TIDMMSLH
RNS Number : 4794Z
Marshalls PLC
15 March 2017
Preliminary results for the year ended 31 December 2016
Marshalls plc, the specialist Landscape Products Group,
announces its full year results for the year ended 31 December
2016.
Financial Highlights Year ended Year ended Increase
31 December 31 December %
2016 2015
Revenue GBP396.9m GBP386.2m 3
EBITDA GBP60.8m GBP51.8m 17
Operating profit GBP47.6m GBP37.5m 27
Profit before tax GBP46.0m GBP35.3m 31
Basic EPS 18.95p 14.32p 32
Total dividends - ordinary and
supplementary 11.70p 9.00p 30
Final ordinary dividend - recommended 5.80p 4.75p 22
Supplementary dividend - recommended 3.00p 2.00p
Return on capital employed ("ROCE") 23.0% 19.0%
up 400
Net cash / (debt) GBP5.4m GBP(11.5)m basis points
Highlights:
-- Revenue up 3% to GBP396.9 million (2015: GBP386.2 million)
-- Strong profit before tax growth of 31% to GBP46.0 million
(2015: GBP35.3 million) driven by improved operating margins to
12.0% (2015: 9.7%)
-- Return on capital employed improved 21% (400 basis points) to 23.0% (2015: 19.0%)
-- EPS up 32% to 18.95 pence (2015: 14.32 pence)
-- Final ordinary dividend increased by 22% to 5.80 pence (2015: 4.75 pence) per share
-- Supplementary dividend of 3.00 pence per share
-- Strong sales and order intake since the year end
The 2020 Strategy:
-- Grow EBITDA, improve ROCE and strengthen our brand
-- Promote self help investment and growth initiatives
-- Prioritise organic capital investment
-- Commit further investment to research and development
-- Focus on innovation and new product development to drive sales growth
-- Focus on increasing the profitability of the Smaller UK Businesses
-- Advance the development of a wide-ranging digital strategy
-- Target selective bolt-on acquisition opportunities
Commenting on these results, Martyn Coffey, Chief Executive,
said:
"The Group has again delivered significant profit growth in 2016
with the underlying indicators remaining supportive in Marshalls'
main end markets. The Construction Products Association's recently
published Winter Forecast reflected a slight improvement in medium
term growth assumptions compared with the Autumn Forecast.
Marshalls has a strong balance sheet and the Group's innovative
product range and strong market positions mean it is well placed to
deliver continued growth and operational profit improvements as it
implements its 2020 Strategy. Sales and order intake have been
strong in the first couple of months of 2017."
Enquiries:
Martyn Coffey Chief Executive Marshalls plc +44(0)1422 314777
Jack Clarke Group Finance
Director
Andrew Jaques +44(0)20 3128
James White MHP Communications 8540
There will be a live video webcast of the analyst presentation
which you can access via the following link:
http://webcasting.brrmedia.co.uk/broadcast/58c28d41649fc94ffb07f644
or from our website, www.marshalls.co.uk. An on demand version
of the webcast will be available on the website later in the day.
The presentation is also available by dial in conference call on
+44 (0)330 336 9436; meeting code 5811388.
Group Results
Marshalls' revenue for the year ended 31 December 2016 was up 3
per cent at GBP396.9 million (2015: GBP386.2 million).
Sales to the Domestic end market, which represent 31 per cent of
Group sales, were up 10 per cent for the year compared with 2015.
Domestic sales growth was particularly strong in the second half of
the year increasing by 14 per cent in this period. The survey of
domestic installers at the end of February 2017 revealed order
books of 10.9 weeks (2016: 10.5 weeks), which compares with 11.7
weeks at the end of June 2016.
Sales to the Public Sector and Commercial end market represent
64 per cent of Group sales and, as previously reported, were
broadly in line with the prior year. However, based on public
indicators, we believe we continue to outperform our peers and gain
market share.
Operating profit was supported by a strong finish to the year
and increased by 27 per cent to GBP47.6 million (2015: GBP37.5
million). EBITDA increased by 17 per cent to GBP60.8 million (2015:
GBP51.8 million). The Group's operating margin increased strongly
from 9.7 per cent to 12.0 per cent during the year.
ROCE is defined as EBITA / shareholders' funds plus cash / net
debt and was 23.0 per cent for the year ended 31 December 2016, an
increase of 21 per cent (400 basis points) compared with the prior
year.
Profit before tax increased by 31 per cent to GBP46.0 million
(2015: GBP35.3 million) and EPS was 18.95 pence (2015: 14.32
pence), an increase of 32 per cent.
Net finance costs were GBP1.6 million (2015: GBP2.2 million) and
interest was covered 29.9 times (2015: 17.2 times). External
charges totalled GBP1.2 million (2015: GBP1.8 million) and,
including scheme administration costs, there was an IAS 19 notional
interest charge of GBP0.4 million (2015: GBP0.4 million) in
relation to the Group's pension scheme.
The effective tax rate was 18.5 per cent (2015: 20.9 per cent)
and benefited from a credit arising on the finalisation of prior
period tax computations. The tax charge includes a deferred tax
credit of GBP1.1 million arising, in part, due to a further
substantively enacted reduction in the rate of corporation tax to
17 per cent by April 2021. The Group has paid GBP7.1 million (2015:
GBP7.0 million) of corporation tax during the year. Deferred tax of
GBP0.2 million in relation to the actuarial gain arising on the
defined benefit pension scheme in the year has been taken to the
Consolidated Statement of Comprehensive Income.
Marshalls has again been awarded the Fair Tax Mark which
recognises social responsibility and transparency in a company's
tax affairs. The Group's tax policy has long been closely aligned
with the Fair Tax Mark's objectives and this is now supported by
additional tax disclosures and a declared tax policy.
Significant cash generation has seen the Group deliver a cash
positive position of GBP5.4 million at 31 December 2016, which
compares with net debt of GBP11.5 million at 31 December 2015.
Operating Performance
The Marshalls brand remains central to our strategy and the
Group has again received "Superbrand" status for 2017. The Group
has an increasingly strong market position and we continue to
benefit from our leading, trusted brand with clear values and
excellent environmental credentials. Marshalls remains a benchmark
for excellence and our 3 cornerstone themes of customer service,
quality and sustainability continue to put the customer at the very
heart of our business.
The core Commercial and Domestic businesses continue to deliver
benefits from operational gearing and our network of manufacturing
sites remains a key competitive strength. The performance of our
Smaller UK Businesses has continued to improve during 2016 and
collectively they have delivered profit growth of 13 per cent.
These businesses include Street Furniture, Mineral Products and
Stone Cladding.
International revenue has grown by 2 per cent during 2016 and
represents approximately 5 per cent of Group sales. Marshalls has
made continued progress in developing the International business
although the market background in mainland Europe remains subdued.
