSLH   

Half-year Report

Released 07:00 16-Aug-2018

RNS Number : 9473X
Marshalls PLC
16 August 2018
 

 

Interim results for the half year ended 30 June 2018

 

Marshalls plc, the specialist Landscape Products group, announces its half year results

 

Financial Highlights

Half Year ended

30 June 2018

Half Year ended

30 June 2017

Increase

%

 

 

 

 

Revenue

£244.3m

£219.1m

12

EBITDA

£41.6m

£36.7m

13

Operating profit

£33.5m

£29.8m

12

Profit before tax

£32.5m

£29.1m

12

 

 

 

 

Basic EPS

13.24p

12.04p

10

 

 

 

 

Interim dividend

4.00p

3.40p

18

 

 

 

 

ROCE

20.0%

23.7%

 

Net (debt) / cash

£(48.9)m

£1.2m

 

 

Note:

Alternative performance measures are used consistently throughout this Interim Announcement.  These relate to EBITA, EBITDA and ROCE.  For further details of their purpose, definition and reconciliation to the equivalent statutory measures, see Note 3.

 

Highlights:

·      Strong revenue growth for the half year despite severe weather impact

·      Operating margins slightly ahead to 13.7% (2017: 13.6%)

·      Recent trading very strong - both June and July revenues up 21%

·      CPM Group Limited performed well in the period and its integration is on track and well advanced

·      The Group's strong cash generation has continued

·      Net debt of £48.9 million (31 December 2017: £24.3 million), reflecting the purchase of CPM for £41.4 million

·      Payment of £21.3 million final and supplementary dividends on 29 June 2018

·      Return on capital employed for the 12 months ended 30 June 2018 continues at circa 20% (31 December 2017 : 20.8%)

 

The 2020 Strategy continues to deliver long-term sustainable EBITDA growth, high ROCE and a strengthened brand:

               ·      Capital expenditure of £28 million planned for 2018 to support growth and deliver cost savings of £5 million per annum by

                    2019

               ·      Research and development expenditure increased to £2.2 million (2017: £1.7 million) coupled with new product

                    development and service to drive sales growth

               ·      Focus on increasing the profitability of the Emerging UK Businesses continues

               ·      Digital strategy gaining momentum and delivering real benefits across the business

               ·      Continue to target selective bolt-on acquisition opportunities

               ·      Maintained a 2 times dividend cover policy, enhanced by supplementary dividends

 

Commenting on these results, Martyn Coffey, Chief Executive, said:

 

"The Group continues to outperform the Construction Products Association's ("CPA") growth figures, despite ongoing macroeconomic uncertainty.  The CPA's recent Summer Forecast predicts a decrease in UK market volumes of 0.6 per cent in 2018, followed by an increase of 2.3 per cent in 2019, while the underlying indicators in the New Build Housing, Road, Rail and Water Management markets remains supportive. Recent trading has been very strong with both June and July revenues up 21 per cent against the prior year period.

 

The self help programme to support organic growth is progressing well and the integration of CPM Group Limited ("CPM") is on track with post acquisition trading continuing strongly. The Board believes that Marshalls' innovative product range and strong market positions mean the Group is well placed to deliver continued future growth. The Group's focus remains the delivery of long-term sustainable growth, whilst maintaining a strong balance sheet and a flexible capital structure.

 

The Board remains confident of achieving its expectations for 2018."

 

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: 1478410.  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

Jack Clarke

 

Group Finance 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 2018 grew by 12 per cent to £244.3 million (2017: £219.1 million). This result has been achieved despite the severe weather conditions in the first 4 months, which resulted in a reduction in sales of approximately £9 million. Recent trading has been strong and the Group has continued to experience strong order intake. Revenue in both June and July is up 21 per cent against the prior year period. Encouragingly, despite wider political and economic uncertainty, the underlying indicators remain positive in Marshalls' end markets. The Group's positive cash generation has continued in the period.

 

Sales to the Domestic end market, which represented approximately 31 per cent of Group sales, were significantly impacted by the severe weather. Despite this, results were in line with the prior year period reflecting strong growth either side of the bad weather period. The survey of domestic installers at the end of June 2018 shows continuing strong order books of 11.3 weeks (June 2017: 11.9 weeks; February 2018 : 10.8 weeks).

 

Sales to the Public Sector and Commercial end market, which represented approximately 64 per cent of Group sales, increased by 19 per cent compared with the prior year period. CPM, which was acquired in October 2017, has continued to trade strongly and its integration is in line with our expectations and well advanced. The Group continues to target those parts of the market where higher levels of growth are anticipated including New Build Housing, Road, Rail and Water Management.

 

Sales in the International business increased by 1 per cent in the 6 months ended 30 June 2018 and represented 5 per cent of Group sales.  Progress continues to be 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 £33.5 million (2017: £29.8 million) with operating margins slightly ahead at 13.7 per cent (2017 : 13.6 per cent).  EBITDA improved to £41.6 million (2017: £36.7 million).

 

Group return on capital employed ("ROCE") remained strong and was 20.0 per cent for the 12 months ended 30 June 2018. This compares with 20.8 per cent for the year ended 31 December 2017 and reflects the increase in the pension scheme surplus.  ROCE is defined as EBITA divided by shareholders' funds plus cash / net debt.

 

Net financial expenses were £1.0 million (2017: £0.7 million) and interest was covered 34.0 times (2017: 42.4 times).  The effective tax rate was 19.5 per cent (2017: 18.8 per cent).

 

Basic EPS was 13.24 pence (2017: 12.04 pence) per share, which represented an increase of 10 per cent. The Board has declared an interim dividend of 4.00 pence (2017: 3.40 pence) per share, an increase of 18 per cent, reflecting the strong cash generation and the Group's continuing 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. As a consequence of the acquisition of CPM in October 2017 for £41.4 million, including £3 million of CPM debt taken on, the Group reported net debt of £48.9 million at 30 June 2018 (30 June 2017: net cash of £1.2 million). The half year end net debt is after the payment of the 2017 final and supplementary dividends of £21.3 million made to shareholders on 29 June 2018.

 

Group Strategy

 

The Group strategy continues to focus on the delivery of long-term sustainable growth. The strategy is to maintain a strong balance sheet, a flexible capital structure and a clear capital allocation policy that drives both long-term growth and shareholder returns. 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 focus remains 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 so strengthen and differentiate the Marshalls brand.

 

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, together with sustainable cost reductions and improvements in operational efficiency.

 

Numerous cross-selling opportunities have been identified and CPM is generating a strong pipeline of new products. Our acquisition focus remains centred on the Minerals, Protective Street Furniture, Building Materials 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.  

 

Marshalls' digital strategy is increasing in momentum across all Group operations. The strategy combines digital trading, digital marketing and digital business and is focused on the customer experience. The strategy puts the interests of stakeholders and the requirements of customers as the key priority. For example, web and mobile applications enable customers to model their requirements and allow full digital access. A new Commercial web platform was launched in this period and a new Domestic platform will follow later this year. Our strategic direction is "digital by default", which seeks to define digital as a core part of the Group's culture.

 

Operating Performance

 

Operating margins increased slightly to 13.7 per cent in the 6 months ended 30 June 2018 (2017: 13.6 per cent). The increased operating margins in the core Landscape Products business, together with the positive impact from CPM, were tempered by the performances of certain of the Emerging UK Businesses and the impact of restructuring costs. CPM has delivered strong trading results since the acquisition date and its half year performance is in line with expectations.  Revenue increased by £25.3 million and operating profit by £4.8 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 reflects the delivery of sustainable cost reductions and operational efficiency improvements as part of our 2020 Strategy programmes.  The performance of our Emerging UK Businesses has been mixed during the half year period, with significant focus on restructuring certain less profitable areas. The profit is calculated after charging restructuring costs of £0.9 million which have been incurred in the period and are designed to benefit these businesses going forward.  Increasing profitability in the Emerging UK Businesses remains a key part of the Group's 2020 Strategy and Street Furniture, Mineral Products and Premier Mortars 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 Marshalls Register is unique and comprises approximately 1,900 installer teams. The Group is committed to delivering a consistently high standard of quality, customer service and marketing support and we remain focused on enhancing the overall customer experience by extending digitisation and our commitment to innovation.

 

In the Public Sector and Commercial end market, Marshalls' continuing strategy is to offer sustainable integrated solutions to customers, architects and contractors. The Group's technical and sales teams remain particularly focused on those market areas where future demand is considered to be greatest, including New Build Housing, Road, Rail and Water Management. CPM is now fully part of the Landscape Products business and numerous cross-selling opportunities have been identified. CPM has a strong order book and a healthy pipeline of new products and has recently secured orders to supply a number of Smart Motorway projects.

 

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 2018 was £2.2 million (2017: £1.7 million). This investment includes project engineering to enhance manufacturing capabilities, concrete and other materials technology innovations and extending the new product pipeline.  New product solutions for the Domestic range include Urbex Riven paving for new housing, together with additional innovative stone and vitrified paving products.  In Public Sector and Commercial, CPM's Perfect Manhole System and its Redi-Rock Flood Protection System are important new product solutions now available to the Group.  Revenue from new products in the core Landscape Products business has continued to grow strongly and represented 11 per cent of Group sales in the 6 months ended 30 June 2018.

 

Capital investment in property, plant and equipment in the 6 months ended 30 June 2018 totalled £13.5 million (2017: £7.9 million) and this compares with depreciation of £7.4 million (2017: £6.4 million). The Group's self help investment programme remains an important part of our 2020 Strategy and total capital expenditure of £28 million is planned in 2018. The aim is to deliver sustainable cost savings of £5 million per annum by 2019.  This detailed plan is on track and includes various projects within natural stone, block paving and automated material handling.  In addition, further to our acquisition last year, a new factory is due for completion at CPM's Somerset site in November 2018, at a cost of £5 million, which is expected to increase capacity and efficiency at the plant.

 

Balance Sheet and Cash Flow

 

Net assets at 30 June 2018 were £244.6 million (June 2017: £222.6 million).

 

Cash generation remains strong, although the bad weather in the first 4 months of the year has pushed out the working capital cycle in the second quarter. This knock-on impact of the bad weather is reflected in the reported net cash flows from operating activities, which were £14.0 million (2017: £19.2 million) in the 6 months ended 30 June 2018.  The Group continues to focus on maintaining a strong balance sheet supported by robust capital disciplines, and 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 provide headroom against available facilities at appropriately conservative levels. On 9 August 2018 we extended our committed facilities by 1 year to 2023 to enhance the maturity profile and also renewed 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 significant capacity within our banking facilities to fund organic investment and selective "bolt-on" acquisitions.

 

The balance sheet value of the Group's defined benefit pension scheme was a surplus of £11.5 million at 30 June 2018 (December 2017: £4.1 million surplus; June 2017: £3.6 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.  The increased surplus is largely due to an increase, during the last 6 months, in the AA corporate bond rate from 2.50 per cent to 2.60 per cent and this is in line with market movements. The expected rate of inflation decreased to 2.10 per cent from 2.15 per cent at 31 December 2017. The balance sheet value continues to benefit from the high proportion of liability-driven investments whose performance matches the liabilities.

 

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 4.00 pence (June 2017: 3.40 pence) per share, an increase of 18 per cent, which reflects the Group's strong cash generation.  This dividend will be paid on 5 December 2018 to shareholders on the register at the close of business on 19 October 2018.  The ex-dividend date will be 18 October 2018. 

 

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 2017. 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 2017 Annual Report, which is available at www.marshalls.co.uk/investor/annual-and-interim-reports.

 

Going concern

 

As stated in Note 1 of the 2018 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 Group continues to outperform the Construction Products Association's ("CPA") growth figures, despite ongoing macroeconomic uncertainty.  The CPA's recent Summer Forecast predicts a decrease in UK market volumes of 0.6 per cent in 2018, followed by an increase of 2.3 per cent in 2019, while the underlying indicators in the New Build Housing, Road, Rail and Water Management markets remain supportive.  Recent trading has been very strong with both June and July revenues up 21 per cent against the prior year period.

 

The self help programme to support organic growth is progressing well and the integration of CPM Group Limited is on track with post acquisition trading continuing strongly. The Board believes that Marshalls' innovative product range and strong market positions mean the Group is well placed to deliver continued future growth. The Group's focus remains the delivery of long-term sustainable growth, whilst maintaining a strong balance sheet and a flexible capital structure.

 

The Board remains confident of achieving its expectations for 2018.

 

Martyn Coffey

Chief Executive

 

 

Condensed Consolidated Income Statement

for the half year ended 30 June 2018

 

 

                     Half year

                     ended June

Year ended

December

 

 

2018

2017

2017

 

Notes

£'000

£'000

£'000

Revenue

4

244,340

219,131

430,194

 

 

 

 

 

Net operating costs

5

(210,827)

(189,299)

(376,755)

 

 

              

              

              

Operating profit

4

33,513

29,832

53,439

Financial expenses

6

(986)

(703)

(1,388)

 

 

              

              

              

Profit before tax

4

32,527

29,129

52,051

Income tax expense

7

(6,350)

(5,477)

(9,925)

 

 

              

              

              

Profit for the financial period

 

26,177

23,652

42,126

 

 

              

              

              

Profit for the period

 

 

 

 

Attributable to:

 

 

 

 

  Equity shareholders of the Parent

 

26,158

23,779

42,503

  Non-controlling interests

 

19

(127)

(377)

 

 

              

              

              

 

 

26,177

23,652

42,126

 

 

              

              

              

Earnings per share

 

 

 

 

Basic

8

13.24p

12.04p

21.52p

 

 

              

              

              

Diluted

8

13.13p

11.94p

21.37p

 

 

               

               

              

Dividend

 

 

 

 

     Pence per share

9

6.80p

5.80p

9.20p

     Supplementary

 

4.00p

3.00p

3.00p

 

 

              

              

              

     Dividends declared

9

21,344

17,387

24,105

 

 

              

              

              

 

All results relate to continuing operations.