During the early part of 2016 we opened a sales office in Dubai to
facilitate further sales growth in the Middle East and the Group
continues to improve its global infrastructure, supply chains and
routes to market.
We are continuing to focus on improving operational and
manufacturing efficiency. The Group adopts a flexible operating
framework that focuses on employee accountability, process
repeatability and plant reliability. In the UK, the Group has a
unique manufacturing network of 13 concrete manufacturing sites as
well as quarries producing paving, walling and cladding products,
making Marshalls the only truly national supplier. Our national
geographic coverage continues to provide strong competitive
advantage and the implementation of best practice across the entire
network continues to be a priority. All the Group's operations are
supported by a centrally managed logistics and distribution
capability.
In the core Landscape Products business, revenue from new
products increased by 10 per cent during 2016. The development
pipeline continues to be strong and the Group remains committed to
increasing the resources and investment that will drive further
innovation and new product development. The growth in new products
and the development of new manufacturing processes are evidenced by
the increase in the number of patents being taken out by the
business and we currently have 8 patents pending. Particular focus
is given to those businesses with the greatest growth
opportunity.
Research and development expenditure in the year ended 31
December 2016 amounted to GBP3.4 million (2015: GBP3.1 million).
Investment in research and development covers a number of areas
including the development of the Group's project engineering and
manufacturing capabilities, technical innovations in concrete and
other materials and the extension of the new product pipeline.
Skilled engineers and technicians are integral to the Group's
world--class Manufacturing, Innovation and New Product Development
team. This capability delivers strong competitive advantage by
combining machinery design and implementation with process
improvement and continues to enable the Group to accelerate new
product development across the business. As regards the Group's
mineral reserves, the "Marshalls Stone Standard" quality mark gives
our customers full assurance that all Marshalls natural stone not
only meets, but exceeds, the base technical levels outlined under
BS7533.
The Group's operational strategy continues to be to drive more
sales through quality installers. The Marshalls Register of
approved domestic installers is unique and has now grown to almost
2,000 teams. The objective is to continually develop the Marshalls
brand and improve the product mix whilst ensuring a consistently
high standard of quality, excellent customer service and marketing
support across our national network.
Delivering the 2020 Strategy
Good progress has been made in the year to deliver our 2020
Strategy and our self help programme to support further organic
growth is well advanced. The drive for sustainable operational
improvements is proving successful, as evidenced by the margin
improvements in the year.
Looking ahead, the Group's strategic priorities continue to be
the growth initiatives of the 2020 Strategy and to drive through
further sustainable cost reductions and improvements in operational
efficiency. Capital expenditure of GBP20 million is targeted for
2017 including GBP6 million of additional self help investment. A
good pipeline of performance improving projects has been identified
that will drive this growth. In addition, further increases in
research and new product development expenditure are planned.
Targeted bolt-on acquisitions remain a key part of the 2020
Strategy, specifically within our identified focus sectors of Water
Management, Street Furniture and Minerals. However, given current
market uncertainty, our approach remains cautious. Any proposed
acquisition target will be carefully selected against strict
criteria and will be thoroughly considered during detailed due
diligence. Any acquisitions would be funded by operational cash
flow and the Group's bank facilities.
Marshalls' operational priorities continue to focus on service,
quality, design, innovation and sustainability and the Group
continues to extend its product range and provide more integrated
product solutions. The Group continues to receive good feedback
from its customers and installers for the consistency and quality
of service and we remain committed to developing new products that
are better than any existing market offering. Marshalls continues
to have customer service as a key KPI and maintains industry
leading standards of product quality, availability and "on time"
delivery. Our combined customer service measure continued to be in
excess of 98 per cent throughout 2016.
Marshalls' Digital Strategy remains a key priority and further
investment is being directed to enhance capability and digital
support throughout the business, combining digital trading, digital
marketing and digital business. Web and mobile applications now
enable customers to model their requirements, allow digital access
to the registered installer base and allow real-time visibility of
stock.
Marshalls' strategy continues to be to enhance its position as a
market leading landscape products specialist. The Group's technical
and sales teams remain particularly focused on those market areas
where future demand is considered to be greatest and Rail, Water
Management and New Build Housing continue to show strong order
intake. We promote our full range of new products and sustainable
integrated solutions to customers, architects and contractors and
the Group is outperforming the market in these areas. The Group's
"Design Space" office in Central London was opened specifically to
showcase the Group's brand leading capabilities where customers are
provided with ready access to samples and technical advice.
Capital allocation
The Group's capital allocation policy is to maintain a strong
balance sheet with a flexible capital structure that recognises
cyclical risk. The Group's capital structure has 3 guiding
principles; security, efficiency and liquidity.
The priorities for capital allocation are:
1. Organic growth - capital investment, with GBP20 million targeted for 2017;
2. Increased research and development and new product development expenditure;
3. Ordinary dividends - maintaining dividend cover of 2 times
earnings over the business cycle;
4. Selective bolt-on acquisition opportunities in Water
Management, Street Furniture and Minerals; and
5. Supplementary dividends when appropriate - discretionary and non-recurring.
Balance Sheet and Net Debt
Net assets at 31 December 2016 were GBP217.1 million (2015:
GBP192.7 million). The Group has a strong balance sheet with a good
range of medium-term bank facilities available to fund investment
initiatives to generate growth. At 31 December 2016 the Group had
cash of GBP5.4 million compared with net debt of GBP11.5 million at
31 December 2015.
The Group continues to prioritise inventory management and
improved stock turnover. We believe debtor days remain industry
leading due to continued close control of credit management
procedures. The Group maintains credit insurance which provides
excellent intelligence to minimise the number and value of bad
debts and, ultimately, compensation if bad debts are incurred.
The Group's defined benefit pension scheme reported a surplus of
GBP4.3 million at 31 December 2016 (2015: GBP3.4 million). The
amount has been determined by the scheme actuary using assumptions
that are considered to be prudent and in line with current market
levels. The fair value of the scheme assets at 31 December 2016 was
GBP360.1 million (2015: GBP302.2 million) and the present value of
the scheme liabilities is GBP355.8 million (2015: GBP298.8
million). These changes have resulted in an actuarial gain, net of
deferred taxation, of GBP1.4 million (2015: GBP3.9 million
actuarial loss) and this has been recorded in the Consolidated
Statement of Comprehensive Income. The Company has agreed with the
Trustee that no cash contributions are now payable under the
funding and recovery plan.
Dividends
Marshalls has strong cash generation and a robust balance sheet
which underpins our progressive dividend policy. The Group
maintains the objective of 2 times dividend cover over the business
cycle. The Board is recommending a final dividend of 5.80 pence
(2015: 4.75 pence) per share which, together with the interim
dividend of 2.90 pence (2015: 2.25 pence) per share, makes a total
ordinary dividend for the year of 8.70 pence (2015: 7.00 pence) per
share.
Given the strong performance in the year, the Board is also
recommending a supplementary dividend of 3.00 pence per share
(2015: 2.00 pence). This supplementary dividend is discretionary
and non-recurring. It recognises the Board's objective of
maintaining an efficient and prudent capital structure and
providing increased returns for shareholders whilst at the same
time retaining flexibility for capital and other investment
opportunities.
Taken together, the ordinary and supplementary dividends
represent an aggregate distribution for the year of 11.70 pence per
share. The final ordinary dividend of 5.80 pence per ordinary share
will, subject the shareholders' approval at the Annual General
Meeting on 10 May 2017, be paid alongside the supplementary
dividend of 3.00 pence per share on 30 June 2017 to shareholders on
the register at 16 June 2017.
Outlook
The Group has again delivered significant profit growth in 2016
with the underlying indicators remaining supportive in Marshalls'
main end markets. The Construction Products Association's recently
published Winter Forecast reflected a slight improvement in medium
term growth assumptions compared with the Autumn Forecast.
Marshalls has a strong balance sheet and the Group's innovative
product range and strong market positions mean it is well placed to
deliver continued growth and operational profit improvements as it
implements its 2020 Strategy. Sales and order intake have been
strong in the first couple of months of 2017.
Martyn Coffey
Chief Executive
Marshalls plc
Preliminary Announcement of Results
Consolidated Income Statement
for the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
---------------------------------- ------- ---------- ----------
Revenue 2 396,922 386,204
Net operating costs 3 (349,283) (348,752)
---------------------------------- ------- ---------- ----------
Operating profit 2 47,639 37,452
Financial expenses 4 (1,594) (2,181)
Financial income 4 1 7
---------------------------------- ------- ---------- ----------
Profit before tax 2 46,046 35,278
Income tax expense 5 (8,539) (7,387)
---------------------------------- ------- ---------- ----------
Profit for the financial year 37,507 27,891
---------------------------------- ------- ---------- ----------
Profit for the year
Attributable to:
Equity shareholders of the Parent 37,350 28,149
Non-controlling interests 157 (258)
---------------------------------- ------- ---------- ----------
37,507 27,891
---------------------------------- ------- ---------- ----------
Earnings per share
Basic 6 18.95p 14.32p
Diluted 6 18.61p 14.10p
---------------------------------- ------- ---------- ----------
Dividend
Pence per share 7 9.65p 6.25p
Dividends declared 7 19,034 12,291
---------------------------------- ------- ---------- ----------
All results relate to continuing
operations.
Marshalls plc
Preliminary Announcement of Results
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Profit for the financial year 37,507 27,891
----------------------------------------------------------- -------- --------
Other comprehensive income / (expense)
Items that will not be reclassified to the Income
Statement:
Remeasurements of the net defined benefit liability 1,394 (3,866)
Deferred tax arising (237) 773
----------------------------------------------------------- -------- --------
Total items that will not be reclassified to the
Income Statement 1,157 (3,093)
----------------------------------------------------------- -------- --------
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 1,123 (940)
Fair value of cash flow hedges transferred to the
Income Statement 1,681 1,984
Deferred tax arising (561) (209)
Impact of the change in rate of deferred taxation - (375)
Exchange difference on retranslation of foreign
currency net investment 2,729 (980)
Exchange movements associated with borrowings (2,641) 847
Foreign currency translation differences - non-controlling
interests 169 (78)
----------------------------------------------------------- -------- --------
Total items that are or may be reclassified subsequently
to the Income Statement 2,500 249
----------------------------------------------------------- -------- --------
Other comprehensive income / (expense) for the
year, net of income tax 3,657 (2,844)
----------------------------------------------------------- -------- --------
Total comprehensive income for the year 41,164 25,047
----------------------------------------------------------- -------- --------
Attributable to:
Equity shareholders of the Parent 40,838 25,383
Non-controlling interests 326 (336)
----------------------------------------------------------- -------- --------
41,164 25,047
----------------------------------------------------------- -------- --------
Marshalls plc
Preliminary Announcement of Results
Consolidated Balance Sheet
for the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 146,995 147,489
Intangible assets 40,093 40,168
Trade and other receivables 208 415
Employee benefits 8 4,276 3,427
Deferred taxation assets 1,821 1,316
-------------------------------------------- ------- --------- ---------
193,393 192,815
-------------------------------------------- ------- --------- ---------
Current assets
Inventories 68,713 65,254
Trade and other receivables 49,010 44,542
Cash and cash equivalents 20,681 24,990
Assets classified as held for sale 624 2,231
Derivative financial instruments 657 -
-------------------------------------------- ------- --------- ---------
139,685 137,017
-------------------------------------------- ------- --------- ---------
Total assets 333,078 329,832
-------------------------------------------- ------- --------- ---------
Liabilities
Current liabilities
Trade and other payables 79,646 79,607
Corporation tax 7,388 5,281
Interest-bearing loans and borrowings 34 34
Derivative financial instruments - 2,149
-------------------------------------------- ------- --------- ---------
87,068 87,071
-------------------------------------------- ------- --------- ---------
Non-current liabilities
Interest-bearing loans and borrowings 15,234 36,418
Deferred taxation liabilities 13,655 13,625
-------------------------------------------- ------- --------- ---------
28,889 50,043
-------------------------------------------- ------- --------- ---------
Total liabilities 115,957 137,114
-------------------------------------------- ------- --------- ---------
Net assets 217,121 192,718
-------------------------------------------- ------- --------- ---------
Equity
Capital and reserves attributable to equity
shareholders of the Parent
Called-up share capital 49,845 49,845
Share premium account 22,695 22,695
Own shares (3,622) (5,529)
Capital redemption reserve 75,394 75,394
Consolidation reserve (213,067) (213,067)
Hedging reserve 590 (1,653)
Retained earnings 283,821 263,894
-------------------------------------------- ------- --------- ---------
Equity attributable to equity shareholders
of the Parent 215,656 191,579
Non-controlling interests 1,465 1,139
-------------------------------------------- ------- --------- ---------
Total equity 217,121 192,718
-------------------------------------------- ------- --------- ---------
Marshalls plc
Preliminary Announcement of Results
Consolidated Cash Flow Statement
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
-------------------------------------- -------- --------
Cash flows from operating activities
Profit for the financial year 37,507 27,891
Income tax expense 8,539 7,387
Profit before tax 46,046 35,278
Adjustments for:
Depreciation 12,146 13,054
Amortisation 1,009 1,322
Associates - 582
Gain on sale of property, plant and equipment (609) (149)
Equity settled share-based payments 2,884 2,202
Financial income and expenses (net) 1,593 2,174