 

 

Condensed Consolidated Statement of Comprehensive Income

for the half year ended 30 June 2018

 

 

                Half year

                ended June

Year ended

December

 

2018

£'000

2017

£'000

2017

£'000

 

 

 

 

Profit for the financial period

26,177

23,652

42,126

 

              

              

              

Other comprehensive income / (expense)

 

 

 

Items that will not be reclassified to the Income Statement:

 

 

 

Remeasurement of the net defined benefit liability

7,699

(517)

328

Deferred tax arising

(1,309)

88

(56)

 

              

              

              

Total items that will not be reclassified to the Income

  Statement

6,390

(429)

272

 

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

500

(704)

146

Fair value of cash flow hedges transferred to the Income             Statement

(262)

(251)

(385)

Deferred tax arising

(38)

159

35

Exchange difference on retranslation of foreign currency net

  investment

62

135

179

Exchange movements associated with borrowings

(84)

 (412)

(638)

Foreign currency translation differences - non-controlling interests

(5)

213

371

 

              

              

              

Total items that are or may be reclassified subsequently to

  the Income Statement

173

(860)

(292)

 

              

              

              

Other comprehensive income / (expense) for the period,

  net of income tax

6,563

(1,289)

(20)

 

              

              

              

Total comprehensive income for the period

32,740

22,363

42,106

 

              

              

              

Attributable to:

 

 

 

  Equity shareholders of the Parent

32,726

22,277

42,112

  Non-controlling interests

14

86

(6)

 

              

              

              

 

32,740

22,363

42,106

 

              

              

              

 

 

Condensed Consolidated Balance Sheet

as at 30 June 2018

 

 

 

      June

December

 

 

Notes

 

2018

£'000

2017

£'000

2017*

£'000

 

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

 

173,662

147,514

169,093

 

Intangible assets

 

 

73,318

40,386

72,060

 

Trade and other receivables

 

 

-

208

-

 

Employee benefits

10

 

11,498

3,622

4,127

 

Deferred taxation assets

 

 

1,324

2,390

2,775

 

 

 

 

             

             

              

 

259,802

194,120

248,055

 

 

 

 

              

              

              

 

Current assets

 

 

 

 

 

 

Inventories

 

 

84,867

70,380

77,859

 

Trade and other receivables

 

 

94,644

74,295

68,221

 

Cash and cash equivalents

 

 

20,617

26,862

19,845

 

Derivative financial instruments

 

 

654

-

447

 

 

 

 

              

              

             

 

 

 

 

200,782

171,537

166,372

 

 

 

 

              

              

             

 

Total assets

 

 

460,584

365,657

414,427

 

 

 

 

              

              

             

 

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

 

114,394

96,818

100,173

 

Corporation tax

 

 

8,282

7,555

9,299

 

Interest-bearing loans and borrowings

 

 

34

34

35

 

Derivative financial instruments

 

 

-

276

-

 

 

 

 

              

              

            

 

 

 

 

122,710

104,683

109,507

 

 

 

 

              

              

             

 

Non-current liabilities

 

 

 

 

 

 

Interest-bearing loans and borrowings

 

 

69,484

25,669

44,107

 

Provisions

 

 

7,540

-

8,200

 

Deferred taxation liabilities

 

 

16,274

12,669

14,986

 

 

 

 

              

              

              

 

 

 

 

93,298

38,338

67,293

 

 

 

 

              

              

              

 

Total liabilities

 

 

216,008

143,021

176,800

 

 

 

 

              

              

              

 

Net assets

 

 

244,576

222,636

237,627

 

 

 

 

              

              

             

 

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

 

 

(919)

(2,470)

(2,359)

 

Capital redemption reserve

 

 

75,394

75,394

75,394

 

Consolidation reserve

 

 

(213,067)

(213,067)

(213,067)

 

Hedging reserve

 

 

586

(206)

386

 

Retained earnings

 

 

308,569

288,894

303,274

 

 

 

 

              

              

             

 

Equity attributable to equity shareholders of the Parent

 

 

243,103

221,085

236,168

 

Non-controlling interests

 

 

1,473

1,551

1,459

 

 

 

 

              

              

             

 

Total equity

 

 

244,576

222,636

237,627

 

 

 

 

              

              

             

 

               

* The comparatives have been restated as a result of a reassessment of the fair value of assets and liabilities acquired (Note 11

 

 

Condensed Consolidated Cash Flow Statement

for the half year ended 30 June 2018

 

                      Half year ended

                     June

 

Year ended

December

 

2018

£'000

 

2017

£'000

 

2017

£'000

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

Profit for the financial period

26,177

 

23,652

 

42,126

Income tax expense

6,350

 

5,477

 

9,925

 

             

 

              

 

              

Profit before tax

32,527

 

29,129

 

52,051

Adjustments for:

 

 

 

 

 

Depreciation

7,427

 

6,438

 

13,314

Amortisation

717

 

501

 

1,142

Gain on sale of property, plant and equipment

(954)

 

(870)

 

(948)

Share-based payment expense

534

 

736

 

2,382

Financial income and expenses (net)

986

 

703

 

1,388

 

            

 

            

 

              

Operating cash flow before changes in working capital

41,237

 

36,637

 

69,329

(Increase) / decrease in trade and other receivables

(26,729)

 

(24,569)

 

5,334

Increase in inventories

(7,045)

 

(1,469)

 

(4,252)

Increase / (decrease) in trade and other payables

14,830

 

14,842

 

(320)

Operational restructuring costs paid

(917)

 

-

 

(1,217)

Acquisition costs paid

(594)

 

-

 

(193)

 

             

 

             

 

              

Cash generated from operations

20,782

 

25,441

 

68,681

Financial expenses paid

(707)

 

(513)

 

(911)

Income tax paid

(6,057)

 

(5,723)

 

(10,465)

 

             

 

             

 

              

Net cash flow from operating activities

14,018

 

19,205

 

57,305

 

             

 

             

 

              

Cash flows from investing activities

 

 

 

 

 

Proceeds from sale of property, plant and equipment

1,571

 

4,171

 

3,891

Acquisition of subsidiary undertaking

-

 

-

 

(41,227)

Acquisition of property, plant and equipment

(13,539)

 

(7,922)

 

(18,895)

Acquisition of intangible assets

(557)

 

(794)

 

(1,750)

 

             

 

             

 

              

Net cash flow from investing activities

(12,525)

 

(4,545)

 

(57,981)

 

             

 

             

 

              

Cash flows from financing activities

 

 

 

 

 

Payments to acquire own shares

(1,210)

 

(1,054)

 

(1,068)

Payments in respect of share-based awards

(3,683)

 

-

 

-

Net decrease in other debt and finance leases

-

 

-

 

(3,407)

Increase in borrowings

25,500

 

10,000

 

28,226

Equity dividends paid

(21,344)

 

(17,387)

 

(24,105)

 

              

 

              

 

              

Net cash flow from financing activities

(737)

 

(8,441)

 

(354)

 

              

 

              

 

               

Net increase / (decrease) in cash and cash equivalents

756

 

6,219

 

(1,030)

Cash and cash equivalents at the beginning of the period

19,845

 

20,681

 

20,681

Effect of exchange rate fluctuations

16

 