----------------------------------------------- -------- --------
Operating cash flow before changes in working
capital and pension scheme contributions 63,069 54,463
Increase in trade and other receivables (4,602) (443)
(Increase) / decrease in inventories (2,419) 1,706
Increase in trade and other payables 1,868 7,262
Operational restructuring costs paid (476) (175)
Pension scheme contributions - (4,350)
----------------------------------------------- -------- --------
Cash generated from operations 57,440 58,463
Financial expenses paid (940) (1,775)
Income tax paid (7,107) (7,003)
----------------------------------------------- -------- --------
Net cash flow from operating activities 49,393 49,685
----------------------------------------------- -------- --------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment 3,839 933
Financial income received 1 7
Net proceeds from disposal of associates - 200
Acquisition of property, plant and equipment (12,939) (14,016)
Acquisition of intangible assets (934) (909)
----------------------------------------------- -------- --------
Net cash flow from investing activities (10,033) (13,785)
----------------------------------------------- -------- --------
Cash flows from financing activities
Payments to acquire own shares (1,175) (4,582)
Net decrease in other debt and finance leases (40) (166)
Decrease in borrowings (23,791) (14,182)
Equity dividends paid (19,034) (12,291)
----------------------------------------------- -------- --------
Net cash flow from financing activities (44,040) (31,221)
----------------------------------------------- -------- --------
Net (decrease) / increase in cash and cash
equivalents (4,680) 4,679
Cash and cash equivalents at the beginning
of the year 24,990 20,320
Effect of exchange rate fluctuations 371 (9)
----------------------------------------------- -------- --------
Cash and cash equivalents at the end of the
year 20,681 24,990
----------------------------------------------- -------- --------
Marshalls plc
Preliminary Announcement of Results
Consolidated Statement of Changes in Equity
for the year ended 31 December 2016
Attributable to equity holders of the Company
-----------------------------------------------------------------------------------------
Share Capital
Share premium Own redemption Consolidation Hedging Retained Non-controlling Total
capital account shares reserve reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Current year
At 1 January 2016 49,845 22,695 (5,529) 75,394 (213,067) (1,653) 263,894 191,579 1,139 192,718
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total comprehensive
income for the year
Profit for the financial year attributable to equity
shareholders of the Parent - - - - - - 37,350 37,350 157 37,507
Other comprehensive
income / (expense)
Foreign currency translation differences - - - - - - 88 88 169 257
Effective portion of changes in fair value of cash flow
hedges - - - - - 1,123 - 1,123 - 1,123
Net change in fair value of cash flow hedges transferred to
the Income Statement - - - - - 1,681 - 1,681 - 1,681
Deferred tax arising - - - - - (561) - (561) - (561)
Defined benefit plan actuarial losses - - - - - - 1,394 1,394 - 1,394
Deferred tax arising - - - - - - (237) (237) - (237)
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total other comprehensive income - - - - - 2,243 1,245 3,488 169 3,657
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total comprehensive income for the year - - - - - 2,243 38,595 40,838 326 41,164
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share-based payments - - - - - - 2,884 2,884 - 2,884
Deferred tax on share-based payments - - - - - - 122 122 - 122
Corporation tax on share-based payments - - - - - - 442 442 - 442
Dividends to equity shareholders - - - - - - (19,034) (19,034) - (19,034)
Purchase of own shares - - (1,175) - - - - (1,175) - (1,175)
Disposal of own shares - - 3,082 - - - (3,082) - - -
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total contributions by and
distributions to owners - - 1,907 - - - (18,668) (16,761) - (16,761)
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total transactions with owners of the Company - - 1,907 - - 2,243 19,927 24,077 326 24,403
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
At 31 December 2016 49,845 22,695 (3,622) 75,394 (213,067) 590 283,821 215,656 1,465 217,121
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Marshalls plc
Preliminary Announcement of Results
Consolidated Statement of Changes in Equity
for the year ended 31 December 2016
Attributable to equity holders of the Company
Share Capital
Share premium Own redemption Consolidation Hedging Retained Non-controlling Total
capital account shares reserve reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Prior year
At 1 January 2015 49,845 22,695 (6,689) 75,394 (213,067) (2,488) 254,729 180,419 1,475 181,894
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total comprehensive
income / (expense) for the year
Profit / (loss) for the financial year
attributable to equity shareholders of the Parent - - - - - - 28,149 28,149 (258) 27,891
Other comprehensive
income / (expense)
Foreign currency translation differences - - - - - - (133) (133) (78) (211)
Effective portion of changes in fair value of cash flow
hedges - - - - - (940) - `(940) - (940)
Net change in fair value of cash flow hedges transferred to
the Income Statement - - - - - 1,984 - 1,984 - 1,984
Deferred tax arising - - - - - (209) - (209) - (209)
Defined benefit plan actuarial losses - - - - - - (3,866) (3,866) - (3,866)
Impact of change in rate of deferred tax - - - - - - (375) (375) - (375)
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ----------------
Deferred tax arising - - - - - - 773 773 - 773
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total other comprehensive income / (expense) - - - - - 835 (3,601) (2,766) (78) (2,844)
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total comprehensive income / (expense) for the year - - - - - 835 24,548 25,383 (336) 25,047
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share-based payments - - - - - - 2,202 2,202 - 2,202
Deferred tax on share-based payments - - - - - - (5) (5) - (5)
Corporation tax on share-based payments - - - - - - 445 445 - 445
Impact of the change in rate of deferred tax on share-based
payments - - - - - - 8 8 - 8
Dividends to equity shareholders - - - - - - (12,291) (12,291) - (12,291)
Purchase of own shares - - (4,582) - - - - (4,582) - (4,582)
Disposal of own shares - - 5,742 - - - (5,742) - - -
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total contributions by and distributions to owners - - 1,160 - - - (15,383) (14,223) - (14,223)
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
Total transactions with owners of the Company - - 1,160 - - 835 9,165 11,160 (336) 10,824
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
At 31 December 2015 49,845 22,695 (5,529) 75,394 (213,067) (1,653) 263,894 191,579 1,139 192,718
------------------------------------------------------------ -------- -------- -------- ----------- -------------- -------- --------- --------- ---------------- ---------
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Marshalls plc
Preliminary Announcement of Results
Notes to the Financial Statements
for the year ended 31 December 2016
1 Basis of preparation
Whilst the Financial Information included in this Preliminary
Announcement has been prepared on the basis of the recognition and
measurement criteria of IFRSs in issue, as adopted by the European
Union and effective at 31 December 2016, this announcement does not
itself contain sufficient information to comply with IFRS. The
Group expects to publish full Consolidated Financial Statements in
April 2017.
The Financial Information set out in this Preliminary
Announcement does not constitute the Company's Consolidated
Financial Statements for the years ended 31 December 2016 or 2015,
but is derived from those Financial Statements. Statutory Financial
Statements for 2015 have been delivered to the Registrar of
Companies and those for 2016 will be delivered following the
Company's Annual General Meeting. The auditor, Deloitte LLP, has
reported on those Financial Statements. The audit reports were
unqualified, did not draw attention to any matters by way of
emphasis without qualifying the reports and did not contain
statements under Section 498(2) or (3) of the Companies Act 2006 in
respect of the Financial Statements for 2016 or 2015.
The Consolidated Financial Statements have been prepared in
accordance with IFRSs as adopted for use in the EU and therefore
the Group Financial Statements comply with Article 4 of the EU IAS
Regulations. The Group has applied all accounting standards and
interpretations issued by the IASB and International Financial
Reporting Committee relevant to its operations and which are
effective in respect of these Financial Statements.
In the current year, the Group has applied a number of
amendments to IFRSs issued by the International Accounting
Standards Board ("IASB") that are mandatorily effective for an
accounting period that begins on or after 1 January 2016. Their
adoption has not had any material impact on the disclosures or on
the amounts reported in these Financial Statements.
- Amendments to IAS 1 "Disclosure Initiative". The Group has
adopted the amendments to IAS 1 "Disclosure Initiative" for the
first time in the current year. The amendments clarify that an
entity need not provide a specific disclosure required by an IFRS
if the information resulting from that disclosure is not material,
and give guidance on the bases of aggregating and disaggregating
information for disclosure purposes. However, the amendments
reiterate that an entity should consider providing additional
disclosures when compliance with the specific requirements in IFRSs
is insufficient to enable users of financial statements to
understand the impact of particular transactions, events and
conditions on the entity's financial position and financial
performance.
In addition, the amendments clarify that an entity's share of
the other comprehensive income of associates and joint ventures
accounted for using the equity method should be presented
separately from those arising from the Group, and should be
separated into the share of items that, in accordance with other
IFRSs: (i) will not be reclassified subsequently to profit or loss;
and (ii) will be reclassified subsequently to profit or loss when
specific conditions are met.
The amendments also address the structure of the financial
statements by providing examples of systematic ordering or grouping
of the notes. The adoption of these amendments has not resulted in
any impact on the financial performance or financial position of
the Group.
- Amendments to IAS 16 and IAS 38 "Clarification of Acceptable
Methods of Depreciation and Amortisation". The Group has adopted
the amendments to IAS 16 and IAS 38 "Clarification of Acceptable
Methods of Depreciation and Amortisation" for the first time in the
current year. The amendments to IAS 16 prohibit entities from using
a revenue-based depreciation method for items of property, plant
and equipment. The amendments to IAS 38 introduce a rebuttable
presumption that revenue is not an appropriate basis for
amortisation of an intangible asset. This presumption can only be
rebutted in the following two limited circumstances:
(a) when the intangible asset is expressed as a measure of revenue; or
(b) when it can be demonstrated that revenue and consumption of
the economic benefits of the intangible asset are highly
correlated.
Other than in relation to quarries, where a rate of extraction
basis for depreciation is applied, the Group already uses the
straight line method for depreciation and amortisation for all
other items of property, plant and equipment and intangible assets.
Consequently, the adoption of these amendments has had no impact on
the Group's Consolidated Financial Statements.
- "Annual Improvements to IFRSs 2012-2014 Cycle". The Group has
adopted the amendments to IFRSs included in the "Annual
Improvements to IFRSs 2012-2014 Cycle" for the first time in the
current year.
The amendments to IFRS 5 introduce specific guidance in IFRS 5
for when an entity reclassifies an asset (or disposal group) from
held for sale to held for distribution to owners (or vice versa).
The amendments clarify that such a change should be considered as a
continuation of the original plan of disposal and hence
requirements set out in IFRS 5 regarding the change of sale plan do
not apply. The amendments also clarify the guidance for when
held-for-distribution accounting is discontinued.
The amendments to IFRS 7 provide additional guidance to clarify
whether a servicing contract is continuing involvement in a
transferred asset for the purpose of the disclosures required in
relation to transferred assets.
The amendments to IAS 19 clarify that the rate used to discount
post-employment benefit obligations should be determined by
reference to market yields at the end of the reporting period on
high quality corporate bonds. The assessment of the depth of a
market for high qualify corporate bonds should be at the currency
level (i.e. the same currency as the benefits are to be paid). For
currencies for which there is no deep market in such high quality
corporate bonds, the market yields at the end of the reporting
period on Government bonds denominated in that currency should be
used instead.
The adoption of these amendments has had no effect on the
Group's Consolidated Financial Statements.
At the date of authorisation of these Financial Statements, the
Group has not applied the following new and revised IFRSs that have
been issued but are not yet effective and, in some cases, had not
yet been adopted by the EU:
- IFRS 9 "Financial Instruments";
- IFRS 15 "Revenue from Contracts with Customers";
- IFRS 16 "Leases";
- IFRS 2 (amendments) "Classification and Measurement of
Share-based Payment Transactions";
- IAS 7 (amendments) "Disclosure Initiative"; and
- IAS 12 (amendments) "Recognition of Deferred Tax Assets for Unrealised Losses".
The Directors do not expect that the adoption of the standards
listed above will have a material impact on the Financial
Statements of the Group in future periods, except as noted
below:
- IFRS 9 will impact both the measurement and disclosure of financial instruments;
- IFRS 15 is not expected to have a material impact on revenue
recognition and related disclosures; and
- IFRS 16 will have a material impact on the reported assets,
liabilities, income statement and cash flows of the Group.
Furthermore, extensive disclosures will be required by IFRS 16. The
Group has operating lease commitments at 31 December 2016 amounting
to GBP71.0 million (2015: GBP74.0 million).
Beyond the information above, it is not practicable to provide a
reasonable estimate of the effect of these standards until a
detailed review has been completed.
Details of the Group's funding position are set out in Note 9
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 16 August 2016. In
the opinion of the Directors 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 which is
not dependent on facility renewals. 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 Consolidated Financial Statements.
The Consolidated Financial Statements are prepared on the
historical cost basis except that the following assets and
liabilities are stated at their fair value: derivative financial
instruments and liabilities for cash-settled share-based
payments.
The accounting policies have been applied consistently
throughout the Group for the purposes of these Consolidated
Financial Statements and are also set out on the Company's website
(www.marshalls.co.uk).
The Consolidated Financial Statements are presented in Sterling,
rounded to the nearest thousand. Sterling is the currency of the
primary economic environment in which the Group operates.
The preparation of Financial Statements in conformity with
adopted IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
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.