(38)

 

194

 

               

 

               

 

               

Cash and cash equivalents at the end of the period

20,617

 

26,862

 

19,845

 

              

 

              

 

              

             

 

 

Condensed Consolidated Statement of Changes in Equity

for the half year ended 30 June 2018

 

 

Attributable to equity holders of the Company

 

 

 

Share

capital

Share

premium

account

Own

shares

Capital

redemption

reserve

Consolid-

ation

reserve

Hedging

reserve

Retained

earnings

Total

Non-con-

trolling

interests

Total

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Current half year

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

49,845

22,695

(2,359)

75,394

(213,067)

386

303,274

236,168

1,459

237,627

 

             

              

            

              

               

             

              

             

             

             

Total comprehensive

  income / (expense) for the

  period

 

 

 

 

 

 

 

 

 

 

Profit for the financial

  period attributable to

  equity shareholders of

  the Parent

-

-

-

-

-

-

26,158

26,158

19

26,177

Other comprehensive

  income / (expense)

 

 

 

 

 

 

 

 

 

 

Foreign currency translation
  differences

-

-

-

-

-

-

(22)

(22)

(5)

(27)

Effective portion of

  changes in fair value of

  cash flow hedges

-

-

-

-

-

500

-

500

-

500

Net change in fair value of
cash flow hedges transferred
to the Income Statement

-

-

-

-

-

(262)

-

(262)

-

(262)

Deferred tax arising

-

-

-

-

-

(38)

-

(38)

-

(38)

Defined benefit plan

  actuarial gain

-

-

-

-

-

-

7,699

7,699

-

7,699

Deferred tax arising

-

-

-

-

-

-

(1,309)

(1,309)

-

(1,309)

 

             

             

             

             

             

             

              

              

             

             

Total other comprehensive

  income

-

-

-

-

-

200

6,368

6,568

(5)

6,563

 

             

             

             

             

             

             

              

              

             

             

Total comprehensive

  income for the

  period

-

-

-

-

-

200

32,526

32,726

14

32,740

 

             

             

             

             

             

             

              

              

             

             

Transactions with owners,

  recorded directly in equity

 

 

 

 

 

 

 

 

 

 

Contributions by and

  distributions to owners

 

 

 

 

 

 

 

 

 

 

Share-based payments

-

-

-

-

-

-

(3,149)

(3,149)

-

(3,149)

Deferred tax on share-based

  payments

-

-

-

-

-

-

(352)

(352)

-

(352)

Corporation tax on share-

  based payments

-

-

-

-

-

-

264

264

-

264

Dividends to equity

  shareholders

-

-

-

-

-

-

(21,344)

(21,344)

-

(21,344)

Purchase of own shares

-

-

(1,210)

-

-

-

-

(1,210)

-

(1,210)

Disposal of own shares

-

-

2,650

-

-

-

(2,650)

-

-

-

 

             

             

             

             

             

             

              

              

             

             

Total contributions by

  and distributions to owners

-

-

1,440

-

-

-

(27,231)

(25,791)

-

(25,791)

 

             

             

            

             

             

            

              

              

             

             

Total transactions with

 owners of the Company

-

-

1,440

-

-

200

5,295

6,935

14

6,949

 

             

              

            

              

               

            

              

              

              

             

At 30 June 2018

49,845

22,695

(919)

75,394

(213,067)

586

308,569

243,103

1,473

244,576

 

             

              

            

              

               

             

              

              

              

              

 

 

Condensed Consolidated Statement of Changes in Equity (continued)

for the half year ended 30 June 2018

 

 

Attributable to equity holders of the Company

 

 

 

Share

capital

Share

premium

account

Own

shares

Capital

redemption

reserve

Consolid-

ation

reserve

Hedging

reserve

Retained

earnings

Total

Non-con-

trolling

interests

Total

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Prior 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 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 income /

  (expense)

-

-

-

-

-

(796)

(706)

(1,502)

213

(1,289)

 

             

             

             

             

             

             

              

              

             

             

Total comprehensive

  income / (expense) 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

 

             

              

            

              

               

             

              

              

              

              

 

 

Condensed Consolidated Statement of Changes in Equity (continued)

for the half year ended 30 June 2018

 

 

Attributable to equity holders of the Company

 

 

 

Share

capital

Share

premium

account

Own

shares

Capital

redemption

reserve

Consolid-

ation

reserve

Hedging

reserve

Retained

earnings

Total

Non-con-

trolling

interests

Total

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Prior 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
  year

 

 

 

 

 

 

 

 

 

 

Profit for the financial

  period attributable to

  equity shareholders of

  the Parent

-

-

-

-

-

-

42,503

42,503

(377)

42,126

Other comprehensive

  income / (expense)

 

 

 

 

 

 

 

 

 

 

Foreign currency translation
  differences

-

-

-

-

-

-

(459)

(459)

371

(88)

Effective portion of

  changes in fair value of

  cash flow hedges

-

-

-

-

-

146

-

146

-

146

Net change in fair value of
  cash flow hedges
  transferred to the Income
  Statement

-

-

-

-

-

(385)

-

(385)

-

(385)

Deferred tax arising

-

-

-

-

-

35

-

35

-

35

Defined benefit plan

  actuarial gain

-

-

-

-

-

-

328

328

-

328

Deferred tax arising

-

-

-

-

-

-

(56)

(56)

-

(56)

 

             

             

             

             

             

             

             

             

             

             

Total other

  comprehensive income /
  (expense)

-

-

-

-

-

(204)

(187)

(391)

371

(20)

 

             

             

             

             

             

             

             

             

             

             

Total comprehensive

  income / (expense) for

  the year

-

-

-

-

-

(204)

42,316

42,112

(6)

42,106

 

             

             

             

             

             

             

             

             

             

             

Transactions with

  owners, recorded

  directly in equity

 

 

 

 

 

 

 

 

 

 

Contributions by and

  distributions to

  owners

 

 

 

 

 

 

 

 

 

 

Share-based payments

-

-

-

-

-

-

2,382

2,382

-

2,382

Deferred tax on share-based

  payments

-

-

-

-

-

-

885

885

-

885

Corporation tax on share-

  based payments

-

-

-

-

-

-

306

306

-

306

Dividends to equity
shareholders

-

-

-

-

-

-

(24,105)

(24,105)

-

(24,105)

Purchase of own shares

-

-

(1,068)

-

-

-

-

(1,068)

-

(1,068)

Disposal of own shares

-

-

2,331

-

-

-

(2,331)

-

-

-

 

             

             

          

             

             

             

             

             

             

             

Total contributions by

  and distributions to

  owners

-

-

1,263

-

-

(22,863)

(21,600)

-

(21,600)

 

             

             

          

             

             

             

             

             

             

             

Total transactions with

 owners of the Company

-

-

1,263

-

-

(204)

19,453

20,512

(6)

20,506

 

             

              

          

              

               

             

              

              

              

             

At 31 December 2017

49,845

22,695

(2,359)

75,394

(213,067)

386

303,274

236,168

1,459

237,627

 

             

              

            

              

               

             

              

              

              

              

 

Notes to the Condensed Consolidated Financial Statements

for the half year ended 30 June 2018

 

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 2018 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 Guidance 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 16 August 2018.  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 2018 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 27.