2 Segmental analysis
Segment revenues and results
2016 2015
------------------------ -------- -------- ------------------------ -------- --------
Landscape Products Other Total Landscape Products Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
Total revenue 311,100 89,070 400,170 299,650 90,915 390,565
Inter-segment revenue (89) (3,159) (3,248) (123) (4,238) (4,361)
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
External revenue 311,011 85,911 396,922 299,527 86,677 386,204
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
Segment operating profit 50,441 3,157 53,598 41,816 1,763 43,579
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
Unallocated administration
costs (5,959) (5,545)
Associates - (582)
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
Operating profit 47,639 37,452
Finance charges (net) (1,593) (2,174)
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
Profit before tax 46,046 35,278
Taxation (8,539) (7,387)
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
Profit after tax 37,507 27,891
-------------------------- ------------------------ -------- -------- ------------------------ -------- --------
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 Public
Sector and Commercial end markets and the operating assets produce
and deliver a range of broadly similar products that are sold into
each of these end markets. Within the Landscape Products operating
segment the focus is on the 1 integrated production, logistics and
distribution network supporting both end markets.
Included in "Other" are the Group's Street Furniture, Mineral
Products, Stone Cladding and International operations, which do not
currently meet the IFRS 8 reporting requirements.
The accounting policies of the Landscape Products operating
segment are the same as the Group's accounting policies. Segment
profit represents the profit earned without allocation of the share
of profit of associates and certain 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 assets 2016 2015
GBP'000 GBP'000
----------------------------------------- -------- --------
Fixed assets and inventory:
Landscape Products 157,786 156,112
Other 57,922 56,631
----------------------------------------- -------- --------
Total segment fixed assets and inventory 215,708 212,743
Unallocated assets 117,370 117,089
----------------------------------------- -------- --------
Consolidated total assets 333,078 329,832
----------------------------------------- -------- --------
For the purpose of monitoring segment performance and allocating
resources between segments, the Group's CODM monitors the tangible
fixed assets and inventory. Assets used jointly by reportable
segments are not allocated to individual reportable segments.
Other segment information Depreciation and amortisation Fixed asset additions
---------------------------- ------------------------------- -----------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------------- -------------- ----------- ----------
Landscape Products 9,462 10,465 9,131 11,678
Other 3,693 3,911 3,883 3,816
---------------------------- --------------- -------------- ----------- ----------
13,155 14,376 13,014 15,494
---------------------------- --------------- -------------- ----------- ----------
Geographical destination of
revenue
2016 2015
GBP'000 GBP'000
---------------------------- --------------- -------------- ----------- ----------
United Kingdom 377,659 367,248
Rest of the World 19,263 18,956
---------------------------- --------------- -------------- ----------- ----------
396,922 386,204
---------------------------- --------------- -------------- ----------- ----------
The Group's revenue is subject to seasonal fluctuations
resulting from demand from customers. In particular, demand is
higher in the summer months. The Group manages the seasonal impact
through the use of a seasonal working capital facility.
3 Net operating costs 2016 2015
GBP'000 GBP'000
--------------------------------------------- -------- --------
Raw materials and consumables 142,011 141,471
Changes in inventories of finished goods and
work in progress 2,591 (1,801)
Personnel costs 98,128 96,716
Depreciation 12,146 13,054
Amortisation of intangible assets 1,009 1,322
Own work capitalised (1,381) (1,810)
Other operating costs 97,069 100,707
Restructuring costs 476 -
--------------------------------------------- -------- --------
Operating costs 352,049 349,659
Other operating income (2,157) (1,340)
Net gain on asset and property disposals (609) (149)
Associates - 582
--------------------------------------------- -------- --------
Net operating costs 349,283 348,752
--------------------------------------------- -------- --------
4 Financial expenses and income
2016 2015
GBP'000 GBP'000
---------------------------------------------------------- -------------- -------
(a) Financial expenses
Net interest expense on defined benefit pension
scheme 445 406
Interest expense on bank loans, overdrafts and loan
notes 1,143 1,767
Finance lease interest expense 6 8
---------------------------------------------------------- -------------- -------
1,594 2,181
---------------------------------------------------------- -------------- -------
(b) Financial income
Interest receivable and similar income 1 7
---------------------------------------------------------- -------------- -------
Net interest expense on defined benefit pension scheme is disclosed
net of Company recharges.
5 Income tax expense
2016 2015
GBP'000 GBP'000
---------------------------------------------------------- -------------- -------
Current tax expense Current year 10,611 8,164
Adjustments for prior years (921) 289
---------------------------------------------------------- -------------- -------
9,690 8,453
Deferred taxation expense
Origination and reversal of temporary differences:
Current year (1,098) (684)
Adjustments for prior years (53) (382)
---------------------------------------------------------- -------------- -------
Total tax expense 8,539 7,387
---------------------------------------------------------- -------------- -------
2016 2015
% GBP'000% GBP'000
-------------------------------------------------- ------ ------- ---- -------
Reconciliation of effective tax rate
Profit before tax 100.0 46,046 100.0 35,278
-------------------------------------------------- ------ ------- ----- -------
Tax using domestic corporation tax
rate 20.0 9,209 20.2 7,144
Impact of capital allowances in excess
of depreciation 0.4 173 2.0 710
Short-term timing differences 1.0 480 (0.2) (81)
Adjustment to tax charge in prior
year (2.0) (921) 0.8 289
Expenses not deductible for tax purposes 1.6 749 1.1 391
-------------------------------------------------- ------ ------- ----- -------
Corporation tax charge for the year 21.0 9,690 23.9 8,453
Impact of capital allowances in excess
of depreciation (1.0) (443) (1.0) (355)
Short-term timing differences (0.1) (66) (0.2) (79)
Pension scheme movements 0.3 127 2.1 746
Other items (0.9) (397) (0.3) (100)
Adjustment to tax charge in prior
year (0.1) (53) (1.1) (382)
Impact of the change in the rate of
corporation tax on deferred taxation (0.7) (319) (2.5) (896)
-------------------------------------------------- ------ ------- ----- -------
Total tax charge for the year 18.5 8,539 20.9 7,387
-------------------------------------------------- ------ ------- ----- -------
The net amount of deferred taxation (debited) / credited to the
Consolidated Statement of Comprehensive Income in the year was
GBP798,000 debit (2015: GBP189,000 credit).
The majority of the Group's profits are earned in the UK with
the standard rate of corporation tax being 20 per cent for the year
to 31 December 2016.
Capital allowances are tax reliefs provided in law for the
expenditure the Group makes on fixed assets. The rates are
determined by Parliament annually, and spread the tax relief due
over a number of years. This contrasts with the accounting
treatment for such spending, where the expenditure on fixed assets
is treated as an investment with the cost then being spread over
the anticipated useful life of the asset, and / or impaired if the
value of such assets is considered to have reduced materially.