 

The financial information for the year ended 31 December 2017 has been extracted from the annual Financial Statements, included in the Annual Report 2017, 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 Guidance and Transparency Rules of the UK Financial Conduct Authority and, other than in respect of IFRS 9 and IFRS 15 which apply from 1 January 2018, 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 2017.

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 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 2017.

 

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 13 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 9 August 2018. 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.  Accounting policies

 

IFRS 9, "Financial Instruments" and IFRS 15 "Revenue from Contracts with Customers", have been applied from 1 January 2018. The application of both Standards has not had a material impact on the Group's financial reporting. The Group expects to adopt IFRS 16 "Leases", with effect from 1 January 2019. The Group is currently assessing the impact of IFRS 16, which is expected to have a significant impact on the consolidated results of the Group. It is not practicable to provide a reasonable estimate of the financial effect until the Directors complete the review.

 

Except as stated below, 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 following new accounting policies have been applied from 1 January 2018.

 

IFRS 9, "Financial Instruments"

 

IFRS 9 replaces the provisions of IAS 39 that relate to recognition, classification and measurement of financial assets and financial liabilities, de-recognition of financial instruments, impairment of financial assets and hedge accounting.  The adoption of IFRS 9, "Financial Instruments" from 1 January 2018 resulted in changes in accounting policies, however, no adjustments were required to the amounts recognised in the financial statements in previous periods.  The new accounting policies are set out below.

 

(a)  Classification and measurement

 

On 1 January 2018, the Group has classified its financial instruments in the appropriate IFRS 9 categories.

 

The derivative financial instruments designated as cash flow hedges and fair value hedges under IAS 39 at 31 December 2017 continue to qualify for hedge accounting under IFRS 9 at 1 January 2018 and are, therefore, treated as continuing hedges.

 

(b)  Impairment of financial assets

 

The Group has one type of financial asset that is subject to IFRS 9's new expected credit loss model:

 

·      trade and other receivables

 

Trade and other receivables do not contain a significant financing element and therefore expected credit losses are measured using the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from the initial recognition of the receivables.

 

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

 

There was no IFRS 9 impact on retained earnings at 1 January 2018.

 

IFRS 15, "Revenue from Contracts with Customers"

 

IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 supersedes the revenue recognition guidance within IAS 18 "Revenue" and the related interpretations.  The Group adopted IFRS 15 on 1 January 2018. Comparative information has not been restated as the impact on prior periods is not material. 

 

IFRS 15 provides a single, principles-based, five-step model to be applied to all sales contracts, based on the transfer of control of goods and services to customers, and it replaces the separate model for goods and services of IAS 18 "Revenue".

 

Revenue represents income derived from contracts for the provision of goods and services by the Company and its subsidiary undertakings to customers in exchange for consideration in the ordinary course of the Group's activities.

 

Upon approval by the parties to a contract, the contract is assessed to identify each promise to transfer either a distinct good or service, or a series of distinct goods or services, that are substantially the same and have the same pattern of transfer to the customer.  Goods and services are distinct and accounted for as separate performance obligations in the contract if the customer can benefit from them either on their own or together with other resources that are readily available to the customer and they are separately identifiable in the contract.

 

The Group's revenues are primarily earned from the sale of goods and revenue is recognised when the performance obligation in the contracts with customers is satisfied, typically on delivery of goods to customers.

 

At the start of the contract the total transaction price is estimated as the amount of consideration to which the Group expect to be entitled in exchange for transferring the promised goods and services to the customer, excluding sales taxes.  Any variable consideration is included based on the expected value, or most likely amount, only to the extent that it is highly probable that there will not be a reversal in the amount of revenue recognised.  Total transaction price is allocated to the performance obligations identified in the contract in proportion to their relative standalone selling prices.

 

3.  Alternative performance measures

 

The Group used alternative performance measures ("APMs") which are not defined or specified under IFRS. The Group believes that their APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information. APMs are consistent with how business performance is planned, reported and assessed internally by management and the Board and provide more meaningful comparative information.

 

EBITA and EBITDA

 

EBITA represents earnings before interest, tax and the amortisation of intangibles. This is a component of the ROCE calculation. EBITDA is calculated by adding back depreciation to EBITA.

 

 

June

2018

June

2017

December

2017

Increase

 

£'000

£'000

£'000

%

 

 

 

 

 

EBITDA

41,657

36,771

67,895

13

Depreciation

(7,427)

(6,438)

(13,314)

 

 

              

              

              

              

EBITA

34,230

30,333

54,581

 

Amortisation of intangible assets

(717)

(501)

(1,142)

 

 

              

              

              

              

Operating profit

33,513

29,832

53,439

12

 

              

              

              

              

 

ROCE

 

Reported ROCE is defined as EBITA divided by shareholders funds plus net debt / (cash).

 

 

June

2018

June

2017

December

2017

 

£'000

£'000

£'000

 

 

 

 

EBITA - half year ended 30 June

34,230

30,333

30,333

EBITA - half year ended 31 December

24,248

22,183

24,248

 

              

              

              

EBITA - year ended 30 June

58,478

52,516

54,581

 

              

              

              

 

 

 

 

Shareholders funds

244,576

222,636

237,627

Net debt / (cash)

48,901

(1,159)

24,297

 

              

              

              

 

293,477

221,477

261,924

 

              

              

              

 

 

 

 

Reported ROCE

20.0%

23.7%

20.8%

 

              

              

              

 

4.  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 plc 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 one integrated production, logistics and distribution network supporting both end markets. Following its acquisition, the CPM business has been included within the Landscape Products operating segment.

 

Included in "Other" are the Group's Street Furniture, Mineral Products, Premier Mortars and International operations, which do not currently meet the IFRS 8 reporting requirements. 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 central 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.

 

Segment revenues and results

 

 

Half year ended June

2018

Half year ended June

2017

Year ended December

2017

 

Landscape Products

Other

Total

Landscape Products

Other

Total

Landscape

Products

Other

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

External
  revenue

197,545

48,745

246,290

172,140*

49,408*

221,548

339,655

94,622

434,277

Inter-segment

  revenue

(105)

(1,845)

(1,950)

(130)*

(2,287)*

(2,417)

(226)

(3,857)

(4,083)

 

              

            

            

              

            

            

              

            

           

Total revenue

197,440

46,900

244,340

172,010

47,121

219,131

339,429

90,765

430,194

 

            

           

           

            

           

           

             

            

            

 

 

 

 

 

 

 

 

 

 

Segment

  operating profit

35,489

1,010

36,499

31,676*

2,099*

33,775

56,104

1,873

57,977

 

            

           

 

            

           

 

             

            

            

Unallocated

  administration

  costs

 

 

(2,986)

 

 

(3,943)

 

 

(4,538)

 

 

 

           

 

 

           

 

 

            

Operating profit

 

 

33,513

 

 

29,832

 

 

53,439

 

 

 

 

 

 

 

 

 

 

Finance

  charges (net)

 

 

(986)

 

 

(703)

 

 

(1,388)

 

 

 

            

 

 

            

 

 

            

Profit before tax

 

 

32,527

 

 

29,129

 

 

52,051

Taxation

 

 

(6,350)

 

 

(5,477)

 

 

(9,925)

 

 

 

            

 

 

            

 

 

            

Profit after tax

 

 

26,177

 

 

23,652

 

 

42,126

 

 

 

            

 

 

            

 

 

            

 

 * Following a change to the way in which information is reported internally, the June 2017 comparative figures have been restated to ensure consistent classification with the analysis reported for the half year ended 30 June 2018.