The different accounting treatment of fixed assets for tax and
accounting purposes is one reason why the taxable income of the
Group is not the same as its accounting profit. During the year to
31 December 2016 the depreciation charge for the year exceeded the
capital allowances due to the Group.
Short-term timing differences arise on items such as
depreciation in stock and share-based payments because the
treatment of such items is different for tax and accounting
purposes. These differences usually reverse in the years following
those in which they arise, as is reflected in the deferred tax
charge in the Financial Statements.
Adjustments to tax charges arising in earlier years arise
because the tax charge to be included in a set of accounts has to
be estimated before those financial statements are finalised. Such
charges therefore include some estimates that are checked and
refined before the Group's corporation tax returns for the year are
submitted to HM Revenue & Customs, which may reflect a
different liability as a result.
Some expenses incurred may be entirely appropriate charges for
inclusion in the Financial Statements but are not allowed as a
deduction against taxable income when calculating the Group's tax
liability for the same accounting period. Examples of such
disallowable expenditure include business entertainment costs and
some legal expenses.
As can be seen from the tax reconciliation, the process of
adjustment that can give rise to current year adjustments to tax
charges arising in previous periods can also give rise to revisions
in prior year deferred tax estimates. This is why the current year
adjustments to the current year charge for capital allowances and
short-term timing differences are not exactly replicated in the
deferred taxation charge for the year.
The Group's overseas operations comprise a manufacturing
operation in Belgium and sales and administration offices in the
USA, China and Dubai. The sales of these units, in total, were less
than 5 per cent of the Group's turnover in the year to 31 December
2016. In total, the trading profits were not material and no tax
was due.
6 Earnings per share
Basic earnings per share of 18.95 pence (2015: 14.32 pence) per
share is calculated by dividing the profit attributable to Ordinary
Shareholders for the financial year, after adjusting for
non-controlling interests, of GBP37,350,000 (2015: GBP28,149,000)
by the weighted average number of shares in issue during the period
of 197,130,419 (2015: 196,574,435).
Profit attributable to Ordinary Shareholders
2016 2015
GBP'000 GBP'000
------------------------------------------------ ----------- -----------
Profit for the financial year 37,507 27,891
Profit / (loss) attributable to non-controlling
interests (157) 258
------------------------------------------------ ----------- ------------
Profit attributable to Ordinary Shareholders 37,350 28,149
------------------------------------------------ ----------- ------------
Weighted average number of Ordinary Shares
2016 2015
Number Number
------------------------------------------------ ----------- ------------
Number of issued Ordinary Shares (at beginning
of the year) 199,378,755 199,378,755
Effect of shares transferred into employee
benefit trust (2,248,336) (2,804,320)
------------------------------------------------ ----------- ------------
Weighted average number of Ordinary Shares
at end of the year 197,130,419 196,574,435
------------------------------------------------ ----------- ------------
Diluted earnings per share of 18.61 pence (2015: 14.10 pence)
per share is calculated by dividing the profit for the financial
year, after adjusting for non-controlling interests, of
GBP37,350,000 (2015: GBP28,149,000) by the weighted average number
of shares in issue during the period of197,130,419 (2015:
196,574,435) plus potentially dilutive shares of 3,561,243 (2015:
3,092,619), which totals 200,691,662 (2015: 199,667,054).
Weighted average number of Ordinary Shares 2016 2015
(diluted)
Number Number
------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares 197,130,419 196,574,435
Potentially dilutive shares 3,561,243 3,092,619
------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares
(diluted) 200,691,662 199,667,054
------------------------------------------- ----------- -----------
7 Dividends
After the balance sheet date a final dividend of 5.80 pence
(2015: 4.75 pence) per qualifying Ordinary Share was proposed by
the Directors. In addition a supplementary dividend of 3.00 pence
(2015: 2.00 pence) per qualifying Ordinary Share was proposed by
the Directors. These dividends have not been provided for and there
are no income tax consequences. The total dividends proposed in
respect of the year are as follows:
Pence per 2016 2015
qualifying GBP'000 GBP'000
shares
------------------------------ ------------------ ------------- -------------
2016 supplementary 3.00 5,917
2016 final 5.80 11,440
2016 interim 2.90 5,720
------------------------------ ------------------ ------------- -------------
11.70 23,077
------------------------------ ------------------ ------------- -------------
2015 supplementary 2.00 3,988
2015 final 4.75 9,470
2015 interim 2.25 4,425
------------------------------ ------------------ ------------- -------------
9.00 17,883
------------------------------ ------------------ ------------- -------------
The following dividends were approved by the shareholders and recognised
in the year:
--------------------------------------------------------------------------------
Pence per 2016 2015
qualifying GBP'000 GBP'000
shares
------------------------------ ------------------ ------------- -------------
2016 interim 2.90 5,720
2015 supplementary 2.00 3,945
2015 final 4.75 9,369
------------------------------ ------------------ ------------- -------------
9.65 19,034
------------------------------ ------------------ ------------- -------------
2015 interim 2.25 4,425
2014 final 4.00 7,866
------------------------------ ------------------ ------------- -------------
6.25 12,291
------------------------------ ------------------ ------------- -------------
The Board recommends a 2016 final dividend of 5.80 pence per
qualifying Ordinary Share (amounting to GBP11,440,000), alongside a
supplementary dividend of 3.00 pence per qualifying Ordinary Share
(amounting to GBP5,917,000), to be paid on 30 June 2017 to
shareholders registered at the close of business on 16 June
2017.
8 Employee benefits
The Company sponsors a pension scheme for employees in the UK
which incorporates a funded defined benefit pension section and a
defined contribution section (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 interest of the Scheme and all
relevant stakeholders, including the members and the Company. The
Trustee is also responsible for the investment of the Scheme's
assets.
The defined benefit section of the Scheme, which closed to
future service accrual on 30 June 2006, provides pension and lump
sums to members on retirement and to dependants on death. Members
of the defined benefit section became entitled to a deferred
pension on closure. 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 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 31 December
2016 by a qualified independent actuary. The figures in the
following disclosure were measured using the projected unit
method.
During 2015 an exercise was carried out offering eligible
defined benefit section members and current pensioners and
dependants the option to commute small pensions for a cash lump sum
representing the value of their benefits. This represents a
settlement of benefits for members taking the option. The cash lump
sums were determined by the Trustee on a best estimate basis after
taking advice from the actuary.