 

Segment assets

 

June

2018

June

2017

December

2017

 

£'000

£'000

£'000

 

 

 

 

Fixed assets and inventory:

 

 

 

Landscape Products

200,973

162,369*

182,391

Other

57,556

55,525*

64,561

 

              

              

              

Total segment fixed assets and inventory

258,529

217,894

246,952

 

 

 

 

Unallocated assets

202,055

147,763

167,475**

 

              

              

              

Consolidated total assets

460,584

365,657

414,427

 

              

              

              

 

* Following a change to the way in which information is reported internally, the June 2017 comparative figures have been restated to ensure consistent classification with the analysis reported for the half year ended 30 June 2018.

 

** The comparatives have been restated as a result of a reassessment of the fair value of assets and liabilities acquired (Note 11).

 

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

June

Year ended

December

Half year ended

June

Year ended

December

 

2018

2017

2017

2018

2017

2017

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Landscape Products

5,816

5,111*

10,878

11,376

6,749*

17,041

Other

2,328

1,828*

3,578

713

2,078*

5,445

 

              

              

              

             

              

              

 

8,144

6,939

14,456

12,089

8,827

22,486

 

              

           

             

            

           

             

 

*Following a change to the way in which information is reported internally, the June 2017 comparative figures have been restated to ensure consistent classification with the analysis reported for the half year ended 30 June 2018. 

 

Geographical destination of revenue

 

 

Half year

ended June

Year ended

December

 

 

2018

2017

2017

 

 

£'000

£'000

£'000

United Kingdom

 

230,784

205,670

407,215

Rest of the World

 

13,556

13,461

22,979

 

 

              

              

              

 

 

244,340

219,131

430,194

 

 

              

              

              

 

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.

 

5.  Net operating costs

 

 

                             Half year

                            ended June

Year ended

December

 

2018

2017

2017

 

£'000

£'000

£'000

Raw materials and consumables

81,871

79,779

151,343

Changes in inventories of finished goods and work

  in progress

6,241

2,019

7,231

Personnel costs

57,633

51,086

100,811

Depreciation

7,427

6,438

13,314

Amortisation of intangible assets

717

501

1,142

Own work capitalised

(1,494)

(666)

(1,919)

Other operating costs

59,483

51,785

106,569

Restructuring costs

917

1,003

1,217

Acquisition costs

-

-

837

 

              

              

              

Operating costs

212,795

191,945

380,545

Other operating income

(1,014)

(1,776)

(2,842)

Net gain on asset and property disposals

(954)*

(870)

(948)

 

              

              

              

Net operating costs

210,827

189,299

376,755

 

              

              

              

 

* This reflects the proceeds of the sale of a domain name and is net of the associated digital strategy costs.

 

6.  Financial expenses and income

 

                         Half year

                            ended June

Year ended

December

 

2018

2017

2017

 

£'000

£'000

£'000

 

(a)  Financial expenses

 

 

 

 

Net interest expense on defined benefit pension
  scheme

278

187

377

 

Interest expense on bank loans, overdrafts and loan

  notes

705

513

1,005

 

Finance lease interest expense

3

3

6

 

                       

              

              

              

 

 

986

703

1,388

 

 

              

              

              

 

 

Net interest expense on the defined benefit pension scheme is disclosed net of Company recharges.

 

7.  Income tax expense

 

 

                        Half year

                        ended June

Year ended

December

 

2018

2017

2017

 

£'000

£'000

£'000

 

Current tax expense

 

 

 

 

Current year

5,624

6,363

11,554

 

Adjustments for prior years

(320)

(289)

(732)

 

                       

              

              

              

 

 

5,304

6,074

10,822

 

Deferred taxation expense

 

 

 

 

Origination and reversal of temporary

  differences:

 

 

 

 

Current year

998

(478)

(797)

 

Adjustments for prior years

48

(119)

(100)

 

 

              

              

              

 

Total tax expense

6,350

5,477

9,925

 

 

              

              

              

 

 

 

 

Half year ended June

Year ended

December

 

2018

2017

 

2017

 

%

£'000

%

£'000

%

£'000

Reconciliation of effective tax rate

 

 

 

 

 

 

Profit before tax

100.0

32,527

100.0

29,129

100.0

52,051

Tax using domestic corporation tax rate

19.0

6,180

19.3

5,608

19.3

10,020

Impact of capital allowances in excess of depreciation

0.1

27

0.4

136

0.3

184

Short-term timing differences

1.0

328

1.1

310

1.2

630

Adjustment to tax charge in prior period

(1.0)

(320)

(1.1)

(289)

(1.4)

(732)

Expenses not deductible for tax purposes

(2.8)

(911)

1.1

309

1.4

720

Corporation tax charge for the year

16.3

5,304

20.8

6,074

20.8

10,822

Impact of capital allowances in excess of depreciation

0.3

82

(1.9)

(545)

(1.2)

(618)

Short-term timing differences

2.6

860

0.1

30

(0.2)

(103)

Pension scheme movements

-

-

0.1

23

(0.1)

(77)

Other items

-

(3)

1.8

509

1.0

532

Adjustment to tax charge in prior period

0.1

48

(0.4)

(119)

(0.2)

(100)

Impact of the change in the rate of corporation tax on deferred taxation

0.2

59

(1.7)

(495)

(1.0)

(531)

Total tax charge for the year

19.5

6,350

18.8

5,477

19.1

9,925

 

The net amount of deferred taxation credited to the Consolidated Statement of Comprehensive Income in the period was £1,347,000 debit (30 June 2017: £247,000 credit; 31 December 2017: £21,000 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.

 

8.  Earnings per share

 

Basic earnings per share of 13.24 pence (30 June 2017: 12.04 pence; 31 December 2017: 21.52 pence) per share is calculated by dividing the profit attributable to Ordinary Shareholders for the financial period after adjusting for non-controlling interests of £26,158,000 (30 June 2017: £23,779,000; 31 December 2017: £42,503,000) by the weighted average number of shares in issue during the period of 197,619,775 (30 June 2017: 197,440,624; 31 December 2017: 197,518,109).

 

Profit attributable to Ordinary Shareholders

 

                Half year

              ended June

Year ended December

 

2018

£'000

2017

£'000

2017

£'000

 

Profit for the financial period

26,177

23,652

42,126

Result attributable to non-controlling interests

(19)

127

377

 

              

              

              

Profit attributable to Ordinary Shareholders

26,158

23,779

42,503

 

              

              

              

 

Weighted average number of Ordinary Shares

 

 

 

    Half year

    ended June

Year ended

December

 

 

2018

2017

2017

 

 

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

 

(1,758,980)

(1,938,131)

(1,860,646)

 

 

                    

                    

                    

Weighted average number of Ordinary Shares

197,619,775

197,440,624

197,518,109

 

 

                    

                    

                    

             

 

 

Diluted earnings per share of 13.13 pence (30 June 2017: 11.94 pence; 31 December 2017: 21.37 pence) per share is calculated by dividing the profit for the financial period, after adjusting for non-controlling interests of £26,158,000 (30 June 2017: £23,779,000; 31 December 2017: £42,503,000), by the weighted average number of shares in issue during the period of 197,619,775 (30 June 2017: 197,440,624; 31 December 2017: 197,518,109), plus potentially dilutive shares of 1,609,647 (30 June 2017: 1,722,526; 31 December 2017: 1,384,707), which totals 199,229,422 (30 June 2017: 199,163,150 31 December 2017: 198,902,816).

 

Weighted average number of Ordinary Shares (diluted)

 

 

      Half year

      ended June

Year ended December

 

2018

2017

2017

 

Number

Number

Number

 

 

 

 

Weighted average number of Ordinary Shares

197,619,775

197,440,624

197,518,109

Dilutive shares

1,609,647

1,722,526

1,384,707

 

                    

                    

                    

Weighted average number of Ordinary Shares (diluted)

199,229,422

199,163,150

198,902,816

 

                    

                    

                    

 

 

 

 

9.  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

      ended June

Year ended

December

 

 

2018

2017

2017

 

 

£'000

£'000

£'000

 

 

 

 

 

2018 interim

4.00

7,905

-

-

2017 supplementary

4.00

-

-

7,904

2017 final

6.80

-

-

13,436

2017 interim

3.40

-

6,718

6,718

 

 

              

              

              

 

 

7,905

6,718

28,058

 

 

              

              

              

 

The following dividends were approved by the shareholders in the period:

 

 

Pence per qualifying share

      Half year

      ended June

Year ended December

 

 

2018

2017

2017

 

 

£'000

£'000

£'000

 

 

 

 

 

2017 supplementary

4.00

7,905

-

-

2017 final

6.80

13,439

-

-

2017 interim

3.40

-

-

6,718

2016 supplementary

3.00

-

5,927

5,927

2016 final

5.80

-

11,460

11,460

 

 

              

              

              

 

 

21,344

17,387

24,105

 

 

              

              

              

 

The 2017 final dividend of 6.80 pence per qualifying Ordinary Share alongside a supplementary dividend of 4.00 pence per qualifying Ordinary Share (total value £21,344,000) was paid on 29 June 2018 to shareholders registered at the close of business on 8 June 2018.

 

The Board has declared an interim dividend of 4.00 pence (June 2017: 3.40 pence) per share. This dividend will be paid on 5 December 2018 to shareholders on the register at the close of business on 19 October 2018. The ex-dividend date will be 18 October 2018.

 

10.  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 2018 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

 

2018

2017

2017

 

£'000

£'000

£'000

Present value of Scheme liabilities

(342,992)

(353,971)

(350,554)

Fair value of Scheme assets

354,490

357,593

354,681

 

              

              

              

Net amount recognised (before any adjustment for deferred tax)

11,498

3,622

4,127

 

              

              

              

         

 

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

ended June

Year ended

December

 

2018

2017

2017

 

£'000

£'000

Service cost:

 

 

 

Net interest expense recognised in the Consolidated Income Statement

328

137

477

 

              

              

              

Remeasurements of the net liability:

 

 

 

     Return on scheme assets (excluding amount included in interest

     expense)

(762)

(507)

(2,819)

     (Gain) / loss arising from changes in financial assumptions

(6,937)

5,565

10,158

     Gain arising from changes in demographic assumptions

-

(3,628)

(7,667)

     Experience gain

-

(913)

-

 

              

              

              

(Credit) / charge recorded in other comprehensive income

(7,699)

517

(328)

 

              

              

              

Total defined benefit (credit) / charge

(7,371)

654

149

 

              

              

              

 

 

 

 

 

The principal actuarial assumptions used were:

 

 

       June

December

 

2018

2017

2017

Liability discount rate

2.60%

2.55%

2.50%

Inflation assumption - RPI

3.10%

3.15%

3.15%

Inflation assumption - CPI

2.10%

2.15%

2.15%

Rate of increase in salaries

n/a

n/a

n/a

 

 

 

 

Revaluation of deferred pensions

2.10%

2.15%

2.15%

Increases for pensions in payment:

 

 

 

CPI pension increases (maximum 5% per annum)

2.10%

2.15%

2.15%

CPI pension increases (maximum 5% per annum,

  minimum 3% per annum)

3.20%

3.10%

3.20%

CPI pension increases (maximum 3% per annum)

1.90%

2.05%

1.95%

Proportion of employees opting for early retirement

0%

0%

0%

Proportion of employees commuting pension for cash

50.0%

50%

50.0%

 

 

Mortality assumption - before retirement

Same as post retirement

Same as post retirement

Same as post retirement

 

 

 

 

Mortality assumption - after retirement (males)

S2PMA tables

S2PMA tables

S2PMA tables

Loading

105%

105%

105%

Projection basis

Year of birth

Year of birth

Year of birth

 

CMI_2016 1.0%

CMI_2016 1.0%

CMI_2016 1.0%

 

 

 

 

Mortality assumption - after retirement (females)

S2PFA tables

S2PFA tables

S2PFA tables

Loading

105%

105%

105%

Projection basis

Year of birth

Year of birth

Year of birth

 

CMI_2016 1.0%

CMI_2016 1.0%

CMI_2016 1.0%

Future expected lifetime of current pensioner at age 65:

 

 

 

Male aged 65 at year end

86.2

86.5

86.2

Female aged 65 at year end

88.0

88.4

88.0

Future expected lifetime of future pensioner at age 65:

 

 

 

Male aged 45 at year end

87.2

87.6

87.2

Female aged 45 at year end

89.2

89.6

89.2

 

11.  Acquisition of subsidiary

 

On 19 October 2017, Marshalls Mono Limited acquired 100 per cent of the issued share capital of CPM Group Limited, a precast concrete manufacturer which specialises in underground water management solutions.

 

Initial cash consideration paid to the vendors was £26,272,000 and, in addition, a further £12,000,000 was paid into an escrow account in relation to certain ongoing legal and regulatory matters identified during the course of due diligence carried out prior to concluding the acquisition.  Provisions of £11,840,000 were recorded at the date of acquisition, for the estimated liabilities arising from concluding these ongoing matters.  The Group has a right of reimbursement of amounts held in an escrow account to the extent that any liability crystallises in respect of these ongoing legal and regulatory matters to enable the Group to settle these liabilities, up to the full value of the £12,000,000 held in escrow and consequently a reimbursement asset of £12,000,000 was recognised within other debtors.  To the extent that any liabilities arising from these ongoing legal and regulatory matters are resolved at a lower amount than the escrow balances, the excess balance remaining in escrow is payable to the vendors as additional consideration.