The amounts recognised in the Consolidated Balance Sheet were
as follows:
2016 2015 2014
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ---------
Present value of Scheme liabilities (355,793) (298,812) (309,067)
Fair value of Scheme assets 360,069 302,239 312,516
-------------------------------------------- --------- --------- ---------
Net amount recognised at year end (before
any adjustments for deferred tax) 4,276 3,427 3,449
-------------------------------------------- --------- --------- ---------
The current and past service costs, settlements and
curtailments, together with the net interest expense for the year,
are included in the employee benefits expense in the Statement of
Comprehensive Income. Remeasurements of the net defined benefit
surplus are included in other comprehensive income.
2016 2015
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Net interest expense recognised in the Consolidated
Income Statement 545 506
----------------------------------------------------- -------- --------
Remeasurements of the net liability:
Return on scheme assets (excluding amount included
in interest expense) (59,979) 14,164
Loss / (gain) arising from changes in financial
assumptions 62,474 (5,063)
Gain arising from changes in demographic assumptions - (7,412)
Experience (gain) / loss (3,889) 2,177
----------------------------------------------------- -------- --------
(Credit) / charge recorded in other comprehensive
income (1,394) 3,866
----------------------------------------------------- -------- --------
Total defined benefit (credit) / charge (849) 4,372
----------------------------------------------------- -------- --------
The principal actuarial assumptions used were: 2016 2015
GBP'000 GBP'000
---------------------------------------------------- ------------- -------------
Liability discount rate 2.65% 3.70%
Inflation assumption - RPI 3.20% 3.10%
Inflation assumption - CPI 2.20% 2.10%
Rate of increase in salaries n/a n/a
Revaluation of deferred pensions 2.20% 2.10%
Increases for pensions in payment:
CPI pension increases (maximum 5% pa) 2.20% 2.10%
CPI pension increases (maximum 5% pa, minimum
3% pa) 3.10% 3.10%
CPI pension increases (maximum 3% pa) 2.10% 2.00%
Proportion of employees opting for early retirement 0% 0%
Proportion of employees commuting pension for
cash 50.0% 50.0%
Mortality assumption - before retirement Same as post Same as post
retirement retirement
Mortality assumption - after retirement (males) S2PMA tables S2PMA tables
Loading 105% 105%
Projection basis Year of birth Year of birth
CMI_2015 1.0% CMI_2015 1.0%
Mortality assumption - after retirement (females) S2PFA tables S2PFA tables
Loading 105% 105%
Projection basis Year of birth Year of birth
CMI_2015 1.0% CMI_2015 1.0%
Future expected lifetime of current pensioner
at age 65:
Male aged 65 at year end 86.5 86.5
Female aged 65 at year end 88.5 88.5
Future expected lifetime of future pensioner
at age 65:
Male aged 45 at year end 87.8 87.7
Female aged 45 at year end 89.8 89.8
---------------------------------------------------- ------------- -------------
9 Analysis of net debt
1 January Cash Other 31 December
2016 flow changes 2016
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ------- ------- -----------
Cash at bank and in hand 24,990 (4,680) 371 20,681
Debt due after 1 year (36,125) 23,791 (2,641) (14,975)
Finance leases (327) 40 (6) (293)
------------------------- --------- ------- ------- -----------
(11,462) 19,151 (2,276) 5,413
------------------------- --------- ------- ------- -----------
Reconciliation of net cash flow to movement 2016 2015
in net debt GBP'000 GBP'000
---------------------------------------------- -------- --------
Net (decrease) / increase in cash equivalents (4,680) 4,679
Cash outflow from decrease in debt and lease
financing 23,831 13,350
Effect of exchange rate fluctuations (2,276) 989
---------------------------------------------- -------- --------
Movement in net debt in the year 16,875 19,018
Net debt at 1 January (11,462) (30,480)
---------------------------------------------- -------- --------
Net debt at 31 December 5,413 (11,462)
---------------------------------------------- -------- --------
Borrowing facilities
The total bank borrowing facilities at 31 December 2016 amounted
to GBP95.0 million (2015: GBP95.0 million) of which GBP80.0 million
(2015: GBP58.9 million) remained unutilised. There are additional
seasonal bank working capital facilities of GBP10.0 million
available between 1 February and 31 August each year. The undrawn
facilities available at 31 December 2016, in respect of which all
conditions precedent had been met, were as follows:
2016 2015
GBP'000 GBP'000
-------------------------------------- -------- --------
Committed:
Expiring in more than 2 years but not
more than 5 years 65,025 43,875
Expiring in 1 year or less - -
Uncommitted:
Expiring in 1 year or less 15,000 15,000
-------------------------------------- -------- --------
80,025 58,875
-------------------------------------- -------- --------
On 16 August 2016, the Group renewed its short-term working
capital facilities and reduced its seasonal working capital
facility to GBP10.0 million. The Group also extended the maturity
of each of its committed facilities by 12 months. 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. The
current facilities are set out as follows:
Cumulative
Facility facility
GBP'000 GBP'000
---------------------------------------- -------- ----------
Committed facilities:
Q3: 2021 20,000 20,000
Q3: 2020 20,000 40,000
Q3: 2019 20,000 60,000
Q3: 2018 20,000 80,000
On-demand facilities:
Available all year 15,000 95,000
Seasonal (February to August inclusive) 10,000 105,000
---------------------------------------- -------- ----------
10 Principal risks and uncertainties
The principal risks and uncertainties that could impact the
Group for the remainder of the current financial year are set out
in the 2016 Annual Report. These cover the strategic, financial and
operational risks.
Strategic risks include those relating to general economic
conditions, Government policy, the actions of customers, suppliers
and competitors and also weather conditions. Cyber risk 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 effect of legislation or other regulatory
actions, the actions of competitors, raw material prices and
threats from cyber security, new technologies and business models.
Internal operational risks include investment in new products, new
business strategies and acquisitions.
The Group continues to monitor all these risks and pursue
policies that take account of, and mitigate, the risks where
possible.
11 Annual General Meeting
The Annual General Meeting will be held at The Cedar Court
Hotel, Ainley Top, Huddersfield, HD3 3RH at 11.00am on Wednesday 10
May 2017.
The Board
The Directors serving during the year ended 31 December 2016
were as follows:
Andrew Allner Chairman
Janet Ashdown Non-Executive Director
Jack Clarke Finance Director
Martyn Coffey Chief Executive
Alan Coppin Non-Executive Director (retired 18 May 2016)
Mark Edwards Non-Executive Director
Tim Pile Non-Executive Director
By order of the Board
Cathy Baxandall
Company Secretary
15 March 2017
Cautionary Statement
This Preliminary Results announcement 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
Preliminary Results announcement should be construed as a profit
forecast.
Directors' Liability
Neither the Company nor the Directors accept any liability to
any person in relation to the contents of this Preliminary Results
announcement except to the extent that such liability arises 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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March 15, 2017 03:00 ET (07:00 GMT)
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