 

As required under the terms of the sale and purchase agreement, a net working capital review was undertaken in the period.  Adjustments were agreed with the vendor which resulted in a reimbursement of £2,163,000 to Marshalls Mono Limited during the period to 30 June 2018.  This amount covered both the required working capital adjustment and monies that were required to settle certain of the legal and regulatory matters which crystallised during the period.

 

In addition, and as part of the same review required under the terms of the sale and purchase agreement, an amount of £1,419,000 was paid to the vendors from the escrow account during the period.

 

As part of the ongoing review of the fair value of assets and liabilities acquired, adjustments were made to certain accruals and provisions during the period.  These had the effect of increasing the fair value of the net assets acquired under the acquisition by £1,019,000, which has given rise to a reduction in goodwill of a similar amount. Goodwill, trade and other payables and provisions have been restated accordingly in the reported 31 December 2017 balance sheet.

 

12.  Analysis of net debt

 

 

1 January

2018

Cash flow

 

Other changes

30 June

2018

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Cash at bank and in hand

19,845

756

16

20,617

Debt due after 1 year

(43,883)

(25,443)

70

(69,256)

Finance leases

(259)

-

(3)

(262)

 

              

              

              

              

 

(24,297)

(24,687)

83

(48,901)

 

              

              

              

              

 

Reconciliation of net cash flow to movement in net debt

 

 

           Half year ended

          June

Year ended December

 

2018

£'000

 

 2017

£'000

2017

£'000

 

Net increase in cash and cash equivalents

756

 

6,219

1,925

Cash inflow from increase in debt and lease financing

(25,443)

 

(10,000)

(24,819)

On acquisition of subsidiary undertaking

-

 

-

(6,362)

Effect of exchange rate fluctuations

83

 

(473)

(454)

 

             

 

             

              

Movement in net debt in the period

(24,604)

 

(4,254)

(29,710)

Net (debt) / cash at the beginning of the period

(24,297)

 

5,413

5,413

 

             

 

             

              

Net (debt) / cash at the end of the period

(48,901)

 

1,159

(24,297)

 

             

 

             

              

 

13.  Borrowing facilities

 

The total bank borrowing facilities at 30 June 2018 amounted to £125.0 million (30 June 2017: £105.0 million; 31 December 2017: £115.0 million), of which £55.7 million (30 June 2017: £79.6 million; 31 December 2017: £71.1 million) remained unutilised. 

 

These figures include an additional seasonal working capital facility of £10.0 million available between 1 February and 31 August each year.

 

The undrawn facilities available at 30 June 2018, in respect of which all conditions precedent had been met, were as follows:

 

 

        June

December

 

2018

£'000

2017

£'000

2017

£'000

Committed:

 

 

 

- Expiring in more than 2 years but not more than 5 years

30,379

54,593

50,617

- Expiring in 1 year or less

365

-

5,500

 

 

 

 

Uncommitted:

 

 

 

- Expiring in 1 year or less

25,000

25,000

15,000

 

              

              

              

 

55,744

79,593

71,117

 

              

              

              

 

The total borrowing facilities at 16 August 2018 amounted to £125.0 million.  On 9 August 2018, the Group renewed its short-term working capital facilities of £25.0 million and took out an additional committed facility of £20.0 million with a 2023 maturity date.  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

 

£'000

£'000

Committed facilities:

 

 

Q3: 2023

20,000

20,000

Q3: 2022

20,000

40,000

Q3: 2021

20,000

60,000

Q3: 2020

20,000

80,000

Q3: 2019

20,000

100,000

 

 

 

On-demand facilities:

 

 

Available all year

15,000

115,000

Seasonal (February to August inclusive)

10,000

125,000

 

14.  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 2018 is shown below:

 

 

               June

June

December

 

                2018

2017

2017*

 

Book

amount

Fair

value

Book

 amount

Fair

value

Book

 amount

Fair

value

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Trade and other receivables

84,713

84,713

70,217

 

70,217

62,787

62,787

Cash and cash equivalents

20,617

20,617

26,862

26,862

19,845

19,845

Bank loans

(69,256)

(70,639)

(25,407)

(24,322)

(43,883)

(42,836)

Finance lease liabilities

(262)

(280)

(296)

(317)

(259)

(280)

Trade and other payables

(100,260)

(100,260)

(81,638)

(81,638)

(94,758)

(95,777)

Interest rate swaps, forward contracts and fuel hedges

654

654

(276)

(276)

447

447

 

              

 

              

 

              

 

Financial instrument assets and liabilities - net

(63,794)

 

(10,538)

 

(55,821)

 

Non-financial instrument assets and liabilities - net

308,370

 

233,174

 

293,448

 

 

              

 

              

 

              

 

 

244,576

 

222,636

 

237,627

 

 

              

 

              

 

              

 

 

* The comparatives have been restated a result of the reassessment of the Fair Value of asset and liabilities acquired (Note 11).

 

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

 

£'000

£'000

£'000

£'000

30 June 2018

 

 

 

 

Derivative financial assets

-

654

-

654

 

              

              

              

              

30 June 2017

 

 

 

 

Derivative financial liabilities

-

(276)

-

(276)

 

              

              

              

              

 

 

 

 

 

31 December 2017

 

 

 

 

Derivative financial assets

-

447

-

447

 

              

              

              

              

 

15.  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 2017 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. Cyber risks within the wider market is also an increasing risk for the Group and an area of major focus. 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. 

 

External operational risks include the weather, political and economic conditions, the potential impact of Brexit, the effect of legislation or other regulatory actions, the actions of competitors, raw material prices and threats from cyber security, new business strategies, acquisitions and the integration of CPM.

 

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 Guidance and Transparency Rules, being an indication of important events that have occurred during the half year ended 30 June 2018 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 Guidance and Transparency Rules, being related party transactions that have taken place in the half year ended 30 June 2018 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 2018 were as follows:

 

Vanda Murray               Chair of the Board (appointed 9 May 2018)

Andrew Allner               Chair of the Board (retired 9 May 2018)

Janet Ashdown             Senior Non-Executive Director

Jack Clarke                   Group Finance Director

Martyn Coffey               Chief Executive

Tim Pile                         Non-Executive Director

Graham Prothero          Non-Executive Director

 

The responsibilities of the Directors during their period of service were as set out on pages 44 and 45 of the 2017 Annual Report.

 

 

By order of the Board

Cathy Baxandall

Group Company Secretary

16 August 2018

 

 

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 2018, which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement, the Condensed Consolidated Statement of Changes in Equity and related Notes 1 to 14. 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 Guidance 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 Financial Reporting Council 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 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

Deloitte LLP

Statutory Auditor

Manchester, United Kingdom

16 August 2018

 

 

Shareholder Information

 

Financial calendar

 

Half year results for the year ending December 2018

Announced 16 August 2018

Half year dividend for the year ending December 2018

Payable 5 December 2018

Results for the year ending December 2018

Announcement March 2019

Report and accounts for the year ending December 2018

                                                               April 2019

Annual General Meeting

                                                               May 2019

Final dividend for the year ending December 2018

                                                  Payable June 2019

 

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.

 


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Half-year Report - RNS